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As filed with the Securities and Exchange Commission on December 30, 1999
Registration No. 333-
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM S-3
REGISTRATION STATEMENT
Under
The Securities Act of 1933
----------------------
CELL THERAPEUTICS, INC.
(Exact name of Registrant as specified in its charter)
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WASHINGTON 2384 91-1533912
(State or other (Primary Standard Industrial (I.R.S. Employer
jurisdiction of Classification Code Number) Identification Number)
incorporation or 201 ELLIOTT AVENUE WEST
organization) SEATTLE, WASHINGTON 98119
(206) 282-7100
(Address, including zip code, and telephone number, including area code, of
Registrant's principal executive offices)
----------------------
JAMES A. BIANCO
PRESIDENT AND CHIEF EXECUTIVE OFFICER
CELL THERAPEUTICS, INC.
201 ELLIOTT AVENUE WEST
SEATTLE, WASHINGTON 98119
(206) 282-7100
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
----------------------
Copy to:
MICHAEL J. KENNEDY, Esq.
MICHAEL S. DORF, Esq.
TORREY J. MILLER, Esq.
WILSON SONSINI GOODRICH & ROSATI
650 PAGE MILL ROAD
PALO ALTO, CALIFORNIA 94304
(650) 493-9300
----------------------
Approximate date of commencement of proposed sale to the public: From time
to time after this registration statement becomes effective.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [_]
<PAGE>
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. [_]
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
==================================================================================================================================
Offering of Proposed Maximum
Aggregate Amount to Be Registration Price Aggregate Offering Amount of
Title of Each Class of Securities Registered(1) Per Share Price Registration Fee
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<S> <C> <C> <C> <C>
Common Stock
no par value........................... 6,148,087 shares(2) $3.25 $19,981,282.75(3) $5,276.00
==================================================================================================================================
</TABLE>
_________________
(1) In accordance with Rules 416 and 457 under the Securities Act, this
Registration Statement also covers such indeterminate number of additional
shares of Common Stock as may be issuable in connection with the conversion
of the Preferred Stock and exercise of the warrants described in footnote
(2) below, to prevent dilution resulting from stock splits, stock dividends
and similar transactions.
(2) A total of 4,624,277 shares of the Registrant's Common Stock are being
registered hereunder for resale upon conversion of shares of Series D
Convertible Preferred Stock into shares of Common Stock. A total of
1,523,810 shares of Registrant's Common Stock are being registered hereunder
for resale upon exercise of warrants to purchase 1,523,810 shares of Common
Stock at an exercise price of $2.625 per share.
(3) Pursuant to Rule 457(c) under the Securities Act of 1933, the proposed
maximum aggregate offering price and the amount of the registration fee are
calculated based on the average of the high and low prices of the Company's
Common Stock on December 27, 1999, as reported on the Nasdaq National
Market.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES
AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE
A FURTHER AMENDMENT THAT SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT
SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF THE
SECURITIES ACT OF 1933, AS AMENDED, OR UNTIL THE REGISTRATION STATEMENT SHALL
BECOME EFFECTIVE ON SUCH DATE AS THE SEC, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
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THE INFORMATION CONTAINED IN THIS PRELIMINARY PROSPECTUS IS NOT COMPLETE AND MAY
BE CHANGED. THESE SECURITIES MAY NOT BE SOLD UNTIL THE REGISTRATION STATEMENT
FILED WITH THE SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS
IS NOT AN OFFER TO SELL NOR DOES IT SEEK AN OFFER TO BUY THESE SECURITIES IN ANY
JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
SUBJECT TO COMPLETION, DATED DECEMBER 30, 1999
PRELIMINARY PROSPECTUS
6,148,087 SHARES
CELL THERAPEUTICS, INC.
COMMON STOCK
This Prospectus relates to the public offering, which is not being
underwritten, of 6,148,087 shares of our Common Stock which is held by some of
our current shareholders.
The holders of shares of Series D Convertible Preferred Stock of Cell
Therapeutics, Inc., a Washington corporation, named in this Prospectus (the
"Selling Stockholders") are selling up to 6,148,087 shares of the Company's
Common Stock acquired upon conversion of shares of the Company's Series D
Convertible Preferred Stock or exercise of certain warrants to purchase shares
of the Company's Common Stock.
The Selling Stockholders (or their permitted successors or assigns) propose
to sell the shares of Common Stock from time to time in transactions occurring
either on or off the Nasdaq National Market at prevailing market prices or at
negotiated prices. Sales may be made to brokers or to dealers, who are expected
to receive customary commissions or discounts.
The Selling Stockholders and any broker-dealers or other persons acting on
their behalf in connection with the sale of Common Stock under this Prospectus
may be deemed to be "underwriters" within the meaning of the Securities Act of
1933, as amended (the "Securities Act"), and any commissions received by them
and any profits realized by them on their sale of Common Stock as principals may
be deemed to be underwriting compensation under the Securities Act. As of the
date of this Prospectus, there are no special selling arrangements between any
broker-dealer or other person and the Selling Stockholders.
No period of time has been fixed within which the shares will be offered or
sold. None of the proceeds from the sale of the shares will be received by the
Company. The Company will pay all expenses with respect to this offering, except
for brokerage fees and commissions and transfer taxes for the Selling
Stockholders, which will be borne by the Selling Stockholders.
AN INVESTMENT IN THE SHARES OF CTI'S COMMON STOCK OFFERED HEREBY INVOLVES
CERTAIN RISKS. SEE "RISK FACTORS" BEGINNING ON PAGE 3 OF THIS PROSPECTUS.
The prices at which such shareholders may sell the shares will be
determined by the prevailing market price for the shares or in negotiated
transactions. We will not receive any of the proceeds from the sale of the
shares.
Our Common Stock is quoted on the Nasdaq National Market under the symbol
"CTIC." On December 27, 1999, the average of the high and low price for the
Common Stock was $3.25.
<PAGE>
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or passed upon the
adequacy or accuracy of this prospectus. Any representation to the contrary is a
criminal offense.
The date of this Prospectus is ________ __, 2000.
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No person has been authorized to give any information or to make any
representations other than those contained in this Prospectus in connection with
the offering made hereby, and if given or made, such information or
representations must not be relied upon as having been authorized by Cell
Therapeutics, Inc. (referred to in this Prospectus as "CTI" or the
"Registrant"), any selling shareholder or by any other person. Neither the
delivery of this Prospectus nor any sale made hereunder shall, under any
circumstances, create any implication that information herein is correct as of
any time subsequent to the date hereof. This Prospectus does not constitute an
offer to sell or a solicitation of an offer to buy any security other than the
securities covered by this Prospectus, nor does it constitute an offer to or
solicitation of any person in any jurisdiction in which such offer or
solicitation may not lawfully be made.
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports, proxy statements and other
information with the SEC. You may read and copy any document we file at the
SEC's Public Reference Room at 450 Fifth Street, N.W., Washington, D.C. 20549.
Please call the SEC at 1-800-SEC-0330 for further information on the operation
of the Public Reference Room. Our SEC filings are also available to the public
from our web site at http://www.ctiseattle.com or at the SEC's web site at
http://www.sec.gov. The SEC allows us to "incorporate by reference" the
information we file with them, which means that we can disclose important
information to you by referring you to those documents. The information
incorporated by reference is considered to be part of this prospectus, and later
information filed with the SEC will update and supersede this information. We
incorporate by reference the documents listed below and any future filings made
with the SEC under Section 13a, 13(c), 14, or 15(d) of the Securities Exchange
Act of 1934 until our offering is completed.
(a) Annual Report on Form 10-K for the fiscal year ended December 31,
1998, filed March 31, 1999, including certain information in CTI's Definitive
Proxy Statement in connection with CTI's 1999 Annual Meeting of Shareholders and
certain information in CTI's Annual Report to Shareholders for the fiscal year
ended December 31, 1998;
(b) Quarterly Reports on Form 10-Q for the quarters ended March 31,
1999, June 30, 1999 and September 30, 1999;
(c) The description of CTI common stock contained in its registration
statement on Form 10 filed June 27, 1996 and June 28, 1996, including any
amendments or reports filed for the purpose of updating such descriptions; and
(d) The description of CTI's Preferred Stock Purchase Rights,
contained in its registration statement on Form 8-A filed on November 15, 1996,
including any amendments or reports filed for the purpose of updating such
description.
You may request a copy of these filings, at no cost, by writing or
telephoning us at the following address:
Louis A. Bianco
Executive Vice President, Finance and Administration
Cell Therapeutics, Inc.
201 Elliott Avenue West
Seattle, WA 98119
(206) 282-7100
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You should rely only on the information incorporated by reference or
provided in this prospectus or the prospectus supplement. We have authorized no
one to provide you with different information. We are not making an offer of
these securities in any state where the offer is not permitted. You should not
assume that the information in this prospectus or any prospectus supplement is
accurate as of any date other than the date on the front of the document.
THE COMPANY
CTI is a pharmaceutical research and development company that focuses on
the discovery, development and commercialization of small molecule drugs
which regulate the metabolism of lipids and phospholipids relevant to the
treatment of cancer. The Company's initial business strategy is to build a
diversified, vertically integrated portfolio of oncology products targeting
major unmet needs in the treatment of patients with cancer. CTI's principal
executive offices are located at 201 Elliott Avenue West, Seattle, WA 98119.
CTI's telephone number is (206) 282-7100.
FACTORS AFFECTING OUR OPERATING RESULTS
The risks and uncertainties described below are not the only ones facing
us. Additional risks and uncertainties not presently known to us or that we
currently deem immaterial may also impair our business operations. If any of the
following risks actually occur, our business, financial condition or results of
operations could be materially adversely affected. In such case, the trading
price of our common stock could decline. This Form S-3 also contains "forward-
looking" statements that involve risks and uncertainties. Our actual results
could differ materially from those anticipated in these forward-looking
statements as a result of certain factors, including the risks faced by us
described below and elsewhere in this Form S-3.
We Are a Mid Stage Development Company
We have one drug candidate Apra in phase II clinical trials and a second
candidate PG-TXL about to enter human clinical trials. The remainder of our drug
candidates are still in research and preclinical development. We will have to
commit significant time and resources to develop these and additional product
candidates. We are dependent on the successful completion of our trials for Apra
and PG-TXL and obtaining regulatory approval in order to generate revenues.
The failure to generate such revenues may preclude us from continuing our
research and development of these and other product candidates.
There Is No Certainty of Positive Clinical Trial Outcomes
Our first and second leading drug candidates, Apra and PG-TXL, are
currently being tested in or about to begin human clinical trials. Clinical
trials or drug candidates involve the testing of potential therapeutic agents in
humans to determine the safety and efficacy of drug candidates. Many drugs in
human clinical trials fail to demonstrate the desired safety and efficacy
characteristics. Drugs in later stages of development may fail despite having
progressed through initial human testing. A number of companies in the
pharmaceutical industry, including CTI, have suffered significant setbacks in
advanced clinical trials, even after reporting promising results in earlier
trials. In two Phase III trials for a drug candidate called lisofylline (LSF),
completed in March 1998 and October 1999, we failed to meet our primary
endpoints, even though we met our endpoints in two earlier Phase II trials for
LSF. In addition, data obtained from clinical trials are susceptible to varying
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interpretations. There can be no assurance that government regulators or our
collaborators will agree with our interpretation of our future clinical trial
results. We cannot assure you that the clinical trials of Apra, PG-TXL or any of
our future drug candidates will be successful.
Our Product Development Programs Are In an Intermediate Stage
Since our inception in 1991, we have dedicated substantially all of our
resources to the research and development of our technologies and related
compounds. All of our compounds currently are in research or development. Two
have entered human clinical trials. None has been submitted for marketing
approval. Preclinical studies of product candidates do not ensure safety or
efficacy in humans and are not necessarily indicative of the results that may be
achieved in human clinical trials. There can be no assurance that any of our
other compounds will enter human clinical trials on a timely basis, if at all,
or that we will develop any product candidates suitable for commercialization.
Prior to commercialization, each product candidate will require significant
additional research, development and preclinical testing and extensive clinical
investigation before submission of any regulatory application for marketing
approval. Potential products that appear to be promising at early stages of
development may not reach the market for a number of reasons. Potential products
may:
. be found ineffective or cause harmful side effects during clinical
testing or clinical trials,
. fail to receive necessary regulatory approvals,
. be difficult to manufacture on a large scale,
. be uneconomical to produce,
. fail to achieve market acceptance, or
. be precluded from commercialization by proprietary rights of third
parties.
We cannot assure you that our product development efforts or that of our
collaborative partners' efforts will be successfully completed, that required
regulatory approvals will be obtained or that any products, if introduced, will
be successfully marketed or achieve customer acceptance. Failure to identify and
commercialize any products would have a material adverse affect on our business,
financial condition or results of operations.
We Are Dependent on Collaborators and Others
A key element of our strategy is to enhance our drug discovery and
development programs and to fund our capital requirements, in part, by entering
into various collaborative arrangements with corporate partners, academic
collaborators and licensors. In 1996, we entered into a Collaboration Agreement
with subsidiaries of Johnson & Johnson ("Johnson & Johnson") to jointly develop
and commercialize LSF. On November 16, 1998, the Collaboration Agreement was
amended. Under the terms of the amended Collaboration Agreement, we assumed all
responsibility for further development of LSF as of January 1, 1999. On October
11, 1999 the Company announced the results of its Phase III trial from LSF in
treating patients with AML. The preliminary endpoint of reduction in the
incidence of serious neutropemia-associated infections was not met. In
accordance with the amended Collaboration Agreement, the Company has prepared
the data from that trial for Johnson & Johnson's review. The Company does not
anticipate that Johnson & Johnson will elect to resume responsibility for
development and commercialization of LSF.
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If Johnson & Johnson does not resume its development activities, then we
will be free to license LSF to other third parties. In January 1998, we entered
into an agreement with City of Hope National Medical Center to form a joint
venture to discover and develop a new class of drugs to treat diabetes and its
complications. In July 1998, we in-licensed exclusive worldwide rights to PG-
TXL, a water-soluble and potentially more effective form of the cancer drug,
Taxol. However, we cannot assure you that we will be able to negotiate
acceptable collaborative arrangements in the future or that these
collaborations, if entered into, will be on terms favorable to us. If we are
unable to enter into future collaborations with capable partners and on
commercially reasonable terms, the development and commercialization of our
product candidates would be delayed and possibly postponed indefinitely.
We Must Be Able to Protect Our Intellectual Property
Our success depends in part on our ability to:
. obtain patent protection for our products or processes both in the
United States and other countries,
. protect trade secrets,
. operate without infringing upon the proprietary rights of others, and
. prevent others from infringing on our proprietary rights.
The patent position of biopharmaceutical firms generally is highly
uncertain and involves complex legal and factual questions. The U.S. Patent and
Trademark Office has not established a consistent policy regarding the breadth
of claims that it will allow in patents affecting subject matters of interest to
CTI. If it allows broad claims, the number and cost of patent interference
proceedings in the U.S. and the risk of infringement litigation may increase. If
it allows narrow claims, the risk of infringement may decrease, but the value of
our rights under our patents, licenses and patent applications may also
decrease.
We cannot assure you that patent applications in which we have rights will
ever issue as patents or that the claims of any issued patents will afford
meaningful protection for our technologies or products. In addition, we cannot
assure you that any patents issued to us or our licensors will not be challenged
and subsequently narrowed, invalidated or circumvented. Litigation, interference
proceedings or other governmental proceedings that we may become involved in
with respect to our proprietary technologies or the proprietary technology of
others could result in substantial cost to us. Patent litigation is widespread
in the biotechnology industry, and it is not possible to predict how any patent
litigation will affect us. We attempt to monitor the patent filings of our
competitors in an effort to guide the design and development of our products to
avoid infringement.
Notwithstanding these efforts, however, third parties may challenge the
patents that have been issued or licensed to us. In addition, patents issued to
third parties may cover our products and services as ultimately developed. We
may need to acquire licenses to these patents or challenge the validity of these
patents. We may not be able to license any patent rights on acceptable terms or
successfully challenge such patents. The need to do so will depend on the scope
and validity of these patents and ultimately on the final design or formulation
of the products and services that we develop.
We have rights to numerous patents and patent applications worldwide.
Nonetheless, we cannot guarantee that the patents that we currently have or will
obtain in the future will effectively protect our technology.
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We also rely upon trade secrets, proprietary know-how and continuing
technological innovation to remain competitive. Third parties may independently
develop such know-how or otherwise obtain access to our technology. While our
employees, consultants and corporate partners with access to proprietary
information are generally required to enter into confidentiality agreements,
these agreements may not be honored.
Our Lipid and Polymer Based Technologies Are Uncertain
We rely predominantly upon our lipid and polymer based technologies for the
discovery, development and commercialization of drugs for the treatment of
cancer. Results from our preclinical research indicate that certain kinds of
lipids and phospholipids may play an important role in the process by which
normal cells become cancerous. To date, we have dedicated our resources
primarily to the discovery of novel drugs candidates that we believe regulate
lipids as a new approach to the treatment of cancer. We also rely on our polymer
technology and its application to certain cancer drugs like paclitaxel. We
believe our polymer technology will allow certain currently marketed cancer
drugs like paclitaxel to be administered to patients with fewer side effects and
better anti cancer effects. The causes of cancer are complex however, and the
precise role of lipids and phospholipids is not fully known. In addition,
polymer based drug delivery agents such as ours have not been tested in humans.
See "--Scientific Overview." We cannot assure you that our lipid-based or
polymer based technological approaches are correct or that our drug candidates
will be proven safe or effective. We also cannot assure you that we ultimately
will be able to develop commercial products from our drug candidates.
Competition Is Intense
The biotechnology and pharmaceutical industries are intensely competitive.
We have numerous competitors in the United States and elsewhere. Our competitors
include major, multinational pharmaceutical and chemical companies, specialized
biotechnology firms and universities and other research institutions. Many of
these competitors have greater financial and other resources, larger research
and development staffs and more effective marketing and manufacturing
organizations, than we do. In addition, academic and government institutions
have become increasingly aware of the commercial value of their research
findings. These institutions are now more likely to enter into exclusive
licensing agreements with commercial enterprises, including our competitors, to
market commercial products.
We cannot give any assurance that our competitors will not succeed in
developing or licensing technologies and drugs that are more effective or less
costly than any we are developing. Our competitors may succeed in obtaining FDA
or other regulatory approvals for drug candidates before we do. We face direct
competition from many companies focusing on areas such as cell signal
transduction, surface receptor technology, transcription factors and gene
therapies. We cannot give any assurance that drugs resulting from our research
and development efforts, if approved for sale, will be able to compete
successfully with our competitors' existing products or products under
development.
Rapid Technological Change Could Make Our Products Obsolete
Biotechnology and related pharmaceutical technology have undergone and are
subject to rapid and significant change. We expect that the technologies
associated with biotechnology research and development will continue to develop
rapidly. Our future will depend in large part on our ability to maintain a
competitive position with respect to these technologies. Any compounds, products
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or processes that we develop may become obsolete before we recover any expenses
incurred in connection with developing these products.
We Have a History of Losses and an Expectation of Future Losses
CTI was incorporated in 1991 and has incurred a net operating loss every
year. As of September 30, 1999, we had an accumulated deficit of approximately
$150.0 million. Losses have resulted principally from costs incurred in research
activities aimed at discovering and developing our product candidates, and from
general and administrative costs associated with our operations. We currently
have no product revenue, and we cannot assure you that we will ever be able to
earn such revenue or that our operations will become profitable, even if we are
able to commercialize any products. We will be required to conduct significant
research, development, testing and regulatory compliance activities that,
together with projected general and administrative expenses, are expected to
result in substantial increasing operating losses for at least the next several
years. Our future profitability depends, in part, on:
. our obtaining regulatory approval for Apra and PG-TXL, our two lead
product candidates,
. our entering into agreements for the commercialization, manufacture
and marketing of Apra, PG-TXL, and
. our entering into agreements for the development, commercialization,
manufacture and marketing of additional products derived from our other drug
development and discovery programs.
We cannot assure you that we, or any potential collaborative partners, will
obtain required regulatory approvals, or successfully develop, commercialize,
manufacture and market product candidates. We also cannot assure you that we
will ever achieve product revenue or profitability.
We Will Require Substantial Additional Capital
We expect that the capital raised through the sale of Series D Preferred
Stock and our existing capital resources and the interest earned thereon, will
enable us to maintain our current and planned operations at least through the
first quarter of 2001. Beyond that time, we will require substantial funds to:
(1) continue our research and development programs, (2) in-license or acquire
additional technologies, and (3) conduct preclinical studies and clinical
trials. We may be required to raise additional capital to fund our operations
repeatedly. Such capital may be raised through public or private equity
financings, partnerships, debt financings, bank borrowings, or other sources.
Our capital requirements will depend upon numerous factors, including the
following:
. the establishment of additional collaborations,
. the development of competing technologies or products,
. changing market conditions,
. the cost of protecting our intellectual property rights,
. the purchase of capital equipment,
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. the progress of our drug discovery and development programs, the
progress of our collaborations and receipt of any option/license, milestone and
royalty payment resulting from those collaborations, and
. in-licensing and acquisition opportunities.
Additional funding may not be available on favorable terms or at all. If
adequate funds are not otherwise available, we may be required to curtail
operations significantly. To obtain additional funding, we may need to enter
into arrangements that require us to relinquish rights to certain technologies,
drug candidates, products and/or potential markets. To the extent that
additional capital is raised through the sale of equity, or securities
convertible into equity, you may experience dilution of your proportionate
ownership of CTI.
Government Regulation Is Extensive and There Is No Assurance of FDA Approval
The pharmaceutical industry is subject to stringent regulation with respect
to product safety and efficacy by various federal, state and local authorities.
Of particular significance are the FDA's requirements covering research and
development, testing, manufacturing, quality control, labeling and promotion of
drugs for human use. A pharmaceutical product cannot be marketed in the U.S.
until it has been approved by the FDA, and then can only be marketed for the
indications and claims approved by the FDA. As a result of these requirements,
the length of time, the level of expenditures and the laboratory and clinical
information required for approval of a NDA (New Drug Application) are
substantial and can require a number of years, although recently revised
regulations are designed to reduce somewhat the time for approval of new
products. In addition, data obtained from preclinical studies and clinical
trials are susceptible to varying interpretations which could delay, limit or
prevent regulatory approval. Furthermore, studies conducted with alternative
designs or alternative patient populations could produce results which vary from
those obtained by us. We cannot assure you that our data or our interpretation
of our data will be accepted by governmental regulators, the medical community
or our collaborators.
If our products are marketed abroad, they will also be subject to export
requirements and to regulation by foreign governments. The applicable regulatory
approval process is lengthy and expensive and must be completed prior to the
commercialization of a product. We cannot give any assurance that we will be
able to obtain necessary regulatory approvals on a timely basis, if at all, for
any of our products under development. Delays in receipt or failure to receive
such approvals or failure to comply with existing or future regulatory
requirements could have a material adverse effect on our business, financial
condition and results of operations.
Product development and approval to meet FDA regulatory requirements takes
a number of years, involves the expenditure of substantial resources and is
uncertain. Many products that initially appear promising ultimately do not reach
the market because they are not found to be safe or effective.
In addition, the current regulatory framework could change and additional
regulations may arise at any stage of product development that may affect
approval, delay the submission or review of an application or require additional
expenditures. The effect of government regulation may be to delay marketing of
our products for a considerable or indefinite time, impose costly procedural
requirements and furnish a competitive advantage to larger companies or
companies more experienced in regulatory affairs. Delays in obtaining
governmental regulatory approval could adversely affect our marketing strategy
as well as our ability to generate revenue from product sales. The failure to
obtain marketing approval of our products on a timely basis, or at all, would
have a material adverse effect on our business, financial condition and results
of operations.
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We Rely on Third-Party Manufacturers
We currently do not have internal facilities for the manufacture of any of
our products for clinical or commercial production.
We will need to develop additional manufacturing resources, enter into
collaborative arrangements with other parties which have established
manufacturing capabilities or elect to have other third parties manufacture our
products on a contract basis. We are a party to such agreements with third-party
vendors to furnish Apra and PG-TXL for ongoing and future clinical studies. We
are dependent on such collaborators or third parties to supply us in a timely
way with products manufactured in compliance with standards imposed by the FDA
and foreign regulators. We cannot assure you that the manufacturing facilities
of contract manufacturers will comply with applicable manufacturing regulations
of the FDA or meet our requirements for quality, quantity or timeliness.
We Lack Significant Sales and Marketing Capabilities
We have no direct experience in marketing, sales or distribution of any of
the Company's products. We believe, however, that the United States oncology
market is accessible by a limited marketing staff and field sales organization.
Our strategy for commercializing our oncology products is to establish a
strategic alliance with a corporate partner that has an established, skilled,
and experienced field sales organization with which to enter a co-promotional
agreement within the U.S. There can be no assurance that we will be able to
establish such a strategic alliance. Should we have to market and sell our
products directly, we would need to develop a marketing and sales force with
technical expertise and distribution capability. The creation of infrastructure
to commercialize pharmaceutical products is an expensive and time-consuming
process. There can be no assurance that we would be able to develop the
necessary marketing and sales capabilities or be successful in gaining market
acceptance for our products.
We Depend on Certain Key Personnel
We are highly dependent on the principal members of our scientific and
management staff. Recruiting and retaining qualified scientific personnel to
perform research and development work are critical to CTI's success. There is
intense competition for qualified scientists and managerial personnel from
numerous pharmaceutical and biotechnology companies, as well as from academic
and government organizations, research institutions and other entities. The loss
of any principal member of our scientific or management staff, or failure to
attract or retain other key scientific personnel employees, could have a
material adverse effect on our business, financial condition and results of
operations. In addition, we rely on consultants and advisors, including our
scientific and clinical advisors, to assist us in formulating our research and
development strategy. All of our consultants and advisors are employed by other
employers or are self-employed, and have commitments to or consulting or
advisory contracts with other entities that may limit their availability to us.
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There Is Risk of Product Liability and We Face Potential Difficulties In
Obtaining Insurance
Our business exposes us to potential product liability risks inherent in
the testing, manufacturing and marketing of human pharmaceutical products, and
we cannot assure you that we will be able to avoid significant product liability
exposure. Except for insurance covering product use in our clinical trials, we
do not currently have any product liability insurance, and we cannot assure you
that we will be able to obtain or maintain such insurance on acceptable terms or
that any insurance obtained will provide adequate coverage against potential
liabilities. Our inability to obtain sufficient insurance coverage at an
acceptable cost or otherwise to protect against potential product liability
claims could prevent or limit the commercialization of any products we develop.
A successful product liability claim in excess of our insurance coverage could
have a material adverse effect on our business, financial condition and
prospects.
Uncertainty Regarding Third-Party Reimbursement and Health Care Cost Containment
Initiatives May Impact Our Revenue
Our ability to commercialize our products successfully will be affected by
the ongoing efforts of governmental and third-party payors to contain or reduce
the cost of health care. Governmental and other third-party payors increasingly
are attempting to contain health care costs by:
. challenging the prices charged for health care products and services,
. limiting both coverage and the amount of reimbursement for new
therapeutic products,
. denying or limiting coverage for products that are approved by the FDA
but are considered experimental or investigational by third-party payors, and
. refusing in some cases to provide coverage when an approved product is
used for disease indications in a way that has not received FDA marketing
approval.
In addition, the trend toward managed health care in the United States, the
growth of organizations such as health maintenance organizations, and
legislative proposals to reform healthcare and government insurance programs
could significantly influence the purchase of healthcare services and products,
resulting in lower prices and reducing demand for our products.
If we succeed in bringing any of our proposed products to the market, we
cannot assure you that they will be considered cost-effective or that third-
party reimbursement will be available or sufficient. In addition, legislation
and regulations affecting the pricing of pharmaceuticals may change in ways
adverse to us before or after any of our proposed products are approved for
marketing. While we cannot predict whether any such legislative or regulatory
proposals will be adopted, the adoption of such proposals could have a material
adverse effect on our business, financial condition and results of operations.
We Cannot Assure Market Acceptance of Our Product
We cannot assure you that our drug candidates, if approved by the FDA and
other regulatory agencies, will achieve market acceptance. The degree of market
acceptance will depend on a number of factors, including:
. the receipt and timing of regulatory approvals
. the availability of third-party reimbursement, and
-11-
<PAGE>
. the establishment and demonstration in the medical community of the
clinical safety, efficacy and cost-effectiveness of our drug candidates and
their advantages over existing technologies and therapeutics.
We cannot assure you that we will be able to manufacture and successfully
market our drug candidates even if they perform successfully in clinical
applications. Also, we cannot assure you that physicians or the medical
community in general will accept and utilize any therapeutic products that we
may develop.
The Year 2000 Issue Could Impact Our Business
The Company has completed the assessment of its computer systems to
determine the extent of modifications required so that its computer systems will
function properly with respect to dates in the year 2000 and thereafter. The
Company's systems are all relatively new and PC-based. All of the Company's
business software programs, including a Year 2000 compliant fixed asset module
installed in the first quarter of 1999, have been evaluated as Year 2000
compliant. In the first quarter of 1999 the Company completed an assessment of
its non-information technology ("non-IT") systems. Critical electro-mechanical
instruments containing software have been evaluated for Year 2000 compliance.
The Company has also initiated formal communications with all of its significant
suppliers to determine the extent to which the Company's interface systems are
vulnerable to those third parties' failure to remedy their own Year 2000 issues.
During the first quarter of 1999, the Company completed its follow up with these
suppliers to determine the extent of alternative sources or contingency plans
that are required. The Company presently believes the Year 2000 issue will not
pose significant operational problems for its computer systems, non-IT systems
or third-party relationships.
The Company has been continually upgrading its information technology
systems and critical laboratory instrumentation since inception in 1992. The
Company has not incurred to date, and does not have plans currently to incur,
material additional costs to accelerate the replacement of its existing
information technology systems or critical laboratory instrumentation due to
Year 2000 issues. Costs incurred to date and costs estimated to complete the
Year 2000 project are not expected to be material.
If corrections to the Company's Year 2000 issues are not completed, or the
systems of other companies on which the Company's systems rely are not timely
converted, the Year 2000 issue could have a material impact on the Company's
business, prospects, financial condition, liquidity and results of operations.
These impacts could include, but are not limited to, future revenue delays due
to delayed research, development, clinical trials or agency approvals.
The Company presently believes that the Year 2000 issues can be effectively
avoided, and has developed for each critical activity a contingency plan to
allow operations to continue even if significant issues are experienced. The
Company has a team assigned to review all information technology systems, all
equipment, and vendors of equipment and services that may be impacted by Year
2000 issues.
We Use Hazardous Materials
Our research and development activities involve the controlled use of
hazardous materials, chemicals and various radioactive compounds. We are subject
to federal, state and local laws and regulations governing the use, manufacture,
storage, handling and disposal of such materials and certain waste products.
Although we believe that our safety procedures for handling and disposing of
such materials comply with the standards prescribed by state and federal
regulations, the risk of accidental contamination or injury from these materials
cannot be eliminated completely. In the event of such an accident, we could be
held liable for any damages that result and any such liability not covered by
insurance could exceed our resources.
-12-
<PAGE>
Ownership of Our Common Stock Is Concentrated
Directors and officers of CTI, and their affiliates, beneficially own in
the aggregate 4,085,347 shares of our Common Stock (including shares of Common
Stock subject to options or warrants exercisable or convertible within 60 days
of December 1, 1999), representing approximately 25.04 percent of the voting
power of our outstanding securities. Such concentration of ownership may have
the effect of delaying, deferring or preventing a change in control of the
Company.
Our Stock Price May Be Volatile
The market price for securities of biopharmaceutical and biotechnology
companies, including that of CTI, historically have been highly volatile, and
the market from time to time has experienced significant price and volume
fluctuations that are unrelated to the operating performance of such companies.
Factors that may have a significant impact on the market price and marketability
of our Common Stock include:
. announcements of technological innovations or new commercial
therapeutic products by us, our collaborative partners or our present
or potential competitors,
. announcements by us or others of results of preclinical testing and
clinical trials,
. developments or disputes concerning patent or other proprietary
rights,
. developments in our relationships with collaborative partners,
. acquisitions,
. litigation,
. adverse legislation,
. changes in governmental regulation, third-party reimbursement
policies, the status of our regulatory approvals or applications,
. changes in earnings,
. changes in securities analysts' recommendations,
. changes in health care policies and practices,
. economic and other external factors,
. period-to-period fluctuations in our financial result, and
. general market conditions.
Fluctuations in the trading price or liquidity of our Common Stock may
adversely affect our ability to raise capital through future equity financings.
-13-
<PAGE>
Our Charter Documents Contain Certain Anti-Takeover Provisions and We Have a
Rights Plan
Our Restated Articles of Incorporation and Bylaws contain provisions that
may make it more difficult for a third party to acquire or make a bid for us.
These provisions could limit the price that certain investors might be willing
to pay in the future for shares of our Common Stock. In addition, shares of our
preferred stock may be issued in the future without further shareholder approval
and upon such terms and conditions and having such rights, privileges and
preferences, as the Board of Directors may determine. The rights of the holders
of Common Stock will be subject to, and may be adversely affected by, the rights
of any holders of preferred stock that may be issued in the future. The
issuance of preferred stock, while providing desirable flexibility in connection
with possible acquisitions and other corporate purposes, could have the effect
of making it more difficult for a third party to acquire, or of discouraging a
third party from acquiring, a majority of our outstanding voting stock. We have
no present plans to issue any shares of preferred stock. In addition, we have
adopted a shareholder rights plan that, along with certain provisions of our
Restated Articles of Incorporation, may have the effect of discouraging certain
transactions involving a change of control of CTI.
USE OF PROCEEDS
CTI will not receive any of the net proceeds from the sale of the shares of
CTI Common Stock offered hereby, all of which proceeds will be received by the
Selling Shareholders.
SELLING SHAREHOLDERS
The following table sets forth the number of shares owned by each of the
Selling Shareholders. None of the Selling Shareholders has had a material
relationship with CTI within the past three years other than as a result of the
ownership of the shares or other securities of CTI. No estimate can be given as
to the amount of shares that will be held by the Selling Shareholders after
completion of this offering because the Selling Shareholders may offer all or
some of the shares and because there currently are no agreements, arrangements
or understandings with respect to the sale of any of the shares. The shares
offered by this prospectus may be offered from time to time by the Selling
Shareholders named below.
<TABLE>
<CAPTION>
Number of Shares
Shares of Common Stock Offered hereby for Shares of Common Stock
Beneficially Owned Prior to Stockholder's Beneficially Owned
Offering Account/(2)(3)/ After the Offering
---------------------------------- ---------------------------- ----------------------------------
Name of Beneficial Owner Number Percentage/(1)/ Number Percentage/(1)/
- ------------------------------- ------------------ --------------- --------------------------- ------------------ ---------------
<S> <C> <C> <C> <C> <C>
The Aries Master Fund 0 * 1,037,797 1,037,797 6.25
Aries Domestic Fund, L.P. 0 * 420,529 420,529 2.63
Aries Domestic Fund II, L.P. 0 * 32,585 32,585 *
Essex Woodlands Health 0 * 3,688,852 3,688,852 19.16
Ventures Fund IV, L.P.
Caduceus Capital Trust 0 * 410,692 410,692 2.57
Caduceus Capital II, L.P. 0 * 204,116 204,116 1.29
Wayne Rothbaum 0 * 122,962 122,962 *
Steven Olivera 0 * 122,962 122,962 *
Joseph Edelman 0 * 61,481 61,481 *
Mitchell Silber 0 * 46,111 46,111 *
</TABLE>
____________________
-14-
<PAGE>
* Represents beneficial ownership of less than one percent.
(1) Based on the number of shares outstanding on December 1, 1999.
(2) Assumes sale of all shares of Common Stock offered by the Selling
Stockholders, based on the fixed conversion ratio price of $2.16250 per
share and exercise of warrants to purchase 1,523,810 shares of Common Stock.
The Company has registered for resale under this Prospectus a maximum of up
to 6,148,087 shares of its Common Stock. In addition, the actual number of
shares of Common Stock offered for resale may be higher or lower based on
issuances of additional shares in the event of any future stock dividends,
stock distributions, stock splits or similar capital readjustments.
(3) For each Selling Stockholder, includes shares of Common Stock issuable upon
conversion of shares of Series D Preferred Stock (assuming a conversion
price of $2.16250 per share), and also includes shares of Common Stock
issuable upon exercise in full of such Selling Stockholder's pro rata share
of warrants to purchase a total of 1,523,810 shares of Common Stock.
PLAN OF DISTRIBUTION
CTI is registering all 6,148,087 shares (the "Shares") on behalf of certain
selling shareholders. All of the shares either originally were issued by us or
will be issued upon the conversion of Series D Preferred Stock or upon exercise
of warrants to acquire shares of our common stock. CTI will receive no proceeds
from this offering. The Selling Shareholders named in the table above or
pledgees, donees, transferees or other successors-in-interest selling shares
received from a named selling shareholder as a gift, partnership distribution or
other non-sale-related transfer after the date of this prospectus (collectively,
the "Selling Shareholders") may sell the shares from time to time. The Selling
Shareholders will act independently of CTI in making decisions with respect to
the timing, manner and size of each sale. The sales may be made on one or more
exchanges or in the over-the-counter market or otherwise, at prices and at terms
then prevailing or at prices related to the then current market price, or in
negotiated transactions. The Selling Shareholders may effect such transactions
by selling the shares to or through broker-dealers. The shares may be sold by
one or more of, or a combination of, the following:
. a block trade in which the broker-dealer so engaged 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-dealer as principal and resale by such broker-
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, and
. in privately negotiated transactions.
To the extent required, this prospectus may be amended or supplemented from
time to time to describe a specific plan of distribution. In effecting sales,
broker-dealers engaged by the Selling Shareholders may arrange for other broker-
dealers to participate in the resales.
The Selling Shareholders may enter into hedging transactions with broker-
dealers in connection with distributions of the shares or otherwise. In such
transactions, broker-dealers may engage in short sales of the shares in the
course of hedging the positions they assume with Selling Shareholders. The
Selling Shareholders also may sell shares short and redeliver the shares to
close out such short positions. The Selling Shareholders may enter into option
or other transactions with broker-dealers which require the delivery to the
broker-dealer of the shares. The broker-dealer may then resell or otherwise
transfer such shares pursuant to this prospectus. The Selling Shareholders also
may loan or pledge the shares to a broker-dealer. The broker-
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<PAGE>
dealer may sell the shares so loaned, or upon a default the broker-dealer may
sell the pledged shares pursuant to this prospectus.
Broker-dealers or agents may receive compensation in the form of
commissions, discounts or concessions from Selling Shareholders. Broker-dealers
or agents may also receive compensation from the purchasers of the shares for
whom they act as agents or to whom they sell as principals, or both.
Compensation as to a particular broker-dealer might be in excess of customary
commissions and will be in amounts to be negotiated in connection with the sale.
Broker-dealers or agents and any other participating broker-dealers or the
Selling Shareholders may be deemed to be "underwriters" within the meaning of
Section 2(11) of the Securities Act in connection with sales of the shares.
Accordingly, any such commission, discount or concession received by them and
any profit on the resale of the shares purchased by them may be deemed to be
underwriting discounts or commissions under the Securities Act. Because Selling
Shareholders may be deemed to be "underwriters" within the meaning of Section
2(11) of the Securities Act, the Selling Shareholders will be subject to the
prospectus delivery requirements of the Securities Act. In addition, any
securities covered by this prospectus which qualify for sale pursuant to Rule
144 promulgated under the Securities Act may be sold under Rule 144 rather than
pursuant to this prospectus. The Selling Shareholders have advised CTI that
they have not entered into any agreements, understandings or arrangements with
any underwriters or broker-dealers regarding the sale of their securities.
There is no underwriter or coordinating broker acting in connection with the
proposed sale of shares by Selling Shareholders.
The shares will be sold only through registered or licensed brokers or
dealers if required under applicable state securities laws. In addition, in
certain states the shares may not be sold unless they have been registered or
qualified for sale in the applicable state or an exemption from the registration
or qualification requirement is available and is complied with.
Under applicable rules and regulations under the Exchange Act, any person
engaged in the distribution of the shares may not simultaneously engage in
market making activities with respect to our common stock for a period of two
business days prior to the commencement of such distribution. In addition, each
Selling Shareholder will be subject to applicable provisions of the Exchange Act
and the associated rules and regulations under the Exchange Act, including
Regulation M, which provisions may limit the timing of purchases and sales of
shares of our common stock by the Selling Shareholders. CTI will make copies of
this prospectus available to the Selling Shareholders and has informed them of
the need for delivery of copies of this prospectus to purchasers at or prior to
the time of any sale of the shares.
CTI will file a supplement to this prospectus, if required, pursuant to
Rule 424(b) under the Securities Act upon being notified by a Selling
Shareholder that any material arrangement has been entered into with a broker-
dealer for the sale of shares through a block trade, special offering, exchange
distribution or secondary distribution or a purchase by a broker or dealer. Such
supplement will disclose:
. the name of each such Selling Shareholder and of the participating
broker-dealer(s),
. the number of shares involved,
. the price at which such shares were sold,
. the commissions paid or discounts or concessions allowed to such broker-
dealer(s), where applicable,
. that such broker-dealer(s) did not conduct any investigation to verify
the information set out or incorporated by reference in this prospectus,
and
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<PAGE>
. other facts material to the transaction.
In addition, upon being notified by a Selling Shareholder that a donee or
pledgee intends to sell more than 500 shares, CTI will file a supplement to this
prospectus.
CTI will bear all costs, expenses and fees in connection with the
registration of the shares. The Selling Shareholders will bear all commissions
and discounts, if any, attributable to the sales of the shares. The Selling
Shareholders may agree to indemnify any broker-dealer or agent that participates
in transactions involving sales of the shares against certain liabilities,
including liabilities arising under the Securities Act. The Selling
Shareholders have agreed to indemnify certain persons, including broker-dealers
and agents, against certain liabilities in connection with the offering of the
shares, including liabilities arising under the Securities Act.
-17-
<PAGE>
LEGAL MATTERS
The validity of the securities offered hereby will be passed upon for CTI
by Wilson Sonsini Goodrich & Rosati, San Francisco, California.
EXPERTS
The consolidated financial statements of Cell Therapeutics, Inc. appearing
in the Company's Annual Report (Form 10-K) for the year ended December 31, 1998,
have been audited by Ernst & Young LLP, independent auditors, as set forth in
their report thereon included therein and incorporated herein by reference. Such
consolidated financial statements are incorporated herein by reference in
reliance upon such report given on the authority of such firm as experts in
accounting and auditing.
-18-
<PAGE>
We have not authorized any person to make a statement that differs from
what is in this prospectus. If any person does make a statement that differs
from what is in this prospectus, you should not rely on it. This prospectus is
not an offer to sell, nor is it seeking an offer to buy, these securities in any
state in which the offer or sale is not permitted. The information in this
prospectus is complete and accurate as of its date, but the information may
change after that date.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Where You Can Find More Information................. 3
The Company......................................... 4
Selling Shareholders................................ 14
Plan of Distribution................................ 15
Legal Matters....................................... 18
Experts............................................. 18
</TABLE>
[CELL THERAPEUTICS, INC. LOGO]
COMMON STOCK
NO PAR VALUE
----------
PROSPECTUS
----------
_______, __, 2000
________________________________________________________________________________
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table sets forth the costs and expenses, other than
underwriting discounts and commissions, payable by CTI in connection with the
sale of common stock being registered. All amounts are estimates except the SEC
registration fee.
SEC Registration Fee $ 5,276
Legal Fees and Expenses 50,000
Accounting Fees and Expenses 10,000
Printing Fees 18,000
Transfer Agent Fees 2,500
Miscellaneous 1,000
========
Total $ 86,776
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Sections 23B.08.500 through 23B.08.600 of the Washington Business
Corporation Act (the "WBCA") authorize a court to award, or a corporation's
board of directors to grant, indemnification to directors and officers on terms
sufficiently broad to permit indemnification under certain circumstances for
liabilities arising under the Securities Act of 1933, as amended (the
"Securities Act"). Article IX of the Registrant's Restated Bylaws provides for
indemnification of the Registrant's directors, officers, employees and agents to
the maximum extent permitted by Washington law. The directors and officers of
the Registrant also may be indemnified against liability they may incur for
serving in such capacity pursuant to a liability insurance policy maintained by
the Company for such purpose.
Section 23B.08.320 of the WBCA authorizes a corporation to limit a
director's liability to the corporation or its shareholders for monetary damages
for acts or omissions as a director, except in certain circumstances involving
intentional misconduct, knowing violations of law or illegal corporate losses or
distributions, or any transaction from which the director personally receives a
benefit in money, property or services to which the director is not legally
entitled. Article VI of the Registrant's Restated Articles of Incorporation
(Exhibit 4.1 hereto) contains provisions implementing, to the fullest extent
permitted by Washington law, such limitations on a director's liability to the
Registrant and its shareholders.
The Registrant has entered into an indemnification agreement with each of
its executive officers and directors in which the Registrant agrees to hold
harmless and indemnify the officer or director to the fullest extent permitted
by Washington law. The Registrant agrees to indemnify the officer or director
against any and all losses, claims, damages, liabilities or expenses incurred in
connection with any actual, pending or threatened action, suit, claim or
proceeding, whether civil, criminal, administrative or investigative and whether
formal or informal, in which the officer or director is, was or becomes involved
by reason of the fact that the officer or director is or was a director,
officer, employee, trustee or agent of the Registrant or any related company,
partnership or enterprise, including service with respect to an employee benefit
plan, whether the basis of such proceeding is alleged action (or inaction) by
the officer or director in an official capacity and any action, suit, claim or
proceeding instructed by or at the direction of the officer or director unless
such action, suit, claim or proceeding is or was authorized by the Registrant's
Board of Directors. No indemnity pursuant to the indemnification agreements
<PAGE>
shall be provided by the Registrant on account of any suit in which a final,
unappealable judgment is rendered against the officer or director for an
accounting of profits made from the purchase or sale by the officer or director
of securities of the Registrant in violation of the provisions of Section 16(b)
of the Securities Exchange Act of 1934, as amended, and amendments thereto, or
for damages that have been paid directly to the officer or director by an
insurance carrier under a policy of directors' and officers' liability insurance
maintained by the Registrant.
CTI has entered into Registration Rights Agreements with the Selling
Holders. Such agreements provide for indemnification by such Selling Holders of
the Company and its officers and directors, and by the Company of such Selling
Holders, for certain liabilities arising under the Securities Act or otherwise.
ITEM 16. EXHIBITS
4.1 Securities Purchase Agreement dated as of November 15, 1999 between Cell
Therapeutics, Inc. and the Purchasers named therein.
4.2 Form of Registration Rights Agreement dated as of November 24, 1999
between Cell Therapeutics, Inc. and the Investors named therein.
4.3 Form of Warrant to purchase shares of Common Stock of Cell Therapeutics,
Inc. (pursuant to the Securities Purchase Agreement filed as Exhibit 4.1
hereto).
5.1 Opinion of Wilson Sonsini Goodrich & Rosati
23.1 Consent of Ernst & Young LLP, Independent Auditor
23.2 Consent of Wilson Sonsini Goodrich & Rosati (included in the Opinion of
Wilson Sonsini Goodrich & Rosati filed as Exhibit 5.1 hereto)
24.1 Power of Attorney (included on page II-4 of this registration statement)
ITEM 17. UNDERTAKINGS
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; (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; and (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.
(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.
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<PAGE>
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 SEC such indemnification is against
public policy as expressed in the Securities Act and therefore is 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.
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
Exchange Act, and, where applicable, each filing of an employee benefit plan's
annual report pursuant to Section 15(d) of the Exchange Act, 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.
-3-
<PAGE>
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 registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized in the City of Seattle, State of Washington, on this 29th day
of December, 1999.
CELL THERAPEUTICS, INC.
By /s/ James A. Bianco, M.D.
--------------------------------------------
James A. Bianco, M.D.,
President and Chief Executive
Officer
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints James A. Bianco and Louis A. Bianco, and each of
them, as his true and lawful attorneys-in-fact and agents, with full power of
substitution and resubstitution, for him and in his name, place and stead, in
any and all capacities, to sign any and all amendments (including post-effective
amendments) to this registration statement, and to file same, with all exhibits
thereto, and other documents in connection therewith, with the Securities and
Exchange Commission, granting unto said attorneys-in-fact and agents, and each
of them, full power and authority to do and perform each and every act and thing
requisite and necessary to be done in connection therewith, as fully to all
intents and purposes as he might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents, and any of them, or their
or his substitutes, may lawfully do or cause to be done by virtue thereof.
Pursuant to the requirements of the Securities Act of 1933, as amended,
this registration statement has been signed below by the following persons on
behalf of CTI and in the capacities and on the dates indicated:
<TABLE>
<CAPTION>
Signature Title Date
- ---------------------------------------- --------------------------------------- ------------------------
<S> <C> <C>
/s/ James A. Bianco President, Chief Executive Officer and December 29, 1999
- ---------------------------------------- Director (Principal Executive Officer)
James A. Bianco, M.D.
/s/ Louis A. Bianco December 29, 1999
- ---------------------------------------- Executive Vice President, Finance and
Louis A. Bianco Administration, (Principal Financial
and Accounting Officer)
/s/ Max E. Link Chairman of the Board and Director December 29, 1999
- ----------------------------------------
Max E. Link, Ph.D.
/s/ Jack W. Singer Director December 29, 1999
- ----------------------------------------
Jack W. Singer, M.D.
/s/ Jack L. Bowman Director December 29, 1999
- ----------------------------------------
Jack L. Bowman
</TABLE>
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<PAGE>
<TABLE>
<S> <C> <C>
/s/ Jeremy L. Curnock Cook Director December 29, 1999
- ----------------------------------------
Jeremy L. Curnock Cook
/s/ Wilfred E. Jaeger Director December 29, 1999
- ----------------------------------------
Wilfred E. Jaeger, M.D.
/s/ Terrence M. Morris Director December 29, 1999
- ----------------------------------------
Terrence M. Morris
/s/ Mary O'Neil Mundinger Director December 29, 1999
- ----------------------------------------
Mary O'Neil Mundinger
/s/ Phillip M. Nudelman Director December 29, 1999
- ----------------------------------------
Phillip M. Nudelman, Ph.D.
</TABLE>
-5-
<PAGE>
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibit Exhibit Title
- ------- -------------
Number
- ------
<S> <C>
4.1 Securities Purchase Agreement dated as of November 15, 1999 between
Cell Therapeutics, Inc. and the Purchasers named therein.
4.2 Form of Registration Rights Agreement dated as of November 24, 1999
between Cell Therapeutics, Inc. and the Investors named therein.
4.3 Form of Warrant to purchase shares of Common Stock of Cell
Therapeutics, Inc. (pursuant to the Securities Purchase Agreement
filed as Exhibit 4.1 hereto).
5.1 Opinion of Wilson Sonsini Goodrich & Rosati
23.1 Consent of Ernst & Young LLP, Independent Auditor
23.2 Consent of Wilson Sonsini Goodrich & Rosati (included in the
Opinion of WSGR filed as Exhibit 5.1)
24.1 Power of Attorney (included on page II-4 of this registration
statement)
</TABLE>
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<PAGE>
EXHIBIT 4.1
EXECUTION COPY
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SECURITIES PURCHASE AGREEMENT
This Securities Purchase Agreement (the "Agreement") is entered into as of
November 15, 1999 (the "Execution Date"), between Cell Therapeutics, Inc., a
Washington corporation (the "Company"), and each investor delivering a
signature page hereto (each an "Investor" and collectively the "Investors").
WHEREAS:
A. The Company and the Investors are executing and delivering this
Agreement in reliance upon the exemption from securities registration afforded
by Rule 506 under Regulation D ("Regulation D") as promulgated by the United
States Securities and Exchange Commission (the "SEC") under the Securities Act
of 1933, as amended (the "1933 Act");
B. The Company has authorized a new series of preferred stock, no par
value, designated as Series D Preferred Stock (the "Preferred Stock"), having
the rights, preferences and privileges set forth in the Articles of Amendment to
Restated Articles of Incorporation in the form attached hereto as Exhibit A (the
"Articles");
C. The Preferred Stock is convertible into shares of common stock, no par
value per share, of the Company (the "Common Stock"), upon the terms and subject
to the limitations and conditions set forth in the Articles;
D. The Company desires to issue and sell to each Investor and each
Investor desires to purchase (i) the number of shares of Preferred Stock set
forth opposite such Investor's name on the signature page of such Investor
attached hereto (the "Signature Page"), with each share having a purchase price
of One Thousand Dollars ($1,000) and (ii) a warrant to purchase shares of Common
Stock in the amount specified on such Investor's Signature Page substantially in
the form attached hereto as Exhibit B (the "Warrant"); and
E. Contemporaneous with the execution and delivery of this Agreement, the
parties hereto are executing and delivering a Registration Rights Agreement, in
the form attached hereto as Exhibit C (the "Registration Rights Agreement"),
providing for the registration of the Underlying Shares (as herein defined).
NOW THEREFORE, the Company and Investor hereby agree as follows:
1. PURCHASE AND SALE OF SECURITIES.
a. Sale of Preferred Shares. Subject to the terms and conditions hereof,
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the Company shall issue and sell to each Investor and each Investor
agrees to purchase from the Company, the number of shares of Preferred
Stock set forth opposite such Investor's name on its Signature Page
(collectively, together with any Preferred Stock issued in replacement
thereof or as a dividend thereon or otherwise with respect thereto in
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accordance with the terms thereof, the "Preferred Shares") each with a
purchase price of One Thousand Dollars ($1,000) per share (the
"Purchase Price"). One (1) Preferred Share will be issued to the
Investor for each One Thousand Dollars ($1,000) provided by the
Investor to the Company. The shares of Common Stock issuable or issued
upon conversion of the Preferred Shares together with the shares of
Common Stock issuable or issued upon exercise of the Warrants (as
defined herein) are collectively referred to herein as the "Underlying
Shares." The Preferred Shares, the Warrants and the Underlying Shares
are collectively referred to herein as the "Securities."
b. Issuance of Warrants. On the Closing Date, the Company will issue to
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each Investor the Warrant for the number of shares of Common Stock set
forth opposite such Investor's name on its Signature Page.
c. Closing. Subject to the terms set forth in this Agreement, the
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issuance, sale and purchase of the Preferred Stock and the Warrants
shall be consummated in one closing (the "Closing").
d. Payment. At the Closing each Investor shall pay the Purchase Price for
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the Securities being acquired by it by wire transfer to the Company,
in accordance with the Company's written wiring instructions, against
delivery of the appropriate amount of duly executed stock certificates
and the items required by Section 7 for the same and the Company shall
deliver such Preferred Stock against delivery of such Purchase Price.
e. Closing Date. Subject to the satisfaction of the conditions set forth
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in Sections 6 and 7 below, the date and time of the issuance, sale and
purchase of Securities pursuant to this Agreement shall be November
24, 1999 or such other date as the Company and the Investor may
mutually agree. Each Closing shall occur at 9:30 p.m. local time, at
the offices of the Company. The date of a Closing hereunder is
hereinafter referred to as a "Closing Date."
2. INVESTOR'S REPRESENTATIONS AND WARRANTIES. Each Investor, severally,
and not jointly, represents and warrants to the Company that, as of the
date hereof:
a. Investment Purpose. Such Investor is purchasing the Securities for
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its own account as principal for investment only and not with a
present view towards the public sale or distribution thereof, except
pursuant to sales registered or exempted from registration under the
1933 Act. By making this representation, such Investor does not
represent that it will hold such Securities for any period of time.
b. Accredited Investor Status. Such Investor is an "accredited investor"
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as that term is defined in Rule 501(a) of Regulation D and has such
business and financial experience as is required to give it the
capacity to protect its own interests in connection with the purchase
of the Securities.
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c. Reliance on Exemptions. Such Investor understands that the Securities
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are being offered and sold to it in reliance upon specific exemptions
from the registration requirements of United States federal and state
securities laws and that the Company is relying upon the truth and
accuracy of, and the Investor's compliance with, the representations,
warranties, agreements, covenants, acknowledgments and understandings
of the Investor set forth herein in order to determine the
availability of such exemptions and the eligibility of the Investor to
acquire the Securities.
d. Information. Such Investor and its advisors, if any, have been
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furnished with all materials relating to the business, finances and
operations of the Company and materials relating to the offer and sale
of the Securities which have been requested by such Investor or its
advisors. Such Investor and its advisors, if any, have been afforded
the opportunity to ask questions of the Company and have received what
such Investor believes to be satisfactory answers to any such
inquiries. Neither such inquiries nor any other due diligence
investigation conducted by such Investor or any of its advisors or
representatives shall modify, amend or affect such Investor's right to
rely on the Company's representations and warranties contained in
Section 3 below. Such Investor understands that its investment in the
Securities involves a significant degree of risk.
e. Governmental Review. Such Investor understands that no United States
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federal or state agency or any other government or governmental agency
has passed upon or made any recommendation or endorsement of the
Securities.
f. Transfer or Resale. Such Investor understands that (i) except as
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provided in the Registration Rights Agreement, the Securities have not
been and are not being registered under the 1933 Act or any applicable
state securities laws, and may not be transferred unless (a)
subsequently included in an effective registration statement
thereunder, (b) the Investor shall have delivered to the Company an
opinion of counsel (which opinion shall be reasonably satisfactory to
the Company) to the effect that the Securities to be sold or
transferred may be sold or transferred pursuant to an exemption from
such registration or (c) sold pursuant to Rule 144 promulgated under
the 1933 Act (or a successor rule) ("Rule 144")), (ii) any sale of
such Securities made in reliance on Rule 144 may be made only in
accordance with the terms of said Rule and further, if Rule 144 is not
applicable, any resale of such Securities under circumstances in which
the seller (or the person through whom the sale is made) may be deemed
to be an underwriter (as that term is defined in the 1933 Act) may
require compliance with some other exemption under the 1933 Act or the
rules and regulations of the "SEC" thereunder, and (iii) neither the
Company nor any other person is under any obligation to register such
Securities under the 1933 Act or any state securities laws or to
comply with the terms and conditions of any exemption thereunder (in
each case, other than pursuant to the Registration Rights Agreement).
g. Legends. Such Investor understands that the Preferred Shares, the
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Warrants and, until such time as the Underlying Shares have been
registered under the 1933 Act as contemplated by the Registration
Rights Agreement, the Underlying Shares, may
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bear a restrictive legend in substantially the following form (and a
stop-transfer order may be placed against transfer of the certificates
for such Securities):
The following legend under the 1933 Act:
"THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), AND MAY
NOT BE OFFERED, SOLD, TRANSFERRED, ASSIGNED, PLEDGED OR HYPOTHECATED
ABSENT AN EFFECTIVE REGISTRATION THEREOF UNDER SUCH ACT OR COMPLIANCE
WITH RULE 144 PROMULGATED UNDER SUCH ACT, OR UNLESS THE COMPANY HAS
RECEIVED AN OPINION OF COUNSEL, REASONABLY SATISFACTORY TO THE COMPANY
AND ITS COUNSEL, THAT SUCH REGISTRATION IS NOT REQUIRED";
Underlying Shares shall not contain the legend set forth above nor any
other legend if the conversion of Preferred Shares or exercise of
Warrants, or other issuances of Underlying Shares as contemplated
hereby, by the Articles or the Warrants occurs at any time while a
registration statement filed pursuant to the Registration Rights
Agreement is effective under the 1933 Act or, in the event there is
not such an effective registration statement, at such time, in the
opinion of counsel to the Company, such legend is not required under
applicable requirements of the 1933 Act (including judicial
interpretations and pronouncements issued by the staff of the SEC).
The Company agrees that, in the event any Underlying Shares are issued
with a legend in accordance with this Section 2(g)(2), it will, within
three (3) trading days after request therefor by such Investor,
provide such Investor with a certificate or certificates representing
such Underlying Shares, free from such legend at such time as such
legend would not have been required under this Section 2(g)(2) had
such issuance occurred on the date of such request. The Company may
not make any notation on its records or give instructions to any
transfer agent of the Company which enlarge the restrictions of
transfer set forth in this Section.
h. Authorization; Enforcement. Such Investor represents and warrants to
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the Company that (i) such Investor has all requisite legal and
corporate or other power and capacity and has taken all requisite
corporate or other action to execute and deliver this Agreement, to
purchase the Securities to be purchased by it and to carry out and
perform all of its obligations under this Agreement, and (ii) this
Agreement constitutes the legal, valid and binding obligation of the
Investor, enforceable in accordance with its terms, except (1) as
limited by applicable bankruptcy, insolvency, reorganization, or
similar laws relating to or affecting the enforcement of creditors'
rights generally and (2) as limited by equitable principles generally
and (iii) to the extent that indemnification provisions in the
Registration Rights Agreement may be limited by applicable federal or
state securities laws.
i. No Legal, Tax or Investment Advice. Such Investor understands that
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nothing in this Agreement or any other materials presented to the
Investor in connection with the purchase and sale of the Securities
constitutes legal, tax or investment advice. Such
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Investor has consulted such legal, tax and investment advisors as it,
in its sole discretion, has deemed necessary or appropriate in
connection with this Agreement and all exhibits hereto and the
transactions contemplated herein and therein.
j. Residency. Such Investor is a company organized under the laws of the
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jurisdiction set forth opposite such Investor's name on its Signature
Page.
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company represents
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and warrants to the Investor that, except as set forth in the Schedule
of Exceptions attached hereto as Exhibit D, as of the date hereof:
a. Organization and Qualification. The Company is duly organized,
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validly existing and in good standing under the laws of Washington,
with requisite corporate power and authority to own, lease and operate
its properties and to carry on its business as presently conducted
and/or proposed to be conducted. The Company and each of its
subsidiaries is qualified to do business as a foreign corporation in
each jurisdiction in which the ownership of its property or the nature
of its business requires such qualification, except where failure to
so qualify would not have an Adverse Effect. For purposes of this
Agreement, "Adverse Effect" means with respect to the Company and its
subsidiaries, taken as a whole, any event, change or effect that, when
taken individually or together with all other adverse changes and
effects, is or is reasonably likely to be materially adverse to the
condition (financial or otherwise), properties, assets, liabilities,
business, operations or results of operations of the Company and its
subsidiaries taken as a whole or impair the ability of the Company to
perform fully on a timely basis its obligations under the Transaction
Documents. "Transaction Documents" means, collectively, this
Agreement, the Registration Rights Agreement, the Warrant and the
Articles.
b. Authorization; Enforcement. The Company has all requisite legal and
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corporate power and has taken all requisite corporate action to
execute and deliver this Agreement, the Registration Rights Agreement
and the Warrants, to sell and issue the Preferred Shares and the
Warrants and to carry out and perform all of its obligations under the
Transaction Documents. All corporate action on the part of the
Company, its directors and stockholders necessary for the
authorization, execution, delivery and performance of this Agreement,
the Registration Rights Agreement and the Warrants by the Company, and
the authorization, sale, issuance and delivery of the Securities and
the performance of the Company's obligations under the Transaction
Documents has been taken, except for the filing of the Articles which
will be filed with the Secretary of State of Washington immediately
after the date hereof. Each of the Transaction Documents constitutes
the legal, valid and binding obligations of the Company, enforceable
in accordance with their respective terms, except (i) as limited by
applicable bankruptcy, insolvency, reorganization or similar laws
relating to or affecting the enforcement of creditors' rights
generally, (ii) as limited by equitable principles generally and (iii)
to the extent that indemnification
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provisions in the Registration Rights Agreement may be limited by
applicable federal or state securities laws.
c. Capitalization. The authorized capital stock of the Company consists
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of 100,000,000 shares of Common Stock of which there were 15,567,959
shares issued and outstanding as of September 30, 1999, and 10,000,000
shares of Preferred Stock, no par value per share, none of which
shares are issued and outstanding. All outstanding shares of Common
Stock are duly authorized, validly issued, fully paid and
nonassessable, free of any liens or encumbrances and are not subject
to preemptive rights. As of September 30, 1999, the Company had
reserved 3,836,715 shares of Common Stock for issuance to employees,
directors and consultants pursuant to the 1994 Amended and Restated
CTI Stock Option Plan, of which 65,318 shares have been issued
pursuant to option exercises, and 3,199,520 shares of Common Stock are
subject to outstanding, unexercised options. As of September 30,
1999, the Company had reserved 285,714 shares of Common Stock for
issuance to employees pursuant to the 1996 CTI Employee Stock Purchase
Plan (together with the Stock Option Plan, the ("CTI Plans"), of which
129,135 shares have been issued to employees. There has been no
change in the capitalization of the Company since September 30, 1999.
Other than as set forth in the Schedule of Exceptions, the CTI Plans
or as contemplated in this Agreement, there are no other options,
warrants, calls, rights, commitments or agreements of any character to
which the Company is a party or by which either the Company is bound
or obligating the Company to issue, deliver, sell, repurchase or
redeem, or cause to be issued, delivered, sold, repurchased or
redeemed, any shares of the capital stock of the Company or obligating
the Company to grant, extend or enter into any such option, warrant,
call, right, commitment or agreement.
d. Issuance of Shares. The Securities are duly authorized and, upon
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issuance in accordance with the terms of this Agreement, the Articles
and the Warrants, as the case may be, will be validly issued, fully
paid and non-assessable, and free from all taxes, liens and charges
with respect to the issue thereof and shall not be subject to
preemptive rights or other similar rights of stockholders of the
Company. Based in part upon the representations of the Investor in
this Agreement, the offer, sale and issuance of the Preferred Stock
and Warrants will be made in compliance with all applicable federal
and state securities laws. The Underlying Shares have been duly and
validly reserved and, upon issuance in accordance with the terms of
the Articles and the Warrants, respectively, will be duly and validly
issued, fully-paid and nonassessable, and will be issued in compliance
with all applicable federal and state securities laws.
e. No Conflicts. The execution, delivery and performance of the
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Transaction Documents by the Company and the consummation by the
Company of the transactions contemplated hereby and thereby
(including, without limitation, the filing of the Articles and the
issuance and reservation for issuance of the Underlying Shares) do not
and will not (i) conflict with or result in a violation of any
provision of the Company's Certificate of Incorporation or Bylaws or
(ii) violate or conflict with, or result in a breach of any provision
of, or constitute a default (or an event
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which with notice or lapse of time or both would become a default)
under, or give to others any rights of termination, acceleration or
cancellation of (with or without notice, lapse of time or both), any
indenture, mortgage, lease or other agreement or instrument, or result
in a violation of any law, rule, regulation, order, judgment or decree
(including federal and state securities laws and regulations)
applicable to the Company or by which any property or asset of the
Company is bound or affected (in each case except for such conflicts,
defaults, terminations, accelerations, cancellations and violations
that are not reasonably likely to, individually or in the aggregate,
have an Adverse Effect).
f. Accuracy of Reports; Financial Statements. All reports required to be
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filed with the SEC by the Company during the twelve (12) month period
preceding the date hereof under the Securities Exchange Act of 1934,
as amended (the "Exchange Act") (the "SEC Documents"), have been duly
and timely filed, were in substantial compliance with the requirements
of the 1933 Act and Exchange Act when filed, were complete and correct
in all material respects as of the dates at which the information was
furnished, and contained (as of such dates) no untrue statement of a
material fact nor omitted to state a material fact necessary in order
to make the statements made therein in light of the circumstances in
which made not misleading. The financial statements of the Company
included in the SEC Documents (the "Financial Statements") comply in
all material respects with applicable accounting requirements and with
the published rules and regulations of the SEC with respect thereto.
The Financial Statements have been prepared in accordance with
generally accepted accounting principles ("GAAP") consistently applied
and fairly present the consolidated financial position of the Company
and any subsidiaries at the dates thereof and the consolidated results
of operations and consolidated cash flows for the periods then ended
(subject, in the case of unaudited statements, to normal, recurring
year-end adjustments). Except as set forth in the SEC Documents, the
Company does not have any liabilities or obligations of any nature
(whether accrued, absolute, contingent or otherwise) required by GAAP
to be set forth on a balance sheet of the Company or in the notes
thereto.
g. Changes. Since September 30, 1999 and except as is set forth in the
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SEC Documents, there has not been (a) any incurrence by the Company of
any material liability, absolute or contingent, or (b) any event or
condition of any character that has materially and adversely affected
or might materially and adversely affect the business, properties,
prospects or financial condition of the Company (as such business is
presently conducted and as it is proposed to be conducted). There is
no material liability or contingency of the Company that is not
disclosed in the SEC Documents.
h. Governmental Consents, etc. No consent, approval or authorization of
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or designation, declaration or filing with any governmental authority
on the part of the Company is required in connection with the valid
execution, delivery and performance of the Transaction Documents, or
the consummation of any other transaction contemplated hereby and
thereby, except such filings as may be required to be made with the
SEC, the National Association of Securities Dealers, Inc.
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("NASD") the Nasdaq National Market (the "NADDAQ"), such filings as
may be required under the Hart-Scott-Rodino Antitrust Improvements Act
of 1976, as amended ("HSR") and filings with governmental authorities
for purposes of effecting compliance with the securities and blue sky
laws in the states in which Securities are offered and/or sold, which
compliance will be effected in accordance with such laws. The Company
has not received any delisting notices, notice of violation or similar
inquiry regarding its eligibility for listing from the NASDAQ.
i. Litigation. There is no pending or, to the best of the Company's
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knowledge, threatened lawsuit, administrative proceeding, arbitration,
labor dispute or governmental investigation ("Litigation") to which
the Company is a party or by which any material portion of its assets,
taken as a whole, may be bound, nor is the Company aware of any basis
therefor, which Litigation, if adversely determined, would have an
Adverse Effect.
j. Patents and Trademarks. To its knowledge, except as disclosed in the
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SEC Documents, the Company owns or possesses the right to use to all
patents, trademarks, service marks, tradenames, copyrights, trade
secrets, licenses, information and proprietary rights and processes
necessary for its business as now conducted and as proposed to be
conducted, without infringement of any rights of a third party.
Except as is disclosed in the SEC Documents, the Company has not
received any communications alleging that the Company has violated or,
by conducting its business as proposed, would violate any of the
patents, trademarks, service marks, tradenames, copyrights, trade
secrets or other proprietary rights or processes of any other person
or entity, which violation would have an Adverse Effect on the
Company. Except as disclosed in the SEC Documents, the Company has
not granted (nor has the Company licensed from a third party) any
material rights to or licenses to its patents, trademarks, service
marks, tradenames, copyrights, trade secrets or other proprietary
rights or processes.
k. Registration Rights. Except for the registration rights granted in
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connection with the license of PG-Taxol, there are no outstanding
obligations of the Company to register the securities of a third
party.
l. Disclosure. No representation or warranty of the Company contained in
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any Transaction Documents or the exhibits attached thereto, contains
any untrue statement of a material fact or omits to state a material
fact necessary in order to make the statements contained herein or
therein in light of the circumstances under which they were made not
misleading. The Company confirms that it has not provided the
Investors or their agents or counsel with any information that
constitutes or might constitute material non-public information. The
Company understands and confirms that the Investors shall be relying
on the foregoing representations in effecting transactions in
securities of the Company.
m. Solvency; No Default. The Company has sufficient funds and cash flow
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to pay its debts and other liabilities as they become due, and the
Company is not in default with respect to any material debt or
liability.
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n. No Default or Violation. Neither the Company nor any subsidiary is in
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violation of or default under any provision of (and no event has
occurred which has not been waived which, with notice or lapse of time
or both, would result in a default by the Company or any subsidiary),
nor has the Company or any subsidiary received notice of a claim that
it is in default under or that it is in violation of (a) its
Certificate of Incorporation or Bylaws, or (b) any mortgage,
indenture, lease or other agreement or instrument, permit, concession,
franchise or license to which it is a party or by which it is bound or
(c) any federal or state judgment, order, decree, statute, law,
ordinance, rule or regulation applicable to the Company, except with
respect to clauses (b) and (c) above, such violations or defaults as
would not have an Adverse Effect.
o. Eligibility. The Company is eligible and meets the requirements to
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register for resale on Form S-3 under the 1933 Act.
4. COVENANTS.
a. Best Efforts. The parties shall use their commercially reasonable
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best efforts to satisfy timely each of the conditions described in
Section 6 and Section 7 of this Agreement.
b. Form D; Blue Sky Laws. The Company agrees to file a Form D with
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respect to the Securities as required under Regulation D and to
provide a copy thereof to the Investors promptly after such filing.
The Company shall qualify the Securities for sale to the Investors
pursuant to this Agreement under applicable securities or "blue sky"
laws of the states of the United States (or to obtain an exemption
from such qualification), and shall provide evidence of any such
action so taken to Investor.
c. Reservation of Shares. The Company shall at all times have authorized
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and reserved for the purpose of issuance, a sufficient number of
shares of Common Stock to provide for the full conversion of the
outstanding Preferred Shares and issuance of Underlying Shares in
connection therewith and for the full exercise of the Warrants and
issuance of Underlying Shares in connection therewith. If at any time
the number of shares of Common Stock authorized and reserved for
issuance is below the number of Underlying Shares issued and issuable
upon conversion of the Preferred Shares and exercise of the Warrants,
the Company will, within 45 days from such date, take all corporate
action necessary to authorize and reserve a sufficient number of
shares, including, without limitation, calling a special meeting of
shareholders to authorize additional shares to meet the Company's
obligations under this Section 4(c), in the case of an insufficient
number of authorized shares, and using its commercially reasonable
best efforts to obtain shareholder approval of an increase in such
authorized number of shares. Other than in connection with an
underwritten public offering or with respect to employee stock
options, prior to June 30, 2000, the Company will not sell any of its
equity or equity linked securities at a price per share less than
$2.16.
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d. Listing. The Company shall, no later than fourteen (14) business days
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after the Closing Date, secure the listing of the Underlying Shares
upon the NASDAQ and each national securities exchange or automated
quotation system, if any, upon which the shares of Common Stock are
then listed (subject to official notice of issuance) and shall
maintain, so long as any other shares of Common Stock shall be so
listed, such listing of all such Underlying Shares. The Company will
obtain and maintain the listing and trading of its Common Stock on the
NASDAQ, the Nasdaq SmallCap Market, the New York Stock Exchange, or
the American Stock Exchange as may then be applicable, and will comply
in all material respects with the Company's reporting, filing and
other obligations under the bylaws or rules of the NASD.
e. Transfer of Securities by Investor.
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(i) As set forth in this Section 4(i), each Investor shall have
limited rights to transfer the Securities before they are
registered under the 1933 Act or transferable under Rule 144.
Once the Securities are registered under the 1933 Act or
transferable under Rule 144, each Investor may transfer the
Securities as permitted by federal and state securities laws.
Prior to such time, each Investor may transfer the Securities
solely to (A) an Affiliate of the Investor (as such term is
defined in Rule 405 under the 1933 Act), (B) an entity solely in
connection with charitable contributions by the Investor or (C)
an individual or entity solely for estate planning purposes,
provided that written notice is provided to the Company five (5)
business days prior to any such assignment and immediately
following such assignment the further disposition of such
securities by the transferee or assignee is restricted under the
1933 Act and the transferee or assignee agrees in writing to be
bound by all of the provisions of this Agreement. All other
transfers of the Securities are prohibited unless such Investor
has obtained the Company's prior written consent.
(ii) At least five (5) business days prior to the date it intends
to transfer Securities (other than a sale after the Securities
are registered under the 1933 Act of less than 2% of the
Company's outstanding voting stock (computed on an as-converted
basis)), an Investor shall deliver to the Company a written
notice (the "Transfer Notice") stating: (A) the Investor's bona
fide intention to sell or otherwise transfer the Securities; (B)
the name and address of each permitted proposed purchaser or
other transferee ("Proposed Transferee"); (C) the quantity of
Securities to be transferred to each Proposed Transferee; and (D)
the terms and conditions of each proposed sale or transfer,
including the price. Any such sale or other transfer shall be
consummated within 30 days after the date of the Transfer Notice.
Any such sale or other transfer shall be effected in accordance
with any applicable securities laws and the Proposed Transferee
shall agree in writing that the provisions of this Section 4(e)
and the remaining restrictions and conditions contained in this
Agreement shall continue to apply to the Securities in the hands
of such Proposed Transferee. If the Securities described in the
Transfer Notice are not transferred to the Proposed Transferee
within such period, a new Transfer Notice shall be given
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to the Company before any Securities held by the Investor may be
sold or otherwise transferred.
f. Transactions with Affiliates. The Company agrees that to the extent
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it engages in transactions with Affiliates, it will do so upon fair
and reasonable terms, as if the transaction were with an unaffiliated
party.
g. Board Seat. Until such time as Essex Woodlands shall own less than 5%
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of the outstanding voting securities of the Company, they shall be
entitled to designate an individual, reasonably acceptable to the
Company, who shall be elected to serve as a member of the Board of
Directors of the Company. If necessary, the Board of Directors of the
Company will elect such individual to the Board of Directors by
creating a new position on the Board of Directors promptly following
the execution of this Agreement in connection with any stockholder
vote for Directors, and the Company will use its best efforts to
ensure that the stockholders of the Company agree to vote all their
securities in favor of such person's election. The Company agrees to
vote all voting securities for which the Company holds proxies,
granting it voting discretion, or is otherwise entitled to vote, in
favor of, and to use its best efforts in all respect to cause, the
election of the individual designated by Essex Woodlands. In the
event that a vacancy is created on the Board of Directors at any time
by the death, disability, resignation or removal (with or without
cause) of any such individual proposed and nominated by Essex
Woodlands pursuant to this Agreement, the Company will, and will use
its best efforts to ensure that the sotckholders of the Company, vote
all its voting securities to elect the individual proposed by Essex
Woodlands to fill such vacancy and serve as a voting Director.
5. TRANSFER AGENT INSTRUCTIONS. The Company shall issue irrevocable
instructions to its transfer agent to issue certificates, registered in the
name of the relevant Investor, for the Underlying Shares in such amounts as
specified from time to time by such Investor to the Company upon conversion
of the Preferred Shares and exercise of the Warrants in accordance with the
terms hereof, the Articles and the Warrants (as the case may be) (the
"Irrevocable Transfer Agent Instructions"). Subsequent to the registration
of the Underlying Shares under the 1933 Act and Section 2 of the
Registration Rights Agreement, no such certificates shall bear the
restrictive legend specified in Section 2(g) of this Agreement. The
Company warrants that no instruction other than the Irrevocable Transfer
Agent Instructions referred to in this Section 5, and stop transfer
instructions to give effect to Section 2(f) hereof (in the case of the
Underlying Shares, prior to registration of the Conversion Shares under the
1933 Act), will be given by the Company to its transfer agent and that the
Securities shall otherwise be freely transferable on the books and records
of the Company. Nothing in this Section shall affect in any way the
Investor's obligations and agreement set forth in Section 2(g) hereof to
comply with all applicable prospectus delivery requirements, if any, upon
resale of the Securities.
-11-
<PAGE>
6. CONDITIONS TO THE COMPANY'S OBLIGATIONS. The obligation of the Company
hereunder issue and sell the Preferred Stock and the Warrants to the
Investor at the Closing is subject to the satisfaction, at or before the
Closing Date, respectively, of each of the following conditions thereto,
provided that these conditions are for the Company's sole benefit and may
be waived by the Company at any time in its sole discretion:
a. Representations and Warranties Correct. The representations and
--------------------------------------
warranties made by the Investor in this Agreement hereof shall be true
and correct in all material respects on and as of the Closing Date
with the same effect as though such representations and warranties had
first been made on and as of the Execution Date and such Closing Date,
respectively except for those representations and warranties that
address matters only as of a particular date (which shall remain true
and correct as of such particular date), with the same effect as
though such representations and warranties had first been made on and
as of the applicable Closing Date.
b. Performance. All covenants, agreements and conditions contained in
-----------
this Agreement to be performed by the Investor on or prior to the
applicable Closing Date shall have been performed or complied with in
all material respects.
c. Execution of Documents. The Investor shall have executed this
----------------------
Agreement and the Registration Rights Agreement and delivered the same
to the Company. As of the Closing Date, each such agreement shall
remain in full force and effect.
d. Articles. The Articles shall have been accepted for filing with the
--------
Secretary of State of the State of Washington.
e. No Order Pending. There shall not then be in effect any order
----------------
enjoining or restraining the transactions contemplated by this
Agreement.
f. No Law Prohibiting or Restricting Such Sale. There shall not be in
-------------------------------------------
effect any law, rule or regulation prohibiting or restricting such
sale, or requiring any consent or approval of any person which shall
not have been obtained to issue the Securities (except as otherwise
provided in this Agreement).
7. CONDITIONS TO INVESTOR'S OBLIGATIONS. The obligation of each Investor
hereunder (i) to execute this Agreement and (ii) to purchase the Securities
is subject to the satisfaction, at or before the Closing Date, of each of
the following conditions, provided that these conditions are such
Investor's sole benefit and may be waived by Investor at any time in its
sole discretion:
a. Representations and Warranties Correct. The representations and
--------------------------------------
warranties made by the Company in Section 4 shall be true and correct
in all material respects on and as of the Execution Date or the
Closing Date, respectively, except for changes contemplated by this
Agreement and except for those representations and warranties that
address matters only as of a particular date (which shall remain true
and correct as of such particular date), with the same effect as
through such representations and warranties had been made on and as of
the Execution Date or the Closing Date, respectively, except in all
cases where the failure of such representations and
-12-
<PAGE>
warranties to be so true and correct would not (with respect to
representations and warranties not qualified by an Adverse Effect
clause), individually or in the aggregate, reasonably be expected to
have an Adverse Effect on the Company and its subsidiaries, taken as a
whole.
b. Performance. All covenants, agreements and conditions contained in
-----------
the Transaction Documents to be performed by the Company on or prior
to the Closing Date shall have been performed or complied with in all
material respects.
c. Execution of Documents. The Company shall have executed this
----------------------
Agreement, the Registration Rights Agreement and delivered the same to
the Investor. As of the Closing Date each such agreement shall remain
in full force and effect.
d. Articles. The Articles shall have been accepted for filing with the
--------
Secretary of State of the State of Washington.
e. No Order Pending. There shall not then be in effect any order
----------------
enjoining or restraining the transactions contemplated by this
Agreement.
f. No Law Prohibiting or Restricting Sale. There shall not be in effect
--------------------------------------
any law, rule or regulation prohibiting or restricting such sale, or
requiring any consent or approval of any person which shall not have
been obtained to issue the Securities (except as otherwise referenced
in this Agreement).
g. Legal Opinion. The Investor shall have received an opinion of the
-------------
Company's counsel, dated as of the Closing Date, in customary form and
otherwise reasonably acceptable by Investor.
h. Insolvency. The Company is not insolvent and no Insolvency Proceeding
----------
has been commenced by or against the Company. As used herein,
"Insolvency Proceeding" means any proceeding commenced by or against
any person or entity under any provision of the United States
Bankruptcy Code, as amended, or under any other bankruptcy or
insolvency law, including assignments for the benefit of creditors,
formal or informal moratoria, compositions, extension generally with
its creditors, or proceedings seeking reorganization, arrangement, or
other relief.
i. Reporting Status. The Company shall have filed all reports required
----------------
to be filed with the SEC pursuant to the Exchange Act, and the
Company's status as an issuer required to file reports under the
Exchange Act shall be effective.
8. GOVERNING LAW; MISCELLANEOUS.
a. Governing Law. This Agreement and all acts and transactions pursuant
-------------
hereto and the rights and obligations of the parties hereto shall be
governed, construed and interpreted in accordance with the laws of the
State of New York, without giving effect to principles of conflicts of
law. The parties hereby irrevocably submit to the non-exclusive
jurisdiction of the state and federal courts sitting in the City of
New
-13-
<PAGE>
York, borough of Manhattan, for the adjudication of any dispute
hereunder or in connection herewith or with any transaction
contemplated hereby or discussed herein (including with respect to the
enforcement of the any of the Transaction Documents), and hereby
irrevocably waives, and agrees not to assert in any suit, action or
proceeding, any claim that it is not personally subject to the
jurisdiction of any such court, that such suit, action or proceeding
is improper.
b. Counterparts; Signatures by Facsimile. This Agreement may be executed
-------------------------------------
in counterparts and each such counterpart shall be deemed an original
for all purposes. In the event that any signature is delivered by
facsimile transmission, such signature shall create a valid and
binding obligation of the party executing (or on whose behalf such
signature is executed) the same with the same force and effect as if
such facsimile signature page were an original thereof.
c. Captions and Headings. The captions and headings of this Agreement
---------------------
are for convenience and ease of reference only and are not intended to
be a part of or to affect the meaning or interpretation of this
Agreement.
d. Severability. If any term, provision, covenant or restriction of this
------------
Agreement is held by a court of competent jurisdiction to be invalid,
void or unenforceable, the remainder of the terms, provisions,
covenants and restrictions of this Agreement shall remain in full
force and effect and shall in no way be affected, impaired or
invalidated.
e. Entire Agreement; Amendment. This Agreement, the Warrant, the
---------------------------
Registration Rights Agreement and the other documents delivered
pursuant hereto constitute the full and entire understanding and
agreement between the parties with regard to the subject matter hereof
and thereof and supersede all prior agreements and understandings
among the parties relating to the subject matter hereof. Neither this
Agreement nor any term hereof may be amended, waived, discharged or
terminated other than by a written instrument signed by the party
against which enforcement of any such amendment, waiver, discharge or
termination is sought.
f. No Third Party Rights. Nothing in this Agreement shall create or be
---------------------
deemed to create any rights in any person or entity not a party to
this Agreement.
g. Survival. Unless otherwise set forth in this Agreement, the
--------
warranties, representations and covenants of the Company and the
Investor contained in or made pursuant to this Agreement shall survive
the execution and delivery of this Agreement and the Closing.
h. Publicity. Each Investor and the Company shall not issue any public
---------
statement concerning the transactions contemplated by this Agreement
without the prior written consent of the parties named in such public
statement not to be unreasonably withheld; provided, however, that the
parties may disclose the transaction or the terms hereof or thereof
from time to time without the approval of the party whose name is
disclosed if (i) such approval has been requested and not received and
such party concludes (after consulting with counsel) that it is
required by law to disclose
-14-
<PAGE>
the transaction or the terms thereof or (ii) to the extent that
similar disclosure has been previously approved pursuant to this
Section 8(h). In addition, with respect to any press releases issued
by the Company, the Company shall provide copies to the Investors
prior to public dissemination thereof and shall consider Investors'
comments to such press release, if any, in good faith.
i. No Strict Construction. The language used in this Agreement will be
----------------------
deemed to be the language chosen by the parties to express their
mutual intent, and no rules of strict construction will be applied
against any party.
j. Costs and Expenses. Each party hereto shall pay its own costs and
------------------
expenses incurred in connection herewith, including the fees of its
counsel, auditors and other representatives, whether or not the
transactions contemplated herein are consummated.
k. Brokers. The Company has not engaged, consented to or authorized any
-------
broker, finder or intermediary to act on its behalf, directly or
indirectly, as a broker, finder or intermediary in connection with the
transactions contemplated by this Agreement, except for Paramount
Capital, Inc. The Company hereby agrees to indemnify and hold
harmless each Investor and its respective Affiliates from and against
all fees, commissions or other payments owing to any party acting on
behalf of the Company hereunder.
l. Notices. Any notices required or permitted to be given under the
-------
terms of this Agreement shall be sent by certified or registered mail
(return receipt requested) or delivered personally or by courier
(including a recognized overnight delivery service) or by facsimile
and shall be effective five days after being placed in the mail, if
mailed by regular U.S. mail, or upon receipt, if delivered personally
or by courier (including a recognized overnight delivery service) or
by facsimile, in each case addressed to a party. The addresses for
such communications shall be:
If to the Company:
Cell Therapeutics, Inc.
201 Elliott Avenue West, Suite 400
Seattle, Washington 98119
Attention: James Bianco, Chief Executive Officer
Facsimile: (206) 284-6114
With copy to:
Wilson Sonsini Goodrich & Rosati
975 Page Mill Road
Palo Alto, California 94304
Facsimile: (650) 461-5375
Attention: Michael J. Kennedy, Esq.
If to Investor at its address set forth on its Signature Page.
-15-
<PAGE>
Each party shall provide notice to the other party of any change in
address.
m. Successors and Assigns. This Agreement shall be binding upon and
----------------------
inure to the benefit of the parties and their successors and permitted
assigns. Neither the Company nor any Investor may assign this
Agreement or any rights or obligations hereunder without the prior
written consent of the other. This Agreement shall be binding upon
and shall inure to the benefit of the parties hereto and their
respective successors and permitted assigns.
n. Remedies. In addition to being entitled to exercise all rights
--------
provided herein or granted by law, including recovery of damages, each
Investor will be entitled to specific performance of the obligations
of the Company under the Transaction Documents. The Company and each
Investor agree that monetary damages may not be adequate compensation
for any loss incurred by reason of any breach of its obligations
described in the foregoing sentence and hereby agrees to waive in any
action for specific performance of any such obligation the defense
that a remedy at law would be adequate.
o. Dividends. Notwithstanding anything to the contrary contained in the
---------
Articles, the Company will pay to each Investor four annual dividend
payments in accordance with Section 2 of the Articles with respect to
the Preferred Stock held by the Investor, notwithstanding any
conversion, redemption or sale of the Preferred Stock held by such
Investor. The dividend right provided for herein is personal to the
Investor and may not be assigned to any third party without the
Company's prior written consent, except pursuant to assignments made
in accordance with of this Agreement.
-16-
<PAGE>
IN WITNESS WHEREOF, the undersigned Investor and the Company have caused
this Agreement to be duly executed as of the date first above written.
CELL THERAPEUTICS, INC.
By:_____________________________________
Name: James Bianco
Title: Chief Executive Officer
-17-
<PAGE>
INVESTOR SIGNATURE PAGE
THE ARIES MASTER FUND
By:________________________ 1,688 Shares of Preferred
Name:______________________ 257,219 Warrants
Title:_____________________
c/o Paramount Capital Asset
Management, Inc.
787 Seventh Avenue
48th Floor
New York, NY 10019
-18-
<PAGE>
INVESTOR SIGNATURE PAGE
ARIES DOMESTIC FUND, L.P.
By:_______________________ 684 Shares of Preferred
Name:_____________________ 104,229 Warrants
Title:____________________
c/o Paramount Capital Asset
Management, Inc.
787 Seventh Avenue
48th Floor
New York, NY 10019
-19-
<PAGE>
INVESTOR SIGNATURE PAGE
ARIES DOMESTIC FUND II, L.P.
By:________________________ 53 Shares of Preferred
Name:______________________ 8,076 Warrants
Title:_____________________
c/o Paramount Capital Asset
Management, Inc.
787 Seventh Avenue
48th Floor
New York, NY 10019
-20-
<PAGE>
INVESTOR SIGNATURE PAGE
ESSEX WOODLANDS HEALTH
VENTURES FUND IV, L.P.
By:___________________________ 6,000 Shares of Preferred
Name:_________________________ 914,286 Warrants
Title:________________________
15001 Walden Road
Suite 101
Montgomery, TX 77356
-21-
<PAGE>
INVESTOR SIGNATURE PAGE
CADUCEUS CAPITAL TRUST
By:__________________________ 668 Shares of Preferred
Name:________________________ 101,791 Warrants
Title:_______________________
c/o Orbimed Advisors, LLC
767 Third Avenue
New York, NY 10017
-22-
<PAGE>
INVESTOR SIGNATURE PAGE
CADUCEUS CAPITAL II, L.P.
By:_________________________ 332 Shares of Preferred
Name:_______________________ 50,590 Warrants
Title:______________________
c/o Orbimed Advisors, LLC
767 Third Avenue
New York, NY 10017
-23-
<PAGE>
INVESTOR SIGNATURE PAGE
WAYNE ROTHBAUM
By:_______________________ 200 Shares of Preferred
Name:_____________________ 30,476 Warrants
Title:____________________
c/o Carson Group
156 W. 56th Street
10th Floor
New York, NY 10019
-24-
<PAGE>
INVESTOR SIGNATURE PAGE
STEVEN OLIVERA
By:________________________ 200 Shares of Preferred
Name:______________________ 30,476 Warrants
Title:_____________________
4 Piper Court
Blauvelt, NY 10913
-25-
<PAGE>
INVESTOR SIGNATURE PAGE
JOSEPH EDELMAN
By:_______________________ 100 Shares of Preferred
Name:_____________________ 15,238 Warrants
Title:____________________
c/o First New York Securities
850 Third Avenue
New York, NY 10022
-26-
<PAGE>
INVESTOR SIGNATURE PAGE
MITCHELL SILBER
By:______________________ 75 Shares of Preferred
Name:____________________ 11,429 Warrants
Title:___________________
C/o Carson Group
156 W. 56th Street
10th Floor
New York, NY 10019
-27-
<PAGE>
Exhibit 4.2
CELL THERAPEUTICS, INC.
FORM OF REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (the "Agreement") is made as of the 24
day of November, 1999, by and between Cell Therapeutics, Inc., a Washington
corporation (the "Company") and the persons executing signature pages hereto
(each "Investor" and collectively the "Investors").
RECITALS
The Company and the Investor have entered into a Securities Purchase
Agreement (the "Purchase Agreement") of even date herewith pursuant to which the
Company will issue and sell to the Investor shares of Series D convertible
preferred stock of the Company ("Preferred Stock") and certain warrants to
purchase shares of Common Stock of the Company ("Warrants") on the terms and
conditions set forth in the Purchase Agreement. A condition to the Investor's
obligations under the Purchase Agreement is that the Company and the Investor
enter into this Agreement in order to provide the Investor with certain rights
to register shares of the Company's Common Stock issuable upon conversion of the
Preferred Stock and exercise of Warrants.
AGREEMENT
The parties hereby agree as follows:
1. REGISTRATION RIGHTS. The Company and the Investor covenant and agree as
follows:
1.1 DEFINITIONS. For purposes of this Section 1:
(a) The terms "register," "registered," and "registration" refer
to a registration effected by preparing and filing a registration statement or
similar document in compliance with the Securities Act of 1933, as amended (the
"Securities Act"), and the declaration or ordering of effectiveness of such
registration statement or document;
(b) The term "Registrable Securities" means (i) the shares of
Common Stock issuable or issued upon conversion of the Preferred Stock, (ii) the
shares of Common Stock issuable or issued upon exercise of the Warrants, and
(iii) any other shares of Common Stock of the Company issued as (or issuable
upon the conversion or exercise of any warrant, right or other security which is
issued as) a dividend or other distribution with respect to, or in exchange for
or in replacement of, the shares listed in (i) or (ii); provided, however, that
the foregoing definition shall exclude in all cases any Registrable Securities
sold by a person in a transaction in which his or her rights under this
Agreement are not assigned. Notwithstanding the foregoing, Common Stock or other
securities shall only be treated as Registrable Securities if and so long as
they have
<PAGE>
not been (A) sold to or through a broker or dealer or underwriter in a public
distribution or a public securities transaction, or (B) sold in a transaction
exempt from the registration and prospectus delivery requirements of the
Securities Act under Section 4(1) thereof so that all transfer restrictions, and
restrictive legends with respect thereto, if any, are removed upon the
consummation of such sale;
(c) The number of shares of "Registrable Securities then
outstanding" shall be determined by the number of shares of Common Stock
outstanding which are, and the number of shares of Common Stock issuable
pursuant to then exercisable or convertible securities which are, Registrable
Securities;
(d) The term "Holder" means any person owning or having the right
to acquire Registrable Securities or any assignee thereof in accordance with
Section 1.9 of this Agreement;
(e) The term "Form S-3" means such form under the Securities Act
as in effect on the date hereof or any successor form that permits significant
incorporation by reference of the Company's filings under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"); and
(f) The term "SEC" means the Securities and Exchange Commission.
1.2 FORM S-3 REGISTRATION. (a)
(a) Unless otherwise instructed in writing by the Holder, the
Company will use its best efforts to effect a registration on Form S-3 (or, if
not available Form S-2 or S-1, the form so utilized being the "Relevant
Registration Statement") as soon as possible, but in any event prior to 30 days
after any issuance of Preferred Stock and all related qualifications and
compliances as would permit or facilitate the sale and distribution of such
shares of Holder's Registrable Securities that Holder requests; provided,
however, that the Company shall not be obligated to effect any such
registration, qualification or compliance pursuant to this Section 1.2 (x) if
the Company shall furnish to the Holder a certificate signed by the President of
the Company stating that in the good faith judgment of the Board of Directors of
the Company, it would be seriously detrimental to the Company and its
stockholders for such registration statement to be effected at such time because
the filing thereof would require premature disclosure of a potential transaction
or transactions (a "Potential Transaction"), in which event the Company shall
have the right to defer the filing of such registration statement for a period
of not more than 60 days; provided, however, that the Company shall not utilize
this right more than once in any 270 day period; or (y) in any particular
jurisdiction in which the Company would be required to qualify to do business or
to execute a general consent to service of process in effecting such
registration, qualification or compliance.
(b) If (1) the Relevant Registration Statement is not filed on or
prior to the thirty (30) days specified above (subject to subclause(x)), or (2)
the Company fails to file with the Commission a request for acceleration in
accordance with Rule 12d1-2 promulgated under the Exchange Act within five (5)
days of the date that the Company is notified (orally or in
2
<PAGE>
writing, whichever is earlier) by the Commission that a Relevant Registration
Statement will not be "reviewed," or not subject to further review or comment,
or (3) a Relevant Registration Statement is not declared effective by the
Commission on or prior to (subject to subclause x) ninety (90) days from the
issuance of the Preferred Stock (or one hundred twenty (20) days from filing in
the event the Company then has an S-4 Registration Statement on file), or (4) a
Relevant Registration Statement is filed with and declared effective by the
Commission but thereafter ceases to be effective as to all Registrable
Securities at any time prior to the expiration of twenty-four (24) months from
the last issuance of securities covered by such Relevant Registration Statement
without being succeeded within ten (10) days by a subsequent Relevant
Registration Statement filed with and declared effective by the Commission, or
(5) trading in the Common Stock shall be suspended from the NASDAQ or a
Subsequent Market for more than three (3) Business Days (which need not be
consecutive days), or (6) the conversion rights of the Holders are suspended for
any reason or (7) an amendment to a Relevant Registration Statement is not filed
by the Company with the Commission within twenty (20) days of the Commission's
notifying the Company that such amendment is required in order for the Relevant
Registration Statement to be declared effective (any such failure or breach
being referred to as an "Event," and for purposes of clauses (1), (3) and (6)
-----
the date on which such Event occurs, or for purposes of clause (2) the date on
which such five (5) day period is exceeded, or for purposes of clauses (4) and
(7) the date which such 10 day-period is exceeded, or for purposes of clause (5)
the date on which such three (3) Business Day-period is exceeded, being referred
to as an "Event Date"), then, on an Event Date and each monthly anniversary
----------
thereof until the earlier to occur of (i) the third (3/rd/) monthly anniversary
of the Event Date and (ii) such time as the applicable Event is cured, the
Company shall pay to the Holder 1.5% of the aggregate Stated Value of the shares
of Preferred Stock then held by such Holder and required to be registered
(which, for purposes hereof shall include all shares of Preferred Stock tendered
for conversion by such Holder but for which Underlying Shares due in respect
thereof shall not have been received by such Holder), in cash, as liquidated
damages and not as a penalty. Commencing on the (3/rd/) monthly anniversary of
the Event Date and on each monthly anniversary thereof until the applicable
Event is cured, the Company shall pay to the Holder 3% of the aggregate Stated
Value of the shares of Preferred Stock then held by such Holder and required to
be registered (which, for purposes hereof shall include all shares of Preferred
Stock tendered for conversion by such Holder but for which Underlying Shares due
in respect thereof shall not have been received by such Holder), in cash, as
liquidated damages and not as a penalty. If the Company fails to pay the
liquidated damages hereunder in full pursuant to this Section on the date such
amount is due in accordance with this Section, the Company will pay interest
thereon at a rate of 18% per annum (or the lesser amount permitted by applicable
law), accruing daily from such date until the liquidated damages hereunder, plus
all such interest thereon, are paid in full.
1.3 OBLIGATIONS OF THE COMPANY. Whenever required under Section 1.2
to effect the registration of any Registrable Securities, the Company shall, as
expeditiously as reasonably possible, use its best commercial efforts to:
(a) Prepare and file with the SEC a registration statement with
respect to such Registrable Securities and cause such registration statement to
become effective, and, upon the request of the Holder of the Registrable
Securities registered thereunder, keep such registration
3
<PAGE>
statement effective for twenty-four (24) months.
(b) Prepare and file with the SEC such amendments and supplements
to such registration statement and the prospectus used in connection with such
registration statement as may be necessary to comply with the provisions of the
Securities Act with respect to the disposition of all Registrable Securities
covered by such registration.
(c) Furnish to the Holder such numbers of copies of a prospectus,
including a preliminary prospectus, in conformity with the requirements of the
Securities Act, and such other documents as the Holder may reasonably request in
order to facilitate the disposition of Registrable Securities owned by the
Holder.
(d) Register and qualify the Registrable Securities covered by
such registration statement under such other securities or Blue Sky laws of such
jurisdictions as shall be reasonably requested by the Holder, provided that the
Company shall 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.
(e) Notify the 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.
(f) Cause all such Registrable Securities registered pursuant the
Section 1.2 to be listed on each securities exchange on which similar securities
issued by the Company are then listed.
(g) Provide Holder's counsel copies of such registration
statement, amendments and supplements prior to filing with the SEC, and promptly
provide such counsel with any comment letters or similar notices received by the
Company from the SEC with respect thereto.
(h) Provide a transfer agent and registrar for all Registrable
Securities registered pursuant hereunder and a CUSIP number for all such
Registrable Securities, in each case not later than the effective date of such
registration.
(i) Furnish, at the request of the Holder, on the date that the
registration statement with respect to such securities becomes effective, (i) an
opinion, dated such date, of the counsel representing the Company for the
purposes of such registration, in form and substance as is customarily given to
underwriters in an underwritten public offering, addressed to the Holder and
(ii) a letter dated such date, from the independent certified public accountants
of the Company, in form and substance as is customarily given by independent
certified public accountants to underwriters in an underwritten public offering,
addressed to the Holder.
4
<PAGE>
1.4 RESTRICTIONS ON AND PROCEDURE FOR SALES PURSUANT TO A
REGISTRATION STATEMENT.
(a) Each Holder agrees to the following:
Delay of Sale. The Company may refuse to permit the Holder to
-------------
resell any Registrable Securities for a specified period of time; provided,
however, that (a) in order to exercise this right, the Company must deliver a
certificate in writing to the Holder to the effect that the registration
statement in its then current form omits discussion of a Potential Transaction
or contains an untrue statement of material fact or omits to state a material
fact necessary in order to make the statements made therein, in light of the
circumstances under which they were made, not misleading, and (b) in no event
shall such delay exceed 60 days in the event of a Potential Transaction, or 20
days in other cases (none of which other cases shall have a duration of more
than five consecutive business days) in any twelve-month period, and (c) in no
event shall this right of delay be exercised within five business days of the
effective date of a Relevant Registration Statement. During any suspension as
contemplated by this Section 1.4 (a)(iii), the Company will not allow any of its
officers or directors to buy or sell shares of the Company's securities.
1.5 FURNISH INFORMATION. It shall be a condition precedent to the
obligations of the Company to take any action pursuant to this Section 1 with
respect to the Registrable Securities of the Holder that the Holder shall
furnish to the Company such information regarding itself, the Registrable
Securities held by it, and the intended method of disposition of such securities
as shall be required to effect the registration of such Holder's Registrable
Securities. The Company shall have no obligation with respect to any
registration requested pursuant to Section 1.2 of this Agreement if, as a result
of the application of the preceding sentence, the anticipated aggregate value of
the Registrable Securities to be included in the registration does not equal or
exceed the anticipated aggregate value required to originally trigger the
Company's obligation to initiate such registration as specified in subsection
1.2(b).
1.6 EXPENSES OF REGISTRATION. All expenses incurred in connection
with a registration requested pursuant to Section 1.2, including (without
limitation) all registration, filing, qualification, printers' and accounting
fees and the reasonable fees and disbursements of one counsel for the selling
Holder selected by Holder with the approval of the Company, which approval shall
not be unreasonably withheld, and counsel for the Company shall be borne by the
Company.
1.7 INDEMNIFICATION. In the event any Registrable Securities are
included in a registration statement under Section 1:
(a) To the extent permitted by law, the Company will indemnify
and hold harmless Holder and each person, if any, who controls 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
5
<PAGE>
respect thereof) arise out of or are based upon any of the following statements,
omissions or violations (collectively a "Violation"): (i) 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, (ii) 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 (iii) any violation
or alleged violation by the Company of the Securities Act, the Exchange Act, any
state securities law or any rule or regulation promulgated under the Securities
Act, the Exchange Act or any state securities law; and the Company will pay to
each such Holder or controlling person, as incurred, any legal or other expenses
reasonably incurred by them in connection with investigating or defending any
such loss, claim, damage, liability, or action; provided, however, that the
indemnity agreement contained in this subsection 1.7(a) shall 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
shall not be unreasonably withheld), nor shall the Company be liable to any
Holder or controlling person 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 any such Holder or
controlling person.
(b) To the extent permitted by law, the Holder will indemnify and
hold harmless the Company, each of its directors, each of its officers who has
signed the registration statement, each person, if any, who controls the Company
within the meaning of the Securities Act and any controlling person of any
Holder, against any losses, claims, damages, or liabilities (joint or several)
to which any of the foregoing persons 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, in each case to the extent (and only to the
extent) that such Violation occurs in reliance upon and in conformity with
written information furnished by Holder expressly for use in connection with
such registration; and Holder will pay, as incurred, any legal or other expenses
reasonably incurred by any person intended to be indemnified pursuant to this
subsection 1.7(b), in connection with investigating or defending any such loss,
claim, damage, liability, or action; provided, however, that the indemnity
agreement contained in this subsection 1.7(b) shall 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 shall
not be unreasonably withheld; provided, that in no event shall any indemnity
under this subsection 1.7(b) exceed the net proceeds from the offering received
by Holder, except in the case of willful fraud by Holder.
(c) Promptly after receipt by an indemnified party under this
Section 1.7 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 1.7, deliver to
the indemnifying party a written notice of the commencement thereof and the
indemnifying party shall 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
(together with all other indemnified parties which may be represented
6
<PAGE>
without conflict by one counsel) shall have the right to retain one separate
counsel, with the reasonable 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 prejudicial to its ability to defend such action, shall
relieve such indemnifying party of any liability to the indemnified party under
this Section 1.7 but the omission so to deliver written notice to the
indemnifying party will not relieve it of any liability that it may have to any
indemnified party otherwise than under this Section 1.7.
(d) If the indemnification provided for in this Section 1.7 is
held by a court of competent jurisdiction to be unavailable to an indemnified
party with respect to any loss, liability, claim, damage or expense referred to
therein, then 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 statements or omissions that resulted in such loss,
liability, claim, damage or expense as well as any other relevant equitable
considerations; provided, that in no event shall any contribution by Holder
under this subsection 1.7(d) exceed the net proceeds from the offering received
by Holder, except in the case of willful fraud by Holder. 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.
(e) The obligations of the Company and Holder under this Section
1.7 shall survive the completion of any offering of Registrable Securities in a
registration statement under this Section 1, and otherwise.
1.8 REPORTS UNDER SECURITIES EXCHANGE ACT OF 1934. With a view to
making available to the Holder the benefits of Rule 144 promulgated under the
Securities Act and any other rule or regulation of the SEC that may at any time
permit a Holder to sell securities of the Company to the public without
registration or pursuant to a registration on Form S-3, the Company agrees to
use its best commercial efforts to:
(a) make and keep public information available, as those terms
are understood and defined in SEC Rule 144, at all times so long as the Company
remains subject to the periodic reporting requirements under Sections 13 or
15(d) of the Exchange Act;
(b) file with the SEC in a timely manner all reports and other
documents required of the Company under the Securities Act and the Exchange Act;
and
(c) furnish to Holder, so long as Holder owns any Registrable
Securities, forthwith upon request (i) a written statement by the Company that
it has complied with the
7
<PAGE>
reporting requirements of SEC Rule 144, the Securities Act and the Exchange Act,
or that it qualifies as a registrant whose securities may be resold pursuant to
Form S-3 (at any time when it so qualifies), (ii) a copy of the most recent
annual or quarterly report of the Company and such other reports and documents
so filed by the Company, and (iii) such other information as may be reasonably
requested in availing any Holder of any rule or regulation of the SEC which
permits the selling of any such securities without registration or pursuant to
such form.
1.9 [RESERVED]
1.10 "MARKET STAND-OFF" AGREEMENT. Holder hereby agrees that, during
the period of duration (up to, but not exceeding, 90 days) specified by the
Company and an underwriter of Common Stock or other securities of the Company,
following the effective date of an underwritten registration statement of the
Company filed under the Securities Act, it shall not, to the extent requested by
the Company and such underwriter if, and only if, at the time of such request
Holder is subject to reporting under Section 16(a) of the Exchange Act with
respect to securities of the Company beneficially owned by it, directly or
indirectly sell, offer to sell, contract to sell (including, without limitation,
any short sale), grant any option to purchase or otherwise transfer or dispose
of (other than to donees who agree to be similarly bound) any securities of the
Company held by it at any time during such period except Common Stock included
in such registration.
In order to enforce the foregoing covenant, the Company may impose stop-
transfer instructions with respect to the Registrable Securities of the Holder
(and the shares or securities of every other person subject to the foregoing
restriction) until the end of such period, and the Holder agrees that, if so
requested, the Holder will execute an agreement in the form provided by the
underwriter containing terms which are essentially consistent with the
provisions of this Section 1.10.
1.11 TERMINATION OF REGISTRATION RIGHTS. With respect to shares of
Registrable Securities issued to the Investor at the Initial Closing or any
particular Subsequent Closing(s) (as such terms are defined in the Purchase
Agreement), the Holder shall not be entitled to exercise any right provided for
in this Section 1 after such time as Rule 144(k) under the Securities Act is
available for the sale of all of such Holder's shares that were issued at the
Initial Closing or the applicable Subsequent Closing. For purposes of clarity,
the registration rights of a Holder provided for in this Section 1 shall
terminate in stages, which stages shall correspond to the initial issuance date
of such Registrable Securities.
2. MISCELLANEOUS.
2.1 SUCCESSORS AND ASSIGNS. Except as otherwise provided in this
Agreement, the terms and conditions of this Agreement shall inure to the benefit
of and be binding upon the respective successors and assigns of the parties
(including transferees of any of the Preferred Stock or any Common Stock issued
upon conversion thereof). 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.
8
<PAGE>
2.2 AMENDMENTS AND WAIVERS. Any term of this Agreement may be
amended or waived only with the written consent of the Company and the holders
of a majority of the Registrable Securities then outstanding. Any amendment or
waiver effected in accordance with this paragraph shall be binding upon each
holder of any Registrable Securities then outstanding, each future holder of all
such Registrable Securities, and the Company.
2.3 NOTICES. Unless otherwise provided, any notice required or
permitted by this Agreement shall be in writing and shall be deemed sufficient
upon delivery, when delivered personally or by overnight courier or sent by
telegram or fax, or forty-eight (48) hours after being deposited in the U.S.
mail, as certified or registered mail, with postage prepaid, and addressed to
the party to be notified at such party's address or fax number as set forth on
the signature page hereto or in the Purchase Agreement in the case of the
Company.
2.4 SEVERABILITY. If one or more provisions of this Agreement are
held to be unenforceable under applicable law, the parties agree to renegotiate
such provision in good faith. In the event that the parties cannot reach a
mutually agreeable and enforceable replacement for such provision, then (a) such
provision shall be excluded from this Agreement, (b) the balance of the
Agreement shall be interpreted as if such provision were so excluded and (c) the
balance of the Agreement shall be enforceable in accordance with its terms.
2.5 GOVERNING LAW. This Agreement and all acts and transactions
pursuant hereto shall be governed, construed and interpreted in accordance with
the laws of the State of New York, without giving effect to principles of
conflicts of laws.
2.6 COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
2.7 TITLES AND SUBTITLES. The titles and subtitles used in this
Agreement are used for convenience only and are not to be considered in
construing or interpreting this Agreement.
[Signature Page Follows]
9
<PAGE>
The parties have executed this Registration Rights Agreement as of the date
first above written.
COMPANY:
CELL THERAPEUTICS, INC.
By:
James Bianco
Chief Executive Officer
Address: 201 Elliott Avenue West, Suite 400
Seattle, Washington 98119
Fax: (206) _____________
INVESTOR:
THE ARIES MASTER FUND
By:
Name: __________________
(print)
Title: _________________
SIGNATURE PAGE TO THE
REGISTRATION RIGHTS AGREEMENT
10
<PAGE>
The parties have executed this Registration Rights Agreement as of the date
first above written.
COMPANY:
CELL THERAPEUTICS, INC.
By:
James Bianco
Chief Executive Officer
Address: 201 Elliott Avenue West, Suite 400
Seattle, Washington 98119
Fax: (206) _____________
INVESTOR:
ARIES DOMESTIC FUND, L.P.
By:
Name: __________________
(print)
Title: _________________
SIGNATURE PAGE TO THE
REGISTRATION RIGHTS AGREEMENT
<PAGE>
The parties have executed this Registration Rights Agreement as of the date
first above written.
COMPANY:
CELL THERAPEUTICS, INC.
By:
James Bianco
Chief Executive Officer
Address: 201 Elliott Avenue West, Suite 400
Seattle, Washington 98119
Fax: (206) _____________
INVESTOR:
ARIES DOMESTIC FUND II, L.P.
By:
Name: __________________
(print)
Title: _________________
SIGNATURE PAGE TO THE
REGISTRATION RIGHTS AGREEMENT
<PAGE>
The parties have executed this Registration Rights Agreement as of the date
first above written.
COMPANY:
CELL THERAPEUTICS, INC.
By:
James Bianco
Chief Executive Officer
Address: 201 Elliott Avenue West, Suite 400
Seattle, Washington 98119
Fax: (206) _____________
INVESTOR:
ESSEX WOODLANDS HEALTH
VENTURES FUND IV, L.P.
By:
Name: __________________
(print)
Title: _________________
SIGNATURE PAGE TO THE
REGISTRATION RIGHTS AGREEMENT
<PAGE>
The parties have executed this Registration Rights Agreement as of the date
first above written.
COMPANY:
CELL THERAPEUTICS, INC.
By:
James Bianco
Chief Executive Officer
Address: 201 Elliott Avenue West, Suite 400
Seattle, Washington 98119
Fax: (206) _____________
INVESTOR:
CADUCEUS CAPITAL TRUST
By:
Name: __________________
(print)
Title: _________________
SIGNATURE PAGE TO THE
REGISTRATION RIGHTS AGREEMENT
<PAGE>
The parties have executed this Registration Rights Agreement as of the date
first above written.
COMPANY:
CELL THERAPEUTICS, INC.
By:
James Bianco
Chief Executive Officer
Address: 201 Elliott Avenue West, Suite 400
Seattle, Washington 98119
Fax: (206) _____________
INVESTOR:
CADUCEUS CAPITAL II, L.P.
By:
Name: __________________
(print)
Title: _________________
SIGNATURE PAGE TO THE
REGISTRATION RIGHTS AGREEMENT
<PAGE>
The parties have executed this Registration Rights Agreement as of the date
first above written.
COMPANY:
CELL THERAPEUTICS, INC.
By:
James Bianco
Chief Executive Officer
Address: 201 Elliott Avenue West, Suite 400
Seattle, Washington 98119
Fax: (206) _____________
INVESTOR:
WAYNE ROTHBAUM
By:
Name: __________________
(print)
Title: _________________
SIGNATURE PAGE TO THE
REGISTRATION RIGHTS AGREEMENT
<PAGE>
The parties have executed this Registration Rights Agreement as of the date
first above written.
COMPANY:
CELL THERAPEUTICS, INC.
By:
James Bianco
Chief Executive Officer
Address: 201 Elliott Avenue West, Suite 400
Seattle, Washington 98119
Fax: (206) _____________
INVESTOR:
STEVEN OLIVERA
By:
Name: __________________
(print)
Title: _________________
SIGNATURE PAGE TO THE
REGISTRATION RIGHTS AGREEMENT
<PAGE>
The parties have executed this Registration Rights Agreement as of the date
first above written.
COMPANY:
CELL THERAPEUTICS, INC.
By:
James Bianco
Chief Executive Officer
Address: 201 Elliott Avenue West, Suite 400
Seattle, Washington 98119
Fax: (206) _____________
INVESTOR:
JOSEPH EDELMAN
By:
Name: __________________
(print)
Title: _________________
SIGNATURE PAGE TO THE
REGISTRATION RIGHTS AGREEMENT
<PAGE>
The parties have executed this Registration Rights Agreement as of the date
first above written.
COMPANY:
CELL THERAPEUTICS, INC.
By:
James Bianco
Chief Executive Officer
Address: 201 Elliott Avenue West, Suite 400
Seattle, Washington 98119
Fax: (206) _____________
INVESTOR:
MITCHELL SILBER
By:
Name: __________________
(print)
Title: _________________
SIGNATURE PAGE TO THE
REGISTRATION RIGHTS AGREEMENT
<PAGE>
Exhibit 4.3
WARRANT NO. P-3 DATE OF ISSUANCE: November 24, 1999
WARRANT TO PURCHASE SHARES
OF COMMON STOCK OF
CELL THERAPEUTICS, INC.
This Warrant is issued to ("Purchaser")
pursuant to that certain Securities Purchase Agreement dated as of November,
1999 between Cell Therapeutics, Inc., a Washington corporation ("CTI" or the
"Company"), and Purchaser (the "Purchase Agreement") and is subject to the terms
and conditions therein.
1. EXERCISE OF WARRANT.
(a) Method of Exercise. Subject to the terms and conditions herein
------------------
set forth, upon surrender of this Warrant at the principal office of the Company
and upon payment of the purchase price by wire transfer to the Company or
cashiers check drawn on a United States bank made to the order of the Company,
or exercise of the right to credit the Warrant Price (as defined in Section
1(c)) against the fair market value of the Warrant Stock (as defined below) at
the time of exercise (the "Net Exercise Right") pursuant to Section 1(b),
Purchaser is entitled to purchase from the Company, at any time following the
date hereof, and on or before November 24, 2004, _____ fully paid and non-
assessable shares of the Company Common Stock ("Warrant Stock"). Subject to
adjustment as hereinafter provided, the purchase price of one share of Warrant
Stock (or such securities as may be substituted for one share of Warrant Stock
pursuant to the provisions hereinafter set forth) shall be the Warrant Price.
(b) Net Exercise Right. If the Company shall receive written notice
------------------
from the holder of this Warrant at the time of exercise of this Warrant that the
holder elects to exercise Purchaser's Net Exercise Right, the Company shall
deliver to such holder (without payment by the Purchaser of any exercise price
of any cash or other consideration ) that number of shares of fully paid and
nonassessable Common Stock equal to the quotient obtained by dividing (x) the
value of this Warrant (or the specified portion thereof) on the date of
exercise, which value shall be determined by subtracting (1) the aggregate
Warrant Price of the Warrant Stock immediately prior to the exercise of this
Warrant from (2) the aggregate fair market value of the Warrant Stock issuable
upon exercise of this Warrant (or specified portion thereof) on the date of
exercise by (y) the fair market value of one share of Common Stock on the date
of exercise. For purposes of this Section 1(b), "fair market value" of a share
of Common Stock shall mean the closing price of the Common Stock on the business
day prior to the date of exercise as reported by the Nasdaq National Market or
such other principal exchange or quotation system on which the Common Stock is
then traded. For purposes of this Warrant, shares issued pursuant to the Net
Exercise Right shall be treated as if they were issued upon the exercise of this
Warrant.
<PAGE>
(c) Price of Shares Subject to Warrant. The "Warrant Price" shall be
----------------------------------
equal to $2.625.
2. CERTAIN ADJUSTMENTS.
(a) Mergers or Consolidations. If at any time after the date hereof
-------------------------
there shall be a capital reorganization (other than a combination or subdivision
of Warrant Stock otherwise provided for herein), or a merger or consolidation of
the Company with another corporation (other than a merger with another
corporation in which the Company is a continuing corporation and which does not
result in any reclassification or change of outstanding securities issuable upon
exercise of this Warrant), then, as a part of such reorganization, merger or
consolidation, lawful provision shall be made so that Purchaser shall thereafter
be entitled to receive upon exercise of this Warrant, during the period
specified in this Warrant and upon payment of the Warrant Price, the number of
shares of stock or other securities or property of the Company or the successor
corporation resulting from such reorganization, merger or consolidation, to
which a holder of the Common Stock deliverable upon exercise of this Warrant
would have been entitled under the provisions of the agreement in such
reorganization, merger or consolidation if this Warrant had been exercised
immediately before that reorganization, merger or consolidation. In any such
case, appropriate adjustment (as determined in good faith by the Company's Board
of Directors) shall be made in the application of the provisions of this Warrant
with respect to the rights and interests of Purchaser after the reorganization,
merger or consolidation to the end that the provisions of this Warrant
(including adjustment of the Warrant Price then in effect and the number of
shares of Warrant Stock) shall be applicable after that event, as near as
reasonably may be, in relation to any shares or other property deliverable after
that event upon exercise of this Warrant.
(b) Splits and Subdivisions; Dividends. In the event the Company
----------------------------------
should at any time or from time to time fix a record date for the effectuation
of a split or subdivision of the outstanding shares of Common Stock or the
determination of the holders of Common Stock entitled to receive a dividend or
other distribution payable in additional shares of Common Stock or other
securities or rights convertible into, or entitling the holder thereof to
receive directly or indirectly, additional shares of Common Stock (hereinafter
referred to as the "Common Stock Equivalents") without payment of any
consideration by such holder for the additional shares of Common Stock or Common
Stock Equivalents (including the additional shares of Common Stock issuable upon
conversion or exercise thereof), then, as of such record date (or the date of
such distribution, split or subdivision if no record date is fixed), the per
share Warrant Price shall be appropriately decreased and the number of shares of
Warrant Stock shall be appropriately increased in proportion to such increase
(or potential increase) of outstanding shares.
(c) Combination of Shares. If the number of shares of Common Stock
---------------------
outstanding at any time after the date hereof is decreased by a combination of
the outstanding shares of Common Stock, the per share Warrant Price shall be
appropriately increased and the number of shares of Warrant Stock shall be
appropriately decreased in proportion to such decrease in outstanding shares.
(d) Adjustments for Other Distributions. In the event the Company
-----------------------------------
shall declare a distribution payable in securities of other persons, evidences
of indebtedness issued by the Company
-2-
<PAGE>
or other persons, assets (excluding cash dividends paid out of net profits) or
options or rights not referred to in Section 2(b), then, in each such case for
the purpose of this Section 2(d), upon exercise of this Warrant the holder
hereof shall be entitled to a proportionate share of any such distribution as
though such holder was the holder of the number of shares of Common Stock of the
Company into which this Warrant may be exercised as of the record date fixed for
the determination of the holders of Common Stock of the Company entitled to
receive such distribution.
3. NO FRACTIONAL SHARES. No fractional shares of Warrant Shares will be
issued in connection with any exercise of this Warrant. In lieu of any
fractional shares which would otherwise be issuable, the Company shall pay cash
equal to the product of such fraction multiplied by the closing price of one
Warrant Share as reported on the Nasdaq National Market on the date of exercise.
4. NO STOCKHOLDER RIGHTS. Until the exercise of this Warrant or any
portion of this Warrant, Purchaser shall not have nor exercise any rights by
virtue hereof as a stockholder of the Company (including without limitation the
right to notification of stockholder meetings or the right to receive any notice
or other communication concerning the business and affairs of the Company).
5. RESERVATION OF STOCK. The Company covenants that during the period
this Warrant is exercisable, the Company will reserve from its authorized and
unissued Common Stock a sufficient number of shares of Common Stock (or other
securities, if applicable) to provide for the issuance of Warrant Stock (or
other securities) upon the exercise of this Warrant. the Company agrees that
its issuance of this Warrant shall constitute full authority to its officers who
are charged with the duty of executing stock certificates to execute and issue
the necessary certificates for the Warrant Stock upon the exercise of this
Warrant.
6. EXERCISE OF WARRANT.
Procedural Requirements. Subject to Section 6(b), this Warrant may be
-----------------------
exercised by the holder hereof, in whole or in part, by the surrender of this
Warrant and the Notice of Exercise attached hereto as Exhibit A duly completed
and executed on behalf of the holder hereof, at the principal office of the
Company together with payment in full of the Warrant Price then in effect with
respect to the number of shares of Warrant Stock as to which the Warrant is
being exercised. The Warrant Price shall be paid by wire transfer to the
Company or cashiers check drawn on a United States bank made to the order of the
Company or by exercise of the Net Exercise Right pursuant to Section 1(b). 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 Warrant Stock issuable upon such exercise shall
be treated for all purposes as the holder of such shares of record as of the
close of business on such date. As promptly as practicable on or after such
date and in any event within three (3) days thereafter, the Company at its
expense shall cause to be issued and delivered to the person or persons entitled
to receive the same a certificate or certificates for the number of full shares
of Warrant Stock issuable upon such exercise, together with cash in lieu of any
fraction of a share as provided above. The shares of Warrant Stock issuable
upon exercise hereof shall, upon their issuance, be fully paid and
nonassessable. In the
-3-
<PAGE>
event that this Warrant is exercised in part, the Company at its expense will
execute and deliver a new Warrant of like tenor exercisable for the number of
shares for which this Warrant may then be exercised.
7. CERTIFICATE OF ADJUSTMENT. Whenever the Warrant Price or number or
type of securities issuable upon exercise of this Warrant is adjusted, as herein
provided, the Company shall, at its expense, promptly deliver to the record
holder of this Warrant a certificate of an officer of the Company setting forth
the nature of such adjustment and showing in detail the facts upon which such
adjustment is based.
8. REPRESENTATIONS OF PURCHASER. As of the date hereof, Purchaser hereby
confirms the representations and warranties made by Purchaser in Section 3 of
the Purchase Agreement.
9. RESTRICTIONS.
(a) UNREGISTERED SECURITY. The holder of this Warrant acknowledges
that this Warrant and the Warrant Stock have not been registered under the
Securities Act of 1933, as amended (the "1933 Act") and agrees not to sell,
pledge, distribute, offer for sale, transfer or otherwise dispose of this
Warrant or any Warrant Stock issued upon its exercise in the absence of (i) an
effective registration statement under the 1933 Act as to this Warrant or such
Warrant Stock and registration or qualification of this Warrant or such Warrant
Stock under any applicable U.S. federal or state securities law then in effect
or (ii) an opinion of counsel, reasonably satisfactory to the Company, that such
registration and qualification are not required. Each certificate or other
instrument for Warrant Stock issued upon the exercise of this Warrant shall bear
a legend substantially to the foregoing effect.
10. NOTICES OF RECORD DATE. In the event of:
(a) any taking by the Company of a record of the holders of any class
of securities for the purpose of determining the holders thereof who are
entitled to receive any dividend (other than a cash dividend payable out of
earned surplus of the Company) or other distribution, or any right to subscribe
for, purchase or otherwise acquire any shares of stock of any class or any other
securities or property, or to receive any other right; or
(b) any capital reorganization of the Company, any reclassification or
recapitalization of the capital stock of the Company or any transfer of all or
substantially all the assets of the Company to or consolidation or merger of the
Company with or into any other person; or
(c) any voluntary or involuntary dissolution, liquidation or winding-
up of the Company, then and in each such event the Company will mail or cause to
be mailed to the holder of this Warrant a notice specifying (i) the date on
which any such record is to be taken for the purpose of such dividend,
distribution or right, and stating the amount and character of such dividend,
distribution or right, and (ii) the date on which any such reorganization,
reclassification, recapitalization, transfer, consolidation, merger,
dissolution, liquidation or winding-up is to take place, and the time, if any,
as of which the holders of record of Common Stock (or other securities)
-4-
<PAGE>
shall be entitled to exchange their shares of Common Stock (or other securities)
for securities or other property deliverable upon such reorganization,
reclassification, recapitalization, transfer, consolidation, merger,
dissolution, liquidation or winding-up. Such notice shall be mailed at least 10
days prior to the date therein specified.
11. REPLACEMENT OF WARRANTS. On receipt of evidence reasonably
satisfactory to the Company of the loss, theft, destruction or mutilation of
this Warrant and, in the case of any such loss, theft, destruction or mutilation
of this Warrant, on delivery of an indemnity agreement or security reasonably
satisfactory in form and amount to the Company or, in the case of any such
mutilation, on surrender and cancellation of such Warrant, the Company at its
expense will execute and deliver, in lieu thereof, a new Warrant of like tenor.
12. DAMAGES. If the Company fails to deliver to the Purchaser Warrant
Stock pursuant to Section 6(a) by the fifth (5th) trading day (the "Deadline")
after the Company's receipt of all or a portion of the Warrant for exercise and
surrender, the Company shall pay to such Holder, in cash, as liquidated damages
and not as a penalty, $1,000 for each Trading Day after such fifth (5th) Trading
Day until such Warrant Stock is delivered. In addition to any other rights
available to the Purchaser, if the Company fails to deliver to the Purchaser
such Warrant Stock, by the Deadline, and if after the Deadline the Purchaser
purchases (in an open market transaction or otherwise) Common Stock to deliver
in satisfaction of a sale by such Purchaser of the Underlying Shares which the
Purchaser was entitled to receive upon such exercise of the Warrant (a "Buy-
In"), then the Company shall (A) pay in cash to the Purchaser the amount by
which (x) the Purchaser's total purchase price (including brokerage commissions,
if any) for the Common Stock so purchased exceeds (y) the product of (1) the
aggregate number of shares of Common Stock that such Purchaser was entitled to
receive upon exercise multiplied by (2) the market price of the Common Stock at
the time of the sale giving rise to such purchase obligation and (B) at the
option of the Purchaser, either return the portion of the Warrant for which such
exercise was not honored or deliver to such Purchaser the number of shares of
Common Stock that would have been issued had the Company timely complied with
its delivery obligations. For example, if the Purchaser purchases Common Stock
having a total purchase price of $11,000 to cover a Buy-In with respect to an
attempted exercise of the Warrant with respect to which the market price of the
Underlying Shares on the date of exercise totaled $10,000, under clause (A) of
the immediately preceding sentence the Company shall be required to pay the
Purchaser $1,000. The Purchaser shall provide the Company written notice
indicating the amounts payable to the Purchaser in respect of the Buy-In.
Nothing herein shall limit a Purchaser's right to pursue actual damages for the
Company's failure to deliver Warrant stock upon exercise within the period
specified herein and such Purchaser shall have the right to pursue all remedies
available to it hereunder, including, without limitation, a decree of specific
performance and/or injunctive relief.
13. NO IMPAIRMENT. The Company will not, by amendment of its charter or
through reorganization, consolidation, merger, dissolution, sale of assets or
any other voluntary action, avoid or seek to avoid the observance or performance
of any of the terms of this Warrant, but will at all times in good faith assist
in the carrying out of all such terms and in the taking of all such action as
may be necessary or appropriate in order to protect the rights of the holder of
this Warrant against impairment.
-5-
<PAGE>
14. TERMINATION. This Warrant (and the right to purchase Warrant Stock
upon exercise hereof) shall terminate on [FIVE YEARS].
15. SATURDAYS, SUNDAYS, HOLIDAYS, ETC. If the last or appointed day for
the taking of any action or the expiration of any right required or granted
herein shall be a Saturday or Sunday or shall be a legal holiday, then such
action may be taken or such right may be exercised on the next succeeding day
not a Saturday, Sunday or legal holiday.
16. EXCHANGE ACT FILINGS. Purchaser agrees and acknowledges that it shall
have sole responsibility for making any filings with the U.S. Securities and
Exchange Commission pursuant to Sections 13 and 16 of the Securities Exchange
Act of 1934, as amended, as a result of its acquisition of this Warrant and the
Warrant Stock (collectively, the "Securities") and any future retention or
transfer thereof.
17. NO LEGAL, TAX OR INVESTMENT ADVICE. Purchaser understands that
nothing in this Agreement or any other materials presented to Purchaser in
connection with the acquisition of the Securities constitutes legal, tax or
investment advice. Purchaser has consulted such legal, tax and investment
advisors as it, in its sole discretion, has deemed necessary or appropriate in
connection with its acquisition of the Securities.
18. MISCELLANEOUS. This Warrant shall be governed by the laws of the
State of New York. The headings in this Warrant are for purposes of convenience
and reference only, and shall not be deemed to constitute a part hereof.
Neither this Warrant nor any term hereof may be changed, waived, discharged or
terminated orally but only by an instrument in writing signed by the Company and
the Purchaser. All notices and other communications from the Company to the
holder of this Warrant shall be sufficient if in writing and sent by registered
or certified mail, domestic or international courier, or facsimile, return
receipt requested, postage or courier charges prepaid, to the address furnished
to the Company in writing by Purchaser. All such notices and communications
shall be effective if delivered (i) personally, (ii) by facsimile transmission
(receipt verified), (iii) by registered or certified mail (return receipt
requested), postage prepaid, or (iv) sent by express courier service (receipt
verified). The invalidity or unenforceability of any provision hereof shall in
no way affect the validity or enforceability of any other provisions.
-6-
<PAGE>
IN WITNESS WHEREOF, this Common Stock Purchase Warrant is issued effective
as of this 24 day of November, 1999.
CELL THERAPEUTICS, INC.
By:
James Bianco
Chief Executive Officer
ACKNOWLEDGED AND AGREED:
By:
Title:
SIGNATURE PAGE TO THE WARRANT TO
PURCHASE SHARES OF COMMON STOCK
-7-
<PAGE>
EXHIBIT A
NOTICE OF INTENT TO EXERCISE
(To be signed only upon exercise of Warrant)
To: CELL THERAPEUTICS, INC.
The undersigned, the Holder of the within Warrant, hereby irrevocably
elects to exercise the purchase right represented by such Warrant for, and to
purchase thereunder, _____________ ____________________________ (_____________)
shares of Common Stock of Cell Therapeutics, Inc. and (choose one) ___ herewith
makes payment of ____________________ Dollars ($__________) thereof or
____________ exercises Holder's Net Exercise Right pursuant to Section 1(b)
thereof, and requests that the certificates for such shares be issued in the
name of, and delivered to ________________________________, whose address is
________________
_____________________________________________________________________________.
DATED: ______________
(Signature must conform in all respects to name of
Holder as specified on the face of the Warrant)
(Address)
<PAGE>
EXHIBIT B
NOTICE OF ASSIGNMENT FORM
FOR VALUE RECEIVED, _________________________________________ hereby sells,
assigns and transfers all of the rights of the undersigned under the attached
Warrant with respect to the number of shares of Common Stock covered thereby set
forth below, to:
NAME OF ASSIGNEE ADDRESS/FAC NUMBER NO. OF SHARES
Dated: Signature:
Witness:
<PAGE>
Exhibit 5.1
December 28, 1999
Cell Therapeutics, Inc.
201 Elliott Avenue West
Seattle, Washington 98119
Re: Registration Statement on Form S-3
----------------------------------
Ladies and Gentlemen:
We have examined the Registration Statement on Form S-3 to be filed by you
with the Securities and Exchange Commission on or about December 30, 1999 (the
"Registration Statement") in connection with the registration under the
Securities Act of 1933, as amended (the "Act"), of an aggregate of 6,148,087
shares (the "Shares") of your Common Stock which are issuable to those persons
who acquired shares of your Series D Convertible Preferred Stock (the "Preferred
Stock") or the exercise of the warrants (the "Warrants") to purchase shares of
Common Stock issued to such investors (the "Investors"). As your counsel in
connection with this transaction, we have examined the proceedings taken and are
familiar with the proceedings proposed to be taken by you in connection with the
issuance and sale of the Shares to the investors upon conversion of the shares
of Preferred Stock or the exercise of the Warrants held by the Investors.
It is our opinion that, upon completion of the actions being taken, or
contemplated by us as your counsel to be taken by you prior to the issuance of
the Shares pursuant to the Registration Statement and the Warrants, and upon
completion of the actions being taken in order to permit such transactions to be
carried out in accordance with the securities laws of the various states where
required, the Shares will be legally and validly issued, fully-paid and non-
assessable.
We consent to the use of this opinion as an exhibit to the Registration
Statement, and further consent to the use of our name wherever appearing in the
Registration Statement and any amendments thereto.
Very truly yours,
WILSON SONSINI GOODRICH & ROSATI
Professional Corporation
<PAGE>
EXHIBIT 23.1
Consent of Ernst & Young LLP, Independent Auditor
We consent to the reference to our firm under the caption "Experts" in the
Registration Statement (Form S-3) of Cell Therapeutics, Inc. for the
registration of 6,148,087 shares of its common stock and to the incorporation by
reference therein of our report dated February 12, 1999, with respect to the
consolidated financial statements of Cell Therapeutics, Inc. included in its
Annual Report (Form 10-K) for the year ended December 31, 1998, filed with the
Securities and Exchange Commission.
Seattle, Washington
December 29, 1999
