EXHIBIT 10.20
THIS SECURITY AND THE COMMON STOCK ISSUABLE UPON ITS CONVERSION HAVE NOT
BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"), AND MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE
TRANSFERRED EXCEPT PURSUANT TO AN AVAILABLE EXEMPTION FROM REGISTRATION UNDER
THE SECURITIES ACT AND IN ACCORDANCE WITH ALL APPLICABLE SECURITIES LAWS OF THE
STATES OF THE UNITED STATES AND OTHER JURISDICTIONS.
CELGENE CORPORATION
9.25 % CONVERTIBLE NOTE DUE SEPTEMBER 16, 2003
No. R-1 $8,750,000
CELGENE CORPORATION, a corporation duly organized and existing under the
laws of Delaware (the "Company") for value received, hereby promises to pay to
Warburg Dillon Read LLC, or registered assigns, the principal sum of eight
million, seven hundred and fifty thousand Dollars ($8,750,000) on September 16,
2003 and to pay interest thereon, from September 16, 1998, or from the most
recent interest payment date to which interest has been paid or duly provided
for, semiannually on March 16 and September 16 in each year, commencing March
16, 1999, at the rate of 9.25% per annum, until the principal hereof is due, and
at the rate of 9.25% per annum on any overdue principal and premium, if any,
and, to the extent permitted by law, on any overdue interest. The interest so
payable, and punctually paid or duly provided for, on any interest payment date
will be paid to the person in whose name this Security (or one or more
predecessor Securities) is registered at the close of business on the regular
record date for such interest, which shall be the March 1 or September 1
(whether or not a business day), as the case may be, next preceding such
interest payment date. Payment of the principal of (and premium, if any, on)
this Security shall be made upon the surrender of this Security to the Company,
at its office at 7 Powder Horn Drive, Warren, NJ 07059 (or such other office
within the United States as shall be notified by the Company to the holder
hereof) (the "Designated Office"), in such coin or currency of the United States
of America as at the time of payment shall be legal tender for the payment of
public and private debts, by transfer to a U.S. dollar account maintained by the
payee with a bank in the United States of America. Payment of interest on this
Security shall be made by wire transfer to a U.S. dollar account maintained by
the payee with a bank in the United States of America, provided that if the
holder shall not have furnished wire instructions in writing to the Company no
later than the record date relating to an interest payment date, such payment
may be made by U.S. dollar check mailed to the address of the person entitled
thereto as such address shall appear in the Company security register. In
respect of any interest payment date, the Company may, at its election but
subject to fulfillment of the conditions set forth in Section 6 and subject to
the limitations set forth therein, pay all or a portion of the interest on this
Security in shares of Common Stock having a fair market value equal to the
amount then payable hereunder, as described in Section 6.
1. Redemption. This Security is subject to redemption upon not less than 30
nor more than 60 days' notice by mail, at any time on or after September 16,
2000, as a whole or in part, (in any amount that is an integral multiple of
$1000) at the election of the Company, at a redemption price of 103% the
principal amount thereof, together with accrued interest to the redemption date,
but interest installments whose stated maturity is on or prior to such
redemption date will be payable to the holder of this Security, or one or more
predecessor Securities, of record at the close of business on the relevant
record dates referred to on the face hereof; provided, however, that the Company
may not redeem this Security on or prior to September 16, 2001 unless the
Closing Price of the Common Stock exceeds 225% of the Conversion Price for each
Trading Day in a period of 20 Consecutive Trading Days commencing not earlier
than September 16, 2000. The term "Conversion Price" on any day shall equal
$1,000 divided by the Conversion Rate in effect on each such day.
2. Conversion. (a) The holder of this Security is entitled at any time on
or after September 16, 1999 and before the close of business on September 16,
2003 (or, in case this Security or a portion hereof is called for redemption or
the holder hereof has exercised his right to require the Company to repurchase
this Security or a portion hereof, then in respect of this Security or such
portion hereof, as the case may be, until and including, but (unless the Company
defaults in making the payment due upon redemption or repurchase, as the case
may be) not after, the close of business on the redemption date or the
Repurchase Date, as the case may be) to convert this Security (or any portion of
the principal amount hereof that is an integral multiple of $1,000), into fully
paid and nonassessable 1,000 shares (calculated as to each conversion to the
nearest 1/100 of a share) of Common Stock of the Company at the rate of 90.91
shares of Common Stock for each $1,000 principal amount of Security (or at the
current adjusted rate if an adjustment has been made as provided below) (the
"Conversion Rate") by surrender of this Security, duly endorsed or assigned to
the Company or in blank to the Company at the Designated Office, accompanied by
written notice to the Company that the holder hereof elects to convert this
Security (or if less than the entire principal amount hereof is to be converted,
specifying the portion hereof to be converted). Upon surrender of this Security
for conversion, the holder will be entitled to receive the interest accruing on
the principal amount of this Security then being converted from the interest
payment date next preceding the date of such conversion to such date of
conversion. No payment or adjustment is to be made on conversion for dividends
on the Common Stock issued on conversion hereof. No fractions of shares or scrip
representing fractions of shares will be issued on conversion, but instead of
any fractional interest, the Company shall pay a cash adjustment, computed on
the basis of the Closing Price of the Common Stock on the date of conversion,
or, at its option, the Company shall round up to the next higher whole share.
Notwithstanding the foregoing, at no time will the holder be entitled to
convert this Security into shares of Common Stock that, together with the number
of shares of Common Stock owned (or deemed for bank regulatory purposes to be
owned) by such holder and its affiliates as set forth in the notice of
conversion, represent more than 4.9% of the Common Stock then outstanding. If at
any time the Conversion Rate and the principal amount of this Security would
result in a greater number of shares being issuable upon conversion, then for so
long as such condition shall exist, upon exercise of the conversion right the
holder shall receive (i) up to that number of shares of Common
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Stock that, together with the number of shares of Common Stock owned (or deemed
for bank regulatory purposes to be owned) by such holder and its affiliates as
set forth in the notice of conversion, represent 4.9% of the Common Stock then
outstanding, and (ii) an amount (in cash but not less than zero), payable in
immediately available funds, determined pursuant to the formula:
C = (P/CR - I) x CP
where C = the cash amount receivable by the holder;
P = the principal amount of this Security being converted;
CR = the Conversion Rate;
I = the number of shares issuable pursuant to clause (i) above;
and
CP = the Closing Price of the Common Stock on the date of
conversion.
(b) The Conversion Rate shall be subject to adjustments from time to time
as follows:
(1) In case the Company shall pay or make a dividend or other
distribution on any class of capital stock of the Company payable in shares
of Common Stock, the Conversion Rate in effect at the opening of business
on the day following the Determination Date for such dividend or other
distribution shall be increased by dividing such Conversion Rate by a
fraction of which the numerator shall be the number of shares of Common
Stock outstanding at the close of business on such Determination Date and
the denominator shall be the sum of such number of shares and the total
number of shares constituting such dividend or other distribution, such
increase to become effective immediately after the opening of business on
the day following such Determination Date. For the purposes of this
paragraph (1), the number of shares of Common Stock at any time outstanding
shall not include shares held in the treasury of the Company but shall
include shares issuable in respect of scrip certificates issued in lieu of
fractions of shares of Common Stock. The Company will not pay any dividend
or make any distribution on shares of Common Stock held in the treasury of
the Company.
(2) Subject to the last sentence of paragraph (7) of this Section
2(b), in case the Company shall issue rights, options or warrants to all
holders of its Common Stock entitling them to subscribe for or purchase
shares of Common Stock at a price per share less than the current market
price per share (determined as provided in paragraph (8) of this Section
2(b)) of the Common Stock on the Determination Date for such distribution,
the Conversion Rate in effect at the opening of business on the day
following such Determination Date shall be increased by dividing such
Conversion Rate by a fraction of which the numerator shall be the number of
shares of Common Stock outstanding at the close of business on such
Determination Date plus the number of shares of Common Stock which the
aggregate of the offering price of the total number of shares of Common
Stock so offered for subscription or purchase would purchase at such
current market price and the denominator shall be the number of shares of
Common Stock outstanding at the close of business on such Determination
Date plus the
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number of shares of Common Stock so offered for subscription or purchase,
such increase to become effective immediately after the opening of business
on the day following such Determination Date. For the purposes of this
paragraph (2), the number of shares of Common Stock at any time outstanding
shall not include shares held in the treasury of the Company but shall
include shares issuable in respect of scrip certificates issued in lieu of
fractions of shares of Common Stock. The Company will not issue any rights,
options or warrants in respect of shares of Common Stock held in the
treasury of the Company.
(3) In case outstanding shares of Common Stock shall be subdivided
into a greater number of shares of Common Stock, the Conversion Rate in
effect at the opening of business on the day following the day upon which
such subdivision becomes effective shall be proportionately increased, and,
conversely, in case outstanding shares of Common Stock shall each be
combined into a smaller number of shares of Common Stock, the Conversion
Rate in effect at the opening of business on the day following the day upon
which such combination becomes effective shall be proportionately reduced,
such increase or reduction, as the case may be, to become effective
immediately after the opening of business on the day following the day upon
which such subdivision or combination becomes effective.
(4) Subject to the last sentence of paragraph (7) of this Section
2(b), in case the Company shall, by dividend or otherwise, distribute to
all holders of its Common Stock evidences of its indebtedness, shares of
any class of capital stock, or other property (including securities, but
excluding (i) any rights, options or warrants referred to in paragraph (2)
of this Section 2(b) (ii) any dividend or distribution paid exclusively in
cash, (iii) any dividend or distribution referred to in paragraph (1) of
this Section 2(b) and (iv) any merger or consolidation to which Section
2(h) applies), the Conversion Rate shall be adjusted so that the same shall
equal the rate determined by dividing the Conversion Rate in effect
immediately prior to the close of business on the Determination Date for
such distribution by a fraction of which the numerator shall be the current
market price per share (determined as provided in paragraph (8) of this
Section 2(b)) of the Common Stock on such Determination Date less the then
fair market value (as determined in good faith by the Board of Directors of
the Company) of the portion of the assets, shares or evidences of
indebtedness so distributed applicable to one share of Common Stock and the
denominator shall be such current market price per share of the Common
Stock, such adjustment to become effective immediately prior to the opening
of business on the day following such Determination Date. If the Board of
Directors determines the fair market value of any distribution for purposes
of this paragraph (4) by reference to the actual or when issued trading
market for any securities comprising such distribution, it must in doing so
consider the prices in such market over the same period used in computing
the current market price per share pursuant to paragraph (8) of this
Section 2(b).
(5) In case the Company shall, by dividend or otherwise, make a Cash
Distribution, then, and in each such case, immediately after the close of
business on the Determination Date for such Cash Distribution, the
Conversion Rate shall be adjusted so that the same shall equal the rate
determined by dividing the Conversion Rate in effect immediately prior to
the close of business on such Determination Date by a fraction (a) the
numerator of which shall be equal to the current market price per share
(determined as provided in paragraph (8) of this Section 2(b)) of the
Common Stock on such Determination Date less an amount equal to the
quotient of
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(1) the amount of such Cash Distribution divided by (2) the number of
shares of Common Stock outstanding on such Determination Date and (b) the
denominator of which shall be equal to the current market price per share
(determined as provided in paragraph (8) of this Section 2(b)) of the
Common Stock on such Determination Date.
(6) In case the Company or any Subsidiary shall make an Excess
Purchase Payment, then, and in each such case, immediately prior to the
opening of business on the day after the tender offer in respect of which
such Excess Purchase Payment is to be made expires, the Conversion Rate
shall be adjusted so that the same shall equal the rate determined by
dividing the Conversion Rate in effect immediately prior to the close of
business on the Determination Date for such tender offer by a fraction (a)
the numerator of which shall be equal to the current market price per share
(determined as provided in paragraph (8) of this Section 2(b)) of the
Common Stock on such Determination Date less an amount equal to the
quotient of (A) the Excess Purchase Payment divided by (B) the number of
shares of Common Stock outstanding (including any tendered shares) as of
the Determination Date less the number of all shares validly tendered and
not withdrawn as of the Determination Date and (b) the denominator of which
shall be equal to the current market price per share (determined as
provided in paragraph (8) of this Section 2(b)) of the Common Stock as of
such Determination Date.
(7) The reclassification of Common Stock into securities other than
Common Stock (other than any reclassification upon a consolidation or
merger to which Section 2(h) applies) shall be deemed to involve (a) a
distribution of such securities other than Common Stock to all holders of
Common Stock (and the effective date of such reclassification shall be
deemed to be the Determination Date), and (b) a subdivision or combination,
as the case may be, of the number of shares of Common Stock outstanding
immediately prior to such reclassification into the number of shares of
Common Stock outstanding immediately thereafter (and the effective date of
such reclassification shall be deemed to be "the day upon which such
subdivision becomes effective" or "the day upon which such combination
becomes effective", as the case may be, and "the day upon which such
subdivision or combination becomes effective"' within the meaning of
paragraph (3) of this Section 2(b)). Rights or warrants issued by the
Company to all holders of its Common Stock entitling the holders thereof to
subscribe for or purchase shares of Common Stock, which rights or warrants
(i) are deemed to be transferred with such shares of Common Stock, (ii) are
not exercisable and (iii) are also issued in respect, of future issuances
of Common Stock, in each case in clauses (i) through (iii) until the
occurrence of a specified event or events ("Trigger Event"), shall for
purposes of this Section 2(b) not be deemed issued until the occurrence of
the earliest Trigger Event.
(8) For the purpose of any computation under paragraphs (2), (4), (5)
or (6) of this Section 2(b) the current market price per share of Common
Stock on any date shall be calculated by the Company and be deemed to be
the average of the daily Closing Prices for the five consecutive Trading
Days selected by the Company commencing not more than 10 Trading Days
before, and ending not later than, the earlier of the day in question and
the day before the "ex" date with respect to the issuance or distribution
requiring such computation. For purposes of this paragraph, the term "ex
date", when used with respect to any issuance or distribution, means the
first date on which the Common Stock trades regular way in the applicable
securities
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market or on the applicable securities exchange without the right to
receive such issuance or distribution.
(9) No adjustment in the Conversion Rate shall be required unless such
adjustment (plus any adjustments not previously made by reason of this
paragraph (9)) would require an increase or decrease of at least one
percent in such rate; provided, however, that any adjustments which by
reason of this paragraph (9) are not required to be made shall be carried
forward and taken into account in any subsequent adjustment. All
calculations under this Section 2 shall be made to the nearest cent or to
the nearest one-hundredth of a share, as the case may be.
(10) The Company may make such increases in the Conversion Rate, for
the remaining term of the Securities or any shorter term, in addition to
those required by paragraphs (1), (2), (3), (4), (5) and (6) of this
Section 2(b) as it considers to be advisable in order to avoid or diminish
any income tax to any holders of shares of Common Stock resulting from any
dividend or distribution of stock or issuance of rights or warrants to
purchase or subscribe for stock or from any event treated as such for
income tax purposes.
(c) Whenever the Conversion Rate is adjusted as provided in Section 2(b),
the Company shall compute the adjusted Conversion Rate in accordance with
Section 2(b) and shall prepare a certificate signed by the chief financial
officer of the Company setting forth the adjusted Conversion Rate and showing in
reasonable detail the facts upon which such adjustment is based, and shall
promptly deliver such certificate to the holder of this Security.
(d) In case:
(1) the Company shall declare a dividend or other distribution on its
Common Stock payable (i) otherwise than exclusively in cash or (ii)
exclusively in cash in an amount that would require any adjustment pursuant
to Section 2(b); or
(2) the Company shall authorize the granting to the holders of its
Common Stock of rights, options or warrants to subscribe for or purchase
any shares of capital stock of any class or of any other rights; or
(3) of any reclassification of the Common Stock of the Company, or of
any consolidation, merger or share exchange to which the Company is a party
and for which approval of any shareholders of the Company is required, or
of the conveyance, sale, transfer or lease of all or substantially all of
the assets of the Company; or
(4) of the voluntary or involuntary dissolution, liquidation or
winding up of the Company; or
(5) the Company or any Subsidiary shall commence a tender offer for
all or a portion of the Company's outstanding shares of Common Stock (or
shall amend any such tender offer);
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then the Company shall cause to be delivered to the holder of this Security, at
least 20 days (or 10 days in any case specified in clause (1) or (2) above)
prior to the applicable record, expiration or effective date hereinafter
specified, a notice stating (x) the date on which a record is to be taken for
the purpose of such dividend, distribution, rights, options or warrants, or, if
a record is not to be taken, the date as of which the holders of Common Stock of
record to be entitled to such dividend, distribution, rights, options or
warrants are to be determined, (y) the date on which the right to make tenders
under such tender offer expires or (z) the date on which such reclassification,
consolidation, merger, conveyance, transfer, sale, lease, dissolution,
liquidation or winding up is expected to become effective, and the date as of
which it is expected that holders of Common Stock of record shall be entitled to
exchange their shares of Common Stock for securities, cash or other property
deliverable upon such reclassification, consolidation, merger, conveyance,
transfer, sale, lease, dissolution, liquidation or winding up. Neither the
failure to give such notice nor any defect therein shall affect the legality or
validity of the proceedings described in clauses (1) through (5) of this Section
2(d).
(e) The Company shall at all times reserve and keep available, free from
preemptive rights, out of its authorized but unissued Common Stock, for the
purpose of effecting the conversion of the Security, the full number of shares
of Common Stock then issuable upon the conversion of this Security.
(f) Except as provided in the next sentence, the Company will pay any and
all taxes and duties that may be payable in respect of the issue or delivery of
shares of Common Stock on conversion of this Security. The Company shall not,
however, be required to pay any tax or duty which may be payable in respect of
any transfer involved in the issue and delivery of shares of Common Stock in a
name other than that of the holder of this Security, and no such issue or
delivery shall be made unless and until the person requesting such issue has
paid to the Company the amount of any such tax or duty, or has established to
the satisfaction of the Company that such tax or duty has been paid.
(g) The Company agrees that all shares of Common Stock which may be
delivered upon conversion of the Security, upon such delivery, will have been
duly authorized and validly issued and will be fully paid and nonassessable (and
shall be issued out of the Company's authorized but unissued Common Stock) and,
except as provided in Section 2(f), the Company will pay all taxes, liens and
charges with respect to the issue thereof.
(h) In ease of any consolidation of the Company with any other person, any
merger of the Company into another person or of another person into the Company
(other than a merger which does not result in any reclassification, conversion,
exchange or cancellation of outstanding shares of Common Stock of the Company)
or any conveyance, sale, transfer or lease of all or substantially all of the
properties and assets of the Company, the person formed by such consolidation or
resulting from such merger or which acquires such properties and assets, as the
case may be, shall execute and deliver to the holder of this Security a
supplemental agreement providing that such holder has the right thereafter,
during the period this Security shall be convertible as specified in Section
2(a), to convert this Security only into the kind and amount of securities, cash
and other property receivable upon such consolidation, merger, conveyance, sale,
transfer or lease (including any Common Stock retainable) by a holder of the
number of shares of Common Stock of the Company into which this Security might
have been converted immediately prior to such consolidation, merger, conveyance,
sale, transfer or
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lease, assuming such holder of Common Stock of the Company (i) is not a person
with which the Company consolidated, into which the Company merged or which
merged into the Company or to which such conveyance, sale, transfer or lease was
made, as the case may be (a "Constituent Person"), or an Affiliate of a
Constituent Person and (ii) failed to exercise his rights of election, if any,
as to the kind or amount of securities, cash and other property receivable upon
such consolidation, merger, conveyance, sale, transfer or lease (provided that
if the kind or amount of securities, cash and other property receivable upon
such consolidation, merger, conveyance, sale, transfer, or lease is not the same
for each share of Common Stock of the Company held immediately prior to such
consolidation, merger, conveyance, sale, transfer or lease by others than a
Constituent Person or an Affiliate thereof and in respect of which such rights
of election shall not have been exercised ("Non-electing Share"), then for the
purpose of this Section 2(h) the kind and amount of securities, cash and other
property receivable upon such consolidation, merger, conveyance, sale, transfer
or lease by the holders of each Non-electing Share shall be deemed to be the
kind and amount so receivable per share by a plurality of the Non-electing
Shares). Such supplemental agreement shall provide for adjustments which, for
events subsequent to the effective date of such supplemental agreement, shall be
as nearly equivalent as may be practicable to the adjustments provided for in
this Section 2. The above provisions of this Section 2(h) shall similarly apply
to successive consolidations, mergers, conveyances, sales, transfers or leases.
In this paragraph, "securities of the kind receivable" upon such consolidation,
merger, conveyance, transfer, sale or lease by a holder of Common Stock means
securities that, among other things, are registered and transferable under the
Securities Act, and listed and approved for quotation in all securities markets,
in each case to the same extent as such securities so receivable by a holder of
Common Stock.
(i) The Company (i) will effect all registrations with, and obtain all
approvals by, all governmental authorities that may be necessary under any
United States Federal or state law (including the Securities Act of 1933, the
Securities Exchange Act of 1934 and state securities and Blue Sky laws) for the
shares of Common Stock issuable upon conversion of this Security to be lawfully
issued and delivered as provided herein, and thereafter publicly traded (if
permissible under such Securities Act) and qualified or listed as contemplated
by clause (ii) (it being understood that the Company shall not be required to
register the Common Stock issuable on conversion hereof under the Securities
Act, except pursuant to the Registration Rights Agreement between the Company
and the initial holder of this Security); and (ii) will list the shares of
Common Stock required to be issued and delivered upon conversion of Securities,
prior to such issuance or delivery, on each national Securities exchange on
which outstanding Common Stock is listed or quoted at the time of such delivery,
or if the Common Stock is not then listed on any securities exchange, to qualify
the Common Stock for quotation on the Nasdaq National Market or such other
inter-dealer quotation system, if any, on which the Common Stock is then quoted.
(j) For purposes hereof:
"Affiliate" of any specified person means any other person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified person. For the purposes of this definition,
"control", when used with respect to any specified person, means the power to
direct the management and policies of such person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise;
and the terms "controlling" and "controlled" have meanings correlative to the
foregoing.
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"Cash Distribution" means the distribution by the Company to all holders of
its Common Stock of cash, other than any cash that is distributed upon a merger
or consolidation to which Section 2(h) applies or as part of a distribution
referred to in paragraph (4) of Section 2(b).
"Closing Price" means, with respect to the Common Stock of the Company, for
any day, the reported last sale price per share on the Nasdaq National Market,
or, if the Common Stock is not admitted to trading on the Nasdaq National
Market, on the principal national securities exchange or inter-dealer quotation
system on which the Common Stock is listed or admitted to trading, or if not
admitted to trading on the Nasdaq National Market, or listed or admitted to
trading on any national securities exchange or inter-dealer quotation system,
the average of the closing bid and asked prices per share in the
over-the-counter market as furnished by any New York Stock Exchange member firm
selected from time to time by the Company for that purpose.
"Common Stock" means the Common Stock, par value $.01 per share, of the
Company authorized at the date of this instrument as originally executed.
Subject to the provisions of Section 2(h), shares issuable on conversion or
repurchase of this Security shall include only shares of Common Stock or shares
of any class or classes of common stock resulting from any reclassification or
reclassifications thereof; provided, however, that if at any time there shall be
more than one such resulting class, the shares so issuable on conversion of this
Security shall include shares of all such classes, and the shares of each such
class then so issuable shall be substantially in the proportion which the total
number of shares of such class resulting from all such reclassifications bears
to the total number of shares of all such classes resulting from all such
reclassifications.
"Determination Date" means, in the case of a dividend or other
distribution, including the issuance of rights, options or warrants, to
shareholders, the date fixed for the determination of shareholders entitled to
receive such dividend or other distribution and, in the case of a tender offer,
the last time that tenders could have been made pursuant to such tender offer.
"Excess Purchase Payment" means the product of (A) the excess, if any, of
(i) the amount of cash plus the fair market value (as determined in good faith
by the Company's Board of Directors) of any non-cash consideration required to
be paid with respect to one share of Common Stock acquired or to be acquired in
a tender offer made by the Company or any subsidiary of the Company for all or
any portion of the Common Stock over (ii) the current market price per share as
of the last time that tenders could have been made pursuant to such tender offer
and (B) the number of shares validly tendered and not withdrawn as of the
Determination Date in respect of such tender offer.
"Trading Day" means (i) if the Common Stock is admitted to trading on the
Nasdaq National Market or any other system of automated dissemination of
quotations of securities prices, a day on which trades may be effected through
such system; (ii) if the Common Stock is listed or admitted for trading on the
New York Stock Exchange or any other national securities exchange, a day on
which such exchange is open for business; or (iii) if the Common Stock is not
admitted to trading on the Nasdaq National Market or listed or admitted for
trading on any national securities exchange or any other system of automated
dissemination of quotation of securities prices, a day on which the Common Stock
is traded regular way in the over-the-counter market and for which a closing bid
and a closing asked price for the Common Stock are available.
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3. Right to Require Repurchase. (a) In the event that a Change in Control
(as hereinafter defined) shall occur, then the holder of this Security shall
have the right, at such holder's option, to require the Company to repurchase,
and upon the exercise of such right the Company shall repurchase, this Security,
or any portion of the principal amount hereof that is equal to $1,000 or any
integral multiple thereof, on the date (the "Repurchase Date") that is fifteen
Trading Days after the date on which the Company gives notice thereof to the
holder of this Security, at a purchase price equal to 100% of the principal
amount of this Security to be repurchased plus interest accrued to the
Repurchase Date (the "Repurchase Price"); provided, however, that installments
of interest on this Security whose stated maturity is on or prior to the
Repurchase Date shall be payable to the holder of this Security, or one or more
predecessor Securities, registered as such on the relevant Record Date according
to their terms. At the option of the Company, the Repurchase Price may be paid
in cash or, subject to the fulfillment by the Company of the conditions set
forth in Section 6 and subject to the limitations set forth therein, by delivery
of shares of Common Stock having a fair market value equal to the Repurchase
Price as described in Section 6. The Company agrees to give the holder of this
Security notice of any Change in Control, by facsimile transmission confirmed in
writing by overnight courier service, promptly and in any event within two
Trading Days of the occurrence thereof.
(b) To exercise a repurchase right, the holder shall deliver to the Company
on or before the 10th trading day prior to the Repurchase Date, together with
this Security, written notice of the holder's exercise of such right, which
notice shall set forth the name of the holder, the number of shares of Common
Stock then owned by such holder and its affiliates, the principal amount of this
Security to be repurchased (and, if this Security is to be repurchased in part,
the portion of the principal amount thereof to be repurchased and the name of
the person in which the portion thereof to remain outstanding after such
repurchase is to be registered) and a statement that an election to exercise the
repurchase right is being made thereby, and, in the event that the Repurchase
Price shall be paid in shares of Common Stock, the name or names (with
addresses) in which the certificates for shares of Common Stock shall be issued.
Such written notice shall be irrevocable, except that the right of the holder to
convert this Security (or the portion hereof with respect to which the
repurchase right is being exercised) shall continue until the close of business
on the Repurchase Date (or if the Company elects to pay the Repurchase Price by
delivery of shares of Common Stock, until the close of business on the Trading
Day immediately preceding the first delivery of Common Stock in respect
thereof).
(c) In the event a repurchase right shall be exercised in accordance with
the terms hereof, the Company shall pay or cause to be paid to the holder the
Repurchase Price in cash or shares of Common Stock, as provided above, together
with accrued and unpaid interest to the Repurchase Date; provided, however, that
installments of interest that mature on or prior to the Repurchase Date shall be
payable in cash, to the holders of this Security, or one or more predecessor
Securities, registered as such at the close of business on the relevant regular
record date.
(d) If this Security (or portion thereof) is surrendered for repurchase and
is not so paid on or prior to the Repurchase Date, the principal amount of this
Security (or such portion hereof, as the case may be) shall, until paid, bear
interest to the extent permitted by applicable law from the Repurchase Date at
the rate per annum borne by this Security, and shall remain convertible into
Common Stock until the principal of this Security (or portion thereof, as the
case may be) shall have been paid or duly provided for.
10
(e) If this Security is to be repurchased only in part, it shall be
surrendered to the Company at the Designated Office (with, if the Company so
requires, due endorsement by, or a written instrument of transfer in form
satisfactory to the Company duly executed by, the holder hereof or his attorney
duly authorized in writing), and the Company shall execute and make available
for delivery to the holder without service charge, a new Security or Securities,
containing identical terms and conditions, each in an authorized denomination in
aggregate principal amount equal to and in exchange for the unrepurchased
portion of the principal of the Security so surrendered.
(f) For purposes of this Section 3.
(1) the term "beneficial owner" shall be determined in accordance with Rule
13d-3 promulgated by the Securities and Exchange Commission pursuant to the
Securities Exchange Act of 1934; and
(2) a "Change in Control" shall be deemed to have occurred at the time,
after the original issuance of this Security, of:
(i) the acquisition by any person of beneficial ownership, directly or
indirectly, through a purchase, merger or other acquisition transaction or
series of transactions, of shares of capital stock of the Company entitling
such person to exercise 50% or more of the total voting power of all shares
of capital stock of the Company entitled to vote generally in the elections
of directors (any shares of voting stock of which such person is the
beneficial owner that are not then outstanding being deemed outstanding for
purposes of calculating such percentage) other than any such acquisition by
the Company or any employee benefit plan of the Company; or
(ii) any consolidation or merger of the Company with or into, any
other person, any merger of another person with or into the Company, or any
conveyance, transfer, sale, lease or other disposition of all or
substantially all of the assets of the Company to another person (other
than (a) any such transaction (x) which does not result in any
reclassification, conversion, exchange or cancellation of outstanding
shares of Common Stock and (y) pursuant to which holders of Common Stock
immediately prior to such transaction have the entitlement to exercise,
directly or indirectly, 50% or more of the total voting power of all shares
of capital stock entitled to vote generally in the election of directors of
the continuing or surviving person immediately after such transaction and
(b) any merger which is effected solely to change the jurisdiction of
incorporation of the Company and results in a reclassification, conversion
or exchange of outstanding shares of Common Stock into solely shares of
common stock);
provided, however, that a Change in Control shall not be deemed to have occurred
if the Closing Price for any five Trading Days within the period of 10
consecutive Trading Days (x) ending immediately after the later of the date of
the Change in Control or the date of the public announcement of the Change in
Control (in the case of a Change in Control under Clause (i) above) or (y)
ending immediately prior to the date of the Change in Control (in the case of a
Change in Control under Clause (ii) above) shall equal or exceed 105% of the
Conversion Price in effect on each such Trading Day.
11
4. Events of Default. (a) "Event of Default", wherever used herein, means
any one of the following events (whatever the reason for such Event of Default
and whether it shall be voluntary or involuntary or be effected by operation of
law or pursuant to any judgment, decree or order of any court or any order, rule
or regulation of any administrative or governmental body):
(1) default in the payment of any interest upon this Security when it
becomes due and payable, and continuance of such default for a period of 30
days; or
(2) default by the Company in the performance of its obligations in
respect of any conversion of this Security (or any portion hereof) in
accordance with Section 2; or
(3) failure by the Company to give any notice of a Change of Control
required to be delivered in accordance with Section 3(a); or
(4) default in the performance, or breach, of any material covenant or
warranty of the Company herein (other than a covenant or warranty a default
in the performance or breach of which is specifically dealt with elsewhere
in this Section 4(a)) and continuance of such default or breach for a
period of 30 days after there has been given, by registered or certified
mail, to the Company by the holder of this Security a written notice
specifying such default or breach and requiring it to be remedied and
stating that such notice is a "Notice of Default" hereunder; or
(5) a default under any bond, debenture, note or other evidence of
indebtedness for money borrowed by the Company, or under any agreement,
mortgage, indenture or instrument under which there may be issued or by
which there may be secured or evidenced any indebtedness for money borrowed
by the Company, with a principal amount then outstanding in excess of
$1,000,000, whether such indebtedness now exists or shall hereafter be
created, which default shall constitute a failure to pay the principal of
such indebtedness (in whole or in any part greater than $1,000,000) when
due and payable or shall have resulted in such indebtedness (in whole or in
any part greater than $1,000,000) becoming or being declared due and
payable prior to the date on which it would otherwise have become due and
payable, without such indebtedness having been discharged, or such
acceleration having been rescinded or annulled, within a period of 15 days
after there shall have been given, by registered or certified mail, to the
Company by the holder of this Security a written notice specifying such
default and requiring the Company to cause such indebtedness to be
discharged or cause such acceleration to be rescinded or annulled and
stating that such notice is a "Notice of Default" hereunder; or
(6) the entry by a court having jurisdiction in the premises of (A) a
decree or order for relief in respect of the Company in an involuntary case
or proceeding under any applicable Federal or State bankruptcy, insolvency,
reorganization or other similar law or (B) a decree or order adjudging the
Company a bankrupt or insolvent, or approving as properly filed a petition
seeking reorganization, arrangement, adjustment or composition of or in
respect of the Company under any applicable Federal or State law, or
appointing a custodian, receiver, liquidator, assignee, trustee,
sequestrator or other similar official of the Company or of any substantial
part of its property, or ordering the winding up or liquidation of its
affairs, and the
12
continuance of any such decree or order for relief or any such other decree
or order unstayed and in effect for a period of 60 consecutive days; or
(7) the commencement by the Company of a voluntary case or proceeding
under any applicable Federal or State bankruptcy, insolvency,
reorganization or other similar law or of any other case or proceeding to
be adjudicated a bankrupt or insolvent, or the consent by it to the entry
of a decree or order for relief in respect of the Company in an involuntary
case or proceeding under any applicable Federal or State bankruptcy,
insolvency, reorganization or other similar law or to the commencement of
any bankruptcy or insolvency case or proceeding against it, or the filing
by it of a petition or answer or consent seeking reorganization or similar
relief under any applicable Federal or State law, or the consent by it to
the filing of such petition or to the appointment of or taking possession
by a custodian, receiver, liquidator, assignee, trustee, sequestrator or
other similar official of the Company or of any substantial part of its
property, or the making by it of an assignment for the benefit of
creditors, or the admission by it in writing of its inability to pay its
debts generally as they become due, or the taking of corporate action by
the Company in furtherance of any such action.
(b) If an Event of Default (other than an Event of Default specified in
Section 4(a)(6) or 4(a)(7)) occurs and is continuing, then in every such case
the holder of this Security may declare the principal hereof to be due and
payable immediately, by a notice in writing to the Company, and upon any such
declaration such principal and all accrued interest thereon shall become
immediately due and payable. If an Event of Default specified in Section 4(a)(6)
or 4(a)(7) occurs and is continuing, the principal of, and accrued interest on,
this Security shall ipso facto become immediately due and payable without any
declaration or other act of the holders.
5. Consolidation, Merger, Etc. (a) The Company shall not consolidate with
or merge into any other person or, directly or indirectly, convey, transfer,
sell or lease all or substantially all of its properties and assets to any
person, and the Company shall not permit any person to consolidate with or merge
into the Company or, directly or indirectly, convey, transfer, sell or lease all
or substantially all of its properties and assets to the Company, unless:
(1) in case the Company shall consolidate with or merge into another
person or convey, transfer, sell or lease all or substantially all of its
properties and assets to any person, the person formed by such
consolidation or into which the Company is merged or the person which
acquires by conveyance, transfer or sale, or which leases, all or
substantially all the properties and assets of the Company shall be a
corporation, limited liability company, partnership or trust, shall be
organized and validly existing under the laws of the United States of
America, any State thereof or the District of Columbia and shall expressly
assume, by an agreement supplemental hereto, executed and delivered to the
holder of this Security in form satisfactory to the holder, the due and
punctual payment of the principal of (and premium, if any) and interest on
this Security and the performance or observance of every covenant of this
Security on the part of the Company to be performed or observed, including
the conversion rights provided herein (which shall thereafter relate to
common stock of such successor, on a basis reasonably designed to preserve
the economic value to the holder of this Security of such conversion
rights);
13
(2) immediately after giving effect to such transaction and treating
any indebtedness which becomes an obligation of the Company or a subsidiary
of the Company as a result of such transaction as having been incurred by
the Company or such subsidiary of the Company at the time of such
transaction, no Event of Default, and no event which, after notice or lapse
of time or both, would become an Event of Default, shall have happened and
be continuing;
(3) the Company has delivered to the holder of this Security an
officers' certificate stating that such consolidation, merger, conveyance,
transfer, sale or lease and, if a supplemental agreement is required in
connection with such transaction, such supplemental agreement, comply with
this Section and that all conditions precedent herein provided for relating
to such transaction have been complied with; and
(4) counsel for the Company has delivered to the holder of this
Security an opinion of such counsel with respect to such consolidation,
merger, conveyance, transfer, sale or lease, and if a supplemental
agreement is required in connection with such transaction, such
supplemental agreement, which opinion shall be, in form and substance,
reasonably acceptable to such holder and its counsel.
(b) Upon any consolidation of the Company with, or merger of the Company
into, any other person or any conveyance, transfer, sale or lease of all or
substantially all of the properties and assets of the Company in accordance with
Section 5(a), the successor person formed by such consolidation or into which
the Company is merged or to which such conveyance, transfer, sale or lease is
made shall succeed to, and be substituted for, and may exercise every right and
power of, the Company under this Security with the same effect as if such
successor person had been named as the Company herein, and thereafter, except in
the case of a lease, the predecessor person shall be relieved of all obligations
and covenants under this Security.
6. Payment in Stock. (a) The Company may elect to pay any amount due
hereunder in respect of interest or Repurchase Price in respect hereof by
delivery of shares of Common Stock if and only if the following conditions have
been satisfied:
(1) Any such payment shall be made in five equal installments, on each of
the five consecutive Trading Days ending on and including the third Trading Day
immediately preceding the date when cash payment would otherwise be due, and the
shares of Common Stock deliverable in payment of each such installment shall
have a fair market value as of the date of such installment of not less than 20%
of the amount of such payment due hereunder. For purposes of this Section 6, the
fair market value of shares of Common Stock shall be equal to 95% of the Closing
Price for the immediately preceding Trading Day;
(2) In the event any shares of Common Stock to be issued in respect of such
amount due hereunder require registration under any Federal securities law
before such shares may be freely transferrable without being subject to any
transfer restrictions under the Securities Act of 1933 upon issuance, such
registration shall have been completed and shall have become effective prior to
the date of the first such installment;
14
(3) In the event any shares of Common Stock to be issued in respect of such
amount due hereunder require registration with or approval of any governmental
authority under any State law or any other Federal law before such shares may be
validly issued or delivered upon issuance, such registration shall have been
completed or have become effective and such approval shall have been obtained,
in each case, prior to the date of the first such installment;
(4) The shares of Common Stock deliverable in payment of such amount due
hereunder shall have been approved for quotation in the Nasdaq National Market
immediately prior to the date of the first such installment;
(5) All shares of Common Stock deliverable in payment of such amount due
hereunder shall, upon issue, be duly and validly issued and fully paid and
non-assessable and free of any preemptive rights; and
(6) In respect of each such payment date, the Company shall have given the
holder of this Security not less than 10 nor more than 15 Trading Days' notice
of its election to effect payment in respect of such payment date by delivery of
shares of Common Stock; provided that any such notice in respect of amounts
payable on a Repurchase Date shall accompany the Company's notice of a Change of
Control relating thereto.
If all of the conditions set forth in this Section 6(a) are not satisfied
in accordance with the terms thereof, any such amount due hereunder shall be
paid by the Company only in cash.
Notwithstanding the foregoing, at no time will the Company deliver shares
of Common Stock to any holder in satisfaction of an obligation to pay interest
or Repurchase Price if the number of shares so delivered, together with the
number of shares of Common Stock owned (or deemed for bank regulatory purposes
to be owned) by such holder and its affiliates as theretofore notified to the
Company (in a notice delivered not less than five Trading Days prior to the
relevant interest payment date, in the case of interest, or as set forth in the
election of holder to require repurchase, in the case of Repurchase Price),
represent more than 4.9% of the Common Stock then outstanding. If the limitation
set forth in the previous sentence would apply to any payment of interest or
Repurchase Price, the Company may elect (by notice to the holder delivered not
less than three Trading Days prior to the relevant interest payment date, in the
case of interest, or not less than eight Trading Days prior to the Repurchase
Date, in the case of Repurchase Price) to satisfy a portion of such payment in
shares of Common Stock (up to the maximum number of shares permitted under the
limitation set forth in the previous sentence) and the balance in cash.
(b) Any issuance of shares of Common Stock in respect of any installment
due hereunder pursuant to this Section 6 shall be deemed to have been effected
immediately prior to the close of business on the date of delivery of such
installment and the person or persons in whose name or names any certificate or
certificates for shares of Common Stock shall be issuable upon such delivery
shall be deemed to have become on such date the holder or holders of record of
the shares represented thereby; provided, however, that in case any installment
shall be due on a date when the stock transfer books of the Company shall be
closed, the person or persons in whose name or names the certificate or
certificates for such shares are to be issued shall be deemed to have become the
record holder or holders thereof for all purposes at the opening of business on
the next succeeding day on
15
which such stock transfer books are open. No payment or adjustment shall be made
for dividends or distributions on any Common Stock issued pursuant to this
Section 6 declared prior to the relevant delivery date.
(c) No fractions of shares shall be issued upon payment made in shares of
Common Stock in respect of this Security. Instead of any fractional share of
Common Stock which would otherwise be so issuable, the Company will round up to
the next higher whole share.
(d) Any issuance and delivery of certificates for shares of Common Stock
pursuant to this Section 6 shall be made without charge to the holder of this
Security for such certificates or for any tax or duty in respect of the issuance
or delivery of such certificates or the securities represented thereby;
provided, however, that the Company shall not be required to pay any tax or duty
which may be payable in respect of any transfer involved in the issuance or
delivery of certificates for shares of Common Stock in a name other than that of
the holder of this Security, and no such issuance or delivery shall be made
unless and until the person requesting such issuance or delivery has paid to the
Company the amount of any such tax or duty or has established, to the
satisfaction of the Company, that such tax or duty has been paid.
7. Other. (a) No provision of this Security shall alter or impair the
obligation of the Company, which is absolute and unconditional, to pay the
principal of, premium, if any, and interest on this Security at the times,
places and rate, and in the coin or currency, herein prescribed or to convert
this Security as herein provided.
(b) The Company will give prompt written notice to the holder of Security
of any change in the location of the Designated Office.
(c) The transfer of this Security is registrable on the Security Register
of the Company upon surrender of this Security for registration of transfer at
the Designated Office, duly endorsed by, or accompanied by a written instrument
of transfer in form satisfactory to the Company duly executed by, the holder
hereof or his attorney duly authorized in writing, and thereupon one or more new
Securities, of authorized denominations and for the same aggregate principal
amount, will be issued to the designated transferee or transferees. Such
Securities are issuable only in registered form without coupons in denominations
of $1,000 and any integral multiple thereof. No service charge shall be made for
any such registration of transfer, but the Company may require payment of a sum
sufficient to recover any tax or other governmental charge payable in connection
therewith. Prior to due presentation of this Security for registration of
transfer, the Company and any agent of the Company may treat the person in whose
name this Security is registered as the owner thereof for all purposes, whether
or not this Security be overdue, and neither the Company nor any such agent
shall be affected by notice to the contrary.
Notwithstanding any other provision of this Security, this Security and the
shares of Common Stock issuable upon conversion hereof may only be transferred
by the holder of this Security (a) in the case of the Common Stock only, in a
widely dispersed registered public offering; (b) to one or more accredited
investors, in one or more transactions, any one of whom, after such purchase,
would hold not more than 2 % of the shares of Common Stock then outstanding
(assuming conversion of any portion of this Security so transferred); (c) to any
person or entity that already controls more
16
than 50% of the voting securities of the Company prior to such transfer; or (d)
in a transaction that complies with the volume and manner of sale restrictions
of Rule 144 under the Securities Act of 1933. The holder of this Security, by
acceptance thereof, shall be deemed to have agreed to the foregoing restriction
on transfers.
17
(D) THIS SECURITY SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF NEW YORK, UNITED STATES OF AMERICA.
IN WITNESS WHEREOF, the Company has caused this Security to be duly
executed under its corporate seal.
Dated: September __, 1998
CELGENE CORPORATION
By:
--------------------------------
Name:
Title:
Attest:
- --------------------------------
Name:
Title:
ELECTION OF HOLDER TO REQUIRE REPURCHASE
1. Pursuant to Section 3(a) of this Security, the undersigned hereby elects
to have all or a portion of this Security repurchased by the Company.
2. The undersigned hereby directs the Company to pay [choose one] (a) it or
(b) Name: _______________________; address: _____________________; Social
Security or Other Taxpayer Identification Number, if any: ___________________,in
amount in cash or, at the Company's election (subject to the limitations set
forth in the Security) Common Stock valued as set forth in the Security, equal
to 100 % of the principal amount to be repurchased (as set forth below), plus
interest accrued to the Repurchase Date, as provided herein.
Dated:
------------------------------
------------------------------
Signature
Number of shares of Common Stock
owned by the holder and its affiliates:
------------------------------
Principal amount to be repurchased
(an integral multiple of $1,000):
------------------------------
Remaining principal amount following such repurchase
(not less than $1,000):
------------------------------
NOTICE: The signature to the foregoing Election must correspond to the name as
written upon the face of this Security in every particular, without alteration
or any change whatsoever.
CONVERSION NOTICE
The undersigned holder of this Security hereby irrevocably exercises the
option to convert this Security, or any portion of the principal amount hereof
(which is an integral multiple of $1,000) below designated, into shares of
Common Stock (subject to the limitation set forth in the second paragraph of
Section 2(a) of the Security) in accordance with the terms of this Security, and
directs that such shares, together with a check in payment for any fractional
share and any Security representing any unconverted principal amount hereof, be
delivered to and be registered in the name of the undersigned unless a different
name has been indicated below. If shares of Common Stock or Securities are to be
registered in the name of a person other than the undersigned, the undersigned
will pay all transfer taxes payable with respect thereto. Any amount required to
be paid by the undersigned on account of interest accompanies this Security.
Dated:
------------------------------
------------------------------
Signature
Number of shares of Common Stock
owned by the holder and its affiliates:
------------------------------
If shares or Securities are to be If only a portion of the Securities is
registered in the name of a person to be converted, please indicate:
other than the holder, please print
such person's name and address:
1. Principal amount to be converted:
$
------------------------------
Name
2. Principal amount and denomination
of Security representing
unconverted principal amount to
be issued:
------------------------------
Address
Amount: $________
Denominations: $________
(any integral multiple of $1,000)
------------------------------
Social Security or other Taxpayer
Identification Number, if any