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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported) January 24, 2000
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CELL THERAPEUTICS, INC.
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(Exact name of registrant as specified in charter)
Washington 0-28386 91-1533912
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(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
201 Elliott Avenue West, Suite 400, Seattle, WA 98119
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (206) 270-8404
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NOT APPLICABLE
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(Former name or former address, if changed since last report.)
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Item 2. Acquisition or Disposition of Assets
On January 13, 2000, Cell Therapeutics, Inc. (the "Company") completed the
acquisition of PolaRx Biopharmaceuticals Inc., (the "Target") pursuant to the
terms of the Agreement and Plan of Merger and Reorganization, dated as of
January 7, 2000 (the "Agreement"), among the Company, the Target and PolaRx
Biopharmaceuticals Acquisition Corp. (the "Subsidiary") with the Target
surviving the merger as the surviving corporation.
Under the terms of the Agreement, Company will assume the Target's
liabilities which is estimated to be approximately $5 million. In addition, the
Target's shareholders received 2 million shares of Company's common stock at
signing and could earn an additional 3 million shares upon NDA approval. Two
additional payouts tied to annualized sales thresholds of $10 million and $20
million are contemplated payable in tranches of $4 million and $5 million at the
then fair market value of the Company's stock, at the time such thresholds are
achieved. For annual sales in excess of $40 million, the Target's shareholders
would receive a 2% royalty on net sales payable at the then fair market value of
the Company common stock or, in certain circumstances, cash.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits
(a) Financial Statements of
It is impracticable for the Company to provide financial statements
for the business acquired at this time. Such financial statements
shall be filed as soon as practicable, but not later than sixty (60)
days after the date hereof.
(b) Pro Forma Statements of
It is impracticable for the Company to provide pro forma financial
information reflecting the Company's acquisition of PolaRx
Biopharmaceuticals, Inc. at this time. Such pro forma financial
information shall be filed as soon as practicable, but not later than
sixty (60) days after the date hereof.
(c) Exhibits
2.1 Agreement and Plan of Reorganization dated as of January 7, 2000.
99.1 Press release dated January 10, 2000.
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SIGNATURE
Pursuant to the requirements of the Securities Act of 1934, the Registrant
has duly caused this report to be signed on its behalf by the undersigned
thereunto duly authorized.
CELL THERAPEUTICS INC.
Date: January 24, 2000 /s/ James A. Bianco
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Name: James A. Bianco
Title: Chief Executive Officer
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EXHIBIT INDEX
2.1 Agreement and Plan of Reorganization dated as of January 7, 2000.
99.1 Press release dated January 10, 2000.
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Exhibit 2.1
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MERGER AGREEMENT
This Merger Agreement (this "Agreement") is dated January 7, 2000 (the
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"Effective Date"), and is by and among PolaRx Biopharmaceuticals, Inc., a
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company duly organized and existing under the laws of the State of Delaware,
having a place of business located at 787 Seventh Avenue, 48th Floor, New York,
New York 10019 (hereinafter referred to as "PolaRx"), Cell Therapeutics, Inc., a
company duly organized and existing under the laws of the State of Washington,
having a place of business located at 201 Elliot Ave., Suite 400, Seattle, WA
98119 (hereinafter referred to as "CTI") and PolaRx Biopharmaceuticals
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Acquisition Corp., a company duly organized and existing under the laws of the
State of Delaware, having a place of business located at 201 Elliot Ave., Suite
400, Seattle, WA 98119 (hereinafter referred to "PBAC").
RECITALS
WHEREAS, the respective Boards of Directors of each of CTI, PBAC and PolaRx have
determined that it is in the best interests of their respective companies and
stockholders that PBAC merge with and into PolaRx (the "Merger") with PolaRx
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being the surviving corporation;
WHEREAS, CTI, as the sole stockholder of PBAC, has approved this Agreement, the
Merger and the transactions contemplated by this Agreement pursuant to action
taken by written consent in accordance with the requirements of the Delaware
General Corporation Law ("DGCL") and the Bylaws of PBAC;
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WHEREAS, the stockholders of PolaRx have approved this Agreement, the Merger and
the transactions contemplated by this Agreement pursuant to action taken by
written consent in accordance with the requirements of DGCL and the Bylaws of
PolaRx;
WHEREAS, pursuant to the Merger, among other things, the outstanding shares of
common stock of PolaRx shall be converted into the right to receive upon Closing
(as hereinafter defined) and thereafter, the Merger Consideration (as
hereinafter defined); and
WHEREAS, the parties to this Agreement intend that the Merger qualify as a
"reorganization," within the meaning of Section 368(a) of the Internal Revenue
Code of 1986, as amended (the "Code"), and that CTI, PBAC and PolaRx will each
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be a "party to a reorganization," within the meaning of Section 368(b) of the
Code, with respect to the Merger.
NOW THEREFORE, PolaRx and CTI hereby agree as follows:
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ARTICLE 1 THE MERGER
1.1 The Merger. Upon the terms and subject to the conditions set forth in this
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Agreement, and in accordance with the DGCL, PBAC shall be merged with and into
PolaRx at the Effective Time (as defined in Section 1.3). Following the
Effective Time, PolaRx shall be the surviving corporation (the "Surviving
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Corporation") and shall succeed to and assume all the rights and obligations of
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PolaRx in accordance with the DGCL.
1.2 The Closing. The closing of the Merger (the "Closing") shall occur
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contemporaneously with the filing of this Agreement with the Secretary of State
of Delaware (the "Closing").
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1.3 The Effective Time. As soon as is practicable following the signing of
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this Agreement, the parties shall file a copy of this Agreement or other
appropriate documents (in any such case, the "Certificate of Merger") executed
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in accordance with the relevant provisions of the DGCL and shall make all other
filings or recordings required under the DGCL. The Merger shall become
effective at such time as the Certificate of Merger is duly filed with the
Delaware Secretary of State, or at such subsequent date or time as CTI and
PolaRx shall agree and specify in the Certificate of Merger (the time the Merger
becomes effective being hereinafter referred to as the "Effective Time").
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1.4 The Merger Consideration. As of the Effective Time, as a result of the
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Merger and without any other action on the part of the stockholders, all of
the outstanding shares of common stock, $0.001 par value per share, of PBAC (the
"PBAC Common Stock") shall be converted into shares of common stock of the
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Surviving Corporation (the "PolaRx Common Stock") and all of the shares of
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PolaRx outstanding immediately prior to the Effective Time shall, at the
Effective Time, by virtue of the Merger and without any action on the part of
the stockholders, be automatically converted into the shares of CTI Common Stock
(as hereinafter defined) and additional consideration upon subsequent closing
dates, for aggregate consideration (the "Merger Consideration") by virtue of the
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Merger and without any action on the part of the stockholders and be converted
into the right of such PolaRx Stockholders to receive that portion of the Merger
Consideration (as defined below) set forth across from their names in Schedule 1
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(the "PolaRx Stockholders"). Fractional shares shall be rounded up or down to
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the nearest whole number.
The Merger Consideration shall be:
(a) Two million (2,000,000) unregistered newly issued shares of CTI
common stock, no par value per share ("CTI Common Stock"), to be
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issued and delivered to the PolaRx Stockholders at the Effective
Time;
(b) One million (1,000,000) unregistered newly issued shares of CTI
Common Stock, subject to stock splits, stock dividends,
reclassifications and reorganizations, to be issued and delivered
to the PolaRx Stockholders on or before the second closing date,
which shall be the earlier of, (x) within thirty (30) days
following the first New Drug Application approved by the U.S.
Food and Drug Administration submitted by CTI or an
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affiliate or sublicensee of CTI with respect to an Arsenic
Product, or (x) the day preceding the fifth anniversary of the
Closing Date (the earlier such date shall be referred to herein
as the "Second Closing");
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(c) Two million (2,000,000) unregistered newly issued shares of CTI
Common Stock, subject to stock splits, stock dividends,
reclassifications and reorganizations, to be issued and delivered
to the PolaRx Stockholders at the Second Closing;
(d) A number of unregistered newly issued shares of CTI Common Stock
having a Fair Market Value of four million dollars ($4,000,000),
to be issued and delivered to the PolaRx Stockholders within
thirty (30) days following the end of the first calendar quarter
in which aggregate Net Sales of Arsenic Products sold by CTI,
affiliates and sublicensees of CTI equal or exceed ten million
dollars ($10,000,000) for the previous four (4) calendar
quarters;
(e) An additional number of unregistered newly issued shares of CTI
Common Stock having a Fair Market Value of five million dollars
($5,000,000), to be issued and delivered to the PolaRx
Stockholders within thirty (30) days following the end of the
first calendar quarter in which aggregate Net Sales of Arsenic
Products sold by CTI, affiliates and sublicensees of CTI equal or
exceed twenty million dollars ($20,000,000) for the previous four
(4) calendar quarters;
(f) Until the later of, (x) the last patent to expire contained in
the patent rights owned or licensed by PolaRx and included in the
PolaRx Assets, or (y) seven (7) years following the first
commercial sale of an Arsenic Product by CTI, its sublicensees or
affiliates; within thirty (30) days following the end of every
calendar year in which Net Sales of Arsenic Products sold by CTI,
its sublicensees and affiliates exceed forty million dollars
($40,000,000), CTI shall issue to the PolaRx Stockholders (or to
an exchange fund or escrow arrangement for the benefit of, and
agreed to in writing by a majority of the PolaRx Stockholders, a
number of shares of CTI Common Stock having a Fair Market Value
equal to two percent (2%) of Net Sales of Arsenic Products sold
by CTI, its sublicensees or affiliates during the previous
calendar year.
If at the time that any payment shall be required pursuant to this Section 1.4,
CTI does not have a class of common stock that is then publicly traded on a
national securities exchange, than any such payment shall be made in cash in the
applicable amount.
1.5 Stockholder Approval. Issuance of the CTI Common Stock issuable under
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Sections 1.4(c), (d), (e) and (f) shall be subject to the approval of the
stockholders of CTI. On or before the earlier to occur of (i) the Company's
next annual meeting of stockholders and (ii) September 30, 2000, CTI shall cause
a meeting of stockholders of CTI to be held to consider approval of all
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of the CTI Common Stock issuable to the PolaRx Stockholders pursuant to Sections
1.4(c), (d), (e) and (f). To the extent that the CTI stockholders do not approve
of the issuance of any of such shares on or before the time such shares would
otherwise be required to be issued hereunder (or if later, by January 1, 2001 in
the case of Section 1.4(c)) (the "Delivery Date"), then within one hundred and
twenty (120) days of the relevant Delivery Date, CTI shall issue to PolaRx
Stockholders an amount of cash (or other equity securities as may be offered by
CTI and acceptable to a majority of the PolaRx Stockholders (based upon the
number of shares held by each), to be determined in the sole and absolute
discretion of a majority of the PolaRx Stockholders) equal to the Fair Market
Value of the CTI Common Stock at the time of such Delivery Date.
1.6 Registration Rights. Subject to reasonable and customary black-out periods
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in the case of certain public offerings by CTI as may be requested by the
managing underwriter in connection with such offerings (but in no event more
than one hundred and eighty (180) days during any twelve month period), upon
receipt of a written request of holders of at least fifty percent (50%) of the
CTI Common Stock issued by CTI under this Agreement and unregistered through the
date of such request (the "CTI Securities"), CTI shall use its reasonable best
efforts, at its own expense (excluding underwriting commissions and discounts)
for up to four (4) such demands, to file within thirty (30) days from the date
or such written notice, a registration statement with the Securities and
Exchange Commission ("SEC") pursuant to the Securities Act of 1933, as amended,
registering the CTI Securities for public resale and shall use its best efforts
to have such registration statement declared effective by the SEC. CTI Common
Stock registration rights under this Section shall not be assignable except to
family trusts or controlled affiliates.
1.7 The Surviving Corporation. The Certificate of Incorporation of PolaRx as
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in effect at the Effective Time shall be the Certificate of Incorporation of the
Surviving Corporation until duly amended in accordance with applicable law. The
Bylaws of PolaRx as in effect at the Effective Time shall be the Bylaws of the
Surviving Corporation until thereafter amended in accordance with applicable
law. The officers and directors of PBAC shall be the officers and directors of
the Surviving Corporation until their successors are duly elected. The Merger
shall have the effects set forth in Section 259 of the DGCL.
ARTICLE 2
REPRESENTATIONS AND WARRANTIES OF POLARX, CTI AND PBAC
2.1 PolaRx Assets. (a) Subject to the terms of this Agreement, at the
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Closing (as hereinafter defined), PolaRx represents and warrants to CTI that
PolaRx has good and proper title free and clear of any Liens and to the
following schedule of assets owned by PolaRx, which constitute substantially all
of PolaRx's assets (collectively, the "PolaRx Assets"):
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(1) Exclusive License Agreement dated February 9, 1998, between
PolaRx and Sloan Kettering Institute for Cancer Research relating
to United States Patent Application Serial Number 60/064,655
("SKI" and the "SKI License", attached hereto as Exhibit A);
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(2) License Agreement dated May 24, 1999 between the Samuel Waxman
Cancer Research Foundation and PolaRx relating to United States
Patent Application Serial Number 08/702,011 (attached hereto as
Exhibit B);
(3) License Agreement dated August 5, 1999 between the Dr. Lu Dao Pei
and PolaRx relating to People's Republic of China Patent
Application Number 92104358.9 and corresponding United States
Patent Application Serial Number 09/110,366 (attached hereto as
Exhibit C);
(4) United States patent application filed October 15, 1998 claiming
priority to United States provisional application number
60/062,375 and the corresponding international patent
applications relating thereto including PCT/US98/21782 filed in
the United States Receiving Office of the World Intellectual
Property Organization on October 18, 1998 (attached hereto as
Exhibit D);
(5) Notice of Claimed Investigational Exemption for a New Drug
("IND") Number 55,291 in the name of PolaRx (attached hereto as
Exhibit E);
(6) Food and Drug Administration Orphan Drug designation dated March
3, 1998, relating to orphan drug application number 97-1096
(attached hereto as Exhibit F);
(7) Cooperative Research and Development Agreement CACR-0799 and
Letter of Intent between the National Cancer Institute of the
United States Public Health Service and PolaRx dated October 14,
1998 (attached hereto as Exhibit G);
(8) Clinical Trial Agreements by and between Sloan-Kettering
Institute for Cancer Research and its affiliate, Memorial
Hospital for Cancer and Allied Diseases and PolaRx dated
September 9, 1997, June 3, 1998, June 26, 1998 and July 20, 1998
(attached hereto as Exhibit H);
(9) Clinical Trial Agreements by and between PolaRx, and; Health
Research Association Inc. dated July 15, 1998; The Cleveland
Clinic Foundation dated October 15, 1998; Stanford University
dated October 25, 1998; Georgetown University/Lombardi Cancer
Center dated May 1, 1998; Georgetown University/Lombardi Cancer
Center dated November 30, 1998; and LabCorp dated August 10, 1998
(attached hereto as Exhibit I);
(10) Contract Agreements between Research Testing Laboratories, Inc.
and PolaRx dated February 11, 1998, July 14, 1998 and September
2, 1998 (attached hereto as Exhibit J);
(11) Clinical Data Management Consultant Agreement between Meta
Solutions, Inc. and PolaRx dated July 14, 1999 (attached hereto
as Exhibit K);
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(12) Agreement between Abt Associates Inc. and PolaRx dated August 12,
1999 (attached hereto as Exhibit L);
(13) Supply Agreement between ChemCon, GbR and PolaRx dated July 23,
1999 (attached hereto as Exhibit M);
(14) Development Supply Agreement between Taylor Pharmaceuticals, Inc.
and PolaRx dated June 3, 1999 (attached hereto as Exhibit N);
(15) Inventory of the tangible assets owned by PolaRx and specifically
listed in the schedule of assets attached hereto as Exhibit O;
and
(16) All other clinical and non-clinical data, information and know-
how owned by PolaRx specifically listed in the schedule of assets
attached hereto as Exhibit P.
(b) After the Closing, CTI shall be responsible for all of the costs,
expenses and other obligations associated with the clinical, regulatory,
manufacturing and marketing of Arsenic Trioxide on a worldwide basis and shall
specifically assume the contractual and other obligations arising under the
PolaRx Assets.
2.2 Tax Intent of the Parties. It is the intention of the parties
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that the Merger be treated as a reorganization qualifying under Section 368(a)
of the Internal Revenue Code of 1986, as amended. The parties shall use their
best efforts to take all reasonable actions necessary to cause the Merger to
qualify as a reorganization pursuant to such section and shall treat the Merger
accordingly on their respective tax returns.
2.3 Assumed Liabilities. Subject to the terms of this Agreement, CTI
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and PBAC hereby jointly and severally guarantee, and CTI and PBAC shall only be
responsible for guaranteeing (in addition to the continuing obligations
contained within the PolaRx Contracts described in Section 2.1(a) above), the
Liabilities of PolaRx specifically set forth in the Schedule attached hereto as
Exhibit R (collectively, the "Assumed Liabilities"), including but not limited
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to payment of all principal and interest on the notes (the "Notes") set forth in
Exhibit R attached hereto when and as the same shall become due, whether at the
stated maturity thereof or by acceleration or call for prepayment or otherwise.
CTI further specifically agrees to assume the liability of PolaRx to Paramount
Capital, Inc. ("PCI") in the amount, but only to the extent, of seven hundred
and fifty thousand dollars ($750,000) pursuant to the Advisory Agreement between
PolaRx and PCI dated June 30, 1998.
ARTICLE 3
REPRESENTATIONS OF POLARX
3.1 Organization; Qualification. PolaRx is a corporation validly
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existing and in good standing under the laws of the State of Delaware with
corporate power and authority to own all of its properties and assets and carry
on its business as it is currently being conducted.
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3.2 Authorization. PolaRx has the requisite corporate power and
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authority to execute and deliver this Agreement and to consummate the
transactions contemplated hereby. The execution and delivery of this Agreement
and the consummation of the transactions contemplated hereby by PolaRx have been
duly authorized by the board of directors of PolaRx and no other proceedings on
the part of PolaRx are necessary with respect thereto. Assuming that CTI has
duly authorized the execution and delivery of this Agreement, this Agreement
constitutes the valid and binding obligation of PolaRx, enforceable in
accordance with its terms, except as enforceability may be limited by (1) any
applicable bankruptcy, insolvency, reorganization, moratorium or similar law
affecting creditors' rights generally or (2) general principles of equity,
whether considered in a proceeding in equity or at law
3.3 Consents and Approvals. Except as specified in Exhibit S attached
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hereto, PolaRx is not required to obtain any material permit, make any filing
with, or obtain the consent of any Governmental Authority, any party to any
PolaRx Contract, or any other Person in connection with the execution and
delivery of this Agreement and the consummation of the transactions contemplated
hereby.
3.4 Capitalization. The authorized, issued and outstanding capital
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stock of the Company is as set forth in Schedule 1 attached hereto.
3.5 No Violations. PolaRx's execution and delivery of this Agreement
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and performance by PolaRx of its obligations under this Agreement do not (1)
violate any provision of the certificate of incorporation or by-laws of PolaRx,
(2) conflict with, result in a breach of, constitute a default under (or an
event that, with notice or lapse of time or both, would constitute a default
under), accelerate the performance required by, result in the creation of any
Lien upon any of the properties or assets of PolaRx under, or create in any
party the right to accelerate, terminate, modify, or cancel, or require any
notice under, any contract to which either PolaRx is a party or by which any
properties or assets of PolaRx are bound, or (3) violate any Law or Order
currently in effect to which PolaRx is subject.
3.6 Contracts. PolaRx has made available to CTI a true correct and
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complete copy of each PolaRx contract included as a PolaRx Asset (the "PolaRx
Contracts"). Each PolaRx Contract is in full force and effect and is valid and
enforceable in accordance with its terms. PolaRx is not in default under any
PolaRx Contract, and to PolaRx's knowledge no event or circumstance has occurred
that would, with notice or lapse of time or both, constitute an event of default
under any PolaRx Contract. To the knowledge of PolaRx, no other party to any of
the PolaRx Contracts is in default under that PolaRx Contract.
3.7 Indemnification. (a) Each PolaRx Stockholder hereby indemnifies
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CTI and PBAC (the "CTI Indemnified Parties") pro rata in proportion to the
Merger Consideration to be received by each such PolaRx Stockholder as set forth
on Schedule 1 attached hereto against any and all excluded claims for
liabilities not disclosed in writing to CTI on or before the Closing to the
extent they exceed two hundred thousand dollars ($200,000) in the aggregate, the
remedy for which shall be an offset against any and all consideration owed or
owable under this Agreement.
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(b) Notwithstanding Section 3.7(a) above, no offset shall be made by
CTI or PBAC against the Assumed Liabilities or the initial CTI Common Stock
issued pursuant to Subsection 1.4(a) hereof.
(c) Promptly after receipt by a CTI Indemnified Party entitled to
indemnification pursuant to this Section of notice of the commencement of any
action, the CTI Indemnified Party will, if a claim in respect thereof is to be
made against the CTI Indemnified Party regarding an undisclosed liability under
this Section 3.7, the CTI Indemnified Party shall notify, in writing, the
Representative (as defined in Section 6.9 below) of the commencement thereof.
Upon such notification, the Representative will be entitled to participate in
and, to the extent that it may wish, assume the defense thereof subject to the
provisions herein stated, with counsel reasonably satisfactory to the CTI
Indemnified Party.
(d) No settlement, compromise, consent to entry of judgment or other
termination of any action in respect of which a CTI Indemnified Party may seek
indemnification hereunder (whether or not any CTI Indemnified Party is a party
thereto) shall be made without the prior written consent of the Representative.
ARTICLE 4
REPRESENTATIONS OF CTI AND PBAC
CTI and PBAC each represent to PolaRx as follows:
4.1 Organization; Qualification. CTI is a corporation validly existing
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and in good standing under the laws of the State of Washington with corporate
power and authority to own all of its properties and assets and carry on its
business as it is currently being conducted. PBAC is a corporation validly
existing and in good standing under the laws of the State of Delaware with
corporate power and authority to own all of its properties and assets and carry
on its business as it is currently being conducted
4.2 Authorization. CTI and PBAC each have the requisite corporate power
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and authority to execute and deliver this Agreement and to consummate the
transactions contemplated hereby. The execution and delivery of this Agreement
and the consummation of the transactions contemplated hereby by CTI and PBAC
have each been duly authorized by the responsible corporate officers of CTI and
PBAC, respectively, and no other proceedings on the part of CTI or PBAC are
necessary with respect thereto. Assuming that PolaRx has duly authorized the
execution and delivery of this Agreement, this Agreement constitutes the valid
and binding obligation of CTI and PBAC, enforceable in accordance with its
terms, except as enforceability may be limited by (1) any applicable bankruptcy,
insolvency, reorganization, moratorium or similar law affecting creditors'
rights generally or (2) general principles of equity, whether considered in a
proceeding in equity or at law.
4.3 Consents and Approvals. Neither CTI nor PBAC are required to obtain
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any permit, make any filing with, or obtain the consent of any Governmental
Authority or any other
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Person in connection with the execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby.
4.4 No Violations. CTI and PBAC's execution and delivery of this
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Agreement and performance by it of its obligations under this Agreement do not
(1) violate any provision of the certificate of incorporation or by-laws of CTI
or PBAC, (2) conflict with, result in a breach of, constitute a default under
(or an event that, with notice or lapse of time or both, would constitute a
default under), accelerate the performance required by, result in the creation
of any Lien upon any of the properties or assets of CTI or PBAC under, or create
in any party the right to accelerate, terminate, modify, or cancel, or require
any notice under, any Contract to which CTI or PBAC is a party or by which any
properties or assets of CTI or PBAC are bound, or (3) violate any Law or Order
currently in effect to which CTI or PBAC is subject.
ARTICLE 5
ANCILLARY AGREEMENTS
5.1 At the Closing, PolaRx, CTI and PBAC shall either enter into, or
deliver to the other, copies of the following agreements:
(a) Consent Letters from each PolaRx employee to CTI and PBAC
consenting to the assignment of their inventions, obligations of confidentiality
and the like to PolaRx;
(b) Non-competition Agreements between PolaRx and each PolaRx
employee and Paramount Capital Investments, LLC agreeing not to compete for a
period of five (5) years which respect to the commercialization or sale of any
Arsenic Product, such limitation with respect to Paramount Capital Investments,
LLC shall not include making investments on a passive basis in publicly traded
companies;
(c) Voting Agreement from the shareholders of PolaRx comprising at
least eighty percent (80%) the outstanding PolaRx shares, that for a period of
four (4) years while such holders continue to hold the CTI Common Stock received
in the Merger, the CTI Common Stock shall be voted as recommended by the then
incumbent Board of Directors of CTI;
(d) Investor Representation Letters from holders of PolaRx Common
Stock establishing that the issuance of securities by CTI in connection with the
Merger is exempt from registration under the Securities Act of 1933, as amended.
ARTICLE 6
MISCELLANEOUS
6.1 Definition of Certain Terms. When used in this Agreement, the
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following terms shall have the following meanings:
"Affiliate" means an individual or entity controlled by or under
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common control with a party.
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"Control" means direct or indirect ownership of voting securities
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comprising at least fifty percent (50%) of the issued and outstanding voting
securities of an entity or other contractual or other arrangements by which a
party may exert significant influence on another individual or entity.
"Know-how" means all tangible information related to an Arsenic
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Product and pharmacological, toxicological, clinical, analytical, and quality
control data, and regulatory information, including but not limited to
formulations, materials, data, drawings and sketches, designs, testing and test
results, and other regulatory information of a like nature, owned by or licensed
to PolaRx and which PolaRx has a right to disclose.
"Arsenic Product" means a product containing (a) arsenic trioxide or
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its metabolites, or (b) forms of arsenic that are, or that may be, described in
the international patent application of Dr. Lu Dao Pei (included as an
attachment to Exhibit C hereto), as an active ingredient for human or animal
use.
"Net Sales" means, in the case of Arsenic Products that are sold, the
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invoice price to the retail customer of Arsenic Products sold by CTI, its
sublicensee(s), exclusive or semi-exclusive distributors or any affiliates
(regardless of uncollectible accounts) less any shipping costs, allowances
because of returned Arsenic Products, or sales taxes.
"Fair Market Value" means the average closing bid price as published
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by a national securities exchange of publicly traded securities for the ten (10)
trading days immediately preceding the date of issue of such securities.
"Governmental Authority" means any governmental or regulatory body, or
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political subdivision thereof, whether federal, state, local or foreign, or any
agency, instrumentality or authority
"Law" means any laws, statutes, ordinances, regulations, rules, and
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orders of any Governmental Authority.
"Liability" means any direct or indirect liability, indebtedness,
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obligation, commitment, expense, claim, deficiency, guaranty or endorsement of
or by any Person of any type, whether accrued, absolute, contingent, matured or
unmatured.
"Lien" means, with respect to the assets or property of any Person,
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any claim, lien, security interest, deed of trust, mortgage, encumbrance or
charge of any kind, excluding statutory liens for taxes not yet due, in favor of
any other Person, whether voluntarily incurred or arising by operation of law,
and includes, without limitation, any agreement to give any of the foregoing in
the future, and any contingent sale or other title retention agreement or lease
in the nature thereof.
"Order" means any award, decision, injunction, judgment, order,
------
ruling, subpoena, or verdict entered, issued, made, or rendered by any court,
arbitral tribunal, administrative agency, or other Governmental Body.
10
<PAGE>
"Person" means any individual, corporation, partnership, firm, joint
------
venture, association, joint-stock company, trust, unincorporated organization,
Governmental Authority or other entity.
"Sublicensee" shall mean a person that is granted an exclusive, semi-
-----------
exclusive or non-exclusive right to manufacture, market and/or sell an Arsenic
Product directly or indirectly from CTI.
6.2 Severability. If any provision of this Agreement is held in any
------------
jurisdiction to be prohibited or unenforceable for any reason, that provision
will, as to such jurisdiction, be ineffective to the extent of such prohibition
or unenforceability without invalidating the remaining provisions of this
Agreement, and any such prohibition or unenforceability in any jurisdiction will
not invalidate or render unenforceable that provision in any other jurisdiction.
6.3 Notices. (a) Every notice or other communication required or
-------
contemplated by this Agreement must be in writing and sent by one of the
following methods: (1) personal delivery, in which case delivery is deemed to
occur the day of delivery; (2) certified or registered mail, postage prepaid,
return receipt requested, in which case delivery is deemed to occur the day it
is officially recorded by the U.S. Postal Service as delivered to the intended
recipient; or (3) next-day delivery to a U.S. address by recognized overnight
delivery service such as Federal Express, in which case delivery is deemed to
occur one business day after being sent. In each case, a notice or other
communication sent to a Party must be directed to the address for that Party set
forth below, or to another address designated by that party by written notice:
If to CTI, to:
Cell Therapeutics, Inc.
201 Elliot Avenue
Suite 400
Seattle, WA 98119
Attention: James Bianco, M.D.
with a copy to:
Wilson, Sonsini, Goodrich & Rosati
650 Page Mill Road
Palo Alto CA, 94304
Attention: Michael Kennedy, Esq.
11
<PAGE>
If to PBAC:
PolaRx Biopharmaceuticals Acquisition Corp.
c/o Cell Therapeutics, Inc.
201 Elliot Avenue
Suite 400
Seattle, WA 98119
Attn: James Bianco, M.D.
If to PolaRx, to:
PolaRx Biopharmaceuticals, Inc.
787 Seventh Avenue, 48th Floor
New York, New York 10018
Attention: Mark C. Rogers, M.D., Chairman
with a copy to:
Skadden, Arps, Slate, Meagher & Flom
919 Third Avenue
New York, New York 10022
Attention: Kathy Bristor, Esq.
If to the Representative, to:
David M. Tanen
787 Seventh Avenue, 48th Floor
New York, NY 10019
(b) Notice not given in writing shall be effective only if
acknowledged in writing by a duly authorized representative of the party to whom
it was given.
6.4 Entire Agreement. This Agreement, together with all exhibits and
----------------
schedules, and the Agreement constitute the entire agreement among the parties
pertaining to the subject matter hereof and supersede all prior agreements,
understandings, negotiations and discussions, whether oral or written, of the
parties pertaining to the subject matter hereof.
6.5 Amendments and Waivers. This Agreement may not be amended except by
----------------------
an instrument in writing signed on behalf of each of the parties. No waiver by
any party of any default, breach or misrepresentation under this Agreement will
be deemed to extend to any prior or subsequent default, breach or
misrepresentation or affect in any way any rights arising by virtue of any prior
or subsequent such occurrence.
6.6 Counterparts. This Agreement may be executed in several counterparts,
------------
each of which is deemed an original and all of which together constitute one and
the same instrument.
12
<PAGE>
6.7 Governing Law. This Agreement is governed by the law of the state of
-------------
Delaware, without giving effect to the conflicts of laws provisions.
6.8 Binding Effect. This Agreement is binding upon and inures to the
--------------
benefit of the parties and their respective heirs, successors and permitted
assigns.
6.9 Appointment of Representative. The holders of a majority of the
-----------------------------
Polarx Common Stock immediately prior to the Effective Date hereby appoint and
empower David M. Tanen to act as their representative (the "Representative")
with respect to rights that inure to them under this Agreement as PolaRx
Stockholders until such time as he is replaced, retires or is removed, in which
case a successor shall be appointed. The Representative shall be entitled now
and in the future to negotiate and uphold the rights of the PolaRx Stockholders
under this Agreement, which is specifically acknowledged. The Representative
shall not be the sole remedy of the PolaRx Stockholders and such PolaRx
Stockholders may avail themselves of any and all remedied available to them
under the DGCL or at law or equity.
6.10 Assignment. PolaRx and CTI and PBAC may freely assign any of their
----------
rights (but not their obligations) under this Agreement without the prior
written consent of the other, but with an obligation of providing timely written
notice to the other of any such assignment.
13
<PAGE>
IN WITNESS HEREOF, PolaRx, CTI and PBAC hereby execute this Agreement as of
the date stated in the first introductory clause of this Agreement.
POLARX BIOPHARMACEUTICALS, INC.
By:
----------------------------
Name:
Title:
CELL THERAPEUTICS, INC.
By:
----------------------------
Name:
Title:
POLARX BIOPHARMACEUTICALS
ACQUISITION CORP.
By:
----------------------------
Name:
Title:
14
<PAGE>
Exhibit 99.1
<PAGE>
Monday January 10, 8:47 am Eastern Time
Company Press Release
Cell Therapeutics Acquires Promising Cancer Drug
Treatment and Accelerates Commercial Timeline
NDA Filing by Q2 Provides Potential for Market Launch in 2000
SEATTLE--(BW HealthWire)--Jan. 10, 2000--Cell Therapeutics, Inc. (cti)
(Nasdaq:CTIC - news) has acquired the proprietary rights to Arsenic TriOxide
(ATO), a novel treatment for leukemia and potentially for other cancers through
its acquisition of PolaRx Biopharmaceuticals, Inc. (PolaRx), a privately held
company.
In connection with the acquisition, the Company issued 2 million shares of
common stock, will assume up to $5 million in PolaRx liabilities and will issue
additional shares if certain milestones are achieved. The Company anticipates
filing an NDA for ATO in the first half of 2000.
In a recent pivotal clinical trial, ATO induced a high rate of complete
remission among patients suffering from acute promyelocytic leukemia who had
relapsed after prior therapy had failed. The most common side effects in this
trial were asymptomatic EKG changes, mostly managed in an outpatient setting and
a differentiation syndrome, which was easily managed with steroids.
"We have been looking for this kind of opportunity for cti and our
shareholders --a product with proven results in the clinic and one that can
jump-start our commercial efforts in oncology while helping to fund the
development of other products in our pipeline," said James A. Bianco, M.D.,
President and CEO of Cell Therapeutics, Inc. "We were impressed with the caliber
of the institutions conducting clinical studies with arsenic trioxide, including
the National Cancer Institute." In 1998, the National Cancer Institute entered
into a joint development agreement to investigate ATO in a variety of cancers
including blood cell cancers and certain solid tumors.
"A great deal of interest was expressed in this drug by other companies, but we
chose to go with cti for two reasons. First, arsenic trioxide fits very well
into the cti pipeline, which includes two other promising oncology drug
candidates, PG-TXL(TM) and Apra(TM). Secondly, I believe that with their
experience and expertise in the field of cancer therapeutics, cti will fully
develop the potential of this drug which will ultimately maximize the benefit to
patients," said Ralph Ellison, M.D., Chief Executive Officer of PolaRx. "Given
that there were over 25 abstracts on arsenic trioxide at the recent meeting of
the American Society of Hematology, there is a real potential for a significant
amount of clinical news flow this year on this product alone. The published data
suggests this product may have activity in a variety of cancers, including
multiple myeloma and preleukemic syndromes."
<PAGE>
Under the terms of the agreement, cti will assume PolaRx's liabilities which is
estimated to be approximately $5 million. In addition, PolaRx shareholders
received 2 million shares of cti common stock at signing and could earn an
additional 3 million shares upon NDA approval. Two additional payouts tied to
annualized sales thresholds of $10 million and $20 million are contemplated
payable in tranches of $4 million and $5 million at the then fair market value
of the Company's stock, at the time such sales thresholds are achieved. For
annual sales in excess of $40 million, PolaRx shareholders would receive a 2%
royalty on net sales payable at the then fair market value of cti common stock
or, in certain circumstances, cash.
"This has all of the features for an accretive acquisition. PolaRx has an
approvable cancer drug but no infrastructure or significant operating expenses,
while we have the infrastructure and development expertise to take this product
to market," Dr. Bianco said. "An opportunity like this doesn't come along
often. We moved quickly and are excited that we came to an equitable
agreement," Dr. Bianco added.
cti is committed to developing an integrated portfolio of oncology products
targeting unmet needs in the treatment of patients with cancer. In addition to
ATO, the Company is developing two other compounds: PG-TXL(TM), a potentially
safer, more effective derivative of paclitaxel, the active ingredient of the
well known cancer drug Taxol(R), and Apra(TM), a novel anti-cancer drug
candidate for patients with cancers such as soft tissue sarcoma and prostate
cancer which have become resistant to conventional chemotherapy. The Company's
web site is located at www.cticseattle.com.
This announcement includes forward-looking statements that involve a number of
risks and uncertainties, the outcome of which could materially and/or adversely
affect actual future results. Specifically, the risks and uncertainties that
could affect the development of cti's products under development include risks
associated with preclinical and clinical developments in the biotechnology
industry in general and of cti's products under development in particular
(including, without limitation, the potential failure of ATO, PG-TXL(TM),
Apra(TM) and related compounds to prove safe and effective for treatment of
disease), determinations by regulatory, patent and administrative governmental
authorities, competitive factors, technological developments, costs of
developing, producing and selling cti's products under development, and the risk
factors listed or described from time to time in the Company's filings with the
Securities and Exchange Commission including, without limitation, the Company's
most recent registrations on Forms 10-K, 8-K and 10-Q.
http://www.businesswire.com/cnn/ctic.htm
- ----------------------------------------
Contact:
Cell Therapeutics, Inc.
James A. Bianco, 206/282-7100 or 800/664-CTIC
[email protected]
www.cticseattle.com
or
KNCB Dave
Susan Callahan, 206/794-4706
[email protected]
