EXHIBIT 4.1
EXECUTION COPY
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SECURITIES PURCHASE AGREEMENT
This Securities Purchase Agreement (the "Agreement") is entered into as of
November 15, 1999 (the "Execution Date"), between Cell Therapeutics, Inc., a
Washington corporation (the "Company"), and each investor delivering a
signature page hereto (each an "Investor" and collectively the "Investors").
WHEREAS:
A. The Company and the Investors are executing and delivering this
Agreement in reliance upon the exemption from securities registration afforded
by Rule 506 under Regulation D ("Regulation D") as promulgated by the United
States Securities and Exchange Commission (the "SEC") under the Securities Act
of 1933, as amended (the "1933 Act");
B. The Company has authorized a new series of preferred stock, no par
value, designated as Series D Preferred Stock (the "Preferred Stock"), having
the rights, preferences and privileges set forth in the Articles of Amendment to
Restated Articles of Incorporation in the form attached hereto as Exhibit A (the
"Articles");
C. The Preferred Stock is convertible into shares of common stock, no par
value per share, of the Company (the "Common Stock"), upon the terms and subject
to the limitations and conditions set forth in the Articles;
D. The Company desires to issue and sell to each Investor and each
Investor desires to purchase (i) the number of shares of Preferred Stock set
forth opposite such Investor's name on the signature page of such Investor
attached hereto (the "Signature Page"), with each share having a purchase price
of One Thousand Dollars ($1,000) and (ii) a warrant to purchase shares of Common
Stock in the amount specified on such Investor's Signature Page substantially in
the form attached hereto as Exhibit B (the "Warrant"); and
E. Contemporaneous with the execution and delivery of this Agreement, the
parties hereto are executing and delivering a Registration Rights Agreement, in
the form attached hereto as Exhibit C (the "Registration Rights Agreement"),
providing for the registration of the Underlying Shares (as herein defined).
NOW THEREFORE, the Company and Investor hereby agree as follows:
1. PURCHASE AND SALE OF SECURITIES.
a. Sale of Preferred Shares. Subject to the terms and conditions hereof,
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the Company shall issue and sell to each Investor and each Investor
agrees to purchase from the Company, the number of shares of Preferred
Stock set forth opposite such Investor's name on its Signature Page
(collectively, together with any Preferred Stock issued in replacement
thereof or as a dividend thereon or otherwise with respect thereto in
accordance with the terms thereof, the "Preferred Shares") each with a
purchase price of One Thousand Dollars ($1,000) per share (the
"Purchase Price"). One (1) Preferred Share will be issued to the
Investor for each One Thousand Dollars ($1,000) provided by the
Investor to the Company. The shares of Common Stock issuable or issued
upon conversion of the Preferred Shares together with the shares of
Common Stock issuable or issued upon exercise of the Warrants (as
defined herein) are collectively referred to herein as the "Underlying
Shares." The Preferred Shares, the Warrants and the Underlying Shares
are collectively referred to herein as the "Securities."
b. Issuance of Warrants. On the Closing Date, the Company will issue to
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each Investor the Warrant for the number of shares of Common Stock set
forth opposite such Investor's name on its Signature Page.
c. Closing. Subject to the terms set forth in this Agreement, the
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issuance, sale and purchase of the Preferred Stock and the Warrants
shall be consummated in one closing (the "Closing").
d. Payment. At the Closing each Investor shall pay the Purchase Price for
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the Securities being acquired by it by wire transfer to the Company,
in accordance with the Company's written wiring instructions, against
delivery of the appropriate amount of duly executed stock certificates
and the items required by Section 7 for the same and the Company shall
deliver such Preferred Stock against delivery of such Purchase Price.
e. Closing Date. Subject to the satisfaction of the conditions set forth
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in Sections 6 and 7 below, the date and time of the issuance, sale and
purchase of Securities pursuant to this Agreement shall be November
24, 1999 or such other date as the Company and the Investor may
mutually agree. Each Closing shall occur at 9:30 p.m. local time, at
the offices of the Company. The date of a Closing hereunder is
hereinafter referred to as a "Closing Date."
2. INVESTOR'S REPRESENTATIONS AND WARRANTIES. Each Investor, severally,
and not jointly, represents and warrants to the Company that, as of the
date hereof:
a. Investment Purpose. Such Investor is purchasing the Securities for
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its own account as principal for investment only and not with a
present view towards the public sale or distribution thereof, except
pursuant to sales registered or exempted from registration under the
1933 Act. By making this representation, such Investor does not
represent that it will hold such Securities for any period of time.
b. Accredited Investor Status. Such Investor is an "accredited investor"
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as that term is defined in Rule 501(a) of Regulation D and has such
business and financial experience as is required to give it the
capacity to protect its own interests in connection with the purchase
of the Securities.
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c. Reliance on Exemptions. Such Investor understands that the Securities
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are being offered and sold to it in reliance upon specific exemptions
from the registration requirements of United States federal and state
securities laws and that the Company is relying upon the truth and
accuracy of, and the Investor's compliance with, the representations,
warranties, agreements, covenants, acknowledgments and understandings
of the Investor set forth herein in order to determine the
availability of such exemptions and the eligibility of the Investor to
acquire the Securities.
d. Information. Such Investor and its advisors, if any, have been
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furnished with all materials relating to the business, finances and
operations of the Company and materials relating to the offer and sale
of the Securities which have been requested by such Investor or its
advisors. Such Investor and its advisors, if any, have been afforded
the opportunity to ask questions of the Company and have received what
such Investor believes to be satisfactory answers to any such
inquiries. Neither such inquiries nor any other due diligence
investigation conducted by such Investor or any of its advisors or
representatives shall modify, amend or affect such Investor's right to
rely on the Company's representations and warranties contained in
Section 3 below. Such Investor understands that its investment in the
Securities involves a significant degree of risk.
e. Governmental Review. Such Investor understands that no United States
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federal or state agency or any other government or governmental agency
has passed upon or made any recommendation or endorsement of the
Securities.
f. Transfer or Resale. Such Investor understands that (i) except as
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provided in the Registration Rights Agreement, the Securities have not
been and are not being registered under the 1933 Act or any applicable
state securities laws, and may not be transferred unless (a)
subsequently included in an effective registration statement
thereunder, (b) the Investor shall have delivered to the Company an
opinion of counsel (which opinion shall be reasonably satisfactory to
the Company) to the effect that the Securities to be sold or
transferred may be sold or transferred pursuant to an exemption from
such registration or (c) sold pursuant to Rule 144 promulgated under
the 1933 Act (or a successor rule) ("Rule 144")), (ii) any sale of
such Securities made in reliance on Rule 144 may be made only in
accordance with the terms of said Rule and further, if Rule 144 is not
applicable, any resale of such Securities under circumstances in which
the seller (or the person through whom the sale is made) may be deemed
to be an underwriter (as that term is defined in the 1933 Act) may
require compliance with some other exemption under the 1933 Act or the
rules and regulations of the "SEC" thereunder, and (iii) neither the
Company nor any other person is under any obligation to register such
Securities under the 1933 Act or any state securities laws or to
comply with the terms and conditions of any exemption thereunder (in
each case, other than pursuant to the Registration Rights Agreement).
g. Legends. Such Investor understands that the Preferred Shares, the
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Warrants and, until such time as the Underlying Shares have been
registered under the 1933 Act as contemplated by the Registration
Rights Agreement, the Underlying Shares, may
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bear a restrictive legend in substantially the following form (and a
stop-transfer order may be placed against transfer of the certificates
for such Securities):
The following legend under the 1933 Act:
"THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), AND MAY
NOT BE OFFERED, SOLD, TRANSFERRED, ASSIGNED, PLEDGED OR HYPOTHECATED
ABSENT AN EFFECTIVE REGISTRATION THEREOF UNDER SUCH ACT OR COMPLIANCE
WITH RULE 144 PROMULGATED UNDER SUCH ACT, OR UNLESS THE COMPANY HAS
RECEIVED AN OPINION OF COUNSEL, REASONABLY SATISFACTORY TO THE COMPANY
AND ITS COUNSEL, THAT SUCH REGISTRATION IS NOT REQUIRED";
Underlying Shares shall not contain the legend set forth above nor any
other legend if the conversion of Preferred Shares or exercise of
Warrants, or other issuances of Underlying Shares as contemplated
hereby, by the Articles or the Warrants occurs at any time while a
registration statement filed pursuant to the Registration Rights
Agreement is effective under the 1933 Act or, in the event there is
not such an effective registration statement, at such time, in the
opinion of counsel to the Company, such legend is not required under
applicable requirements of the 1933 Act (including judicial
interpretations and pronouncements issued by the staff of the SEC).
The Company agrees that, in the event any Underlying Shares are issued
with a legend in accordance with this Section 2(g)(2), it will, within
three (3) trading days after request therefor by such Investor,
provide such Investor with a certificate or certificates representing
such Underlying Shares, free from such legend at such time as such
legend would not have been required under this Section 2(g)(2) had
such issuance occurred on the date of such request. The Company may
not make any notation on its records or give instructions to any
transfer agent of the Company which enlarge the restrictions of
transfer set forth in this Section.
h. Authorization; Enforcement. Such Investor represents and warrants to
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the Company that (i) such Investor has all requisite legal and
corporate or other power and capacity and has taken all requisite
corporate or other action to execute and deliver this Agreement, to
purchase the Securities to be purchased by it and to carry out and
perform all of its obligations under this Agreement, and (ii) this
Agreement constitutes the legal, valid and binding obligation of the
Investor, enforceable in accordance with its terms, except (1) as
limited by applicable bankruptcy, insolvency, reorganization, or
similar laws relating to or affecting the enforcement of creditors'
rights generally and (2) as limited by equitable principles generally
and (iii) to the extent that indemnification provisions in the
Registration Rights Agreement may be limited by applicable federal or
state securities laws.
i. No Legal, Tax or Investment Advice. Such Investor understands that
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nothing in this Agreement or any other materials presented to the
Investor in connection with the purchase and sale of the Securities
constitutes legal, tax or investment advice. Such
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Investor has consulted such legal, tax and investment advisors as it,
in its sole discretion, has deemed necessary or appropriate in
connection with this Agreement and all exhibits hereto and the
transactions contemplated herein and therein.
j. Residency. Such Investor is a company organized under the laws of the
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jurisdiction set forth opposite such Investor's name on its Signature
Page.
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company represents
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and warrants to the Investor that, except as set forth in the Schedule
of Exceptions attached hereto as Exhibit D, as of the date hereof:
a. Organization and Qualification. The Company is duly organized,
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validly existing and in good standing under the laws of Washington,
with requisite corporate power and authority to own, lease and operate
its properties and to carry on its business as presently conducted
and/or proposed to be conducted. The Company and each of its
subsidiaries is qualified to do business as a foreign corporation in
each jurisdiction in which the ownership of its property or the nature
of its business requires such qualification, except where failure to
so qualify would not have an Adverse Effect. For purposes of this
Agreement, "Adverse Effect" means with respect to the Company and its
subsidiaries, taken as a whole, any event, change or effect that, when
taken individually or together with all other adverse changes and
effects, is or is reasonably likely to be materially adverse to the
condition (financial or otherwise), properties, assets, liabilities,
business, operations or results of operations of the Company and its
subsidiaries taken as a whole or impair the ability of the Company to
perform fully on a timely basis its obligations under the Transaction
Documents. "Transaction Documents" means, collectively, this
Agreement, the Registration Rights Agreement, the Warrant and the
Articles.
b. Authorization; Enforcement. The Company has all requisite legal and
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corporate power and has taken all requisite corporate action to
execute and deliver this Agreement, the Registration Rights Agreement
and the Warrants, to sell and issue the Preferred Shares and the
Warrants and to carry out and perform all of its obligations under the
Transaction Documents. All corporate action on the part of the
Company, its directors and stockholders necessary for the
authorization, execution, delivery and performance of this Agreement,
the Registration Rights Agreement and the Warrants by the Company, and
the authorization, sale, issuance and delivery of the Securities and
the performance of the Company's obligations under the Transaction
Documents has been taken, except for the filing of the Articles which
will be filed with the Secretary of State of Washington immediately
after the date hereof. Each of the Transaction Documents constitutes
the legal, valid and binding obligations of the Company, enforceable
in accordance with their respective terms, except (i) as limited by
applicable bankruptcy, insolvency, reorganization or similar laws
relating to or affecting the enforcement of creditors' rights
generally, (ii) as limited by equitable principles generally and (iii)
to the extent that indemnification
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provisions in the Registration Rights Agreement may be limited by
applicable federal or state securities laws.
c. Capitalization. The authorized capital stock of the Company consists
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of 100,000,000 shares of Common Stock of which there were 15,567,959
shares issued and outstanding as of September 30, 1999, and 10,000,000
shares of Preferred Stock, no par value per share, none of which
shares are issued and outstanding. All outstanding shares of Common
Stock are duly authorized, validly issued, fully paid and
nonassessable, free of any liens or encumbrances and are not subject
to preemptive rights. As of September 30, 1999, the Company had
reserved 3,836,715 shares of Common Stock for issuance to employees,
directors and consultants pursuant to the 1994 Amended and Restated
CTI Stock Option Plan, of which 65,318 shares have been issued
pursuant to option exercises, and 3,199,520 shares of Common Stock are
subject to outstanding, unexercised options. As of September 30,
1999, the Company had reserved 285,714 shares of Common Stock for
issuance to employees pursuant to the 1996 CTI Employee Stock Purchase
Plan (together with the Stock Option Plan, the ("CTI Plans"), of which
129,135 shares have been issued to employees. There has been no
change in the capitalization of the Company since September 30, 1999.
Other than as set forth in the Schedule of Exceptions, the CTI Plans
or as contemplated in this Agreement, there are no other options,
warrants, calls, rights, commitments or agreements of any character to
which the Company is a party or by which either the Company is bound
or obligating the Company to issue, deliver, sell, repurchase or
redeem, or cause to be issued, delivered, sold, repurchased or
redeemed, any shares of the capital stock of the Company or obligating
the Company to grant, extend or enter into any such option, warrant,
call, right, commitment or agreement.
d. Issuance of Shares. The Securities are duly authorized and, upon
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issuance in accordance with the terms of this Agreement, the Articles
and the Warrants, as the case may be, will be validly issued, fully
paid and non-assessable, and free from all taxes, liens and charges
with respect to the issue thereof and shall not be subject to
preemptive rights or other similar rights of stockholders of the
Company. Based in part upon the representations of the Investor in
this Agreement, the offer, sale and issuance of the Preferred Stock
and Warrants will be made in compliance with all applicable federal
and state securities laws. The Underlying Shares have been duly and
validly reserved and, upon issuance in accordance with the terms of
the Articles and the Warrants, respectively, will be duly and validly
issued, fully-paid and nonassessable, and will be issued in compliance
with all applicable federal and state securities laws.
e. No Conflicts. The execution, delivery and performance of the
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Transaction Documents by the Company and the consummation by the
Company of the transactions contemplated hereby and thereby
(including, without limitation, the filing of the Articles and the
issuance and reservation for issuance of the Underlying Shares) do not
and will not (i) conflict with or result in a violation of any
provision of the Company's Certificate of Incorporation or Bylaws or
(ii) violate or conflict with, or result in a breach of any provision
of, or constitute a default (or an event
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which with notice or lapse of time or both would become a default)
under, or give to others any rights of termination, acceleration or
cancellation of (with or without notice, lapse of time or both), any
indenture, mortgage, lease or other agreement or instrument, or result
in a violation of any law, rule, regulation, order, judgment or decree
(including federal and state securities laws and regulations)
applicable to the Company or by which any property or asset of the
Company is bound or affected (in each case except for such conflicts,
defaults, terminations, accelerations, cancellations and violations
that are not reasonably likely to, individually or in the aggregate,
have an Adverse Effect).
f. Accuracy of Reports; Financial Statements. All reports required to be
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filed with the SEC by the Company during the twelve (12) month period
preceding the date hereof under the Securities Exchange Act of 1934,
as amended (the "Exchange Act") (the "SEC Documents"), have been duly
and timely filed, were in substantial compliance with the requirements
of the 1933 Act and Exchange Act when filed, were complete and correct
in all material respects as of the dates at which the information was
furnished, and contained (as of such dates) no untrue statement of a
material fact nor omitted to state a material fact necessary in order
to make the statements made therein in light of the circumstances in
which made not misleading. The financial statements of the Company
included in the SEC Documents (the "Financial Statements") comply in
all material respects with applicable accounting requirements and with
the published rules and regulations of the SEC with respect thereto.
The Financial Statements have been prepared in accordance with
generally accepted accounting principles ("GAAP") consistently applied
and fairly present the consolidated financial position of the Company
and any subsidiaries at the dates thereof and the consolidated results
of operations and consolidated cash flows for the periods then ended
(subject, in the case of unaudited statements, to normal, recurring
year-end adjustments). Except as set forth in the SEC Documents, the
Company does not have any liabilities or obligations of any nature
(whether accrued, absolute, contingent or otherwise) required by GAAP
to be set forth on a balance sheet of the Company or in the notes
thereto.
g. Changes. Since September 30, 1999 and except as is set forth in the
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SEC Documents, there has not been (a) any incurrence by the Company of
any material liability, absolute or contingent, or (b) any event or
condition of any character that has materially and adversely affected
or might materially and adversely affect the business, properties,
prospects or financial condition of the Company (as such business is
presently conducted and as it is proposed to be conducted). There is
no material liability or contingency of the Company that is not
disclosed in the SEC Documents.
h. Governmental Consents, etc. No consent, approval or authorization of
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or designation, declaration or filing with any governmental authority
on the part of the Company is required in connection with the valid
execution, delivery and performance of the Transaction Documents, or
the consummation of any other transaction contemplated hereby and
thereby, except such filings as may be required to be made with the
SEC, the National Association of Securities Dealers, Inc.
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("NASD") the Nasdaq National Market (the "NADDAQ"), such filings as
may be required under the Hart-Scott-Rodino Antitrust Improvements Act
of 1976, as amended ("HSR") and filings with governmental authorities
for purposes of effecting compliance with the securities and blue sky
laws in the states in which Securities are offered and/or sold, which
compliance will be effected in accordance with such laws. The Company
has not received any delisting notices, notice of violation or similar
inquiry regarding its eligibility for listing from the NASDAQ.
i. Litigation. There is no pending or, to the best of the Company's
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knowledge, threatened lawsuit, administrative proceeding, arbitration,
labor dispute or governmental investigation ("Litigation") to which
the Company is a party or by which any material portion of its assets,
taken as a whole, may be bound, nor is the Company aware of any basis
therefor, which Litigation, if adversely determined, would have an
Adverse Effect.
j. Patents and Trademarks. To its knowledge, except as disclosed in the
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SEC Documents, the Company owns or possesses the right to use to all
patents, trademarks, service marks, tradenames, copyrights, trade
secrets, licenses, information and proprietary rights and processes
necessary for its business as now conducted and as proposed to be
conducted, without infringement of any rights of a third party.
Except as is disclosed in the SEC Documents, the Company has not
received any communications alleging that the Company has violated or,
by conducting its business as proposed, would violate any of the
patents, trademarks, service marks, tradenames, copyrights, trade
secrets or other proprietary rights or processes of any other person
or entity, which violation would have an Adverse Effect on the
Company. Except as disclosed in the SEC Documents, the Company has
not granted (nor has the Company licensed from a third party) any
material rights to or licenses to its patents, trademarks, service
marks, tradenames, copyrights, trade secrets or other proprietary
rights or processes.
k. Registration Rights. Except for the registration rights granted in
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connection with the license of PG-Taxol, there are no outstanding
obligations of the Company to register the securities of a third
party.
l. Disclosure. No representation or warranty of the Company contained in
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any Transaction Documents or the exhibits attached thereto, contains
any untrue statement of a material fact or omits to state a material
fact necessary in order to make the statements contained herein or
therein in light of the circumstances under which they were made not
misleading. The Company confirms that it has not provided the
Investors or their agents or counsel with any information that
constitutes or might constitute material non-public information. The
Company understands and confirms that the Investors shall be relying
on the foregoing representations in effecting transactions in
securities of the Company.
m. Solvency; No Default. The Company has sufficient funds and cash flow
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to pay its debts and other liabilities as they become due, and the
Company is not in default with respect to any material debt or
liability.
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n. No Default or Violation. Neither the Company nor any subsidiary is in
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violation of or default under any provision of (and no event has
occurred which has not been waived which, with notice or lapse of time
or both, would result in a default by the Company or any subsidiary),
nor has the Company or any subsidiary received notice of a claim that
it is in default under or that it is in violation of (a) its
Certificate of Incorporation or Bylaws, or (b) any mortgage,
indenture, lease or other agreement or instrument, permit, concession,
franchise or license to which it is a party or by which it is bound or
(c) any federal or state judgment, order, decree, statute, law,
ordinance, rule or regulation applicable to the Company, except with
respect to clauses (b) and (c) above, such violations or defaults as
would not have an Adverse Effect.
o. Eligibility. The Company is eligible and meets the requirements to
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register for resale on Form S-3 under the 1933 Act.
4. COVENANTS.
a. Best Efforts. The parties shall use their commercially reasonable
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best efforts to satisfy timely each of the conditions described in
Section 6 and Section 7 of this Agreement.
b. Form D; Blue Sky Laws. The Company agrees to file a Form D with
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respect to the Securities as required under Regulation D and to
provide a copy thereof to the Investors promptly after such filing.
The Company shall qualify the Securities for sale to the Investors
pursuant to this Agreement under applicable securities or "blue sky"
laws of the states of the United States (or to obtain an exemption
from such qualification), and shall provide evidence of any such
action so taken to Investor.
c. Reservation of Shares. The Company shall at all times have authorized
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and reserved for the purpose of issuance, a sufficient number of
shares of Common Stock to provide for the full conversion of the
outstanding Preferred Shares and issuance of Underlying Shares in
connection therewith and for the full exercise of the Warrants and
issuance of Underlying Shares in connection therewith. If at any time
the number of shares of Common Stock authorized and reserved for
issuance is below the number of Underlying Shares issued and issuable
upon conversion of the Preferred Shares and exercise of the Warrants,
the Company will, within 45 days from such date, take all corporate
action necessary to authorize and reserve a sufficient number of
shares, including, without limitation, calling a special meeting of
shareholders to authorize additional shares to meet the Company's
obligations under this Section 4(c), in the case of an insufficient
number of authorized shares, and using its commercially reasonable
best efforts to obtain shareholder approval of an increase in such
authorized number of shares. Other than in connection with an
underwritten public offering or with respect to employee stock
options, prior to June 30, 2000, the Company will not sell any of its
equity or equity linked securities at a price per share less than
$2.16.
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d. Listing. The Company shall, no later than fourteen (14) business days
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after the Closing Date, secure the listing of the Underlying Shares
upon the NASDAQ and each national securities exchange or automated
quotation system, if any, upon which the shares of Common Stock are
then listed (subject to official notice of issuance) and shall
maintain, so long as any other shares of Common Stock shall be so
listed, such listing of all such Underlying Shares. The Company will
obtain and maintain the listing and trading of its Common Stock on the
NASDAQ, the Nasdaq SmallCap Market, the New York Stock Exchange, or
the American Stock Exchange as may then be applicable, and will comply
in all material respects with the Company's reporting, filing and
other obligations under the bylaws or rules of the NASD.
e. Transfer of Securities by Investor.
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(i) As set forth in this Section 4(i), each Investor shall have
limited rights to transfer the Securities before they are
registered under the 1933 Act or transferable under Rule 144.
Once the Securities are registered under the 1933 Act or
transferable under Rule 144, each Investor may transfer the
Securities as permitted by federal and state securities laws.
Prior to such time, each Investor may transfer the Securities
solely to (A) an Affiliate of the Investor (as such term is
defined in Rule 405 under the 1933 Act), (B) an entity solely in
connection with charitable contributions by the Investor or (C)
an individual or entity solely for estate planning purposes,
provided that written notice is provided to the Company five (5)
business days prior to any such assignment and immediately
following such assignment the further disposition of such
securities by the transferee or assignee is restricted under the
1933 Act and the transferee or assignee agrees in writing to be
bound by all of the provisions of this Agreement. All other
transfers of the Securities are prohibited unless such Investor
has obtained the Company's prior written consent.
(ii) At least five (5) business days prior to the date it intends
to transfer Securities (other than a sale after the Securities
are registered under the 1933 Act of less than 2% of the
Company's outstanding voting stock (computed on an as-converted
basis)), an Investor shall deliver to the Company a written
notice (the "Transfer Notice") stating: (A) the Investor's bona
fide intention to sell or otherwise transfer the Securities; (B)
the name and address of each permitted proposed purchaser or
other transferee ("Proposed Transferee"); (C) the quantity of
Securities to be transferred to each Proposed Transferee; and (D)
the terms and conditions of each proposed sale or transfer,
including the price. Any such sale or other transfer shall be
consummated within 30 days after the date of the Transfer Notice.
Any such sale or other transfer shall be effected in accordance
with any applicable securities laws and the Proposed Transferee
shall agree in writing that the provisions of this Section 4(e)
and the remaining restrictions and conditions contained in this
Agreement shall continue to apply to the Securities in the hands
of such Proposed Transferee. If the Securities described in the
Transfer Notice are not transferred to the Proposed Transferee
within such period, a new Transfer Notice shall be given
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to the Company before any Securities held by the Investor may be
sold or otherwise transferred.
f. Transactions with Affiliates. The Company agrees that to the extent
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it engages in transactions with Affiliates, it will do so upon fair
and reasonable terms, as if the transaction were with an unaffiliated
party.
g. Board Seat. Until such time as Essex Woodlands shall own less than 5%
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of the outstanding voting securities of the Company, they shall be
entitled to designate an individual, reasonably acceptable to the
Company, who shall be elected to serve as a member of the Board of
Directors of the Company. If necessary, the Board of Directors of the
Company will elect such individual to the Board of Directors by
creating a new position on the Board of Directors promptly following
the execution of this Agreement in connection with any stockholder
vote for Directors, and the Company will use its best efforts to
ensure that the stockholders of the Company agree to vote all their
securities in favor of such person's election. The Company agrees to
vote all voting securities for which the Company holds proxies,
granting it voting discretion, or is otherwise entitled to vote, in
favor of, and to use its best efforts in all respect to cause, the
election of the individual designated by Essex Woodlands. In the
event that a vacancy is created on the Board of Directors at any time
by the death, disability, resignation or removal (with or without
cause) of any such individual proposed and nominated by Essex
Woodlands pursuant to this Agreement, the Company will, and will use
its best efforts to ensure that the sotckholders of the Company, vote
all its voting securities to elect the individual proposed by Essex
Woodlands to fill such vacancy and serve as a voting Director.
5. TRANSFER AGENT INSTRUCTIONS. The Company shall issue irrevocable
instructions to its transfer agent to issue certificates, registered in the
name of the relevant Investor, for the Underlying Shares in such amounts as
specified from time to time by such Investor to the Company upon conversion
of the Preferred Shares and exercise of the Warrants in accordance with the
terms hereof, the Articles and the Warrants (as the case may be) (the
"Irrevocable Transfer Agent Instructions"). Subsequent to the registration
of the Underlying Shares under the 1933 Act and Section 2 of the
Registration Rights Agreement, no such certificates shall bear the
restrictive legend specified in Section 2(g) of this Agreement. The
Company warrants that no instruction other than the Irrevocable Transfer
Agent Instructions referred to in this Section 5, and stop transfer
instructions to give effect to Section 2(f) hereof (in the case of the
Underlying Shares, prior to registration of the Conversion Shares under the
1933 Act), will be given by the Company to its transfer agent and that the
Securities shall otherwise be freely transferable on the books and records
of the Company. Nothing in this Section shall affect in any way the
Investor's obligations and agreement set forth in Section 2(g) hereof to
comply with all applicable prospectus delivery requirements, if any, upon
resale of the Securities.
-11-
6. CONDITIONS TO THE COMPANY'S OBLIGATIONS. The obligation of the Company
hereunder issue and sell the Preferred Stock and the Warrants to the
Investor at the Closing is subject to the satisfaction, at or before the
Closing Date, respectively, of each of the following conditions thereto,
provided that these conditions are for the Company's sole benefit and may
be waived by the Company at any time in its sole discretion:
a. Representations and Warranties Correct. The representations and
--------------------------------------
warranties made by the Investor in this Agreement hereof shall be true
and correct in all material respects on and as of the Closing Date
with the same effect as though such representations and warranties had
first been made on and as of the Execution Date and such Closing Date,
respectively except for those representations and warranties that
address matters only as of a particular date (which shall remain true
and correct as of such particular date), with the same effect as
though such representations and warranties had first been made on and
as of the applicable Closing Date.
b. Performance. All covenants, agreements and conditions contained in
-----------
this Agreement to be performed by the Investor on or prior to the
applicable Closing Date shall have been performed or complied with in
all material respects.
c. Execution of Documents. The Investor shall have executed this
----------------------
Agreement and the Registration Rights Agreement and delivered the same
to the Company. As of the Closing Date, each such agreement shall
remain in full force and effect.
d. Articles. The Articles shall have been accepted for filing with the
--------
Secretary of State of the State of Washington.
e. No Order Pending. There shall not then be in effect any order
----------------
enjoining or restraining the transactions contemplated by this
Agreement.
f. No Law Prohibiting or Restricting Such Sale. There shall not be in
-------------------------------------------
effect any law, rule or regulation prohibiting or restricting such
sale, or requiring any consent or approval of any person which shall
not have been obtained to issue the Securities (except as otherwise
provided in this Agreement).
7. CONDITIONS TO INVESTOR'S OBLIGATIONS. The obligation of each Investor
hereunder (i) to execute this Agreement and (ii) to purchase the Securities
is subject to the satisfaction, at or before the Closing Date, of each of
the following conditions, provided that these conditions are such
Investor's sole benefit and may be waived by Investor at any time in its
sole discretion:
a. Representations and Warranties Correct. The representations and
--------------------------------------
warranties made by the Company in Section 4 shall be true and correct
in all material respects on and as of the Execution Date or the
Closing Date, respectively, except for changes contemplated by this
Agreement and except for those representations and warranties that
address matters only as of a particular date (which shall remain true
and correct as of such particular date), with the same effect as
through such representations and warranties had been made on and as of
the Execution Date or the Closing Date, respectively, except in all
cases where the failure of such representations and
-12-
warranties to be so true and correct would not (with respect to
representations and warranties not qualified by an Adverse Effect
clause), individually or in the aggregate, reasonably be expected to
have an Adverse Effect on the Company and its subsidiaries, taken as a
whole.
b. Performance. All covenants, agreements and conditions contained in
-----------
the Transaction Documents to be performed by the Company on or prior
to the Closing Date shall have been performed or complied with in all
material respects.
c. Execution of Documents. The Company shall have executed this
----------------------
Agreement, the Registration Rights Agreement and delivered the same to
the Investor. As of the Closing Date each such agreement shall remain
in full force and effect.
d. Articles. The Articles shall have been accepted for filing with the
--------
Secretary of State of the State of Washington.
e. No Order Pending. There shall not then be in effect any order
----------------
enjoining or restraining the transactions contemplated by this
Agreement.
f. No Law Prohibiting or Restricting Sale. There shall not be in effect
--------------------------------------
any law, rule or regulation prohibiting or restricting such sale, or
requiring any consent or approval of any person which shall not have
been obtained to issue the Securities (except as otherwise referenced
in this Agreement).
g. Legal Opinion. The Investor shall have received an opinion of the
-------------
Company's counsel, dated as of the Closing Date, in customary form and
otherwise reasonably acceptable by Investor.
h. Insolvency. The Company is not insolvent and no Insolvency Proceeding
----------
has been commenced by or against the Company. As used herein,
"Insolvency Proceeding" means any proceeding commenced by or against
any person or entity under any provision of the United States
Bankruptcy Code, as amended, or under any other bankruptcy or
insolvency law, including assignments for the benefit of creditors,
formal or informal moratoria, compositions, extension generally with
its creditors, or proceedings seeking reorganization, arrangement, or
other relief.
i. Reporting Status. The Company shall have filed all reports required
----------------
to be filed with the SEC pursuant to the Exchange Act, and the
Company's status as an issuer required to file reports under the
Exchange Act shall be effective.
8. GOVERNING LAW; MISCELLANEOUS.
a. Governing Law. This Agreement and all acts and transactions pursuant
-------------
hereto and the rights and obligations of the parties hereto shall be
governed, construed and interpreted in accordance with the laws of the
State of New York, without giving effect to principles of conflicts of
law. The parties hereby irrevocably submit to the non-exclusive
jurisdiction of the state and federal courts sitting in the City of
New
-13-
York, borough of Manhattan, for the adjudication of any dispute
hereunder or in connection herewith or with any transaction
contemplated hereby or discussed herein (including with respect to the
enforcement of the any of the Transaction Documents), and hereby
irrevocably waives, and agrees not to assert in any suit, action or
proceeding, any claim that it is not personally subject to the
jurisdiction of any such court, that such suit, action or proceeding
is improper.
b. Counterparts; Signatures by Facsimile. This Agreement may be executed
-------------------------------------
in counterparts and each such counterpart shall be deemed an original
for all purposes. In the event that any signature is delivered by
facsimile transmission, such signature shall create a valid and
binding obligation of the party executing (or on whose behalf such
signature is executed) the same with the same force and effect as if
such facsimile signature page were an original thereof.
c. Captions and Headings. The captions and headings of this Agreement
---------------------
are for convenience and ease of reference only and are not intended to
be a part of or to affect the meaning or interpretation of this
Agreement.
d. Severability. If any term, provision, covenant or restriction of this
------------
Agreement is held by a court of competent jurisdiction to be invalid,
void or unenforceable, the remainder of the terms, provisions,
covenants and restrictions of this Agreement shall remain in full
force and effect and shall in no way be affected, impaired or
invalidated.
e. Entire Agreement; Amendment. This Agreement, the Warrant, the
---------------------------
Registration Rights Agreement and the other documents delivered
pursuant hereto constitute the full and entire understanding and
agreement between the parties with regard to the subject matter hereof
and thereof and supersede all prior agreements and understandings
among the parties relating to the subject matter hereof. Neither this
Agreement nor any term hereof may be amended, waived, discharged or
terminated other than by a written instrument signed by the party
against which enforcement of any such amendment, waiver, discharge or
termination is sought.
f. No Third Party Rights. Nothing in this Agreement shall create or be
---------------------
deemed to create any rights in any person or entity not a party to
this Agreement.
g. Survival. Unless otherwise set forth in this Agreement, the
--------
warranties, representations and covenants of the Company and the
Investor contained in or made pursuant to this Agreement shall survive
the execution and delivery of this Agreement and the Closing.
h. Publicity. Each Investor and the Company shall not issue any public
---------
statement concerning the transactions contemplated by this Agreement
without the prior written consent of the parties named in such public
statement not to be unreasonably withheld; provided, however, that the
parties may disclose the transaction or the terms hereof or thereof
from time to time without the approval of the party whose name is
disclosed if (i) such approval has been requested and not received and
such party concludes (after consulting with counsel) that it is
required by law to disclose
-14-
the transaction or the terms thereof or (ii) to the extent that
similar disclosure has been previously approved pursuant to this
Section 8(h). In addition, with respect to any press releases issued
by the Company, the Company shall provide copies to the Investors
prior to public dissemination thereof and shall consider Investors'
comments to such press release, if any, in good faith.
i. No Strict Construction. The language used in this Agreement will be
----------------------
deemed to be the language chosen by the parties to express their
mutual intent, and no rules of strict construction will be applied
against any party.
j. Costs and Expenses. Each party hereto shall pay its own costs and
------------------
expenses incurred in connection herewith, including the fees of its
counsel, auditors and other representatives, whether or not the
transactions contemplated herein are consummated.
k. Brokers. The Company has not engaged, consented to or authorized any
-------
broker, finder or intermediary to act on its behalf, directly or
indirectly, as a broker, finder or intermediary in connection with the
transactions contemplated by this Agreement, except for Paramount
Capital, Inc. The Company hereby agrees to indemnify and hold
harmless each Investor and its respective Affiliates from and against
all fees, commissions or other payments owing to any party acting on
behalf of the Company hereunder.
l. Notices. Any notices required or permitted to be given under the
-------
terms of this Agreement shall be sent by certified or registered mail
(return receipt requested) or delivered personally or by courier
(including a recognized overnight delivery service) or by facsimile
and shall be effective five days after being placed in the mail, if
mailed by regular U.S. mail, or upon receipt, if delivered personally
or by courier (including a recognized overnight delivery service) or
by facsimile, in each case addressed to a party. The addresses for
such communications shall be:
If to the Company:
Cell Therapeutics, Inc.
201 Elliott Avenue West, Suite 400
Seattle, Washington 98119
Attention: James Bianco, Chief Executive Officer
Facsimile: (206) 284-6114
With copy to:
Wilson Sonsini Goodrich & Rosati
975 Page Mill Road
Palo Alto, California 94304
Facsimile: (650) 461-5375
Attention: Michael J. Kennedy, Esq.
If to Investor at its address set forth on its Signature Page.
-15-
Each party shall provide notice to the other party of any change in
address.
m. Successors and Assigns. This Agreement shall be binding upon and
----------------------
inure to the benefit of the parties and their successors and permitted
assigns. Neither the Company nor any Investor may assign this
Agreement or any rights or obligations hereunder without the prior
written consent of the other. This Agreement shall be binding upon
and shall inure to the benefit of the parties hereto and their
respective successors and permitted assigns.
n. Remedies. In addition to being entitled to exercise all rights
--------
provided herein or granted by law, including recovery of damages, each
Investor will be entitled to specific performance of the obligations
of the Company under the Transaction Documents. The Company and each
Investor agree that monetary damages may not be adequate compensation
for any loss incurred by reason of any breach of its obligations
described in the foregoing sentence and hereby agrees to waive in any
action for specific performance of any such obligation the defense
that a remedy at law would be adequate.
o. Dividends. Notwithstanding anything to the contrary contained in the
---------
Articles, the Company will pay to each Investor four annual dividend
payments in accordance with Section 2 of the Articles with respect to
the Preferred Stock held by the Investor, notwithstanding any
conversion, redemption or sale of the Preferred Stock held by such
Investor. The dividend right provided for herein is personal to the
Investor and may not be assigned to any third party without the
Company's prior written consent, except pursuant to assignments made
in accordance with of this Agreement.
-16-
IN WITNESS WHEREOF, the undersigned Investor and the Company have caused
this Agreement to be duly executed as of the date first above written.
CELL THERAPEUTICS, INC.
By:_____________________________________
Name: James Bianco
Title: Chief Executive Officer
-17-
INVESTOR SIGNATURE PAGE
THE ARIES MASTER FUND
By:________________________ 1,688 Shares of Preferred
Name:______________________ 257,219 Warrants
Title:_____________________
c/o Paramount Capital Asset
Management, Inc.
787 Seventh Avenue
48th Floor
New York, NY 10019
-18-
INVESTOR SIGNATURE PAGE
ARIES DOMESTIC FUND, L.P.
By:_______________________ 684 Shares of Preferred
Name:_____________________ 104,229 Warrants
Title:____________________
c/o Paramount Capital Asset
Management, Inc.
787 Seventh Avenue
48th Floor
New York, NY 10019
-19-
INVESTOR SIGNATURE PAGE
ARIES DOMESTIC FUND II, L.P.
By:________________________ 53 Shares of Preferred
Name:______________________ 8,076 Warrants
Title:_____________________
c/o Paramount Capital Asset
Management, Inc.
787 Seventh Avenue
48th Floor
New York, NY 10019
-20-
INVESTOR SIGNATURE PAGE
ESSEX WOODLANDS HEALTH
VENTURES FUND IV, L.P.
By:___________________________ 6,000 Shares of Preferred
Name:_________________________ 914,286 Warrants
Title:________________________
15001 Walden Road
Suite 101
Montgomery, TX 77356
-21-
INVESTOR SIGNATURE PAGE
CADUCEUS CAPITAL TRUST
By:__________________________ 668 Shares of Preferred
Name:________________________ 101,791 Warrants
Title:_______________________
c/o Orbimed Advisors, LLC
767 Third Avenue
New York, NY 10017
-22-
INVESTOR SIGNATURE PAGE
CADUCEUS CAPITAL II, L.P.
By:_________________________ 332 Shares of Preferred
Name:_______________________ 50,590 Warrants
Title:______________________
c/o Orbimed Advisors, LLC
767 Third Avenue
New York, NY 10017
-23-
INVESTOR SIGNATURE PAGE
WAYNE ROTHBAUM
By:_______________________ 200 Shares of Preferred
Name:_____________________ 30,476 Warrants
Title:____________________
c/o Carson Group
156 W. 56th Street
10th Floor
New York, NY 10019
-24-
INVESTOR SIGNATURE PAGE
STEVEN OLIVERA
By:________________________ 200 Shares of Preferred
Name:______________________ 30,476 Warrants
Title:_____________________
4 Piper Court
Blauvelt, NY 10913
-25-
INVESTOR SIGNATURE PAGE
JOSEPH EDELMAN
By:_______________________ 100 Shares of Preferred
Name:_____________________ 15,238 Warrants
Title:____________________
c/o First New York Securities
850 Third Avenue
New York, NY 10022
-26-
INVESTOR SIGNATURE PAGE
MITCHELL SILBER
By:______________________ 75 Shares of Preferred
Name:____________________ 11,429 Warrants
Title:___________________
C/o Carson Group
156 W. 56th Street
10th Floor
New York, NY 10019
-27-