EXHIBIT 10.1
CELL THERAPEUTICS, INC.
SERIES A CONVERTIBLE PREFERRED STOCK,
without par value
STOCK PURCHASE AGREEMENT
_________________________
as of September 17, 1996
Cell Therapeutics, Inc.
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Gentlemen:
This Stock Purchase Agreement ("Agreement") is made by and between
Cell Therapeutics, Inc., a Washington corporation ("CTI" or the "Company"), and
the undersigned prospective purchasers (each, an "Investor," and collectively,
the "Investors") who are subscribing hereby for up to an aggregate of 44,776.119
shares (the "Shares") of the Company's Series A Convertible Preferred Stock,
without par value (the "Preferred Stock"), pursuant to the terms set forth
herein. The Shares and the Conversion Shares (as defined herein) are herein
referred to collectively as the "Securities."
In consideration of the Company's agreement to sell Shares to each
Investor, and each Investor's agreement to purchase Shares from the Company, all
on the terms and subject to the conditions contained herein, each of the Company
and each Investor agrees and represents as follows:
A. SUBSCRIPTION
1. Subject to the terms and conditions of this Agreement, each
Investor hereby subscribes for and agrees to purchase, and the Company agrees to
sell, the number of Shares indicated on the signature pages hereto at a purchase
price of $335.00 per share, for the consideration set forth on the signature
pages hereto (the "Subscriptions").
2. (a) The closing (the "Closing") of the purchase of the Shares
provided for in Section A.1 shall take place at the offices of the Company, ▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, at 10:00 A.M. (Seattle
time) on September 17, 1996 or at such other place or such other time or date as
the Company and the Investors may agree.
(b) At the Closing, against delivery by the Investors of payment
therefor to the account of the Company at First Interstate Bank of Oregon, N.A.,
Portland,
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Oregon, ABA # ▇▇▇-▇▇▇-▇▇▇, NW Trust Custody T-13, Account Number 450878,
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ or ▇▇▇▇▇ ▇▇▇▇, Reference: Cell Therapeutics,
Inc., and subject to the satisfaction of all conditions precedent set forth
herein, the Company will deliver to each Investor a certificate or certificates
evidencing the number of Shares purchased by such Investor, registered in such
Investor's name.
B. REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to, and agrees with, the
Investors as follows:
1. The Company is a corporation duly incorporated and validly existing
under the laws of the State of Washington and is duly licensed or qualified as a
foreign corporation in each other jurisdiction where the nature of business
transacted by it makes such licensing or qualification necessary. The Company
has the corporate power and authority and the legal right, to own and operate
its properties and to carry on its business as currently conducted, to execute
deliver, and perform this Agreement and that certain Registration Rights
Agreement, dated as of the Closing Date, among the Company and the Investors and
substantially in the form annexed hereto as Exhibit A (the "Registration Rights
Agreement"), to issue, sell and deliver the Shares, to issue and deliver the
shares of Common Stock, no par value, of the Company ("Common Stock"), issuable
upon conversion of the Shares ("Conversion Shares") and in all other respects to
consummate the transactions contemplated hereby and thereby.
2. The Company does not own any shares of any corporation or have any
ownership or other investment interest, either of record, beneficially or
equitably, in any association, partnership, joint venture or other legal entity.
3. The execution and delivery by the Company of this Agreement and
the Registration Rights Agreement, the performance by the Company of its
obligations hereunder and thereunder, the issuance, sale and delivery by the
Company of the Shares pursuant hereto and the issuance and delivery of the
Conversion Shares upon conversion of the Shares, have been duly authorized by
all requisite corporate action, including without limitation all requisite
action on the part of the Company's shareholders, and will not violate any
provision of law, any order of any court or other agency of government, the
Articles of Incorporation or By-laws of the Company, any judgment award or
decree or any provision of any indenture, agreement or other instrument, to
which the Company is a party, or by which it, or any of its properties or
assets, is bound or affected, or conflict with, result in a breach of or
constitute (with due notice or lapse of time or both) a default under any such
indenture, agreement or other instrument, or result in the creation or
imposition of any lien, charge or encumbrance of any nature whatsoever upon any
of the properties or assets of the Company,
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or result in any suspension, revocation, impairment, forfeiture or nonrenewal of
any Governmental Permit (as hereinafter defined).
4. The Shares have been duly authorized by the Company and, when
paid for in accordance with this Agreement, will be validly issued, fully paid
and nonassessable shares of Preferred Stock. The Conversion Shares have been
duly reserved for issuance upon conversion of the Shares and, when so issued,
will be duly authorized, validly issued, fully paid and nonassessable shares of
Common Stock. Neither the issuance, sale and delivery of the Shares nor the
issuance and delivery of the Conversion Shares are subject to any preemptive
rights of shareholders of the Company or to any right of first refusal or other
similar right in favor of any person.
5. Each of this Agreement and the Registration Rights Agreement has
been duly executed and delivered by the Company and, subject to due execution by
the Investors, constitutes the legal, valid and binding obligation of the
Company, enforceable against the Company in accordance with its respective
terms.
6. The authorized capital stock of the Company consists of
100,000,000 shares of Common Stock, of which 17,300,574 shares are issued and
outstanding as of the date hereof, and 10,000,000 shares of preferred stock, no
par value ("Existing Preferred Stock"), of which 150,000 shares have been
authorized and designated as Preferred Stock, of which 95,447.004 shares are
issued and outstanding as of the date hereof. All shares of capital stock
outstanding as of the date hereof have been duly authorized and validly issued,
and are fully paid and nonassessable. 15,000,000 shares of Common Stock have
been reserved for issuance upon conversion of the Preferred Stock. The
designations, preferences, limitations and relative rights of the Preferred
Stock are set forth in the Certificate of Amendment to Articles of Incorporation
of the Company, as set forth in Exhibit B annexed hereto (the "Articles of
Amendment").
7. The Shares to be issued and delivered to the Investors pursuant
to this Agreement shall be offered, issued and sold in compliance with the
Securities Act of 1933, as amended (the "Securities Act"), and any other
applicable United States federal or state securities laws.
8. Except (a) for the obligations of the Company to the Investors
under this Agreement, (b) as otherwise set forth in the SEC Reports, and (c) for
stock options granted to employees, officers and consultants of the Company
subsequent to the date of the SEC Reports pursuant to the Company's 1994 Equity
Incentive Plan, (i) no subscription, warrant, option, convertible security or
other right (contingent or other) to purchase or acquire any shares of any class
of capital stock of the Company is authorized or outstanding, (ii) there is not
any commitment of the Company to issue any shares, warrants, options or other
such rights or to distribute to holders of any class of its capital stock any
evidences of
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indebtedness or assets and (iii) the Company has no obligation (contingent or
other) to purchase, redeem or otherwise acquire any shares of the capital stock
of the Company or any interest therein or to pay any dividend or make any other
distribution in respect thereof.
9. (a) The Company has filed all forms, reports and documents
required to be filed with the Securities and Exchange Commission (the "SEC")
since April 29, 1996 and has made available to the Investors (i) its
Registration Statement on Form 10, as amended by Amendment No. 2 thereto filed
with the SEC on June 28, 1996; (ii) its Quarterly Report on Form 10-Q for the
period ended June 30, 1996; (iii) all other reports or registration statements
filed by the Company with the SEC since June 28, 1996; and (iv) all amendments
and supplements to all such reports and registration statements filed by the
Company with the SEC (collectively, the "SEC Reports"). The SEC Reports (i) were
prepared in accordance with the requirements of the Securities Act or the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), as the case
may be, and (ii) did not at the time they were filed (or if amended or
superseded by a filing prior to the date of this Agreement, then on the date of
such amending or superseding filing) contain any untrue statement of a material
fact or omit to state a material fact required to be stated therein or necessary
in order to make the statements therein, in the light of the circumstances under
which they were made, not misleading.
(b) Each of the financial statements (including, in each case,
any related notes thereto) contained in the SEC Reports was prepared in
accordance with United States generally accepted accounting principles applied
on a consistent basis throughout the periods involved (except as may be
indicated therein or in the notes thereto) and each fairly presented the
financial position of the Company as at the respective dates thereof and the
results of its operations and cash flows for the periods indicated, except that
the unaudited interim financial statements were or are subject to normal and
recurring year-end adjustments which were not or are not expected to be material
in amount.
10. Except as set forth in the SEC Reports, since June 30, 1996,
the Company has conducted its business in the ordinary course and there has not
occurred: (i) any change or effect that is or is reasonably likely to be
materially adverse to the business, assets (including intangible assets),
financial condition or results of operations of the Company taken as a whole,
(ii) any amendments or changes in the Articles of Incorporation or By-laws of
the Company, other than an amendment to the Company's By-laws adopted on July
16, 1996, (iii) any change by the Company in its accounting methods, principles
or practices, (iv) any revaluation by the Company of any of its assets, (v) any
sale of a material amount of property of the Company, (vi) any discharge or
satisfaction by the Company of any material lien, security interest, charge or
other encumbrance or any payment by the Company of any material obligation or
liability (fixed or contingent), other than in the ordinary course of business
and consistent with past practice, (vii) any investment by the Company of a
capital nature, whether by purchase of stock or securities, contributions
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to capital, property transfers or otherwise, in any other partnership,
corporation or other entity, or any purchase by the Company of any material
property or assets, (viii) any cancellation or compromise by the Company of any
debt or claim other than in the ordinary course of business consistent with past
practice, (ix) any waiver or release by the Company of any rights of material
value, including, without limitation, any Intangible Rights (as hereinafter
defined), (x) any material wage or salary increase by the Company applicable to
any group or classification of employees generally, or any material employment
contract with, loan to, or material transaction of any other nature with, any
officer or employee of the Company, or (xi) any establishment by the Company of
any employee benefit plan within the meaning of Section 3(3) of the Employee
Retirement Income Security Act of 1974.
11. Except as and to the extent (i) reflected in the financial
statements contained in the SEC Reports or (ii) incurred since June 30, 1996 in
the ordinary course of business and consistent with past practice, the Company
has no liabilities or obligations of any kind or nature, whether secured or
unsecured (whether absolute, accrued, contingent or otherwise, and whether due
or to become due), including without limitation any tax liabilities due or to
become due, or whether incurred in respect of or measured by the assets, sales,
income or receipts of the Company for any period, which liabilities or
obligations would be required to be reflected on a balance sheet of the Company
as of December 31, 1995, prepared in accordance with generally accepted
accounting principles.
12. No order, authorization, approval or consent from, or filing
with, any federal or state governmental or public body or other authority having
jurisdiction over the Company is required for the valid execution (where called
for), delivery and performance of this Agreement or the Registration Rights
Agreement by the Company, the issuance, sale and delivery of the Shares or, upon
conversion of the Shares, the issuance and delivery of the Conversion Shares, or
is required in order that the business of the Company can be conducted
immediately following the Closing Date substantially in the same manner as
heretofore conducted, except for those that have been made and obtained, and for
those filings under state "blue sky" laws which are now not required to be made
or obtained.
13. Except as set forth in the SEC Reports, the Company has good and
valid title to all its assets and properties, in each case free and clear of all
liens, charges, security interests or other encumbrances of any nature
whatsoever, other than (x) liens for taxes not yet due, (y) mechanic's,
materialman's and similar statutory liens arising in the ordinary course of
business and which, in the aggregate, would not have a material adverse effect
on the business, properties or condition (financial or other) of the Company, or
(z) security interests securing indebtedness not in default for the purchase
price of or lease rental payments on property purchased or leased under capital
lease arrangements in the ordinary course of business.
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14. Except as is set forth in the SEC Reports, the Company complies
with its contractual obligations relating to the protection of such of the
patents, trademarks and trade names, trademark and trade name registrations,
logos, servicemark registrations, copyright registrations, all applications
pending on the date hereof for patent or for trademark, trade name, servicemark
or copyright registrations, and all other material proprietary rights
(collectively "Intangible Rights") used by it pursuant to licenses or other
contracts, the Company has the right to its Intangible Rights for the purposes
intended thereby, and to conduct its business as heretofore conducted, and the
consummation of the transactions contemplated hereby will not alter or impair
any such Intangible Rights, and, to the knowledge of the Company, all such
Intangible Rights that are capable of being enforced are valid, enforceable and
in good standing, and no claims have been asserted with respect to the ownership
by the Company of any of the Intangible Rights or otherwise. To the knowledge of
the Company, except as is set forth in the SEC Reports (i) no person is
infringing an Intangible Right owned by the Company and (ii) the Company is not
infringing any valid patent, copyright or trademark owned by any third party.
15. Except as set forth in the SEC Reports, there are no material
claims, actions, suits, proceedings or investigations pending or, to the
knowledge of the Company, threatened, by or against the Company or any of its
properties, assets, rights or businesses. No such pending or threatened claims,
actions, suits, proceedings or investigations, if adversely determined, would,
individually or in the aggregate, have a material adverse effect on the
business, properties or condition (financial or other) of the Company. Except as
set forth in the SEC Reports, the Company knows of no basis for any other such
claim, action, suit, proceeding or investigation which, if adversely decided,
would have such a material adverse effect. Except as set forth in the SEC
Reports, there are no actions, suits, proceedings or claims pending before or by
any court, arbitrator, regulatory authority or government agency against or
affecting the Company that might enjoin or prevent the consummation of the
transactions contemplated by this Agreement or the Registration Rights
Agreement.
16. The Company has duly and timely filed or caused to be filed (or
obtained valid, currently effective extensions for filing) all Federal, state,
local and foreign income, franchise, excise, payroll, sales and use, property,
withholding and other tax returns, reports, estimates and information and other
statements or returns (collectively "Tax Returns") required to be filed by or on
behalf of it pursuant to any applicable Federal, state, local or foreign tax
laws for all years and periods for which such Tax Returns have become due. All
such Tax Returns were correct in all material respects as filed and correctly
reflect the Federal, state, local and foreign income, franchise, excise,
payroll, sales and use, property, withholding and other taxes, duties, imposts
and governmental charges (and charges in lieu of any thereof), together with
interest, any additions to tax and penalties (collectively "Taxes") required to
be paid or collected by (or allocable to) the Company. The Company (i) has paid
or caused to be paid all Taxes as shown on Tax Returns filed by it or on any
assessment received by it and (ii) has properly and fully accrued on its audited
and
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interim unaudited financial statements all Taxes for any period from the date of
the last reporting period covered by such Tax Returns. There is no audit
pending or threatened in writing, and, to the knowledge of the Company, there is
no dispute or claim being threatened by any relevant taxing authority concerning
any Tax Return or liability for Taxes. Without limiting the foregoing, the
Company has withheld or collected from each payment made to each of its
employees (or has otherwise paid or made provision for) the amount of all Taxes
(including, but not limited to, Federal income taxes, Federal Insurance
Contribution Act taxes, state and local income and wage taxes, payroll taxes,
worker's compensation and unemployment compensation taxes) required to be
withheld or collected therefrom, and the Company has paid (or caused to be paid)
the same in respect of its employees when due.
17. (a) The Company has all material governmental licenses,
franchises and permits ("Governmental Permits") required under applicable law
for the conduct of its business as currently conducted, including, without
limitation, all such licenses, franchises and permits as are required for
laboratory use, manufacturing, the experimental use of animals and the use and
disposal of hazardous or potentially hazardous substances.
(b) The business of the Company is being conducted in material
compliance with all applicable laws, ordinances, rules and regulations of all
governmental authorities relating to the Company's properties or applicable to
its business, including without limitation the terms of all Governmental
Permits, federal securities laws, and laws relating to safe working conditions,
laboratory and manufacturing practices (including current Good Manufacturing
Practices prescribed by the U.S. Food and Drug Administration ("FDA")), the
experimental use of animals and the use and disposal of hazardous or potentially
hazardous substances (including, without limitation, radioactive compounds and
solvents). The Company has not received any notice from any third party of any
alleged violation of any of the foregoing.
(c) Neither the Company nor any of its properties, operations or
businesses is subject to any order, judgment, injunction or decree. To the
knowledge of the Company, no action has been taken or recommended by any
governmental or regulatory official, body or authority, either to revoke,
withdraw or suspend any certificate of need or any license to operate the
Company.
18. (a) No collective bargaining agreement is applicable to any
employees of the Company. There are no disputes between the Company and any such
employees that might reasonably be expected to materially adversely affect the
conduct of its business or any unresolved labor union grievances or unfair labor
practice or labor arbitration proceedings pending, or to the knowledge of the
Company, threatened, relating to the business of the Company. To the knowledge
of the Company, there are not any organizational efforts presently being made or
threatened involving any of such employees. The Company has not received notice
of any claim that the Company has failed to comply with
8
any laws relating to employment, including any provisions thereof relating to
wages, hours, collective bargaining, the payment of social security and other
payroll or similar taxes, equal employment opportunity, employment
discrimination and employment safety, or that the Company is liable for any
arrears of wages or any taxes or penalties for failure to comply with any of the
foregoing except for routine non-material grievances.
(b) There are no proceedings pending or, to the knowledge of the
Company, threatened before the National Labor Relations Board with respect to
any employees of the Company. There are no discrimination charges (relating to
sex, age, religion, race, national origin, ethnicity, handicap or veteran
status) pending before any Federal or state agency or authority against the
Company.
19. The Company is a named insured under all policies of fire,
liability, workers' compensation, malpractice and professional liability and
other forms of insurance providing insurance coverage to or for the Company. All
premiums with respect to such policies covering all periods have been paid. No
notice of cancellation or termination has been received with respect to any such
policy. All such policies are in full force and effect and will remain in full
force and effect to and including the Closing Date, and coverage thereunder will
continue to be in effect immediately after the Closing Date, without limit as to
time, for occurrences prior to the Closing Date.
20. All real property leased by the Company are used and operated by
the Company in material compliance and conformity with all applicable leases.
The Company has not received notice of any material violation of any applicable
zoning or building regulation, ordinance or other law, order, regulation or
requirement relating to the respective real estate assets of the Company and, to
the knowledge of the Company, there are no such material violations.
21. All tangible personal property, fixtures and equipment comprising
the assets of the Company are in a good state of repair (ordinary wear and tear
excepted) and operating condition, in all material respects, and are sufficient
and adequate to conduct its business on the date hereof.
22. For the purposes of this Section B(22), the following terms shall
have the following meanings:
"Environmental Law" means any federal, state, provincial or local
statute, law, ordinance, rule or regulation of the United States and any
other jurisdiction within the United States now effective and any order, to
which the Company is a party or is otherwise directly bound, of the United
States or other jurisdiction within the United States now effective
relating to: (a) pollution or protection of the environ-
9
ment, including natural resources; or (b) exposure of persons, including
employees, to Hazardous Substances;
"Hazardous Substances" means any substance, whether liquid, solid or
gas (a) listed, identified or designated as hazardous or toxic under any
Environmental Law, (b) which, applying criteria specified in any
Environmental Law, is hazardous or toxic, or (c) the use or disposal of
which is regulated under Environmental Law.
(a) No Hazardous Substances have been, or have been threatened to be,
discharged, released or emitted into the air, water, surface water, ground
water, land surface or subsurface strata or transported to or from the property
of the Company except in accordance with Environmental Law and except for
incidental release of Hazardous Substances in amounts or concentrations which
would not reasonably be expected to give rise to any claims or liabilities
against the Company under Environmental Law.
(b) The Company has not received any notification from a governmental
agency that there is any material violation of any Environmental Law with
respect to the business and properties of the Company and the Company has not
received any notification from a governmental agency pursuant to Section 104,
106 or 107 of the Comprehensive Environmental Response Compensation and
Liability Act, as amended.
23. (a) Neither the Company nor, to the knowledge of the Company,
any officer, director, employee or agent of the Company, nor any other person or
entity acting on behalf of the Company, acting alone or together, has (i)
received, directly or indirectly, any rebates, payments, commissions,
promotional allowances or any other economic benefits, regardless of their
nature or type, from any customer, governmental employee or other person or
entity with whom the Company has conducted business activities directly or
indirectly, or (ii) directly or indirectly, given or agreed to give any gift or
similar benefit to any customer, governmental employee or other person or entity
who is or may be in a position to help or hinder the business of the Company (or
assist the Company in connection with any actual or proposed transaction)
which, under current law, in the case of either clause (i) or clause (ii) above,
would reasonably be expected to subject the Company to any damage or penalty in
any civil, criminal or governmental litigation or proceeding.
(b) To the knowledge of the Company, no employee, officer or director
of the Company, has been debarred under (S)306(a) or (S)306(b) of the Federal
Food, Drug and Cosmetic Act or has, within the last five years, been convicted
of (x) a criminal offense relating to the development or approval process of any
drug product, or (y) a felony involving bribery, payment of illegal gratuities,
fraud, perjury, false statements, racketeering, blackmail, extortion,
falsification or destruction of records, or interference with, obstruction of an
investigation into, or prosecution of, any criminal offense or a conspiracy to
commit, aid or abet such felony.
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24. No person authorized by the Company as agent, broker, dealer or
otherwise in connection with the offering or sale of the Shares, or any similar
securities, has taken or will take any action (including, without limitation,
any offer or sale of any securities under circumstances which would require the
integration of such securities with the Shares being issued and sold hereunder
under the Securities Act, or the rules and regulations of the SEC thereunder),
which would subject such offer and sale to the registration provisions of the
Securities Act.
25. All negotiations relative to this Agreement and the transactions
contemplated hereby have been carried out by the Company directly with the
Investors, without the intervention of any person on behalf of the Company in
such manner as to give rise to any claim by any person against any Investor for
a finder's fee, brokerage commission or similar payment.
C. REPRESENTATIONS AND WARRANTIES OF THE INVESTORS
Each Investor, severally, hereby represents and warrants to, and
agrees with, the Company as follows:
1. Each of this Agreement and the Registration Rights Agreement have
been duly authorized, executed and delivered by the Investor and constitute the
legal, valid and binding obligations of the Investor, enforceable against the
Investor in accordance with their respective terms.
2. The Investor acknowledges its understanding that the offering and
sale of the Shares to be purchased hereto by the Investor are intended to be
exempt from registration under the Securities Act. In furtherance thereof, the
Investor represents and warrants to the Company that the Investor is an
"accredited investor" within the meaning of Rule 501(a) of Regulation D
promulgated under the Securities Act ("Regulation D").
3. The Investor has been advised and understands that the Securities
have not been registered under the Securities Act. The Investor, by purchasing
the Shares, agrees for the benefit of the Company that the Securities may be
resold, pledged or otherwise transferred only (1) to the Company (upon, exchange
or redemption thereof or otherwise), (2) if the Company is then subject to the
reporting requirements of Section 13 or 15(d) of the Exchange Act and the
Securities are eligible for resale pursuant to Rule 144A under the Securities
Act ("Rule 144A"), to a person whom the seller reasonably believes is a
qualified institutional buyer within the meaning of Rule 144A, purchasing for
its own account or for the account of a qualified institutional buyer to whom
notice is given that the resale, pledge or other transfer is being made in
reliance on Rule 144A, (3) in an offshore transaction in accordance with Rule
904 of Regulation S under the Securities Act, but only in the case of a transfer
that is effected by the delivery to the transferee of definitive Securities
registered in
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its name (or in its nominee's name) on the books maintained by the Company, (4)
pursuant to an exemption from registration in accordance with Rule 144 under the
Securities Act (if available and upon delivery of an opinion of counsel
satisfactory in form and substance to the Company, if requested by the Company),
(5) pursuant to an effective registration statement under the Securities Act, or
(6) pursuant to any other exemption from registration under the Securities Act,
provided an opinion of counsel is furnished reasonably satisfactory in form and
substance to the Company, stating that an exemption from the registration
requirements of the Securities Act is available, in each case in accordance with
any applicable securities laws of any state of the United States. The Investor
is acquiring the Shares to be purchased by it for its own account for
investment, and not with a view to, or for resale in connection with, the
distribution thereof, and has no present intention of distributing or reselling
any of the Securities.
4. The Investor is familiar with the business and operations of the
Company and understands and has evaluated the merits and risks of a purchase of
the Securities. The Investor has carefully considered and has, to the extent
the Investor believes such discussion necessary, discussed with the Investor's
professional legal, tax, accounting and financial advisors the suitability of an
investment in the Securities and has determined that the Shares being subscribed
for by the Investor are a suitable investment for the Investor.
5. The Investor: (i) has a pre-existing business relationship with
the Company or any of its officers, directors or controlling persons or (ii) by
reason of the Investor's business or financial experience, or by reason of the
business or financial experience of the Investor's professional advisors who are
unaffiliated with and who are not compensated by the Company or any affiliate of
the Company, directly or indirectly, has the capacity to protect the Investor's
interest in connection with the investment in the Securities.
6. The Company has made available to the Investor all documents and
information that the Investor has requested relating to an investment in the
Securities. The Investor has been given the opportunity to ask questions of,
and has received answers from, the Company with respect to the business of the
Company, the financial condition of the Company, the terms and conditions of
this investment and other matters pertaining to an investment in the Company,
and the Investor has been given the opportunity to obtain such additional
information necessary to verify the accuracy of the information that was
provided in order for the Investor to evaluate the merits and risks of an
investment in the Company.
7. The Investor recognizes that the Company has incurred substantial
accumulated net losses to date and expects to continue to incur operating
losses. The Investor also recognizes that an investment in the Company involves
substantial risk and could afford a complete loss of such investment.
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8. If this Agreement is executed and delivered on behalf of a
partnership, corporation, trust or estate: (i) such partnership, corporation,
trust or estate has the full legal right and power and all authority and
approval required (a) to execute and deliver, or authorize execution and
delivery of, this Agreement and all other instruments executed and delivered by
or on behalf of such partnership, corporation, trust or estate, in connection
with the purchase of the Shares, (b) to delegate authority pursuant to a power
of attorney and (c) to purchase such Shares and hold the Securities; (ii) the
signature of the party signing on behalf of such partnership, corporation, trust
or estate is binding on such partnership, corporation, trust or estate; and
(iii) such partnership, corporation or trust has not been formed for the
specific purpose of acquiring such Shares, unless each beneficial owner of such
entity is an accredited investor within the meaning of Rule 501(a) of Regulation
D.
9. The Investor is not subscribing for the Shares as a result of,
or, to the Investor's knowledge, subsequent to, any general solicitation or
advertisement, article, notice or other communication published in any
newspaper, magazine or similar media or broadcast over television or radio or
presented at any seminar or meeting.
10. The Investor acknowledges that the Company is entering into this
Agreement in reliance upon the Investor's representations and warranties in this
Agreement, including, without limitation, those set forth in this Section C.
11. The Investor agrees to provide such additional information,
representations and agreements as the Company may reasonably request in order to
assure compliance with all United States federal and state securities laws
applicable to the offer or sale of the Shares to be purchased by it; provided,
--------
that, the Investor shall not be obligated to provide the Company with a copy of
----
its or any of its affiliates' partnership agreement.
D. CERTAIN UNDERSTANDINGS OF THE INVESTORS
Each Investor understands, acknowledges and agrees with the Company as
follows:
1. The offering and sale of the Securities is intended to be exempt
from registration under the Securities Act by virtue of Section 4(2) of the
Securities Act which is in part dependent upon the truth, completeness and
accuracy of the statements made by the Investor herein. There is no public
trading market for the Securities and none is expected to develop.
2. The Shares are being offered only in a transaction not involving
any public offering within the meaning of the Securities Act, and that (A) if
within three years after the date of original issuance of the Shares it decides
to resell, pledge or otherwise transfer the Securities, the Securities may be
resold, pledged or transferred only (i) to the
13
Company (upon exchange, redemption or otherwise), (ii) if the Company is then
subject to the reporting requirements of Section 13 or 15(d) of the Exchange Act
and such Security is eligible for resale pursuant to Rule 144A, to a person whom
the seller reasonably believes is a Qualified Institutional Buyer ("QIB") within
the meaning of Rule 144A, (iii) in an offshore transaction in accordance with
Rule 904 of Regulation S, but only in the case of a transfer that is effected by
the delivery to the transferee of definitive securities registered in its name
(or its nominee's name) on the books maintained by the Company, (iv) pursuant to
an exemption from registration in accordance with Rule 144 under the Securities
Act (if available and upon delivery of an opinion of counsel satisfactory in
form and substance to the Company, if requested by the Company), (v) pursuant to
an effective registration statement under the Securities Act, or (vi) pursuant
to any other exemption from registration under the Securities Act, provided an
opinion of counsel is furnished reasonably satisfactory in form and substance to
the Company, stating that an exemption from the registration requirements of the
Securities Act is available, in each case in accordance with any applicable
securities laws of any state of the United States and (B) the Investor will, and
each subsequent holder is required to, notify any purchaser of the Securities
from it of the resale restrictions referred to in (A) above, if then applicable.
3. Except as provided in the Registration Rights Agreement, the
Company is under no obligation to register the Securities on behalf of the
Investor.
4. The Investor acknowledges that the information furnished to the
Investor by the Company in connection with this Subscription is confidential and
non-public and agrees that all such information shall be kept in confidence by
the Investor and neither used by the Investor to the Investor's personal benefit
(other than in connection with this Subscription) nor disclosed to any third
party for any reason; provided, however, that this obligation shall not apply to
-------- -------
any such information which (a) is part of the public knowledge or literature and
readily accessible by publication (except as a result of a breach of this
provision); (b) becomes part of the public knowledge or literature and readily
accessible by publication (except as a result of a breach of this provision); or
(c) is received from third parties (except third parties who disclose such
information in violation of any confidentiality agreements including, without
limitation, any subscription agreement they may have entered into with the
Company). Notwithstanding the foregoing, if the Investor has been requested or
is required (by oral questions, interrogatories, requests for information or
documents, subpoena, civil investigative demand or similar process) to disclose
any such confidential information, the Investor will notify the Company of such
request(s) so that the Company may seek an appropriate protective order or waive
the Investor's compliance with the provisions of this Section D.4. If, in the
absence of a protective order or the receipt of a waiver hereunder, the Investor
is nonetheless compelled to disclose such confidential information or else stand
liable for contempt or suffer other censure or other penalty, the Investor may
disclose such confidential information pursuant to such requests or requirements
without liability hereunder.
14
5. The following legend(s) will be placed on the Securities, unless
otherwise agreed by the Company:
(a) THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT"). THE HOLDER HEREOF BY PURCHASING
THIS SECURITY, AGREES FOR THE BENEFIT OF CELL THERAPEUTICS, INC. ("THE
COMPANY") THAT THIS SECURITY MAY BE RESOLD, PLEDGED OR OTHERWISE
TRANSFERRED ONLY (1) TO THE COMPANY (UPON EXCHANGE OR REDEMPTION THEREOF OR
OTHERWISE), (2) IF THE COMPANY IS THEN SUBJECT TO THE REPORTING
REQUIREMENTS OF SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT AND THIS
SECURITY IS ELIGIBLE FOR RESALE PURSUANT TO RULE 144A UNDER THE SECURITIES
ACT ("RULE 144A"), TO A PERSON WHOM THE SELLER REASONABLY BELIEVES IS A
QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE RESALE,
PLEDGE OR OTHER TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, (3) IN AN
OFFSHORE TRANSACTION IN ACCORDANCE WITH RULE 904 OF REGULATIONS UNDER THE
SECURITIES ACT, BUT ONLY IN THE CASE OF A TRANSFER THAT IS EFFECTED BY THE
DELIVERY TO THE TRANSFEREE OF DEFINITIVE SECURITIES REGISTERED IN ITS NAME
(OR IN ITS NOMINEE'S NAME) ON THE BOOKS MAINTAINED BY THE COMPANY, (4)
PURSUANT TO AN EXEMPTION FROM REGISTRATION IN ACCORDANCE WITH RULE 144
UNDER THE SECURITIES ACT (IF AVAILABLE AND UPON DELIVERY OF AN OPINION OF
COUNSEL SATISFACTORY IN FORM AND SUBSTANCE TO THE COMPANY, IF REQUESTED BY
THE COMPANY), (5) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE
SECURITIES ACT, OR (6) PURSUANT TO ANY OTHER EXEMPTION FROM REGISTRATION
UNDER THE SECURITIES ACT, PROVIDED AN OPINION OF COUNSEL IS FURNISHED
REASONABLY SATISFACTORY IN FORM AND SUBSTANCE TO THE COMPANY, STATING THAT
AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT IS
AVAILABLE, IN EACH CASE IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS
OF ANY STATE OF THE UNITED STATES.
(b) IN MAKING AN INVESTMENT DECISION, INVESTORS MUST RELY ON THEIR OWN
EXAMINATION OF THE COMPANY AND THE TERMS OF THE OFFERING, INCLUDING THE
MERITS AND RISKS INVOLVED. THESE SECURITIES HAVE NOT BEEN RECOMMENDED BY
ANY FEDERAL, STATE OR FOREIGN SECURITIES COMMISSION OR REGULATORY
AUTHORITY. FURTHERMORE, THE FOREGOING AUTHORITIES HAVE NOT REVIEWED OR
PASSED ON THE ACCURACY OR ADEQUACY OF THE
15
SECURITIES OR ANY OTHER DOCUMENT DELIVERED IN CONNECTION WITH THE
INVESTOR'S PURCHASE OF THE SECURITIES. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
(c) THIS OFFERING IS BEING MADE IN RELIANCE UPON AN EXEMPTION FROM
REGISTRATION UNDER THE SECURITIES ACT FOR AN OFFER AND SALE OF SECURITIES
THAT DO NOT INVOLVE A PUBLIC OFFERING. THE SECURITIES OFFERED HEREBY ARE
SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND RESALE AND MAY NOT BE
TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER THE SECURITIES ACT AND
APPLICABLE STATE SECURITIES LAWS, PURSUANT TO REGISTRATION OR EXEMPTION
THEREFROM. THERE IS CURRENTLY NO PUBLIC OR OTHER MARKET FOR THE SHARES OF
CELL THERAPEUTICS, INC. COMMON STOCK, AND THERE CAN BE NO ASSURANCE THAT A
PUBLIC OR OTHER MARKET WILL DEVELOP. EACH PROSPECTIVE INVESTOR SHOULD
PROCEED ONLY ON THE ASSUMPTION THAT SUCH PROSPECTIVE INVESTOR MAY HAVE TO
BEAR THE FINANCIAL RISKS OF THIS INVESTMENT FOR AN INDEFINITE PERIOD OF
TIME.
6. The Investor agrees not to sell, transfer, encumber or otherwise
dispose of any Securities owned by it in contravention of Section D.5(a).
E. CONDITIONS TO CLOSING
1. The obligation of each Investor to purchase and pay for the
Shares being purchased by it on the Closing Date is, at its option, subject to
the satisfaction, on or before such date, of the following conditions:
(a) The representations and warranties of the Company contained
in Section B hereof shall be true and correct on and as of the Closing Date
with the same effect as though such representations and warranties had been
made on and as of such date, and the Company shall have certified to such
effect to the Investors;
(b) The Investors shall have received from Shearman & Sterling,
counsel for the Company, and ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇, Manager, Legal Affairs of
the Company, legal opinions dated the Closing Date in substantially the
form of Exhibit C-1 and C-2 hereto, respectively;
(c) The Company shall have performed and complied with all
agreements and conditions contained herein required to be performed or
complied with by it prior to or at the Closing Date, and the Company shall
have certified to such effect to the Investors;
16
(d) Certified copies of (A) the resolutions of the Board of
Directors of the Company approving this Agreement and the Registration
Rights Agreement and the transactions contemplated hereby and thereby, (B)
all documents evidencing other necessary corporate action and government
approvals, if any with respect to this Agreement, (C) the certificate of
incorporation and by-laws of the Company, and (D) a good standing
certificate with respect to the Company from the Secretary of State (or
similar official) of the State of Washington;
(e) A certificate of the Secretary or an Assistant Secretary of
the Company certifying the names and true signatures of its officers
authorized to sign this Agreement and the Registration Rights Agreement and
the other documents to be delivered by it hereunder;
(f) On the Closing Date, the Company shall have executed and
delivered the Registration Rights Agreement; and
(g) The Company shall have received Subscriptions from Investors
totalling not less than $9,500,000.
2. The obligation of the Company to issue and sell the Shares being
issued and sold by it on the Closing Date is, at its option, subject to the
satisfaction, on or before such date, of the following conditions:
(a) The representations and warranties of the Investors contained
in Section C hereof shall be true and correct on and as of the Closing Date
with the same effect as though such representations and warranties had been
made on and as of such date; and
(b) The Company shall have received Subscriptions from Investors
totalling not less than $9,500,000.
F. MISCELLANEOUS
1. All agreements, representations and warranties made herein shall
survive the execution and delivery of this Agreement, the delivery to the
Investors of the Shares to be purchased pursuant hereto and the payment therefor
and, notwithstanding any investigation heretofore and hereafter made by or on
behalf of a party hereto, shall continue in full force and effect. The rights
and obligations of the Investors under this Agreement shall not be assignable by
the Investors without the prior written consent of the Company. Nothing herein
expressed or implied is intended to confer upon any person, other than the
parties hereto or their respective permitted assignees, successors, heirs and
legal
17
representatives, any rights, remedies, obligations or liabilities under or by
reason of this Agreement.
2. Notices required or permitted to be given hereunder shall be in
writing and shall be deemed to be sufficiently given when personally delivered,
telecopied (which is confirmed) or sent by registered or certified mail (return
receipt requested) to the parties at the following addresses (or at such other
address for a party as shall be specified by like notice):
(a) If to the Company, to
Cell Therapeutics, Inc.
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇. ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, President
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
(b) If to any Investor, to such Investor's address set forth on the
signature page hereof.
3. Failure of the Company, on the one hand, or any Investor, on the
other hand, to exercise any right or remedy under this Agreement or any other
agreement between the Company and such Investor, or otherwise, or delay by the
Company, on the one hand, or such Investor, on the other hand, in exercising
such right or remedy, will not operate as a waiver thereof.
4. This Agreement shall be enforced, governed and construed in all
respects in accordance with the laws of the State of New York, as such laws are
applied by New York courts to agreements entered into and to be performed in New
York by and between residents of New York, and shall be binding upon the
Investors, the Investors' heirs, estate, legal representatives, successors and
assigns and shall inure to the benefit of the Company and its successors and
assigns. In the event that any provision of this Agreement is invalid or
unenforceable under any applicable statute or rule of law, then such provision
shall be deemed inoperative to the extent that it may conflict therewith and
shall be deemed modified to conform with such statute or rule of law. Any
provision hereof which may prove invalid or unenforceable under any law shall
not affect the validity or enforceability of any other provision hereof.
5. This Agreement and the other agreements referred to herein or
expressly contemplated hereby embody the entire agreement and understanding
between the Investors and the Company with respect to the acquisition of the
Shares contemplated hereby and supersede all prior oral or written agreements,
memoranda, understandings and
18
undertakings among the parties hereto relating to the subject matter hereof.
This Agreement may only be amended in a written instrument executed by the
Investor and the Company.
6. Whether or not the transactions contemplated by this Agreement
are consummated, neither of the parties hereto shall have any obligation to pay
any of the fees and expenses of any other party incident to the negotiation,
preparation and execution of this Agreement, including the fees and expenses of
counsel, accountants, investment bankers and other experts. The Company, on the
one hand, and each Investor, on the other hand, will indemnify the other and
hold it harmless from and against any claims for finders' fees or brokerage
commissions in relation to or in connection with such transactions as a result
of any agreement or understanding between such indemnifying party and any third
party.
7. During the period of 180 days after the date of the closing of a
firm commitment underwritten public offering pursuant to an effective
registration statement under the Securities Act, covering the offer and sale of
Common Stock for the account of the Company to the public, the Investors shall
not, directly or indirectly offer to sell, sell, issue, distribute or otherwise
dispose of any securities, any shares of Common Stock or any options, rights or
warrants with respect to any equity securities of the Company without the prior
written consent of the managing underwriter of such public offering (which
consent may be withheld at the sole discretion of such managing underwriter);
provided, however, that the foregoing shall not prohibit the Investors from
-------- -------
privately selling Common Stock in a transaction effected off-exchange and
without use of an intermediate broker or dealer and exempt from registration
under the Securities Act and provided, further, that the foregoing restriction
-------- -------
shall not be applicable unless, immediately prior to the consummation of such
offering each officer, director and 10% stockholder has agreed in writing to be
bound to a 180 day lock-up period on terms substantially similar to those set
forth in this Section F.7.
8. This Agreement may be executed in counterparts, each of which
shall be an original, but all of which together shall constitute one instrument.
9. The Investors agree that a stop order shall be placed in the
stock transfer records of the Company against the transfer of the Securities in
contravention of the terms of this Agreement or applicable United States federal
and state securities laws.
10. If any term or other provision of this Agreement is invalid,
illegal or incapable of being enforced by any rule of law or public policy, all
other conditions and provisions of this Agreement shall nevertheless remain in
full force and effect so long as the economic or legal substance of the
transactions contemplated hereby is not affected in any manner adverse to any
party. Upon such determination that any term or other provision is invalid,
illegal or incapable of being enforced, the parties hereto shall negotiate in
good faith to modify this Agreement so as to effect the original intent of the
parties as closely as
19
possible in an acceptable manner to all parties to the end that the transactions
contemplated hereby are fulfilled to the greatest extent possible.
20
IN WITNESS WHEREOF, the Company and the Investors have caused this
Agreement to be executed as of the date first written above.
THE COMPANY
-----------
CELL THERAPEUTICS, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
--------------------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, M.D.
Title: President and Chief Executive Officer
Number
of Shares
Subscribed Purchase
For Price THE INVESTORS
--- ------- -------------
14,925.373 $5,000,000 KUMMELL INVESTMENTS LIMITED
Suite 922C
Europort, Gibraltar
Telecopy No.: 011-3-504-2676
With copies to:
Morningside Ventures
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
and
Springfield Financial Advisory Limited
22nd Floor Hang Lung Centre
▇-▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇, ▇▇▇▇ ▇▇▇▇
Telecopy No.: 011-85-2-257-6863
By: /s/ Andy Kit-▇▇▇▇▇ ▇▇▇▇
--------------------------------------------------
Name: Andy Kit-▇▇▇▇▇ ▇▇▇▇
Title: Director
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
--------------------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Joint Secretary
21
14,925.373 $5,000,000 INTERNATIONAL BIOTECHNOLOGY TRUST plc
Rothschild Asset Management
Five Arrows House
St. ▇▇▇▇▇▇▇'▇ ▇▇▇▇
London, England, EC4N 8NR
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Telecopy No.: 011-44-71-623-6261
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇
--------------------------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇
Title: Director
10,447.761 $3,500,000 ▇.▇. ▇▇▇▇▇ ▇▇
▇▇▇▇▇ Rede Capital
▇▇▇ ▇.▇. ▇▇▇▇▇▇ ▇▇▇▇., ▇▇▇▇▇ ▇-▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇.▇. ▇▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
/s/ ▇.▇. ▇▇▇▇▇
--------------------------------------------------
2,985.075 $1,000,000 VULCAN VENTURES INC.
Vulcan Ventures ▇▇▇▇▇▇▇▇▇
▇▇▇ - ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
By /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
--------------------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Vice President
22
1,492.537 $ 500,000 THE PHOENIX PARTNERS III LIMITED PARTNERSHIP
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
By /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
--------------------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Managing General Partner
============ ============
44,776.119 $15,000,000