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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON APRIL 25, 2000
REGISTRATION NO. 333-30938
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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AMENDMENT NO. 1
TO
FORM S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
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SCICLONE PHARMACEUTICALS, INC.
(Exact name of registrant as specified in its charter)
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CALIFORNIA 94-3116852
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
901 MARINER'S ISLAND BOULEVARD, SUITE 205
SAN MATEO, CALIFORNIA 94404
(650) 358-3456
(Address, including zip code, and telephone number, including
area code, of registrant's principal executive offices)
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DONALD R. SELLERS
PRESIDENT AND CHIEF EXECUTIVE OFFICER
SCICLONE PHARMACEUTICALS, INC.
901 MARINERS ISLAND BOULEVARD, SUITE 205
SAN MATEO, CALIFORNIA 94404
(650) 358-3456
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
Copies to:
J. HOWARD CLOWES, ESQ.
Gray Cary Ware & Freidenrich LLP
139 Townsend Street, Suite 400
San Francisco, California 94107
(415) 836-2500
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: From
time to time as described in the Prospectus after the effective date of this
Registration Statement.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
If any of the securities being registered on this Form are to be offered
on a delayed or continuous basis pursuant to Rule 415 under the Securities Act
of 1933, other than securities offered only in connection with dividend or
interest reinvestment plans, check the following box. [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ] _______________
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ] ______________
If delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box. [ ]
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES
AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE
A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT
SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF THE
SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SUCH SECTION 8(a),
MAY DETERMINE.
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THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED.
THE SELLING SHAREHOLDERS MAY NOT SELL THESE SECURITIES UNTIL THE REGISTRATION
STATEMENT FILED WITH THE SEC IS EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER TO
SELL THESE SECURITIES AND IT IS NOT SOLICITING AN OFFER TO BUY THESE SECURITIES
IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.
SUBJECT TO COMPLETION, DATED APRIL 25, 2000
SCICLONE PHARMACEUTICALS, INC.
COMMON STOCK
1,000,000 Shares Issued and Outstanding
and
908,000 Shares Subject to Warrants
This prospectus relates to the offer and sale of our common stock by the
selling shareholders, as follows:
- 1,000,000 shares issued to investors in our January 18, 2000
financing; and
- up to 908,000 shares issuable upon exercise of warrants, with an
exercise price of $7.00 per share, issued to the investors and the
placement agent in connection with the January 18, 2000 financing.
Our common stock is quoted on The Nasdaq National Market under the
symbol "SCLN." On April 20, 2000, the last sale price of the common stock as
reported on The Nasdaq National Market was $10.06.
Our principal executive offices are located at 901 Mariner's Island
Boulevard, Suite 205, San Mateo, California 94404, and our telephone number is
(650) 358-3456.
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AN INVESTMENT IN SCICLONE COMMON STOCK INVOLVES A HIGH DEGREE OF RISK.
PLEASE CAREFULLY CONSIDER THE INFORMATION UNDER THE HEADING "RISK FACTORS"
BEGINNING ON PAGE 3.
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NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED THESE SECURITIES, OR DETERMINED IF THIS
PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
The date of this prospectus is ____________, 2000.
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TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
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<S> <C>
RISK FACTORS ........................................................ 3
ABOUT SCICLONE ...................................................... 10
USE OF PROCEEDS ..................................................... 12
SELLING SHAREHOLDERS ................................................ 12
PLAN OF DISTRIBUTION ................................................ 13
LEGAL MATTERS ....................................................... 14
EXPERTS ............................................................. 14
WHERE TO FIND MORE INFORMATION ..................................... 15
DOCUMENTS INCORPORATED BY REFERENCE ................................ 15
</TABLE>
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RISK FACTORS
An investment in our common stock is risky. You should carefully
consider the following risks, as well as the other information contained in this
prospectus. If any of the following risks actually occurs, our business could be
harmed. In that case, the trading of our common stock could decline and you
might lose all or part of your investment.
WE HAVE NOT ACHIEVED OPERATING PROFITABILITY AND EXPECT TO CONTINUE TO INCUR
LOSSES IN THE NEAR TERM. IF WE DO NOT CONTINUE TO INCREASE OUR ZADAXIN SALES, WE
MAY NOT ACHIEVE OPERATING PROFITABILITY WHICH MAY PREVENT OR DELAY OUR LONG-TERM
PRODUCT DEVELOPMENT AND COMMERCIALIZATION EFFORTS
We began to generate revenues from ZADAXIN in December 1996. Future
ZADAXIN sales are uncertain. Our other drug under development, CPX, is a drug
that targets the underlying cause of cystic fibrosis, a disease caused by
genetic defects. Marketing approvals for CPX and additional marketing approvals
for ZADAXIN are uncertain. We have experienced significant operating losses
since our inception and have a substantial accumulated deficit. Furthermore, we
expect our operating expenses to increase over the next several years as we
expand our development, testing and marketing capabilities. Our ability to
achieve and sustain operating profitability depends in large part on whether we:
- increase ZADAXIN sales in existing markets;
- launch ZADAXIN in newly-approved markets;
- commence and continue clinical programs for, and obtain additional
regulatory approvals for ZADAXIN, CPX, SCV-07, DAX and/or future
products, particularly in the U.S., Europe and Japan;
- are able to maintain our partnering arrangements for development and
marketing of ZADAXIN in Europe and Japan; and
- enter into other agreements for product development and
commercialization of our products in the U.S.
If we do not achieve operating profitability, we may have to delay or
curtail our long-term product development and commercialization efforts.
IF WE EXPERIENCE DIFFICULTIES IN OUR FOREIGN SALES AND OPERATIONS, OUR FINANCIAL
CONDITION WOULD SUFFER
Our financial condition in the near term is highly dependent on ZADAXIN
sales in foreign jurisdictions. The majority of our current ZADAXIN sales are to
customers in the People's Republic of China. However, ZADAXIN sales in the
People's Republic of China may be limited due to its low average income and
poorly developed infrastructure. In addition, our ZADAXIN sales and operations
in Asia, Latin America and the Middle East are subject to inherent risks,
including:
- difficulties and delays in obtaining pricing approvals and
reimbursement;
- difficulties and delays in obtaining product health registration;
- difficulties and delays in obtaining importation permits;
- unexpected changes in regulatory requirements;
- tariffs and other barriers;
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- political instability;
- the difficulties of staffing and managing foreign operations;
- long payment cycles;
- difficulty in accounts receivable collection;
- currency fluctuations; and
- potential adverse tax consequences.
We currently do not have any sales in the U.S. with which to offset any decrease
in revenue from ZADAXIN sales in emerging markets in Asia, Latin America and the
Middle East. In addition, some countries in these territories regulate
pharmaceutical prices. This regulation may reduce prices for ZADAXIN
significantly below those that would prevail in a free market.
IF WE FAIL TO OBTAIN ADDITIONAL REGULATORY APPROVALS OR MARKET ACCEPTANCE FOR
ZADAXIN OR IF WE FAIL TO OBTAIN REGULATORY APPROVAL FOR CPX, OUR POTENTIAL
FUTURE REVENUE WOULD BE LIMITED
Our principal late-stage drug development efforts currently focus on
ZADAXIN and CPX. We need favorable results from additional clinical trials of
ZADAXIN to get regulatory approval in the U.S., Europe and Japan. ZADAXIN has
been approved for commercial sale in 19 countries, principally as a treatment
for hepatitis B and hepatitis C, and as a vaccine adjuvant. However, we may not
be able to obtain approvals for ZADAXIN in the U.S., Europe and Japan or other
countries or for the treatment of hepatitis, HIV and other medical conditions,
such as cancer.
Future sales of ZADAXIN will depend on market acceptance and successful
distribution in additional countries. In many of our ZADAXIN markets,
particularly the People's Republic of China, low average per capita income and
poorly developed distribution infrastructure may make it difficult to
successfully commercialize ZADAXIN. Because we currently rely on ZADAXIN sales
as our primary source of revenue, our failure to demonstrate ZADAXIN's safety
and efficacy in future clinical trials, obtain additional marketing approvals or
successfully commercialize ZADAXIN would adversely affect our future revenue and
operating results.
CPX is currently undergoing phase 2 development in the U.S. We may
experience delays and difficulties in the preclinical and clinical development
of CPX. In addition, clinical trials may not prove that CPX is an effective
treatment for cystic fibrosis. Our inability to demonstrate the safety and
efficacy of CPX as a treatment for cystic fibrosis in a clinical trial, obtain
regulatory approval of CPX as a treatment for cystic fibrosis or successfully
commercialize CPX could adversely affect our potential future revenue and
operating results.
REGARDLESS OF WHETHER OR NOT WE ACHIEVE OPERATING PROFITABILITY AS ANTICIPATED,
WE MAY NEED TO OBTAIN ADDITIONAL FUNDS IN ORDER TO SUPPORT OUR LONG-TERM PRODUCT
DEVELOPMENT AND COMMERCIALIZATION PROGRAMS
Since inception, we have financed our operations primarily through sales
of stock. If we do not continue to increase our ZADAXIN revenue and achieve
operating profitability as anticipated, we will need to obtain additional
financing to support our long-term product development and commercialization
programs.
Our need for capital will depend on many factors, including:
- the level of future ZADAXIN sales;
- the timing, location, scope and results of ongoing and planned
preclinical studies and clinical trials;
- the size and complexity of our programs;
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- the timing and cost of FDA and international regulatory approvals;
- the costs involved in filing, prosecuting and enforcing patent claims;
- competing technological and market developments;
- whether any or all of our outstanding common stock warrants are
exercised and the timing and amount of such exercises;
- our ability to establish and maintain partnering arrangements for
development, sales, manufacturing and marketing of our products;
- whether we elect to establish additional partnering arrangements for
development, sales, manufacturing, and marketing of our products; and
- the cost of manufacturing or obtaining preclinical and clinical
materials.
Many of the foregoing factors are not within our control. The unavailability or
timing of any necessary financing could prevent or delay our long-term product
development and commercialization programs. We have no commitments or
arrangements for additional funding and we may not be able to obtain financing
if and when needed.
THE PRICE OF OUR COMMON STOCK HAS EXPERIENCED SUBSTANTIAL VOLATILITY AND MAY
CONTINUE TO DO SO IN THE FUTURE.
There has been significant volatility in the market prices for publicly
traded shares of biopharmaceutical companies, including ours. In 1999, the price
of our common stock fluctuated from a low of $1.06 to a high of $6.13. On April
20, 2000, our common stock closed at a price of $10.06. The price of our common
stock may not remain at or exceed current levels. The following factors may have
an adverse impact on the market price of our common stock:
- announcements of technical or product developments by us or our
competitors;
- market conditions for pharmaceutical and biotechnology stocks;
- market conditions generally;
- governmental regulation;
- healthcare legislation;
- public announcements regarding advances in the treatment of the
disease states that we are targeting;
- public announcements from government officials relating to the
biotechnology or pharmaceutical industries;
- patent or proprietary rights developments;
- changes in third-party reimbursement policies for our products; or
- fluctuations in our operating results.
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IF WE ISSUE ADDITIONAL COMMON STOCK OR SECURITIES CONVERTIBLE INTO COMMON STOCK,
THE PERCENTAGE OWNERSHIP OF OUR THEN-CURRENT SHAREHOLDERS WOULD BE REDUCED AND
THE MARKET PRICE OF OUR COMMON STOCK MAY DECREASE
As of March 23, 2000, there were outstanding stock options for 4,210,345
shares of common stock, of which 3,138,379 were currently exercisable, and there
were warrants outstanding that were exercisable for 2,903,471 shares of common
stock. Upon issuance or conversion, all of these shares of common stock will be
freely tradable.
Future sales of substantial amounts of our common stock or securities
convertible into our common stock could adversely affect the market price of our
common stock.
Similarly, if we raise additional funds through the issuance of common
stock or securities convertible into or exercisable for our common stock, the
percentage ownership of our then-current shareholders will be reduced.
IF WE DO NOT OBTAIN ADDITIONAL PRODUCT RIGHTS FROM THIRD PARTIES OR IF OUR
LICENSEES DO NOT PERFORM THEIR OBLIGATIONS, OUR POTENTIAL FUTURE REVENUE WOULD
BE LIMITED AND OUR FUTURE DEVELOPMENT EXPENSES WOULD INCREASE
Our strategy includes entering into various partnering arrangements. To
date, we have acquired rights to ZADAXIN, CPX, SCV-07, DAX and several other
drugs but we are only actively pursuing clinical development of ZADAXIN and CPX
at this time. If we do not license or otherwise acquire rights to additional
drugs or advance SCV-07 and DAX from preclinical into clinical development, we
may have a shortage of drugs to develop which would limit our potential future
revenue.
In addition, we have exclusively sublicensed our rights to develop and
market ZADAXIN in Europe and Japan to Sigma-Tau S.p.A. and Schering-Plough K.K,
respectively. However, these companies already have a substantial commitment to
alpha interferon, which is an approved drug for cancer, hepatitis B and
hepatitis C in Europe and Japan. Our relationships with these companies may not
be successful and we may not be able to negotiate similar additional
arrangements in the future in Europe and Japan or other major markets. We
generally do not have control over the amount and timing of resources that our
collaborators devote to their activities with us. If these parties do not
perform their obligations as we expect them to, the development and sale of our
products could be limited or delayed.
Our ability to obtain regulatory approval in one country may be delayed
or adversely affected by the timing of regulatory activities and approvals in
other countries, particularly if we do not participate in the regulatory
approval process in these other countries. Any delay or failure to achieve
regulatory approvals may limit our potential future revenue.
IF WE FAIL TO PROTECT OUR PRODUCTS, TECHNOLOGIES AND TRADE SECRETS, WE MAY NOT
BE ABLE TO SUCCESSFULLY USE, MANUFACTURE OR MARKET AND SELL OUR PRODUCTS OR WE
MAY FAIL TO ADVANCE OR MAINTAIN OUR COMPETITIVE POSITION
The United States composition of matter patent, which covers the
chemical structure of ZADAXIN, and most of the European composition of matter
patents for ZADAXIN have expired. Going forward, we will have only limited
patents covering the chemical structure of ZADAXIN and this could adversely
affect our proprietary rights. Our success depends significantly on our ability
to obtain patent protection for our products and technologies, to preserve our
trade secrets and to avoid infringing on the proprietary rights of third
parties. However, our pending patent applications may not result in issued
patents. Any patents that are issued may not provide a competitive advantage to
us or may be invalidated or circumvented by our competitors. Others may
independently develop similar products or designs around patents issued or
licensed to us. Patents issued to or patent applications filed by other
companies could have an adverse effect on our ability to use, manufacture or
market our products or maintain our competitive position with respect to our
products. Many of our patents and patent applications relating to ZADAXIN are
held under exclusive licenses. If we breach the terms of any of these licenses
we could lose our rights to these patents and patent applications. Holders of
patents licensed to us may not file, prosecute, extend or maintain their patents
in countries where we have rights.
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Other companies obtaining patents on products or processes useful to us
may bring infringement actions against us. This type of litigation is typically
costly and time-consuming and could require us to obtain licenses from others,
or prevent us from using, manufacturing or marketing our products. These
licenses may not be available on commercially reasonable terms, if at all.
Pharmaceuticals are not patentable or have only recently become
patentable in several countries in the territory in which we have exclusive
rights to ZADAXIN. Enforcement of intellectual property rights in many countries
in this territory has been limited or non-existent. Future enforcement of
patents and proprietary rights in many countries in this territory will likely
be problematic or unpredictable. Moreover, the issuance of a patent in one
country does not assure the issuance of a similar patent in another country.
Claim interpretation and infringement laws vary by nation, so the extent of any
patent protection is uncertain and may vary in different jurisdictions.
IF WE FAIL TO OBTAIN REGULATORY APPROVALS FOR OUR PRODUCTS IN COUNTRIES IN WHICH
WE HAVE NOT BEEN APPROVED, WE CANNOT DEVELOP, MARKET AND SELL OUR PRODUCTS IN
THOSE COUNTRIES
The research, preclinical and clinical development, manufacturing,
marketing and sale of ZADAXIN, CPX and our other drug candidates are subject to
extensive regulation by governmental authorities. ZADAXIN, CPX and any other
products must be approved before they can be sold in any jurisdiction. Obtaining
regulatory approval is time-consuming and expensive. In some countries where we
are contemplating marketing and selling ZADAXIN, the regulatory approval process
for drugs that have not been previously approved in countries with established
clinical trial review procedures is uncertain, and this may delay the grant of
regulatory approvals for ZADAXIN.
We are currently sponsoring or planning clinical trials and pursuing
regulatory approvals for ZADAXIN in a number of countries and we are currently
sponsoring clinical trials of CPX in the U.S. However, we may not be able to
commence or complete these trials in a timely or cost-effective manner, and even
if completed, these trials may not fulfill the relevant regulatory approval
criteria. We ultimately may not be able to obtain regulatory approvals in these
countries. Adverse results in our development programs also could result in
restrictions on the use of ZADAXIN and, if approved, CPX.
Our failure, or failure by one or more of our partners, to comply with
applicable U.S. or foreign regulatory requirements could, among other things,
result in warning letters, fines, suspensions of regulatory approvals, product
recalls or seizures, operating restrictions, injunctions and criminal
prosecutions. In addition, government regulations may be established or imposed
which prevent or delay regulatory approval of ZADAXIN, CPX or our future
products.
IF WE ARE NOT ABLE TO ESTABLISH AND MAINTAIN ADEQUATE MANUFACTURING AND SUPPLY
RELATIONSHIPS, THE DEVELOPMENT AND SALE OF OUR PRODUCTS COULD BE IMPAIRED
We have entered into long-term contract manufacturing and supply
agreements for ZADAXIN and CPX. To be successful, our products must be
manufactured in commercial quantities, in compliance with regulatory
requirements and at an acceptable cost. While we currently have long-term
manufacturing relationships with experienced suppliers, we may not be able to
maintain these long-term manufacturing relationships with these suppliers. We
currently have vialing and packaging supply agreements in effect and a
sufficient supply of finished ZADAXIN for the near term. We have recently
changed and upgraded our manufacturing source of finished ZADAXIN for our
international markets, excluding Japan. In some countries, this change may
require additional regulatory approvals. If we do not obtain any required
regulatory approvals of this manufacturing change in a timely fashion, new
ZADAXIN marketing approvals may be delayed or sales may be interrupted until the
manufacturing change is approved.
Production interruptions, if any, could significantly delay clinical
development of potential products and reduce third party or clinical researcher
interest and support of proposed trials. These kinds of interruptions could also
impede commercialization of our products, including sales of ZADAXIN in approved
markets, and impair their competitive position, which would have a material
adverse effect on our business.
WE MAY LOSE MARKET SHARE OR OTHERWISE FAIL TO COMPETE IN THE INTENSELY
COMPETITIVE PHARMACEUTICAL INDUSTRY
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Competition in the pharmaceutical industry is intense and we expect that
competition to increase. We believe that the principal competitive factors in
the pharmaceutical industry include the efficacy, safety, price, therapeutic
regimen and manufacturing quality assurance associated with a given drug. Our
competitors include pharmaceutical companies, biotechnology firms, universities
and other research institutions, both in the U.S. and abroad, that are actively
engaged in research and development of chronic and life-threatening diseases
such as hepatitis B, hepatitis C, cancer, immune system disorders and cystic
fibrosis. Most of our competitors, particularly large pharmaceutical companies,
have substantially greater financial, technical, regulatory, manufacturing,
marketing and human resource capabilities than we do. Most of them also have
extensive experience in undertaking the clinical testing and obtaining the
regulatory approvals necessary to market drugs. In addition, we currently rely
on sales of ZADAXIN as a treatment for hepatitis B and hepatitis C as our
primary source of revenue. Several large pharmaceutical companies have
substantial commitments to alpha interferon, which is an approved drug for
treating hepatitis B and hepatitis C.
IF THIRD PARTY REIMBURSEMENT IS NOT AVAILABLE OR PATIENTS CANNOT OTHERWISE PAY
FOR ZADAXIN, WE MAY NOT BE ABLE TO SUCCESSFULLY MARKET ZADAXIN
Our ability to successfully sell ZADAXIN depends in part on whether
pharmaceutical drug consumers will be reimbursed for the cost of ZADAXIN. This
reimbursement may come from government health administration authorities,
private health insurers and other organizations. Third-party reimbursement for
new therapeutic products is highly uncertain and may not be available for our
future products. In many of the foreign countries in which we currently operate
or intend to operate, reimbursement for ZADAXIN under government or private
health insurance programs is currently not widely available. In the U.S.,
proposed health care reforms could limit the amount of third-party reimbursement
available for our products. In many countries where we have marketing rights to
ZADAXIN, government resources and per capita income may be so low that our
products will be prohibitively expensive. In these countries, we may not be able
to market our products on economically favorable terms, if at all.
IF WE ARE UNABLE TO ATTRACT AND RETAIN QUALIFIED PERSONNEL OR IF OUR PRESIDENT
AND CHIEF EXECUTIVE OFFICER, CHIEF OPERATING OFFICER, CHIEF BUSINESS OFFICER OR
OUR REGIONAL MANAGING DIRECTOR FOR GREATER CHINA LEFT SCICLONE, WE MAY NOT BE
ABLE TO SUCCESSFULLY DEVELOP AND COMMERCIALIZE OUR PRODUCTS
We are highly dependent upon our ability to attract and retain qualified
personnel because of the specialized, scientific and international nature of our
business. There is intense competition for qualified management, scientific and
technical personnel in the pharmaceutical industry, and we may not be able to
attract and retain the qualified personnel we need to grow and develop our
business globally. In addition, numerous key responsibilities at SciClone are
assigned to a relatively small number of individuals, such as our President and
Chief Executive Officer, Chief Operating Officer, Chief Business Officer and our
Regional Managing Director for Greater China. If we are unable to attract and
retain qualified personnel as needed or promptly replace those employees who are
critical to our product development and commercialization, the development and
commercialization of our products would adversely be affected. We do not
maintain "key person" life insurance on any of our key personnel.
WE HAVE LIMITED PRODUCT LIABILITY INSURANCE AND ANY PRODUCT LIABILITY CLAIMS
ASSERTED AGAINST US COULD RESULT IN SIGNIFICANT EXPENSES AND DECREASED DEMAND
FOR OUR PRODUCTS
Companies which test, manufacture, market and sell pharmaceutical
products commonly receive product liability claims. These claims may be asserted
against us. Product liability insurance for the pharmaceutical industry
generally is expensive, if it is available at all. We have product liability
insurance coverage for our clinical trials and commercial sales. However,
product liability claims in excess of our insurance coverage or that resulted in
the payment of large deductibles would adversely affect our financial condition
and demand for our products.
ISSUING PREFERRED STOCK WITH RIGHTS SENIOR TO THOSE OF OUR COMMON STOCK COULD
ADVERSELY AFFECT HOLDERS OF COMMON STOCK OR HINDER TAKEOVER TRANSACTIONS THAT
OFFER COMMON SHAREHOLDERS AN OPTIMAL PRICE FOR THEIR SHARES
Our charter documents give our board of directors the authority to issue
additional series of preferred stock without a vote or action by our
shareholders. The board also has the authority to determine the terms of
preferred stock, including price, preferences and voting rights. The rights of
holders of our common stock may be adversely
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affected by the rights granted to holders of preferred stock. For example, a
series of preferred stock may be granted the right to receive a liquidation
preference a pre-set distribution in the event SciClone is liquidated that would
reduce the amount available for distribution to holders of common stock. In
addition, the issuance of preferred stock could make it more difficult for a
third party to acquire a majority of our outstanding voting stock. As a result,
common shareholders could be prevented from participating in transactions that
would offer an optimal price for their shares.
FORWARD-LOOKING STATEMENTS
This prospectus contains and incorporates by reference certain
forward-looking statements within the meaning of the Private Securities
Litigation Reform Act of 1995. Forward-looking statements give our current
expectations or forecasts of future events. You can identify these statements by
the fact that they do not relate strictly to historical or currents facts. Such
statements may include words such as "anticipate," "estimate," "expect,"
"project," "intend," "plan," "believe" and other words or terms of similar
meaning in connection with any discussion of future operating of financial
performance. In particular, these forward-looking statements include statements
include statements relating to:
- our history of operating losses and anticipation of future losses;
- our need for additional capital and uncertainty of additional funding;
- uncertainty of our product development programs;
- uncertainties relating to preclinical and clinical trials;
- government regulation and uncertainties of obtaining additional
regulatory approvals on a timely basis or at all;
- uncertainties related to our patent and proprietary rights;
- our dependence on key personnel;
- our third-party collaborations;
- our dependence in third-party manufacturers of our products;
- uncertainties regarding the acceptance, purchase and use of our
products;
- intense competition and rapid technological change in the specialty
pharmaceutical and biotechnology industries;
- the value and price of our common stock; and
- uncertainties relating to government health care reform proposals,
measures and announcements and third-party reimbursement.
Any or all of our forward-looking statements in this prospectus may turn
out to be wrong. They can be affected by inaccurate assumptions we might make or
by known or unknown risks and uncertainties. Many factors mentioned in our
discussion in this prospectus will be important in determining future results.
Consequently, no forward-looking statements can be guaranteed. Actual future
results may vary materially.
We will not update these forward-looking statements, whether as a result
of new information, future events or otherwise. You should, however, review
additional disclosures we make in our Quarterly Reports on Form 10-Q, Current
Reports on Form 8-K and Annual Reports on Form 10-K filed with the SEC.
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ABOUT SCICLONE
We develop and commercialize novel medicines for treating a broad range
of the world's most serious diseases. We have focused our current product
development and commercial activities on the following diseases:
- hepatocellular carcinoma, the most common and deadliest form of liver
cancer worldwide;
- malignant melanoma, the deadliest form of skin cancer and one of the
most rapidly increasing types of cancer worldwide;
- hepatitis C, an infectious disease affecting 170 million people
worldwide;
- hepatitis B, an infectious disease affecting 350 million people
worldwide;
- HIV, the virus that causes AIDS;
- drug-resistant tuberculosis, an infectious disease reaching pandemic
proportions worldwide; and
- cystic fibrosis, the most common fatal genetic disease among
Caucasians.
Our flagship drug is ZADAXIN(R), an immunotherapy. ZADAXIN boosts the
body's immune system in the fight against multiple types of cancer and
infectious diseases. ZADAXIN is in or expected to enter phase 2 and phase 3
development in the U.S., Europe and Japan, the world's largest pharmaceutical
markets, targeting six diseases: hepatocellular carcinoma, malignant melanoma,
hepatitis C, hepatitis B, HIV and drug-resistant tuberculosis. Approximately
3,000 patients have been treated with ZADAXIN in over 70 clinical trials
covering a broad range of life-threatening diseases in which the immune system
plays a key role in the patient's ability to fight back.
Unlike most biotechnology companies, we are currently selling our lead
drug -- ZADAXIN. ZADAXIN is currently approved for sale in Italy and 18 emerging
markets in Asia, Latin America and the Middle East, principally for the
treatment of hepatitis B and hepatitis C and as a vaccine adjuvant. Total
ZADAXIN sales for 1999 were $9,090,000, a 151% increase over 1998 sales of
$3,625,000. ZADAXIN marketing applications are pending in 18 additional emerging
markets. We plan to file 8 additional ZADAXIN marketing applications in 2000.
Our second product in clinical development, CPX, is a novel
protein-repair therapy for cystic fibrosis, the most common fatal genetic
disease among Caucasians. Currently approved drugs treat only the symptoms of
cystic fibrosis, not the underlying cause of the disease. CPX, which we
in-licensed from the U.S. National Institutes of Health, is designed to repair
the underlying protein-associated defect responsible for cystic fibrosis in most
patients, not just the symptoms of the disease. CPX is currently undergoing
phase 2 development in the U.S.
Additional preclinical drug candidates include SCV-07, the lead orally
active compound in our new class of immunotherapies, and DAX. We expect to
develop SCV-07 for drug-resistant tuberculosis, cancer and viral hepatitis. DAX
is targeted at cystic fibrosis.
OUR MARKETS
We are focusing on a large number of discrete but widespread
life-threatening diseases that afflict different parts of the human body. We
believe the significance, prevalence and diversity of our disease targets, and
the known limitations of current treatment alternatives, have created a
compelling need for improved therapies, with novel medicines often enjoying
premium pricing and rapid market acceptance. Our current product development and
commercial activities are focused on this large, unmet market need.
10
<PAGE> 12
The fundamentals of the cancer, infectious disease and cystic fibrosis
markets that are particularly advantageous for us include:
- inadequate treatment alternatives;
- high incidence and prevalence;
- accelerated FDA approval procedures;
- highly concentrated populations of specialists, allowing a small sales
force to be effective; and
- favorable pricing reimbursement.
OUR STRATEGY
Our objective is to be a leading global immunotherapy and protein-repair
therapy company. Our strategy consists of the following key elements:
- focus on specialist-oriented markets for cancer, infectious disease
and cystic fibrosis;
- develop our portfolio of products for a broad range of diseases;
- use our ZADAXIN sales in emerging markets to fund late-stage
development of our products in the U.S., Europe and Japan, the world's
largest pharmaceutical markets;
- form strategic collaborations to support our development and
commercialization programs, particularly in Europe and Japan; and
- use our global expertise in immunotherapy and protein-repair therapy
to identify and in-license or acquire additional product candidates;
- selectively outsource activities to reduce our development and
manufacturing costs.
All of our current product rights were in-licensed. We observe a
disciplined approach to product acquisition, in-licensing and development, the
key elements of which are that:
- we do not engage in drug discovery or perform early-stage research;
- we only acquire, in-license and develop drug candidates with strong
evidence of preclinical or human efficacy;
- we only acquire, in-license and develop compounds that can be
administered by a highly concentrated population of specialists,
allowing a small sales force to be effective;
- we only acquire, in-license and develop drugs protected by patents,
have patents pending or qualify for orphan drug status from the FDA;
and
- we establish strategic collaborations when appropriate to share the
cost and risk of drug development and commercialization, especially in
large overseas markets such as Europe and Japan.
Internationally, we have 41 ZADAXIN distribution arrangements covering
46 countries outside the U.S., Europe and Japan. We intend to out-license our
products where a collaborative arrangement will materially enhance the prospects
for a drug's commercial success in licensed markets. Our partnering arrangements
with Sigma-Tau and Schering-Plough K.K. for development and marketing of ZADAXIN
in Europe and Japan, and our
11
<PAGE> 13
arrangements with our ZADAXIN distributors are examples of this strategy. We
intend to produce ZADAXIN, CPX and any future products through contract
manufacturing and supply agreements. We have entered into separate long-term
supply agreements in the U.S. and Europe for the supply of bulk and finished
product thymosin alpha 1. We contract with a major U.S. pharmaceutical company
for the supply of bulk CPX and another U.S. pharmaceutical manufacturer for
finished product CPX.
FORMATION AND OTHER INFORMATION
SciClone was incorporated in California in 1990. Our international
operating subsidiary, SciClone Pharmaceuticals International Ltd., is
incorporated in the Cayman Islands and headquartered in Hong Kong. We also have
office locations in London, Singapore, Taiwan, Japan and Italy.
USE OF PROCEEDS
If the warrants are exercised by the selling shareholders, we will
receive proceeds in the form of the exercise price. The warrants issued to the
investors and placement agent for up to 908,000 shares have an aggregate
exercise price of $6,356,000, or $7.00 per share. If we receive any proceeds
from the exercise of the warrants, we expect to use them for working capital. We
will not receive any proceeds from the sale of the shares of common stock by the
selling shareholders and all proceeds will go to the selling shareholders to be
used for their own purposes.
SELLING SHAREHOLDERS
The 1,908,000 shares offered by this prospectus consist of shares issued
or issuable to institutional investors and the placement agents in connection
with a privately placed equity financing on January 18, 2000, as follows:
- 1,000,000 shares of common stock issued to the investors; and
- up to 908,000 shares of common stock issuable upon exercise of
warrants, with an exercise price of $7.00, issued to the investors and
the placement agent.
The investor warrants and the placement agent warrants are exercisable until
January 17, 2005, except that the placement agent warrant shares may not be sold
prior to October 18, 2000 if the market price is less than $10.00 per share. The
table below sets forth each selling shareholder, the number of shares of common
stock which it owns or has the right to acquire as of April 17, 2000, the number
of shares of common stock subject to sale under this prospectus and the number
of shares of common stock it would own assuming the sale of all shares of common
stock covered by this prospectus. The shares offered by the investors consist
of:
- shares issued in the financing and outstanding; and
- shares subject to warrants issued in the financing.
The shares offered by the placement agents consist of shares issuable upon
exercise of warrants issued in connection with our January 18, 2000 financing.
Beneficial ownership is determined in accordance with rules promulgated
by the SEC, and the information is not necessarily indicative of beneficial
ownership for any other purpose. This table is based upon information supplied
to us by the selling shareholders. Except as otherwise indicated, as of April
17, 2000, we believe that each person named in the table has sole voting and
investment power with respect to all of the shares of our common stock listed as
beneficially owned by it. The table has been prepared on the assumption that all
shares offered by this Prospectus will be sold.
12
<PAGE> 14
<TABLE>
<CAPTION>
Shares Shares Shares
Beneficially Offered by Beneficially
Owned Prior to this Owned After
Selling Shareholders the Offering Prospectus the Offering
-------------------- -------------- ----------- ------------
<S> <C> <C> <C>
Investors:
Brown Simpson Strategic Growth Fund, Ltd. 1,397,800(1)(7) 1,135,800 262,000
Brown Simpson Strategic Growth Fund, L.P. 664,200(2)(7) 664,200 0
Placement Agents:
H.C. Wainwright & Co., Inc. 43,200(3)(7) 43,200 0
Matthew Balk 128,860(4)(7) 41,860 87,000
Scott Weisman 62,940(5)(7) 17,940 45,000
Jason Adelman 5,000(6)(7) 5,000 0
</TABLE>
- -------------
(1) includes 504,800 shares issuable upon exercise of Warrants issued in
connection with the January 18, 2000 financing.
(2) includes 295,200 shares issuable upon exercise of Warrants issued in
connection with the January 18, 2000 financing.
(3) includes 43,200 shares issuable upon exercise of Warrants issued in
connection with the January 18, 2000 financing.
(4) includes 41,860 shares issuable upon exercise of Warrants issued in
connection with the January 18, 2000 financing.
(5) includes 17,940 shares issuable upon exercise of Warrants issued in
connection with the January 18, 2000 financing.
(6) Includes 5,000 shares issuable upon exercise of Warrants issued in
connection with the January 18, 2000 financing.
(7) The number of shares of common stock owned by each selling shareholder
includes the aggregate number of shares of common stock which may be
obtained by such shareholder upon exercise of all of the warrants owned by
the shareholder. However, the selling shareholders are not currently the
beneficial owners of all of such shares of common stock.
H.C. Wainwright & Co., Inc. is a corporation of which Steve Barrett is
the Chief Executive Officer. Mr. Barrett may be deemed to have investment and
voting control over the shares held by H.C. Wainwright & Co., Inc.
PLAN OF DISTRIBUTION
The selling shareholders may sell their shares of common stock on the
Nasdaq National Market, or other exchange on which the common stock is trading,
in privately negotiated transactions or otherwise. The shares may be sold by the
selling shareholders by one or more of the following methods:
- block trades in which the broker or dealer will attempt to sell the
shares as agent but may position and resell a portion of the block as
principal to facilitate the transaction;
- purchases by a broker or dealer as principal and resale by such broker
or dealer for its account pursuant to this prospectus;
- an exchange distribution in accordance with the rules of such
exchange;
- ordinary brokerage transactions and transactions in which the broker
solicits purchasers;
- privately negotiated transactions;
- short sales; or
- a combination of any of the above methods.
Brokers and dealers engaged by the selling shareholders may arrange for
other brokers or dealers to participate. Brokers or dealers may receive
commissions or discounts from the selling shareholders. If any broker-dealer
acts as agent for a purchaser of shares, the broker-dealer may receive
commissions or discounts from the purchaser. Commissions or discounts will be
negotiated at the time of the transaction and are not expected to exceed
customary amounts.
Broker-dealers may agree with the selling shareholders to sell a
specified number of shares at a stipulated price per share. To the extent the
broker-dealer is unable to sell the specified number, it may purchase as
principal any unsold shares at the price required to fulfill the broker-dealer's
commitment to the selling shareholder.
13
<PAGE> 15
Broker-dealers who acquire shares as principal may then resell such shares from
time to time in transactions, which may involve block transactions as described
above, in the over-the-counter market or otherwise. Resales by broker-dealers
may be at prices and on terms then prevailing at the time of sale, at prices
then related to the then-current market price or in negotiated transactions. In
connection with resales, broker-dealers may pay to or receive from purchasers of
the shares commissions as described above. The selling shareholders may also
sell their shares in accordance with Rule 144 under the Securities Act, rather
than pursuant to this prospectus.
The selling shareholders and any broker-dealers or agents that
participate with the selling shareholders in sales of the shares may be deemed
to be "underwriters" within the meaning of the Securities Act. If so, any
commissions received by such broker-dealers or agents and any profit on the
resale of shares purchased by them may be deemed to be underwriting commissions
or discounts under the Securities Act.
From time to time the selling shareholders may engage in short sales,
short sales against the box, puts and calls and other transactions in our
securities or instruments that derive their value from our securities, and may
sell and deliver the shares covered by this prospectus in connection with the
transactions or to settle securities loans. From time to time the selling
shareholders may pledge their shares pursuant to the margin provisions of its
agreements with its brokers. Upon a default by the selling shareholders, the
broker may offer and sell the pledged shares from time to time.
Under our agreement with the selling shareholders, we agreed to file a
registration statement covering the 1,000,000 shares issued in our January 18,
2000 financing and the 908,000 shares issuable upon exercise of warrants issued
in connection with the financing within 30 days following the closing of the
financing and to keep a registration statement covering these shares effective
for up to three years following the closing.
We will pay all expenses related to the registration of the shares
covered by this prospectus, including:
- filing, registration and qualification fees;
- printers' fees;
- accounting fees; and
- the fees and disbursements of our outside counsel.
We will not pay underwriters' or brokers' discounts and commissions or
the fees or disbursements of counsel for any selling shareholder.
The selling shareholders are not restricted as to the price or prices at
which they may resell the shares except that the warrant shares may not be sold
prior to October 18, 2000 if the market price is less than $10 per share. Any
resales may have an adverse effect on the market price of the common stock. In
addition, it is possible that a significant number of shares could be sold at
the same time, which also may have an adverse effect on the market price of the
common stock.
We have agreed to indemnify the selling shareholders against specific
civil liabilities, including liabilities under the Securities Act.
LEGAL MATTERS
The legality of the shares offered by this prospectus is being passed
upon by Gray Cary Ware & Freidenrich LLP, San Francisco, California.
EXPERTS
14
<PAGE> 16
Ernst & Young LLP, independent auditors, have audited our consolidated
financial statements and schedule included in our Annual Report on Form 10-K for
the year ended December 31, 1999, as set forth in their report, which is
incorporated by reference in this prospectus and elsewhere in the registration
statement. Our financial statements and schedule are incorporated by reference
in reliance on Ernst & Young LLP's report, given on their authority as experts
in accounting and auditing.
WHERE TO FIND MORE INFORMATION
We file annual, quarterly and special reports, proxy statements and
other information with the SEC. These reports, proxy statements and other
information filed with the SEC may be inspected and copied at the SEC Public
Reference Room, 450 Fifth Street, N.W., Washington, D.C. 20549.
You may obtain information about the operation of the SEC Public
Reference Room by calling 1-800-SEC-0330. You can also inspect this material
free of charge at a Web site maintained by the SEC at http://www.sec.gov.
Finally, you can also inspect reports and other information concerning SciClone
at the offices of the National Association of Securities Dealers, Inc., Market
Listing Section, 1735 K Street, N.W., Washington, D.C. 20006. SciClone common
stock is traded on The Nasdaq National Market under the symbol "SCLN."
SciClone's Internet web site is located at http://www.sciclone.com.
DOCUMENTS INCORPORATED BY REFERENCE
The SEC allows us to "incorporate by reference" information that we file
with them which means that we can disclose important information to you by
referring you to these documents. The information incorporated by reference is
an important part of this prospectus and information we later file with the SEC
will automatically update and supersede this information. The following
documents filed by us with the SEC are incorporated in this prospectus by
reference:
- Annual Report on Form 10-K for the year ended December 31, 1999, filed
on March 30, 2000 (File No. 0-19825); and
- The description of SciClone's Common Stock contained in SciClone's
Registration Statement on Form 8-A filed under the Securities Exchange
Act, including any amendment or report filed for the purpose of
updating that description (File No. 0-19825).
We also incorporate by reference all documents and reports filed by us
pursuant to Sections 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of
1934 after the date of this prospectus. We will provide free of charge to each
person, including any beneficial owner, to whom this prospectus is delivered,
upon written or oral request, a copy of any or all of the documents incorporated
by reference in this prospectus. Please direct such requests to Investor
Relations, SciClone Pharmaceuticals, Inc., 901 Mariner's Island Boulevard, Suite
205, San Mateo, California 94404. Our telephone number is (650) 358-3456.
15
<PAGE> 17
- --------------------------------------------------------------------------------
WE HAVE NOT AUTHORIZED ANYONE TO GIVE ANY INFORMATION OR MAKE ANY REPRESENTATION
OTHER THAN THOSE CONTAINED OR INCORPORATED BY REFERENCE IN THIS PROSPECTUS. YOU
SHOULD RELY ONLY ON THE INFORMATION CONTAINED IN THIS PROSPECTUS. THE
INFORMATION IN THIS PROSPECTUS IS CORRECT AS OF THE DATE OF THIS PROSPECTUS.
DELIVERY OF THIS PROSPECTUS AFTER THE DATE INDICATED BELOW DOES NOT MEAN THAT
THE INFORMATION IS STILL CORRECT.
SCICLONE PHARMACEUTICALS, INC.
COMMON STOCK
1,000,000 SHARES ISSUED AND OUTSTANDING
AND
908,000 SHARES SUBJECT TO WARRANTS
PROSPECTUS
_______________, 2000
- --------------------------------------------------------------------------------
<PAGE> 18
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table sets forth the costs and expenses in connection with
the sale and distribution of the securities being registered, other than
underwriting discounts and commissions. All of the amounts shown are estimates
except the Securities and Exchange Commission registration fees and Nasdaq
filing fee.
<TABLE>
<CAPTION>
To be Paid
By The
Registrant
----------
<S> <C>
SEC Registration Fee $ 4,203
Nasdaq filing fee $17,500
Accounting fees and expenses $ 5,000
Legal fees and expenses $10,000
Miscellaneous expenses $ 2,297
-------
Total................................. $39,000
=======
</TABLE>
- -----------------------
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
As permitted by Section 204 of the California Corporations Code (the
"CCC"), the Registrant's Articles of Incorporation provide that each person who
is or was or who had agreed to become a director or officer of the Registrant or
who had agreed at the request of the Registrant's Board of Directors or an
officer of the Registrant to serve as an employee or agent of the Registrant or
as a director, officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise, shall be indemnified by the Registrant
to the full extent permitted by the CCC or any other applicable laws. Such
Articles of Incorporation also provide that no amendment or repeal of such
Articles shall apply to or have any effect on the right to indemnification
permitted or authorized thereunder for or with respect to claims asserted before
or after such amendment or repeal arising from acts or omissions occurring in
whole or in part before the effective date of such amendment or repeal.
The Registrant's Bylaws provide that the Registrant shall indemnify to
the full extent authorized by law any person made or threatened to be made a
party to an action or a proceeding, whether criminal, civil, administrative or
investigative, by reason of the fact that he, his testator or intestate was or
is a director, officer or employee of the Registrant or any predecessor of the
Registrant or serves or served any other enterprise as a director, officer or
employee at the request of the Registrant or an predecessor of the Registrant.
The Registrant's Bylaws also provide that the Registrant may enter into one or
more agreements with any person which provides for indemnification greater or
different than that provided in such Articles of Incorporation.
The Registrant has entered into indemnification agreements with its
directors and certain of its officers.
The Registrant intends to purchase and maintain insurance on behalf of
any person who is a director or officer against any loss arising from any claim
asserted against him and incurred by him in any such capacity, subject to
certain exclusions.
See also the undertakings set out in response to Item 17 herein.
<PAGE> 19
ITEM 16. EXHIBITS.
The following exhibits are filed with this Registration Statement:
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION OF EXHIBIT
- ----------- ----------------------
<S> <C>
5.1* Opinion of Gray Cary Ware & Freidenrich LLP.
23.1 Consent of Ernst & Young LLP, independent auditors.
23.2* Consent of Gray Cary Ware & Freidenrich LLP (included in Exhibit 5.1).
24.1* Power of Attorney (included in the Signature Page contained in Part II of
the Registration Statement).
99.1 Subscription Agreement dated as of January 14, 2000 by and
among SciClone Pharmaceuticals, Inc. and the investors
listed on the signature page.
99.2 Form of Warrant to Purchase Shares of Common Stock.
</TABLE>
- ------------
* Previously filed.
ITEM 17. UNDERTAKINGS.
A. The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made,
a post-effective amendment to this registration statement:
(i) To include any prospectus required by section 10(a)(3) of the
Securities Act of 1933 (the "Securities Act");
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most
recent post-effective amendment thereof) which, individually or
in the aggregate, represent a fundamental change in the
information set forth in the registration statement.
Notwithstanding the foregoing, any increase or decrease in
volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered)
and any deviation from the low or high end of the estimated
maximum offering range may be reflected in the form of
prospectus filed with the Commission pursuant to Rule 424(b)
if, in the aggregate, the changes in volume and price represent
no more than a 20% change in the maximum aggregate offering
price set forth in the "Calculation of Registration Fee" table
in the effective registration statement;
(iii) To include any material information with respect to the plan
of distribution not previously disclosed in the registration
statement or any material change to such information in the
registration statement; provided, however, that paragraphs
(a)(1)(i) and (a)(1)(ii) do not apply if the information
required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed by the
Registrant pursuant to Section 13 or Section 15(d) of the
Securities Exchange Act of 1934 that are incorporated by
reference in the registration statement.
<PAGE> 20
(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
B. The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
Registrant's annual report pursuant to section 13(a) or section 15(d) of
the Securities Exchange Act of 1934 that is incorporated by reference in
the registration statement shall be deemed to be a new registration
statement relating to the securities offered therein, and the offering
of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
C. The undersigned Registrant hereby undertakes to deliver or cause to
be delivered with the prospectus, to each person to whom the prospectus
is sent or given, the latest annual report to security holders that is
incorporated by reference in the prospectus and furnished pursuant to
and meeting the requirements of Rule 14a-3 or Rule 14c-3 under the
Securities Exchange Act of 1934; and, where interim financial
information required to be presented by Article 3 of Regulation S-X are
not set forth in the prospectus, to deliver, or cause to be delivered to
each person to whom the prospectus is sent or given, the latest
quarterly report that is specifically incorporated by reference in the
prospectus to provide such interim financial information.
D. Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers, and controlling
persons of the Registrant pursuant to the foregoing provisions, or
otherwise, the Registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against
public policy as expressed in the Securities Act and is, therefore,
unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the Registrant of expenses
incurred or paid by a director, officer, or controlling person of the
Registrant in the successful defense of any action, suit, or proceeding)
is asserted by such director, officer, or controlling person in
connection with the securities being registered, the Registrant will,
unless in the opinion of its counsel the matter has been settled by
controlling precedent, submit to a court of appropriate jurisdiction the
question whether such indemnification by it is against public policy as
expressed in the Securities Act and will be governed by the final
adjudication of such issue.
E. The undersigned Registrant hereby undertakes that:
(1) For the purposes of determining any liability under the Securities
Act, the information omitted from the form of prospectus filed as
part of this registration statement in reliance upon Rule 430A and
contained in a form of prospectus filed by the Registrant pursuant
to Rule 424(b)(1) or (4) or 497(h) under the Securities Act shall be
deemed to be part of the registration statement as of the time it
was declared effective.
(2) For the purposes of determining any liability under the Securities
Act, each post-effective amendment that contains a form of
prospectus shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide
offering thereof.
<PAGE> 21
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-3 and has duly caused this amendment to
registration statement to be signed on its behalf by the undersigned, thereunto
duly authorized in the City of San Mateo, State of California on April 25, 2000.
SCICLONE PHARMACEUTICALS, INC.
By: /s/ Donald R. Sellers
---------------------------------
Donald R. Sellers
President, Chief Executive Officer
and Interim Chief Financial Officer
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated:
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ Donald R. Sellers President, Chief Executive April 25, 2000
- ------------------------------ Officer, Interim Chief Financial
Donald R. Sellers Officer and Director (Principal
Executive, Financial and
Accounting Officer)
/s/ Jere E. Goyan* Chairman of the Board and Director April 25, 2000
- --------------------------------
Jere E. Goyan, Ph.D.
/s/ John D. Baxter* Director April 25, 2000
- --------------------------------
John D. Baxter, M.D.
/s/ Edwin C. Cadman* Director April 25, 2000
- --------------------------------
Edwin C. Cadman, M.D.
/s/ Rolf H. Henel* Director April 25, 2000
- --------------------------------
Rolf H. Henel
* By /s/ Donald R. Sellers
----------------------------
Donald R. Sellers
Attorney-in-fact
</TABLE>
<PAGE> 22
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION OF EXHIBIT
- ----------- ----------------------
<S> <C>
5.1* Opinion of Gray Cary Ware & Freidenrich LLP.
23.1 Consent of Ernst & Young LLP, independent auditors.
23.2* Consent of Gray Cary Ware & Freidenrich LLP (included in Exhibit 5.1).
24.1* Power of Attorney (included in the Signature Page contained in Part II
of the Registration Statement).
99.1 Subscription Agreement dated as of January 14, 2000 by and among
SciClone Pharmaceuticals, Inc. and the investors listed on the signature
page.
99.2 Form of Warrant to Purchase Shares of Common Stock.
</TABLE>
- --------
*Previously filed.
<PAGE> 1
EXHIBIT 23.1
CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts" in
Amendment No. 1 to the Registration Statement on Form S-3 and the related
Prospectus of SciClone Pharmaceuticals, Inc. for registration of 1,908,000
shares of its Common Stock and to the incorporation by reference therein of our
report dated January 28, 2000, with respect to the consolidated financial
statements and schedule of SciClone Pharmaceuticals, Inc. included in its Annual
Report on Form 10-K for the year ended December 31, 1999 filed with the
Securities and Exchange Commission.
/s/ ERNST & YOUNG LLP
Palo Alto, California
April 20, 2000
<PAGE> 1
EXHIBIT 99.1
SUBSCRIPTION AGREEMENT
This Subscription Agreement (the "Agreement") is made and entered into
as of January 14, 2000 by and among SciClone Pharmaceuticals, Inc., a California
corporation (the "Company"), and those parties listed on the signature page
hereof as "Investors" (who are referred to individually as an "Investor" and
collectively as the "Investors").
In consideration of the above recitals and the mutual covenants made
herein, the parties hereby agree as follows:
1. Sale of Common Stock and Warrants; Closing; Delivery
(a) Purchase and Sale of Common Stock and Warrants. Subject to
the terms and conditions hereof, the Company will issue and sell to each
Investor, and each Investor will purchase from the Company, at the Closing (as
defined below) the number of shares of common stock ("Shares"), no par value, of
the Company ("Common Stock"), and the number of warrants to purchase shares of
Common Stock ("Warrant Shares") set forth opposite each Investor's name on
Exhibit A. The exercise price per Warrant Share shall be $7.00. A form of the
warrant is attached as Exhibit B ("Warrant"). Each Warrant entitles the Investor
to purchase one Warrant Share. The purchase price per Share shall be $6.00 per
share. The Purchase price per Warrant shall be $0.13.
(b) Closing. The closing of the purchase and sale of the Shares
and Warrants shall take place at the offices of the Company at 901 Mariners
Island Blvd., Suite 205, San Mateo, California at 9:00 a.m., PDT, on January 18,
2000 (the "Closing"). The date of the Closing is hereinafter referred to as the
"Closing Date."
(c) Delivery. Subject to the terms and conditions of this
Agreement, at the Closing, or, in the case of the original stock certificates,
as soon as practicable after the Closing, the Company will deliver to each
Investor (1) a stock certificate representing the Shares to be purchased by such
Investor and (2) a Warrant representing the Warrants to be purchased by such
Investors against payment of the purchase price therefor by a wire transfer of
immediately available funds to the Company as follows:
Bank: Union Bank of California
Bank Address: Santa Clara Valley Commercial Banking
P O Box 24512
Oakland, CA 94623-1512
ABA #: 122000496
Account Name: SciClone Pharmaceuticals
Account #: 6480121382
<PAGE> 2
2. Representations and Warranties of Investors. Each Investor represents
and warrants, severally, to the Company that:
(a) Authorization. This Agreement constitutes the valid and
legally binding obligation of such Investor, enforceable in accordance with its
terms, except as such enforcement may be limited by bankruptcy, insolvency and
similar laws affecting the enforcement of creditors' rights generally and
equitable remedies, and except as indemnity provisions in the enforcement of
Section 4 of this Agreement (relating to registration rights) may be limited by
law, and such Investor (if an individual) is over eighteen (18) years of age,
and such Investor has full legal capacity, power and authority to enter into and
be bound by this Agreement.
(b) Purchase for Own Account for Investment. Such Investor is
purchasing the Shares and Warrants for investment purposes only and not with a
view to, or for sale in connection with, a distribution of the Shares and
Warrants within the meaning of the Securities Act of 1933, as amended (the
"Securities Act"). Such Investor has no present intention of selling or
otherwise disposing of all or any portion of the Shares and Warrants.
(c) Access to Information. Such Investor has had an opportunity
to ask questions of the Company's representatives concerning the Company, its
present and prospective business, assets, liabilities and financial condition
that such Investor reasonably considers important in making the decision to
purchase the Shares and Warrants. Such Investor has received a copy of (1) the
Company's Annual Report to the U.S. Securities and Exchange Commission ("SEC" or
"Commission") on Form 10-K for the fiscal year ending December 31, 1998, (2) the
Company's Quarterly Report to the SEC on Form 10-Q for the fiscal quarter ending
September 30, 1999 and (3) the Company's press releases issued from September
30, 1999 through December 31,1999 (collectively, the "Press Releases").
(d) Understanding of Risks. Such Investor is fully aware of: (i)
the highly speculative nature of the investment in the Shares and Warrants; (ii)
the financial hazards involved; (iii) the lack of liquidity of the Shares, the
Warrants and Warrant Shares and the restrictions on the transferability of the
Shares, the Warrants and Warrant Shares (e.g., that such Investor may not be
able to sell or dispose of the Shares, the Warrants and Warrant Shares or use
them as collateral for loans); and (iv) the tax consequences of investment in
the Shares and Warrants.
(e) Investor's Qualifications. Such Investor is an "accredited"
investor as defined under Rule 501 of Regulation D promulgated under the
Securities Act. Such Investor is aware of the general business and financial
circumstances of the Company and, by reason of such Investor's business or
financial experience, such Investor is capable of evaluating the merits and
risks of this investment and is financially capable of bearing a total loss of
this investment.
(f) Compliance with Securities Laws. Such Investor understands
and acknowledges that, in reliance upon the representations and warranties made
by such Investor herein, the Shares, the Warrants and Warrant Shares are not
being registered with the SEC under
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<PAGE> 3
the Securities Act or being qualified under the California Corporate Securities
Law of 1968, as amended (the "Law"), but instead are being issued under an
exemption or exemptions from the registration and qualification requirements of
the Securities Act or the Law or other applicable state securities laws which
impose certain restrictions on such Investor's ability to transfer the Shares,
the Warrants and Warrant Shares.
(g) Restrictions on Transfer. Such Investor understands that
such Investor may not transfer any of the Shares, the Warrants or Warrant Shares
unless such Shares, the Warrants or Warrant Shares are registered under the
Securities Act unless, in the opinion of counsel to the Company, exemptions from
such registration and qualification requirements are available. Such Investor
understands that only the Company may file a registration statement with the
SEC. Such Investor has also been advised that exemptions from registration and
qualification may not be available or may not permit such Investor to transfer
all or any of the Shares, the Warrants or Warrant Shares in the amounts or at
the times proposed by such Investor.
(h) Rule 144. In addition, such Investor has been advised that
SEC Rule 144 ("Rule 144") promulgated under the Securities Act, which permits
certain limited sales of unregistered securities, is not presently available
with respect to the Shares and Warrant Shares solely due to the holding periods
required thereunder and, in any event, requires that the Shares and Warrant
Shares be held for a minimum of one year, and in certain cases two years, after
they have been purchased and paid for (within the meaning of Rule 144), before
they may be resold under Rule 144. Such Investor understands that Rule 144 may
indefinitely restrict transfer of the Shares and Warrant Shares if such Investor
is an "affiliate" of the Company and "current public information" about the
Company (as defined in Rule 144) is not publicly available.
(i) Legends and Stop-Transfer Orders. Such Investor understands
that certificates or other instruments representing any of the Shares, the
Warrants and Warrant Shares acquired by such Investor may bear legends
substantially similar to the following, in addition to any other legends
required by federal or state laws:
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR UNDER THE SECURITIES
LAWS OF CERTAIN STATES. THESE SECURITIES ARE SUBJECT TO RESTRICTIONS ON
TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT
AS PERMITTED UNDER THE ACT AND APPLICABLE STATE SECURITIES LAWS,
PURSUANT TO REGISTRATION OR EXEMPTION THEREFROM. INVESTORS SHOULD BE
AWARE THAT THEY MAY BE REQUIRED TO BEAR THE FINANCIAL RISKS OF THIS
INVESTMENT FOR AN INDEFINITE PERIOD OF TIME. THE ISSUER OF THESE
SECURITIES MAY REQUIRE AN OPINION OF COUNSEL IN FORM AND SUBSTANCE
SATISFACTORY TO THE ISSUER TO THE EFFECT THAT ANY PROPOSED TRANSFER OR
RESALE IS IN COMPLIANCE WITH THE ACT AND ANY APPLICABLE STATE SECURITIES
LAWS UNLESS SOLD PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT.
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<PAGE> 4
In order to ensure and enforce compliance with the restrictions imposed
by applicable law and those referred to in the foregoing legend, or elsewhere
herein, the Company may issue appropriate "stop transfer" instructions to its
transfer agent, if any, with respect to any certificate or other instrument
representing the Shares, the Warrants and Warrant Shares, or if the Company
transfers its own securities, it may make appropriate notations to the same
effect in the Company's records. Any legend endorsed on a certificate pursuant
to this Subsection (i) and the related stop transfer instructions with respect
to such securities shall be removed, and the Company shall issue a certificate
without such legend to the holder thereof, if such securities are registered
under the Securities Act and a prospectus meeting the requirements of Section 10
of the Securities Act is available, if such legend may be properly removed under
the terms of Rule 144 promulgated under the Securities Act or if such holder
provides the Company with an opinion of counsel for such holder, reasonably
satisfactory to legal counsel for the Company, to the effect that a sale,
transfer or assignment of such securities may be made without registration.
3. Representations and Warranties of the Company. The Company hereby
represents and warrants to the Investors that, except as set forth in this
Section, on the Schedule of Exceptions attached hereto as Exhibit C (the
"Schedule of Exceptions"), or in the Press Releases, with any disclosure thereon
being deemed disclosure for all purposes and all relevant subsections hereof,
which exceptions will be deemed to be representations and warranties as if made
hereunder:
(a) Organization and Good Standing. The Company is a corporation
duly organized, validly existing and in good standing under the laws of the
State of California. The Company has all necessary corporate power and authority
to own its assets and to carry on its business as now being conducted and
presently proposed to be conducted. The Company is duly qualified to do business
as a foreign corporation and is in good standing in each jurisdiction in which
its ownership or leasing of assets, or the conduct of its business, makes such
qualification necessary, except where the failure to be so qualified or in good
standing would not have a material adverse effect on the Company and its
subsidiaries considered as a whole.
(b) Requisite Power and Authorization. The Company has all
necessary corporate power and authority to execute and deliver this Agreement,
to issue the Shares, the Warrants and the Warrant Shares and to carry out the
provisions of this Agreement and the Warrants. All corporate action on the part
of the Company required for the lawful execution and delivery of this Agreement,
and issuance and delivery of the Shares, the Warrants and the Warrant Shares has
been taken. Upon execution and delivery, this Agreement and the Warrants
constitute valid and binding obligations of the Company enforceable in
accordance with their respective terms, except as enforcement may be limited by
insolvency and similar laws affecting the enforcement of creditors' rights
generally and equitable remedies, and except as the indemnity provisions of
Section 4 of this Agreement (relating to registration rights) may be limited by
law. The Shares and the Warrants and the Warrant Shares issuable upon exercise
of the Warrants, when issued in compliance with the provisions of this Agreement
or the Warrants, as the case may be, will be duly authorized and validly issued,
fully paid, non-assessable, and issued in compliance with federal securities
laws and the securities laws of the State of California. No shareholder of the
Company or other person has any preemptive or similar right
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<PAGE> 5
with respect to the Shares, Warrants or Warrant Shares. The Company has reserved
such number of shares of its Common Stock necessary for issuance of the Warrant
Shares.
(c) SEC Documents. The Company has furnished to each Investor:
the Company's Annual Report on Form 10-K for the fiscal year ended December 31,
1998, excluding exhibits, the Company's Quarterly Report on Form 10-Q for the
fiscal quarter ended September 30, 1999, excluding exhibits, and all documents
that the Company was required to file, which it represents and warrants it did
timely file, with the SEC under Sections 13 or 14(a) of the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), since December 31, 1998
(collectively, the "SEC Documents"). As of their respective filing dates, or
such later date on which such reports were amended, the SEC Documents complied
in all material respects with the requirements of the Exchange Act. The SEC
Documents as of their respective dates, or such later date on which such reports
were amended, did not contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements made therein, in light of the circumstances under which they were
made, not misleading. The financial statements included in the SEC Documents
("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. Except as may be indicated in the notes to the
Financial Statements or, in the case of unaudited statements, as permitted by
Form 10-Q of the SEC, 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 any subsidiaries
at the dates thereof and the consolidated results of their operations and
consolidated cash flows for the periods then ended (subject, in the case of
unaudited statements, to normal, recurring adjustments).
(d) Capital Stock. The authorized capital stock of the Company
consists of 75,000,000 shares of Common Stock, without par value, and 10,000,000
shares of Preferred Stock, without par value. As of January 14, 2000, there were
25,646,486 shares of Common Stock issued and outstanding and there was no issued
and outstanding Preferred Stock. All outstanding shares of Common Stock have
been duly authorized and validly issued and are fully paid and non-assessable.
As of January 14, 2000, (a) 4,484,614 shares of Common Stock were reserved for
future issuance pursuant to options granted and outstanding under the Company's
stock option plans, (b) 826,345 shares of Common Stock were reserved for future
issuance pursuant to options which may be granted under the Company's stock
option plans, (c) 4,930,602 shares of Common Stock were reserved for future
issuance pursuant to outstanding warrants, and (d) 382,478 shares of Common
Stock were reserved for issuance under the Company's Employee Stock Purchase
Plan. Except as set forth above, the Company has no outstanding securities
convertible into or exchangeable for Common Stock and no contracts, rights,
options or warrants to purchase or otherwise acquire Common Stock or securities
convertible into or exchangeable for Common Stock. Since January 14, 2000, the
Company has not issued any shares of capital stock or any options, warrants or
other rights with respect thereto except for shares issued upon exercise of
options, warrants and rights, as set forth above.
(e) Compliance with Other Agreements. Neither the execution and
delivery of, nor the consummation of any transaction or execution of any
instrument contemplated by,
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<PAGE> 6
this Agreement, nor the issuance of the Shares, the Warrants and the Warrant
Shares, has constituted or resulted in, or will constitute or result in, a
material default under or breach or violation of any term or provision of the
Company's Bylaws, Articles of Incorporation, or material contracts with third
parties, state or federal laws, rules or regulations, writs, orders or judgments
or decrees which are applicable to the Company or its properties.
(f) Consents. All consents necessary for the Company to perform
its respective obligations hereunder have been obtained, except for the approval
of the SEC of the registration statement contemplated by Section 4.
(g) No Material Adverse Change. Since September 30, 1999, except
as set forth in the Schedule of Exceptions and the Press Releases, there has not
been:
(i) any changes in the assets, liabilities, financial
condition or operations of the Company from that reflected in the Financial
Statements except changes in the ordinary course of business which have not
been, either in any individual case or in the aggregate, materially adverse to
the Company and its subsidiaries taken as a whole;
(ii) any material change, except in the ordinary course
of business, in the contingent obligations of the Company whether by way of
guarantee, endorsement, indemnity, warranty or otherwise;
(iii) any damage, destruction or loss, whether or not
covered by insurance, materially and adversely affecting the properties or
business of the Company; or
(iv) any declaration or payment of any dividend or other
distribution of the assets of the Company.
(h) Litigation. There is no action, suit, proceeding or
investigation pending or, to the Company's knowledge, currently threatened
against the Company that questions the validity of this Agreement or the
Warrants, or the right of the Company to enter into such agreements, or to
consummate the transactions contemplated hereby or thereby, or that might
result, either individually or in the aggregate, in any material adverse changes
in the business, assets, condition, affairs or prospects of the Company,
financially or otherwise, or any change in the current equity ownership of the
Company.
4. Registration Rights.
(a) Definitions. For purposes of this Section 4:
(i) "Register", "registered", and "registration" refer
to a registration effected by preparing and filing a registration statement in
compliance with the Securities Act, and the declaration or ordering of
effectiveness of such registration statement.
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<PAGE> 7
(ii) "Registrable Securities" means all shares of Common
Stock of the Company issued under this Agreement, including all shares of Common
Stock issued or issuable pursuant to the exercise of the Warrants, excluding in
all cases, however, the Warrants and all Registrable Securities sold pursuant to
Rule 144.
(iii) "Holder" means any person owning of record
Registrable Securities that have not been sold to the public or any assignee of
record of such Registrable Securities to whom rights under this Section 4
(and/or, with respect to the rights of the Investors set forth in Section 5,
under such Section 5) have been assigned in accordance with this Agreement.
(b) Shelf Registration.
(i) The Company will file as soon as practicable, and in
no event later than 30 days after the Closing Date (the "Filing Date"), a
registration statement under the Securities Act for, and all such qualifications
and compliances as may be so required and as would permit, the sale and
distribution of all of the Holders' Registrable Securities and thereafter shall
use its best efforts to secure the effectiveness of such registration statement
as soon as practicable thereafter.
(ii) The Company will pay all expenses incurred in
connection with any registration, qualification and compliance requested
hereunder (excluding underwriters' or brokers' discounts and commissions and the
fees and disbursements of counsel for any Investor), including without
limitation all filing, registration and qualification, printers' and accounting
fees and the fees and disbursements of counsel for the Company.
(iii) The Company will use its best efforts to cause the
registration statement to remain effective until the earlier of (A) the date
ending three (3) years after the Closing Date, (B) the date as all the
Registrable Securities have been resold, or (C) the date on which each Holder of
Registrable Securities is able to sell all of such Holder's Registrable
Securities in any single three (3) month period without registration under the
Securities Act pursuant to Rule 144.
(c) Obligations of the Company. In order to effect the
registration of any Registrable Securities under Section 4(b) of this Agreement,
the Company will, as expeditiously as reasonably possible:
(i) Prepare and file with the SEC a registration
statement with respect to such Registrable Securities and use its best efforts
to cause such registration statement to become effective, and deliver such
registration statement, at the time of such filing, to each Holder.
(ii) Prepare and file with the SEC such amendments and
supplements to such registration statement and the prospectus used in connection
with such registration
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<PAGE> 8
statement as may be necessary to comply with the provisions of the Securities
Act with respect to the disposition of all securities covered by such
registration statement.
(iii) Furnish to the Holders such number of copies of a
prospectus in conformity with the requirements of the Securities Act, and such
other documents as they may reasonably request in order to facilitate the
disposition of the Registrable Securities owned by them that are included in
such registration.
(iv) Use its best efforts to register and qualify the
securities covered by such registration statement under such other securities or
"blue sky" laws of such jurisdictions as will be reasonably requested by the
Holders, provided that the Company will not be required in connection therewith
or as a condition thereto to qualify to do business or to file a general consent
to service of process in any such states or jurisdictions.
(v) Notify each Holder of Registrable Securities covered
by such registration statement at any time when a prospectus relating thereto is
required to be delivered under the Securities Act of the happening of any event
as a result of which the prospectus included in such registration statement, as
then in effect, includes an untrue statement of a material fact or omits to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading in the light of the circumstances then
existing, and upon such notice the Company shall use its best efforts to
promptly correct such misstatement or omission and deliver to each Holder copies
of such corrected prospectus. The Company shall have the right, upon such
notice, to suspend the delivery of prospectuses included in such registration
statement from the date of notice until the date of such correction. The period
during which the Company is required to keep any registration statement filed
pursuant to Section 4(b) effective shall be extended for the amount of time
required to amend such registration statement and deliver such prospectus
relating thereto.
(d) Furnish Information. It will be a condition precedent to the
obligations of the Company to take any action pursuant to Section 4(b) hereof
that the selling Holders will furnish to the Company such information regarding
themselves, the Registrable Securities held by them, and the intended method of
disposition of such securities as will be required to effect the registration of
their Registrable Securities.
(e) Indemnification. In the event any Registrable Securities are
included in a registration statement under Section 4(b) hereof:
(i) To the extent permitted by law, the Company will
indemnify and hold harmless each Holder, the partners, shareholders, officers
and directors of each Holder, any underwriter (as defined in the Securities Act)
for such Holder and each person, if any, who controls such Holder or underwriter
within the meaning of the Securities Act or the Exchange Act against any losses,
claims, damages, or liabilities (joint or several) to which they may become
subject under the Securities Act, the Exchange Act or other federal or state
law, insofar as such losses, claims, damages, or liabilities (or actions in
respect thereof) arise out of or are based upon any of the following statements,
omissions or violations (collectively, a "Violation"):
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<PAGE> 9
(A) any untrue statement or alleged untrue
statement of a material fact contained in such registration statement, including
any preliminary prospectus or final prospectus contained therein or any
amendments or supplements thereto;
(B) the omission or alleged omission to state
therein a material fact required to be stated therein, or necessary to make the
statements therein not misleading; or
(C) any violation or alleged violation by the
Company of the Securities Act, the Exchange Act, any federal or state securities
law or any rule or regulation promulgated under the Securities Act, the Exchange
Act or any federal or state securities law in connection with the offering
covered by such registration statement;
and the Company will reimburse each such Holder, partner, shareholder, officer
or director, underwriter or controlling person for any legal or other expenses
reasonably incurred by them, as incurred, in connection with investigating or
defending any such loss, claim, damage, liability or action; provided however,
that the indemnity agreement contained in this Section 4(e)(i) will not apply to
amounts paid in settlement of any such loss, claim, damage, liability or action
if such settlement is effected without the consent of the Company (which consent
will not be unreasonably withheld), nor will the Company be liable in any such
case for any such loss, claim, damage, liability or action to the extent that it
arises out of or is based upon a Violation which occurs in reliance upon and in
conformity with written information furnished expressly for use in connection
with such registration by such Holder, partner, shareholder, officer, director,
underwriter or controlling person of such Holder.
(ii) To the extent permitted by law, each selling Holder
will indemnify and hold harmless the Company, each of its directors, each of its
officers who have signed the registration statement, each person, if any, who
controls the Company within the meaning of the Securities Act, any underwriter
and any other Holder selling securities under such registration statement or any
of such other Holder's partners, directors or officers or shareholders or any
person who controls such Holder within the meaning of the Securities Act or the
Exchange Act, against any losses, claims, damages or liabilities (joint or
several) to which the Company or any such director, officer, controlling person,
underwriter or other such Holder, partner or director, officer, shareholder or
controlling person of such other Holder may become subject under the Securities
Act, the Exchange Act or other federal or state law, insofar as such losses,
claims, damages or liabilities (or actions in respect thereto) arise out of or
are based upon any Violation that arises solely as a result of written
information furnished by such Holder expressly for use in connection with such
registration; and each such Holder will reimburse any legal or other expenses
reasonably incurred by the Company or any such director, officer, controlling
person, underwriter or other Holder, partner, officer, director, shareholder or
controlling person of such other Holder in connection with investigating or
defending any such loss, claim, damage, liability or action: provided, however,
that the indemnity agreement contained in this Section 4(e)(ii) will not apply
to amounts paid in settlement of any such loss, claim, damage, liability or
action if such settlement is effected without the consent of the Holder, which
consent will not be unreasonably withheld; and provided further, that the total
amounts payable in
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<PAGE> 10
indemnity by a Holder under this Section 4(e)(ii) in respect of any Violation
will not exceed the aggregate proceeds (net of discounts) received by such
Holder upon the sale of the Shares or Warrant Shares.
(iii) Promptly after receipt by an indemnified party
under this Section 4(e) of notice of the commencement of any action (including
any governmental action), such indemnified party will, if a claim in respect
thereof is to be made against any indemnifying party under this Section 4(e),
deliver to the indemnifying party a written notice of the commencement thereof
and the indemnifying party will have the right to participate in, and, to the
extent the indemnifying party so desires, jointly with any other indemnifying
party similarly noticed, to assume the defense thereof with counsel mutually
satisfactory to the parties; provided, however, that an indemnified party will
have the right to retain its own counsel, with the fees and expenses to be paid
by the indemnifying party, if representation of such indemnified party by the
counsel retained by the indemnifying party would be inappropriate due to actual
or potential differing interests between such indemnified party and any other
party represented by such counsel in such proceeding. The failure to deliver
written notice to the indemnifying party within a reasonable time of the
commencement of any such action, if the indemnifying party is materially
prejudiced thereby, will relieve such indemnifying party of liability, but only
to the extent that such indemnifying party is prejudiced with respect to a
specific claim.
(iv) The foregoing indemnity agreement with respect to
any prospectus shall not inure to the benefit of any Holder or underwriter, or
any person controlling such Holder or underwriter, from whom the person
asserting any losses, claims, damages or liabilities purchased Registrable
Securities, if a copy of the prospectus (as then amended or supplemented if the
Company shall have furnished any amendments or supplements thereto) provided by
the Company was not sent or given by or on behalf of such Holder or underwriter
to such person, if required by law so to have been delivered, at or prior to the
written confirmation of the sale of the Registrable Securities to such person,
and if the prospectus (as so amended or supplemented) would have cured the
defect giving rise to such loss, claim, damage or liability.
(v) If the indemnification provided for in Sections
4(e)(i) or 4(e)(ii) hereof shall be unavailable to hold harmless an indemnified
party in respect of any liability under the Securities Act, then, and in each
such case, the indemnifying party, in lieu of indemnifying such indemnified
party hereunder, shall contribute to the amount paid or payable by such
indemnified party as a result of such loss, liability, claim, damage or expense
in such proportion as is appropriate to reflect the relative fault of the
indemnifying party on the one hand and of the indemnified party on the other in
connection with the statement or omissions that resulted in such loss,
liability, claim, damage or expense as well as any other relevant equitable
considerations. The relative fault of the indemnifying party and of the
indemnified party shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or the
omission to state a material fact relates to information supplied by the
indemnifying party or by the indemnified party and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission; provided that in no event shall any contribution under
this subsection (v) by any Holder exceed the gross proceeds from the offering
received by such indemnifying party. No person or entity guilty of fraudulent
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<PAGE> 11
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
will be entitled to contribution from any person or entity who was not guilty of
such fraudulent misrepresentation.
(vi) The obligations of the Company and Holders under
this Section 4(e) will survive the completion of any offering of Registrable
Securities in a registration statement, and otherwise.
(f) Rule 144 Reporting. With a view to making available the
benefits of certain rules and regulations of the Commission which may at any
time permit the sale of the Registrable Securities to the public without
registration, while a public market exists for the Common Stock of the Company,
the Company will:
(i) Make and keep public information available, as those
terms are understood and defined in Rule 144 under the Securities Act, at all
times while the Company is reporting under the Exchange Act;
(ii) Use its best efforts to file with the SEC in a
timely manner all reports and other documents required of the Company under the
Securities Act and the Exchange Act (at any time it is subject to such reporting
requirements); and
(iii) So long as a Holder owns any Registrable
Securities, furnish to the Holder forthwith upon request a written statement by
the Company as to its compliance with the reporting requirements of Rule 144,
and of the Securities Act and the Exchange Act (at any time it is subject to the
reporting requirements of the Exchange Act), a copy of the most recent annual or
quarterly report of the Company, and such other reports and documents of the
Company as a Holder may reasonably request in availing itself of any rule or
regulation of the SEC allowing a Holder to sell any such securities without
registration (at any time the Company is subject to the reporting requirements
of the Exchange Act).
(g) The Company may notify the Investor that the Company will
refuse to permit the Investor to resell any Registrable Securities pursuant to
the registration statement for an initial period not to exceed thirty (30) days;
provided, however, that in order to exercise this right, the Company must
deliver a certificate in writing to the Investor to the effect that a delay in
such sale is necessary because a sale pursuant to such registration statement in
its then-current form would not be in the best interests of the Company and its
shareholders due to disclosure obligations of the Company. In such event, the
Company shall use its best efforts to amend the registration statement, if
necessary, and to take all other actions reasonably necessary to allow such
sale, and shall notify the Investor promptly after it has determined that such
sale has become permissible. Notwithstanding the foregoing, the Company shall
not be entitled to exercise its right to refuse to permit a sale by any
particular Investor more than three (3) times in any twelve-month period or for
more than two (2) consecutive thirty (30) day periods in any twelve-month
period; provided, however, that no particular Investor will be refused
permission to sell under this Section 4(g) at the same time that another person
is permitted to sell under the registration statement. Each Investor hereby
covenants and agrees that it will not sell any
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Registrable Securities pursuant to the registration statement during the periods
the registration statement is withdrawn as set forth in this Section 4(g).
(h) Investor Information. Each Investor covenants that it will
promptly notify the Company of any changes in the information set forth in the
registration statement regarding such Investor or such Investor's "Plan of
Distribution."
(i) Penalties. If (i) the registration statement covering all
the applicable Registrable Securities and required to be filed by the Company
pursuant to this Agreement is not (A) filed with the Commission on or before the
Filing Date or (B) declared effective by the Commission within 90 days after the
Filing Date (the "Effectiveness Date") or (ii) on any day after the registration
statement has been declared effective by the Commission (A) sales of all the
Registrable Securities required to be included on a registration statement
cannot be made pursuant to the registration statement (including, without
limitation, because of a failure to keep the registration statement effective,
to disclose such information as is necessary for sales to be made pursuant to
the registration statement, or to register sufficient shares of Common Stock) or
(B) the Common Stock is not listed or included for quotation on the National
Market System of the Nasdaq Stock Market ("Nasdaq"), the New York Stock Exchange
("NYSE") or the American Stock Exchange (the "AMEX") after being so listed or
included for quotation, (each such event specified in (i) and (ii) above, an
"Event"), then, as partial relief for the damages to any Investor by reason of
any such delay in or reduction of its ability to sell the Registrable Securities
(which remedy shall not be exclusive of any other remedies available at law or
in equity), the Company shall pay to each Investor an amount in cash (a
"Registration Delay Payment") equal to the purchase price of Common Stock as set
forth herein (the "Aggregate Price") multiplied by two hundredths (.020) times
the sum of: (i) the number of months (prorated for partial months) after the end
of the Effectiveness Date and prior to the date the registration statement is
declared effective by the Commission, provided, however, that there shall be
excluded from such period any delays which are solely attributable to changes
required by the Investors or the Commission in the registration statement with
respect to information relating to the Investors; (ii) the number of months
(prorated for partial months) that sales cannot be made pursuant to the
registration statement after the registration statement has been declared
effective (including, without limitation, when sales cannot be made by reason of
the Company's failure to properly supplement or amend the prospectus in
accordance with the terms of this Agreement, or otherwise, but excluding when
such sales cannot be made solely by reason of any act or omission solely
attributable to the Investors or information in the registration statement
relating to the Investors and excluding any suspensions of the registration
statement within the time limits set forth in Section 4(g)); and (iii) the
number of months (prorated for partial months) that the Common Stock is not
listed or included for quotation on the Nasdaq, NYSE or AMEX or that trading
thereon is halted after the registration statement has been declared effective,
but excluding any months or portion thereof during which sales cannot otherwise
be made as set forth in (ii). The Company shall pay any Required Registration
Delay Payments to each Investor in cash on the last business day of each month
during which an Event has occurred and is continuing. In the event the Company
fails to make a Registration Delay Payment in a timely manner, such Registration
Delay Payment shall bear interest at the rate of 2.0% per month (prorated for
partial months) until paid in full.
12
<PAGE> 13
5. Conditions to Obligations of the Investors. The obligation of each
Investor to purchase the Shares and Warrants at the Closing is subject to the
fulfillment on or prior to the Closing Date of the following conditions, any of
which may be waived by such Investor:
(a) Representations and Warranties Correct; Performance of
Obligations. The representations and warranties made by the Company in Section 3
hereof shall be true and correct when made, and shall be true and correct on the
Closing Date with the same force and effect as if they had been made on and as
of said date, except for representations and warranties made as of a specific
date which shall be true and correct as of such date; and the Company shall have
performed all obligations and conditions herein required to be performed or
observed by it under this Agreement on or prior to the Closing Date.
(b) Consents and Waivers. The Company shall have obtained any
and all consents (including all governmental or regulatory consents, approvals
or authorizations required in connection with the valid execution and delivery
of this Agreement), permits and waivers necessary or appropriate for
consummation of the transactions contemplated by this Agreement.
(c) Compliance Certificate. The Company shall have delivered to
the Investors a certificate, executed by the Chief Executive Officer of the
Company, dated the Closing Date, certifying to the fulfillment of the conditions
specified in subsection (a) of this Section 5.
(d) Opinion of Company's Counsel. Investors shall have received
from Gray Cary Ware & Freidenrich, counsel to the Company, an opinion addressed
to the Investors, dated the Closing Date and in substantially the form attached
hereto as Exhibit D.
6. Conditions to Obligations of the Company. The obligation of the
Company to sell and issue the Shares and Warrants to each Investor at the
Closing is subject to the fulfillment on or prior to the Closing Date of the
following conditions, any of which may be waived by the Company:
(a) Representations and Warranties. The representations and
warranties made by such Investor in Section 2 hereof shall be true and correct
when made, and shall be true and correct on the Closing Date with the same force
and effect as if they had been made on and as of said date.
(b) Consents and Waivers. The condition set forth in subsection
(b) of Section 5 hereof shall have been fulfilled.
7. Miscellaneous.
(a) Governing Law. This Agreement will be governed by and
construed in accordance with the internal laws of the State of California
applicable to contracts made among
13
<PAGE> 14
residents of, and wholly to be performed within, the State of California,
without regard to principles of conflict of laws or choice of laws.
(b) Further Instruments. From time to time, each party hereto
will execute and deliver such instruments and documents as may be reasonably
necessary to carry out the purposes and intent of this Agreement.
(c) Successors; No Other Beneficiaries. This Agreement will be
binding upon and will inure to the benefit of the executors, administrators,
legal representatives, heirs, successors, and assigns of the parties hereto;
provided, however, that (i) rights of Investors hereunder may be transferred
only in connection with (and to the transferee of) Common Stock of the Company
purchased by a Investor hereunder, but the Company may prohibit such transfer of
rights if the transfer to a particular transferee would not, in the good faith
judgment of the Company's Board of Directors, be in the Company's best
interests, and (ii) any transferee of any shares of stock of the Company
affected by this Agreement to whom rights are so transferred (a "Permitted
Transferee") will be required, as a condition precedent to acquiring such
shares, to agree in writing to be bound by all the terms and conditions of this
Agreement applicable to such Permitted Transferee's transferor, and (iii) upon
and after such transfer the Permitted Transferee will be deemed to be an
Investor for purposes of this Agreement. Nothing in this Agreement, express or
implied, is intended to confer upon any party other than the parties hereto or
their respective successors and assigns any rights, remedies, obligations, or
liabilities under or by reason of this Agreement, except as expressly provided
in this Agreement.
(d) Counterparts. This Agreement may be executed in two or more
counterparts, each of which will be deemed an original, but all of which
together will constitute one and the same instrument. This Agreement will be
effective following the parties signatory hereto upon such counterpart signature
by all initial parties hereto.
(e) Entire Agreement. This Agreement, including and
incorporating the Schedule of Exceptions and all Exhibits attached hereto and
referred to herein, constitutes and contains the entire agreement and
understanding of the parties regarding the subject matter of this Agreement and
supersedes in its entirety any and all prior negotiations, correspondence,
understandings and agreements among the parties respecting the subject matter
hereof.
(f) Notices. Any notice required to be given or delivered to the
Company under the terms of this Agreement shall be addressed to the Senior Vice
President and Secretary of the Company at its principal corporate offices. Any
notice required to be given or delivered to an Investor shall be addressed to
the Investor at the address indicated below or to such other address as such
party may designate in writing from time to time to the Company. Unless
otherwise provided, notice required or permitted to be given to a party pursuant
to the provisions of this Agreement will be in writing and will be effective and
deemed given under this Agreement on the earliest of (i) the date of personal
delivery, or (ii) the date of delivery by facsimile, or (iii) the business day
after deposit with a nationally-recognized courier or overnight service,
including Federal Express or Express Mail, for United States deliveries or three
(3) business days after such deposit for deliveries outside of the United
States, or (iv) three
14
<PAGE> 15
(3) business days after deposit in the United States mail by registered or
certified mail for United States deliveries. All notices not delivered
personally or by facsimile will be sent with postage and other charges prepaid
and properly addressed to the party to be notified at the address set forth on
the signature page, or at such other address as such party may designate by ten
(10) days' advance written notice to the other parties hereto. All notices for
delivery outside the United States will be sent by facsimile, or by nationally
recognized courier or overnight service, including Express Mail. Any notice
given hereunder to more than one person will be deemed to have been given, for
purposes of counting time periods hereunder, on the date given to the last party
required to be given such notice.
(g) Broker's Fee. Each Investor acknowledges that the Company
intends to pay a fee and issue warrants to H.C. Wainwright & Co., Inc. in
respect of the sale of the Shares and Warrants to the Investors. Each of the
parties hereto hereby represents that, on the basis of any actions and
agreements by it, there are no other brokers or finders entitled to compensation
in connection with the sale of the Shares and Warrants to the Investors.
(h) Amendments and Waivers. Any term of this Agreement may be
amended and the observance of any term of the Agreement may be waived (either
generally or in a particular instance and either retroactively or
prospectively), only with the written consent of the Company and each of the
Investors. Any amendment or waiver effected in accordance with this Section 8(h)
will be binding upon the Company, each Investor, and their permitted transferees
and assignees.
(i) Severability. If one or more provisions of this Agreement
are held to be unenforceable under applicable law, such provisions will be
excluded from this Agreement to the extent unenforceable and the balance of such
provisions, and of this Agreement, will be interpreted as if such provision or
part and hereof were so excluded and will be enforceable in accordance with its
terms.
(j) Aggregation of Stock. All shares of Common Stock held or
acquired by affiliated entities or persons will be aggregated together for the
purpose of determining the availability of any rights under this Agreement.
(k) Expenses. The Company and each Investor will bear its own
costs and expenses incurred on its behalf with respect to the Agreement and the
transactions contemplated hereby, including fees of legal counsel.
15
<PAGE> 16
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date and year first above written.
INVESTOR
- -------------------------------------- Shares Subscribed: ______________
(Print Name of Individual or Entity) Share Purchase Price: ___________
Warrants Subscribed: ____________
Warrant Purchase Price: _________
Aggregate Purchase Price: _______
By:
-----------------------------------
(Signature)
Name:
---------------------------------
Title:
--------------------------------
Address:
------------------------------
- --------------------------------------
- --------------------------------------
- --------------------------------------
Tax ID:
-------------------------------
COMPANY
SCICLONE PHARMACEUTICALS, INC. Shares Issued: __________________
Warrants Issued: ________________
By:
-----------------------------------
Name: Shawn K. Singh, J. D.
Title: Chief Business Officer
Address: SciClone Pharmaceuticals, Inc.
901 Mariners Island Blvd.
San Mateo, CA 94404
16
<PAGE> 17
EXHIBIT A
TO
SUBSCRIPTION AGREEMENT
<TABLE>
<CAPTION>
INVESTOR NUMBER OF SHARES NUMBER OF WARRANTS
- -------- ---------------- ------------------
<S> <C> <C>
Brown Simpson Strategic Growth Fund, Ltd. 631,000 504,800
Brown Simpson Strategic Growth Fund, L.P. 369,000 295,200
TOTAL 1,000,000 800,000
</TABLE>
<PAGE> 18
EXHIBIT B
TO
SUBSCRIPTION AGREEMENT
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE "ACT"), OR UNDER THE SECURITIES LAWS OF CERTAIN
STATES. THESE SECURITIES ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND
RESALE AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER THE ACT
AND THE APPLICABLE STATE SECURITIES LAWS, PURSUANT TO REGISTRATION THEREUNDER OR
EXEMPTIONS FROM SUCH REGISTRATION REQUIREMENTS. INVESTORS SHOULD BE AWARE THAT
THEY MAY BE REQUIRED TO BEAR THE FINANCIAL RISKS OF THIS INVESTMENT FOR AN
INDEFINITE PERIOD OF TIME. THE ISSUER OF THESE SECURITIES MAY REQUIRE AN OPINION
OF COUNSEL IN FORM AND SUBSTANCE SATISFACTORY TO THE ISSUER TO THE EFFECT THAT
ANY PROPOSED TRANSFER OR RESALE IS IN COMPLIANCE WITH THE ACT AND ANY APPLICABLE
STATE SECURITIES LAWS.
SCICLONE PHARMACEUTICALS, INC.
WARRANT TO PURCHASE SHARES OF COMMON STOCK
VOID AFTER JANUARY 17, 2005
1. Warrant to Purchase Common Stock.
1.1 Warrant to Purchase Shares. This warrant (this "Warrant")
certifies that for good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, _____________________________ (the "Warrant
Holder") is entitled, effective as of January 18, 2000, subject to the terms and
conditions of this Warrant to purchase from SciClone Pharmaceuticals, Inc., a
California corporation (the "Company") up to a total of _______ shares of Common
Stock of the Company (the "Shares") at the price of $7.00 per share (the
"Exercise Price") prior to 5:00 p.m. Pacific Time on January 17, 2005 (the
"Expiration Date"). The Warrant must be exercised, in whole or in part, any time
on or before the Expiration Date. Unless the context otherwise requires, the
term "Shares" shall mean and include the common stock of the Company and other
securities and property at any time receivable or issuable upon exercise of this
Warrant. The term "Warrant" as used herein, shall include this Warrant and any
warrants delivered in substitution or exchange therefor as provided herein.
1.2 Adjustment of Exercise Price and Number of Shares. The
number and character of Shares issuable upon exercise of this Warrant (or any
shares of stock or other securities or property at the time receivable or
issuable upon exercise of this Warrant) and the Exercise Price therefor, are
subject to adjustment upon occurrence of the following events:
<PAGE> 19
(a) Adjustment for Stock Splits, Stock Dividends,
Recapitalizations, etc. The Exercise Price of this Warrant and the number of
Shares issuable upon exercise of this Warrant shall each be proportionally
adjusted to reflect any stock dividend, stock split, reverse stock split,
combination of shares, reclassification, recapitalization or other similar event
altering the number of outstanding shares of the Company's Common Stock.
(b) Adjustment for Other Dividends and Distributions. In
case the Company shall make or issue, or shall fix a record date for the
determination of eligible holders entitled to receive, a dividend or other
distribution with respect to the Shares payable in securities of the Company
then, and in each such case, the Warrant Holder, on exercise of this Warrant at
any time after the consummation, effective date or record date of such event,
shall receive, in addition to the Shares (or such other stock or securities)
issuable on such exercise prior to such date, the securities of the Company to
which such Warrant Holder would have been entitled upon such date if such
Warrant Holder had exercised this Warrant immediately prior thereto (all subject
to further adjustment as provided in this Warrant).
(c) Adjustment for Capital Reorganization,
Consolidation, Merger. If any capital reorganization of the capital stock of the
Company, or any consolidation or merger of the Company with or into another
corporation, or the sale of all or substantially all of the Company's assets to
another corporation shall be effected in such a way that holders of the
Company's Common Stock will be entitled to receive stock, securities or assets
with respect to or in exchange for the Company's Common Stock, and in each such
case the Warrant Holder, upon the exercise of this Warrant, at any time after
the consummation of such capital reorganization, consolidation, merger, or sale,
shall be entitled to receive, in lieu of the stock or other securities and
property receivable upon the exercise of this Warrant prior to such
consummation, the stock or other securities or property to which such Warrant
Holder would have been entitled upon such consummation if such Warrant Holder
had exercised this Warrant immediately prior to the consummation of such capital
reorganization, consolidation, merger, or sale, all subject to further
adjustment as provided in this Section 1.2; and in each such case, the terms of
this Warrant shall be applicable to the shares of stock or other securities or
property receivable upon the exercise of this Warrant after such consummation.
(d) Issuance's Below Exercise Price. If the Company, at
any time prior to December 31, 2000:
(i) issues or sells, or is deemed to have issued
or sold, any Common Stock;
(ii) in any manner grants, issues or sells any
rights, options, warrants, options to subscribe for or to purchase Common Stock
or any stock or other securities convertible into or exchangeable for Common
Stock (other than any Excluded Securities) (such rights, options or warrants
being herein called "Options" and such convertible or exchangeable stock or
securities being herein called "Convertible Securities"); or
(iii) in any manner issues or sells any
Convertible Securities; for (a) with respect to paragraph (h)(i), a price per
share, or (b) with respect to paragraphs h(ii) or h(iii), a price per share for
which Common Stock issuable upon the exercise of such Options or
2
<PAGE> 20
upon conversion or exchange of such Convertible Securities, which is less than
the Exercise Price in effect immediately prior to such issuance or sale, then,
immediately after such issuance, sale or grant, the Exercise Price then in
effect shall be reduced to an amount equal to the consideration per share of the
Common Stock in such issuance, sale or grant, or shall be reduced to equal the
price per share for which Common Stock are issuable upon the exercise of such
Options, or upon the conversion or exchange of such Convertible Securities, as
the case may be. No adjustment of the Exercise Price shall be made upon the
actual issuance of such Common Stock upon conversion or exchange of such Options
or Convertible Securities. If there is a change at any time in (i) the exercise
price provided for in any Options, (ii) the additional consideration, if any,
payable upon the issuance, conversion or exchange of any Convertible Securities
or (iii) the rate at which any Convertible Securities are convertible into or
exchangeable for Common Stock, then immediately after such change the Exercise
Price in effect shall be reduced to the Exercise Price which would have been in
effect at such time had such Options or Convertible Securities still outstanding
provided for such changed exercise price, additional consideration or changed
conversion rate, as the case may be, at the time initially granted, issued or
sold; provided that no adjustment shall be made if such adjustment would result
in an increase of the Exercise Price then in effect.
(e) Effect on Exercise Price of Certain Events. For
purposes of determining the adjusted Exercise Price under Section 1.2(d), the
following shall be applicable:
(i) Calculation of Consideration Received. If
any Common Stock, Options or Convertible Securities are issued or sold or deemed
to have been issued or sold for cash, the consideration received therefor will
be deemed to be the net amount received by the Company therefor, without
deducting any expenses paid or incurred by the Company or any commissions or
compensations paid or concessions or discounts allowed to underwriters, dealers
or others performing similar services in connection with such issue or sale. In
case any Common Stock, Options or Convertible Securities are issued or sold for
a consideration other than cash, the amount of the consideration other than cash
received by the Company will be the fair value of such consideration. In case
any Common Stock, Options or Convertible Securities are issued to the owners of
a non-surviving entity in connection with any merger in which the Company is the
surviving entity, the amount of consideration therefor will be deemed to be the
fair value of such portion of the net assets and business of the non-surviving
entity as is attributable to such Common Stock, Options or Convertible
Securities, as the case may be. The fair value of any consideration other than
cash or securities will be determined jointly by the Company and the holders of
a majority of the Warrant Shares and Warrants then outstanding. If such parties
are unable to reach agreement within ten (10) days after the occurrence of an
event requiring valuation (the "Valuation Event"), the fair value of such
consideration will be determined within five (5) Business Days of the tenth
(10th) day following the Valuation Event by a nationally recognized or major
regional investment banking firm or firm of independent certified public
accountants of recognized standing (an "Appraiser") selected in good faith by
the Company and agreed upon in good faith by the holders of a majority of the
Warrant Shares and the Warrants then outstanding. The determination of such
Appraiser shall be binding upon all parties absent manifest error.
3
<PAGE> 21
(ii) Integrated Transactions. In case any Option
is issued in connection with the issue or sale of other securities of the
Company, together comprising one integrated transaction in which no specific
consideration is allocated to such Options by the parties thereto, the Options
will be deemed to have been issued for an aggregate consideration of $.01.
(iii) Record Date. If the Company takes a record
of the holders of Common Stock for the purpose of entitling them (a) to receive
a dividend or other distribution payable in Common Stock, Options or in
Convertible Securities or (b) to subscribe for or purchase Common Stock, Options
or Convertible Securities, then such record date will be deemed to be the date
of the issue or sale of the Common Stock deemed to have been issued or sold upon
the declaration of such dividend or the making of such other distribution or the
date of the granting of such right of subscription or purchase, as the case may
be.
(f) Certain Events. If any event that would adversely
affect the rights of any holder of the Warrants occurs but is not expressly
provided for by Section 1.2 hereof (including, without limitation, the granting
of stock appreciation rights, phantom stock rights or other rights with equity
features), then the Board of Directors of the Company will make an appropriate
adjustment in the Exercise Price so as to protect the rights of the holders of
the Warrants; provided, however, that no such adjustment will increase the
Exercise Price.
(g) Definitions: The following terms shall have the
meanings ascribed below for the purposes of this Section 1.2:
"Excluded Securities" means (i) shares of Common Stock
issued or issuable pursuant to the terms of this Agreement, (ii) shares of
Common Stock issuable upon exercise of any option or warrant outstanding as of
January 14, 2000 or (iii) Common Stock (including options and warrants) deemed
to have been issued by the Company in connection with an Approved Stock Plan.
"Approved Stock Plan" means any contract, plan or
agreement which has been approved by the Board of Directors of the Company, or
committee thereof pursuant to which the Company's securities may be issued to
any employee, officer, director or consultant.
2. Manner of Exercise.
2.1 Exercise Agreement. This Warrant may be exercised, in whole
or in part, on any business day on or prior to the Expiration Date. To exercise
this Warrant, the Warrant Holder must surrender to the Company this Warrant and
deliver to the Company: (a) a duly executed exercise agreement in the form
attached hereto as Exhibit A, or in such other form as may be approved by the
Company from time to time (the "Exercise Agreement"); and (b) payment in full of
the Exercise Price for the number of Shares to be purchased upon exercise
hereof. If someone other than the Warrant Holder exercises this Warrant, then
such person must submit documentation reasonably acceptable to the Company that
such person has the right to exercise this Warrant. Upon a partial exercise,
this Warrant shall be surrendered, and a new Warrant of the same tenor for
purchase of the number of remaining Shares not previously
4
<PAGE> 22
purchased shall be issued by the Company to the Warrant Holder. This Warrant
shall be deemed to have been exercised immediately prior to the close of
business on the date of its surrender for exercise as provided above, and the
person entitled to receive the Shares issuable upon such exercise shall be
treated for all purposes as the holder of record of such Shares as of the close
of business on such date.
2.2 Limitations on Exercise. This Warrant may not be exercised
as to fewer than 1,000 Shares unless it is exercised as to all Shares as to
which this Warrant is then exercisable.
2.3 Limitation on Resale. Before the earlier to occur of (i)
October 14, 2000 or (ii) the date one (1) trading day following the trading day
the closing sales price for a share of the Company's Common Stock as reported on
the Nasdaq National Market equals or exceeds $10.00, the Holder shall not,
directly or indirectly, sell, offer to sell, contract to sell (including,
without limitation, any short sale), loan, grant any option to purchase or
otherwise transfer or dispose of (other than to donees who agree to be similarly
bound) any of the Warrant Shares or securities issuable upon exercise of this
Warrant held by it any time during such period. In order to enforce the
foregoing, the Company may impose stop-transfer instructions with respect the
Warrant Shares until the end of such period.
2.4 Payment. The Exercise Agreement shall be accompanied by full
payment of the Exercise Price for the Shares being purchased in cash (by
certified or cashiers check or wire transfer or other immediately available
funds), or where permitted by law and provided that a public market for the
Company's stock exists, (a) through a "same day sale" commitment from the
Warrant Holder and a broker-dealer that is a member of the National Association
of Securities Dealers (an "NASD Dealer") whereby the Warrant Holder irrevocably
elects to exercise this Warrant and to sell a portion of the Shares so purchased
to pay for the Exercise Price and whereby the NASD Dealer irrevocably commits
upon receipt of such Shares to forward the Exercise Price directly to the
Company, or (b) through a "margin" commitment from the Warrant Holder and an
NASD Dealer whereby the Warrant Holder irrevocably elects to exercise this
Warrant and to pledge the Shares so purchased to the NASD Dealer in a margin
account as security for a loan from the NASD Dealer in the amount of the
Exercise Price, and whereby the NASD Dealer irrevocably commits upon receipt of
such Shares to forward the Exercise Price directly to the Company.
2.5 Tax Withholding. Prior to the issuance of the Shares upon
exercise of this Warrant, the Warrant Holder must pay or provide for any
applicable federal or state withholding obligations of the Company.
2.6 Issuance of Shares. Provided that the Exercise Agreement and
payment have been received by the Company as provided above, the Company shall
issue the Shares (adjusted as provided herein) registered in the name of the
Warrant Holder, the Warrant Holder's authorized assignee, or the Warrant
Holder's legal representative, and shall deliver certificates representing the
Shares with the appropriate legends affixed thereto.
5
<PAGE> 23
3. Registration Rights. The Shares will have the registration rights as
provided for in Section 4 of the Subscription Agreement entered into between the
Company and the Warrant Holder as of the date of this Warrant.
4. Redemption. The Company, at its sole discretion, may, at any time and
from time to time after January 18, 2000, redeem all or any part of the
outstanding Warrants by paying therefor in cash an amount equal to $0.13 per
Share for which the Warrant is then exercisable; provided, however, that any
such redemptions may be made by the Company only upon 30 days' prior written
notice (the "Redemption Date" being the close of business on the 30th day
following the date the notice is deemed to be given to Warrant Holders pursuant
to Section 9 hereof) and only if the closing sales price for a share of the
Company's Common Stock as reported on the Nasdaq National Market has exceeded
$12.00 for 20 consecutive trading days ending not more than ten business days
prior to the date the notice of redemption is faxed and delivered by overnight
courier to Warrant Holder; and provided further that the holder of any Warrant
subject to such redemption may exercise such Warrant at any time prior to the
expiration of the 30-day notice period; and provided further that the Company's
right to redeem the Warrant shall be suspended in the event the shelf
registration statement required under Section 4 of the Subscription Agreement is
subject to a stop order or is otherwise not in effect or if a Warrant Holder is
advised under Section 4(c) of the Subscription Agreement that the prospectus
thereto contains a material misstatement or omission during any portion of the
30-day notice period, with such suspension to terminate and the Company's right
to redeem to be reinstated on the date following such time as (i) a registration
statement covering the Shares is effective and not subject to any stop orders
and (ii) the Company has delivered to the Warrant Holder a prospectus covering
the Shares of such Warrant Holder under Section 4(c) of the Subscription
Agreement. The notice period shall then be extended for a period equal to the
number of days during the notice period during which registration was not
effective or the prospectus was not available or contained a material
misstatement or omission. If less than all of the outstanding Warrants are
redeemed, Warrants shall be redeemed on a pro rata basis.
5. Compliance with Laws and Regulations. The exercise of this Warrant
and the issuance and transfer of Shares shall be subject to compliance by the
Company and the Warrant Holder with all applicable requirements of federal and
state securities laws and with all applicable requirements of any stock exchange
and/or over-the-counter market on which the Company's Common Stock may be listed
at the time of such issuance or transfer.
6. Transfer and Exchange. This Warrant and the rights hereunder may not
be transferred in whole or in part without the Company's prior written consent,
which consent shall not be unreasonably withheld, and may not be transferred
unless such transfer complies with all applicable securities laws. If a transfer
of all or part of this Warrant is permitted as provided in the preceding
sentence, then this Warrant and all rights hereunder may be transferred, in
whole or in part, on the books of the Company or its agent maintained for such
purpose at the principal office of the Company or its agent, by the Warrant
Holder hereof in person, or by duly authorized attorney, upon surrender of this
Warrant properly endorsed and upon payment of any necessary transfer tax or
other governmental charge imposed upon such transfer. Upon any permitted partial
transfer, the Company will issue and deliver to the Warrant Holder a new Warrant
or
6
<PAGE> 24
Warrants with respect to the Warrants not so transferred. Each taker and holder
of this Warrant, by taking or holding the same, consents and agrees to be bound
by the terms, conditions, representations and warranties hereof, including the
registration provisions contained in Section 4 of the Subscription Agreement,
(and as a condition to any transfer of this Warrant the transferee shall execute
an agreement confirming the same), and, when this Warrant shall have been so
endorsed, the person in possession of this Warrant may be treated by the
Company, and all other persons dealing with this Warrant, as the absolute owner
hereof for any purpose and as the person entitled to exercise the rights
represented hereby, any notice to the contrary notwithstanding; provided,
however that until a transfer of this Warrant is duly registered on the books of
the Company or its agent, the Company may treat the Warrant Holder hereof as the
owner of this Warrant for all purposes.
7. Privileges of Stock Ownership. The Warrant Holder shall not have any
of the rights of a shareholder with respect to any Shares until the Warrant
Holder exercises this Warrant and pays the Exercise Price.
8. Entire Agreement. The Warrant Exercise Agreement is incorporated
herein by reference. This Warrant and the Warrant Exercise Agreement constitute
the entire agreement of the parties and supersede all prior undertakings and
agreements with respect to the subject matter hereof.
9. Notices. Any notice required to be given or delivered to the Company
under the terms of this Warrant shall be in writing and addressed to the Senior
Vice President, Corporate Development, and Secretary of the Company at its
principal corporate offices. Any notice required to be given or delivered to the
Warrant Holder shall be in writing and addressed to the Warrant Holder at the
address indicated below or to such other address as such party may designate in
writing from time to time to the Company. All notices shall be deemed to have
been given or delivered upon: personal delivery; five (5) days after deposit in
the United States mail by certified or registered mail (return receipt
requested); one (1) business day after deposit for next business day delivery
with any return receipt express courier (prepaid); or one (1) business day after
transmission by fax or telecopier.
10. Successors and Assigns. This Warrant shall be binding upon and inure
to the benefit of the successors and assigns of the Company. Subject to the
restrictions on transfer set forth herein, this Warrant shall be binding upon
the Warrant Holder and the Warrant Holder's heirs, executors, administrators,
legal representatives, successors and assigns.
11. Governing Law. This Warrant shall be governed by and construed in
accordance with the laws of the State of California as such laws are applied to
agreements between California residents entered into and to be performed
entirely within California.
12. Acceptance. The Warrant Holder has read and understands the terms
and provisions of this Warrant, and accepts this Warrant subject to all the
terms and conditions hereof. The Warrant Holder acknowledges that there may be
adverse tax consequences upon exercise of this Warrant or disposition of the
Shares and that the Warrant Holder should consult a tax adviser prior to such
exercise or disposition.
7
<PAGE> 25
13. Restriction on Conversion by Either the Registered Owner or the
Company. Notwithstanding anything herein to the contrary, in no event shall the
Warrant Holder or the Company have the right or be required to exercise this
Warrant if as a result of such conversion the aggregate number of shares of
Common Stock beneficially owned by the Warrant Holder and its affiliates (as
defined pursuant to Rule 12b-2 of the Exchange Act Rules) exceed 4.99% of the
outstanding shares of the Common Stock following such exercise. For purposes of
this Section 13, beneficial ownership shall be calculated in accordance with
Section 13(d) of the Securities Exchange Act of 1934, as amended. The provisions
of this Section 13 may be waived by the Warrant Holder as to itself (and solely
as to itself) upon not less than 65 days prior written notice to the Company,
and the provisions of this Section 13 shall continue to apply until such 65th
day (or later, if stated in the notice of waiver).
13.
8
<PAGE> 26
IN WITNESS WHEREOF, the Company has caused this Warrant to be executed
by its duly authorized representative as of January 18, 2000.
SCICLONE PHARMACEUTICALS, INC.
Signed:
-----------------------------
Printed: Shawn K. Singh, J.D.
Title: Chief Business Officer
Address:
901 Mariner's Island Boulevard
Suite 205 San Mateo, CA 94404
9
<PAGE> 27
EXHIBIT C
SCHEDULE OF EXCEPTIONS
TO THE
SUBSCRIPTION AGREEMENT
DATED AS OF JANUARY 14, 2000
On December 17, 1997, the Company entered into an Alpha Rights Acquisition
Agreement (the ("Acquisition Agreement") with Alpha-1 Biomedicals, the Company's
then-current licensor ("Alpha 1"), whereby the Company acquired Alpha 1's
worldwide marketing, development and manufacturing rights to the Company's lead
drug, ZADAXIN thymosin alpha 1. Pursuant to the Acquisition Agreement, which was
approved by Alpha 1's stockholders, the Company loaned Alpha 1 an aggregate
principal amount of $350,000 (the "Alpha 1 Loans"), approximately $325,000 of
which amount is still outstanding. As partial consideration for the acquired
assets, the Company also issued 600,000 shares of its Common Stock to Alpha 1
(the "Acquisition Shares").
As security for the repayment of the Alpha 1 Loans, the Company has a perfected
security interest in 69,085 of the Acquisition Shares (the "Collateral Shares").
Alpha-1 has been in default of its obligations repay the Alpha 1 Loans to the
Company since May 1999. In mid-December 1999, the Company began aggressively
pursuing repayment of the Alpha 1 Loans. In response to the Company's
collection's efforts, in late-December 1999, Alpha-1 stated that it believes it
may have claims against the Company for securities fraud. The Company has
responded to Alpha 1 that these claims are without merit and that the Company
intends to defend them vigorously if formally asserted against the Company.
Alpha 1's claims were asserted only after the Company began collection efforts
with respect to the Alpha 1 Loans. Alpha-1 has stated that they would like to
find an amicable solution to this situation and the Company and Alpha-1 are in
active discussions.
The Company believes that Alpha-1's only assets are the Collateral
Shares and 75,000 remaining Acquisition Shares held by Alpha 1 in a brokerage
account. The Company believes that Alpha 1 anticipates that the Company's stock
price will appreciate further during 2000 and is seeking a means to survive
without dissolving by holding its remaining 75,000 Acquisition Shares and
preventing the Company from forcing a sale of the Collateral Shares until after
the Company's stock price further appreciates to enable Alpha 1 to repay all of
its outstanding debts and recapitalize. The Company expects the matter to be
resolved in the near term by obtaining a release of claims, a $162,500 payment
from Alpha-1 from proceeds from the sale of the Collateral Shares and
cancellation of the balance of the Alpha 1 Loans.
<PAGE> 28
EXHIBIT D
TO
SUBSCRIPTION AGREEMENT
Form of Opinion of Gray Cary Ware & Freidenrich LLP
1. The Company has been duly organized and is validly existing and in
good standing under the laws of the State of California. The Company has all
necessary corporate power and authority to own its assets and to carry on its
business as presently conducted. The Company is duly qualified to transact
business as a foreign corporation and is in good standing under the laws of all
other United States jurisdictions where the ownership or leasing of its
properties or the conduct of its business requires such qualification, except
where the failure to be so qualified or in good standing would not have a
material adverse effect on the Company and its subsidiaries considered as a
whole.
2. The Company has all necessary corporate power and authority to enter
into the Agreement and to issue the Shares, the Warrants and the Warrant Shares
in accordance with the terms thereof.
3. The Company has an authorized capitalization consisting of 75,000,000
shares of Common Stock, no par value, and 10,000,000 shares of Preferred Stock,
no par value, consisting of 875,000 shares of Series A Preferred Stock,
2,000,000 shares of Series B Preferred Stock and 800,000 shares of Series C
Preferred Stock, no par value, except that 661,157 shares of Series C Preferred
Stock have been reacquired upon conversion and may not be reissued.
4. The issuance and sale of the Shares, the Warrants and the Warrant
Shares have been duly authorized by the Company. The Shares are duly and validly
issued, fully paid and nonassessable. The Warrant Shares, when and if issued and
delivered in accordance with the Warrants, will be duly and validly issued,
fully paid and nonassessable.
5. The execution and delivery of the Agreement has been duly authorized
by all necessary action of the Company and has been duly executed and delivered
by the Company, and is the legal, valid and binding agreement of the Company,
enforceable against the Company in accordance with its terms, subject, as to
enforcement, to the effect of bankruptcy, insolvency, reorganization, moratorium
and other laws of general applicability relating to or affecting creditors'
rights and to general principles of equity.
6. The execution and delivery by the Company of the Agreement does not
(i) violate any provision of the Restated Articles of Incorporation or Bylaws of
the Company, or (ii) violate any provision of any applicable federal or
California statute, rule or regulation to which the Company is subject.
7. The issuance to each of you of the Shares and the Warrants should be
exempt from the registration requirements under the Securities Act under either
Section 4(2) of the Securities Act or Regulation D thereunder.
<PAGE> 1
EXHIBIT 99.2
EXHIBIT A TO WARRANT
SCICLONE PHARMACEUTICALS, INC.
WARRANT EXERCISE AGREEMENT
SCICLONE PHARMACEUTICALS, INC.
901 Mariner's Island Boulevard, Suite 205
San Mateo, CA 94404
Attn: Shawn K. Singh, J.D.
The Warrant Holder hereby elects to purchase the number of shares (the
"Shares") of the Common Stock of SciClone Pharmaceuticals, Inc. (the "Company")
as set forth below, pursuant to that certain Warrant dated as of the date set
forth below (the "Warrant"), the terms and conditions of which are hereby
incorporated by reference (please print):
Warrant Holder:
Social Security or
Tax I.D. No.:
Address:
Warrant Date:
Date of Exercise
Exercise Price Per Share:
Number of Shares Purchased:
Total Exercise Price:
Exact Name of Title to Shares:
The Warrant Holder hereby delivers to the Company the Total Exercise
Price as follows (check and complete as appropriate):
[ ] in cash in the amount of $_________, receipt of which is
acknowledged by the Company;
[ ] through a "same-day-sale" commitment from the Warrant Holder and
the broker named below in the amount of $_________ and
substantially in the form attached hereto as Attachment 1;
[ ] through a "margin" commitment from the Warrant Holder and the
broker named below in the amount of $_________ and substantially
in the form attached hereto as Attachment 2;
Broker Name: Brokerage Firm:
---------------------- -----------------
10
<PAGE> 2
Tax Consequences. THE COMPANY IS UNDER NO OBLIGATION TO REPORT THE
EXERCISE OF THIS WARRANT TO THE INTERNAL REVENUE SERVICE OR ANY STATE OR LOCAL
INCOME TAX AUTHORITY. WARRANT HOLDER UNDERSTANDS THAT THE WARRANT HOLDER MAY
SUFFER ADVERSE TAX CONSEQUENCES AS A RESULT OF THE WARRANT HOLDER'S PURCHASE OR
DISPOSITION OF THE SHARES. THE WARRANT HOLDER REPRESENTS THAT THE WARRANT HOLDER
HAS CONSULTED WITH ANY TAX CONSULTANT(S) THE WARRANT HOLDER DEEMS ADVISABLE IN
CONNECTION WITH THE PURCHASE OR DISPOSITION OF THE SHARES AND THAT THE WARRANT
HOLDER IS NOT RELYING ON THE COMPANY FOR ANY TAX ADVICE.
------------------------------------
Name of Warrant Holder
------------------------------------
Signature of Warrant Holder
------------------------------------
Printed Name
------------------------------------
Title
11
<PAGE> 3
ATTACHMENT 1 TO WARRANT EXERCISE AGREEMENT
SAME DAY SALE COMMITMENT
--------------, ------
SCICLONE PHARMACEUTICALS, INC.
901 Mariner's Island Boulevard, Suite 205
San Mateo, CA 94404
Attn: Shawn K. Singh, J.D.
The undersigned Warrant Holder ("Warrant Holder") desires to exercise
that certain warrant described in the attached Warrant Exercise Agreement (the
"Warrant") with respect to ________ shares of SciClone Pharmaceuticals, Inc.
(the "Company") Common Stock (the "Number of Shares"), and to sell immediately
________ of the Number of Shares (the "Same-Day Sale Shares") through the
undersigned broker (the "Broker") and for the Broker to pay directly to the
Company from the proceeds from such sale $_________ (the "Exercise Price").
Accordingly, the Warrant Holder hereby represents as follows: (i)
Warrant Holder hereby irrevocably exercises the Warrant with respect to the
Number of Shares; and (ii) Warrant Holder hereby irrevocably elects to sell
through Broker the Same-Day-Sale Shares and unconditionally authorizes the
Company or its transfer agent to deliver certificates representing the
Same-Day-Sale Shares to the Broker.
The Broker hereby represents as follows: (i) the Broker is a member in
good standing of the National Association of Securities Dealers; and (ii) the
Broker irrevocably commits to pay to the Company, no more than one (1) business
day after receiving certificates representing the Same-Day-Sale Shares, the
Exercise Price by check or wire transfer to an account specified by the Company.
WARRANT HOLDER: BROKER:
----------------------------- ---------------------------------
(Name) (Name of Firm)
----------------------------- ---------------------------------
(Signature) (Signature)
----------------------------- ---------------------------------
(Printed) (Printed Name)
----------------------------- ---------------------------------
(Title) (Title)
12
<PAGE> 4
ATTACHMENT 2 TO WARRANT EXERCISE AGREEMENT
MARGIN COMMITMENT
--------------, -----
SCICLONE PHARMACEUTICALS, INC.
901 Mariner's Island Boulevard, Suite 205
San Mateo, CA 94404
Attn: Shawn K. Singh, J.D.
The undersigned Warrant Holder ("Warrant Holder") desires to exercise
that certain warrant described in the attached Warrant Exercise Agreement (the
"Warrant") with respect to ________ shares of SciClone Pharmaceuticals, Inc.
(the "Company") Common Stock (the "Number of Shares"), and to pledge immediately
________ of the Number of Shares (the "Margin Shares") through the undersigned
broker (the "Broker") as security for a loan from the Broker and for the Broker
to pay directly to the Company $_______ (the "Exercise Price").
Accordingly, the Warrant Holder hereby represents as follows: (i)
Warrant Holder hereby irrevocably exercises the Warrant with respect to the
Number of Shares; and (ii) Warrant Holder hereby irrevocably elects to pledge to
Broker the Margin Shares and unconditionally authorizes the Company or its
transfer agent to deliver certificates representing the Margin Shares to the
Broker.
The Broker hereby represents as follows: (i) the Broker is a member in
good standing of the National Association of Securities Dealers; and (ii) the
Broker irrevocably commits to pay to the Company, no more than one (1) business
day after receiving certificates representing the Margin Shares, the Exercise
Price by check or wire transfer to an account specified by the Company.
WARRANT HOLDER: BROKER:
----------------------------- ---------------------------------
(Name) (Name of Firm)
----------------------------- ---------------------------------
(Signature) (Signature)
----------------------------- ---------------------------------
(Printed) (Printed Name)
----------------------------- ---------------------------------
(Title) (Title)
13
