<PAGE>
As filed with the Securities and Exchange Commission on June 15, 1998.
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported)
JUNE 12, 1998 (JUNE 10, 1998)
MEDAREX, INC.
(Exact name of registrant as specified in its charter)
NEW JERSEY 0-19312 22-2822175
(State of other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
1545 ROUTE 22 EAST, ANNANDALE, NEW JERSEY 08801-0953
(Address of Principal Executive Offices)
Registrant's telephone number, including area code: (908) 713-6001
NOT APPLICABLE
(Former name or former address, if changed since last report)
<PAGE>
MEDAREX, INC.
TABLE OF CONTENTS
FOR
CURRENT REPORT ON FORM 8-K
<TABLE>
<S> <C>
Item 5. Other Events................................................... 3
Item 7. Financial Statements and Exhibits.............................. 4
Signature ............................................................... 5
</TABLE>
2
<PAGE>
ITEM 5. OTHER EVENTS.
On June 11, 1998, BCC Acquisition I LLC, a Delaware limited liability
company ("BCC") formed between Bay City Capital Fund I, L.P., an affiliate of
Bay City Capital LLC, and various Pritzker family business interests, made an
offer (the "Offer") to former shareholders (the "Holders") of GenPharm
International, Inc. ("GenPharm"), to purchase the contingent payment rights (the
"Rights") of such Holders to receive the remainder of the merger consideration
(currently, $44,412,500) payable by Medarex, Inc., a New Jersey corporation
("Medarex"), in connection with Medarex's acquisition of GenPharm in October
1997. Under the terms of the Offer, BCC would purchase any or all of the Rights
from the Holders at a 20% discount from the face value of the Rights. The Offer
is contingent on at least $22,206,250 (or 50%) of the Rights being tendered for
purchase. The complete terms and conditions of the Offer are set forth in the
Offer to Purchase attached as Exhibit A to the Rights Exchange Agreement (as
defined below) filed herewith as Exhibit 10.81.
On June 10, 1998, Medarex and BCC entered into a Rights Exchange
Agreement (the "Rights Exchange Agreement"). The Rights Exchange Agreement
provides that, immediately upon the consummation of the Offer, Medarex will
issue to BCC in exchange for each $6.75 in face value of the Rights acquired by
BCC (i) one share of Medarex's common stock, par value $.01 per share (the
"Common Stock") (up to a maximum of 6,579, 629 shares; such shares being the
"Shares") and (ii) a warrant or warrants (the "Warrants") to purchase 0.1222
shares of Common Stock at an exercise price of $10.00 per share exercisable over
a period of seven years (up to a maximum of 804,000 shares). The Warrants will
be issued upon the terms and conditions set forth in the Warrant Agreement
between Medarex and BCC in the form attached as Exhibit C to the Rights Exchange
Agreement. If all of the Rights are assigned to BCC and exchanged for Shares
under the Rights Exchange Agreement, BCC will beneficially own (after taking
into account the Warrants) approximately 25% of the outstanding Common Stock.
The Rights Exchange Agreement also provides, among other things, that
Medarex will register the Shares and the shares to be issued to BCC upon
exercise of the Warrants as well as any resale thereof, and will pay to BCC a
fee of $750,000 (plus expenses) under certain circumstances if the Offer is not
consummated and Medarex completes a similar transaction with another party.
Under the Rights Exchange Agreement, Medarex will appoint a representative of
BCC to Madarex's Board of Directors immediately following the closing of the
transactions contemplated by the Rights Exchange Agreement. While no formal
agreement exists, Medarex and BCC have discussed adding another director
mutually acceptable to Medarex and BCC.
The press release announcing the Offer and the Rights Exchange
Agreement is filed herewith as Exhibit 99.1.
This Current Report on Form 8-K contains "forward-looking statements"
within the meaning of Section 27A of the Securities Act of 1933, as amended, and
Section 21E of the Securities Exchange Act of 1934, as amended, which represent
Medarex's expectations or beliefs concerning future events. Forward-looking
statements involve known and unknown risks and uncertainties and are indicated
by words such as "anticipates", "expects", "believes", "plans", "could" and
similar words and phrases. These risks and uncertainties include, but are not
limited to, uncertainties regarding the consummation of the Offer and the
transactions contemplated by the Rights Exchange Agreement, receipt of future
payments, the continuation of business partnerships, development of new business
opportunities and other risks that may be detailed from time to time in
Medarex's periodic reports and registration statements filed with the Securities
and Exchange Commission.
3
<PAGE>
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(c) Exhibits. The following materials are filed as exhibits
to this Current Report on Form 8-K:
Exhibit
Number Description of Exhibit
- ------- ----------------------
10.81 Rights Exchange Agreement dated as of June 10, 1998 between
Medarex, Inc. and BCC Acquisition I LLC, together with the
exhibits thereto.
99.1 Press release dated June 11, 1998.
4
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
MEDAREX, INC.
Registrant
Date: June 12, 1998 By: /s/ Michael A. Appelbaum
-------------------------------------
Michael A. Appelbaum
Executive Vice President - Finance
and Administration, Secretary,
Treasurer and Chief Financial
Officer
5
<PAGE>
EXHIBIT INDEX
-------------
Exhibit Page
Number Description Number
- ------- ----------- ------
10.81 Rights Exchange Agreement dated as of June 10, 1998
between Medarex, Inc. and BCC Acquisition I LLC,
together with the exhibits thereto.
99.1 Press release dated June 11, 1998.
6
<PAGE>
EXHIBIT 10.81
MEDAREX, INC.
RIGHTS EXCHANGE
AGREEMENT
JUNE 10, 1998
<PAGE>
TABLE OF CONTENTS
<TABLE>
<S> <C>
SECTION 1. THE PURCHASER'S OFFER ........................................... 2
--
1.1 Making the Offer........................................................ 2
--
1.2 Company Actions......................................................... 3
--
1.3 Accuracy of Information................................................. 4
--
SECTION 2. AUTHORIZATION AND ISSUANCE OF THE SECURITIES..................... 4
--
SECTION 3. AGREEMENT TO EXCHANGE THE SECURITIES............................. 5
--
3.1 Issuance of Shares and Warrants......................................... 5
--
3.2 Fractional Shares....................................................... 5
--
SECTION 4. CLOSING AND DELIVERY............................................. 6
--
4.1 Closing................................................................. 6
--
4.2 Delivery of the Warrant Agreement and the Shares........................ 6
--
SECTION 5. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.................... 6
--
5.1 Organization and Standing............................................... 6
--
5.2 Corporate Power; Authorization.......................................... 7
--
5.3 Issuance and Delivery of the Shares; Grant of the Warrants.............. 7
--
5.4 SEC Documents; Financial Statements..................................... 8
--
5.5 Consummation of Merger; Issuance of Rights.............................. 8
--
5.6 Intellectual Property................................................... 9
--
5.7 Properties.............................................................. 10
--
5.8 Capitalization.......................................................... 10
--
5.9 Litigation.............................................................. 11
--
5.10 No Defaults............................................................ 11
--
5.11 Material Agreements.................................................... 11
--
5.12 Governmental Consents; Compliance with Law............................. 11
--
5.13 Insurance.............................................................. 12
--
5.14 Investment Company..................................................... 12
--
5.15 Taxes.................................................................. 12
--
5.16 Listing................................................................ 12
--
5.17 Broker's Fee........................................................... 12
--
SECTION 6. REPRESENTATIONS AND WARRANTIES OF THE PURCHASER.................. 12
--
6.1 Organization and Standing............................................... 12
--
6.2 Investment Purposes..................................................... 12
--
6.3 No Advice............................................................... 13
--
6.4 Restriction on Transfer................................................. 13
--
6.5 Broker's Fee............................................................ 14
--
SECTION 7. COVENANTS OF THE PARTIES......................................... 14
--
7.1 Full Cooperation........................................................ 14
--
7.2 Access to Information................................................... 15
--
7.3 Maintenance of Listing.................................................. 15
--
7.4 Purchaser Representative................................................ 15
--
</TABLE>
(i)
<PAGE>
<TABLE>
<S> <C>
7.5 Filings................................................................. 15
--
7.6 Shelf Registration Opinion.............................................. 16
--
SECTION 8. NO-SHOP CLAUSE................................................... 16
--
8.1 In General.............................................................. 16
--
8.2 Third-Party Offer....................................................... 17
--
SECTION 9. SURVIVAL OF REPRESENTATIONS, WARRANTIES AND AGREEMENTS.......... 17
--
SECTION 10. CONDITIONS TO COMPANY'S OBLIGATIONS AT THE CLOSING.............. 17
--
10.1 Closing Under the Purchaser's Offer.................................... 17
--
10.2 Surrender of the Rights................................................ 17
--
10.3 Consents and Approvals................................................. 18
--
10.4 Representations and Warranties Correct................................. 18
--
SECTION 11. CONDITIONS TO THE PURCHASER'S OBLIGATIONS AT THE CLOSING........ 18
--
11.1 Closing Under Purchaser's Offer........................................ 18
--
11.2 Appointment of Directors............................................... 18
--
11.3 No Other Issuance by the Company....................................... 18
--
11.4 Statement of Position of the Company................................... 18
--
11.5 Delivery of Shares..................................................... 19
--
11.6 Warrant Agreement...................................................... 19
--
11.7 Consents and Approvals................................................. 19
--
11.8 Representations and Warranties Correct................................. 19
--
11.9 Legal Opinion.......................................................... 19
--
SECTION 12. REGISTRATION OF THE SHARES; COMPLIANCE WITH THE SECURITIES ACT.. 19
--
12.1 Registration Procedures and Expenses................................... 19
--
12.2 Transfer of Securities After Shelf Registration........................ 21
--
12.3 Indemnification........................................................ 21
--
12.4 Termination of Conditions and Obligations.............................. 23
--
12.5 Information Available.................................................. 23
--
12.6 Changes in Purchaser Information....................................... 24
--
SECTION 13. INDEMNIFICATION FOR INCOMPLETE OR INACCURATE INFORMATION........ 24
--
13.1 By the Company......................................................... 24
--
13.2 By the Purchaser....................................................... 24
--
13.3 Procedure.............................................................. 25
--
SECTION 14. TERMINATION.................................................... 25
--
14.1 Termination............................................................ 25
--
14.2 Effect of Termination.................................................. 25
--
14.3 Termination Fee........................................................ 25
--
SECTION 15. NOTICES......................................................... 26
--
SECTION 16. MISCELLANEOUS................................................... 27
--
16.1 Waivers and Amendments................................................. 27
--
16.2 Sections; Headings; Dollar Amounts..................................... 27
--
16.3 Severability........................................................... 27
--
16.4 Governing Law.......................................................... 27
--
</TABLE>
(ii)
<PAGE>
<TABLE>
<S> <C>
16.5 Counterparts........................................................... 27
--
16.6 Successors and Assigns................................................. 28
--
16.7 Entire Agreement....................................................... 28
--
16.8 Payment of Fees and Expenses........................................... 28
--
</TABLE>
EXHIBITS, APPENDICES, AND SCHEDULES
EXHIBITS
- --------
Exhibit A Offer to Purchase
Exhibit B Letter to Holders
Exhibit C Form of Warrant Agreement
Exhibit D Opinion of Company counsel
APPENDICES
- ----------
Appendix I Purchaser's Certificate of Resale of Shares
SCHEDULES
- ---------
Schedule 1 Table of Former GenPharm share values
Schedule 2 List of Holders
Schedule 3 Schedule of Exceptions
(iii)
<PAGE>
RIGHTS EXCHANGE AGREEMENT
This Rights Exchange Agreement (this "Agreement") is made as of June 10,
1998 (the "Effective Date"), by and among Medarex, Inc., a New Jersey
corporation with its principal place of business at 1545 Route 22 East,
Annandale, New Jersey 08801 (the "Company"), and BCC Acquisition I LLC, a
Delaware limited liability company with its principal place of business at 750
Battery Street, Suite 600, c/o Bay City Capital, San Francisco, CA 94111
("Purchaser").
BACKGROUND
A. Pursuant to that certain Agreement and Plan of Reorganization dated as
of May 5, 1997 (the "Merger Agreement"), among the Company, Medarex Acquisition
Corp. ("Merger Sub"), and GenPharm International, Inc. ("GenPharm"), GenPharm
merged with and into Merger Sub, with GenPharm being the surviving corporation
and becoming a wholly-owned subsidiary of the Company (such transaction referred
to herein as the "Merger"). As a result of the Merger, the former holders of
GenPharm preferred stock and GenPharm common stock (collectively, the "Holders",
and each, individually, a "Holder") are currently entitled to receive the
remainder of the Merger Consideration (as defined in the Merger Agreement),
presently $44,412,500, in the form of shares of the common stock of the Company,
par value $.01 per share (the "Common Stock"), or, under certain circumstances,
cash, with such shares to be issued at a price per share equal to the Fair
Market Value thereof (as defined in the Merger Agreement).
B. Upon consummation of the Merger on October 21, 1997, certain of the
Holders received an initial issuance of Common Stock in partial satisfaction of
the Company's obligation to pay the Merger Consideration. The contingent
payment rights of the Holders to receive the remaining $44,412,500 in Merger
Consideration, as such amount may be adjusted downward under certain
circumstances, are herein referred to as the "Rights".
C. The Company and the Purchaser herein agree that, for purposes of this
Agreement, the aggregate face value of the Rights (the "Face Value") shall be
$44,412,500, although the Company and the Purchaser recognize that this value
may not represent the value that would actually be received by the Holders other
than pursuant to this transaction. The Face Value of the Rights held by any
individual Holder for purposes of this Agreement reflects such Holder's share of
such $44,412,500 and may be determined for each Holder by multiplying the per
share portion of the Merger
<PAGE>
Consideration allocable to each former share of GenPharm preferred stock and
common stock (assuming the full $44,412,500 is paid), as set forth on Schedule 1
-------- -
attached hereto, by the respective number of shares of GenPharm preferred stock
and/or common stock formerly held by such Holder.
D. The parties contemplate that the Purchaser will make an offer (the
"Purchaser's Offer") to purchase any or all of the Rights (subject to minimum of
a $22,206,250 in aggregate Face Value) from the Holders at a 20% discount from
the Face Value of such Rights, provided that the Company, among other things,
enters into this Agreement through which the Company shall issue to the
Purchaser, in exchange for each $6.75 in Face Amount of Rights acquired pursuant
to the Purchaser's Offer, (i) one Share of the Company's Common Stock and (ii)
a Warrant (as defined in Section 2 below) to purchase 0.1222 shares of the
Company's Common Stock, exercisable for a period of seven (7) years. Such
Shares and Warrants shall be issued by the Company solely in exchange for and
through the cancellation of the Rights that the Purchaser acquires pursuant to
the Purchaser's Offer and shall represent payment in full by the Company of the
Merger Consideration represented by such Rights under the Merger Agreement as if
the Company had paid that portion of the Merger Consideration directly to the
Holders of such Rights.
AGREEMENT
In consideration of the mutual covenants contained in this Agreement, and
for other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the Company and the Purchaser hereby agree as follows:
SECTION 1. THE PURCHASER'S OFFER
1.
1.1 MAKING THE OFFER. (a) The Company and the Purchaser agree that, on
the Effective Date or within five (5) business days thereafter, the Purchaser
will make an offer to the Holders of Rights to acquire from such Holders any or
all of the Rights (subject to a $22,206,250 minimum) for cash. The Purchaser's
Offer shall be on substantially the terms and conditions set forth in the Offer
to Purchase attached hereto as Exhibit A (the "Offer to Purchase").
(b) The Purchaser expressly reserves the right to waive any condition to
the Purchaser's Offer, to increase the price offered for such Rights (the "Offer
Price"), to extend the duration of the Purchaser's Offer, or to make any other
changes in the terms and conditions of the Purchaser's Offer; provided, however,
that, without the prior
2
<PAGE>
written consent of the Company, no such change may be made which (i) reduces the
Offer Price, (ii) changes the form of consideration payable in the Purchaser's
Offer, (iii) except as provided in the next sentence, extends the Purchaser's
Offer, (iv) amends or imposes conditions to the Purchaser's Offer in addition to
those set forth in the Offer to Purchase or (v) amends any other term of the
Purchaser's Offer in a manner adverse to the Holders. Notwithstanding the
foregoing, the Purchaser may, without the consent of the Company, (A) extend the
Purchaser's Offer, if at the scheduled or extended expiration date of the
Purchaser's Offer any of the conditions of the Purchaser's Offer set forth in
the Offer to Purchase shall not be satisfied or waived, until such time as such
conditions are satisfied or waived (provided, however, that without the prior
written consent of the Company, which consent shall not be unreasonably
withheld, no such extension shall exceed thirty (30) days), (B) extend the
Purchaser's Offer for any period required by any rule, regulation,
interpretation or position of the Securities and Exchange Commission (the "SEC")
or other securities authority, or the staff thereof, applicable to the
Purchaser's Offer, and (C) extend the Purchaser's Offer on one or more
occasions, if on such expiration date there shall not have been irrevocably
assigned at least 50% of the aggregate Face Value of the Rights. The Purchaser
agrees that if all of the conditions to the Purchaser's Offer set forth in the
Offer to Purchase are not satisfied on any scheduled expiration date of the
Purchaser's Offer then, provided that all such conditions are reasonably capable
of being satisfied, the Purchaser shall extend the Purchaser's Offer from time
to time until such conditions are satisfied or waived, provided that the
Purchaser shall not be required to extend the Purchaser's Offer beyond the
Termination Date (as defined in Section 4.1 below). Subject to the terms and
conditions of the Purchaser's Offer and this Agreement, the Purchaser shall
accept for payment, and pay for, any and all Rights validly assigned and not
revoked pursuant to the Purchaser's Offer that the Purchaser becomes obligated
to accept for payment, and pay for, pursuant to the Purchaser's Offer as
promptly as practicable after the expiration of the Purchaser's Offer.
1.2 COMPANY ACTIONS. (a) The Company hereby consents to the transfer of
the Rights by the Holders thereof to the Purchaser pursuant to the Purchaser's
Offer and represents and warrants that (i) the Company's board of directors has
adopted resolutions (A) approving and adopting this Agreement and the
transactions contemplated hereby, (B) authorizing the granting by the Company of
a waiver of the transfer restrictions contained in Section 1.2(c) of the Merger
Agreement with respect to the transfer of the Rights by the Holders to the
Purchaser, (C) approving the exchange of the Shares for the Rights on the terms
and subject to the conditions set forth in this Agreement, and (D) approving the
issuance of a Warrant or Warrants to purchase shares of Common Stock to
3
<PAGE>
the Purchaser. The Company hereby consents to the inclusion in the Purchaser's
Offer documents of the information supplied by the Company for use in the Offer
to Purchase.
(b) The Company further represents that it received a verbal assurance from
the SEC in response to a letter of inquiry from the Company dated April 29,
1998, (the "SEC Letter") confirming that the transactions contemplated by the
SEC Letter and this Agreement are not subject to the provisions of Rules 13-e
and 14-d under the Exchange Act (as defined in Section 5.4 below).
(c) The Company shall deliver to the Holders a letter in substantially the
form attached hereto as Exhibit B discharging the obligation of the Company (if
any) pursuant to Rule 14e-2 under the Exchange Act to make a disclosure
statement to the Holders with respect to the Purchaser's Offer.
(d) In connection with the Purchaser's Offer, the Company will promptly
furnish the Purchaser with mailing labels, security position listings and any
available listing or computer file containing the names and addresses of the
Holders as of a recent date (to be set forth on Schedule 2) and shall furnish
-------- -
the Purchaser with such information and assistance as the Purchaser or its
agents or representatives may reasonably request in communicating the
Purchaser's Offer to the Holders. The Purchaser shall hold in confidence the
information contained in any such labels, listings and files, will use such
information only in connection with the Purchaser's Offer and the Rights
Exchange (as defined below in Section 3.1), and, if this Agreement is terminated
in accordance with Section 14, will deliver to the Company all copies of such
information in the possession of the Purchaser.
1.3 ACCURACY OF INFORMATION. Each of the Company and the Purchaser
represents and warrants to the other that the information supplied by such party
for use in the Offer to Purchase (including, without limitation, in the case of
the Company, the information appearing in Sections 6, 7 and 8 of the Offer to
Purchase) does not contain any untrue statement of a material fact or omit to
state a material fact necessary in order to make the statements made in such
Offer to Purchase, in the light of the circumstances under which they were made,
not misleading. The Company further agrees that the information contained in
the Offer to Purchase and derived from public filings of the Company including,
without limitation, the SEC Documents (as defined in Section 5.4 below), is
deemed to have been "supplied" by the Company for purposes of the preceding
sentence. Each of the Company and the Purchaser shall promptly notify the other
party of any changes in the information supplied by the notifying party and
shall provide the other party with copies of any information necessary to make
the statements
4
<PAGE>
made in the Offer to Purchase not untrue or misleading in accordance with the
terms of this Section 1.3.
SECTION 2. AUTHORIZATION AND ISSUANCE OF THE SECURITIES.
Subject to the terms and conditions of this Agreement, the Company has
authorized the issuance and delivery of up to 6,579,629 shares of its Common
Stock and a warrant or warrants to purchase up to 804,000 shares of its Common
Stock for a period of seven years and at an exercise price of $10.00 per share
pursuant to a Warrant agreement in substantially the form attached hereto as
Exhibit C (the "Warrant Agreement"). The shares of Common Stock and the warrant
or warrants to purchase Common Stock issued to the Purchaser pursuant to this
Agreement shall be referred to herein as the "Shares" and the "Warrants",
respectively.
2.
SECTION 3. AGREEMENT TO EXCHANGE THE SECURITIES.
3.
3.1 ISSUANCE OF SHARES AND WARRANTS. At the Closing (as defined in
Section 4.1 below), the Purchaser agrees to exchange the Rights at the aggregate
Face Value of such Rights acquired by the Purchaser pursuant to the Purchaser's
Offer (the "Aggregate Exchange Price") and the Company agrees to issue in
exchange for each $6.75 in Face Value of Rights acquired by the Purchaser in the
Offer (i) one Share of the Company's Common Stock and (ii) a Warrant or Warrants
to purchase 0.1222 shares of Common Stock at an exercise price of $10.00 per
share exercisable for a period of seven (7) years pursuant to the Warrant
Agreement. The Aggregate Exchange Price shall be paid solely in the form of the
complete cancellation of the Rights acquired by the Purchaser in connection with
the Purchaser's Offer. The delivery of the Rights in exchange for the issuance
of the Shares and the Warrants to Purchaser pursuant to this Agreement shall be
referred to herein as the "Rights Exchange". In the event that it is determined
that the Rights were not validly assigned to the Purchaser, but the Holder
thereof executed a Letter of Assignment releasing the Company from any further
obligation to pay to the Holder the Merger Consideration in such circumstances
upon receipt of payment from the Purchaser pursuant to the Offer, and the
Purchaser made such payment, all such payments shall, in the aggregate,
constitute payment of the Aggregate Exchange Price.
3.2 FRACTIONAL SHARES. No fractional shares shall be issued by the
Company in connection with this transaction. If the Purchaser would otherwise
be entitled to a fractional interest in a Share, the Purchaser shall receive an
amount of cash (without
5
<PAGE>
interest) determined by multiplying (i) the Price Per Share by (ii) the
fractional share interest to which the Purchaser would otherwise be entitled
(the "Fractional Share Payment"). The payment of cash in lieu of fractional
shares is made solely for the purpose of avoiding the expense and inconvenience
of issuing and transferring fractional shares and does not represent separately
bargained-for consideration.
SECTION 4. CLOSING AND DELIVERY.
4.
4.1 CLOSING. The Closing of the issuance of the Shares and the Warrants
in exchange for the Rights (the "Closing") shall be held as soon as practicable
after the satisfaction or waiver of all other conditions to Closing set forth in
Sections 10 and 11 hereof, at the offices of Heller Ehrman White & McAuliffe,
333 Bush Street, San Francisco, California 94104, or on such other date and
place as may be agreed to by the Company and the Purchaser, provided, however,
that in no event shall the Closing take place after August 14, 1998 (the
"Termination Date"). The date on which the Closing occurs is herein referred to
as the "Closing Date".
4.2 DELIVERY OF THE WARRANT AGREEMENT AND THE SHARES. At the Closing, the
Company shall deliver to the Purchaser (i) an executed Warrant Agreement in
substantially the form of Exhibit C and (ii) stock certificates registered in
the name of the Purchaser, or in such nominee name(s) as designated by the
Purchaser, representing the number of Shares to be issued by the Company to the
Purchaser at the Closing determined in accordance with Section 3.1 against
cancellation of the Rights acquired by the Purchaser pursuant to the Purchaser's
Offer. The parties hereto acknowledge that the issuance of the Shares and the
Warrants in exchange for the Rights represents the payment in full of that
portion of the Merger Consideration represented by such Rights under the terms
of the Merger Agreement.
SECTION 5. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
5.
Except as set forth on the Schedule of Exceptions attached hereto as
Schedule 3, the Company hereby represents and warrants as of the date hereof to
- -------- -
the Purchaser as follows:
5.1 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 New Jersey, has full corporate power and authority to own or lease its
properties and conduct its business as presently conducted, and is duly
qualified as a foreign
6
<PAGE>
corporation and is 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). Other than as disclosed in
the SEC Documents and a Stock Purchase Agreement dated as of May 4, 1998,
between the Company and ErythroMed, Inc. (the "ErythroMed Agreement"), the
Company has no Subsidiaries or equity interest in any other entity. For purposes
of this Agreement, "Subsidiary" shall mean an entity controlled by the Company
(including, without limitation, any entity 50% or more of the voting securities
of which are held by the Company).
5.2 CORPORATE POWER; AUTHORIZATION. The Company has all requisite
corporate power, and has taken all requisite corporate action, to execute and
deliver this Agreement, to sell and issue the Shares and to enter into the
Warrant Agreement and to carry out and perform all of its obligations under this
Agreement and the Warrant Agreement. This Agreement and the Warrant Agreement
constitute the legal, valid and binding obligations of the Company, enforceable
in accordance with their 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 and (iii) as rights to indemnity or contributions hereunder
may be limited by federal or state securities laws or principles of public
policy. The execution and delivery of this Agreement and the Warrant Agreement
do not, and the performance of this Agreement and the Warrant Agreement and the
compliance with the provisions hereof and thereof 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 Articles of Incorporation or Bylaws of the Company or any
statute, law, rule or regulation applicable to the Company or any Subsidiary, or
any state or federal order, judgment or decree applicable to the Company or any
Subsidiary, or any indenture, mortgage, lease or other agreement or instrument
to which the Company or any Subsidiary or any of the properties of such person
is subject (including, without limitation, the Merger Agreement), except such as
would not have a material adverse effect on the Company or such Subsidiary.
5.3 ISSUANCE AND DELIVERY OF THE SHARES; GRANT OF THE WARRANTS. The
Shares, when issued and exchanged for the Rights in compliance with the
provisions of this Agreement, will be validly issued, fully paid and
nonassessable. Further, the Shares, when issued and exchanged for the Rights in
compliance with the provisions of this Agreement, will not be subject to
preemptive, co-sale, right of first refusal or any other
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similar rights of the shareholders of the Company or any liens or encumbrances.
In addition, the shares issuable upon exercise by the Purchaser of the Warrants
(the "Warrant Shares"), when issued, paid for and delivered in accordance with
the terms of the Warrant Agreement, will be validly issued, fully paid and
nonassessable, and will not be subject to preemptive, co-sale, right of first
refusal or any other similar rights of the shareholders of the Company or any
liens or encumbrances. Other than a Registration Rights Agreement between the
Company and Novartis Pharma AG, the Company has not granted any registration
rights which are still in effect with respect to its securities other than the
registration rights set forth herein.
5.4 SEC DOCUMENTS; FINANCIAL STATEMENTS. The Company and each Subsidiary
has filed in a timely manner all documents that such person 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 36 months preceding the date
of this Agreement. As of their respective filing dates (or, if amended, when
amended), all documents filed by the Company or any of its Subsidiaries with the
SEC, whether under the Exchange Act or under the Securities Act of 1933, as
amended (the "Securities Act"), during such 36-month period (the "SEC
Documents") complied in all material respects with the requirements of the
Exchange Act or the Securities Act, as the case may be. The Company satisfies
the requirements for the use of Form S-3 under the Securities Act, to register
the offers and sales of the Shares and the Warrant Shares contemplated by the
Shelf Registration Statement (as defined in Section 12). None of the SEC
Documents as of their respective dates contained any untrue statement of
material fact or omitted to state a material fact required 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 consolidated financial
statements of the Company and its Subsidiaries included in the SEC Documents
(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 consolidated financial position of the Company and its
Subsidiaries at the dates thereof and the results of their operations and cash
flows for the periods then ended (subject, in the case of unaudited statements,
to normal, recurring adjustments and the absence of footnotes). There is no
material liability or commitment of the Company or any of its Subsidiaries which
is not reflected in the most recent Financial Statements except commitments made
since the date of such Financial Statements in the ordinary course of business.
There have not been any changes in the assets, liabilities, financial condition
or operations of the Company or any of its Subsidiaries from that reflected in
the most recent Financial Statements, except changes
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in the ordinary course of business that have not had a material adverse effect
on the business, properties, financial condition or results of operations of the
Company or any of its Subsidiaries.
5.5 CONSUMMATION OF MERGER; ISSUANCE OF RIGHTS. The Merger Agreement was
properly adopted, and was properly executed and delivered, and, together with
the Rights created therein, is a valid and binding obligation of the Company,
enforceable against the Company in accordance with its terms, subject, as to
enforcement, to bankruptcy, insolvency, reorganization, moratorium or other laws
relating to or limiting creditors' rights or by equitable principles generally.
The Merger has been duly consummated in accordance with the terms of the Merger
Agreement and the Company has the power to allow the transfer of the Rights to
the Purchaser and has taken (or shall have taken prior to the Closing) all steps
necessary to be taken by the Company to permit the Holders to sell and the
Purchaser to acquire the Rights.
5.6 INTELLECTUAL PROPERTY. (a) The Company and each Subsidiary has
sufficient title and ownership of all material patents, patent rights,
inventions, trademarks, service marks, copyrights, trade secrets, proprietary
rights, processes and know-how (collectively, "Intellectual Property") owned or
used by it or that are necessary for the conduct of its business as presently
conducted and believes that it can obtain, on commercially reasonable terms, any
additional rights necessary for its business as proposed to be conducted, and
that the Intellectual Property does not, and would not, conflict with or
constitute an infringement of the rights of others.
(b) Other than the strategic partnership agreements described in paragraph
(f) of this Section 5.6 and as set forth in the SEC Documents, there are no
outstanding options, licenses (whether to or from the Company) or agreements of
any kind relating to the Intellectual Property described in paragraph (a) of
this Section 5.6 or granting rights to any other person to manufacture, license,
produce, assemble, market or sell products or services derived or derivable from
the Intellectual Property of the Company or any of its Subsidiaries, nor is the
Company or any of its Subsidiaries bound by or a party to any options, licenses
or agreements of any kind with respect to the Intellectual Property of any other
person or entity.
(c) Neither the Company nor any of its Subsidiaries has received any
communications alleging that such person or any of its employees of has violated
or infringed or, by conducting its business as proposed, would violate or
infringe, any of the Intellectual Property of any other person or entity.
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(d) Neither the Company nor any of its Subsidiaries is aware that any of
its employees is obligated under any contract (including licenses, covenants, or
commitments of any nature) or other agreement, or subject to any judgment,
decree, or order of any court or administrative agency, that would interfere
with the use of such employee's best efforts to promote the interests of the
Company or such Subsidiary with respect to the Intellectual Property of the
Company or such Subsidiary or otherwise or that would conflict with the business
of the Company or such Subsidiary as proposed to be conducted.
(e) Neither the execution nor delivery of this Agreement, nor the carrying
on of the business of the Company or any of its Subsidiaries by the employees of
such person, nor the conduct of the business of the Company or any of its
Subsidiaries as proposed, will, to the Company=s knowledge, conflict with or
result in a breach of the terms, conditions, or provisions of, or constitute a
default under, any contract, covenant, or instrument under which any of such
employees is now obligated. The Company does not believe it is or will be
necessary to utilize any inventions of any of the employees of the Company or
any of its Subsidiaries (or people such person currently intends to hire) made
prior to their employment by such person; and
(f) The strategic partnering agreements between the Company and each of
Merck KGaA, Novartis Pharma AG, Centeon L.L.C., Santen Pharmaceutical Co., Ltd.,
Eisai Co., Ltd., Centocor, Inc., LeukoCite, Inc. and Schering, AG (together, the
"Major Strategic Partners"), described under the caption "Corporate
Collaborations" in the Company's Form 10-K for the period ending December 31,
1997, and under the caption "Recent Developments" in the Company's Form 10-Q for
the period ending March 31, 1998, are in full force and effect and constitute
valid and binding obligations of the Company and each Major Strategic Partner
party thereto. Neither the Company nor any Major Strategic Partner is in
default under any of such agreements.
5.7 PROPERTIES. The Company and each Subsidiary has good and valid title
to all of the properties and assets reflected as owned by the Company or any
Subsidiary in the Financial Statements, free and clear of all material liens,
mortgages (statutory or otherwise), security interests, pledges, claims or
encumbrances except those, if any, disclosed in the Financial Statements. The
Company and each Subsidiary holds its leased properties under valid and binding
leases, with such exceptions as are not materially significant in relation to
the business of the Company or such Subsidiary. The Company and each Subsidiary
owns or leases all of such properties as are necessary to its operations as now
conducted.
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5.8 CAPITALIZATION. The authorized capital stock of the Company consists
of 40,000,000 shares of Common Stock and 2,000,000 shares of preferred stock.
Immediately prior to the Closing, 22,200,034 shares of Common Stock will be
outstanding (other than shares issued between the Effective Date and immediately
prior to the Closing as the result of the exercise of employee or consultant
stock options existing on the Effective Date) and no shares of preferred stock
will be outstanding. The certificates evidencing the Shares are in due and
proper legal form and have been duly authorized for issuance by the Company. All
of the issued and outstanding securities of the Company have been duly
authorized and validly issued, are fully paid and nonassessable, have been
issued in compliance with federal, state and other applicable laws and were
issued without violation of any preemptive, co-sale or other right. Except as
otherwise disclosed in the SEC Documents and in the Financial Statements, there
is no outstanding option, warrant, agreement or other right calling for the
issuance or redemption of, and there is no commitment, plan or arrangement to
issue or redeem, any securities of the Company. Other than the Merger Agreement
and the ErythroMed Agreement, the Company does not have any binding agreement
with respect to the acquisition or purchase of the securities of or owned by any
person or entity or the acquisition of the business, assets or liabilities of
any person or entity, and the Company does not have any agreement or
understanding with respect to the disposition or sale of its business, assets or
property.
5.9 LITIGATION. There is no pending or, to the Company's knowledge,
threatened, action, suit or other proceeding to which the Company or any of its
Subsidiaries is a party or to which the property or assets of the Company or any
of its Subsidiaries is subject which might result in a material adverse effect
on the business, properties, financial condition or results of operations of the
Company or any of its Subsidiaries.
5.10 NO DEFAULTS. Neither the Company nor any of its Subsidiaries is in
violation or default of any provisions of its certificate of incorporation or
bylaws, or any organizational documents, or in breach with respect to any
provision of any agreement, judgment, decree, order, mortgage, deed of trust,
lease franchise, license, indenture, permit or other instrument to which it is a
party or by which it or any of its properties are bound which violation, default
or breach would have a material adverse effect on the business, properties,
financial condition or results of operations of the Company or any of its
Subsidiaries, and there does not exist any state of facts which constitutes an
event of default on the part of the Company or any of its Subsidiaries as
defined in such documents or which, with notice or lapse of time or both, would
constitute such an event of default.
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5.11 MATERIAL AGREEMENTS. The Company and each Subsidiary is a party to
all agreements that are necessary for the conduct of the business of such person
as presently conducted and all such agreements are currently in effect. Neither
the Company nor any of its Subsidiaries is in breach of any provision of any
such agreement where such breach would have a material adverse effect on the
business, properties, financial condition or results of operations of the
Company or such Subsidiary.
5.12 GOVERNMENTAL CONSENTS; COMPLIANCE WITH LAW. 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 (i) the filing of a
Shelf Registration Statement and all amendments thereto with the SEC as
contemplated by Section 12.1 of this Agreement, (ii) any filings required by
state securities laws and (iii) the filing of a notification and report form
under the United States Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended (the "HSR Act"). The Company and each Subsidiary is conducting business
in compliance in all material respects with all applicable laws, rules and
regulations of the jurisdictions in which it is conducting business, including
but not limited to, all applicable local, state and federal environmental laws
and regulations.
5.13 INSURANCE. The Company and each Subsidiary maintains insurance of the
types and in the amounts generally deemed adequate for its business covering all
risks customarily insured against, all of which insurance is in full force and
effect.
5.14 INVESTMENT COMPANY. The Company is not an "investment company" within
the meaning of the Investment Company Act of 1940, as amended.
5.15 TAXES. The Company and each Subsidiary has filed all necessary
federal, state and foreign income and franchise tax returns and has paid or
accrued all taxes shown as due thereon except for such taxes as are being
contested in good faith, and the Company has no knowledge of any tax deficiency
which has been or might be asserted or threatened against the Company or any of
its Subsidiaries which would have a material adverse effect on the business,
properties, financial condition or results of operations of the Company or any
of its Subsidiaries.
5.16 LISTING. The Company's Common Stock is traded on The Nasdaq National
Market.
5.17 BROKER'S FEE. The Company represents that there are no brokers or
finders entitled to compensation by the Company in connection with the Rights
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Exchange, and shall indemnify the Purchaser for any such fees for which the
Company is responsible.
SECTION 6. REPRESENTATIONS AND WARRANTIES OF THE PURCHASER.
The Purchaser hereby represents and warrants as of the date hereof to the
Company as follows:
6.
6.1 ORGANIZATION AND STANDING. The Purchaser has been duly organized and
is validly existing as a limited liability company 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 is
duly qualified as a foreign organization and is 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
Purchaser).
6.2 INVESTMENT PURPOSES. (a) The Purchaser acknowledges that the Shares
and the Warrants are being issued in reliance upon the exception from the
registration requirements of the Securities Act provided by Section 4(2) thereof
and as such the Shares and the Warrants will be "restricted securities" within
the meaning of Rule 144.
(b) The Purchaser is acquiring the Shares and the Warrants 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 Warrants or any arrangement or understanding with any other persons
regarding the distribution of such Shares or Warrants except in each case as
conforms with all applicable requirements of the Securities Act, applicable blue
sky laws and all rules and regulations promulgated thereunder.
(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, applicable blue sky laws, and the
rules and regulations promulgated thereunder.
(d) The Purchaser has, in connection with its decision to acquire the
Shares and the Warrants, relied with respect to the Company and its affairs
solely upon the SEC
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Documents and the other information delivered to the Purchaser by the Company as
described in Sections 5.4 above and the representations and warranties of the
Company contained herein.
(e) The Purchaser is an "accredited investor" within the meaning of Rule
501 of Regulation D promulgated under the Securities Act.
(f) 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 12.3 and 13.2
relating to indemnity or contribution.
6.3 NO ADVICE. The Purchaser understands that nothing in this Agreement or
any other materials presented to the Purchaser in connection with the
acquisition of the Shares and the Warrants constitutes legal, tax or investment
advice to the Purchaser. The Purchaser has consulted such legal, tax and
investment advisors as it, in its sole discretion, has deemed necessary or
appropriate in connection with the Rights Exchange.
6.4 RESTRICTION ON TRANSFER. The Purchaser understands that: (a) other
than to a person directly or indirectly controlling, controlled by, or in common
control with, the Purchaser (any such person, an "Affiliate"), neither the
Shares nor the Warrants will be transferable in the absence of a registration
under the Securities Act or an exemption therefrom or in the absence of
compliance with any term of this Agreement; (b) the Company may provide stop
transfer instructions to its transfer agent with respect to the Shares and the
Warrants in order to enforce the restrictions contained in this Section 6.4 and
to confirm that the Purchaser has complied with its obligations contained in
Section 12.2 hereof; and (c) each certificate representing Shares shall be in
the name of the Purchaser and shall bear substantially the following legends (in
addition to any legends required under applicable securities laws):
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"), OR REGISTERED OR QUALIFIED UNDER THE SECURITIES
LAWS OF ANY STATE OR
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OTHER JURISDICTION, AND MAY ONLY BE SOLD, PLEDGED, TRANSFERRED OR
OTHERWISE DISPOSED OF BY THE HOLDER THEREOF IF SUBSEQUENTLY REGISTERED
UNDER THE SECURITIES ACT AND REGISTERED OR QUALIFIED UNDER ANY
APPLICABLE STATE OR OTHER SECURITIES LAWS, UNLESS THE COMPANY
DETERMINES THAT EXEMPTIONS FROM SUCH REGISTRATION REQUIREMENT ARE
AVAILABLE.
The legend contained in this Section 6.4 may be removed from a stock certificate
immediately upon receipt by the Company's transfer agent of a certificate
substantially in the form of Appendix I attached hereto. Notwithstanding the
foregoing, such Shares must be held in certificated form until such Shares have
been sold in accordance with the provisions of Appendix I attached hereto.
6.5 BROKER'S FEE. The Purchaser represents that there are no brokers or
finders entitled to compensation by the Purchaser in connection with the Rights
Exchange, and shall indemnify the Company for any such fees for which the
Purchaser is responsible.
SECTION 7. COVENANTS OF THE PARTIES.
7.
7.1 FULL COOPERATION. The Company will use its reasonable best efforts to
cooperate with and assist the Purchaser with respect to the Purchaser's Offer.
Such cooperation and assistance shall include, without limitation, the provision
of any additional disclosure to the Holders that the Parties determine to be
necessary or advisable after the date hereof in connection with the Purchaser's
Offer under applicable federal and state securities laws, rules and regulations.
The Company will not take any position with respect to the Purchaser's Offer but
has waived the transfer restrictions contained in Section 1.2(c) of the Merger
Agreement to the extent required to permit the Holders to transfer the Rights to
the Purchaser. The Company will advise the Purchaser of any need to amend the
Offer to Purchase as it relates to information supplied by the Company for
inclusion therein such that the Offer to Purchase does not contain any untrue
statement of a material fact or omit to state a material fact necessary in order
to make the statements made in such Offer to Purchase, in the light of the
circumstances under which they were made, not misleading as of any date during
the period in which the Purchaser's Offer is pending in accordance with the
provisions of Section 1.3.
7.2 ACCESS TO INFORMATION. For a period beginning on the Effective Date
and continuing until the earlier of the Closing or the Termination Date, the
Company shall afford to the Purchaser and its agents and representatives full
access, at reasonable times
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and in a reasonable manner, to all of its premises, facilities, properties,
books and records and shall make its directors, officers, agents, and (with the
prior consent of the Company, which consent shall not be unreasonably withheld),
customers, vendors and creditors reasonably available to confer with the
Purchaser and its agents and representatives. The Purchaser shall have the right
to make copies, extracts and summaries of all such reports, books, records and
information, subject, however, to any obligations of the Company to any other
persons. The Company shall notify the Purchaser of any material change in the
business of the Company or in its operations or properties, or of any
governmental complaints, investigations or hearings (or communications
indicating the same may be contemplated) or of the institution, continuation or
threat of any litigation involving the Company or any affiliate of the Company
or any of its assets, and will keep the Purchaser informed of such events.
7.3 MAINTENANCE OF LISTING. For so long as the Company is obligated to
keep in effect the Shelf Registration Statement provided under Section 12
hereof, the Company will use its reasonable best efforts to maintain its listing
on The Nasdaq National Market or a national securities exchange, as defined in
the Exchange Act.
7.4 PURCHASER REPRESENTATIVE. The Company shall use its reasonable best
efforts to ensure that, as long as the Purchaser (or an Affiliate of the
Purchaser) holds either (i) 5% of the outstanding voting securities of the
Company or (ii) 75% of the Shares, the Purchaser Representative (as defined in
Section 11.2) appointed to serve on the Company's board of directors in
accordance with the provisions of Section 11.2 shall be included in the
Company's proxy statement as a nominee of the board of directors for election to
the board and shall be elected to serve on the Company's board of directors.
7.5 FILINGS. The parties shall consult and fully cooperate with and
provide assistance to each other in preparing and filing as soon as practicable
all consents, approvals and authorizations necessary or advisable to be made or
obtained from any third party or governmental agency in order to consummate the
transactions contemplated hereby, including, without limitation, any required
filing under the HSR Act.
7.6 SHELF REGISTRATION OPINION. Upon the effective date a Shelf
Registration Statement in connection with Section 12, the Company shall provide
the Purchaser with an opinion letter addressed to the Purchaser, dated as of the
effective date of such Shelf Registration Statement, from Satterlee, Stephens,
Burke & Burke LLP, counsel to the Company, stating (i) that the Shelf
Registration Statement covers the Shares and the Warrant Shares (including the
resale thereof), (ii) that such counsel is not aware of any
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material untruths in such Shelf Registration Statement and (iii) such other
matters as may be reasonable and customary in connection with such registration.
SECTION 8. NO-SHOP CLAUSE.
8.
8.1 IN GENERAL. For a period beginning on the Effective Date and
continuing until the earlier of the Closing or the Termination Date (the "No-
Shop Period"), the Company shall not, and shall use its best efforts to cause
its respective officers, directors and employees not to, and shall use its
commercially reasonable efforts to cause its investment bankers, attorneys or
other agents retained by or acting on behalf of the Company not to: (i)
initiate, solicit or encourage, directly or indirectly, any inquiries or the
making of any proposal that constitutes or is reasonably likely to lead to a
Third-Party Offer (as defined below), (ii) engage in negotiations or discussions
(other than to advise as to the existence of the restrictions set forth in this
Section 8.1) with, or furnish any information or data to, any third party
relating to a Third-Party Offer or (iii) enter into any agreement with respect
to any Third-Party Offer or approve any Third-Party Offer. Notwithstanding
anything to the contrary contained in this Section 8.1 or elsewhere in this
Agreement, the Company and its board of directors (or any committee thereof) (x)
may participate in discussions or negotiations with or furnish information to
any third party making an unsolicited Third-Party Offer (a "Potential Acquiror")
or approve an unsolicited Third-Party Offer if the board is advised by its
financial advisor that such Potential Acquiror has the financial wherewithal to
be reasonably capable of consummating such a Third-Party Offer, and the board
determines in good faith (A) after receiving advice from its financial advisor,
that the Third-Party Offer submitted by such third party to the Company is more
favorable to the Company and its stockholders than the transaction contemplated
by this Agreement, and (B) based upon advice of outside legal counsel, that the
failure to participate in such discussions or negotiations or to furnish such
information or approve a Third-Party Offer would be reasonably likely to violate
the board's fiduciary duties under applicable law, or (y) may take any action
necessary to comply with Rule 14e-2 promulgated under the Exchange Act. The
Company agrees that any non-public information furnished to a Potential Acquiror
will be furnished to the Purchaser as well and shall be furnished pursuant to a
confidentiality agreement upon terms reasonably acceptable to the Purchaser and
the Company. In the event that the Company shall receive a Third-Party Offer or
determine to provide any information as described, it shall promptly, and in any
event within 24 hours, notify the Purchaser in writing as to that fact and shall
describe the terms of such Third-Party Offer.
8.2 THIRD-PARTY OFFER. As used in Section 8.1, the term "Third-Party
Offer" shall mean any bona fide written proposal, made by a third party to
acquire beneficial
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ownership (as defined under Rule 13d-3 of the Exchange Act) of all or a material
portion of the assets of, or any material equity interest in, the Company
pursuant to a merger, consolidation or other business combination, sale of
shares of capital stock, sale of assets, tender offer or exchange offer or
similar transaction involving the Company including any single or multi-step
transaction or series of related transactions which is structured to permit such
third party to acquire beneficial ownership of any material portion of the
assets of, or any material portion of the equity interest in, the Company (other
than, but including any transaction similar to, the transactions contemplated by
this Agreement).
SECTION 9. SURVIVAL OF REPRESENTATIONS, WARRANTIES AND AGREEMENTS.
9.
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 certificates representing the Shares and the exchange of
the Rights.
SECTION 10. CONDITIONS TO COMPANY'S OBLIGATIONS AT THE CLOSING.
10.
The Company's obligation to complete the issuance of the Shares in exchange
for the Rights and deliver Shares to the Purchaser shall be subject to the
following conditions to the extent not waived by the Company:
10.1 CLOSING UNDER THE PURCHASER'S OFFER. The Purchaser shall have
purchased Rights pursuant to the Purchaser's Offer.
10.2 SURRENDER OF THE RIGHTS. The Purchaser shall have surrendered to the
Company against delivery of the Shares and the Warrants the Rights acquired by
the Purchaser pursuant to the Purchaser's Offer.
10.3 CONSENTS AND APPROVALS. Any consents, waivers, clearances, approvals
and authorizations of regulatory or governmental bodies (including, without
limitation, the expiration or termination of the waiting period under the HSR
Act) that are necessary in connection with the consummation of the transactions
contemplated by this Agreement shall have been obtained.
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10.4 REPRESENTATIONS AND WARRANTIES CORRECT. The representations and
warranties made by the Purchaser in Sections 1 and 6 hereof shall be true and
correct in all material respects when made, and shall be true and correct in all
material respects on the Closing Date.
Provided that the Company has delivered the notice referred to in Section
12(g) of the Offer to Purchase, and notwithstanding anything to the contrary
contained in this Section 10, all the foregoing conditions shall be deemed to
have been satisfied or waived by the Company upon the closing under the
Purchaser's Offer.
SECTION 11. CONDITIONS TO THE PURCHASER'S OBLIGATIONS AT THE CLOSING.
The Purchaser's obligation to deliver the Rights in exchange for the Shares
shall be subject to the following conditions to the extent not waived by the
Purchaser:
11.
11.1 CLOSING UNDER PURCHASER'S OFFER. All conditions to closing under the
Purchaser's Offer shall have been satisfied or shall have been waived by the
Purchaser.
11.2 APPOINTMENT OF DIRECTORS. The Company shall have taken all actions
necessary to ensure that a representative of the Purchaser (the "Purchaser
Representative"), to be selected by the Purchaser and reasonably acceptable to
the Company, shall be appointed, effective immediately after the Closing, to
serve on the Company's board of directors as a Class II director.
11.3 NO OTHER ISSUANCE BY THE COMPANY. Other than the Initial Payment (as
defined in the Merger Agreement), the Company shall not have issued any Common
Stock of the Company to any of the Holders who have not accepted the Purchaser's
Offer. Other than the general plan of distribution of the Merger Consideration
as set forth in the Merger Agreement as in effect on the Effective Date, the
Company shall not have any agreement, arrangement or plan to issue any Common
Stock of the Company to any of the Holders who have not accepted the Purchaser's
Offer.
11.4 STATEMENT OF POSITION OF THE COMPANY. The Company shall have delivered
to the Holders the letter contemplated by Section 1.2(c).
11.5 DELIVERY OF SHARES. The Company shall have delivered to the Purchaser
stock certificates representing the Shares in accordance with the terms of
Section 4.2.
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11.6 WARRANT AGREEMENT. The Company shall have executed and delivered to
the Purchaser a Warrant Agreement in substantially the form of Exhibit C.
11.7 CONSENTS AND APPROVALS. Any consents, waivers, clearances, approvals
and authorizations of regulatory or governmental bodies (including, without
limitation, under the HSR Act) that are necessary in connection with the
consummation of the transactions contemplated by this Agreement shall have been
obtained.
11.8 REPRESENTATIONS AND WARRANTIES CORRECT. The representations and
warranties made by the Company in Sections 1 and 5 shall be true and correct in
all material respects when made and as of the Closing Date or any other date, if
a representation or warranty specifically refers to such other date, and the
Purchaser shall have received a certificate signed by the chief executive
officer and chief financial officer of the Company, or such other officers of
the Company as agreed upon by the parties hereto, that each of such
representations and warranties is true and correct in all material respects on
and as of the Closing Date with the same effect as though such representations
and warranties had been made or given on and as of the Closing Date, and that
such party has performed and complied with all of its obligations under this
Agreement which are to be performed or complied with on or prior to the Closing
Date.
11.9 LEGAL OPINION. The Purchaser shall have received from Satterlee,
Stephens, Burke & Burke LLP, counsel to the Company, an opinion letter addressed
to the Purchaser, dated as of the Closing Date, covering the matters set forth
in Exhibit D hereto, subject to customary assumptions and qualifications.
SECTION 12. REGISTRATION OF THE SHARES; COMPLIANCE WITH THE SECURITIES ACT.
12.
12.1 REGISTRATION PROCEDURES AND EXPENSES. (a) As soon as practicable
following the Closing Date and in any event no later than thirty (30) days
following the Closing Date, the Company shall prepare and file with the SEC, and
thereafter shall use its reasonable best efforts to cause to be declared
effective, a shelf registration statement on an appropriate form under the
Securities Act relating to the offer and sale of the Shares and the Common Stock
issuable upon exercise of the Warrants (together, the "Registrable Securities")
by the Company to the Purchaser and by any other holders thereof from time to
time (including, without limitation, the Purchaser), in accordance with the
methods of distribution set forth in such shelf registration statement, through
The Nasdaq National Market or the facilities of any national securities exchange
on which the Company's Common Stock is then traded, or in privately-negotiated
20
<PAGE>
transactions (a "Shelf Registration Statement"). All shares of Common Stock
acquired by the Purchaser pursuant to Section 3.1 or upon the exercise of a
Warrant acquired by the Purchaser pursuant to Section 3.1 shall be included in
such Shelf Registration Statement.
(b) The Company shall use its reasonable best efforts (including,
without limitation, the preparation and filing with the SEC of amendments and
supplements to the Shelf Registration Statement and a prospectus to be used in
connection therewith) to keep the Shelf Registration Statement continuously
effective and not misleading for a period of seven (7) years from the Closing
Date or such shorter period that will terminate when all the Registrable
Securities covered by the Shelf Registration Statement have been sold pursuant
thereto. The Company shall be deemed not to have used its reasonable best
efforts to keep the Shelf Registration Statement effective during the requisite
period if it takes any action that would result in the holders of the
Registrable Securities covered thereby not being able to offer and sell such
Registrable Securities during that period, unless such action is required by
applicable law. Notwithstanding the foregoing, following the effectiveness of
the Shelf Registration Statement, the Company may, at any time, suspend the
effectiveness of the Shelf Registration Statement for up to no longer than sixty
(60) days, as appropriate (a "Suspension Period"), by giving notice to the
Purchaser, if (i) the Company shall have determined that the Company may be
required to disclose any material corporate development or (ii) the Company
shall be involved in an underwritten public offering of its securities. The
Company will use its best efforts to minimize the length of any Suspension
Period. Notwithstanding the foregoing, no more than two Suspension Periods may
occur in any twelve (12) month period. The Purchaser agrees that, upon receipt
of any notice from the Company of a Suspension Period, the Purchaser will not
sell any Registrable Securities pursuant to the Shelf 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 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 Registrable Securities by the Purchaser, the Company shall
furnish to the Purchaser with respect to the Registrable Securities registered
under the Shelf 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.
21
<PAGE>
(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 Purchaser, which fees and expenses shall be borne by the
Purchaser (except as referred to in Section 16.8 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 12.1.
12.2 TRANSFER OF SECURITIES AFTER SHELF REGISTRATION. The Purchaser agrees
that the Purchaser will not effect any disposition of the Registrable Securities
that would constitute a sale within the meaning of the Securities Act, except:
(I) pursuant to the Shelf Registration Statement, in which case
the Purchaser shall submit the certificates evidencing the Registrable
Securities to the Company's transfer agent, accompanied by a separate
"Purchaser's Certificate" (A) in the form of Appendix I attached hereto, (B)
executed by an officer of, or other authorized person designated by, the
Purchaser, and (C) to the effect that (1) the Registrable Securities have been
sold in accordance with the Shelf Registration Statement and (2) the requirement
of delivering a current prospectus has been satisfied; or
(II) in a transaction exempt from registration under the
Securities Act.
12.3 INDEMNIFICATION. As used in this Section 12.3 the following terms
shall have the following respective meanings:
(A) "Selling Shareholder" shall mean the Purchaser and any transferee
of the Purchaser who is entitled to resell Registrable Securities pursuant to
the Shelf Registration Statement, including any underwriter involved in such
resale, and each person, if any, who controls such Selling Shareholder within
the meaning of Section 15 of the Securities Act, and each officer and each
director of such Selling Shareholder;
(B) "Shelf Registration Statement" shall include any final
prospectus, exhibit, supplement or amendment included in or relating to the
Shelf Registration Statement referred to in Section 12.1; and
22
<PAGE>
(C) "Untrue Statement" shall include any untrue statement or alleged
untrue statement, or any omission or alleged omission to state in the Shelf
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 Shareholder
from and against any losses, claims, damages or liabilities to which such
Selling Shareholder 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 Untrue
Statement on or after the effective date of the Shelf Registration Statement, or
on or after the date of any prospectus or prospectus supplement or the date of
any sale by the Purchaser thereunder, or arise out of any failure by the Company
to fulfill any undertaking included in the Shelf Registration Statement and the
Company will reimburse such Selling Shareholder 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 Shareholder 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 Shelf Registration Statement in reliance upon and
in conformity with written information furnished to the Company by or on behalf
of such Selling Shareholder specifically for use in preparation of the Shelf
Registration Statement, or the failure of such Selling Shareholder to comply
with the covenants and agreements contained in Section 12.1 or 12.2 hereof
respecting sale of the Registrable Securities or any statement or omission in
any prospectus that is corrected in any subsequent prospectus that was delivered
to the Selling Shareholder prior to the pertinent sale or sales by the Selling
Shareholder.
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 Shelf 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 12.1 or 12.2
hereof respecting sale of the Registrable Securities, or any Untrue Statement
contained in the Shelf 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
23
<PAGE>
conformity with written information furnished by or on behalf of the Purchaser
specifically for use in preparation of the Shelf 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 12.3 exceed the gross proceeds received by the Purchaser from the
sale of Registrable Securities covered by such Shelf 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 12.3, 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 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.
12.4 TERMINATION OF CONDITIONS AND OBLIGATIONS. The conditions precedent
imposed by Section 6 or this Section 12 upon the transferability of the
Registrable Securities shall cease and terminate as to any particular number of
the Registrable Securities when such Registrable Securities shall have been sold
or otherwise disposed of in accordance with the intended method of disposition
set forth in the Shelf Registration Statement covering such Registrable
Securities 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.
12.5 INFORMATION AVAILABLE. So long as the Purchaser continues to own any
of the Registrable Securities and the Shelf Registration Statement is effective
covering the
24
<PAGE>
resale of Registrable Securities owned by the Purchaser, the Company will
furnish to the Purchaser:
(a) as soon as practicable after available (but in the case of the
Company's Annual Report to Shareholders, within one hundred twenty (120) days
after the end of each fiscal year of the Company), one copy of (i) its Annual
Report to Shareholders (which Annual Report shall contain financial statements
audited in accordance with generally accepted auditing standards certified by a
national firm of certified public accountants); (ii) its Annual Report on Form
10-K (excluding exhibits); (iii) its quarterly reports on Form 10-Q (excluding
exhibits); (iv) its Proxy Statement; and (v) its current reports on Form 8-K, if
any (excluding exhibits);
(b) upon the request of the Purchaser, all exhibits excluded by the
parentheticals to subparagraphs (a)(ii),(iii) and (v) of this Section 12.5, in
the form generally available to the public; and
(c) upon the reasonable request of the Purchaser, an adequate number
of copies of the prospectuses and supplements to supply to any other party
requiring such prospectuses.
12.6 CHANGES IN PURCHASER INFORMATION. The Purchaser agrees to promptly
notify the Company of any changes in the information set forth in the Shelf
Registration Statement regarding the Purchaser or the Purchaser's plan of
distribution set forth in such Shelf Registration Statement.
SECTION 13. INDEMNIFICATION FOR INCOMPLETE OR INACCURATE INFORMATION.
13.
13.1 BY THE COMPANY. The Company agrees to indemnify and hold harmless the
Purchaser (and each person, if any, who controls the Purchaser within the
meaning of Section 15 of the Securities Act, and each officer, director and
employee of persons who control the Purchaser) from and against any losses,
claims, damages or liabilities to which the Purchaser (or any such officer,
director, employee 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, (a) any untrue statement of a material fact, or omission of a
material fact, in any information provided by the Company for use in the Offer
to Purchase, as contemplated in Section 1 thereof (including, without limitation
any such misstatement or omission in Sections 6, 7 and 8 of the Offer), and (b)
the Merger failing to qualify as a
25
<PAGE>
reorganization as defined in Section 368(a) of the Internal Revenue Code of 1986
as amended, as a result of the transfer contemplated hereby. Further, the
Company will reimburse the Purchaser (or such officer, director, employee or
controlling person) for any reasonable legal or other expenses reasonably
incurred in investigating, defending or preparing to defend any such action,
proceeding or claim.
13.2 BY THE PURCHASER. 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 and each officer and 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 untrue statement of a material fact, or omission of a
material fact in any information about the identity of the Purchaser, the source
of the Purchasers' funds or the Purchasers' plans and intentions provided by the
Purchaser for use in the Offer to Purchase as contemplated by Section 1 hereof.
Further, the Purchaser will reimburse the Company (or such officer, director or
controlling person) for any reasonable legal or other expenses reasonably
incurred in investigating, defending or preparing to defend any such action,
proceeding or claim.
13.3 PROCEDURE. The procedure with respect to claims under this Section 13
shall be the same as that provided in Section 12.3.
SECTION 14. TERMINATION.
14.
14.1 TERMINATION. This Agreement may be terminated at any time prior to
the Closing: (a) by mutual written consent of the parties hereto; (b) by written
notice by any party if the consummation of the Rights Exchange shall violate any
nonappealable final order, decree or judgment of any court or governmental body
having competent jurisdiction; (c) by written notice by either of the Purchaser
or the Company, respectively, to the other party, upon the failure of any
closing condition applicable to either of the Purchaser or the Company,
respectively, which failure is not capable of being cured by the Termination
Date; (d) by written notice by the Company in accordance with Section 8.1 above
and (e) by written notice by either of the Purchaser or the Company,
respectively, to the other party, if the Closing has not occurred by the
Termination Date set forth in Section 4.1, unless the Closing has not occurred
due to the fault or bad faith of the terminating party. The parties agree that
this Agreement shall be terminated immediately upon the effectiveness of the
written notice or written consent described above.
26
<PAGE>
14.2 EFFECT OF TERMINATION. In the event of termination of this Agreement
as provided in Section 14.1, this Agreement shall forthwith become void and
there shall be no further liability of any party to this Agreement or their
respective officers, directors, employees, agents, representatives, or
shareholders, except as otherwise provided in this Agreement.
14.3 TERMINATION FEE. If this Agreement is terminated by the Company
pursuant to Section 14.1(d) above, which termination is the result of: (a) the
receipt by the Company of a Third-Party Offer during the term of this Agreement
and (b) the commitment by the Company to accept a Third-Party Offer (as such
Third-Party Offer may be amended from time to time) within six (6) months
following the Termination Date, then the Company shall, at the time of the
closing of such Third-Party Offer, pay the Purchaser a termination fee in the
amount of (i) any and all out-of-pocket expenses of the Purchaser (including,
without limitation, reasonable attorneys' fees) incurred in connection with this
Agreement (not to exceed $150,000) plus (ii) $750,000. If this Agreement is
----
terminated by the Company pursuant to Section 14.1(b), (c) or (e) above due to
the Company's inability to meet the conditions set forth herein, the Company
shall pay the expenses of the Purchaser referred to in clause (i) of this
Section 14.3.
SECTION 15. NOTICES.
15.
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:
Medarex, Inc.
1545 Route 22 East
Annandale, NJ 08801
Attention: Donald L. Drakeman, President
Phone: (609) 713-6001
Fax: (609) 713-6002
with a copy to:
Satterlee, Stephens, Burke & Burke LLP
230 Park Avenue
27
<PAGE>
New York, NY 10169
Attention: Dwight Kinsey, Esq.
Phone: (212) 818-9200
Fax: (212) 818-9606/9607
(B) if to the Purchaser, to:
Bay City Capital
750 Battery Street, Suite 600
San Francisco, CA 94111
Attention: Sandy Zweifach, Chief Financial Officer
Phone: (415) 676-3830
Fax: (415) 837-0996
with a copy to:
Heller, Ehrman, White & McAuliffe
333 Bush Street
San Francisco, CA 94104
Attention: Timothy G. Hoxie, Esq.
Phone: (415) 772-6000
Fax: (415) 772-6268
Any change of an address set forth in this Section 15 may be accomplished by
means of a notice sent in accordance with the terms of this Section 15.
SECTION 16. MISCELLANEOUS.
16.
16.1 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.
16.2 SECTIONS; HEADINGS; DOLLAR AMOUNTS. Unless otherwise specified, all
references in this Agreement to "Sections" shall be to Sections of this
Agreement. 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. All currency referred to herein shall be in U.S. dollars.
16.3 SEVERABILITY. In case any provision contained in this Agreement should
be invalid, illegal or unenforceable in any respect, the validity, legality and
enforceability of
28
<PAGE>
the remaining provisions contained herein shall not in any way be affected or
impaired thereby.
16.4 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.
16.5 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. Delivery of an executed counterpart by facsimile
shall be the same as delivery of an original counterpart.
16.6 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.
16.7 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.
16.8 PAYMENT OF FEES AND EXPENSES. Except as provided in Section 14.3, 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. 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.
[SIGNATURE PAGE FOLLOWS THIS PAGE]
29
<PAGE>
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.
MEDAREX, INC.
By: /s/ Donald L. Drakeman
--------------------------------
Name: Donald L. Drakeman
--------------------------------
Title:President
-------------------------------
BCC ACQUISITION I LLC
By: THE BAY CITY CAPITAL
FUND I, L.P.
Its: Manager
By: Bay City Capital Management LLC
Its: General Partner
By: /s/ R.H. Salquist
-------------------------------
Name: Roger H. Salquist
-------------------------------
Title:
-------------------------------
30
<PAGE>
EXHIBIT A
OFFER TO PURCHASE
<PAGE>
OFFER TO PURCHASE FOR CASH
ANY OR ALL OF THE $44,412,500 AGGREGATE FACE VALUE
(SUBJECT TO A $22,206,250 MINIMUM)
OF CONTINGENT PAYMENT RIGHTS OF
MEDAREX, INC.
BY BCC ACQUISITION I LLC
THE OFFER AND WITHDRAWAL RIGHTS EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON
FRIDAY, JULY 17, 1998, UNLESS THE OFFER IS EXTENDED.
BCC Acquisition I LLC, a Delaware limited liability company (the
"Purchaser"), hereby offers to purchase for cash any or all of the $44,412,500
(subject to a $22,206,250 minimum) in aggregate face value of certain contingent
payment rights (the "Rights") of Medarex, Inc. (the "Company"), upon the terms
and subject to the conditions set forth in this Offer to Purchase and in the
related Letter of Assignment enclosed with this Offer to Purchase (which
together constitute the "Offer"). The full, undiscounted value of any of the
Rights is referred to herein as the "Face Value" of such Rights. The Rights are
held by the former holders (the "Holders") of preferred stock ("GenPharm
Preferred Stock") and common stock ("GenPharm Common Stock") of GenPharm
International, Inc. ("GenPharm"). The Rights, as such term is used in this
Offer, represent such Holders' rights to receive the remainder of the merger
consideration (the "Remaining Merger Consideration") payable to such Holders
under the Amended and Restated Agreement and Plan of Reorganization dated as of
May 5, 1997 by and among the Company, Medarex Acquisition Corp., a California
corporation wholly-owned by the Company ("Merger Sub"), and GenPharm (the
"Merger Agreement"), pursuant to which the Company acquired GenPharm (the
"Merger"). While the Remaining Merger Consideration is denominated in dollars,
the Merger Agreement provides that it is payable (in most cases) in shares of
the Company's common stock, par value $.01 per share (the "Common Stock"),
valued at the Fair Market Value thereof at the time of payment (as defined in
the Merger Agreement). At the date hereof, the Remaining Merger Consideration is
$44,412,500. This amount is not required to be paid until December 31, 1998 (and
possibly, to some extent, in 1999) and is subject to reduction in certain
circumstances all as more fully described herein.
The Purchaser is offering to acquire any or all of the Rights, subject to
the terms and conditions of the Offer (which includes the condition that at
least 50% ($22,206,250) of the
<PAGE>
aggregate Face Value of the Rights be assigned), at a price that represents a
20% discount from the amount of the Remaining Merger Consideration such Holder
would receive if the Remaining Merger Consideration were not reduced and such
Holder actually received such Holder's maximum entitlement to such Remaining
Merger Consideration. Since, pursuant to the Merger Agreement, the amount of
each Holder's share of the Remaining Merger Consideration is dependent on
whether such Holder was a holder of GenPharm Preferred Stock and/or GenPharm
Common Stock (and, if a holder of GenPharm Preferred Stock, which series of
GenPharm Preferred Stock such Holder held), the price the Purchaser is offering
to pay to each Holder depends upon which class or series of GenPharm stock the
Holder held.
The following table sets forth the cash payment the Purchaser is offering
to make to the Holders to acquire the Rights pursuant to the Offer. The first
line of the table sets forth the price to be paid by the Purchaser for the
Rights relating to each share of GenPharm Preferred Stock and GenPharm Common
Stock (on an as-converted fully diluted basis) formerly held by any such Holder.
This price reflects the 20% discount. The second line of the table sets forth,
on the same per-share basis, the amount of Remaining Merger Consideration that
would be received by such Holders pursuant to the Merger, assuming no further
reduction in the Remaining Merger Consideration.
<TABLE>
GenPharm
Common
Series of GenPharm Preferred Stock Stock
--------------------------------------------------------- -----------
A B C D E F G H I
- - - - - - - - -
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Cash Payment to be $.17 $.17 $.67 $.78 $1.57 $4.02 $4.47 $3.14 $3.13 $1.65
Received Pursuant to
the Offer
Value of Additional $.21 $.21 $.84 $.98 $1.96 $5.03 $5.59 $3.93 $3.91 $2.06
Shares to be Received
Assuming No Further
Reduction in
Remaining Merger
Consideration (the Face
Value of the Rights)
</TABLE>
In evaluating the Offer, Holders should note that, under the Merger
Agreement, the aggregate amount of the Remaining Merger Consideration payable to
the Holders is subject to reduction, on a dollar-for-dollar basis, to the extent
GenPharm fails to receive certain license fees and promissory note payments from
unrelated third parties (the "Third Party Payments") of approximately $23
million. Although the Company believes that the Third Party Payments will be
received (and the Company has to date received timely payment of sums due from
the parties obligated to make the Third Party Payments), there is a risk that
unforeseen factors will result in the Company's not receiving some or possibly
all of the Third Party Payments. A significant reduction in the receipt of such
Third Party Payments could result in a significant reduction in the amount of
the Remaining
(iv)
<PAGE>
Merger Consideration to be received by the Holders of the Rights. The Company
also has some discretion as to when the Remaining Merger Consideration is paid
and is not required to pay such amount until December 31, 1998 (and possibly, to
some extent, until 1999). Even the form of payment is uncertain. While in most
cases the Company is obligated to pay the Remaining Merger Consideration in
shares of Common Stock, at any time during which the Fair Market Value (as
defined in the Merger Agreement) of the Company's Common Stock is less than
$5.00, it may pay such Remaining Merger Consideration in cash. Finally, if the
Company issues Common Stock to the Holders, depending on the then Fair Market
Value of such stock, a large number of shares may be issued. Any attempt by a
significant number of Holders to sell such a large number of shares of Common
Stock upon receipt could have an adverse effect on the market price of the
Company's Common Stock.
Holders who accept the Offer will receive, at the consummation of the
Offer, in consideration of their assignment of their Rights to Purchase, the
cash purchase price offered by the Purchaser. Holders who do not accept the
Offer will receive payment of the amount of the Remaining Merger Consideration
they are entitled to receive as and when provided under the terms of the Merger
Agreement.
The Purchaser and the Company have entered into a Rights Exchange Agreement
(the "Rights Exchange Agreement"), dated as of June 10, 1998. This Offer is
being made by the Purchaser pursuant to the Rights Exchange Agreement. The
Rights Exchange Agreement provides that, immediately upon the consummation of
the Offer, the Company will issue to the Purchaser in exchange for each $6.75 in
Face Value of the Rights acquired by the Purchaser (i) one share of the
Company's Common Stock (up to a maximum of 6,579,629 shares; such shares being
the "Shares") and (ii) a warrant or warrants (the "Warrants") to purchase 0.1222
shares of the Company's Common Stock at an exercise price of $10.00 per share
exercisable over a period of seven years (up to a maximum of 804,000 shares).
The Warrants will be issued upon the terms and conditions set forth in the
Warrant Agreement (the "Warrant Agreement") between the Company and the
Purchaser in a form attached as an exhibit to the Rights Exchange Agreement. The
Company and the Purchaser have agreed that the aggregate Face Value of the
Rights for purposes of the exchange for Shares shall be $44,412,500 (i.e., their
full, undiscounted value). If all of the Rights are assigned to the Purchaser
and exchanged for Shares under the Rights Exchange Agreement, the Purchaser will
beneficially own (after taking into account the Warrants) approximately 25% of
the Company's outstanding Common Stock.
The Rights Exchange Agreement also provides, among other things, that the
Company will register the Shares and the shares to be issued to the Purchaser
upon exercise of the Warrants as well as any resale thereof, and will pay to the
Purchaser a fee of $750,000 (plus expenses) under certain circumstances if the
Offer is not consummated and the Company completes a similar transaction
(v)
<PAGE>
with another party. The Rights Exchange Agreement is more particularly described
in Section 5 of this Offer to Purchase. Under the Rights Exchange Agreement, the
Company will appoint a representative of the Purchaser to the Company's Board of
Directors immediately following the closing of the transactions contemplated by
the Rights Exchange Agreement. While no formal agreement exists, the Company and
the Purchaser have discussed adding another director mutually acceptable to the
Company and the Purchaser.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, AT LEAST $22,206,250
(50%) IN AGGREGATE FACE VALUE OF RIGHTS BEING PROPERLY ASSIGNED AND NOT
WITHDRAWN PRIOR TO THE EXPIRATION OF THE OFFER. NEITHER THE COMPANY NOR ITS
BOARD OF DIRECTORS MAKES ANY RECOMMENDATION TO ANY HOLDER OF THE RIGHTS AS TO
WHETHER OR NOT TO ASSIGN THE RIGHTS. HOWEVER, IN ORDER TO FACILITATE THE OFFER,
THE COMPANY HAS AGREED TO GRANT ITS CONSENT TO THE TRANSFER OF THE RIGHTS TO THE
PURCHASER. THE RIGHTS MAY NOT BE ASSIGNED OR OTHERWISE TRANSFERRED EXCEPT
PURSUANT TO THE OFFER.
__________________
IMPORTANT
The Offer is being made by the Purchaser pursuant to the Rights Exchange
Agreement between the Purchaser and the Company. Pursuant to that agreement, the
Company and the Purchaser have prepared this Offer to Purchase. All statements
made in this Offer to Purchase (other than those relating to the identity of the
Purchaser, the source of the Purchaser's funds, the Purchaser's plans and
intentions, or the terms of the Offer) are based solely on information supplied
by the Company to the Purchaser or contained in the Company's public filings
under the Securities Act of 1933 (the "Securities Act") and the Securities
Exchange Act of 1934 (the "Exchange Act"). The Company has reviewed this Offer
to Purchase and believes that all information (other than that pertaining to the
identity of the Purchaser, the source of the Purchaser's funds or the
Purchaser's plans and intentions, as to which the Company can express no view)
set forth herein is accurate and complete in all material respects. While the
Purchaser believes all information supplied by the Company or obtained from the
Company's filings under the Securities Act and the Exchange Act to be accurate
in all material respects, the Purchaser does not and cannot warrant the accuracy
of such information.
Any Holder of Rights desiring to assign to the Purchaser all or any portion
of its Rights should complete and sign the Letter of Assignment or a facsimile
thereof in accordance with the instructions in the Letter of Assignment and mail
or deliver it and any other required documents to Continental Stock Transfer &
Trust Company (the "Depositary"). The Company will pay all charges and expenses
of the Depositary in connection with the Offer.
Questions and requests for assistance may be directed to the Depositary or
Shareholder Communications Corporation (the "Information Agent") at their
respective addresses and telephone numbers specified on the back cover of this
Offer to Purchase. Additional copies of this Offer to Purchase and the Letter of
Assignment may be obtained from the Depositary.
(vi)
<PAGE>
CONTENTS
<TABLE>
<S> <C>
INTRODUCTION............................................................... 1
SECTION 1 TERMS OF THE OFFER............................................. 4
SECTION 2 ACCEPTANCE FOR PAYMENT AND PAYMENT FOR RIGHTS.................. 6
SECTION 3 PROCEDURE FOR ASSIGNING RIGHTS; EFFECTS OF ASSIGNING RIGHTS 7
SECTION 4 WITHDRAWAL RIGHTS.............................................. 8
SECTION 5 THE RIGHTS EXCHANGE AGREEMENT.................................. 8
SECTION 6 CERTAIN FEDERAL INCOME TAX CONSEQUENCES........................ 9
SECTION 7 PRICE RANGE OF THE COMPANY'S COMMON STOCK, DIVIDENDS........... 12
SECTION 8 CERTAIN INFORMATION CONCERNING THE COMPANY..................... 13
SECTION 9 CERTAIN INFORMATION CONCERNING THE PURCHASER................... 17
SECTION 10 SOURCE AND AMOUNT OF FUNDS..................................... 17
SECTION 11 PURPOSE OF THE OFFER........................................... 17
SECTION 12 CERTAIN CONDITIONS OF THE OFFER................................ 19
SECTION 13 CERTAIN LEGAL MATTERS.......................................... 21
SECTION 14 FEES AND EXPENSES.............................................. 22
SECTION 15 MISCELLANEOUS.................................................. 23
</TABLE>
(viii)
<PAGE>
INTRODUCTION
The Purchaser hereby offers to purchase for cash any or all of the Rights
upon the terms and subject to the conditions set forth in the Offer. The
"Rights" are each Holder's right to receive such Holder's share of the Remaining
Merger Consideration to be paid to the Holders under the Merger Agreement
pursuant to which the Company acquired GenPharm. THE OFFER IS CONDITIONED UPON,
AMONG OTHER THINGS, A MINIMUM OF $22,206,250 (50%) IN AGGREGATE FACE VALUE OF
RIGHTS BEING PROPERLY ASSIGNED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION OF THE
OFFER.
The Purchaser is offering to acquire any or all of the Rights, subject to
the terms and conditions of the Offer, at a price that represents a 20% discount
from the amount of Remaining Merger Consideration such Holder would receive if
the Remaining Merger Consideration were not reduced as described below and such
Holder actually received such Holder's maximum entitlement to such Remaining
Merger Consideration. Since, pursuant to the Merger Agreement, each Holder's
share of the Remaining Merger Consideration is dependent on whether such Holder
was a holder of GenPharm Preferred Stock and/or GenPharm Common Stock (and, if a
holder of GenPharm Preferred Stock, which series of GenPharm Preferred Stock
such Holder held), the price the Purchaser is offering to pay to each Holder
depends upon which class or series of GenPharm stock the Holder held.
The following table sets forth the cash payment the Purchaser is offering
to make to the Holders to acquire the Rights pursuant to the Offer. The first
line of the table sets forth the price to be paid by the Purchaser for the
Rights relating to each share of GenPharm Preferred Stock and GenPharm Common
Stock (on an as-converted fully diluted basis) formerly held by any such Holder.
This price reflects the 20% discount. The second line of the table sets forth,
on the same per-share basis, the amount of Remaining Merger Consideration that
would be received by such Holders pursuant to the Merger, assuming no further
reduction.
<TABLE>
<CAPTION>
GenPharm
Common
Series of GenPharm Preferred Stock Stock
---------------------------------- -----
A B C D E F G H I
---- ---- ---- ---- ----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Cash Payment to be $.17 $.17 $.67 $.78 $1.57 $4.02 $4.47 $3.14 $3.13 $1.65
Received Pursuant to
the Offer
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Value of Additional $.21 $.21 $.84 $.98 $1.96 $5.03 $5.59 $3.93 $3.91 $2.06
Shares to be Received
Assuming No Further
Reduction in
Remaining Merger
Consideration (the Face
Value of the Rights)
</TABLE>
The Company, Merger Sub and GenPharm entered into the Merger Agreement on
May 5, 1997. Pursuant to the Merger Agreement, on October 21, 1997 (the "Merger
Date"), Merger Sub merged with and into GenPharm with GenPharm being the
surviving corporation and all of the outstanding shares of GenPharm Common Stock
and GenPharm Preferred Stock were converted into the right to receive
$62,725,000 (the "GenPharm Purchase Price"), subject to adjustment. As a
result, GenPharm became a wholly-owned subsidiary of the Company. On the Merger
Date, the Company issued 3,250,000 shares of Common Stock (the "Initial Shares")
as payment of $17,793,750 of the GenPharm Purchase Price. As of the date
hereof, the GenPharm Purchase Price has been reduced by $518,750 as a result of
certain adjustments provided for in the Merger Agreement. As a result, the
Remaining Merger Consideration payable to the Holders is currently $44,412,500.
However, under the Merger Agreement, the aggregate amount of the Remaining
Merger Consideration payable to the Holders is subject to reduction, on a
dollar-for-dollar basis, to the extent GenPharm fails to receive certain license
fees and promissory note payments from unrelated third parties (the "Third Party
Payments") of approximately $23 million. Although the Company believes that the
Third Party Payments will be received (the $23 million in remaining Third Party
Payments already reflects the timely receipt of approximately $8 million of such
payments) there is a risk that unforeseen factors will result in non-receipt of
some or possibly all of the Third Party Payments. A significant reduction in
the receipt of such Third Party Payments could result in a significant reduction
in the amount of the Remaining Merger Consideration to be received by the
Holders of the Rights. (As noted above, the Remaining Merger Consideration
already reflects a reduction of $518,750).
The Remaining Merger Consideration is payable in additional shares of the
Company's Common Stock (the "Additional Shares") or, under certain
circumstances, cash. The Additional Shares are to be issued first to the
Holders of the Rights relating to GenPharm Preferred Stock to the extent of the
balance of their aggregate preference amount of $40,378,646 (the "Preference
Amount") and then pro rata to the Holders of the Rights relating to GenPharm
Common Stock and GenPharm Preferred Stock (on an as-converted fully diluted
basis).
The Merger Agreement provides that payment of the Remaining Merger
Consideration is to be made on or before December 31, 1998, provided GenPharm
has received the Third Party Payments by that time. In the event any of the
Third Party Payments are received after December 15, 1998, final payment of the
Remaining Merger Consideration will occur not later than the earlier of (i) 30
days following the receipt of the last Third Party Payment, and (ii) December
31, 1999. The Remaining Merger Consideration will be paid first to the Holders
of the Rights relating to GenPharm
2
<PAGE>
Preferred Stock to the extent of the Preference Amount remaining after the
issuance of the Initial Shares ($22,584,896), and then to Holders of the Rights
relating to GenPharm Common Stock and GenPharm Preferred Stock (on an as-
converted basis). Since the number of Additional Shares to be issued as payment
of the Remaining Merger Consideration will be determined at future dates based
on the then Fair Market Value of the Company's Common Stock and the amount of
the Remaining Merger Consideration as adjusted, the maximum number of Additional
Shares to be issued in connection with the Merger cannot be determined at this
time. A significant decrease in the Fair Market Value of the Company's Common
Stock would result in a significant increase in the number of Additional Shares
issuable in connection with the Merger or, possibly, the payment of the
Remaining Merger Consideration in cash. Similarly, a significant increase in the
Fair Market Value of the Company's Common Stock and/or a significant reduction
in the Remaining Merger Consideration would result in a significant decrease in
the number of Additional Shares issuable in connection with the Merger. The
uncertainties surrounding payment of the Remaining Merger Consideration are of
particular concern to former Holders of GenPharm Common Stock, since, at least
to the extent of the remaining Preference Amount, the Remaining Merger
Consideration is first paid to former Holders of GenPharm Preferred Stock and,
therefore, any significant reduction in the Remaining Merger Consideration would
have a disproportionately greater negative impact on the value received in the
Merger per share of GenPharm Common Stock.
Holders of Rights who accept the Offer and assign their Rights eliminate
the risk associated with a reduction of the Remaining Merger Consideration in
the event all or a portion of the Third Party Payments are not received. In
addition, under the terms of the Merger Agreement, the Company is not required
to issue Additional Shares of its Common Stock in satisfaction of the Rights
until December 31, 1998 (and possibly, to some extent, until December 31, 1999).
Thus, Holders who accept the Offer will, if the Offer is completed, receive cash
payments for their Rights in advance of the time they would receive any
Additional Shares (or cash) from the Company as payment of the Remaining Merger
Consideration. Furthermore, there can be no assurance that Holders who do not
accept the Offer will be able to sell the Additional Shares they receive in
payment of the balance of the Remaining Merger Consideration at one time or over
a relatively short time frame without adversely affecting the market price of
the Company's Common Stock. Finally, if the Company issues Common Stock to the
Holders, depending on the then Fair Market Value of such stock, a large number
of shares may be issued. Any attempt by a significant number of Holders to sell
such a large number of shares of Common Stock upon receipt could have an adverse
effect on the price of the Company's Common Stock.
While acceptance of the Offer would reduce or eliminate the above described
risks, assuming the Third Party Payments are received and there are no further
reductions in the Remaining Merger Consideration, because of the discount,
Holders of the Rights who accept the Offer will receive less
3
<PAGE>
in value than they would if they did not accept the Offer and continued to hold
their Rights until the Company delivered the Additional Shares as payment of the
Remaining Merger Consideration.
Holders who accept the Offer will receive at the consummation of the Offer,
in consideration of their assignment of their Rights to Purchase, the cash
purchase price offered by Purchaser. Holders who do not accept the Offer will
receive payment of the amount of the Remaining Merger Consideration they are
entitled to receive as and when provided under the terms of the Merger
Agreement.
The Purchaser and the Company have entered into the Rights Exchange
Agreement and this Offer is being made by the Purchaser pursuant thereto. The
Rights Exchange Agreement provides that, immediately upon the consummation of
the Offer, the Company will issue to the Purchaser in exchange for each $6.75 in
Face Value of the Rights acquired by the Purchaser (i) one Share of the
Company's Common Stock (up to a maximum of 6,579,629 Shares), and (ii) a Warrant
or Warrants to purchase .1222 shares of the Company's Common Stock at an
exercise price of $10.00 per share exercisable over a period of seven years (up
to a maximum of 804,000 shares). The Warrants will be issued upon the terms and
conditions set forth in the Warrant Agreement between the Company and the
Purchaser in the form attached to the Rights Exchange Agreement.
In order to facilitate the Offer, pursuant to the Rights Exchange
Agreement, the Company has granted its consent to the transfer of the Rights to
the Purchaser. The Rights may not be assigned or otherwise transferred except
pursuant to the Offer. The Rights Exchange Agreement is more particularly
described in Section 5 of this Offer to Purchase.
The purpose of the Offer is for the Purchaser to purchase for cash any or
all of the $44,412,500 aggregate Face Value of Rights so that the Purchaser
will, upon acquisition of the Shares under the Rights Exchange Agreement, have a
substantial equity interest in the Company, and be entitled to purchase
additional Common Stock of the Company by exercising the Warrants. The
Purchaser will also obtain representation on the Company's board of directors
(see Section 11 below). In connection with the Rights Exchange Agreement, the
Company and Purchaser have agreed that the aggregate value of the Rights for
purposes of the exchange for Shares shall be $44,412,500; in other words, the
Purchaser will receive Shares based on the full, undiscounted value of the
Rights. Holders should note that the Company and the Purchaser have no
agreement preventing the sale of the Shares by the Purchaser, and the Company
has agreed in the Rights Exchange Agreement to register the Shares for resale.
According to the Company's Quarterly Report on Form 10-Q for the fiscal
quarter ended March 31, 1998 (the "March 10-Q"), as filed with the Securities
and Exchange Commission (the "Commission") on May 14, 1998, there were
22,197,486 shares of Common Stock outstanding (the "Outstanding Shares") as of
May 7, 1998. In the event the minimum amount of Rights are assigned and
accepted for purchase by the Purchaser, the number of shares of Common Stock to
be issued by the Company to the Purchaser under the Rights Exchange Agreement in
exchange for the Rights
4
<PAGE>
acquired in the Offer will constitute approximately 14% (or approximately 25% if
all the Rights are assigned and accepted for payment) of the number of shares of
the Company's Common Stock that will be outstanding following the completion of
the Offer, in each case including the shares of the Company's Common Stock that
the Purchaser would receive upon exercise of the Warrants.
1. Terms of the Offer. Upon the terms and subject to the conditions of the
Offer, the Purchaser will accept for payment and will pay for any or all of the
$44,412,500 in Face Value of the Rights which are properly assigned on or prior
to the Expiration Date (as hereinafter defined) and not withdrawn in accordance
with Section 4 of this Offer to Purchase. The Purchaser is offering to acquire
the Rights at a price that represents a 20% discount from the amount of
Remaining Merger Consideration each Holder would receive if the amount of
Remaining Merger Consideration were not reduced below $44,412,500.
As used in the Offer, the term "Expiration Date" means 12:00 Midnight, New
York City time, on Friday, July 17, 1998, provided, however, that if the
Purchaser, in its sole discretion, has extended the period of time for which the
Offer is open, the term "Expiration Date" means the latest time and date to
which the Offer is extended, subject to the terms and conditions of the Rights
Exchange Agreement, including, but not limited to, the provisions contained
therein that the Offer may not be extended beyond August 14, 1998 (the
"Termination Date").
Any Holder of Rights desiring to assign to the Purchaser all or any portion
of its Rights should complete and sign the Letter of Assignment or a facsimile
thereof in accordance with the instructions in the Letter of Assignment and mail
or deliver it and any other required documents to the Depositary. (See Section
3 below).
If Letters of Assignment convey fewer than $22,206,250 (50%) in aggregate
Face Value of the Rights are properly delivered to the Depositary by the
Expiration Date and not withdrawn, the Purchaser may (i) terminate the Offer and
return all assigned Rights to assigning Holders, (ii) extend the Offer and
retain all such Rights until the expiration of the Offer as extended, or (iii)
waive the condition that at least $22,206,250 (50%) in aggregate Face Value of
the Rights be properly assigned and purchase all properly assigned Rights.
Due to the difficulty of determining the precise amount of Rights properly
assigned and not withdrawn, the Purchaser does not expect to announce the final
results of the Offer or pay for any Rights until at least seven NASDAQ trading
days after the Expiration Date. Holders of Rights will be notified as promptly
as practicable as to the results of the Offer.
The Purchaser reserves the right, at any time or from time to time, to
extend the period of time during which the Offer is open by announcing such
extension in a press release followed as promptly giving written notice of such
extension to the Holders of the Rights. If the Purchaser
5
<PAGE>
decides to increase the consideration offered in the Offer to Holders of the
Rights, make a material modification to the Offer or waive a material condition
to the Offer and, at the time that notice of such action is first sent or given
to Holders of the Rights in the manner specified below, the Offer is scheduled
to expire at any time earlier than the expiration of a period ending on the
tenth business day from, and including, the date that such notice is first so
sent or given, the Offer will be extended until the expiration of such period of
ten business days, provided that such date is not beyond the Termination Date.
The Purchaser also expressly reserves the right (i) to delay payment for
any Rights regardless of whether such Rights were theretofore accepted for
payment or to terminate the Offer and not accept for payment or pay for any
Rights not theretofore accepted for payment or paid for upon the occurrence of
any of the conditions specified in Section 12 by giving as provided in the next
sentence notice of such delay in payment or termination to the Holders of the
Rights and (ii) at any time or from time to time, subject only to the Rights
Exchange Agreement, to amend the Offer in any respect. Any extension, delay in
payment, termination or amendment will be announced by means of press release
followed as promptly as practicable by delivery of written notice thereof to the
Holders of the Rights.
This Offer to Purchase and the related Letter of Assignment is being mailed
to the record Holders of the Rights and will be furnished to brokers, banks and
similar persons whose names, or the names of whose nominees, appear on the
Company's list of Rights Holders.
2. Acceptance for Payment and Payment for Rights. Upon the terms and subject
to the conditions of the Offer, the Purchaser will purchase, by accepting for
payment, and will pay for, Rights properly assigned and not withdrawn by the
Expiration Date as soon as practical after the latest of (i) the expiration or
termination of the waiting period applicable to the issuance of the Shares by
the Company to the Purchaser in exchange for the Rights acquired by the
Purchaser in the Offer pursuant to the Rights Exchange Agreement under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976 (the "H-S-R Act"), and (ii)
Expiration Date. In all cases, payment for Rights purchased pursuant to the
Offer will be made only after timely receipt by the Depositary of a properly
completed and duly executed Letter of Assignment (or facsimile thereof) and any
other documents required by the Letter of Assignment. Since the Rights are not
transferable (except pursuant to the Offer), the Rights may only be assigned as
provided in the Letter of Assignment.
The Company and the Purchaser intend to file a Notification and Report Form
with respect to the issuance of the Shares by the Company to the Purchaser in
exchange for the Rights acquired by the Purchaser pursuant to the Offer under
the H-S-R Act on or before June 17, 1997 and, accordingly, the waiting period
under the H-S-R Act applicable thereto will expire at 11:59 p.m., New York City
time, on the date which is 30 days from the date of such filing. However, prior
to such time, the Federal Trade Commission (the "FTC") or the Antitrust Division
of the Department of Justice (the "Antitrust Division") may extend the waiting
period by requesting additional information or documentary material from the
Purchaser. If such a request is made, the waiting
6
<PAGE>
period would expire on the tenth day after substantial compliance by the
Purchaser with such request. For additional information regarding the H-S-R Act,
see Section 12.
For purposes of the Offer, the Purchaser shall be deemed to have accepted
for payment (and thereby purchased) assigned Rights as, if and when the
Purchaser gives oral or written notice to the Depositary of the Purchaser's
acceptance of such Rights for payment. Payment for Rights purchased
pursuant to the Offer will be made by deposit of the purchase price with the
Depositary, which will act as agent for Holders choosing to assign their Rights
for the purpose of receiving payment from the Purchaser and transmitting
payments to such Holders. Under no circumstances will interest be paid on the
purchase price by the Purchaser by reason of any delay in making such payment.
IF ANY ASSIGNED RIGHTS ARE NOT PURCHASED FOR ANY REASON, THE ASSIGNMENT OF SUCH
RIGHTS WILL NOT BE EFFECTIVE.
If, prior to the Expiration Date, the Purchaser increases the consideration
offered to Holders of the Rights pursuant to the Offer, such increased
consideration shall be paid to all Holders whose assignments of Rights have
previously been accepted for payment pursuant to the Offer.
The Purchaser reserves the right to transfer or assign to one or more
direct or indirect affiliates of the Purchaser the right to purchase Rights
assigned pursuant to the Offer, but any such transfer or assignment shall not
relieve the Purchaser of its obligations under the Offer or prejudice the rights
of Holders assigning their Rights to receive payment for Rights properly
assigned and accepted for payment.
3. Procedure for Assigning Rights; Effects of Assigning Rights. For Rights to
be properly assigned pursuant to the Offer, a properly completed and duly
executed Letter of Assignment or facsimile thereof with any other documents
required by the Letter of Assignment must be received by the Depositary at one
of its addresses indicated on the back cover of this Offer to Purchase on or
before the Expiration Date.
THE METHOD OF DELIVERY OF ALL DOCUMENTS IS AT THE ELECTION AND RISK OF THE
ASSIGNING HOLDER.
Under the backup withholding rules, unless an exception applies under the
applicable law and regulations, the Depositary will be required to withhold, and
will withhold, 20 percent of the gross proceeds paid to a Holder pursuant to the
Offer unless the Holder provides his tax identification number (employer
identification number or social security number) and certifies that such number
is correct. Therefore, unless such an exception exists and is proved in a
manner satisfactory to the Purchaser and the Depositary, each Holder wishing to
assign Rights should complete and sign the main signature form, and, if
applicable, should complete and sign the Substitute Form W-9 (or a Form W-8 for
foreign Holders) included as part of the Letter of
7
<PAGE>
Assignment, so as to provide the information and certification necessary to
avoid backup withholding.
Payment for Rights assigned and purchased pursuant to the Offer will be
made only after timely receipt by the Depositary of a properly completed and
duly executed Letter of Assignment or facsimile thereof and any other documents
required by the Letter of Assignment.
The assignment of Rights pursuant to the procedures described above will
constitute a binding agreement between the Holder and the Purchaser upon the
terms and subject to the conditions of the Offer. In addition, by delivering
the Letter of Assignment a Holder thereof assigns (conditioned upon payment) to
the Purchaser any claim such Holder may have against the Company to receive any
portion of the Remaining Merger Consideration represented by such Rights, as
well as any non-contractual claims against the Company. Further, if for any
reason the assignment is not effective, the Holder agrees to release any claim
that the Holder may have against the Company for payment of the Remaining Merger
Consideration in consideration of the payment by the Purchaser of the purchase
price for the Rights pursuant to the Offer.
All questions as to the validity, form, eligibility (including time of
receipt) and acceptance for payment of any assignment of Rights will be
determined in the sole discretion of the Purchaser, whose determination shall be
final and binding. The Purchaser reserves the absolute right to reject any or
all assignments not in proper form or if the acceptance of or payment for such
Rights may, in the opinion of the Purchaser's counsel, be unlawful. The
Purchaser also reserves the absolute right to waive any of the conditions of the
Offer or any defect or irregularity in any assignment with respect to any
particular Rights of any particular Holder. None of the Purchaser, the
Depositary, or the Company will be under any duty to give notification of any
defects or irregularities in assignment or incur any liability for failure to
give any such notification.
4. Withdrawal Rights. Except as otherwise provided in this Section,
assignments of Rights made pursuant to the Offer are irrevocable. Holders
assigning Rights to the Purchaser pursuant to the Offer may withdraw their
Rights (in other words, they may revoke their assignment) at any time prior to
12:00 Midnight on the Expiration Date, and, unless theretofore accepted for
payment as provided in this Offer to Purchase, such assignments may also be
revoked after the date that is 60 days after the commencement of the Offer. For
the purposes of the Offer, a "business day" means any day other than a Saturday,
Sunday or federal holiday, and consists of the time period from 12:01 a.m.
through 12:00 Midnight, New York City time. If the Purchaser extends the Offer,
is delayed in its purchase of or payment for Rights or is unable to purchase or
pay for Rights for any reason, then, without prejudice to the Purchaser's rights
under Sections 1 and 12, assigned Rights may be retained by the Depositary on
behalf of the Purchaser and may not be revoked except to the extent that Holders
are entitled to revoke such assignments as set forth in this Section.
For a revocation to be effective, a written, telegraphic, telex or
facsimile transmission notice of revocation must be timely received by the
Depositary at its address indicated on the back cover
8
<PAGE>
of this Offer to Purchase. Any such notice of revocation must specify the name
of the Holder who assigned the Rights and the aggregate Face Value of Rights to
be revoked. Such notice of revocation must be signed by such revoking Holder
prior to becoming effective. All questions as to the form and validity
(including time of receipt) of notices of revocation will be determined by the
Purchaser, in its discretion, whose determination shall be final and binding.
Any assignments of Rights revoked will be deemed not properly assigned for
purposes of the Offer. However, Rights may be reassigned by following any of
the procedures described in Section 3 at any subsequent time prior to or at the
Expiration Date.
5. The Rights Exchange Agreement. The Purchaser and the Company have entered
into the Rights Exchange Agreement. What follows is a summary of the Rights
Exchange Agreement. This summary is qualified in its entirety by the text of
the Rights Exchange Agreement itself, which has been filed by the Company with
the Commission as an exhibit to a Current Report on Form 8-K (see Section 8 for
information or how to obtain documents from the Commission).
The Rights Exchange Agreement provides that, immediately upon the
consummation of the Offer, each $6.75 in Face Value of the Rights purchased by
the Purchaser in the Offer will be exchanged for (i) one Share of the Company's
Common Stock (up to a maximum of 6,579,629 Shares) plus (ii) a Warrant or
Warrants to purchase 0.1222 shares of the Company's Common Stock (up to a
maximum of 804,000 shares) for $10.00 per share exercisable over a period of
seven years, upon the terms and conditions set forth in the Warrant Agreement.
The Company and the Purchaser have agreed that, for purposes of the Rights
Exchange Agreement, the aggregate Face Value of the Rights shall be $44,412,500.
The closing conditions to the Rights Exchange Agreement include, among
other things: (i) the consummation of the Offer, (ii) that a director specified
by the Purchaser be appointed to the board of directors of the Company, (iii)
that the Company has not paid any of the Remaining Merger Consideration to any
of the Holders, and (iv) certain other customary closing conditions.
As soon as practicable (but not later than 30 days) after the consummation
of the Offer, the Company has agreed to prepare and file with the Securities and
Exchange Commission (the "Commission") a shelf registration statement (and
thereafter shall use its reasonable best efforts to cause such shelf
registration statement to be declared effective) for the Shares and the Common
Stock issuable upon the complete exercise of the Warrants (the "Warrant Shares")
as well as any resale thereof. An effective shelf registration statement would
permit the Purchaser to sell or otherwise transfer the Shares or the Warrant
Shares without violating the Securities Act or relying on a transfer that is
exempt from the Securities Act.
9
<PAGE>
If (i) during the term of the Rights Exchange Agreement, the Company
receives an unsolicited third-party offer where the third-party offers to merge
with, acquire assets or stock of, or engage in a similar transaction with, the
Company, and (ii) within six months of the termination of the Rights Exchange
Agreement, the Company commits to accept such third-party offer, then the
Company is obligated to pay the Purchaser $750,000 plus up to $150,000 in
expenses as a break-up fee. The terms of the Rights Exchange Agreement provide
that the Company cannot itself solicit third-party offers and can only accept
such an offer if advised that such offer is more favorable than the Offer, and
if advised by outside legal counsel that failure to accept the third-party offer
would be reasonably likely to violate the fiduciary duties of its board of
directors.
6. Certain Federal Income Tax Consequences. The following discussion
summarizes the material federal income tax consequences of the Offer that are
generally applicable to Holders of Rights. This discussion is based on
currently existing provisions of the Internal Revenue Code of 1986, as amended
(the "Code"), existing and proposed Treasury Regulations thereunder and current
administrative rulings and court decisions, all of which are subject to change.
Any such change, which may or may not be retroactive, could alter the tax
consequences to Holders of Rights.
Holders should be aware that this discussion does not deal with all federal
income tax considerations that may be relevant to particular Holders in light of
their particular circumstances, such as Holders who are dealers in securities,
who are subject to the alternative minimum tax provisions of the Code, who are
foreign persons, or who do not hold their Rights as capital assets. In
addition, the following discussion does not address the tax consequences of the
Offer under foreign, state or local tax laws, the tax consequences of
transactions effectuated prior or subsequent to, or concurrently with, the Offer
(whether or not any such transactions are undertaken in connection with the
Offer).
RIGHTS HOLDERS ARE URGED TO CONSULT THEIR OWN TAX ADVISORS AS TO THE
SPECIFIC TAX CONSEQUENCES TO THEM OF THE OFFER, INCLUDING THE APPLICABLE
FEDERAL, STATE, LOCAL AND FOREIGN TAX CONSEQUENCES.
Assignment of Rights
--------------------
Assignment of Rights pursuant to the Offer will be taxable transactions for
federal income tax purposes. A Holder who assigns Rights in the Offer will
recognize capital gain or loss (assuming the Rights are held as a capital asset)
and imputed interest income. The amount of capital gain or loss will be
determined by subtracting the adjusted basis of the Rights from the present
value of the cash consideration received (using a discount rate equal to the
appropriate applicable federal rate ("AFR") of interest) as discounted from the
date of assignment to the Merger Date. The remainder of the cash consideration
will be treated as interest for federal income tax purposes. To the extent that
a Holder recognizes capital gain or loss, such capital gain or loss will be
long-term if, as of the date of assignment, the holding period of the Rights is
more than 18 months, mid-term if the holding
10
<PAGE>
period is more than one year but not more than 18 months, or short-term if, as
of such date, the holding period is one year or less.
Retention of Rights
-------------------
Holders of Rights who do not accept the Offer will continue to be entitled
---
to payment of the Remaining Merger Consideration in accordance with the terms of
the Merger Agreement. As a general matter, the federal income tax consequences
of a Holder who does not accept the Offer should not be affected by the Offer or
the acceptance of the Offer by other Holders.
The Merger was intended to constitute a tax-free reorganization under
Section 368(a) of the Code (a "Reorganization"). However, the parties to the
Merger did not request a ruling from the Internal Revenue Service ("IRS") in
connection with the Merger. Assuming the Merger qualified as a Reorganization,
subject to the limitations and qualifications referred to herein, the receipt of
the Remaining Merger Consideration pursuant to the Merger Agreement should
result in the following federal income tax consequences:
(a) No gain or loss will be recognized by holders of GenPharm Common Stock
and GenPharm Preferred Stock solely upon their receipt of the Company's Common
Stock in exchange for GenPharm Common Stock and GenPharm Preferred Stock in the
Merger (except as described below with respect to a portion of the Additional
Shares being characterized as interest under the Code and gain or loss being
recognized on cash received in lieu of a fractional share of the Company's
Common Stock).
(b) The aggregate tax basis of the Company's Common Stock received by
GenPharm shareholders in the Merger (other than Common Stock characterized as
interest under the Code), as reduced by any tax basis attributable to fractional
shares deemed to be disposed of, will be the same as the aggregate tax basis of
the GenPharm Common Stock and GenPharm Preferred Stock surrendered in exchange
therefor.
(c) The holding period of the Company's Common Stock received by each
GenPharm shareholder in the Merger, other than Common Stock characterized as
interest under the Code, will include the period for which the GenPharm Common
Stock and GenPharm Preferred Stock so surrendered is held as a capital asset at
the time of the Merger.
(d) Cash payments received by holders of GenPharm Common Stock and
GenPharm Preferred Stock in lieu of a fractional share will be treated as if
such fractional share of the Company's Common Stock had been issued in the
Merger and then redeemed by the Company. A GenPharm shareholder receiving such
cash will recognize gain or loss, upon such payment,
11
<PAGE>
measured by the difference (if any) between the amount of cash received and the
basis in such fractional share.
Imputed Interest
----------------
Notwithstanding the intended qualification of the Merger as a
reorganization, a portion of any Additional Shares received by a holder more
than six months after the Merger Date will be characterized as interest for
federal income tax purposes under the imputed interest rules of the Code and in
certain circumstances, the original issue discount rules of the Code. Generally,
under these rules, a portion of the Additional Shares received more than six
months after the Merger Date equal to the present value of the Additional Shares
(using a discount rate equal to the appropriate AFR) as discounted from the date
of payment of the Additional Shares to the Merger Date will be treated as merger
consideration (and therefore subject to the rules discussed above). The
remainder of each such payment of Additional Shares will be treated as interest
for federal income tax purposes. The interest portion of the payment will be
includable in the gross income of the holder in the year in which the amount of
the payment is made. Also, in the event the right of payment of Additional
Shares becomes fixed more than six months before the payment is due, the holder
of the right to Additional Shares will recognize original issue discount.
The federal income tax discussion set forth is included for general
information only. For a more detailed description of the federal income tax
consequences of the Merger please see the discussion relating thereto contained
the Section entitled "THE MERGER-Certain Federal Income Tax Considerations" in
the Prospectus/Consent Solicitation Statement dated September 25, 1997 delivered
to the Holders in connection with the Merger. Each Holder is urged to consult
his tax advisor with respect to the tax consequences to him of the Offer,
including the effects of state, local and other tax consequences.
A Holder who sells Rights in the Offer and who fails to complete and sign
the Substitute Form W-9 that is included in the Offer (or, in the case of a
Foreign Holder, a Form W-8) may be subject to a required United States backup
withholding tax of 31% of the gross proceeds payable to such Holder. In
addition, that portion of the purchase price paid to a Foreign Holder which is
attributable to imputed interest will be subject to a withholding tax at a 30%
rate or at such lesser rate as may be provided by treaty. To claim a lower
treaty withholding tax rate, a Foreign Holder must submit a properly completed
Form 1001 to the Purchaser.
7. Price Range of the Company's Common Stock, Dividends. The Rights are not
transferable (other than pursuant to this Offer by virtue of the Company's
waiver of the transfer restrictions under the Merger Agreement). Accordingly,
there is no public or private market for the Rights. However, Holders not
accepting the Offer are likely to be paid their share of the Remaining Merger
Consideration in shares of Common Stock, since that is required by the Merger
Agreement so long as the Fair Market Value (as defined in the Merger Agreement)
of the Company's Common Stock is $5.00 or more. Further, the Purchaser will
receive up to 6,579,629 Shares under the Rights
12
<PAGE>
Exchange Agreement at a valuation equal to $6.75 per Share and Warrants to
acquire up to 804,000 shares of Common Stock for $10.00 per share exercisable
over a period of seven years.
The Company's Common Stock is traded on The Nasdaq National Market under
the symbol "MEDX." The following table sets forth for the periods indicated the
high and low sale prices for the Common Stock as reported by Nasdaq.
13
<PAGE>
<TABLE>
<CAPTION>
1995 High Low
- ---- ------ -----
<S> <C> <C>
First Quarter........................................... $ 4.13 $2.38
Second Quarter.......................................... $ 6.50 $2.75
Third Quarter........................................... $ 7.63 $5.13
Fourth Quarter.......................................... $ 7.50 $5.38
1996
- ----
First Quarter........................................... $ 8.00 $5.75
Second Quarter.......................................... $12.25 $6.25
Third Quarter........................................... $ 9.00 $5.38
Fourth Quarter.......................................... $ 9.00 $6.25
1997
- ----
First Quarter........................................... $10.00 $6.50
Second Quarter.......................................... $ 8.75 $5.88
Third Quarter........................................... $ 6.75 $4.13
Fourth Quarter.......................................... $ 7.06 $4.75
1998
- ----
First Quarter........................................... $ 6.25 $4.38
Second Quarter (through June 10)........................ $ 8.25 $4.75
</TABLE>
The Company has not paid any dividends on its Common Stock and does not
anticipate paying dividends in the foreseeable future. The Company intends to
retain any earnings to finance its growth.
On May 5, 1997, the last trading day prior to the announcement by the
Company and GenPharm that they had reached an agreement concerning the Merger,
the closing sale price of the Company's Common Stock as reported on The Nasdaq
National Market was $8.50 per share. On June 10, 1998, the last trading date
prior to the commencement of the Offer, the closing sale price of a share of the
Company's Common Stock as reported on The Nasdaq National Market was $6.31.
8. Certain Information Concerning the Company. The Company is incorporated
under the laws of the State of New Jersey and its principal executive offices
are located at 1545 Route 22 East, Annandale, New Jersey 08801 (telephone (908)
713-6001).
The following description of the Company is derived from the Company's
Annual Report on Form 10-K for the year ended December 31, 1997 and filed with
the Commission on March 31, 1998 (the "1997 10-K").
The Company is engaged in the discovery and development of novel
therapeutics to treat cancer, autoimmune diseases and other life threatening
diseases based on its expertise in monoclonal antibodies and immunology.
Virtually all of the Company's products are designed either to enhance and
direct a specific immune response or to block or diminish an undesired
immunological activity. The Company's broad technology platform has led to five
products in clinical trials and eight
14
<PAGE>
strategic alliances and includes: (i) bispecific antibodies that are designed to
attach to both disease targets and immune system killer cells simultaneously;
(ii) with the acquisition of Houston Biotechnology, Incorporated,
immunoconjugates, a monoclonal antibody linked to a toxin; (iii) monoclonal
antibodies; and (iv) with the acquisition of GenPharm, the ability to create
fully human monoclonal antibodies for itself and for potential partners.
The Company files periodic reports, proxy statements and other information
with the Commission under the Exchange Act, relating to its business, financial
statements and other matters. The Company is required to disclose in such proxy
statements certain information, as of particular dates, concerning its directors
and officers, their remuneration, stock options granted to them, the principal
holders of the Company's securities, and any material interests of such persons
in transactions with the Company. Such reports, proxy statements and other
information filed by the Company may be inspected and copied at the public
reference facilities of the Commission located at Room 1024, Judiciary Plaza,
450 Fifth Street, N.W., Washington, D.C., and at the Commission's regional
offices located at 7 World Trade Center, Suite 1300, New York, New York 10048,
Citicorp Center, Suite 1400, 500 West Madison, Chicago, Illinois 60661, and at
5670 Wilshire Boulevard, 11th Floor, Los Angeles, California 90036-3648. Copies
of such material can also be obtained at prescribed rates from the Public
Reference Section of the Commission at 450 Fifth Street, N.W., Washington, D.C.
20549. Copies may also be obtained from the Commission's web page at:
http:\\www.sec.gov.
Set forth below is certain summary consolidated financial information with
respect to the five years ended December 31, 1993, 1994, 1995, 1996 and 1997 of
the Company and its consolidated subsidiaries, which is excerpted or derived
from the 1997 10-K, and certain unaudited consolidated summary financial
information with respect to the quarter ended March 31, 1998 which is excerpted
or derived from the March 10-Q. More comprehensive financial and other
information is included in such reports and other documents filed by the Company
with the Commission, and the following summary is qualified in its entirety by
reference to such reports and other documents and all of the financial
information and notes contained therein.
15
<PAGE>
<TABLE>
<CAPTION>
Year Ended December 31,
----------------------------------------------------
1993 1994 1995 1996 1997
-------- -------- -------- -------- --------
(in thousands, except per share data)
<S> <C> <C> <C> <C> <C>
Statement of Operations Data:
Revenues:
Sales $ 406 $ 378 $ 312 $ 255 $ 221
Grants, contract and license revenues -- 200 1,467 1,626 3,011
-------- -------- -------- -------- --------
Total revenues 406 578 1,778 1,881 3,232
Costs and expenses:
Cost of sales 82 91 123 132 150
Research and development 3,797 5,905 6,442 7,596 14,100
General and administrative 2,361 2,154 2,275 2,558 3,644
Stock bonus to GenPharm International,
Inc. Employees -- -- -- -- 2,275
Acquisition of in-process technology -- -- -- -- 40,316
-------- -------- -------- -------- --------
Total costs and expenses 6,240 8,150 8,840 10,286 60,486
Operating loss (5,834) (7,573) (7,062) (8,405) (57,254)
Interest and dividend income 419 337 553 1,537 1,876
-------- -------- -------- -------- --------
Net loss $ (5,415) $ (7,236) $ (6,509) $ (6,868) $(55,377)
======== ======== ======== ======== ========
Basic and diluted net loss per share/(1)/ $ (0.86) $ (1.00) $ (0.69) $ (0.45) $ (2.93)
Weighted average common shares
outstanding/(1)/ 6,304 7,269 9,457 15,289 18,871
</TABLE>
<TABLE>
<CAPTION>
December 31,
----------------------------------------------------
1993 1995 1995 1996 1997
-------- -------- -------- -------- --------
(in thousands)
<S> <C> <C> <C> <C> <C>
Balance Sheet Data:
Cash, cash equivalents and marketable
securities $ 9,687 $ 9,434 $ 15,729 $ 31,463 $ 28,444
Working capital 8,330 8,017 14,549 31,259 1,647
Total assets 12,640 13,017 19,240 36,044 48,695
Long-term obligations 78 60 40 110 107
Cash dividends declared per common share -- -- -- -- --
Accumulated deficit (10,877) (18,113) (24,623) (31,491) (86,869)
Total stockholders' equity 10,943 11,097 17,375 34,648 5,681
</TABLE>
__________
(1) Computed on the basis described for net loss per share in Note 2 to the
Consolidated Financial Statements.
16
<PAGE>
<TABLE>
<CAPTION>
Three Months Ended
March 31,
------------------------------------------------
(Unaudited)
1998 1997
-------------- -------------
<S> <C> <C>
Statement of Operations Data:
Revenues: 59,213 50,163
Sales
Grants, contract and license revenues 1,254,345 400,177
----------- ------------
Total revenues 1,313,558 450,340
Costs and expenses:
Cost of sales 131,351 38,485
Research and development 5,287,577 2,530,380
General and administrative 1,059,254 810,323
Acquisition of in-process technology -- 10,662,952
----------- ------------
Operating loss (5,164,624) (13,591,800)
Interest and dividend income 695,071 390,817
Interest expense 600,218 5,651
-----------
Net loss (5,069,771) (13,206,634)
=========== ============
Basic and diluted net loss per share/(1)/ $(0.23) $(0.74)
Weighted average shares outstanding 22,163,875 17,963,137
</TABLE>
<TABLE>
<CAPTION>
March 31, 1998
-----------------------------------------------
Actual As Adjusted/(2)/
-------------- ----------------
(Unaudited)
<S> <C> <C>
Balance Sheet Data:
Current assets, principally cash, cash
equivalents, notes receivable and marketable
securities $36,911,455 $ 44,411,455
Property, plant and equipment, net 3,118,373 3,118,373
Investments in, and advances to affiliate 414,777 414,777
Other assets 1,217,245 1,217,245
----------- ------------
$41,661,850 $ 49,161,850
=========== ============
Current liabilities $39,852,244 $ 5,487,051
Other liabilities 87,018 87,018
Stockholders' equity 1,722,588 43,587,781
----------- ------------
$41,661,850 $ 49,161,850
=========== ============
</TABLE>
___________________
(1) Compiled on the basis described for net loss per share in Note 2 to the
Consolidated Financial Statements.
(2) As adjusted to give effect to the issuance of the Shares in exchange for
the Rights pursuant to the Rights Exchange Agreement and the receipt of the
remaining Third Party Payments.
17
<PAGE>
The information concerning the Company contained herein has been taken from
or is based upon documents and records on file with the Commission or otherwise
publicly available. Although the Purchaser has no knowledge that would indicate
that any statements contained herein are untrue, the Purchaser cannot take
responsibility for the accuracy of the information or for any failure by the
Company to disclose events unknown to the Purchaser that may have occurred and
may affect the significance or accuracy of any such information.
9. Certain Information Concerning the Purchaser.
The Purchaser, BCC Acquisition I LLC, is a manager-managed Delaware limited
liability company which has two members. One member, The Bay City Capital Fund
I, L.P. ("BCC"), is a Delaware limited partnership. BCC has committed to
provide $15,000,000 to the Purchaser. BCC is the manager of the Purchaser and
is an investment fund that solely invests in companies in the life sciences
industry. BCC has made $24,310,054 in investments within the past twelve months
and has undrawn committed funds of $75,689,946. The second member of the
Purchaser is Bay Investment Group, L.L.C., a Delaware limited liability company
("BIG"). BIG has committed to contribute all funds in excess of $15,000,000
needed to consummate the Offer. BIG has assets in excess of $23 million and has
undrawn committed funds of $63.9 million. BIG is ultimately owned by trusts for
the benefit of various members of the Pritzker family.
Other than the Rights Exchange Agreement or as elsewhere disclosed herein,
neither the Purchaser nor, to the best knowledge of the Purchaser, any of its
officers, directors or affiliates has any contract, arrangement, understanding
or relationship with any other person with respect to any securities of the
Company, including, but not limited to, the transfer or voting of such
securities, joint ventures, loan or option arrangements, puts or calls,
guaranties of loans, guaranties against loss or the giving or withholding of
proxies.
10. Source and Amount of Funds. The total amount of funds required by the
Purchaser to purchase the Rights pursuant to the Offer (not including related
fees and expenses) is estimated to be approximately $35,530,000 (the "Funds"),
assuming all $44,412,500 in aggregate Face Value of the Rights are assigned and
accepted for payment pursuant to the Offer.
The Purchaser has received a binding commitment to contribute $15,000,000
from BCC. BIG has made a binding commitment to contribute the balance of the
funds needed to consummate the Offer. The commitments are unconditional. The
Offer is not conditioned on financing.
11. Purpose of the Offer. The primary purpose of the Offer is to acquire for
cash all of the Rights so that, upon exchange of the Rights for shares of
Company Common Stock under the Rights Exchange Agreement, the Purchaser will
have a significant equity interest in the Company. Immediately upon the
consummation of the Offer, the Purchaser will exchange each $6.75 in Face Value
of the Rights it acquires in the Offer for (i) one Share of the Company's
Common Stock (up to a maximum of 6,579,629 shares) plus a Warrant or Warrants to
purchase .1222 shares of Common Stock of the Company (up to a maximum of 804,000
shares) at an exercise price of $10.00 per share exercisable over a period of
seven years. In the event the minimum amount of Rights are accepted for
purchase by the Purchaser and assigned to the Purchaser, the number of shares of
Common Stock
18
<PAGE>
to be issued by the Company to the Purchaser in exchange for the Rights will
constitue approximately 14% (or approximately 25% if all the Rights are assigned
and accepted for payment) of the number of shares of the Company's Common Stock
that will be outstanding following the completion of the Offer, in each case
including the shares that the Purchaser would hold upon exercise of the
Warrants.
Upon consummation of the Offer, Purchaser shall obtain representation on
the board of directors of the Company. Under the terms of the Rights Exchange
Agreement, the Company and the Purchaser have agreed that the Company will add
to its board of directors, on or before the Closing of the transactions
contemplated by the Rights Exchange Agreement, a person with substantial
experience and reputation in the biotechnology or pharmaceutical industries who
is nominated by the Purchaser and acceptable to the board of directors of the
Company. In addition, so long as the Purchaser owns at least 5% of the
Company's outstanding Common Stock or at least 75% of the number of shares of
Common Stock it received from the Company pursuant to the Rights Exchange
Agreement, the Company will use its reasonable best efforts to ensure that the
Purchaser's representative is included in the Company's proxy materials as a
nominee of the board of directors for election to the board and is elected to
serve on the Company's board of directors.
In addition, while no formal agreement currently exists as to any future
changes in the board of directors of the Company, discussions have taken place
between the Company and the Purchaser to the effect that it may be appropriate
for the addition of another new director who has substantial experience and
reputation in the biotechnology or pharmaceutical industry and who is deemed
mutually acceptable by the board of directors of the Company and the Purchaser.
The Purchaser does not presently have any plans to acquire control of the
Company, nor does it have any current plans relating to or which would result in
(i) an extraordinary corporate transaction relating to Company, (ii) the sale or
transfer of a material amount of the Company's assets, (iii) a change (beyond
that described above) in the Company's board of directors or management, (iv)
beyond that contemplated by the Offer and the Rights Exchange Agreement, any
material change in the Company's capitalization or dividend policy, (v) any
other material change to the Company's corporate structure and business, or (vi)
any distribution of the Company Common Stock or termination of the registration
of the Company's Common Stock under Section 12 of the Exchange Act.
While the Purchaser presently intends to hold the shares of Common Stock it
acquires under the Rights Exchange Agreement, it reserves the right to either
acquire more such shares or sell, in any lawful manner, any or all of such
shares at any time. In this regard, the Purchaser notes that, pursuant to the
Rights Exchange Agreement, the Company has agreed within 30 days of the closing
of the Offer, to file a shelf registration statement covering the Shares of
Common Stock and the shares of Common Stock resulting from the complete exercise
of the Warrants to be acquired by the Purchaser as well as any resales thereof.
19
<PAGE>
Upon consummation of the transactions contemplated by this Offer and by the
Rights Exchange Agreement, the Purchaser will be the beneficial owner of more
than 10% of the Company's Common Stock and as such will be an "interested
stockholder" as defined in the New Jersey Shareholders Protection Act ("NJSPA").
The NJSPA may prohibit certain future business combinations between the
Purchaser and the Company including a merger or consolidation, a sale, lease,
exchange, transfer or other disposition of 10% or more of the assets of the
Company.
12. Certain Conditions of the Offer. Notwithstanding any other provisions of
the Offer, the Purchaser will not be required to accept for payment or pay for
any Rights assigned, or may terminate or amend the Offer, or may postpone the
acceptance for payment or payment for any Rights assigned, if fewer than
$22,206,250 (50%) in aggregate Face Value of the Rights are properly assigned
and the assignments are not revoked prior to the Expiration Date, or if at any
time before payment for any Rights assigned (whether or not any other Rights
have theretofore been accepted for payment or paid for pursuant to the Offer),
any of the following shall occur:
(a) any change (or any condition, event or development involving a
prospective change) shall have occurred or been threatened or shall have
become known to the Purchaser in the business, properties, assets,
liabilities, financial condition, operations, prospects or results of
operations of the Company or any of its subsidiaries or affiliates which
has or may have material adverse significance with respect to the Company
and its subsidiaries and affiliates, taken as a whole, or the value of the
Company's Common Stock.
(b) any (i) general suspension of, or limitation on prices for, trading in
securities on The Nasdaq National Market, (ii) declaration of a banking
moratorium or any suspension of payments in respect of federal or state
banks in the United States of any limitation on, or any other condition,
event or development which may affect, the extension of credit by lending
institutions in the United States, or in any other country, (iii)
commencement of a war, armed hostilities or other international or national
calamity directly or indirectly involving the United States, (iv) material
change in United States or any other currency exchange rates or a
suspension of, or limitation on the market therefor or (v) in the case of
any of the foregoing existing at the time of commencement of the Offer, a
material acceleration or worsening thereof;
(c) the Company or any subsidiary or affiliate of the Company shall, on or
after June 10, 1998, have (i) issued or sold, or authorized or proposed the
issuance or sale of, any shares of capital stock of any class, or any
securities convertible into any such shares, or any rights, warrants or
options to acquire any such shares or convertible securities, except (a)
the issuance of shares upon the exercise, in accordance with the terms
thereof in effect on June 10, 1998, of employee stock options outstanding
on June 10, 1998, and (b) pursuant to the terms of any agreement with the
Company's strategic corporate partners as disclosed in the 1997 10-K and
the March 10-Q, (ii) issued, sold, authorized or proposed the issuance or
sale of any other securities in respect of, in lieu or in substitution for
shares of its Common Stock outstanding on June 10, 1998, (iii) declared or
paid any dividend or distribution on any shares of its capital stock, or
(iv) authorized, proposed, recommended or entered into or granted any
option or other right with respect to, or announced any intention to
authorize,
20
<PAGE>
propose, recommend or enter into or grant any option or right with respect
to any merger, consolidation, business combination, acquisition of assets
or securities, disposition of assets, disposition of shares of a subsidiary
or affiliate, or any material change in its capitalization, any
relinquishment of any material contractual rights, or any comparable event
not in the ordinary course of business or taken any action to implement any
such transaction previously authorized, recommended or proposed, other than
recommendations concerning the Offer;
(d) any action or proceeding shall be taken, instituted, proposed or
threatened, or any statute, rule, regulation or order shall be proposed,
introduced, enacted, promulgated, entered, enforced or deemed applicable to
the Offer by or before any domestic or foreign government, court, agency,
authority or instrumentality or any official or representative of any of
the foregoing (each being referred to herein as a "Governmental Agency") or
by any other person, domestic or foreign, which may (i) challenge the
making or completion of the Offer or closing of the transactions
contemplated by the Rights Exchange Agreement or otherwise directly or
indirectly relate to the making or completion of the Offer, or the
execution, delivery or performance by any party of the Rights Exchange
Agreement (ii) result in a delay in or restrict the ability of the
Purchaser to accept for payment or to pay for some or all of the Rights
pursuant to the Offer, or make the consummation of the Offer unduly
burdensome to the Purchaser, (iii) render the Purchaser unable to accept
for payment or to pay for some or all of the Rights pursuant to the Offer,
(iv) make the acceptance for payment or payment for some or all of the
Rights illegal or otherwise restrict or prohibit consummation of the Offer
(whether under any federal or state law or otherwise), (v) seek to prohibit
ownership or require the divestiture by the Purchaser or any of the
Purchaser's subsidiaries or affiliates of any Rights or impose any
limitation on the ability of any of them to acquire or own Rights, (vi)
impose any limitation on the ability of the Purchaser or any of the
Purchaser's subsidiaries or affiliates to exercise effectively all rights
of ownership with respect to the Rights or the Shares, (vii) impose any
limitation upon the ability of the Purchaser or any of the Purchaser's
subsidiaries or affiliates effectively to enforce or enjoy the benefit of
Purchaser's rights under the Rights Exchange Agreement, (viii) prohibit or
impose any limitation upon Purchaser's ownership of the Rights, the Shares,
or the Warrants or compel the Purchaser or the Company to divest or hold
separate all or any portion of the business or assets of the Purchaser or
the Company (including the businesses or assets of any of their respective
subsidiaries and affiliates) or impose any limitation on any of them in the
conduct of their businesses, or (ix) otherwise adversely affect the
Purchaser or the Company or any of their respective subsidiaries or
affiliates;
(e) the Company or any of its subsidiaries or affiliates shall have
proposed or adopted any amendment to any of their articles of incorporation
or bylaws or similar organizational documents, or the Purchaser shall have
learned that the Company or any of its subsidiaries or affiliates shall
have adopted any such amendment which shall not have been publicly
disclosed prior to June 10, 1998;
21
<PAGE>
(f) any condition set forth in the Rights Exchange Agreement has not been
satisfied immediately prior to the Expiration Date or any impediment to
closing the transactions contemplated by the Rights Exchange Agreement
exists; or
(g) the failure of the Company to inform the Purchaser in writing
immediately prior to the Expiration Date that all conditions to Company's
obligations under the Rights Exchange Agreement have been satisfied or
waived and that Company will exchange all Rights purchased by Purchaser for
Shares and Warrants under the Rights Exchange Agreement;
which, in the sole judgment of the Purchaser with respect to each and every
matter referred to above and regardless of the circumstances, including any
action or omission by the Purchaser giving rise to any such condition, makes it
inadvisable to proceed with the Offer and/or with such acceptance for payment of
or payment for the Rights. Any determination by the Purchaser concerning the
events described in this Section 12 shall be final and binding upon all parties.
The foregoing conditions are for the sole benefit of the Purchaser and may be
waived by the Purchaser in whole or in part at any time and from time to time.
13. Certain Legal Matters. General. Except as otherwise disclosed below,
neither the Company nor the Purchaser is aware of any license or regulatory
permit which appears to be material to the business of the Company and likely to
be adversely affected by the consummation of the transactions contemplated by
the Rights Exchange Agreement. Except as disclosed below, neither the Company
nor the Purchaser is aware of any approval or other action by any state, federal
or foreign governmental or administrative agency that would be required for the
acquisition of Rights by the Purchaser as contemplated herein. Should any such
license, permit, approval or other action be required, it is presently
contemplated that the same would be sought. There can be no assurance that any
license, permit, approval or other action, if needed, would be obtained without
substantial conditions or that adverse consequences might not have to be
disposed of in the event that such license, permit, or approval was not obtained
or any such other action was not taken. The Purchaser's obligation under the
Offer to accept for payment and pay for Rights is subject to certain conditions,
including conditions relating to the legal matters discussed in this Section.
Antitrust. The issuance of the Shares by the Company in exchange for the
Rights acquired by the Purchaser pursuant to the Offer (the "Rights Exchange")
is subject to the provisions of the H-S-R Act, which provides that certain
acquisition transactions may not be consummated until certain information has
been furnished to the Antitrust Division and the FTC and certain waiting period
requirements have been satisfied. Pursuant to the H-S-R Act, the Purchaser and
the Company intend to file a Notification and Report Form and certain
supplemental material with respect to the Rights Exchange with the Antitrust
Division and the FTC on or before June 17, 1998. Under the provisions of the H-
S-R Act applicable to the Rights Exchange, the issuance of the Shares by the
Company in exchange for the Rights acquired by the Purchaser pursuant to the
Offer may not be consummated until the expiration of a 30-calendar day waiting
period following the Purchaser's filing. Accordingly, the waiting period under
the H-S-R Act will expire at 11:59 p.m., New York City time, on the date which
is 30 days from the date of such filing, unless the Purchaser or the Company
receives a request for additional information or documentary
22
<PAGE>
material prior thereto. If either the FTC or the Antitrust Division were to
request additional information or documentary material form the Purchaser or the
Company, the waiting period would expire at 11:59 p.m., New York City time, on
the tenth calendar day after the date of substantial compliance by the Purchaser
or the Company with such request. Thereafter, the waiting period could be
extended only by court order. If the Rights Exchange, and therefore, the
acquisition of the Rights pursuant to the Offer, is delayed by a request from
the FTC or the Antitrust Division for additional information or documentary
material pursuant to the H-S-R Act, the Offer may, but need not, be extended
and, in any event, the purchase of and payment for Rights pursuant to the Offer
will be deferred until 10 days after the request is substantially complied with,
unless the 10-day extended period expires on or before the date when the initial
30-day period would otherwise have expired or unless the waiting period is
sooner terminated by the FTC or the Antitrust Division. Any extension of the
waiting period will not give rise to any withdrawal rights not otherwise
provided for by applicable law (see Section 4). Although the Company is required
to file certain information and documentary material with the Antitrust Division
and the FTC in connection with the Rights Exchange, neither the Company's
failure to make such filings nor a request form the Antitrust Division or the
FTC for additional information or documentary material made to the Company will
extend the waiting period.
At any time before or after the Rights Exchange and the Purchaser's
acquisition of the Rights pursuant to the Offer, either the Antitrust Division
or the FTC, or both, could take such action under the antitrust laws as either
deems necessary or desirable in the public interest, or any other person could
take action under the antitrust laws, including seeking to enjoin the Rights
Exchange or seeking divestiture of the Shares acquired thereunder or the
divestiture of substantial assets of the Company or the Purchaser. Neither the
Purchaser nor the Company believe that the Purchaser's acquisition of the Offer
would violate the antitrust laws. However, there can be no assurance that a
challenge to the Rights Exchange on antitrust grounds will not be made or that,
if such a challenge is made, the Purchaser will prevail.
14. Fees and Expenses. The Purchaser will not pay any fees or commissions to
any broker or dealer or any other person for soliciting assignments of Rights
pursuant to the Offer. Brokers, dealers, commercial banks and trust companies
will be reimbursed by the Company for customary mailing and handling expenses
incurred by them in forwarding offering materials to their customers.
The Company has retained Continental Stock Transfer & Trust Company as
Depositary in connection with the Offer. The Depositary will receive reasonable
and customary compensation for its services. The Company will also reimburse
the Depositary for out-of-pocket expenses, including reasonable attorneys' fees,
and has agreed to indemnify the Depositary against certain liabilities in
connection with the Offer, including certain liabilities in connection with the
Offer.
The Purchaser has retained Shareholder Communications Corporation as
Information Agent in connection with the Offer. The Information Agent will
receive reasonable and customary compensation for its services. The Purchaser
will also reimburse the Information Agent for out-of-pocket expenses, including
reasonable attorneys' fees, and has agreed to indemnify the Information
23
<PAGE>
Agent against certain liabilities in connection with the Offer, including
certain liabilities in connection with the Offer.
Neither the Depositary nor the Information Agent has been retained to make
solicitations or recommendations with respect to the Offer.
15. Miscellaneous. The Offer is not being made to, nor will assignments be
accepted front or on behalf of, Holders of Rights in any jurisdiction in which
the making or acceptance thereof would not be in compliance with the laws of
such jurisdiction.
No person has been authorized to give any information or make any
representation on behalf of the Purchaser other than as contained in this Offer
to Purchase or in the related Letter of Assignment and, if given or made, such
information or representation must not be relied upon as having been authorized.
BCC ACQUISITION I LLC
June 11, 1998
24
<PAGE>
Facsimile copies of the Letter of Assignment will be accepted. The Letter
of Assignment and any other required documents should be sent or delivered to
the Depositary at one of its addresses set forth below:
The Depositary:
CONTINENTAL STOCK TRANSFER & TRUST COMPANY
BY MAIL: BY FACSIMILE: BY HAND:
Continental Stock Transfer & (212) 509-5250 Continental Stock Transfer &
Trust Company Trust Company
2 Broadway Confirm by Telephone 2 Broadway
New York, New York 10004 (212) 509-4000, Ext. 535 New York, New York
Any questions or requests for assistance or for additional copies of this
Offer to Purchase or the Letter of Assignment may be directed to the Information
Agent at the telephone numbers and addresses below. To confirm delivery for your
Letter of Assignment you are directed to contact the Depositary.
The Information Agent:
SHAREHOLDER COMMUNICATIONS CORPORATION
BY TELEPHONE:
(800) 733-8481, Ext. 493
(or call direct at)
(212) 805-7000
25
<PAGE>
EXHIBIT B
LETTER TO HOLDERS
<PAGE>
IMPORTANT: ENCLOSED HEREWITH IS AN OFFER TO PURCHASE FOR
IMMEDIATE CASH THE PAYMENT RIGHTS YOU HOLD AS A RESULT OF
THE GENPHARM - MEDAREX MERGER. PLEASE READ THE ENCLOSED
MATERIAL CAREFULLY BEFORE MAKING A DECISION ON WHETHER TO
TRANSFER YOUR RIGHTS.
TO THE FORMER GENPHARM INTERNATIONAL, INC. SHAREHOLDERS:
Enclosed is an offer to purchase for cash (the "Offer") any or all of the
$44,412,500 (subject to a $22,206,250 minimum) in aggregate face value (the
"Face Value") of the contingent payment rights (the "Rights") held by you in
connection with the acquisition of GenPharm International, Inc. ("GenPharm") by
Medarex, Inc. (the "Company"), on October 21, 1997 (the "Merger"). The Rights
represent the right to receive the remaining merger consideration payable by the
Company in connection with the Merger. The Offer is being made by BCC
Acquisition I LLC (the "Purchaser"). The Purchaser seeks to acquire any or all
of your Rights, subject to the conditions set forth in the Offer, at a purchase
price equal to a 20% discount from the Face Value thereof. The Face Value of
the Rights held by you and the amount of the cash payment you will receive
pursuant to the Offer in exchange for your Rights is set forth in the enclosed
Offer to Purchase and Letter of Assignment. The Offer is conditioned upon,
among other things, at least 50% of all outstanding Rights being assigned and
not revoked prior to the expiration date of the Offer. Unless it is extended,
the Offer and any revocation rights will expire at 12:00 Midnight on July 17,
1998.
<PAGE>
The Purchaser is making the Offer pursuant to a Rights Exchange Agreement
between the Purchaser and Company. That agreement provides, among other things,
that immediately upon consummation of the Offer the Company will issue to the
Purchaser, for each $6.75 undiscounted Face Value of Rights delivered by the
Purchaser to the Company, one share of the Company's Common Stock (the "Shares")
and a warrant (the "Warrant") to acquire 0.1222 shares of Common Stock. The
Warrant will have an exercise price of $10 per share and will be exercisable for
a period of seven years.
If all of the Rights are assigned to the Purchaser and exchanged for Shares
of the Company's Common Stock, the Purchaser will beneficially own, assuming
complete exercise of the Warrant, approximately 25% of the Company's outstanding
Common Stock.
As a result of certain payments and adjustments described in the enclosed
Offer to Purchase and related Letter of Assignment, the remaining merger
consideration represented by the aggregate Face Value of the Rights which
remains outstanding at this time is $44,412,500. Please note that if you
continue to hold the Rights, the value of the Rights may be further reduced on a
dollar-for-dollar basis to the extent that GenPharm fails to receive certain
payments from unrelated third parties of approximately $23 million. Although
the Company believes that these payments will be made, there is always a risk
that some or possibly all of the payments may not be received, which would cause
a significant reduction in the value of your Rights.
If you accept the Offer and assign your Rights to the Purchaser, you will
eliminate any risk that the Face Value of your Rights will be further reduced.
In addition, the Company is not required to make any payment in satisfaction of
the Rights until December 31, 1998 (and possibly, to some extent, until December
31, 1999). Thus, if you accept the Offer, you will receive a cash payment for
your Rights earlier than you would receive any shares of common stock or other
payment from the Company. Also, if you accept the Offer you will eliminate any
market risks associated with a large number of shares of the Company's common
stock becoming available for public sale. It is likely that the payment you
would receive from the Company for the Rights will be in the form of the
Company's common stock. If you do not accept the Offer you may not be able to
sell any shares of the Company's common stock you receive in satisfaction of
your Rights at one time or over a
2
<PAGE>
relatively short time frame without adversely affecting the market price of the
common stock.
Neither the Company nor its Board of Directors makes any recommendation to
any Rights holder as to whether to assign or refrain from assigning the Rights.
The Company and the Board of Directors, however, do recommend that you consider
- -------------------------------------------------------------------------------
the enclosed materials relating to the Offer carefully since the Offer
- ----------------------------------------------------------------------
represents an opportunity for you to receive a fixed amount of cash now for your
- --------------------------------------------------------------------------------
Rights. In order to facilitate the Offer, the Company has agreed to grant its
- -------
consent to the transfer of the Rights to the Purchaser. You will not be able to
sell or otherwise transfer your rights except pursuant to this Offer.
The Offer is explained in detail in the enclosed Offer to Purchase and
Letter of Assignment. If you wish to assign your Rights, the instructions on
how to do so are also explained in the enclosed materials. Again, please read
these materials carefully before making any decision with respect to the Offer.
Very truly yours,
Donald L. Drakeman
President and Chief Executive Officer
3
<PAGE>
EXHIBIT C
FORM OF WARRANT AGREEMENT
<PAGE>
THIS WARRANT AND ANY SHARES ACQUIRED UPON THE EXERCISE OF THIS WARRANT HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 AS AMENDED, AND MAY NOT BE SOLD
OR OTHERWISE TRANSFERRED EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT
FILED UNDER SUCH ACT OR PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER SUCH
ACT.
July ___, 1998
WARRANT
To Subscribe for and Purchase Common Stock of Medarex, Inc.
VOID AFTER 5:00 P.M., NEW YORK CITY TIME, ON July ___, 2005, OR IF NOT A
BUSINESS DAY, AS DEFINED HEREIN, AT 5:00 P.M, NEW YORK CITY TIME, ON THE
IMMEDIATELY PRECEDING BUSINESS DAY
NO. [W-1]
THIS CERTIFIES that for valuable consideration, receipt and sufficiency of
which are hereby acknowledged, BCC Acquisition I LLC, a Delaware limited
liability company ("BCC"), or registered assigns, is entitled to subscribe for
and purchase from Medarex, Inc., a New Jersey corporation (hereinafter called
the "Company"), at the price of $10.00 per share (such price, as from time to
time to be adjusted as hereinafter provided), being hereinafter called the
"Warrant Price", at any time and from time to time after the issuance hereof but
not later than the Expiration Date (as defined below), up to [ _________ ] fully
paid, nonassessable shares of Common Stock (as defined below), par value $.01
per share, of the Company, subject, however, to the provisions and upon the
terms and conditions hereinafter set forth, including without limitation the
provisions of Section 2 hereof (the "Warrant"). "Expiration Date" shall mean
5:00 P.M., New York City time, on July ___, 2005, which is seven years from the
date hereof, or if not a Business Day, as defined
<PAGE>
herein, at 5:00 P.M., New York City time, on the next Business Day. "Business
Day" shall mean a day other than a Saturday, Sunday or other day on which banks
in the State of California or New York are authorized by law to remain closed.
SECTION 1. EXERCISE OF WARRANT
(A) CASH EXERCISE
This Warrant may be exercised, at any time and from time to time after the
issuance hereof but not later than the Expiration Date, by the holder hereof or
its permitted assigns (hereinafter referred to as the "Warrantholder"), in whole
or in part (but not as to a fractional share of Common Stock and in no event for
less than 100 shares, unless less than an aggregate of 100 shares are then
purchasable under all outstanding Warrants held by a Warrantholder), by the
completion of the subscription form attached hereto as Exhibit A, and by the
surrender of this Warrant (properly endorsed) at the Company's offices at 1545
Route 22 East, Annandale, New Jersey, 08801 (or at such other location in the
United States as it may designate by notice in writing to the Warrantholder at
the address of the Warrantholder appearing on the books of the Company), and by
payment to the Company of the Warrant Price, in cash or by certified or official
bank check, for each share being purchased.
(B) NET EXERCISE
Notwithstanding anything to the contrary contained in Subsection 1(a), the
Warrantholder may elect to exercise this Warrant and receive shares on a net
exercise basis in an amount equal to the value of this Warrant by delivery of
the subscription form attached hereto as Exhibit A, and surrender of this
Warrant at the address set forth in Section 1(a), above, in which event the
Company shall issue to Holder a number of shares computed using the following
formula:
X = (P)(Y)(A-B)
-----------
A
Where: X = the number of shares of Common Stock to be issued to Holder.
P = a fraction, the numerator of which is the number of shares
of Common Stock with respect to which this Warrant is being exercised
and the denominator of which is Y, expressed as a percentage.
2
<PAGE>
Y = the number of shares of Common Stock issuable upon
exercise of this Warrant.
A = the current Market Price, as defined and determined
pursuant to Subsection 1(d), of one share of Common Stock.
B = Warrant Price.
PROCEDURE FOR EXERCISE
In the event of any exercise of the rights represented by this Warrant, a
certificate or certificates for the total number of whole shares of Common Stock
so purchased, registered in the name of the Warrantholder, shall be delivered to
the Warrantholder within a reasonable time, not exceeding five Business Days,
after the rights represented by this Warrant shall have been so exercised; and,
unless this Warrant has expired, a new Warrant representing the remaining number
of shares (except a remaining fractional share), if any, with respect to which
this Warrant shall not then have been exercised shall also be issued to the
Warrantholder within such time. With respect to any such exercise, the
Warrantholder shall for all purposes be deemed to have become the holder of
record of the number of shares of Common Stock evidenced by such certificate or
certificates from the date on which this Warrant was surrendered and if exercise
is pursuant to Section 1(a), payment of the Warrant Price was made, irrespective
of the date of delivery of such certificate, except that, if the date of such
surrender and payment is a date on which the stock transfer books of the Company
are closed, such person shall be deemed to have been the holder of such shares
at the close of business on the next succeeding date on which the stock transfer
books are open. No fractional shares shall be issued upon exercise of this
Warrant and no payment or adjustment shall be made upon any exercise on account
of any cash dividends on the Common Stock issued upon such exercise. If any
fractional interest in a share of Common Stock would, except for the provisions
of this Section 1, be delivered upon any such exercise, the Company, in lieu of
delivering the fractional share thereof, shall pay to the Warrantholder an
amount in cash equal to the current Market Price, of such fractional interest,
as determined below.
CURRENT MARKET PRICE
For any computation hereunder, the current Market Price per share of Common
Stock on any date shall be deemed to be the average of the daily market price
per share for the 30 consecutive Trading Days (as defined below) commencing 45
Trading Days before the date in question. The daily market price per share shall
be the closing sale price (or, if no closing sale price is reported, the closing
bid price) of the Common Stock on the primary national securities
3
<PAGE>
market or exchange on which the Company's Common Stock trades (currently the
National Association of Securities Dealers Automated Quotation System
("Nasdaq")). If Market Price cannot be established as described above, Market
Price shall be the fair market value of the Common Stock as determined in good
faith by the Board of Directors. "Trading Day" is defined as a day on which
Nasdaq or the principal national securities exchange on which the Common Stock
is listed or admitted to trading is open for the transaction of business.
ADJUSTMENT OF WARRANT PRICE AND NUMBER OF SHARES
The Warrant Price and the number and kind of shares issuable hereunder
shall be subject to adjustment from time to time upon the happening of certain
events as provided in this Section 2.
ADJUSTMENTS
If at any time prior to the exercise of this Warrant in full, the Company
shall (A) declare a dividend or make a distribution on the Common Stock payable
in shares of its capital stock (whether shares of Common Stock or of capital
stock of any other class); (B) subdivide, reclassify or recapitalize its
outstanding Common Stock into a greater number of shares; (C) combine,
reclassify or recapitalize its outstanding Common Stock into a smaller number of
shares, or (D) issue any shares of its capital stock by reclassification of its
Common Stock (excluding any such reclassification in connection with a
consolidation or a merger), the Warrant Price in effect at the time of the
record date of such dividend, distribution, subdivision, combination,
reclassification or recapitalization shall be adjusted as appropriate in
proportion to such increase or decrease in outstanding shares. Upon each such
adjustment of the Warrant Price, as provided in this Section 2, the
Warrantholder shall thereafter be entitled to purchase, at the Warrant Price
resulting from such adjustment, the number of shares (calculated to the nearest
tenth of a share) obtained by multiplying the Warrant Price in effect
immediately prior to such adjustment by the number of shares purchasable
pursuant hereto immediately prior to such adjustment and dividing the product
thereof by the Warrant Price resulting from such adjustment. Any adjustment
required by this Section 2(a) shall be made successively immediately after the
record date, in the case of a dividend or distribution, or the effective date,
in the case of a subdivision, combination, reclassification or recapitalization,
to allow the purchase of such aggregate number and kind of shares.
If at any time prior to the exercise of this Warrant in full, the Company
shall make a distribution to all holders of the Common Stock of stock of a
subsidiary or securities convertible into or exercisable for such stock, then in
lieu of an adjustment in the Warrant Price or the number of shares of Common
4
<PAGE>
Stock purchasable upon the exercise of this Warrant, each Warrantholder, upon
the exercise hereof at any time after such distribution, shall be entitled to
receive from the Company, such subsidiary or both, as the Company shall
determine, the stock or other securities to which such Warrantholder would have
been entitled if such Warrantholder had exercised this Warrant immediately prior
thereto, all subject to further adjustment as provided in this Section 2, and
the Company shall reserve, for the life of the Warrant, such securities of such
subsidiary or other corporation (together with any dividends or interest paid
thereon); provided, however, that no further adjustment in respect of dividends
or interest on such stock or other securities shall be made during the term of
this Warrant or upon its exercise.
If at any time prior to the exercise of this Warrant in full, the Company
shall issue rights or warrants to all holders of Common Stock as such entitling
them (for a period expiring within ninety days after the record date of the
determination of stockholders entitled to receive the same), to subscribe for or
purchase Common Stock at a price per share less than the current Market Price
per share (as defined below) on such record date, then, in each such case the
number of shares subject to this Warrant thereafter purchasable upon the
exercise of this Warrant shall be determined by multiplying the number of shares
of Common Stock theretofore purchasable upon exercise of this Warrant by a
fraction, of which the numerator shall be the number of shares of Common Stock
outstanding on the date of issuance of such rights or warrants, plus the number
of additional shares of Common Stock offered for subscription or purchase, and
of which the denominator shall be the number of shares of Common Stock
outstanding on the date of issuance of such rights or warrants, plus the number
of shares that the aggregate offering price of the total number of shares of
Common Stock so offered would purchase at such current Market Price. In the
event of such adjustment, the Warrant Price shall be proportionately reduced.
For purposes of this Section 2(a)(3), the issuance of rights or warrants to
subscribe for or purchase securities convertible into Common Stock shall be
deemed to be the issuance of rights or warrants to purchase the Common Stock
into which such securities are convertible at an aggregate offering price equal
to the aggregate offering price of such securities plus the minimum aggregate
amount (if any) payable upon conversion of such securities into Common Stock.
If at any time prior to the exercise of this Warrant in full, the
Company shall distribute to all holders of its Common Stock evidence of
indebtedness of the Company or assets of the Company (excluding cash dividends
or distributions out of earned surplus) or rights or warrants to subscribe for
securities
5
<PAGE>
of the Company (excluding those referred to in Sections 2(a)(2) or (3) above),
then in each case the Warrant Price shall be adjusted to a price determined by
multiplying the Warrant Price in effect immediately prior to such distribution
by a fraction, the numerator of which shall be the difference of (i) the then
current Market Price per share of Common Stock (as defined below) on the record
date for determination of stockholders entitled to receive such distribution,
less (ii) the then fair value (as determined by the Board of Directors of the
Company, whose determination shall be conclusive) of the portion of the assets
or evidence of indebtedness so distributed or of such subscription rights or
warrants which are applicable to one share of Common stock, and the denominator
of which shall be the Market Price per share of Common Stock, provided, however,
that if the then current Market Price per share of Common Stock on the record
date for determination of stockholders entitled to receive such distribution is
less than the then fair value of the portion of the assets or evidence of
indebtedness so distributed or of such subscription rights or warrants which are
applicable to one share of Common Stock, the foregoing adjustment of the Warrant
Price shall not be made and in lieu thereof each Warrantholder, upon the
exercise of this Warrant at any time after such distribution, shall be entitled
to receive from the Company the kind and number of assets, evidence of
indebtedness, subscription rights and warrants (or, in the event of the
redemption of such evidence of indebtedness, subscription rights or warrants,
any cash paid in respect of such redemption) that such Warrantholder would have
owned or have been entitled to receive after the happening in such distribution
had such Warrant been exercised immediately prior to the record date of such
distribution.
For purposes of any computation under this Section 2(a), the current Market
Price per share of Common Stock on any date shall be deemed calculated as
provided in Section 1(d).
No adjustment in the Warrant Price shall be required unless such adjustment
would require an increase or decrease of at least five cents ($.05) in such
price; provided, however, that any adjustments which by reason of this Section
2(a)(6) are not required to be made shall be carried forward and taken into
account in any subsequent adjustment. All calculations under this Section 2(a)
shall be made to the nearest cent or to the nearest one hundredth of a share, as
the ease may be. Notwithstanding anything in this Section 2(a) to the contrary,
(i) except for adjustments pursuant to Section 2(a)(1), the Warrant Price shall
not be increased, and (ii) the Warrant Price shall not be reduced to less than
the then existing par value of the Common Stock as a result of any adjustment
made hereunder.
6
<PAGE>
In the event that at any time, as the result of any adjustment made
pursuant to this Section 2(a), the Warrantholder thereafter shall become
entitled to receive any securities other than Common Stock, thereafter the
number of such other securities so receivable, upon exercise of any Warrant
shall be subject to adjustment from time to time in a manner and on terms as
nearly equivalent as practicable to the provisions with respect to the Common
Stock contained in Section 2(a).
NO ADJUSTMENT FOR DIVIDENDS
Except as provided in Section 2(a) of this Warrant, no adjustment in
respect of any cash dividends shall be made during the term of this Warrant or
upon the exercise of this Warrant.
CORPORATE REORGANIZATION, CONSOLIDATION OR MERGER
Subject to the conditions of Section 2(d), the Company shall not
reorganize, or consolidate with, or merge into a partnership, corporation, or
other entity (other than a reorganization, consolidation, or merger, in which
the Company is the surviving entity) or transfer all or substantially all of its
assets to another entity (any one of which shall constitute a "Reorganization"),
unless the Warrantholder, upon the exercise of the Warrant at any time after the
consummation of such Reorganization, shall be entitled to receive, in the same
manner as specified in this Warrant, the stock or other securities or property
to which the Warrantholder would have been entitled upon such consummation if
the Warrantholder had exercised the Warrant on or before the record date for
such Reorganization. Any new entity formed upon or existing as a surviving
entity after any such Reorganization shall be deemed the "Company" for purposes
of this Warrant. The terms of this Warrant shall survive the consummation of any
such Reorganization, and the Warrant shall thereafter be applicable to the
shares of stock or other securities or property to which the Warrantholder would
have been entitled upon such consummation if the Warrantholder had exercised the
Warrant on or before the record date for such Reorganization. The Company shall
not effect any Reorganization, unless prior to or simultaneously with the
consummation thereof, the successor or surviving entity after such
Reorganization shall assume, by written instrument, (i) the obligation to
deliver to the Warrantholder such shares of stock, or other securities or
property as, in accordance with the foregoing provisions, the Warrantholder may
be entitled to purchase and (ii) the other obligations of the Company under this
Warrant.
7
<PAGE>
NOTICE OF REORGANIZATION
Notice of any contemplated Reorganization, and the proposed terms thereof,
including specifically the manner in which the requirements of Section 3(c) will
be met, shall be given to the Warrantholder at least twenty (20) days before the
proposed consummation of such Reorganization.
TREATMENT OF WARRANTHOLDER
Prior to due presentment for registration of transfer of this Warrant, the
Company may deem and treat the Warrantholder as the absolute owner of this
Warrant (notwithstanding any notation of ownership or other writing hereon) for
all purposes and shall not be affected by any notice to the contrary.
NOTICE OF ADJUSTMENT
Upon any Adjustment of the Warrant Price, then and in each such case the
Company shall give written notice thereof, by first-class mail, postage prepaid,
addressed to each Warrantholder at the address of such Holder as shown on the
books of the Company, which notice shall state the Warrant Price resulting from
such adjustment, setting forth in reasonable detail the method of calculation
and the facts upon which such calculation is based.
STOCK TO BE RESERVED
The Company will at all times reserve and keep available out of its
authorized Common Stock, solely for the purpose of issuance upon the exercise of
this Warrant as herein provided, such number of shares of Common Stock as shall
then be issuable upon the exercise of this Warrant. The Company covenants that
all shares of Common Stock which shall be so issued upon full payment of the
Warrant Price therefor or as otherwise set forth herein, shall be duly and
validly issued and fully paid and nonassessable and free from all taxes, liens
and charges with respect to the issue thereof, and, without limiting the
generality of the foregoing, the Company covenants that it will from time to
time take all such action as may be required to ensure that the par value per
share, if any, of the Common Stock is at all times equal to or less than the
effective Warrant Price. The Company will take all such action as may be
necessary to ensure that all such shares of Common Stock may be so issued
without violation of any applicable law or regulation, or of any requirement of
any national securities exchange or automated quotation system upon which the
Common Stock of the Company may be listed. The Company will not take any action
which results in any adjustment of the Warrant Price if the total number of
shares of Common Stock issued and issuable after such action upon exercise of
this Warrant would exceed the total number of shares of Common Stock then
authorized by the Company's Certificate of Incorporation. The Company has not
granted and will not grant any right of first refusal with respect to shares
issuable upon exercise of this Warrant, and there are no preemptive rights
associated with such shares.
8
<PAGE>
ISSUE TAX
The issuance of certificates for shares of Common Stock upon exercise of
any Warrant shall be made without a charge to the Warrantholder for any issuance
tax in respect thereof, provided that the Company shall not be required to pay
any tax which may be payable in respect of any transfer involved in the issuance
and delivery of any certificate in a name other than that of the Warrantholder.
CLOSING OF BOOKS
The Company will at no time close its transfer books against the transfer
of the shares of Common Stock issued or issuable upon the exercise of this
Warrant in any manner which interferes with the timely exercise of this Warrant.
DEFINITION OF COMMON STOCK
Subject to the provisions of this Section 2, the shares purchasable
pursuant to this Warrant shall include only securities designated as Common
Stock of the Company. As used herein, the term "Common Stock" shall mean and
include the Common Stock, par value $.01, of the Company as authorized on the
date hereof, or shares of any class or classes resulting from any
recapitalization or reclassification thereof which are not limited to any fixed
sum or percentage and are not subject to redemption by the Company and in case
at any time there shall be more than one such resulting class, the shares of
each class then so issuable shall be substantially in the proportion which the
total number of shares of such class resulting from all such reclassification
bears to the total number of shares of all such classes resulting from all such
reclassification.
REGISTRATION RIGHTS
SHELF REGISTRATION STATEMENT
Reference is made to that certain Rights Exchange Agreement by and between
the Company and BCC, dated June ___, 1998 ("Exchange Agreement"), the provisions
of which relating to registration rights for the Common Stock issuable upon
exercise of this Warrant are incorporated herein by this reference. The Company
shall file a shelf registration statement fully in compliance with Section 12 of
the Exchange Agreement.
9
<PAGE>
INDEMNIFICATION
The indemnification provisions set forth in Section 12.3 of the Exchange
Agreement, incorporated herein by this reference, shall govern this Warrant.
NOTICES OF RECORD DATES
In the event of:
any taking by the Company of a record of the holders of any class of
securities for the purpose of determining the holders thereof who are entitled
to receive any dividend or other distribution (other than cash dividends out of
earned surplus), or any right to subscribe for, purchase or otherwise acquire
any shares of stock of any class or any other securities or property, or to
receive any right to sell shares of stock of any class or any other right; or
any capital reorganization of the Company, any reclassification or
recapitalization of the capital stock of the Company or any transfer of all or
substantially all the assets of the Company to or consolidation or merger of the
Company with or into any other corporation or entity; or
any voluntary or involuntary dissolution, liquidation or winding-up of
the Company; or
any other action which would represent an adjustment in accordance
with Section 2 hereof;
then in each such event the Company will give notice to the Warrantholder
specifying (1) the date on which any such record is to be taken for the purpose
of such dividend, distribution, right or other event and stating the amount and
character of such dividend, distribution, right, or other event and (2) the date
on which any such reorganization, reclassification, recapitalization, transfer,
consolidation, merger, dissolution, liquidation or winding-up is to take place,
and the time, if any is to be fixed, as of which the holders of record of Common
Stock will be entitled to exchange their shares of Common Stock for securities
or other property deliverable upon such reorganization, reclassification,
recapitalization, transfer, consolidation, merger, dissolution, liquidation or
winding-up. Such notice shall be given at least 20 days and not more than 90
days prior to the date therein specified, and such notice shall state that the
action in question or the record date is subject to the effectiveness of a
registration statement under the Securities Act or to a favorable vote of
stockholders, if either is required. Failure to mail or receive such notice or
any defect therein shall not affect the validity of any action with respect
thereto.
10
<PAGE>
NO STOCKHOLDERS RIGHTS OR LIABILITIES
This Warrant shall not entitle the Warrantholder to any voting rights or
other rights as a stockholder of the Company. No provision hereof, in the
absence of affirmative action by the Warrantholder to purchase shares of Common
Stock, and no mere enumeration herein of the rights or privileges of the
Warrantholder shall give rise to any liability of such Warrantholder for the
Warrant Price or as a stockholder of the Company, whether such liability is
asserted by the Company or by creditors of the Company.
LOST, STOLEN, MUTILATED OR DESTROYED WARRANT
In case the certificate or certificates evidencing the Warrants shall be
mutilated, lost, stolen or destroyed, the Company shall, at the request of the
Warrantholder, issue and deliver in exchange and substitution for and upon
cancellation of the mutilated certificate or certificates, or in lieu of and
substitution for the certificate or certificates lost, stolen or destroyed, a
new Warrant certificate or certificates of like tenor and representing an
equivalent right or interest, but only upon receipt of evidence satisfactory to
the Company of such loss, theft or destruction of such Warrant and a bond of
indemnity, if requested, also satisfactory in form and amount at the applicant's
cost. Applicants for such substitute Warrant certificate or certificates shall
also comply with such other reasonable regulations and pay such other reasonable
charges as the Company may prescribe.
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:
if to the Company, to:
Medarex, Inc.
1545 Route 22 East
Annandale, NJ 08801
Attention: Donald L. Drakeman, President
Phone: (609) 713-6001
Fax: (609) 713-6002
with a copy to:
11
<PAGE>
Satterlee, Stephens, Burke & Burke LLP
230 Park Avenue
New York, NY 10169
Attention: Dwight Kinsey, Esq.
Phone: (212) 818-9200
Fax: (212) 818-9606/9607
if to the Purchaser, to:
Bay City Capital
750 Battery Street, Suite 600
San Francisco, CA 94111
Attention: Sandy Zweifach, Chief Financial Officer
Phone: (415) 676-3830
Fax: (415) 837-0996
with a copy to:
Heller, Ehrman, White & McAuliffe
333 Bush Street
San Francisco, CA 94104
Attention: Timothy G. Hoxie, Esq.
Phone: (415) 772-6000
Fax: (415) 772-6268
Any change of an address set forth in this Section 7 may be accomplished by
means of a notice sent in accordance with the terms of this Section 7.
TRANSFER
This Warrant is non-transferable, except with the prior written consent of
the Company, provided, however, that transfers may be made to an affiliate of
the Warrantholder without prior written consent of the Company. Any transfer or
assignment hereunder shall be in the form of Exhibit B attached hereto.
AMENDMENTS AND WAIVERS
This Warrant and any term hereof may be changed, waived, discharged or
terminated only by an instrument in writing signed by the party against which
enforcement of such change, waiver, discharge or termination is sought.
12
<PAGE>
SEVERABILITY
If one or more provisions of this Warrant are held to be unenforceable
under applicable law, such provisions shall be excluded from this Warrant, and
the balance of this Warrant shall be interpreted as if such provision were so
excluded and shall be enforceable in accordance with its terms.
GOVERNING LAW
This Warrant shall be governed by and construed under the laws of the State
of New Jersey without regard to conflict of law principles.
HEADINGS
The headings in this Warrant are for purposes of reference only and shall
not limit or otherwise affect any of the terms hereof.
COUNTERPARTS
This Warrant may be executed in any number of counterparts, each of which
shall be deemed an original but all of which together shall constitute one and
the same instrument.
IN WITNESS WHEREOF, the Company and BCC have executed this Warrant on and
as of the day and year first above written.
Medarex, Inc.,
a New Jersey corporation
________________________________________
Name
________________________________________
Title
BCC Acquisition I LLC,
a Delaware limited liability company
________________________________________
Name
________________________________________
Title
13
<PAGE>
EXHIBIT A
SUBSCRIPTION FORM
(To be executed upon exercise of this Warrant)
The undersigned hereby irrevocably elects to exercise the right of
purchaser represented by the within Warrant for, and to purchase thereunder,
___________ shares of Common Stock, as provided for therein, and either tenders
herewith payment of the purchase price in full in the form of cash or a
certified or official bank check in the amount of $__________ or, if the
undersigned elects pursuant to Section 1(b) of the within Warrant to convert
such Warrant into Common Stock by net exercise, the undersigned exercises the
within Warrant by exchange under the terms of Section 1(b).
Please issue a certificate or certificates for such Common Stock in the
name of and pay any cash for any fractional share to:
Name:__________________________
Address:_______________________
Tax I.D. No:___________________
Signature
of Authorized Agent:___________
Print Name:____________________
Note: The above signature must correspond exactly with the name on the first
page of this Warrant or with the name of the assignee appearing in the
assignment form below.
If said number of shares shall not be all the shares purchasable under the
within Warrant, a new Warrant is to be issued in the name of said undersigned
for the balance remaining of the shares purchasable thereunder rounded up to the
next higher number of shares.
Signature Guaranteed:_____________________________
(Signature must be guaranteed by a bank or trust company having an office
or correspondence in the United States or by a member firm of a registered
securities exchange or the National Association of Security Dealers, Inc.)
<PAGE>
EXHIBIT B
ASSIGNMENT
(To be executed only upon assignment of Warrant)
For value received, ___________________________ hereby sells, assigns, and
transfers unto ______________________ the within Warrant Certificate, together
with all right, title and interest therein, and does hereby irrevocably
constitute, and appoint attorney, to transfer said Warrant on the books of the
within-named Company with respect to the number of Warrants set forth below,
with full power of substitution in the premises:
Name(s) of
Assignee(s)/Address No. of Warrants
----------------------------------
And if said number of Warrants shall not be all the Warrants represented by the
Warrant, a new Warrant is to be issued in the name of said undersigned for the
balance remaining of the Warrants registered by said Warrant.
Dated: Signature:
Note: The above signature must correspond exactly with the name on the face of
this Warrant
Signature Guaranteed:
(Signature must be guaranteed by a bank or trust company having an office or
correspondence in the United States or by a member firm of a registered
securities exchange or the National Association of Security Dealers, Inc.)
<PAGE>
EXHIBIT D
FORM OF LEGAL OPINION
1. The Company has been duly incorporated and is validly existing as a
corporation in good standing under the laws of the State of New Jersey. The
Company has the requisite corporate power to own or lease its property and
assets and to conduct its business as currently conducted.
2. The Agreement has been duly authorized by all necessary corporate action on
the part of the Company, 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 (a) as
limited by applicable bankruptcy, insolvency, reorganization, arrangement,
moratorium and other laws of general applicability relating to or affecting
creditors' rights generally, (b) as limited by public policy or equitable
principles generally or the availability of equitable remedies, whether
such enforceability is considered in a proceeding in equity or at law, and
(c) as rights to indemnity or contribution or pursuant to Section 12.3 and
13.1 of the Agreement may be limited by applicable laws or principles of
public policy.
3. The Company has _________ authorized and, to such counsel's knowledge,
________ outstanding shares of capital stock. The Shares have been duly
authorized and, upon issuance and delivery against the surrender of the
Rights in accordance with the Agreement, will be validly issued, fully paid
and nonassessable. Except as disclosed in the Agreement, to such counsel's
knowledge, there are no options, warrants, conversion privileges,
preemptive rights or other rights presently outstanding to purchase or
receive any of the authorized but unissued capital stock of the Company or
the Shares, other than the shares reserved for issuance under the Merger
Agreement or ________________.
4. The execution and delivery of the Agreement, the execution and delivery of
the Offer to Purchase, the consummation of the Rights Exchange and the
consummation of the Purchaser's Offer do not violate any provisions of the
Company's Articles or Bylaws, and do not conflict with or constitute a
default under the provisions of any agreement (including, without
limitation, the Merger Agreement, agreements involving the Major Strategic
Partners, and any agreement between the Company and The Nasdaq National
Market) to which the Company is a party, and do not violate or contravene
(a) any law applicable to the Company and known to such counsel other than
as may be required by the securities or Blue Sky laws of the various states
as to which such counsel does not express an opinion or (b) any order,
writ, judgment, injunction, decree, determination or award applicable to
the Company and known to such counsel, except for a default, violation or
contravention which would not have a material adverse effect on the
business, assets, financial condition or results of operations of the
Company.
<PAGE>
5. To such counsel's knowledge, no holders of securities of the Company (other
than the Purchaser and as set forth in the Agreement) have rights to the
registration of such securities following the Effective Date that have not
been waived or satisfied.
6. Except as set forth in the Agreement, to such counsel's knowledge, there is
no action, proceeding or investigation pending or threatened against the
Company which could reasonably be anticipated to result, either
individually or in the aggregate, in any material adverse change in the
business, assets, financial condition or results of operations of the
Company.
7. Assuming the accuracy of the Purchaser's representations and warranties and
the fulfillment of the conditions contained in the Agreement, the issuance
of the Shares by the Company to the Purchaser in exchange for the Rights is
exempt from the registration requirements of the Securities Act of 1933, as
amended (the "Securities Act").
8. To such counsel's knowledge, no material governmental consents, approvals,
authorizations, orders, filings, registrations or qualifications are
required for the issuance of the Shares by the Company under the Agreement
other than as may be required by the securities or Blue Sky laws of the
various states or by the bylaws and rules of the National Association of
Securities Dealers.
9. The waiver by the Company of the restrictions on transferability of the
Rights set forth in Section 2.1(e) of the Merger Agreement is valid and
effective. The Merger Agreement has been duly authorized by all necessary
corporate action on the part of the Company, has been duly executed and
delivered on behalf of the Company and, together with the Rights created
therein, is, and following the Closing of the transactions contemplated by
the Agreement will remain, a valid and binding obligation of the Company
enforceable in accordance with its terms except (a) as limited by
applicable bankruptcy, insolvency, reorganization, arrangement, moratorium
and other laws of general applicability relating to or affecting creditors'
rights generally, (b) as limited by public policy or equitable principles
generally or the availability of equitable remedies, whether such
enforceability is considered in a proceeding in equity or at law, and (c)
as rights to indemnity or contribution may be limited by applicable laws or
principles of public policy; provided only that, upon issuance of the
Shares to the Purchaser under the Agreement the Company will have no
further obligation with respect to the Rights assigned to the Purchaser or
with respect to the former Holders thereof. The Rights are not "equity
securities" of the Company within the meaning of the Securities Exchange
Act of 1934 or the Rules of the Securities and Exchange Commission
promulgated thereunder. The Merger has been duly consummated in accordance
with the terms of the Merger Agreement and the Rights have been duly
created pursuant to the Merger Agreement.
2
<PAGE>
APPENDIX I
MEDAREX, INC.
PURCHASER'S CERTIFICATE OF RESALE OF THE SHARES
(i) The undersigned, an officer of, or other person duly authorized by
_______________________________________________________________________________
[fill in official name of individual or institution]
hereby certifies that he/she [said institution] is the Purchaser of the Shares
evidenced by the attached stock certificate(s) and as such, sold such Shares on
__________________
[date]
in accordance with shelf registration statement number _________________________
________________________________________________________________________________
[fill in the number of or otherwise identify shelf registration statement]
and the requirement of delivering a current prospectus and current annual,
quarterly and current 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: ________________________________
Name of Individual representing Purchaser: ________________________________
Title of Individual representing Purchaser: ________________________________
Signature by:
Individual representing Purchaser: ________________________________
3
<PAGE>
EXHIBIT 99.1
[LETTERHEAD OF MEDAREX APPEARS HERE]
For Immediate Release
- ---------------------
Contact: Donald L. Drakeman Kimberly Hoffman
President and CEO Middleberg + Associates
Medarex, Inc. 212-888-6610 ext.544
908-713-6007 [email protected]
MEDAREX ANNOUNCES THAT BAY CITY CAPITAL
OFFERS TO PURCHASE RIGHTS FOR UP TO
$44 MILLION IN MEDAREX STOCK
- --------------------------------------------------------------------------------
Annandale, NJ; June 11, 1998 - Medarex, Inc. (NASDAQ: MEDX) a biopharmaceutical
company specializing in antibody-based therapeutics, announced today that BCC
Acquisition I LLC ("BCC") a limited liability company formed between The Bay
City Capital Fund I, L.P., an affiliate of Bay City Capital LLC, and various
Pritzker family business interests has made an offer to purchase rights to
receive shares of Medarex common stock totaling approximately $44.4 million.
The rights in question are held by former shareholders of GenPharm
International, Inc. as a result of Medarex's acquisition of GenPharm in October
1997 for a total of up to $62.7 million in stock, approximately $18.3 million of
which has already been paid.
Under the terms of the transaction, the offer will remain open for 20 business
days beginning June 11, 1998. The offer is contingent on at least $22.2 million
(or 50 percent) of the rights being tendered for purchase. If all of the rights
are purchased, BCC will have the right to acquire approximately 6.6 million
shares of Medarex common stock, representing approximately 22 percent of
Medarex's outstanding stock, pursuant to an agreement between BCC and Medarex.
The agreement also provides for BCC to receive certain registration rights and
to be represented on the Medarex board of directors. Additionally, depending on
the amount of rights purchased, BCC will receive warrants to purchase up to an
additional 804,000 shares exercisable at $10 per share.
"We are confident that the commitment of these investors will assist Medarex in
maximizing its full potential," said Donald L. Drakeman, President and CEO of
Medarex.
"We look forward to working with Don Drakeman and Medarex's proven management
team to create a premier biopharmaceutical enterprise," said Fred Craves,
Managing Director of Bay City Capital
Medarex is developing several core proprietary technologies including Bispecific
antibodies which enhance and direct the body's own immune system to fight
disease, the HuMAb-Mouse (TM) antibody development system for the creation of
high affinity human antibodies, and immunotoxin technology. Medarex has five
products in clinical development including the anti-cancer Bispecifics MDX-210
and MDX-447, MDX-33 for autoimmune disease, MDX-RA for the prevention of
secondary contracts, and MDX-22 for acute myeloid leukemia.
Bay City Capital LLC is a merchant banking and management advisory firm with a
$100 million life sciences fund under management. The principals of Bay City
Capital include Fred Craves, Ph.D., former CEO of Berlex Biosciences, John
Diekman, Ph.D., Chairman of Affymetrix, Roger Salquist, former Chairman and CEO
of Calgene, and Pritzker Family business interests. The Pritzker Family
interests invest in and manage businesses in the travel and leisure,
manufacturing, real estate, banking, insurance and life sciences industries.
Certain statements in this press release consist of forward looking statements
that involve risks and uncertainties including, but not limited to,
uncertainties regarding the receipt of future payments, the continuation of
business partnerships and the development of new business opportunities. Actual
results, events or performance may differ materially.
