<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JANUARY 16, 1998
REGISTRATION NO. 333-____
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM S-3
REGISTRATION STATEMENT
Under
THE SECURITIES ACT OF 1933
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CYTEL CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE 33-0245076
(State or other jurisdiction of (I.R.S. Employer Identification Number)
incorporation or organization)
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3525 JOHN HOPKINS COURT
SAN DIEGO, CALIFORNIA 92121
(619) 552-3000
(Address, including zip code, and telephone number, including area code,
of registrant's principal executive offices)
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VIRGIL D. THOMPSON
PRESIDENT, CHIEF EXECUTIVE OFFICER AND ACTING CHIEF FINANCIAL OFFICER
CYTEL CORPORATION
3535 JOHN HOPKINS COURT
SAN DIEGO, CALIFORNIA 92121
(619) 552-3000
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
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COPIES TO:
FREDERICK T. MUTO, ESQ.
L. KAY CHANDLER, ESQ.
COOLEY GODWARD LLP
4365 EXECUTIVE DRIVE, SUITE 1100
SAN DIEGO, CALIFORNIA 92121
(619) 550-6000
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Approximate date of commencement of proposed sale to the public:
FROM TIME TO TIME AFTER THE REGISTRATION STATEMENT BECOMES EFFECTIVE.
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If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. |_|
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. |X|
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. |_|
If this form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. |_|
If delivery of the Prospectus is expected to be made pursuant to Rule 434,
please check the following box. |_|
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
============================= ================= ================================ ================================ ==================
PROPOSED MAXIMUM PROPOSED MAXIMUM
TITLE OF EACH CLASS OF AMOUNT OFFERING PRICE AGGREGATE AMOUNT OF
SECURITIES TO BE REGISTERED PER SHARE(1) OFFERING PRICE(1) REGISTRATION FEE
TO BE REGISTERED
============================= ================= ================================ ================================ ==================
<S> <C> <C> <C> <C>
Common Stock
$0.01 par value........... 4,777,139 $1.56 $7,452,336.80 $2,198.44
============================= ================= ================================ ================================ ==================
</TABLE>
(1) Estimated in accordance with Rule 457(c) solely for the purpose of
computing the amount of the registration fee based on the average of the
high and low prices of the Company's Common Stock as reported on the Nasdaq
National Market on January 12, 1998.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT THAT SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
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<PAGE> 2
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
SUBJECT TO COMPLETION, DATED JANUARY 16, 1998
PROSPECTUS
CYTEL CORPORATION
4,777,139 SHARES OF COMMON STOCK
-------------------
This Prospectus relates to the offer and sale by certain stockholders
of the Company (the "Selling Stockholders") of up to 4,777,139 shares of Common
Stock, $0.01 par value (the "Shares"), of Cytel Corporation ("Cytel" or the
"Company") who acquired such Shares pursuant to an exemption from the
registration requirements provided by Regulation D under the Securities Act of
1933, as amended (the "Securities Act"). The Shares are being registered by the
Company pursuant to the terms of certain Stock Purchase Agreements, dated
November 7, 1997, by and between the Company and the individual Selling
Stockholders (the "Purchase Agreements"). See "Selling Stockholders" and "Plan
of Distribution."
The sale of the Shares may be effected by the Selling Stockholders from
time to time in transactions on the Nasdaq National Market, in privately
negotiated transactions or in a combination of such methods of sale, at fixed
prices that may be changed, at market prices prevailing at the time of sale, at
prices related to such prevailing prices or at negotiated prices. The Selling
Stockholders may effect such transactions by selling the Shares to or through
broker-dealers, and such broker-dealers may receive compensation in the form of
discounts, concessions or commissions from the Selling Stockholders and/or the
purchasers of the Shares for whom such broker-dealers may act as agents or to
whom they may sell as principals or both (which compensation as to a particular
broker-dealer might be in excess of customary commissions). See "Plan of
Distribution."
None of the proceeds from the sale of the Shares by the Selling
Stockholders will be received by the Company. The Company has agreed, among
other things, to bear certain expenses (other than fees and expenses of counsel
and underwriting discounts and commission and brokerage commissions and fees) in
connection with the registration and sale of the Shares being offered by the
Selling Stockholders. See "Selling Stockholders."
The Common Stock of the Company is quoted on the Nasdaq National Market
under the symbol "CYTL." The last reported sales price of the Company's Common
Stock on the Nasdaq National Market on January 13, 1998 was $1.56 per share.
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THIS OFFERING INVOLVES A HIGH DEGREE OF RISK. SEE "RISK FACTORS" BEGINNING ON
PAGE 7 OF THIS PROSPECTUS.
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR
HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE
SECURITIES COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION
TO THE CONTRARY IS A CRIMINAL OFFENSE.
The Selling Stockholders and any agents, broker-dealers or underwriters
that participate in the distribution of the Shares may be deemed to be
"underwriters" within the meaning of the Securities Act of 1933, as amended (the
"Act"), and any commission received by them and any profit on the resale of the
Common Stock purchased by them may be deemed to be underwriting discounts or
commissions under the Act. See "Selling Stockholders" and "Plan of
Distribution." The Company will not receive any proceeds from the sale of shares
by the Selling Stockholders. The Company has agreed to indemnify the Selling
Stockholders and certain other persons against certain liabilities, including
liabilities under the Act.
THE DATE OF THIS PROSPECTUS IS ________, 1998
<PAGE> 3
NO PERSON IS AUTHORIZED IN CONNECTION WITH ANY OFFERING MADE HEREBY TO
GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED OR INCORPORATED
BY REFERENCE IN THIS PROSPECTUS, AND ANY INFORMATION OR REPRESENTATION NOT
CONTAINED OR INCORPORATED HEREIN MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY THE COMPANY. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL,
OR A SOLICITATION OF AN OFFER TO BUY, BY ANY PERSON IN ANY JURISDICTION IN WHICH
IT IS UNLAWFUL FOR SUCH PERSON TO MAKE SUCH OFFER OR SOLICITATION. NEITHER THE
DELIVERY OF THIS PROSPECTUS AT ANY TIME NOR ANY SALE MADE HEREUNDER SHALL, UNDER
ANY CIRCUMSTANCES, IMPLY THAT THE INFORMATION HEREIN IS CORRECT AS OF ANY DATE
SUBSEQUENT TO THE DATE HEREOF.
AVAILABLE INFORMATION
The Company is subject to the reporting requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith, files annual and quarterly reports, proxy statements and other
information with the Securities and Exchange Commission (the "Commission"). Such
reports, proxy statements and other information may be inspected and copied at
the Commission's Public Reference Section, 450 Fifth Street, N.W., Room 1024,
Washington, D.C. 20549, as well as at the Commission's Regional Offices at 7
World Trade Center, 13th Floor, New York, New York 10048; and 500 West Madison
Street, Suite 1400, Chicago, Illinois 60661-2511. Copies of such material can be
obtained at prescribed rates from the Public Reference Section of the Commission
at 450 Fifth Street, N.W., Washington, D.C. 20549. The Common Stock of the
Company is quoted on the Nasdaq National Market. Reports and other information
concerning the Company may be inspected at the National Association of
Securities Dealers, Inc. at 1735 K Street, N.W. Washington, D.C. 20006. The
Commission also maintains a site on the World Wide Web that contains reports,
proxy and information statements and other information regarding the Company,
the address for such site is http://www.sec.gov.
ADDITIONAL INFORMATION
A registration statement on Form S-3 with respect to the Shares offered
hereby (the "Registration Statement") has been filed with the Commission under
the Act. This Prospectus does not contain all of the information contained in
such Registration Statement and the exhibits and schedules thereto, certain
portions of which have been omitted pursuant to the rules and regulations of the
Commission. For further information with respect to the Company and the Shares
offered hereby, reference is made to the Registration Statement and the exhibits
and schedules thereto. Statements contained in this Prospectus regarding the
contents of any contract or any other documents are not necessarily complete
and, in each instance, reference is hereby made to the copy of such contract or
document filed as an exhibit to the Registration Statement. The Registration
Statement, including exhibits thereto, may be inspected without charge at the
Commission's principal office in Washington, D.C., and copies of all or any part
thereof may be obtained from the Public Reference Section, Securities and
Exchange Commission, Washington, D.C., 20549, upon payment of the prescribed
fees.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents, filed or to be filed with the Commission under
the Exchange Act are hereby incorporated by reference into this Prospectus:
(i) The Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1996, including all material incorporated by reference therein;
(ii) The Company's Quarterly Report on Form 10-Q for the quarter ended
March 31, 1997, including all material incorporated by reference therein;
(iii) The Company's Form 8-K filed by the Company on April 10, 1997;
(iv) The Company's Quarterly Report on Form 10-Q for the quarter ended
June 30, 1997, including all material incorporated by reference therein;
(v) The Company's Quarterly Report on Form 10-Q for the quarter ended
September 30, 1997, including all material incorporated by reference therein;
2.
<PAGE> 4
(vi) The Company's Proxy Statement for the 1997 Annual Meeting of
Stockholders filed pursuant to Rule 14a-6 of the Exchange Act;
(vii) The Company's Form 8-K filed by the Company on December 8, 1997;
and
(viii) The description of the Common Stock contained in the Company's
Registration Statement on Form 8-A as filed on October 24, 1991.
All documents filed by the Company pursuant to Sections 13(a), 13(c),
14 or 15(d) of the Exchange Act after the date of this Prospectus and prior to
the termination of the offering shall be deemed to be incorporated by reference
herein and to be a part hereof from the date of filing of such documents. Any
statement contained in this Prospectus or in a document incorporated or deemed
to be incorporated by reference herein shall be deemed to be modified or
superseded for purposes of this Prospectus to the extent that a statement
contained herein or in any subsequently-filed document which also is or is
deemed to be incorporated by reference herein modifies or supersedes such
statement. Any such statement so modified or superseded shall not be deemed,
except as so modified or superseded, to constitute a part of this Prospectus.
The Company will provide without charge to each person, including any
beneficial owner, to whom this Prospectus is delivered, upon written or oral
request of such person, a copy of any and all of the documents that have been
incorporated by reference herein (not including exhibits to such documents
unless such exhibits are specifically incorporated by reference herein or into
such documents). Such request may be directed to Cytel Corporation, Attention:
Investor Relations, 3525 John Hopkins, San Diego, California 92121, telephone
(619) 552-3000.
3.
<PAGE> 5
THE COMPANY
This Prospectus contains forward-looking statements within the meaning
of Section 27A of the Securities Act and Section 21E of the Securities Exchange
Act of 1934, as amended (the "Exchange Act") that involve risks and
uncertainties. The Company's actual results could differ materially from those
projected in the forward-looking statements. Factors that could cause or
contribute to such differences include, but are not limited, to those discussed
in Risk Factors, as well as those discussed elsewhere in this Prospectus. The
information contained in this Prospectus should be considered carefully before
purchasing any of the securities being offered hereby.
Cytel's business strategy is to become the leading manufacturer of
bioactive carbohydrates for consumer and medical product applications, and to
develop and commercialize therapeutics for acute and chronic inflammation. The
Company's strategy is driven by its expertise and strong proprietary position in
the cost-effective synthesis of carbohydrates and by its innovative research in
cell adhesion blockers for treatment of inflammatory diseases. Cytel expects its
Glytec(TM) carbohydrate manufacturing business unit to generaTE near-term
revenues under existing and future collaborations through license fees and
process development and milestone payments and, following product introduction,
expects revenue and profit growth from royalties on product sales and payments
under supply agreements.
Cytel has developed proprietary enzymatic sugar nucleotide cycling
technology ("SNC(TM) Technology") TO enable commercial-scale manufacturing of
bioactive carbohydrates for both consumer and medical products. Although many
opportunities exist for carbohydrate products because of the important role that
bioactive carbohydrates play in the body, commercialization of these products
has not been fully exploited due to the difficulties associated with their
efficient and cost effective manufacture. Traditional chemical synthesis of
bioactive carbohydrates is very expensive, making large scale chemical
manufacturing impractical for all but the most simple structures. Cytel's SNC
Technology enables bioactive carbohydrates to be manufactured efficiently and at
significantly reduced costs compared to alternative chemical or enzymatic
methods of synthesis. The Company has established a strong proprietary position
for its SNC Technology through a combination of United States and foreign
patents and trade secrets covering enzyme compositions and uses, efficient
methods of enzyme production, carbohydrate compositions and uses, and methods of
carbohydrate manufacture.
CARBOHYDRATE MANUFACTURING
Cytel has an established manufacturing collaboration with the Ross
Products Division of Abbott Laboratories ("Abbott") to use Cytel's SNC
Technology in the manufacture of bioactive carbohydrates to be included in
certain of Abbott's nutritional products. Cytel has received $4.0 million in
fees and milestone payments from Abbott to date and is entitled to receive
additional payments if certain milestones are met and royalties on sales of
products containing any sugar manufactured using Cytel's SNC Technology.
In the medical products area, Cytel has entered into a manufacturing
collaboration with Baxter Healthcare Corporation's Nextran unit ("Nextran") for
the manufacture of a specific bioactive carbohydrate which is implicated in the
hyperacute rejection of organs transplanted from non-human species to humans
(xenotransplantation). The Company has received $1.5 million in fees and
milestone payments and Nextran has made a $2.0 million equity investment in the
Company. Cytel will also be entitled to receive additional payments upon
Nextran's achievement of certain milestones through product launch and further
payments for supply of the product to Nextran.
The ability to inhibit or enhance the activity of bioactive
carbohydrates in the body also offers a number of other opportunities for
carbohydrate products. The Company believes there are significant opportunities
for manufacturing bioactive carbohydrates for use in additional consumer
products such as cosmetic, skin care and oral hygiene products. Cytel is
pursuing collaborations with biotechnology and pharmaceutical companies for the
remodeling of therapeutic glycoproteins developed by those companies, offering
potential improvement of their structural and functional characteristics. In
addition, the Company will seek to enter into collaborations for the development
of carbohydrate vaccines, and the manufacture of bioactive carbohydrates to be
incorporated into anti-infective and anti-toxin products.
4.
<PAGE> 6
THERAPEUTIC PIPELINE
Cytel is also pursuing the development of therapeutic anti-inflammatory
products by leveraging its experience in the discovery, design and development
of molecules based on inhibiting the adhesion of white blood cells (cell
adhesion blockers). The Company's two most advanced therapeutic programs are
directed toward treating acute and chronic inflammatory conditions by blocking
specific cell adhesion molecules that are responsible for the recruitment of
white blood cells to sites of inflammation.
In December 1997, Cytel initiated clinical registration trials of
Cylexin(TM), Cytel's lead cell adhesiON blocker molecule for prevention of
reperfusion injury in infants undergoing hypothermic cardiopulmonary bypass
("CPB") during surgical repair of congenital heart defects. Cylexin targets an
unmet medical need in newborn infants with life threatening congenital heart
defects who must undergo CPB to facilitate corrective surgery. Cytel believes
that it is positioned to be the first to the market with a drug for this
indication. The Company estimates that fewer than 100 hospitals perform the
majority of the estimated 20,000 infant heart repair surgeries in the United
States each year. Cytel may sell the drug directly in the United States through
a small, specialty sales force or may seek a partner for such activities. Cytel
will use its SNC Technology for the cost-effective manufacture of Cylexin and is
currently producing Cylexin for this initial indication at commercial scale.
Cytel's second novel class of cell adhesion blockers is directed toward
the treatment of chronic inflammatory diseases including asthma, rheumatoid
arthritis and multiple sclerosis. This class of cell adhesion blockers has been
shown to be effective in accepted animal models of inflammatory disease. Cytel's
compounds also exhibit potential for bronchial and oral administration, an
essential requirement for a chronic use drug. The Company is in the process of
identifying one or more lead compounds for preclinical development and has
commenced additional studies to confirm oral or bronchial therapeutic activity
in relevant animal models. During 1997, Cytel received an issued patent and a
notice of allowance for additional claims relating to this class of cell
adhesion blockers.
COMPANY RESTRUCTURING
In October 1997, Cytel formed a subsidiary, Epimmune Inc. ("Epimmune"),
to develop therapeutic and prophylactic products for cancer and infectious
diseases. Cytel transferred assets from its Immune Stimulation Program to
Epimmune. Since 1988, this Program has been focused on defining the function of
key immune receptors (MHC molecules), and their ligands (epitopes). This
molecular interaction plays a central role in controlling the human immune
response. The Epimmune technology platform includes Cytel's library of
proprietary antigenic epitopes, its proprietary PADRE(TM) immunostimulant
technology and its expertise in epitope discovery aND immunology. The Company
believes that Epimmune's intellectual property portfolio will enable it to
create novel vaccines directed against viruses, bacteria, parasites and fungal
infections as well as melanoma, breast, colon, lung, prostate and cervical
carcinomas. Cytel also transferred relevant equipment to Epimmune, along with an
experienced technical staff of approximately 25 Cytel employees.
Cytel entered into a letter of intent (the "Searle LOI") with G.D.
Searle & Co., a wholly-owned subsidiary of Monsanto Company ("Searle"), on
September 5, 1997 to collaborate with respect to the production, use and sale of
pharmaceutical products derived from Cytel's cancer epitopes and the use thereof
in ex vivo therapies and therapeutic vaccines. Under the terms of the Searle
LOI, on September 18, 1997, Searle purchased 2 million shares of Cytel's Common
Stock at $2.50 per share for an aggregate investment of $5,000,000 pursuant to a
stock purchase agreement (the "Stock Purchase Agreement"). In December 1997, an
additional 222,222 shares of the Company's Common Stock were issued to Searle,
based on the terms set forth in the Stock Purchase Agreement, reducing the
average purchase price for Searle to $2.25 per share. Cytel has agreed to use
the proceeds from the sale of Common Stock to Searle to fund operations for
Epimmune. Under the proposed collaboration, Epimmune and Searle intend to focus
on the development of Epimmune's cancer technology which allows creation of
novel cancer-specific immune responses.
The Company currently employs approximately 97 people (including 28 in
Epimmune) and is located at 3525 John Hopkins Court, San Diego, California
92121. The Company's telephone number is (619) 552-3000.
5.
<PAGE> 7
RISK FACTORS
This Prospectus contains forward-looking statements within the meaning
of Section 27A of the Securities Act and Section 21E of the Exchange Act that
involve risks and uncertainties. The Company's actual results could differ
materially from those projected in the forward-looking statements. Factors that
could cause or contribute to such differences include, but are not limited, to
those discussed in this section, as well as those discussed elsewhere in this
Prospectus. The following risk factors should be considered carefully in
addition to the other information contained in this Prospectus before purchasing
any of the Shares being offered hereby.
EARLY STAGE OF DEVELOPMENT; ABSENCE OF PRODUCTS. The Company is a
development stage company. It has not completed the development of any products
and, accordingly, has not begun to market or generate revenues from the
commercialization of products. The Company does not expect to market any
therapeutic products for a number of years. Few companies have successfully
developed and commercialized complex carbohydrates for pharmaceutical
applications. The Company's products under development will require significant
time consuming and costly research, development, preclinical studies, clinical
testing, regulatory approval and significant additional investment prior to
their commercialization, which may never occur. There can be no assurance that
the Company's research and development programs will be successful, that the
Company will be able to manufacture products in commercial quantities in
compliance with regulatory requirements at an acceptable cost, that any of its
products under development will be successfully commercialized or will prove to
be safe and efficacious in clinical trials or that the Company or its
collaborators will be successful in obtaining market acceptance of any of its
products. The Company or its collaborators may encounter problems and delays
relating to research and development, regulatory approval, manufacturing and
marketing. The failure by the Company to address such problems and delays
successfully would have a material adverse effect on the Company's business,
financial condition and results of operations. See "--Government Regulation;
Uncertainty Associated with Clinical Trials."
RELIANCE ON COLLABORATIVE PARTNERS. Cytel expects to rely on
collaborative arrangements both to exploit its carbohydrate manufacturing
technology in the areas of consumer and medical products, as well as to develop
and commercialize pharmaceutical products. The Company expects that
substantially all of its revenues for the foreseeable future will result from
payments under its existing, and any future, manufacturing and collaborative
research arrangements, including royalties on product sales, and interest
income. There can be no assurance that sales of royalty-bearing nutritional
products incorporating the Company's SNC Technology will commence in late 1998
or that the Company will receive any royalty payments from sales of such
products or any other products. Further, there can be no assurance that the
Company will receive royalty revenues, license fees or milestone payments from
any of its existing collaborative partners or that the Company will be
successful in entering into additional collaborative arrangements that will
result in significant revenues. There can be no assurance that the Company will
be able to negotiate acceptable collaborative arrangements in the future, or
that such collaborative arrangements or its existing collaborative arrangements
will continue or be successful. In addition, collaborative partners may pursue
alternative technologies or develop alternative compounds either on their own or
in collaboration with others, including the Company's competitors, as a means of
developing treatments for the disease targeted by any collaborative program of
the Company.
The Company's collaborations with Abbott and Nextran provide, in part,
for the receipt by the Company of certain license fees, milestone payments, and,
if commercialization occurs, royalty payments or compensation for supply of
products. The success of the collaborations will depend, in significant part, on
Abbott's and Nextran's respective competitive marketing and strategic
considerations, including the relative advantages of alternative products being
developed or marketed by competitors. Although the Company believes that Abbott
and Nextran each will have an economic motivation to commercialize products
incorporating carbohydrates manufactured by the Company or using the Company's
technology, the amount and timing of resources committed to these activities are
entirely within the control of Abbott and Nextran, respectively. There can be no
assurance that Abbott or Nextran will pursue the development and
commercialization of products utilizing the Company's technology, that either
party will perform its obligations as expected or that any future milestone
payments or fees will be received by the Company. The suspension or termination
of the Company's collaborations with Abbott or Nextran, the failure of such
collaborations to be successful or the delay in their development or
commercialization of carbohydrate products could have a material adverse effect
on the Company's business, financial condition and results of operations.
6.
<PAGE> 8
Cytel has relied on certain established pharmaceutical companies
interested in its technology to fund a portion of its research and development
expenses for pharmaceutical product candidates. The Company has entered into
collaborative research agreements with collaborative partners, including
Sumitomo Pharmaceuticals, Inc. ("Sumitomo"), whereby the partners provide
capital in exchange for certain technology, product, manufacturing and marketing
rights. Upon Sumitomo's attainment of certain goals, the Company is entitled to
receive from Sumitomo certain milestone payments and royalties on product sales.
Accordingly, the Company will be dependent in part upon the efforts of Sumitomo
in Pacific Rim countries and new collaborative partners, if any, in other parts
of the world in discharging their obligations in order to develop and
commercialize products and to generate revenues under the collaboration
agreements.
In addition, the Company may be required to enter into licenses or
other collaborative agreements with third parties in order to access
technologies that may be necessary to successfully develop certain of its
products. There can be no assurance that the Company will be able to
successfully negotiate acceptable licenses or other collaborative arrangements
that allow it to access such technology. In addition, there can be no assurance
that any technology accessed through such licenses or other collaborations will
successfully meet the Company's requirements.
RESTRUCTURING OF BUSINESS; SEARLE TRANSACTION. The Company has made a
strategic decision to restructure its business to focus principally on the
manufacture of bioactive carbohydrate products and the development of
anti-inflammatory pharmaceutical products. The Company's restructuring has been
accomplished through the contribution of its vaccine program technology and
related assets to a new company, Epimmune, which is initially a subsidiary of
the Company. Epimmune will be managed and financed separately from Cytel's
continuing business. On September 5, 1997, Cytel entered into the Searle LOI,
pursuant to which Searle has invested $5,000,000 in Cytel for the purpose of
funding Epimmune, and under which Searle has agreed in principle to provide
additional funding for Epimmune upon execution of a mutually satisfactory
definitive agreement (the "Searle Transaction"). There can be no assurance that
the Company will enter into a definitive agreement with Searle and successfully
consummate the Searle Transaction on favorable terms, or at all, or that the
Company will be able to locate or enter into collaborative arrangements with any
other corporate partners to fund Epimmune. There can be no assurance that either
party will perform its obligations as expected or that any future payments or
fees payable under any license entered into between the parties will be received
by the Company. The existence of various rights proposed to be granted to Searle
under the Searle LOI may make it substantially more difficult for Cytel to
successfully obtain additional investment in Epimmune. Accordingly, there can be
no assurance that the stockholders of Cytel will receive any benefit from
Epimmune, or that the restructuring process will not have a material adverse
effect on the Company's business, financial condition and results of operations.
CONTINUING OPERATING LOSSES; ACCUMULATED DEFICIT. The Company has
experienced significant operating losses since its inception in 1987. As of
September 30, 1997, the Company had an accumulated deficit of approximately
$103.2 million. The Company expects to incur substantial additional operating
losses as the Company's research and development and clinical trial efforts
continue to expand. All of the Company's revenues to date have consisted of
contract research and development revenues, license and milestone payments,
research grants and interest income. To achieve profitable operations, the
Company, alone or with others, must successfully develop commercial applications
of its carbohydrate manufacturing technology for consumer and medical products
and identify, develop, register, manufacture and market proprietary products.
There can be no assurance that the Company will be successful in its efforts to
achieve profitable operations.
MANUFACTURING LIMITATIONS. In the short term, the Company anticipates
that it will rely on revenue from its manufacturing technology for the
commercial production of carbohydrates for consumer and medical products. To be
successful, the Company's products and products of its partners must be
manufactured in commercial quantities in compliance with regulatory requirements
and at an acceptable cost. The Company has not commercialized any bioactive
carbohydrate products or any other pharmaceutical products, nor has it
demonstrated its ability to manufacture commercial quantities of its or its
partners' product candidates in accordance with regulatory requirements. If the
Company is unable to develop manufacturing capabilities to produce suitable
quantities of its or its partners' products in accordance with regulatory
standards or to contract with a third party for such capabilities, the ability
of the Company or its partners to conduct clinical trials, obtain regulatory
approvals and market such products may be adversely affected, which could
adversely affect the Company's competitive
7.
<PAGE> 9
position and its chances of achieving profitability. There can be no assurance
that such products can be manufactured by the Company or any other party at a
cost or in quantities which are commercially viable.
FUTURE CAPITAL NEEDS; UNCERTAINTY OF ADDITIONAL FUNDING. The Company
will require substantial funds to conduct research and development, to conduct
preclinical and clinical testing of products, to establish commercial scale
manufacturing facilities and to market products. The Company's future capital
requirements will depend on many factors, including: the ability of the Company
to establish and maintain collaborative arrangements, particularly with respect
to commercial application of the Company's carbohydrate manufacturing
technology; progress with preclinical testing and clinical trials; the time and
costs involved in obtaining regulatory approvals; the costs involved in filing,
prosecuting and enforcing patent claims; competing technological and market
developments; changes in its existing research relationships; continued
scientific progress in its drug discovery programs; the magnitude of these
programs; the cost of manufacturing scale-up; and effective commercialization
activities and arrangements. The Company intends to seek such additional funding
either through collaborative arrangements or through public or private
financings. There can be no assurance that additional financing will be
available, or, if available, that it will be available on acceptable terms. If
additional funds are raised by issuing securities, further dilution to existing
stockholders may result. If adequate funds are not available, the Company may be
required to delay, scale back or eliminate one or more of its drug discovery
programs or obtain funds through arrangements with collaborative partners or
others that may require the Company to relinquish rights to certain of its
technologies, product candidates or products that the Company would not
otherwise relinquish. If additional financing is not available, Cytel
anticipates its existing available cash, cash equivalents and short-term
investments, investment income and research and development funding from
existing collaborative agreements and research grants will be adequate to
satisfy its capital requirements and fund operations through the end of 1998.
GOVERNMENT REGULATION; UNCERTAINTY ASSOCIATED WITH CLINICAL TRIALS. The
production and marketing of the Company's products and its ongoing research and
development activities are subject to regulation by numerous governmental
authorities in the United States and other countries. Before any drug developed
by the Company can be marketed, it will undergo rigorous preclinical and
clinical testing and an extensive regulatory approval process mandated by the
FDA and equivalent foreign authorities. These processes can take a number of
years and require the expenditure of substantial resources. The time required
for completing such testing and obtaining such approvals is uncertain and
approval itself may not be obtained. The FDA or the Company and its
collaborators may decide to discontinue or suspend clinical trials at any time
if the subjects or patients who are participating in such trials are being
exposed to unacceptable health risks or if the results show no or limited
benefit in patients treated with the drug compared to patients in the control
group.
The Company is currently conducting human clinical testing of its lead
product candidate, Cylexin, in infants undergoing surgery to correct congenital
heart defects. Cylexin was evaluated in a Phase II clinical trial for its
ability to prevent reperfusion injury to cardiac (heart) muscle during treatment
of acute myocardial infarction with primary angioplasty. This trial was
terminated in June 1996 after the independent safety and data monitoring panel
determined that the drug was safe, but that there was no benefit in patients
treated with Cylexin over those patients in the placebo control group. Further
testing of this and the Company's other product candidates in research and
development may reveal other undesirable and unintended side effects or other
characteristics that may prevent or limit their commercial use. There can be no
assurance that the Company will not encounter additional problems in clinical
trials that will cause the FDA or the Company to delay or suspend clinical
trials. Furthermore, there can be no assurance that any of the Company's
products will be approved by the FDA for any indication. Products, if any,
resulting from Cytel's research and development programs are not expected to be
commercially available for a number of years. Even if regulatory approval of a
drug is granted, such approval may entail limitations on the indicated uses for
which the drug may be marketed. In addition, a marketed drug, its manufacturer
and the facilities in which the drug is manufactured are subject to continual
review and periodic inspections. Later discovery of previously unknown problems
with a product, manufacturer or facility may result in restrictions on such
product or manufacturer, including withdrawal of the product from the market.
Food and food ingredients, cosmetics and medical devices are subject to
the provisions of the Federal Food, Drug and Cosmetic Act regarding adulteration
and misbranding. Certain of the Company's potential products may be subject to
FDA review as a food additive. Substances that are generally recognized as safe
("GRAS") are
8.
<PAGE> 10
excluded from the definition of food additives. A manufacturer may make an
independent determination that qualified experts would generally agree that a
substance is GRAS for a particular use. The Company expects Abbott will make
such a determination in the future with respect to the infant formula additive
made using Cytel's SNC Technology. There can be no assurance that Abbott will
make such a determination or that the FDA will agree with such determination and
deem the additive, or the infant formula containing the additive, to be
adulterated because it is, or it contains, an unapproved food additive. Such a
determination would result in Abbott being required to seek FDA approval of the
nutritional additive in order to continue marketing and selling the additive or
formula containing the additive. This process could be time consuming and
expensive and would result in a delay in or preclude the Company from receiving
royalty revenue. Furthermore, a company's decision to rely on an independent
determination may limit the marketability of that company's products as to food
manufacturers, many of whom require confirmation of GRAS status from the FDA
before they will purchase substances for use in foods from third parties.
The infant formula products, in which bioactive carbohydrates
manufactured using the Company's technology may be added, will be subject to
review and approval under the Infant Formula Act, which amended the Food, Drug
and Cosmetic Act and established detailed requirements for the manufacture,
composition and labeling of infant formulas. Pursuant to the Company's agreement
with Abbott, Abbott is responsible for all regulatory activities relating to the
infant formula additive. There can be no assurance that Abbott will be able to
satisfy all applicable regulatory requirements. Abbott may also market infant
formula containing the Company's bioactive carbohydrates in foreign countries.
Infant formula regulatory requirements vary widely from country to country, and
may be more or less stringent than FDA requirements. The time required to obtain
clearances, if required, in foreign countries may be longer or shorter than that
required in the United States.
TECHNOLOGICAL CHANGE AND COMPETITION. The Company is engaged in highly
competitive industries. The Company competes with many public and private
companies, including pharmaceutical companies, chemical companies, specialized
biotechnology companies and academic institutions. Many of the Company's
competitors have substantially greater financial, scientific and technical
resources, and manufacturing and marketing experience and capabilities than the
Company. In addition, many of the Company's competitors have significantly
greater experience conducting preclinical studies and clinical trials of new
pharmaceutical products, and in obtaining regulatory approvals for
pharmaceutical products. The Company is relying on Abbott to develop and
commercialize an infant formula additive using the Company's SNC Technology. As
a result, the ability of the Company to derive royalties from sales of infant
formula products will depend on Abbott's ability to compete in the highly
competitive infant formula market. Competitors of the Company and its
collaborators may develop and commercialize such products more rapidly than the
Company and its collaborators. Competition may increase further as a result of
potential advances from the study of complex carbohydrates, and greater
availability of capital for investment in this field. There can be no assurance
that the Company's competitors will not succeed in developing technologies and
products that are more effective than any being developed by the Company or
Abbott, or that would render the Company's technology and products obsolete or
noncompetitive. The Company is aware of companies that are investigating methods
of enzymatic synthesis for production of commercial quantities of complex
carbohydrates. There can be no assurance that these and other efforts by
potential competitors will not be successful, or that other methods of
carbohydrate synthesis will not be developed to compete with the Company's
technology.
The Company's products under development address an array of markets.
The Company's competition will be determined in part by the potential
indications for which the Company's compounds are developed and ultimately
approved by regulatory authorities. For certain of the Company's potential
products, an important factor in competition may be the timing of market
introduction of its or competitive products. Accordingly, the relative speed
with which Cytel can develop products, complete the clinical trials and approval
processes and supply commercial quantities of the products to the market are
expected to be important competitive factors. The Company expects that
competition among products approved for sale will be based, among other things,
on product effectiveness, safety, reliability, availability, price and patent
position.
PATENTS AND PROPRIETARY RIGHTS. The Company's success will depend in
part on its ability to obtain patent protection for its products and processes,
both in the United States and other countries. The patent position of
biotechnology and pharmaceutical companies is highly uncertain and involves
complex legal and factual questions.
9.
<PAGE> 11
There is no consistent policy regarding the breadth of claims allowed in
biotechnology patents. The Company intends to file applications and pursue
patent prosecution as appropriate for patents covering both its products and
processes. There can be no assurance that patents will issue from any of the
patent applications owned or licensed by the Company or that, if patents do
issue, that claims allowed will be sufficiently broad to protect the Company's
products and processes. In addition, there can be no assurance that any patents
issued to the Company will not be challenged, invalidated or circumvented, or
that the rights granted thereunder will provide proprietary protection to the
Company.
As is typical in the biotechnology industry, the commercial success of
the Company will depend in part on the Company neither infringing patents issued
to competitors nor breaching the technology licenses upon which the Company's
products might be based. The Company is aware of third-party patent applications
and issued patents that may require the Company to alter products or processes,
obtain licenses or cease certain activities. Based on a preliminary
investigation, the Company believes that its compound Cylexin, may infringe one
or more claims of a patent issued to a third party. The Company is continuing to
investigate the validity and scope of these patents. Subject to this further
investigation, the Company believes that it may be required to either obtain a
license from the third party in order to manufacture and market Cylexin or,
alternatively, to shift its development effort to another compound with
attendant delay. There can be no assurance that the Company will be able to
obtain any necessary licenses at a reasonable cost. Failure by the Company to
obtain a license to any technology that it requires to commercialize its
products, or to develop an alternative compound and obtain FDA approval within
an acceptable period of time if required to do so, would have a material adverse
effect on the Company. Litigation, which could result in substantial costs to
the Company, may also be necessary to enforce any patents issued to the Company
or to determine the scope and validity of others' proprietary rights. In
addition, the Company may have to participate in interference proceedings
declared by the U.S. Patent and Trademark Office which could result in
substantial costs to the Company to determine the priority of inventions.
Cytel also protects its proprietary technology and processes in part by
confidentiality agreements with its collaborative partners, employees and
consultants. There can be no assurance that these agreements will not be
breached, that the Company will have adequate remedies for any breach, or that
the Company's trade secrets will not otherwise become known or be independently
discovered by competitors.
ABSENCE OF SALES AND MARKETING EXPERIENCE. The Company has no
experience in sales, marketing or distribution. Before it can market any of its
products directly, the Company must develop a substantial marketing and sales
force with technical expertise and supporting distribution capability.
Alternatively, the Company may obtain the assistance of a pharmaceutical company
with a large distribution system and a large direct sales force. Other than its
agreement with Sumitomo, the Company does not have any existing distribution
arrangements with any pharmaceutical company for its products. There can be no
assurance that the Company will be able to establish sales and distribution
capabilities or be successful in gaining market acceptance for its products.
DEPENDENCE ON REIMBURSEMENT. Cytel's ability to commercialize its
products successfully may depend in part on the extent to which reimbursement
for the cost of such products and related treatment will be available from
government health administration authorities, private health insurers and other
organizations. Third-party payors are increasingly challenging the price of
medical products and services. Significant uncertainty exists as to the
reimbursement status of newly approved health care products, and there can be no
assurance that adequate third-party coverage will be available to enable Cytel
to maintain price levels sufficient to realize an appropriate return on its
investment in product development.
DEPENDENCE ON KEY PERSONNEL. The Company is highly dependent on the
principal members of its scientific and management staff. The Company does not
maintain key person life insurance on the life of any employee. The Company's
future success also will depend in part on the continued service of its key
scientific personnel and its ability to identify, hire and retain additional
qualified personnel.
There is intense competition for qualified personnel in the areas of
the Company's activities, and there can be no assurance that the Company will be
able to continue to attract and retain such personnel necessary for the
development of the Company's business. Because of the intense competition, there
can be no assurance that the Company will be successful in adding technical
personnel as needed to meet the staffing requirements of additional
10.
<PAGE> 12
collaborative relationships. Failure to attract and retain key personnel could
have a material adverse effect on the Company.
PRODUCT LIABILITY AND INSURANCE. The Company's business exposes it to
potential product liability risks which are inherent in the testing,
manufacturing and marketing of human therapeutic products. While the Company
currently has product liability insurance, there can be no assurance that it
will be able to maintain such insurance on acceptable terms or that insurance
will provide adequate coverage against potential liabilities.
USE OF HAZARDOUS MATERIALS. The Company's research and development
involves the controlled use of hazardous materials, chemicals and radioactive
compounds. Although the Company believes that its safety procedures for handling
and disposing of such materials comply with the standards prescribed by state
and federal regulations, the risk of accidental contamination or injury from
these materials cannot be completely eliminated. In the event of such an
accident, the Company could be held liable for any damage that results, which
liability could exceed the resources of the Company. The Company may incur
substantial cost to comply with environmental regulations if the Company
develops commercial manufacturing capacity.
Although the Company believes that it is in compliance in all material
respects with applicable environmental laws and regulations and currently does
not expect to make material capital expenditures for environmental control
facilities in the near term, there can be no assurance that it will not be
required to incur significant costs to comply with environmental laws and
regulations in the future, or that the operations, business or assets of the
Company will not be materially, adversely affected by current or future
environmental laws or regulations.
VOLATILITY OF COMMON STOCK PRICE. The market price for securities of
biotechnology companies, including Cytel, have historically been highly
volatile, and the market from time to time has experienced significant price and
volume fluctuations that are unrelated to the operating performance of such
companies. Factors such as announcements of technological innovations or new
commercial therapeutic products by the Company or others, governmental
regulation, developments in patent or other proprietary rights, developments in
the Company's relationships with its collaborative partners, public concern as
to the safety of drugs developed by the Company or others and general market
conditions may have a significant effect on the market price of the Company's
Common Stock. Fluctuations in financial performance from period to period also
may have a significant impact on the market price of the Common Stock.
ABSENCE OF DIVIDENDS. No dividends have been paid on the Company's
Common Stock to date, and the Company does not anticipate paying dividends on
its Common Stock in the foreseeable future.
11.
<PAGE> 13
USE OF PROCEEDS
The Company will not receive any proceeds from the sale of Common Stock
by the Selling Stockholders in the offering.
DIVIDEND POLICY
The Company has never paid cash dividends. The Company's Board of
Directors currently intends to retain any earnings for use in the Company's
business and does not anticipate paying any cash dividends in the foreseeable
future.
SELLING STOCKHOLDERS
The Shares covered by this Prospectus were acquired from the Company
pursuant to the Purchase Agreements for an aggregate purchase price of
$8,359,993.25 ($1.75 per share). The offer and sale by the Company of the Common
Stock to the Selling Stockholders pursuant to the Purchase Agreements was made
pursuant to an exemption from the registration requirements of the Act provided
by Regulation D thereunder. The Purchase Agreements contain representations and
warranties as to each Selling Stockholder's status as an "accredited investor"
as such term is defined in Rule 501 of Regulation D promulgated under the Act.
BT Alex. Brown Incorporated, the placement agent, was paid a fee of
approximately $430,200 in connection with the sale of the Shares by the Company
to the Selling Stockholders pursuant to the Purchase Agreements. In addition,
the Company reimbursed such placement agent for its travel and out-of-pocket
expenses incurred in connection with the sale of the Shares by the Company to
the Selling Stockholders pursuant to the Purchase Agreements in the amount of
$50,000.
Pursuant to the Purchase Agreements, each Selling Stockholder has
represented that he, she or it acquired the Shares for investment and with no
present intention of distributing the Shares. The Company agreed, in such
Purchase Agreements, to prepare and file a registration statement as soon as
practicable (and in any event no later than January 17, 1998) and to bear all
expenses other than fees and expenses of counsel for the Selling Stockholders
and underwriting discounts and commissions and brokerage commissions and fees.
In addition, and in recognition of the fact that the Selling Stockholders, even
though purchasing the Shares without a view to distribution, may wish to be
legally permitted to sell the Shares when each deems appropriate, the Company
filed with the Commission a Registration Statement on Form S-3, of which this
Prospectus forms a part, with respect to, among other things, the resale of the
Shares from time to time at prevailing prices in the over-the-counter market or
in privately-negotiated transactions and has agreed to prepare and file such
amendments and supplements to the Registration Statement as may be necessary to
keep the Registration Statement effective until the earlier of (i) December 3,
1999, (ii) such date as all of the Shares offered hereby have been sold pursuant
thereto or (iii) such Shares are no longer, by reason of Rule 144 under the Act
or any other rule of similar effect, required to be registered for the sale
thereof by the Selling Stockholders.
12.
<PAGE> 14
The following table sets forth the name of the Selling Stockholders,
the number of shares of Common Stock owned beneficially by the Selling
Stockholders as of January 8, 1998, and the number of shares which may be
offered pursuant to this Prospectus. This information is based upon information
provided by the Selling Stockholders. Because the Selling Stockholders may offer
all, some or none their Shares, no definitive estimate as to the number of
shares of Common Stock that will be held by the Selling Stockholders after such
offering can be provided. There are currently no agreements, arrangements or
understandings with respect to the sale of any of the Shares. The Shares are
being registered to permit public secondary trading of the Shares, and the
Selling Stockholders may offer the Shares for resale from time to time.
<TABLE>
<CAPTION>
SHARES BENEFICIALLY SHARES BENEFICIALLY
OWNED PRIOR TO NUMBER OF OWNED AFTER
OFFERING SHARES OFFERING
------------------------------ BEING ----------------------------
NAME NUMBER PERCENT(1) OFFERED(2) NUMBER PERCENT(1)
---- --------- ---------- ---------- --------- ----------
<S> <C> <C> <C> <C> <C>
International Biotechnology 2,792,857 8.7% 1,142,857 1,650,000 5.1%
Trust PLC
Equitable Life Assurance 1,714,285 5.3% 1,714,285 -- --
Company(3)
WPG-Farber, Weber-Fund, L.P. 907,700 2.8% 907,700 -- --
Nextran Inc. 729,656 2.3% 571,428 158,228 *
Greene Family Trust(4) 648,160 2.0% 142,857 505,303 1.6%
Norman Purrington & 62,857 * 62,857 -- --
Joan Purrington Jt/Ten
Kenneth Schild Trust 57,142 * 57,142 -- --
Kenneth Schild TTEE
Under The Will of Edith
Schild FBO Kenneth Schild
dtd 5/14/96
Schild Family Trust 57,142 * 57,142 -- --
Tom Thorner 28,571 * 28,571 -- --
WPG-Farber, Weber Overseas, L.P. 52,300 * 52,300 -- --
Star Creations Ltd. 40,000 * 40,000 -- --
</TABLE>
- ---------------------
* less than 1%
(1) Applicable percentage of ownership is based on 32,222,497 shares of
Common Stock outstanding on January 8, 1998, adjusted as required by rules
promulgated by the Commission.
(2) Assumes the sale of all Shares offered hereby.
(3) The shares beneficially owned by Equitable Life Assurance Company
are registered in the name of How & Co.
(4) Howard E. Greene, Jr., is Chairman of the Board of Directors and a
director of the Company. Includes 310,747 shares held in the Greene Family
Trust, 16,000 shares held in the Greene Children's Trust and 314,632 held
individually by Mr. Greene. As trustee of both trusts, Mr. Greene acting as
trustee has voting and investment power with respect to such shares and may be
deemed to be the beneficial owner of such shares. Includes 6,781 shares which
Mr. Greene has the right to acquire within 60 days after the date of this table
pursuant to outstanding options.
13.
<PAGE> 15
PLAN OF DISTRIBUTION
The Shares offered hereunder may be sold from time to time by the
Selling Stockholders, or by pledgees, donees, transferees or other successors in
interest. Such sales may be made on the Nasdaq National Market or in the
over-the-counter market or otherwise, at prices and on terms then prevailing or
related to the then-current market price, or in negotiated transactions. The
Shares may be sold to or through one or more broker-dealers, acting as agent or
principal, in underwritten offerings, block trades, agency placements, exchange
distributions, brokerage transactions or otherwise, or in any combination of
transactions.
At the time a particular offer of Shares is made, to the extent
required, a supplemental prospectus will be distributed which will set forth the
number of shares being offered and the terms of the offering including the name
or names of any underwriters, dealers or agents, the purchase price paid by any
underwriter for the Shares purchased from the Selling Stockholders and any
discounts, concessions or commissions allowed or reallowed or paid to dealers.
In connection with any transaction involving the Shares, broker-dealers
or others may receive from the Selling Stockholders, and may in turn pay to
other broker-dealers or others, compensation in the form of commissions,
discounts or concessions in amounts to be negotiated at the time. Broker-dealers
and any other persons participating in a distribution of the Shares may be
deemed to be "underwriters" within the meaning of the Act in connection with
such distribution, and any such commissions, discounts or concessions may be
deemed to be underwriting discounts or commissions under the Act.
Any or all of the sales or other transactions involving the Shares
described above, whether effected by the Selling Stockholders, any broker-dealer
or others, may be made pursuant to this Prospectus. In addition, any Shares that
qualify for sale pursuant to Rule 144 under the Act may be sold under Rule 144
rather than pursuant to this Prospectus.
In order to comply with the securities laws of certain states, if
applicable, the Shares may be sold in such jurisdictions only through registered
or licensed brokers or dealers. In addition, in certain states the Shares may
not be sold unless the Shares have been registered or qualified for sale or an
exemption from registration or qualification requirements is available and is
complied with.
Under applicable rules and regulations under the Exchange Act, any
person engaged in the distribution of the Shares may not simultaneously engage
in market making activities with respect to the Company's Common Stock for a
period of two business days prior to the commencement of such distribution. In
addition and without limiting the foregoing, the Selling Stockholders will be
subject to applicable provisions of the Exchange Act and the rules and
regulations thereunder, including, without limitation, Rules 10b-6 and 10b-7,
which provisions may limit the timing of purchases and sales of shares of Common
Stock by the Selling Stockholders.
Notwithstanding the foregoing, broker-dealers who are qualifying
registered market makers on the National Association of Securities Dealers
Automated Quotation System (the "Nasdaq") may engage in passive market making
transactions in the Common Stock of the Company on the Nasdaq Stock Market in
accordance with Rule 10b-6A under the Exchange Act, during the two business day
period before commencement of sales in this offering. The passive market making
transactions must comply with applicable price and volume limits and be
identified as such. In general, a passive market maker may display its bid at a
price not in excess of the highest independent bid for the security. If all
independent bids are lowered below the passive market maker's bid, however, such
bid must then be lowered when certain purchase limits are exceeded. Net
purchases by a passive market maker on each day are generally limited to a
specified percentage of the passive market maker's average daily trading volume
in the Common Stock of the Company during a prior period and must be
discontinued when such limit is reached. Passive market making may stabilize the
market price of the Common Stock of the Company at a level above that which
might otherwise prevail and, if commenced, may be discontinued at any time.
All costs associated with this offering, other than fees and expenses
of counsel for the Selling Stockholders in excess of $5,000 and underwriting
discounts and commissions and brokerage commissions and fees, will be paid
14.
<PAGE> 16
by the Company. The Company has agreed to indemnify the Selling Stockholders
against certain liabilities in connection with any offering of the Shares
pursuant to this Prospectus, including liabilities arising under the Act.
The Company and the Selling Stockholders may agree to indemnify certain
persons including broker-dealers or others, against certain liabilities in
connection with any offering of the Shares, including liabilities under the
Securities Act.
LEGAL MATTERS
The validity of the issuance of the Shares will be passed upon for the
Company by Cooley Godward LLP, San Diego, California.
EXPERTS
The financial statements of the Company appearing in the Company's
Annual Report (Form 10-K) for the year ended December 31, 1996, have been
audited by Ernst & Young LLP, independent auditors, as set forth in their report
thereon included therein and incorporated herein by reference. Such financial
statements and schedules are incorporated herein by reference in reliance upon
such report given upon the authority of such firm as experts in accounting and
auditing.
15.
<PAGE> 17
No dealer, salesman or other person has
been authorized to give any information -------------------------------
or to make any representations other
than those contained in this Prospectus 4,777,139 Shares
and, if given or made, such other
information and representations must not
be relied upon as having been authorized
by the Company. This Prospectus does not
constitute an offer or solicitation by Common Stock
anyone in any state in which such offer
or solicitation is not authorized, or in CYTEL CORPORATION
which the person Common Stock making
such offer or solicitation is not
qualified to do so, or to any person to
whom it is unlawful to make such CYTEL
CORPORATION offer or solicitation. The
delivery of this Prospectus at any time
does not imply that the information
herein is correct as of any time
subsequent to the date hereof.
TABLE OF CONTENTS
Page
----
Available Information............... 2 -------------------------------
Additional Information.............. 2 Prospectus
Incorporation of Certain -------------------------------
Documents by Reference.............. 2
The Company......................... 4
Risk Factors........................ 6
Use of Proceeds..................... 12
Dividend Policy..................... 12
Selling Stockholders................ 12 _________________, 1998
Plan of Distribution................ 14
Legal Matters....................... 15
Experts ............................ 15
<PAGE> 18
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table sets forth all expenses payable by the Registrant
in connection with the sale of the Shares being registered. All the amounts
shown are estimates except for the registration fee. None of these expenses will
be paid by the Selling Stockholders.
Registration fee ................................. $ 2,198
Nasdaq SmallCap Market Listing Fee................ 17,500
Blue sky qualification fees and expenses ......... 2,500
Printing and engraving expenses .................. 2,500
Legal fees and expenses .......................... 50,000
Accounting fees and expenses ..................... 10,000
Miscellaneous .................................... 300
Total ................................... $ 85,000
ITEM 15. INDEMNIFICATION OF OFFICERS AND DIRECTORS.
The Registrant's Certificate of Incorporation and Bylaws include
provisions to (i) eliminate the personal liability of its directors for monetary
damages resulting from breaches of their fiduciary duty to the extent permitted
by Section 102(b)(7) of the DGCL and (ii) require the Registrant to indemnify
its directors and officers to the fullest extent permitted by applicable law,
including circumstances in which indemnification is otherwise discretionary.
Pursuant to Section 145 of the DGCL, a corporation generally has the power to
indemnify its present and former directors, officers, employees and agents
against expenses incurred by them in connection with any suit to which they are
or are threatened to be made, a party by reason of their serving in such
positions so long as they acted in good faith and in a manner they reasonably
believed to be in or not opposed to, the best interests of the corporation and
with respect to any criminal action, they had no reasonable cause to believe
their conduct was unlawful. The Registrant believes that these provisions are
necessary to attract and retain qualified persons as directors and officers.
These provisions do not eliminate the directors' or officers' duty of care, and,
in appropriate circumstances, equitable remedies such as injunctive or other
forms of non-monetary relief will remain available under the DGCL. In addition,
each director will continue to be subject to liability pursuant to Section 174
of the DGCL, for breach of the director's duty of loyalty to the Registrant, for
acts or omissions not in good faith or involving intentional misconduct, for
knowing violations of law, for acts or omissions that the director believes to
be contrary to the best interests of the Registrant or its stockholders, for any
transaction from which the director derived an improper personal benefit, for
acts or omissions involving a reckless disregard for the director's duty to the
Registrant or its stockholders when the director was aware or should have been
aware of a risk of serious injury to the Registrant or its stockholders, for
acts or omission that constitute an unexcused pattern of inattention that
amounts to an abdication of the director's duty to the Registrant or its
stockholders, for improper transactions between the director and the Registrant
and for improper loans to directors and officers. The provision also does not
affect a director's responsibilities under any other law, such as the federal
securities law or state or federal environmental laws.
The Registrant has entered into indemnity agreements with each of its
directors and executive officers that require the Registrant to indemnify such
persons against expenses, judgments, fines, settlements and other amounts
incurred (including expenses of a derivative action) in connection with any
proceeding, whether actual or threatened, to which any such person may be made a
party by reason of the fact that such person is or was a director or an
executive officer of the Registrant or any of its affiliated enterprises,
provided such person acted in good faith and in a manner such person reasonably
believed to be in or not opposed to the best interests of the Registrant and,
with respect to any criminal proceeding, had no reasonable cause to believe his
conduct was unlawful. The
II-1.
<PAGE> 19
indemnification agreements also set forth certain procedures that will apply in
the event of a claim for indemnification thereunder
At present, there is no pending litigation or proceeding involving a
director or officer of the Registrant as to which indemnification is being
sought nor is the Registrant aware of any threatened litigation that may result
in claims for indemnification by any officer or director.
The Registrant has an insurance policy covering the officers and
directors of the Registrant with respect to certain liabilities, including
liabilities arising under the Securities Act or otherwise.
ITEM 16. EXHIBITS
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENT
- ------ -----------------------
4.1 Form of Stock Purchase Agreement between the Registrant and each
Selling Stockholder dated November 7, 1997.
5.1 Opinion of Cooley Godward LLP.
10.1 Reference is made to Exhibit 4.1 above.
23.1 Consent of Ernst and Young LLP, Independent Auditors.
23.2 Consent of Cooley Godward LLP. Reference is made to Exhibit 5.1.
24.1 Power of Attorney. Reference is made to page II-4.
ITEM 17. UNDERTAKINGS.
The undersigned registrant hereby undertakes:
(1) To file, during any period during which offers or sales are being
made, a post-effective amendment to this registration statement;
(I) To include any prospectus required by Section 10(a)(3) of
the Securities Act of 1933;
(II) To reflect in the prospectus any facts or events arising
after the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the registration
statement. Notwithstanding the foregoing, any increase or any decrease in volume
of securities offered (if the total dollar value of securities offered would not
exceed that which was registered) and any deviation from the low end or high end
of the estimated maximum offering range may be reflected in the form of
prospectus filed with the Commission pursuant to Rule 424(b) if, in the
aggregate, the changes in volume and price represent no more than 20% change in
the maximum aggregate offering price set forth in the "Calculation of
Registration Fee" table in the effective registration statement.
(III) To include any material information with respect to the
plan of distribution not previously disclosed in the registration statement or
any material change to such information in the registration statement.
provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not apply if the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed with or furnished to the
Commission by the registrant pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 that are incorporated by reference in the registration
statement.
II-2.
<PAGE> 20
(2)That, for purposes of determining liability under the Securities Act
of 1933, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities to be offered therein, and the
offering of such securities at that time shall be deemed to be an initial bona
fide offering thereof.
(3)To remove from registration by means of a post-effective amendment
any of the securities being registered which shall remain unsold at the
termination of the offering.
The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to Section 13(a) or 15(d) of the Securities
Exchange Act of 1934 (and, where applicable, each filing of an employee benefit
plan's annual report pursuant to Section 15(d) of the Securities Exchange Act of
1934) that is incorporated by reference in the registration statement shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
registrant pursuant to provisions described in Item 15, or otherwise, the
registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
Securities Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer or controlling
person of the registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Securities
Act and will be governed by the final adjudication of such issue.
II-3.
<PAGE> 21
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended,
the Registrant certifies that it has reasonable grounds to believe that it meets
all of the requirements for filing on Form S-3 and has duly caused this
Registration Statement Form S-3 to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City and County of San Diego, State of
California, on the 16th day of January, 1998.
CYTEL CORPORATION
By: /S/ VIRGIL D. THOMPSON
--------------------------------
Virgil D. Thompson
President, Chief Executive Officer,
Acting Chief Financial Officer and
Director
POWER OF ATTORNEY
Each person whose signature appears below constitutes and appoints
Virgil D. Thompson and Deborah Schueren his and her true and lawful
attorneys-in-fact and agents, each acting along, with full power of substitution
and resubstitution, for him and in his name, place and stead, in any and all
capacities, to sign any or all amendments (including post-effective amendments)
to the Registration Statement on Form S-3, and to file the same, with all
exhibits thereto, and all documents in connection therewith, with the Securities
and Exchange Commission, granting unto said attorneys-in-fact and agents, full
power and authority to do and perform each and every act and thing requisite and
necessary to be done in and about the premises, as full to all intents and
purposes as he and she might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents, each acting alone, or his
substitute or substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this Registration
Statement has been signed by the following persons in the capacities and on the
dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/S/HOWARD E. GREENE, JR. Chairman of the Board January 16, 1998
- -----------------------------------
Howard E. Greene, Jr.
/S/ VIRGIL D. THOMPSON President, Chief Executive Officer, Acting January 16, 1998
- ----------------------------------- Chief Financial Officer and Director
Virgil D. Thompson (Principal Executive Officer and Principal
Financial and Accounting Officer)
/S/ ROBERT L. ROE Executive Vice President, Chief Operating January 16, 1998
- ----------------------------------- Officer and Director
Robert L. Roe, M.D.
/S/JAMES C. PAULSON Vice President, Chief Scientific Officer and January 16, 1998
- ----------------------------------- General Manager Glytec(TM) and Director
James C. Paulson, Ph.D.
/S/ DAVID L. ANDERSON Director January 16, 1998
- -----------------------------------
David L. Anderson
/S/ WILLIAM T. COMER Director January 16, 1998
- -----------------------------------
William T. Comer, Ph.D.
/S/ NICOLE VITULLO Director January 16, 1998
- -----------------------------------
Nicole Vitullo
/S/ DAVID L. MAHONEY Director January 16, 1998
- -----------------------------------
David L. Mahoney
</TABLE>
II-4.
<PAGE> 22
INDEX TO EXHIBITS
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENT
- ------ -----------------------
4.1 Form of Stock Purchase Agreement between the Registrant and each
Selling Stockholder dated November 7, 1997.
5.1 Opinion of Cooley Godward LLP.
10.1 Reference is made to Exhibit 4.1 above.
23.1 Consent of Ernst and Young LLP, Independent Auditors.
23.2 Consent of Cooley Godward LLP. Reference is made to Exhibit 5.1.
24.1 Power of Attorney. Reference is made to page II-4.
II-5.
<PAGE> 1
EXHIBIT 4.1
COMMON STOCK
PURCHASE AGREEMENT
THIS AGREEMENT ("Agreement") is made as of November 7, 1997 (the
"Effective Date"), by and between CYTEL CORPORATION, a Delaware corporation with
its principal place of business at 3525 John Hopkins Court, San Diego,
California 92121 (the "Company"), and the purchaser whose name and address is
set forth on the signature page hereof (the "Purchaser").
AGREEMENT
In consideration of the mutual covenants contained in this Agreement,
and for other good and valuable consideration, the receipt of which is hereby
acknowledged, the Company and the Purchaser hereby agree as follows:
SECTION 1. AUTHORIZATION OF SALE OF THE SECURITIES. Subject to the
terms and conditions of this Agreement, the Company has, or before the Closing
(as defined below) will have, authorized the sale and issuance of up to
5,000,000 shares of its Common Stock (the "Common Stock") pursuant to the
Agreements (as defined below). The shares of Common Stock sold to the Purchaser
hereunder shall be referred to herein as the "Shares."
SECTION 2. AGREEMENT TO SELL AND PURCHASE THE SHARES.
2.1 SALE OF SHARES. At the Closing (as defined in Section 3), the
Company will sell to the Purchaser, and the Purchaser will purchase from the
Company, at a purchase price of $1.75 per Share, the number of Shares set forth
below:
NUMBER OF SHARES TO BE AGGREGATE
PURCHASED PURCHASE PRICE
------------------------ ----------------
2.2 SEPARATE AGREEMENTS. The Company proposes to enter the same form of
purchase agreement with certain other investors (the "Other Purchasers") and
expects to complete sales of Shares to them. The Purchaser and the Other
Purchasers are hereinafter sometimes collectively referred to as the
"Purchasers," and this Agreement and the agreements executed by the Other
Purchasers are hereinafter sometimes collectively referred to as the
"Agreements."
2.3 ACCEPTANCE OF PROPOSED PURCHASE OF SHARES. The Company shall have
no obligation hereunder with respect to the Purchaser until the Company shall
execute and deliver to the Purchaser an executed copy of this Agreement. If this
Agreement is not executed and delivered by the Company, this Agreement shall be
of no further force and effect.
<PAGE> 2
SECTION 3. CLOSING AND DELIVERY.
3.1 CLOSING. The Closing of the purchase and sale of the Shares
pursuant to this Agreement (the "Closing") shall be held as soon as practicable
after the satisfaction or waiver of all conditions to Closing set forth in
Sections 7 and 8 hereof, at the offices of Cooley Godward LLP, 4365 Executive
Drive, Suite 1100, California 92121, or on such other date and place as may be
agreed to by the Company and the Purchaser. The Company shall give at least five
(5) business days prior written notice to the Purchaser, in a manner provided
for in Section 11 hereof, of the date, time and location of the Closing. At or
prior to the Closing, the Purchaser shall execute any related agreements or
other documents required to be executed hereunder, dated as of the date of the
Closing (the "Closing Date").
3.2 DELIVERY OF THE SHARES AT THE CLOSING. At the Closing, the Company
shall deliver to the Purchaser stock certificates registered in the name of the
Purchaser, and/or in such nominee name(s) as designated by the Purchaser,
representing the number of Shares to be purchased by the Purchaser at the
Closing as set forth in Section 2.1 against payment of the purchase price for
such Shares. The name(s) in which the stock certificates are to be issued to the
Purchaser are set forth in the Stock Certificate Questionnaire in the form
attached hereto as Appendix I, as completed by the Purchaser.
SECTION 4. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE COMPANY.
Except as set forth on the Schedule of Exceptions attached hereto as
Exhibit A, the Company hereby represents and warrants as of the date hereof to,
and covenants with, the Purchaser as follows:
4.1 ORGANIZATION AND STANDING. The Company has been duly incorporated
and is validly existing as a corporation in good standing under the laws of the
State of Delaware, has full corporate power and authority to own or lease its
properties and conduct its business as presently conducted and as described in
the Confidential Offering Memorandum, dated July 8, 1997, as amended and
supplemented by the Supplement, dated November 6, 1997 (the "Memorandum"), and
is duly qualified as a foreign corporation and in good standing in all
jurisdictions in which the character of the property owned or leased or the
nature of the business transacted by it makes qualification necessary (except
where the failure to be so qualified would not have a material adverse effect on
the business, properties, financial condition or results or operations of the
Company). The Company's only operating subsidiary is Epimmune Inc. Epimmune Inc.
has been duly incorporated and is validly existing as a corporation in good
standing under the laws of the State of Delaware.
4.2 CORPORATE POWER; AUTHORIZATION. The Company has all requisite
corporate power, and has taken all requisite corporate action, to execute and
deliver this Agreement, sell and issue the Shares and carry out and perform all
of its obligations under this Agreement. This Agreement constitutes the legal,
valid and binding obligation of the Company, enforceable in accordance with its
terms, except (i) as limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws relating to or affecting the
enforcement of creditors'
<PAGE> 3
rights generally, (ii) as limited by equitable principles generally, including
any specific performance, and (iii) as to those provisions of Section 9.3
relating to indemnity or contribution. The execution and delivery of this
Agreement does not, and the performance of this Agreement and the compliance
with the provisions hereof and the issuance, sale and delivery of the Shares by
the Company will not, conflict with, or result in a breach or violation of the
terms, conditions or provisions of, or constitute a default under, or result in
the creation or imposition of any lien pursuant to the terms of, the Certificate
of Incorporation or Bylaws of the Company or any statute, law, rule or
regulation applicable to the Company or any state or federal order, judgment or
decree applicable to the Company or any indenture, mortgage, lease or other
agreement or instrument to which the Company or any of its properties is
subject, where such conflict, breach or violation would have a material adverse
effect on the Company.
4.3 ISSUANCE AND DELIVERY OF THE SHARES. The Shares, when issued and
paid for in compliance with the provisions of this Agreement, will be validly
issued, fully paid and nonassessable and will not be issued in violation of any
preemptive right.
4.4 CONFIDENTIAL OFFERING MEMORANDUM; SEC DOCUMENTS; FINANCIAL
STATEMENTS. Each complete or partial statement or report included as an appendix
to the Memorandum is a true and complete copy of or excerpt from such document
as filed by the Company with the United States Securities and Exchange
Commission (the "SEC"). The Company has filed in a timely manner all documents
that the Company was required to file with the SEC under Sections 13, 14(a) and
15(d) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"),
during the twelve (12) months preceding the date of this Agreement. As of their
respective filing dates (or, if amended, when amended), all documents filed by
the Company with the SEC (the "SEC Documents") complied in all material respects
with the requirements of the Exchange Act. Neither the Memorandum nor any of the
SEC Documents as of their respective dates contained any untrue statement of
material fact or omitted to state a material fact required (under the federal
securities laws in connection with the sale of the Shares) to be stated therein
or necessary to make the statements made therein, in light of the circumstances
under which they were made, not misleading. The financial statements of the
Company included in the SEC Documents and the Memorandum (the "Financial
Statements") comply as to form in all material respects with applicable
accounting requirements and with the published rules and regulations of the SEC
with respect thereto. The Financial Statements have been prepared in accordance
with generally accepted accounting principles consistently applied and fairly
present the financial position of the Company at the dates thereof and the
results of its operations and cash flows for the periods then ended (subject, in
the case of unaudited statements, to normal, recurring adjustments).
4.5 INTELLECTUAL PROPERTY. Except as set forth in the Memorandum, the
Company owns or possesses adequate rights to use all material patents, patent
rights, inventions, trade secrets and know-how described or referred to in the
Memorandum as owned or used by it or that are necessary for the conduct of its
business as presently conducted and as described in the Memorandum. Except as
set forth in the Memorandum, the Company has not received any notice of, nor has
any knowledge of, any infringement of or conflict with asserted rights of others
with respect to any patent, patent right, invention, trade secret or know-how
that, individually or
<PAGE> 4
in the aggregate, if the subject of an unfavorable decision, ruling or finding,
would have a material adverse effect on the business, properties, financial
condition or results or operations of the Company.
4.6 CAPITALIZATION. All of the Company's outstanding shares of capital
stock have been duly authorized and validly issued and are fully paid and
nonassessable, have been issued in compliance with all federal and state
securities laws, and were not issued in violation of or subject to any
preemptive right or other rights to subscribe for or purchase securities. The
actual authorized and outstanding capital stock of the Company as of November 5,
1997 is as set forth in the Memorandum. Except as set forth in the Memorandum,
there are no outstanding options to purchase, or any preemptive rights or other
rights to subscribe for or to purchase, any securities or obligations
convertible into, or any contracts or commitments to issue or sell shares of the
Company's capital stock or any such options, rights, convertible securities or
obligations.
4.7 LITIGATION. Except as set forth in the Memorandum, there is no
pending or, to the Company's knowledge, threatened, action, suit or other
proceeding to which the Company is a party or to which its property or assets
are subject.
4.8 GOVERNMENTAL CONSENTS. No consent, approval, order or authorization
of, or registration, qualification, designation, declaration or filing with, any
federal, state, or local governmental authority on the part of the Company is
required in connection with the consummation of the transactions contemplated by
this Agreement except for (a) compliance with the securities and blue sky laws
in the states and other jurisdictions in which shares of Common Stock are
offered and/or sold, which compliance will be effected in accordance with such
laws, and (b) the filing of a registration statement and all amendments thereto
with the SEC as contemplated by Section 9.1 of this Agreement.
4.9 NO MATERIAL ADVERSE CHANGE. Except as otherwise disclosed herein or
in the Memorandum, since June 30, 1997, there have not been any changes in the
assets, liabilities, financial condition or operations of the Company from that
reflected in the Company's Form 10-Q for the period ended June 30, 1997 except
changes in the ordinary course of business or which have not been, either
individually or in the aggregate, materially adverse.
SECTION 5. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE PURCHASER.
5.1 The Purchaser represents and warrants to and covenants with the
Company that:
(a) The Purchaser, taking into account the personnel and
resources it can practically bring to bear on the purchase of the Shares
contemplated hereby, either alone or together with the advice of the Purchaser's
representative, is knowledgeable, sophisticated and experienced in making, and
is qualified to make, decisions with respect to investments in shares presenting
an investment decision like that involved in the purchase of the Shares,
including investments in securities issued by the Company, and has requested,
received, reviewed and considered, either alone or with the Purchaser's
representative, all information the Purchaser
<PAGE> 5
deems relevant (including the Memorandum and any SEC Documents) in making an
informed decision to purchase the Shares.
(b) The Purchaser is acquiring the Shares being acquired by
the Purchaser pursuant to this Agreement in the ordinary course of its business
and for its own account for investment only and with no present intention of
distributing any of such Shares or any arrangement or understanding with any
other persons regarding the distribution of such Shares, except in compliance
with Section 5.1(c).
(c) The Purchaser will not, directly or indirectly, offer,
sell, pledge, transfer or otherwise dispose of (or solicit any offers to buy,
purchase or otherwise acquire or take a pledge of) any of the securities
purchased hereunder except in compliance with the Securities Act of 1933, as
amended (the "Securities Act"), applicable blue sky laws, and the rules and
regulations promulgated thereunder.
(d) The Purchaser has completed or caused to be completed the
subscription documents enclosed with this Agreement, including the Registration
Questionnaire, for use in preparation of the Registration Statement to be filed
by the Company, and the answers thereto are true and correct as of the date
hereof and will be true and correct as of the effective date of the applicable
Registration Statement (provided that the Purchaser shall be entitled to update
such information by providing notice thereof to the Company prior to the
effective date of such Registration Statement).
(e) The Purchaser has, in connection with its decision to
purchase the Securities, relied with respect to the Company and its affairs
solely upon the SEC Documents and the other information delivered to the
Purchaser by the Company as described in Sections 4.4 and 5.1(a) above and the
representations and warranties of the Company contained herein.
(f) The Purchaser is an "accredited investor" within the
meaning of Rule 501 of Regulation D promulgated under the Securities Act or a
Qualified Institutional Buyer within the meaning of Rule 144A promulgated under
the Securities Act.
(g) The Purchaser has full right, power, authority and
capacity to enter into this Agreement and to consummate the transactions
contemplated hereby and has taken all necessary action to authorize the
execution, delivery and performance of this Agreement. Upon the execution and
delivery of this Agreement by the Purchaser, this Agreement shall constitute a
valid and binding obligation of the Purchaser, enforceable in accordance with
its terms, except (i) as limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws relating to or affecting the
enforcement of creditors' rights generally, (ii) as limited by equitable
principles generally, including any specific performance, and (iii) as to those
provisions of Section 9.3 relating to indemnity or contribution.
(h) The Purchaser, together with the Purchaser's Affiliates
and Associates (as defined in Rule 12b-2 of the General Rules and Regulations
promulgated under the Exchange Act), is not, and will not by virtue of the
transactions contemplated by this Agreement be, a
<PAGE> 6
Beneficial Owner (as defined in that certain Rights Agreement dated March 19,
1993) of 15% or more of the outstanding shares of Common Stock of the Company.
5.2 The Purchaser represents and warrants to and covenants with the
Company that it has not engaged and will not engage in any short sales of the
Company's Common Stock prior to the effectiveness of the Registration Statement,
except to the extent that any such short sale is fully covered by shares of
Common Stock of the Company other than the Shares.
5.3 The Purchaser understands that nothing in the Memorandum, this
Agreement or any other materials presented to the Purchaser in connection with
the purchase and sale of the Shares constitutes legal, tax or investment advice
and that no independent legal counsel has reviewed these documents and materials
on the Purchaser's behalf. The Purchaser has consulted such legal, tax and
investment advisors as it, in its sole discretion, has deemed necessary or
appropriate in connection with its purchase of the Shares.
SECTION 6. SURVIVAL OF REPRESENTATIONS, WARRANTIES AND AGREEMENTS.
Notwithstanding any investigation made by any party to this Agreement, all
covenants, agreements, representations and warranties made by the Company and
the Purchaser herein and in the certificates for the securities delivered
pursuant hereto shall survive the execution of this Agreement, the delivery to
the Purchaser of the Shares being purchased and the payment therefor.
SECTION 7. CONDITIONS TO COMPANY'S OBLIGATIONS AT THE CLOSING. The
Company's obligation to complete the sale and issuance of the Shares and deliver
the Shares to the Purchaser shall be subject to the following conditions to the
extent not waived by the Company:
7.1 RECEIPT OF PAYMENT. The Escrow Agent (as defined in that certain
Escrow Agreement of even date herewith) shall have received payment, by check or
wire transfer of immediately available funds, in the full amount of the purchase
price for the number of Shares being purchased by the Purchaser at the Closing
as set forth in Section 2.1.
7.2 REPRESENTATIONS AND WARRANTIES CORRECT. The representations and
warranties made by the Purchaser in Section 5 hereof shall be true and correct
when made, and shall be true and correct on the Closing Date.
SECTION 8. CONDITIONS TO PURCHASERS' OBLIGATIONS AT THE CLOSING. The
Purchaser's obligation to accept delivery of the Shares and to pay for the
Shares shall be subject to the following conditions to the extent not waived by
such Purchaser:
8.1 REPRESENTATIONS AND WARRANTIES CORRECT. The representations and
warranties made by the Company in Section 4 hereof shall be true and correct
when made. At the Closing, the President of the Company shall deliver a
certificate certifying that the representations and warranties made by the
Company in Section 4 are true and correct as of the date of the Closing.
<PAGE> 7
8.2 LEGAL OPINION. Purchasers shall have received from Cooley Godward
LLP, counsel to the Company, an opinion letter addressed to the Purchasers,
dated as of the Closing Date, in the form attached hereto as Exhibit B.
8.3 NO GENERAL SOLICITATION; BLUE SKY. The Company shall have received
such assurances as it may reasonably request from BT Alex. Brown Incorporated
(the "Placement Agent") that the Shares were not offered or sold by any form of
general solicitation or advertising and a list from the Placement Agent of
states where Shares are being sold.
SECTION 9. REGISTRATION OF THE SHARES; COMPLIANCE WITH THE SECURITIES
ACT
9.1 REGISTRATION PROCEDURES AND EXPENSES. The Company is obligated to
do the following:
(a) As soon as practicable following the Closing and in any
event no later than forty-five (45) days following the Closing, the Company
shall prepare and file with the SEC one or more registration statements in order
to register with the SEC the resale by the Purchasers, from time to time, of the
Shares through Nasdaq or the facilities of any national securities exchange on
which the Company's Common Stock is then traded, or in privately negotiated
transactions (a "Registration Statement"). The Company shall use its best
efforts to cause such Registration Statement to be declared effective as soon
thereafter as reasonably possible.
(b) The Company shall prepare and file with the SEC (i) such
amendments and supplements to the Registration Statement and the prospectus used
in connection therewith, (ii) such SEC Documents and (iii) such other filings
required by the SEC, in each case as may be necessary to keep the Registration
Statement continuously effective and not misleading until the earliest of (A)
the second anniversary date of the Closing, (B) such date as all of the Shares
held by all of the Purchasers have been resold or (C) such time as all of the
Shares held by the Purchasers can be sold within a given three-month period
pursuant to Rule 144 under the Securities Act. Notwithstanding the foregoing,
if, at any time following the effectiveness of the Registration Statement, the
Company shall have determined that the Company may be required to disclose any
material corporate development, the Company may suspend the effectiveness of the
Registration Statement until such time as an amendment to the Registration
Statement has been filed by the Company and declared effective by the SEC or
until such time as the Company has filed an appropriate report with the SEC
pursuant to the Exchange Act, which suspension shall endure for such period as
deemed necessary by the Company upon advice of counsel (a "Suspension Period"),
by giving notice to the Purchasers. The Company will use its best efforts to
minimize the length of any Suspension Period. The Purchaser agrees that, upon
receipt of any notice from the Company of a Suspension Period, the Purchaser
will not sell any Shares pursuant to the Registration Statement until (i) the
Purchaser is advised in writing by the Company that the use of the applicable
prospectus may be resumed, (ii) the Purchaser has received copies of any
additional or supplemental or amended prospectus, if applicable, and (iii) the
Purchaser has
<PAGE> 8
received copies of any additional or supplemental filings which are incorporated
or deemed to be incorporated by reference in such prospectus.
(c) In order to facilitate the public sale or other
disposition of all or any of the shares by the Purchaser, the Company shall
furnish to the Purchaser with respect to the Shares registered under the
Registration Statement such number of copies of prospectuses, prospectus
supplements and preliminary prospectuses as the Purchaser reasonably requests in
conformity with the requirements of the Securities Act.
(d) The Company shall file any documents required of the
Company for normal blue sky clearance in states specified in writing by the
Purchaser; provided, however, that the Company shall not be required to qualify
to do business or consent to service of process in any jurisdiction in which it
is not now so qualified or has not so consented.
(e) Other than fees and expenses, if any, of counsel or other
advisers to the Purchasers, which fees and expenses shall be borne by the
Purchasers except as referred to in Section 12.8 below, the Company shall bear
all expenses (exclusive of any brokerage fees, underwriting discounts and
commissions) in connection with the procedures in paragraphs (a) through (d) of
this Section 9.1 and if requested by holders of at least a majority of the
Shares, the fees and expenses, if any, of one counsel to the Selling
Stockholders (as defined in Section 9.4) in an amount not exceeding $5,000.
(f) With a view to making available to the Purchasers the
benefits of Rule 144 promulgated under the Securities Act ("Rule 144") and any
other rule or regulation of the SEC that may at any time permit a Purchaser to
sell Shares to the public without registration or pursuant to registration, the
Company covenants and agrees to: (i) make and keep public information available,
as those terms are understood and defined in Rule 144, until the earlier of (A)
the second anniversary of the Closing Date or (B) such date as all of the Shares
shall have been resold; (ii) file with the SEC in a timely manner all reports
and other documents required of the Company under the Exchange Act; and (iii)
furnish to any Purchaser upon request, as long as the Purchaser owns any Shares,
(A) a written statement by the Company that it has complied with the reporting
requirements of the Exchange Act, (B) a copy of the most recent annual or
quarterly report of the Company, and (C) such other information as may be
reasonably requested in order to avail any Purchaser of any rule or regulation
of the SEC that permits the selling of any such Shares without registration
under the Securities Act.
9.2 TRANSFER OF SECURITIES AFTER REGISTRATION. The Purchaser agrees
that it will not effect any disposition of the Shares that would constitute a
sale within the meaning of the Securities Act, except:
(a) pursuant to the Registration Statement, in which case the
Purchaser shall submit the certificates evidencing the Shares to the Company's
transfer agent, accompanied by a separate "Purchaser's Certificate" (i) in the
form of Appendix I attached hereto, (ii) executed by such Purchaser or by an
officer of, or other authorized person designated by, such Purchaser, and
<PAGE> 9
(iii) to the effect that (A) the Shares have been sold in accordance with the
Registration Statement and (B) the requirement of delivering a current
prospectus has been satisfied; or
(b) the Purchaser shall have notified the Company of the
proposed disposition and shall have furnished the Company with a detailed
statement of the circumstances surrounding the proposed disposition, and if
reasonably requested by the Company, the Purchaser shall have furnished the
Company with an opinion of counsel, reasonably satisfactory to the Company, that
such disposition will not require registration of such Shares under the
Securities Act. It is agreed that the Company will not require opinions of
counsel for transactions made pursuant to Rule 144 except in unusual
circumstances.
9.3 LEGENDS. Each certificate representing Shares shall (unless
otherwise permitted by the provisions of the Agreement) be stamped or otherwise
imprinted with a legend substantially similar to the following (in addition to
any legend required under applicable state securities laws or as provided
elsewhere in this Agreement):
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933 (THE "ACT") AND MAY NOT BE OFFERED,
SOLD OR OTHERWISE TRANSFERRED, PLEDGED OR HYPOTHECATED UNLESS AND UNTIL
REGISTERED UNDER THE ACT OR, IN THE OPINION OF COUNSEL OR BASED ON
OTHER WRITTEN EVIDENCE IN THE FORM AND SUBSTANCE SATISFACTORY TO THE
ISSUER OF THESE SECURITIES, SUCH OFFER, SALE OR TRANSFER, PLEDGE OR
HYPOTHECATION IS IN COMPLIANCE THEREWITH.
9.4 INDEMNIFICATION. As used in this Section 9.3 the following terms
shall have the following respective meanings:
(a) "SELLING STOCKHOLDER" shall mean the Purchaser and any
transferee of the Purchaser who is entitled to resell Shares pursuant to the
Registration Statement;
(b) "REGISTRATION STATEMENT" shall include any final
prospectus, exhibit, supplement or amendment included in or relating to the
Registration Statement referred to in Section 9.1; and
(c) "UNTRUE STATEMENT" shall include any untrue statement or
alleged untrue statement, or any omission or alleged omission to state in the
Registration Statement a material fact required to be stated therein or
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading.
The Company agrees to indemnify and hold harmless each Selling
Stockholder from and against any losses, claims, damages or liabilities to which
such Selling Stockholder may become subject (under the Securities Act or
otherwise) insofar as such losses, claims, damages or liabilities (or actions or
proceedings in respect thereof) arise out of, or are based upon, any failure to
comply with the covenants and agreements contained in Section 9.1 or 9.2 hereof,
or any
<PAGE> 10
Untrue Statement on or after the effective date of the Registration Statement,
or on or after the date of any prospectus or prospectus supplement or the date
of any sale by Purchaser thereunder, or arise out of any failure by the Company
to fulfill any undertaking included in the Registration Statement and the
Company will reimburse such Selling Stockholder for any reasonable legal or
other expenses reasonably incurred in investigating, defending or preparing to
defend any such action, proceeding or claim; provided, however, that the Company
shall not be liable to such Selling Stockholder in any such case to the extent
that such loss, claim, damage or liability arises out of, or is based upon, an
Untrue Statement made in such Registration Statement in reliance upon and in
conformity with written information furnished to the Company by or on behalf of
such Selling Stockholder specifically for use in preparation of the Registration
Statement, or the failure of such Selling Stockholder to comply with the
covenants and agreements contained in Section 9.1 or 9.2 hereof respecting sale
of the Shares or any statement or omission in any Prospectus that is corrected
in any subsequent prospectus that was delivered to the Selling Stockholder prior
to the pertinent sale or sales by the Selling Stockholder.
The Purchaser agrees to indemnify and hold harmless the Company (and
each person, if any, who controls the Company within the meaning of Section 15
of the Securities Act, each officer of the Company who signs the Registration
Statement and each director of the Company) from and against any losses, claims,
damages or liabilities to which the Company (or any such officer, director or
controlling person) may become subject (under the Securities Act or otherwise),
insofar as such losses, claims, damages or liabilities (or actions or
proceedings in respect thereof) arise out of, or are based upon, any failure to
comply with the covenants and agreements contained in Section 9.1 or 9.2 hereof
respecting sale of the Shares, or any Untrue Statement contained in the
Registration Statement on or after the effective date thereof, or in any
prospectus supplement as of its issue date or date of any sale by the Purchaser
thereunder, if such Untrue Statement was made in reliance upon and in conformity
with written information furnished by or on behalf of the Purchaser specifically
for use in preparation of the Registration Statement, and the Purchaser will
reimburse the Company (or such officer, director or controlling person), as the
case may be, for any legal or other expenses reasonably incurred in
investigating, defending or preparing to defend any such action, proceeding or
claim; provided that in no event shall any indemnity by the Purchaser under this
Section 9.3 exceed the gross proceeds received by the Purchaser from the sale of
Shares covered by such Registration Statement.
Promptly after receipt by any indemnified person of a notice of a claim
or the beginning of any action in respect of which indemnity is to be sought
against an indemnifying person pursuant to this Section 9.3, such indemnified
person shall notify the indemnifying person in writing of such claim or of the
commencement of such action, and, subject to the provisions hereinafter stated,
in case any such action shall be brought against an indemnified person and such
indemnifying person shall have been notified thereof, such indemnifying person
shall be entitled to participate therein, and, to the extent it shall wish, to
assume the defense thereof, with counsel reasonably satisfactory to such
indemnified person. After notice from the indemnifying person to such
indemnified person of its election to assume the defense thereof, such
indemnifying person shall not be liable to such indemnified person for any legal
expenses subsequently incurred by such indemnified person in connection with the
defense thereof; provided, however, that if there exists or shall exist a
conflict of interest that would make it
<PAGE> 11
inappropriate, in the opinion of counsel to the indemnified person, for the same
counsel to represent both the indemnified person and such indemnifying person or
any affiliate or associate thereof, the indemnified person shall be entitled to
retain its own counsel at the expense of such indemnifying person; provided,
however, that no indemnifying person shall be responsible for the fees and
expenses of more than one separate counsel for all indemnified parties.
9.5 TERMINATION OF CONDITIONS AND OBLIGATIONS. The conditions precedent
imposed by Section 4, Section 5 or this Section 9 upon the transferability of
the Shares shall cease and terminate as to any particular number of the Shares
when such Shares shall have been sold or otherwise disposed of in accordance
with the intended method of disposition set forth in the Registration Statement
covering such Shares or at such time as an opinion of counsel satisfactory to
the Company shall have been rendered to the effect that such conditions are not
necessary in order to comply with the Securities Act.
9.6 INFORMATION AVAILABLE. So long as the Registration Statement is
effective covering the resale of Shares owned by the Purchaser, the Company will
furnish to the Purchaser:
(a) as soon as practicable after available (but in the case of
the Company's Annual Report to Stockholders, within 120 days after the end of
each fiscal year of the Company), one copy of (i) its Annual Report to
Stockholders (which Annual Report shall contain financial statements audited in
accordance with generally accepted auditing standards certified by a national
firm of certified public accountants); (ii) its Annual Report on Form 10-K;
(iii) its quarterly reports on Form 10-Q (the foregoing, in each case, excluding
exhibits); (iv) its Proxy Statement; and (v) its current reports on Form 8-K, if
any;
(b) upon the request of any Purchaser, all exhibits excluded
by the parenthetical in subparagraph (a)(iii) of this Section 9.5, in the form
generally available to the public; and
(c) upon the reasonable request of any Purchaser, an adequate
number of copies of the prospectuses and supplements to supply to any other
party requiring such prospectuses.
9.7 CHANGES IN PURCHASER INFORMATION. The Purchaser agrees to promptly
notify the Company of any changes in the information set forth in the
Registration Statement regarding the Purchaser or its plan of distribution set
forth in such Registration Statement.
SECTION 10. MARKET STAND OFF.The Purchaser hereby agrees, upon request
of the Company and its underwriters, that it shall not sell or otherwise
transfer or dispose of any Common Stock (or other securities) of the Company
held by it (other than those included in the registration) for a period
specified by the representative of the underwriters of Common Stock (or other
securities) of the Company not to exceed 90 days following the effective date of
a registration statement of the Company filed under the Securities Act, provided
that all executive officers and directors of the Company and enter into similar
agreements. The Purchaser agrees to
<PAGE> 12
execute and deliver such other agreements as may be reasonably requested by the
Company or the underwriter which are consistent with the foregoing or which are
necessary to give further effect thereto. The obligations described in this
Section 10 shall not apply to a registration relating solely to employee benefit
plans on Form S-1 or Form S-8 or similar forms that may be promulgated in the
future, or a registration relating solely to a SEC Rule 145 transaction on Form
S-4 or similar forms that may be promulgated in the future. The Company may
impose stop-transfer instructions with respect to the shares of Common Stock (or
other securities) subject to the foregoing restriction until the end of said 90
day period.
SECTION 11. BROKER'S FEE. The Company and the Purchaser hereby
represent that, except for amounts to be paid to the Placement Agent by the
Company as described in Section 12.8 hereof, there are no brokers or finders
entitled to compensation in connection with the sale of the Shares, and shall
indemnify each other for any such fees for which they are responsible.
SECTION 12. NOTICES. All notices, requests, consents and other
communications hereunder shall be in writing, shall be sent by confirmed
facsimile or mailed by first-class registered or certified airmail, or
nationally recognized overnight express courier, postage prepaid, and shall be
deemed given when so sent in the case of facsimile transmission, or when so
received in the case of mail or courier, and addressed as follows:
(a) if to the Company, to:
Cytel Corporation
3525 John Hopkins Court
San Diego, CA 92121
Attention: President and Chief Executive Officer
with a copy so mailed to:
Cooley Godward LLP
4365 Executive Drive, Suite 1100
San Diego, CA 92121
Attention: Frederick T. Muto, Esq.
or to such other person at such other place as the Company shall designate to
the Purchasers in writing; and
(b) if to the Purchaser, at the address as set forth at the
end of this Agreement, or at such other address or addresses as may have been
furnished to the Company in writing.
SECTION 13. MISCELLANEOUS.
13.1 WAIVERS AND AMENDMENTS. Neither this Agreement nor any provision
hereof may be changed, waived, discharged, terminated, modified or amended
except upon the written consent of the Company and the Purchaser.
<PAGE> 13
13.2 HEADINGS. The headings of the various sections of this Agreement
have been inserted for convenience of reference only and shall not be deemed to
be part of this Agreement.
13.3 SEVERABILITY. In case any provision contained in this Agreement
should be invalid, illegal or unenforceable in any respect, the validity,
legality and enforceability of the remaining provisions contained herein shall
not in any way be affected or impaired thereby.
13.4 GOVERNING LAW. This Agreement shall be governed by and construed
in accordance with the laws of the State of California as applied to contracts
entered into and performed entirely in California by California residents,
without regard to conflicts of law principles.
13.5 COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall constitute an original, but all of which, when
taken together, shall constitute but one instrument, and shall become effective
when one or more counterparts have been signed by each party hereto and
delivered to the other parties.
13.6 SUCCESSORS AND ASSIGNS. Except as otherwise expressly provided
herein, the provisions hereof shall inure to the benefit of, and be binding
upon, the successors, assigns, heirs, executors and administrators of the
parties hereto.
13.7 ENTIRE AGREEMENT. This Agreement and other documents delivered
pursuant hereto, including the exhibits, constitute the full and entire
understanding and agreement between the parties with regard to the subjects
hereof and thereof.
13.8 PAYMENT OF FEES AND EXPENSES. Each of the Company and the
Purchaser shall bear its own expenses and legal fees incurred on its behalf with
respect to this Agreement and the transactions contemplated hereby (the
"Offering"); provided, that the Company shall reimburse the Placement Agent for
certain fees and expenses incurred by the Placement Agent in connection with the
Offering as described in the Memorandum. Purchasers acknowledge that the
Placement Agent will receive a commission in the amount described in the
Memorandum. If any action at law or in equity is necessary to enforce or
interpret the terms of this Agreement, the prevailing party shall be entitled to
reasonable attorney's fees, costs and necessary disbursements in addition to any
other relief to which such party may be entitled.
<PAGE> 14
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their duly authorized representatives as of the day and year first
above written.
CYTEL CORPORATION
By:
--------------------------------
Name:
------------------------------
Title:
-----------------------------
PURCHASER
Purchaser Name:
--------------------
By:
--------------------------------
Name:
------------------------------
Title:
-----------------------------
Address:
---------------------------
---------------------------
---------------------------
Facsimile:
-------------------------
COMMON STOCK PURCHASE AGREEMENT
<PAGE> 15
CYTEL CORPORATION
COMMON STOCK
PURCHASE AGREEMENT
NOVEMBER 7, 1997
<PAGE> 16
TABLE OF CONTENTS
PAGE
Section 1. Authorization of Sale of the Securities..........................1
Section 2. Agreement to Sell and Purchase the Shares........................1
2.1 Sale of Shares.............................................1
2.2 Separate Agreements........................................1
2.3 Acceptance of Proposed Purchase of Shares..................1
Section 3. Closing and Delivery.............................................2
3.1 Closing....................................................2
3.2 Delivery of the Shares at the Closing......................2
Section 4. Representations, Warranties and Covenants of the Company.........2
4.1 Organization and Standing..................................2
4.2 Corporate Power; Authorization.............................2
4.3 Issuance and Delivery of the Shares........................3
4.4 Confidential Offering Memorandum; SEC Documents;
Financial Statements.......................................3
4.5 Intellectual Property......................................3
4.6 Capitalization.............................................4
4.7 Litigation.................................................4
4.8 Governmental Consents......................................4
4.9 No Material Adverse Change.................................4
Section 5. Representations, Warranties and Covenants of the Purchaser.......4
Section 6. Survival of Representations, Warranties and Agreements...........6
Section 7. Conditions to Company's Obligations at The Closing...............6
7.1 Receipt of Payment.........................................6
7.2 Representations and Warranties Correct.....................6
Section 8. Conditions to Purchasers' Obligations At The Closing.............6
8.1 Representations and Warranties Correct.....................6
8.2 Legal Opinion..............................................7
8.3 No General Solicitation; Blue Sky..........................7
Section 9. Registration of the Shares; Compliance with the Securities Act...7
9.1 Registration Procedures and Expenses.......................7
9.2 Transfer of Securities After Registration..................8
9.3 Legends....................................................9
9.4 Indemnification............................................9
9.5 Termination of Conditions and Obligations.................11
9.6 Information Available.....................................11
9.7 Changes in Purchaser Information..........................11
Section 10. Market Stand Off...............................................11
Section 11. Broker's Fee...................................................12
i.
<PAGE> 17
TABLE OF CONTENTS
(CONTINUED)
Section 12. Notices........................................................12
Section 13. Miscellaneous..................................................12
13.1 Waivers and Amendments....................................12
13.2 Headings..................................................13
13.3 Severability..............................................13
13.4 Governing Law.............................................13
13.5 Counterparts..............................................13
13.6 Successors and Assigns....................................13
13.7 Entire Agreement..........................................13
13.8 Payment of Fees and Expenses..............................13
ii.
<PAGE> 18
EXHIBIT A
SCHEDULE OF EXCEPTIONS
None.
<PAGE> 19
EXHIBIT B
FORM OF OPINION OF COUNSEL
1. The Company has been duly incorporated and is validly existing in good
standing under the laws of the State of Delaware. The Company is in
good standing in the State of California. The Company has the requisite
corporate power to own or lease its property and assets and to conduct
its business as currently conducted as described in the Memorandum.
2. The Purchase Agreement has been duly authorized by all necessary
corporate action on the part of the Company and has been duly executed
and delivered on behalf of the Company and constitutes a valid and
binding agreement of the Company, enforceable against the Company in
accordance with its terms except (i) as limited by applicable
bankruptcy, insolvency, reorganization, arrangement, moratorium and
other laws of general applicability relating to or affecting creditors'
rights, (ii) as limited by equitable principles generally, whether such
enforceability is considered in a proceeding in equity or at law, and
(iii) as to those provisions of Section 9.3 relating to indemnity or
contribution.
3. The Company's authorized capital stock consists of (a) fifty million
(50,000,000) shares of Common Stock, $.01 par value, of which [twenty
seven million two hundred fourteen eight hundred eighty six
(27,214,886)] shares are issued and outstanding, and (b) ten million
(10,000,000) shares of Preferred Stock, $.01 par value, of five hundred
thousand (500,000) shares are designated Series A Junior Participating
Preferred Stock, no shares of which are issued and outstanding.
3. The Shares have been duly authorized and when issued, delivered and
paid for in accordance with the terms of the Agreement, will be validly
issued, fully paid and nonassessable.
4. The execution and delivery of the Agreement and the consummation of the
sale of the Shares by the Company as contemplated therein do not
violate any provisions of the Company's Certificate of Incorporation or
Bylaws, and do not violate or contravene (a) any law applicable to the
Company and known to us or (b) any order, writ, judgment, injunction,
decree, determination or award applicable to the Company and known to
us.
5. Except as set forth in the Memorandum, to our knowledge there is no
action proceeding or investigation pending or threatened in writing
against the Company which could reasonably be anticipated to result,
either individually or in the
<PAGE> 20
aggregate, in any material adverse change in the assets, financial
condition or operations of the Company.
6. The offer and sale of the Shares by the Company to the Purchasers is
exempt from the registration requirements of the Securities Act of
1933, as amended.
7. All consents, approvals, authorizations, or orders of, and filings,
registrations and qualifications with any regulatory authority or
governmental body in the United States required for the issuance by the
Company of the Shares as contemplated by the Agreement, have been made
or obtained (except such as may be required under state securities and
blue sky laws for which we express no opinion).
<PAGE> 21
CYTEL CORPORATION
REGISTRATION STATEMENT QUESTIONNAIRE
In connection with the preparation of the Registration Statement,
please provide us with the following information:
1. Please state your or your organization's name exactly as it should
appear in the Registration Statement:
2. Please provide the following information, as of November 7, 1997:
Number of Shares that you are Number of shares of Common
purchasing and seek to include in Stock that you already beneficially
the Registration Statement: own or that you are purchasing and
do NOT seek to include in the
__________________ Registration Statement:
_______________________
3. Have you or your organization had any position, office or other
material relationship within the past three years with the Company or its
affiliates other than as disclosed in the Proxy Statement in connection with the
Company's 1997 Annual Meeting of Stockholders?
Yes __ No __
If yes, please indicate the nature of any such relationships: _________
________________________________________________________________________________
Signature:
-------------------------
Print Name:
------------------------
Title:
-----------------------------
<PAGE> 22
APPENDIX I
PURCHASER'S CERTIFICATE OF RESALE OF THE SHARES
The undersigned, an officer of, or other person duly authorized by
____________________________________________________ hereby certifies that
[fill in official name of individual or institution]
he/she [said institution] is the Purchaser of the Shares evidenced by the
attached stock certificate(s) and as such, sold such Shares
on ____________________________________ in accordance with registration
[date]
statement number _______________________________________________________ and the
[fill in the number of or otherwise identify
registration statement]
requirement of delivering a current prospectus and current annual, quarterly and
reports
(Forms 10-K, 10-Q, and 8-K) by the Company has been complied with in connection
with such sale.
Print or Type:
Name of Purchaser (Individual or Institution):
-----------------------------
Name of Individual representing Purchaser
(if an Institution):
-------------------------------------------------------
Title of Individual representing Purchaser
(if an Institution):
-------------------------------------------------------
Signature by:
Individual Purchaser or Individual
representing Purchaser:
----------------------------------------------------
<PAGE> 1
EXHIBIT 5.1
[COOLEY GODWARD LLP LETTERHEAD]
January 16, 1998
Cytel Corporation
3525 John Hopkins
San Diego, CA 92121
Ladies and Gentlemen:
You have requested our opinion with respect to certain matters in connection
with the filing by Cytel Corporation. (the "Company") of a Registration
Statement on Form S-3 on or about January 16, 1998 (the "Registration
Statement") with the Securities and Exchange Commission, including a related
prospectus filed with the Registration Statement (the "Prospectus") covering the
offering of up to four million seven hundred seventy-seven thousand one hundred
thirty-nine (4,777,139) shares of the Company's Common Stock, $0.01 par value
(the "Shares").
In connection with this opinion, we have examined the Registration Statement and
related Prospectus, your Certificate of Amendment of Amended and Restated
Certificate of Incorporation and Bylaws, and such other documents, records,
certificates, memoranda and other instruments as we deem necessary as a basis
for this opinion. We have assumed the genuineness and authenticity of all
documents submitted to us as originals, the conformity to originals of all
documents submitted to us as copies thereof, and the due execution and delivery
of all documents where due execution and delivery are a prerequisite to the
effectiveness thereof.
On the basis of the foregoing, and in reliance thereon, we are of the opinion
that the Shares are validly issued, fully paid and nonassessable.
We consent to the reference to our form under the Caption "Legal Matters" in the
Prospectus included in the Registration Statement and to the filing of this
opinion as an exhibit to the Registration Statement.
Very truly yours,
COOLEY GODWARD LLP
/S/ L. KAY CHANDLER
L. Kay Chandler
<PAGE> 1
EXHIBIT 23.1
CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts" in the
Registration Statement (Form S-3) and related Prospectus of Cytel Corporation
for the registration of 4,777,139 shares of its Common Stock and to the
incorporation by reference therein of our report dated January 31, 1997, with
respect to the financial statements of Cytel Corporation included in its Annual
Report (Form 10-K) for the year ended December 31, 1996, filed with the
Securities and Exchange Commission
Ernst & Young LLP
San Diego, California
January 14, 1998
