Exhibit 4.6
PREFERRED STOCK PURCHASE AGREEMENT
PREFERRED STOCK PURCHASE AGREEMENT (the "Agreement"), dated as of December
3, 1997 by and between ImClone Systems Incorporated, a Delaware corporation,
with a principal place of business at ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇,
▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇ (the "Company"), and Merck ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇,
D-64271, ▇▇▇▇▇▇▇▇▇ ▇, ▇▇▇▇▇▇▇ (the "Buyer").
WHEREAS:
A. The Company and the Buyer 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 Buyer wishes to purchase, in the amounts and upon the terms and
conditions stated in this Agreement, shares of the Company's Series A
Convertible Preferred Stock, $1.00 par value per share (the "Series A Preferred
Stock"); and
"C. WHEREAS, the parties have also on this day entered into an amendment
to their Research and License Agreement dated December 19, 1990, as previously
amended by amendments dated each of September 1, 1993, November 2, 1993 and May
14, 1996" (the "Amendment").
NOW THEREFORE, the Company and the Buyer hereby agree as follows:
1. PURCHASE AND SALE OF PREFERRED STOCK.
a. Purchase of Preferred Stock. The Company shall issue and sell to the
Buyer on the Closing Date (as defined below) and the Buyer shall purchase
400,000 shares of Series A Convertible Preferred Stock (the "Series A Preferred
Shares"), which shall be convertible into shares (the "Conversion Shares") of
the Company's common stock, $.001 par value (the "Common Stock") in accordance
with the terms of the form of Certificate of Designations, Preferences and
Rights of Series A Convertible Preferred Stock attached hereto as Exhibit A (the
"Certificate of Designations"). The per share purchase price for the Series A
Preferred Shares shall be One Hundred Dollars ($100).
b. Form of Payment. The Buyer shall pay the $40,000,000 purchase price for
the Series A Preferred Shares (the "Purchase Price") by wire transfer of United
States Dollars to the Company on the Closing Date (as defined below). The
Company shall deliver to the Buyer a stock certificate, duly executed on behalf
of the Company, representing the Series A Preferred Shares (the "Stock
Certificate") on the Closing Date.
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c. Closing Date. The date and time of the issuance and sale of the Series
A Preferred Shares (the "Closing Date") shall be no later than 4:00 p.m. New
York Eastern Standard Time on December 15, 1997 or such other date to which the
parties may mutually agree.
2. BUYER REPRESENTATIONS AND WARRANTIES
The Buyer represents and warrants to the Company that:
a. Organization and Qualification. The Buyer is a corporation duly
organized and existing in good standing under the laws of the jurisdiction in
which it is incorporated. The Buyer is duly qualified as a foreign corporation
to do business and is in good standing in every jurisdiction in which the nature
of the business conducted by it makes such qualification necessary and where the
failure so to qualify would have a Material Adverse Effect on it. "Material
Adverse Effect" means any material adverse effect on operations, properties or
financial condition.
b. Investment Purpose. The Buyer is purchasing the Series A Preferred
Shares for its own account for investment only and not with a view towards the
public sale or distribution thereof except pursuant to sales registered under
the 1933 Act or an exemption therefrom.
c. Accredited Investor Status. The Buyer is an "accredited investor" as
that term is defined in Rule 501(a)(3) of Regulation D.
d. Reliance on Exemptions. The Buyer understands that the Series A
Preferred Shares are being offered and sold to it in reliance on 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 Buyer's compliance with, the representations, warranties, agreements,
acknowledgments and understandings of the Buyer set forth herein in order to
determine the availability of such exemption and the eligibility of the Buyer to
acquire the Series A Preferred Shares.
e. Information. The Buyer and its advisors, if any, have been furnished
with all materials relating to the business, finances and operations of the
Company and materials relating to the offer and sale of the Series A Preferred
Shares which have been requested by the Buyer. The Buyer and its advisors, if
any, have been afforded the opportunity to ask questions of the Company and have
received complete and satisfactory answers to any such inquiries. The Buyer
understands that its investment in the Series A Preferred Shares involves a high
degree of risk.
f. Governmental Review. The Buyer understands that no United States
federal or state agency or any other government or governmental agency has
passed on or made any recommendation or endorsement of the Series A Preferred
Shares.
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g. Transfer or Resale. The Buyer understands that (i) the Series A
Preferred Shares and the Conversion Shares have not been and are not being
registered under the 1933 Act or any United States state securities laws or any
other laws, and may not be transferred unless (a) subsequently registered
thereunder, or (b) the Buyer shall have delivered to the Company an opinion of
counsel, reasonably satisfactory in form, scope and substance 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; (ii) any sale of
such securities made in reliance on Rule 144 promulgated under the 1933 Act may
be made only in accordance with the terms of said Rule and further, if said Rule
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 ▇▇▇▇ ▇▇▇) may require compliance
with some other exemption under the 1933 Act or the rules and regulations of the
SEC thereunder; and (iii) except as specified in this Agreement, 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. The Buyer agrees that in no event will
it make a disposition of such securities unless and until it shall have first
(i) notified the Company of the proposed disposition and shall have furnished
the Company with a statement of the circumstances surrounding the proposed
disposition; and (ii) with respect to the Series A Preferred Shares, it shall
have obtained the prior written consent of the Company.
h. Legends. The Buyer understands that the Series A Preferred Shares and
the Conversion Shares may bear a restrictive legend in substantially the
following form (and a stop-transfer order may be placed against transfer of such
stock certificates):
The securities represented by this certificate have not been registered
under the United States Securities Act of 1933, as amended. The securities
have been acquired for investment and may not be sold, transferred or
assigned unless an effective registration statement for the securities
under said Act, or an opinion of counsel, reasonably satisfactory in form,
scope and substance to the Company, that registration is not required
under said Act has been received. The securities represented by this
certificate are subject to certain restrictions on transfer as set forth
in a Preferred Stock Purchase Agreement dated as of December 3, 1997, a
copy of which is available for inspection at the executive offices of the
Company.
i. Authorization; Enforcement. This Agreement has been duly and validly
authorized, executed and delivered on behalf of the Buyer and is a valid and
binding agreement of the Buyer enforceable in accordance with its terms, subject
as to enforceability to general principles of equity and to bankruptcy,
insolvency, moratorium, and other similar laws affecting the enforcement of
creditors' rights generally.
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3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
The Company represents and warrants to the Buyer that:
a. Organization and Qualification. The Company is a corporation duly
organized and existing in good standing under the laws of the jurisdiction in
which it is incorporated. The Company is duly qualified as a foreign corporation
to do business and is in good standing in every jurisdiction in which the nature
of the business conducted by it makes such qualification necessary and where the
failure so to qualify would have a Material Adverse Effect on it.
b. Authorization; Enforcement. This Agreement has been duly and validly
authorized, executed and delivered on behalf of the Company and is a valid and
binding agreement of the Company enforceable in accordance with its terms,
subject as to enforceability to general principles of equity and to bankruptcy,
insolvency, moratorium, and other similar laws affecting the enforcement of
creditors' rights generally.
c. Capitalization. The authorized capital stock of the Company consists of
(i) 45,000,000 shares of Common Stock of which 24,185,955 shares were
outstanding as of September 30, 1997, and (ii) 4,000,000 shares of Preferred
Stock, $1.00 par value, none of which were issued and outstanding. All of such
outstanding shares have been validly issued and are fully paid and
nonassessable. No shares of Common Stock or Preferred Stock are subject to
preemptive rights or any other similar rights of the stockholders of the Company
or any liens or encumbrances. The Company has furnished to the Buyer true and
correct copies of the Company's Certificate of Incorporation, as amended, as in
effect on the date hereof ("Certificate of Incorporation") and the Company's
By-laws, as in effect on the date hereof (the "By-laws").
d. Issuance of Shares. The Series A Preferred Shares are duly authorized
and, upon issuance in accordance with the terms hereof, shall be validly issued,
fully paid and non-assessable, and free from all taxes, liens and charges with
respect to the issue thereof.
e. No Conflicts. The execution, delivery and performance of this Agreement
by the Company and the consummation by the Company of the transactions
contemplated hereby will not result in a violation of the Company's Certificate
of Incorporation or By-laws or cause the Company to be in breach of any
agreement by which it is bound. The business of the Company is not being
conducted in violation of any law, ordinance or regulation of any governmental
entity, except for possible violations which either singly or in the aggregate
do not have a Material Adverse Effect. Except as required under the 1933 Act and
any applicable United States state securities laws, the Company is not required
to obtain any consent, authorization or order of, or make any filing or
registration with, any court or governmental agency in order for it to execute,
deliver or perform any of its obligations under this Agreement in accordance
with the terms hereof.
f. Absence of Litigation. There is no action, suit, proceeding, inquiry or
investigation before or by any court, public board or body pending or, to the
knowledge of the Company, threatened against or affecting the Company, wherein
an unfavorable decision, ruling or finding
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would have a Material Adverse Effect or which would adversely affect the
validity or enforceability of, or the authority or ability of the Company to
perform its obligations under, this Agreement of any of the documents
contemplated herein.
g. No Material Adverse Change. Since September 30, 1997 there has occurred
no change which could reasonably be expected to have a Material Adverse Effect
on the Company.
4. COVENANTS
a. Best Reasonable Efforts. The parties shall use their best reasonable
efforts timely to satisfy each of the conditions described in Section 5 and 6 of
this Agreement.
b. Form D, Blue Sky Laws. The Company agrees to file a Form D with respect
to the Series A Preferred Stock as required under Regulation D. The Company
shall, on or before the Closing Date, take such action as the Company shall
reasonably determine is necessary to qualify the Series A Preferred Stock for,
or obtain exemption for the Series A Preferred Stock for, sale to the Buyer at
the closing pursuant to this Agreement under applicable securities or "blue sky"
laws of the states of the United States.
c. Reservation of Shares. The Company shall at all times have authorized,
and reserved for the purpose of issuance, a sufficient number of shares of
Common Stock to provide for the conversion of the Series A Preferred Shares.
d. Market Stand-Off Agreement. The Buyer hereby agrees that, during the
period of duration specified by the Company and an underwriter of Common Stock
or other securities of the Company, following the effective date of a
registration statement of the Company filed under the 1933 Act, the Buyer and
any Affiliate (as that term is defined under Rule 405 under the ▇▇▇▇ ▇▇▇) shall
not, to the extent requested by the Company and such underwriter, directly or
indirectly sell, offer to sell, contract to sell (including, without limitation,
any short sale), grant any option to purchase or otherwise transfer or dispose
of (other than to donees who agree to be similarly bound) any securities of the
Company held by it at any time except insofar as such securities are covered by
such registration statement; provided, however, that such agreement shall not
exceed 90 days.
In order to enforce the foregoing covenant, the Company may impose
stop-transfer instructions with respect to such securities of the Buyer (and the
shares or securities of every other person subject to the foregoing restriction)
until the end of such period.
e. Stand-Still Agreement. Except for the acquisition of Conversion Shares,
for the exercise of any rights as a holder of Conversion Shares or as otherwise
contemplated by this Agreement, the Buyer hereby agrees that for a period of
five years from the date hereof, without the prior written consent of the
Company, neither the Buyer nor any Affiliate (as that term is defined in Rule
405 under the ▇▇▇▇ ▇▇▇) of the Buyer (regardless of whether such person or
entity is an Affiliate on the date hereof) will (i) acquire, offer to acquire,
or agree to acquire, directly or
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indirectly, by purchase or otherwise, any voting securities or direct or
indirect rights or options to acquire any voting securities of the Company, (ii)
make, or in any way participate, directly or indirectly, in any "solicitation"
of "proxies' to vote (as such terms are used in the proxy rules of the SEC), or
seek to advise or influence any person or entity with respect to the voting of
any voting securities of the Company, (iii) form, join or in any way participate
in a "group" within the meaning of Section 13(d) (3) of the United States
Securities Exchange Act of 1934, as amended with respect to any voting
securities of the Company, or (iv) otherwise act, alone or in concert with
others, to seek to control or influence the management, board of directors or
policies of the Company. Buyer acknowledges that the Company would not have an
adequate remedy at law for money damages in the event that this covenant were
not performed in accordance with its terms and therefore agree that the Company
shall be entitled to specific enforcement of the terms hereof in addition to any
other remedy to which it may be entitled, at law or in equity.
f. Resales of Conversion Shares. Except pursuant to a registration
statement provided in Article 8 hereof, the Buyer hereby agrees that Conversion
Shares shall only be sold by it and any Affiliate (as defined in Rule 405 under
the ▇▇▇▇ ▇▇▇) in accordance with the following:
(i) Conversion Shares relating to Tranche I (as defined in the
Certificate of Designations) (a) shall not be sold prior to December 31, 1998;
and (b) shall not be sold during the period December 31, 1998 through December
31, 1999 in an amount that is excess of that amount specified in Rule 144 (e)
(1) of the 1933 Act.
(ii) Conversion Shares relating to Tranche II (as defined in the
Certificate of Designations) (a) shall not be sold prior to December 31, 2000;
and (b) shall not be sold during the period December 31, 2000 through December
31, 2001 in an amount that is in excess of that amount specified in Rule 144 (e)
(1) of the 1933 Act.
(iii) Conversion Shares relating to Tranche III (as defined in the
Certificate of Designations) (a) shall not be sold prior to December 31, 2001;
and (b) shall not be sold during the period December 31, 2001 through December
31, 2002 in an amount that is in excess of that amount specified in Rule 144 (e)
(1) of the 1933 Act.
(iv) Conversion Shares relating to Tranche IV (as defined in the
Certificate of Designations) (a) shall not be sold prior to December 31, 2002;
and (b) shall not be sold during the period December 31, 2002 through December
31, 2003 in an amount that is in excess of that amount specified in Rule 144 (e)
(1) of the 1933 Act.
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5. CONDITIONS TO THE COMPANY'S OBLIGATION TO SELL.
The obligation of the Company hereunder to sell the Series A Preferred
Shares is subject to the satisfaction, at or before the Closing Date, of each of
the following conditions, 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. The parties shall have executed this Agreement and delivered the same
to each other.
b. The Buyer shall have delivered the Purchase Price to the Company.
c. The representations and warranties of the Buyer shall be true and
correct in all material respects as of the date when made and as of the Closing
Date as though made at that time (except for representations and warranties that
speak as of a specific date), and the Buyer shall have performed, satisfied and
complied in all material respects with the covenants, agreements and conditions
required by this Agreement to be performed, satisfied or complied with by the
Buyer at or prior to the Closing Date and an officers' certificate to such
effect delivered to the Company.
d. The parties shall have executed the Amendment.
6. CONDITIONS TO THE BUYER'S OBLIGATION TO PURCHASE.
The obligation of the Buyer hereunder to purchase the Series A Preferred
Shares is subject to the satisfaction, at or before the Closing Date, of each of
the following conditions, provided that these conditions are for the Buyer's
sole benefit and may be waived by the Buyer at any time in its sole discretion:
a. The parties shall have executed this Agreement and delivered the same
to each other.
b. The Company shall have caused the Certificate of Designations to be
filed with the Secretary of State for the State of Delaware of the United States
at or before the Closing Date.
c. The representations and warranties of the Company shall be true and
correct in all material respects as of the date when made and as of the Closing
Date as though made at that time (except for representations and warranties that
speak as of a specific date) and the Company shall have performed, satisfied and
complied in all material respects with the covenants, agreements and conditions
required by this Agreement to be performed, satisfied or complied with by the
Company at or prior to the Closing Date and an officers' certificate to such
effect delivered to the Buyer.
d. The Company shall have delivered to the Buyer the Stock Certificate.
e. The parties shall have executed the Amendment.
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7. REGISTRATION RIGHTS
The Buyer shall have the right to request, once for Conversion Shares
relating to each tranche, that the Company effect registration with respect to
all or part of Conversion Shares relating to the relevant tranche. Upon written
request of the Buyer in compliance with the preceding sentence that the Company
effect registration with respect to all or a part of the Registrable Securities,
the Company will, as expeditiously as reasonably possible:
a. prepare and file with the Commission a registration statement on Form
S-3 or on any form for which the Company then qualifies or which counsel for the
Company shall deem appropriate, as the case may be, and which form shall be
available for the sale of the Registrable Securities; provided, that before
filing with the Commission a registration statement or prospectus or any
amendments or supplements thereto, the Company will (i) furnish to one counsel
selected by the Buyer copies of all such documents proposed to be filed, which
documents will be subject to reasonable advance review of such counsel, and (ii)
notify the Buyer of any stop order issued or threatened by the Commission and
take all reasonable actions required to prevent the entry of such stop order or
to remove it if entered;
b. keep such registration effective for a period of no longer than two (2)
years after the date of filing of such registration statement or until the Buyer
has completed the distribution described in the registration statement relating
thereto, whichever first occurs;
c. prepare and file with the Commission such amendments and supplements to
such registration statements and the Prospectus used in connection with such
registration statement as may be necessary to comply with the provisions of the
1933 Act with respect to the disposition of all securities covered by such
registration statement;
d. furnish to the Buyer such number of copies of such registration
statement, each amendment and supplement thereto (in each case including all
exhibits thereto), the Prospectus included in such registration statement
(including each preliminary prospectus), in conformity with the requirements of
the 1933 Act and such other documents as the Buyer may reasonably request in
order to facilitate the disposition of the Registrable Securities owned by the
Buyer;
e. advise the Buyer and the managing underwriters, if any, and, if
requested by the Buyer or the managing underwriters, if any, confirm such advice
in writing, when a registration statement or any amendment thereto has been
filed with the Commission and when the registration statement or any
post-effective amendment thereto has become effective;
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f. use its best efforts to obtain the withdrawal of any order suspending
the effectiveness of any registration statement, or the lifting of any
suspension of the qualification (or exemption from qualification) of the
Registrable Securities for sale in any jurisdiction, at the earliest possible
time;
g. cause all such Registrable Securities to be listed on each securities
exchange on which similar securities issued by the Company are then listed;
h. provide a transfer agent and registrar for all such Registrable
Securities not later than the effective date of such registration statement;
i. immediately notify the Buyer at any time when a Prospectus relating
thereto is required to be delivered under the 1933 Act, of the happening of any
event as a result of which the Prospectus included in such registration
statement contains an untrue statement of a material fact or omits to state any
material fact required to be stated therein or necessary to make the statements
therein not misleading in light of the circumstances then existing, and will
promptly prepare and furnish to the Buyer a supplement or amendment to such
Prospectus so that, as thereafter delivered to the purchasers of the Registrable
Securities, such Prospectus will not contain an untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary to make the statements therein not misleading in light of the
circumstances then existing;
j. make available for inspection by the Buyer, any underwriter
participating in any disposition pursuant to such registration statement, and
any attorney, accountant or other agent retained by the Buyer or underwriter
(collectively, the "Inspectors"), all financial and other records, pertinent
corporate documents and properties of the Company (collectively, the "Records")
as shall be reasonably necessary to enable them to exercise their due diligence
responsibility, and cause the Company's officers, directors and employees to
supply all information reasonably requested by any such Inspectors in connection
with such registration statement; provided, however, that such Inspectors shall
first agree in writing with the Company that any Records that are reasonably and
in good faith designated by the Company as confidential at the time of delivery
of such Records shall be kept confidential by such Inspectors; and
k. in connection with underwritten offerings, use its reasonable best
efforts to obtain a comfort letter from the Company's independent public
accountants in customary form and covering such matters of the type customarily
covered by comfort letters as the Buyer reasonably requests.
The Buyer agrees that, upon receipt of any notice from the Company of the
happening of any event of the kind described in Section 7(i) hereof, the Buyer
will forthwith discontinue disposition of Registrable Securities pursuant to the
registration statement covering such Registrable Securities until the Buyer's
receipt of the copies of the supplemented or amended Prospectus contemplated by
Section 7(i) hereof, and, if so directed by the Company, the Buyer will deliver
to the Company (at the Company's expense) all copies, other than permanent file
copies then in the Buyer's possession, of the Prospectus covering such
Registrable Securities current at the time of receipt of such notice.
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8. PIGGYBACK REGISTRATION
If the Company proposes to file a registration statement under the 1933
Act with respect to an offering by the Company of any class of securities after
the Closing Date (other than a registration statement on Form S-4 or S-8 or any
successor form to such Forms, or filed in connection with a merger, exchange
offer or an offering of securities solely to the existing stockholders in
connection with a merger, exchange offer or an offering of securities solely to
the existing stockholders in connection with a rights offering or solely to
employees of the Company), then the Company shall give written notice of such
proposed filing to the Buyer at least twenty days before the anticipated filing
date, and such notice shall offer Buyer the opportunity to register such amount
of Registrable Securities as Buyer may request. The Company shall use its best
efforts to cause the managing underwriter or underwriters of a proposed
underwritten offering to permit the Buyer to include such securities in such
offering on the same terms and conditions as any similar securities of the
Company included therein. Notwithstanding the foregoing, (i) if the managing
underwriter or underwriters of such proposed underwritten offering delivers a
written notice to the Buyer that the total amount of securities which the Buyer,
the Company and any other persons or entities (other than such other persons or
entities with whom the Company has agreements on the date hereof prohibiting
reduction or limitation as contemplated herein) having registration rights,
intend to include in such offering is sufficiently large as to materially and
adversely affect the success of such offering, then the amount of securities to
be offered for the accounts of the Buyer and for the accounts of such other
persons or entities shall be reduced or limited in proportion to their
respective amounts of securities to the extent necessary to reduce the total
amount of securities to be included in such offering to the amount recommended
by such managing underwriter; provided, that no reduction shall be made in the
securities to be offered for the account of the Company; and (ii) if such
proposed underwritten offering involves only equity securities and the managing
underwriter or underwriters thereof shall have delivered a written notice to the
Buyer that the inclusion of any Registrable Securities in such offering will
materially and adversely affect the success of such offering, then no
Registrable Securities shall be included in such offering.
9. EXPENSES OF REGISTRATION.
All Registration Expenses incurred in connection with any registration,
qualification or compliance pursuant to Section 7 or Section 8 hereof shall be
borne by the Company. All Selling Expenses relating to securities so registered
shall be borne by the Buyer.
10. INDEMNIFICATION.
a. Indemnification by the Company. The Company will, and it hereby does,
agree to indemnify and hold harmless, to the full extent permitted by law, the
Buyer, its directors and officers and each other person, if any, who controls
the Buyer within the meaning of the 1933 Act or the Exchange Act, against any
and all losses, claims, damages or liabilities, joint or several, and expenses
(including any amounts personally paid in any settlement) to which the Buyer,
any such director or officer or controlling person may become subject under the
1933 Act, common law or otherwise, insofar as such losses, claims, damages or
liabilities (or actions or proceedings in respect
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thereof) or expenses arise out of or are based upon (i) any untrue statement or
alleged untrue statement of any material fact contained in any registration
statement under which such securities were registered under the 1933 Act, any
preliminary, final or summary prospectus contained therein, or any amendment or
supplement thereto, or (ii) any omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, and the Company will reimburse the Buyer and each such
director, officer or controlling person for any legal or any other expenses
reasonably incurred by them in connection with investigating or defending such
loss, claim, liability, action or proceedings; provided, that the Company shall
not be liable in any such case to the extent that any such loss, claim, damage,
liability (or action or proceeding in respect thereof) or expenses arises out of
or is based upon any untrue statement or alleged untrue statement or omission or
alleged omission made in such registration statement or amendment or supplement
thereto or in any such preliminary, final or summary prospectus in reliance upon
and in conformity with written information furnished to the Company by the Buyer
for use in the preparation thereof; and provided, further, that the Company will
not be liable to the Buyer or any other person, if any, who controls the Buyer,
under the indemnity agreement in this Section 10(a) with respect to any
preliminary prospectus as amended or supplemented as the case may be, to the
extent that any such loss, claim, damage or liability of the Buyer or
controlling person results from the fact that the Buyer sold Registrable
Securities to a person to whom there was not sent or given, at or prior to the
written confirmation of such sale, a copy of the final prospectus (including any
documents incorporated by reference therein), whichever is most recent, if the
Company has previously furnished copies thereof to the Buyer and such final
prospectus, as then amended or supplemented, has corrected any such misstatement
or omission. Such indemnity shall remain in full force and effect regardless of
any investigation made by or on behalf of the Buyer or any such director,
officer or controlling person and shall survive the transfer of such securities
by the Buyer. It is agreed that the indemnity agreement contained in this
Section 10(a) shall not apply to amounts paid in settlement of any such loss,
claim, damage, liability, or action if such settlement is effected without the
consent of the Company (which consent has not been unreasonably withheld).
b. Indemnification by the Buyer. The Buyer will, if the Registrable
Securities are included in the securities as to which such registration,
qualification, or compliance is being effected, indemnify and hold harmless (in
the same manner and to the same extent as set forth in subdivision (a) of this
Section 10) the Company, any underwriter and their respective controlling
persons within the meaning of the 1933 Act and the Exchange Act, and all other
prospective sellers and their respective controlling persons with respect to any
statement or alleged statement in or omission or alleged omission from such
registration statement, any preliminary, final or summary prospectus contained
therein, or any amendment or supplement, if such statement or alleged statement
or omission or alleged omission was made in reliance upon and in conformity with
written information furnished to the Company by the Buyer for use in the
preparation of such registration statement, preliminary, final or summary
prospectus or amendment or supplement, or a document incorporated by reference
into any of the foregoing. Such indemnity shall remain in full force and effect
regardless of any investigation made by or on behalf of the Company or any
underwriter or any of the Buyer or any of its directors, officers and
controlling persons and shall survive the transfer of such securities by the
Buyer; provided, however, that the obligations of the Buyer hereunder shall not
apply to amounts paid in settlement of any such claims, losses, damages, or
liabilities (or actions
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in respect thereof) if such settlement is effected without the consent of the
Buyer (which consent shall not be unreasonably withheld).
c. Notices of Claims, Etc. Each party entitled to indemnification under
this Section 10 (the "Indemnified Party") shall give notice to the party
required to provide indemnification (the "Indemnifying Party") promptly after
such Indemnified Party has actual knowledge of any claim as to which indemnity
may be sought, and shall permit the Indemnifying Party to assume the defense of
such claim or any litigation resulting therefrom, provided, that counsel for the
Indemnifying Party, who shall conduct the defense of such claim or any
litigation resulting therefrom, shall be approved by the Indemnified Party
(whose approval shall not unreasonably be withheld), and the Indemnified Party
may participate in such defense at such party's expense, and provided, further,
that the failure of any Indemnified Party to give notice as provided herein
shall not relieve the Indemnifying Party of its obligations under this Section
10, to the extent such failure is not prejudicial. No Indemnifying Party, in the
defense of any such claim or litigation, shall, except with the consent of each
Indemnified Party, consent to entry of any judgment or enter into any settlement
that does not include as an unconditional term thereof the giving by the
claimant or plaintiff to such Indemnified Party of a release from all liability
in respect to such claim or litigation. Each Indemnified Party shall furnish
such information regarding itself or the claim in question as an Indemnifying
Party may reasonably request in writing and as shall be reasonably required in
connection with defense of such claim and litigation resulting therefrom.
d. Contribution. If the indemnification provided for in this Section 10 is
held by a court of competent jurisdiction to be unavailable to an Indemnified
Party with respect to any loss, liability, claim, damage, or expense referred to
therein, then the Indemnifying Party, in lieu of indemnifying such Indemnified
Party hereunder, shall contribute to the amount paid or payable by such
Indemnified Party as a result of such loss, liability, claim, damage, or expense
in such proportion as is appropriate to reflect the relative fault of the
Indemnifying Party on the one hand and of the Indemnified Party on the other in
connection with the statements or omissions that resulted in such loss,
liability, claim, damage, or expense as well as any other relevant equitable
considerations. The relative fault of the Indemnifying Party and of the
Indemnified Party shall be determined by reference to, among other things,
whether the untrue or alleged untrue statements of a material fact or the
omission to state a material fact relates to information supplied by the
Indemnifying Party or by the Indemnified Party and the parties' relative intent,
knowledge, access to information, and opportunity to correct or prevent such
statement or omission.
12
11. DEFINITIONS
The term "Commission" shall mean the Securities and Exchange Commission or
any other federal agency at the time administering the 1933 Act or the Exchange
Act.
The term "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended, or any similar successor federal statute and the rules and regulations
thereunder, all as the same shall be in effect from time to time and a reference
to a particular section thereof shall be deemed to include a reference to the
comparable section, if any, of any such similar successor federal statute.
The term "person" shall mean an individual, partnership, corporation,
limited liability company, trust, unincorporated organization or government or
political department or agency thereof or other entity.
The term "Prospectus" shall mean the prospectus included in any
Registration Statement (including, without limitation, a prospectus that
discloses information previously omitted from a prospectus filed as part of an
effective registration statement in reliance upon Rule 430A under the 1933 Act),
as amended or supplemented by any prospectus supplement, with respect to the
terms of the offering of any portion of Registrable Securities, covered by such
Registration Statement, and all amendments and supplements to the Prospectus,
including post-effective amendments, and all material incorporated by reference
into such Prospectus.
The term "Registrable Securities" shall mean any Conversion Shares. As to
any Registrable Securities, such securities shall cease to be Registrable
Securities when (i) a registration statement with respect to the sale of such
securities shall have become effective under the 1933 Act and such securities
shall have been disposed of pursuant to such effective registration statement,
(ii) such securities shall have been distributed pursuant to Rule 144, Rule
144A, or any similar provision then in force, under the 1933 Act, (iii) such
securities shall have been otherwise transferred, new certificates or other
evidences of ownership for them not bearing a legend restricting further
transfer and not subject to any stop transfer order or other restrictions on
transfer shall have been delivered by the Company and subsequent disposition of
such securities shall not require registration or qualification of such
securities under the 1933 Act or any state securities laws then in force or (iv)
the sale of such securities by the Buyer shall no longer require registration
under the 1933 Act or such securities shall cease to be outstanding.
The terms "register," "registered" and "registration" shall refer to a
registration effected by preparing and filing a registration statement in
compliance with the 1933 Act and the applicable rules and regulations
thereunder, and the declaration or ordering of the effectiveness of such
registration statement.
The term "Registration Expenses" shall mean all expenses incurred in
effecting anyregistration pursuant to this Agreement, including without
limitation, all registration, qualification and filing fees, printing expenses,
escrow fees, fees and disbursements of counsel
13
for the Company, blue sky fees and expenses and expenses of any regular or
special audits incident to or required by any such registration, but shall not
include Selling Expenses.
The term "Selling Expenses" shall mean all underwriting discounts and
selling commissions applicable to the sale of the Registrable Securities and
fees and disbursements of counsel for the Buyer (other than the fees and
disbursements of counsel constituting a part of blue sky fees and expenses and
included in Registration Expenses).
12. GOVERNING LAW; MISCELLANEOUS.
a. Governing Law. This Agreement shall be governed by and interpreted in
accordance with the laws of the State of Delaware of the United States without
regard to the principles of conflict of laws.
b. Counterparts. This Agreement may be executed in two or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when such counterparts have been signed by each party and
delivered to the other party. In the event any signature page is delivered by
facsimile transmission, the party using such means of delivery shall cause four
(4) additional originally executed signature pages to be physically delivered to
the other party within five (5) days of the execution and delivery hereof.
c. Headings. The headings of this Agreement are for convenience of
reference and shall not form part of, or affect the interpretation of, this
Agreement.
d. Severability. If any provision of this Agreement shall be invalid or
unenforceable in any jurisdiction, such invalidity or unenforceability shall not
affect the validity or enforceability of the remainder of this Agreement or the
validity or enforceability of this Agreement in any other jurisdiction.
e. Entire Agreement; Amendments. This Agreement and the instruments
referenced herein contain the entire understanding of the parties with respect
to the matters covered herein and therein and, except as specifically set forth
herein or therein, neither the Company nor the Buyer makes any representation,
warranty, covenant or undertaking with respect to such matters. No provision of
this Agreement may be waived or amended other than by an instrument in writing
signed by the party to be charged with enforcement.
f. Notices. Any notice or communication hereunder shall be in writing and
delivered by messenger, overnight courier, first class mail, (return receipt
requested) or telex or telecopy (with such telex or telecopy confirmed promptly
in writing by first class mail return receipt requested), as follows:
14
If to the Company:
ImClone Systems Incorporated
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: Corporate Secretary
With copy to:
▇▇▇▇▇▇, ▇▇▇▇▇ and ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ III, Esq.
If to the Buyer:
Merck ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇
▇-▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇
▇▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇ ▇▇ ▇▇ ▇▇ ▇▇ 24
Telecopy: (▇▇▇) ▇▇ ▇▇ ▇▇ ▇▇ ▇▇ 35
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, President, World Pharmaceuticals
With copy to:
Coudert Brothers
▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇., Esq.
or in each case, to such address or telex or telecopy number as such party may
designate in writing to the other by written notice given in the manner
specified herein. All such communications shall be deemed to have been given,
delivered or made when so delivered personally, by overnight courier or first
class mail or sent by telex or telecopy (confirmation received), or five
business days after being so mailed.
15
g. Successors and Assigns. This Agreement shall be binding upon and inure
to the benefit of the parties and their successors and assigns. Neither the
Company nor the Buyer shall assign this Agreement or any rights or obligations
hereunder without the prior written consent of the other (which consent may be
withheld for any reason in the sole discretion of the party from whom consent is
sought).
h. Third Party Beneficiaries. This Agreement is intended for the benefit
of the parties hereto and their respective permitted successors and assigns, and
is not for the benefit of, nor may any provision hereof be enforced by, any
other person.
i. Survival. The representations, warranties and agreements of the Company
and the Buyer set forth in Sections 2, 3, 4, 7, 8, 9, 10, 11 and 12 shall
survive the closing.
j. Publicity. The Company and the Buyer shall have the right to approve
before issuance any press releases, SEC or NASD filings, or any other public
statements with respect to the transactions contemplated hereby; provided,
however, that the Company shall be entitled, without the prior approval of the
Buyer, to make any press release or SEC or NASD filings with respect to such
transactions as is required by applicable law and regulations.
k. Further Assurances. Each party shall do and perform, or cause to be
done and performed, all such further acts and things, and shall execute and
deliver all such other agreements, certificates, instruments and documents, as
the other party may reasonably request in order to carry out the intent and
accomplish the purposes of this Agreement and the consummation of the
transactions contemplated hereby.
IN WITNESS WHEREOF, the Buyer and the Company have caused this Preferred
Stock Purchase Agreement to be duly executed as of the date first above-written.
IMCLONE SYSTEMS INCORPORATED
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
----------------------------------
Its: President & CEO
-----------------------------------
MERCK KGaA
By: /s/ ▇. ▇. ▇▇▇▇▇▇▇
------------------------------------
Name: ▇. ▇. ▇▇▇▇▇▇▇
----------------------------------
Its: Head of Pharmaceuticals
-----------------------------------
16
Exhibit A
to
Preferred Stock Purchase Agreement
CERTIFICATE OF DESIGNATIONS, PREFERENCES
AND RIGHTS OF SERIES A CONVERTIBLE
PREFERRED STOCK
OF
IMCLONE SYSTEMS INCORPORATED
IMCLONE SYSTEMS INCORPORATED (the "Company"), a corporation organized and
existing under the General Corporation Law of the State of Delaware, does hereby
certify that, pursuant to authority conferred upon the Board of Directors of the
Company by the Certificate of Incorporation, as amended, of the Company and
pursuant to Section 151 of the General Corporation Law of the State of Delaware,
the Board of Directors of the Company at a meeting duly held on December 3,
1997, adopted resolutions providing for the designations, preferences and
relative, participating, optional or other rights, and the qualifications,
limitations or restrictions thereof, of four hundred thousand (400,000) shares
of Series A Convertible Preferred Stock (the "Series A Preferred Shares") of the
Company, as follows:
RESOLVED, that the Company is authorized to issue 400,000 shares of Series
A Convertible Preferred Stock (the "Series A Preferred Shares") which shall have
the following powers, designations, preferences and other special rights:
II. Dividends. The holders of the then outstanding Series A Preferred
Shares shall be entitled to receive, out of funds legally available therefor,
cumulative dividends at the annual rate of 6% of the Stated Value thereof
compounded annually (pro-rated for any portion of the applicable period during
which such Series A Preferred Shares are outstanding). Dividends shall be
payable on the Series A Preferred Shares then outstanding in cash (i) annually
on December 31st of each year beginning on December 31, 1999 or (ii) at the time
of conversion or redemption (as
17
provided herein) of the Series A Preferred Shares on which the dividend is to be
paid, whichever is sooner. Dividends on the Series A Preferred Shares shall
accumulate and accrue from the date of original issuance and shall accrue from
day to day thereafter, whether or not earned or declared. Until any such
dividend in arrears is paid, dividends shall continue to accrue on each Series A
Preferred Share but the percentage rate expressed herein shall be applied to the
Stated Value thereof plus all dividends thereon (including dividends computed
pursuant to this sentence).
III. Conversion of Series A Preferred Shares. The holders of the Series A
Preferred Shares shall have the right, at their option, to convert the Series A
Preferred Shares into shares of Common Stock on the following terms and
conditions:
A. Each Series A Preferred Share shall be convertible at any time as
hereinafter provided (or, if such Series A Preferred Share is called for
redemption, at any time up to and including, but not after, the close of
business on the fifth full business day prior to the date fixed for such
redemption, unless default shall be made by the Company in providing the
funds for the payment of the redemption price), into fully paid and
nonassessable shares (calculated to the nearest whole share) of Common
Stock of the Company as constituted at the time of such conversion, at the
conversion price in effect at the time of conversion determined as
hereinafter provided (the "Conversion Price"). Each Series A Preferred
Share shall have a value of $100 (the "Stated Value") and the number of
shares of Common Stock issuable upon conversion of each of the Series A
Preferred Shares shall be determined by dividing the Stated Value thereof
by the Conversion Price then in effect. Every reference herein to the
Common Stock of the Company (unless a different intention is expressed)
shall be to the shares of the Common Stock of the Company, $.001 par
value, as such stock exists immediately after the issuance of the Series A
Preferred Shares provided for hereunder, or to stock into which such
Common Stock may be changed from time to time thereafter.
B. The Series A Preferred Shares shall be convertible as of the
dates set forth in (i) - (iv) below.
(i) up to 100,000 Series A Preferred Shares ("Tranche I")
shall be convertible at any time on or after the date on which the
Series A Preferred Shares are issued (the "Issuance Date"); (ii) up
to an additional 100,000 Series A Preferred Shares ("Tranche II")
shall be convertible at any time on or after January 1, 2000 (the
"Second Anniversary Date"); (iii) up to an additional 100,000 Series
A Preferred Shares ("Tranche III") shall be convertible at any time
on or after January 1, 2001 (the "Third Anniversary Date"); and (iv)
up to an additional 100,000 Series A Preferred Shares ("Tranche IV")
shall be convertible at any time on or after January 1, 2002 (the
"Fourth Anniversary Date").
C. The Series A Preferred Shares shall be convertible at the
Conversion Prices set forth in (i) - (v) below.
18
1. Series A Preferred Shares converted on or after the
Issuance Date and before the Second Anniversary Date shall be
convertible at a per share Conversion Price equal to $12.50; (ii)
Series A Preferred Shares converted on or after the Second
Anniversary Date and before the Third Anniversary Date shall be
convertible at a per share Conversion Price equal to 100% of the
Average Market Price (as defined below) of the Common Stock for the
five (5) consecutive trading days ending one trading day prior to
the Second Anniversary Date; (iii) Series A Preferred Shares
converted on or after the Third Anniversary Date and before the
Fourth Anniversary Date shall be convertible at a per share
Conversion Price equal to 100% of the Average Market Price (as
defined below) of the Common Stock for the five (5) consecutive
trading days ending one trading day prior to the Third Anniversary
Date; (iv) Series A Preferred Shares converted on or after the
Fourth Anniversary Date and before January 1, 2003 shall be
convertible at a per share Conversion Price equal to 88% of the
Average Market Price (as defined below) of the Common Stock for the
five (5) consecutive trading days ending one trading day prior to
the Fourth Anniversary Date; and (v) Series A Preferred Shares
converted on or after January 1, 2003 shall be convertible at a per
share Conversion Price equal to 100% of the Average Market Price (as
defined below) of the Common Stock for the five (5) consecutive
trading days ending one (1) trading day prior to the receipt by the
Company of the Conversion Notice (as defined below).
D. Notwithstanding anything to the contrary contained herein, in the
event (i) the Conversion Price in effect from time to time under Section
2(c) is less than the Average Market Price (as defined below) of the
Common Stock for the five (5) consecutive trading days ending one trading
day prior to the Issuance Date, and (ii) the number of shares of Common
Stock that would be issued at such Conversion Price would exceed that
number of shares of Common Stock permitted to be issued by the Company
without shareholder approval under the rules of the National Association
of Securities Dealers Automated Quotation System ("NASDAQ") (the
"Permissible Shares"), then the Company shall issue the Permissible Shares
as herein provided, and with respect to those shares exceeding the
Permissible Shares (the "Excess Shares") the Company shall use its
reasonable best efforts to take such action as will permit it to issue the
Excess Shares, and if the Company is unable to obtain such required
permission within a reasonable period of time, the Company shall
repurchase the Excess Shares at a per share purchase price equal to the
Stated Value, plus accrued and unpaid dividends thereon.
E. Notwithstanding anything to the contrary contained herein, should
the Average Market Price (as defined below) of the Common Stock for the
five (5) consecutive trading days ending one trading day prior to any
trading day during which any of the Series A Preferred Shares are
outstanding exceed 150% of the Conversion Price then in effect, then so
long as such price is in excess of such percentage the Company, in its
sole discretion, may require the holder of such Series A Preferred Shares
to convert all such Series A Preferred Shares as may then be convertible.
19
F. "Average Market Price" of any security for any period shall be
computed as the arithmetic average of the closing prices for such security
for each trading day in such period on the NASDAQ National Market, or, if
the NASDAQ National Market is not the principal trading market for such
security, on the principal trading market for such security, or, if market
value cannot be calculated for such period on any of the foregoing bases,
the average fair market value during such period as reasonably determined
in good faith by the Board of Directors of the Company.
G. The Conversion Price shall be subject to adjustments from time to
time as follows:
1. If and whenever on or after the Issuance Date the Company
issues, sells or exchanges other than in an Excluded Issuance (as
hereinafter defined), any share of Common Stock for a consideration
per share less than the Average Market Price of the Common Stock for
the five (5) consecutive trading days ending one trading day prior
to such event (the "Actual Price") (a "Dilutive Event"), then
forthwith upon such issue or sale the Conversion Price shall be
decreased by multiplying the Conversion Price in effect immediately
before the Dilutive Event by a fraction, the numerator of which is
the number of shares of Common Stock that are Outstanding on an
As-Converted Basis (as defined below) immediately before the
Dilutive Event plus the number of shares of Common Stock that could
be purchased at the Actual Price at the time of the Dilutive Event
for the aggregate consideration paid or payable upon the sale or
issuance of Common Stock in the Dilutive Event, and the denominator
of which is the number of shares of Common Stock that are
Outstanding on an As-Converted Basis immediately before the Dilutive
Event plus the number of shares that are acquired or to be acquired
upon the sale or issuance of the Common Stock in the Dilutive Event.
For purposes of this paragraph (1), "Outstanding on an As-Converted
Basis immediately before the Dilutive Event" means the sum of (i)
all Common Stock issued and outstanding immediately before the
Dilutive Event plus (ii) ---- all Common Stock issuable upon the
exercise of options or warrants or conversion of convertible
securities outstanding immediately before the Dilutive Event.
2. "Excluded Issuance" means the issue or sale of (i) shares
of Common Stock by the Company pursuant to the exercise of options
and warrants outstanding immediately prior to the Issuance Date (as
adjusted pursuant to the terms of such securities to give effect to
stock dividends or stock splits or a combination of shares in
connection with a recapitalization, merger, consolidation or other
reorganization occurring after the Issuance Date), (ii) options to
acquire Common Stock pursuant to a resolution of, or a stock option
plan approved by a resolution of, the Board of Directors of the
Company (or the compensation committee or stock option committee
thereof) to the Company's employees, directors or Scientific
Advisory Board members, or (iii) shares of Common Stock issued by
the Company as dividends on, or upon conversion of, the Series A
Preferred Shares.
20
3. If after the Issuance Date the Company in any manner grants
or issues any option, warrant or convertible security and the price
per share for which shares of Common Stock are issuable upon the
exercise of any such option, warrant or convertible security is less
than the Actual Price with respect to such date of grant or
issuance, then such shares of Common Stock shall be deemed to have
been issued and sold by the Company at the time of the granting or
issuance of such option, warrant or convertible security for such
price per share and the Conversion Price shall be adjusted in
accordance with paragraph (i) above. For purposes of this paragraph,
the "price per share" for which shares of Common Stock are issuable
upon the conversion or exercise of any option, warrant or
convertible security shall be equal to the sum of the amounts of
consideration (if any) received or receivable by the Company with
respect to such shares of Common Stock upon the granting or issuance
of the option, warrant or convertible security and upon exercise or
conversion of the option, warrant or convertible security. No
further adjustment of the Conversion Price shall be made upon the
actual issue of such Common Stock upon the exercise or conversion of
such option, warrant or convertible security.
4. If after the Issuance Date the purchase price provided for
in any option or warrant, the additional consideration (if any)
payable upon the issue, conversion or exchange of any convertible
security, or the rate at which any convertible security is
convertible into or exchangeable for Common Stock changes at any
time, any Conversion Price previously adjusted with respect to such
option, warrant or convertible security and in effect at the time of
such change shall be readjusted to the Conversion Price which would
have been in effect at such time had such option, warrant or
convertible security originally provided for such changed purchase
price, additional consideration or changed conversion rate, as the
case may be, at the time initially granted, issued or sold.
5. Upon the expiration of any option or warrant or the
termination of any right to convert any convertible security, after
the Issuance Date, without the exercise of any such option or
warrant, any Conversion Price then in effect hereunder shall be
adjusted to the Conversion Price which would have been in effect at
the time of such expiration or termination had such option, warrant
or convertible security, to the extent outstanding immediately prior
to such expiration or termination, never been issued.
6. In case any option or warrant is issued in connection with
the issue or sale of other securities of the Company, together
comprising one (1) integrated transaction in which no specific
consideration is allocated to such option or warrant by the parties
thereto, the option or warrant shall be deemed to have been issued
for a consideration of $.0l.
7. If the Company shall consolidate with or merge into any
corporation or reclassify its outstanding shares of Common Stock
(other than by way of subdivision or reduction of such shares) (each
21
a "Major Transaction"), then each Series A Preferred Share shall
thereafter be convertible into the number of shares of stock or
securities (the "Resulting Securities") or property of the Company,
or of the entity resulting from such consolidation or merger, to
which a holder of the number of shares of Common Stock delivered
upon conversion of such Series A Preferred Share would have been
entitled upon such Major Transaction had the holder of such Series A
Preferred Share exercised its right of conversion and had such
Common Stock been issued and outstanding and had such holder been
the holder of record of such Common Stock at the time of such Major
Transaction, and the Company shall make lawful provision therefor as
a part of such consolidation, merger or reclassification.
8. If at any time, or from time to time after the Issuance
Date, the Company shall (i) declare and pay, on or in respect of,
its Common Stock any dividend payable in shares of Common Stock or
(ii) subdivide the outstanding shares of Common Stock into a greater
number of shares, or reduce the number of outstanding Series A
Preferred Shares by combining such Series A Preferred Shares into a
smaller number of Series A Preferred Shares, the Conversion Price in
effect at the time of the taking of a record for such dividend or
the taking of such other action shall be proportionately decreased
as of such time, and conversely (iii) if at any time, or from time
to time, the Company shall reduce the number of outstanding shares
of Common Stock by combining such shares into a smaller number of
shares, or subdivide the outstanding Series A Preferred Shares into
a greater number of Series A Preferred Shares, the Conversion Price
in effect at the time of the taking of any such action shall be
proportionately increased as of such time.
9. Anything in this Section 2 to the contrary notwithstanding,
the Company shall not be required to give effect to any adjustment
in the Conversion Price unless and until the net effect of one or
more adjustments, determined as above provided, shall have resulted
in a change of the Conversion Price by at least $0.05, provided,
however, that when the cumulative net effect of more than one
adjustment so determined shall be to change the Conversion Price by
at least $0.05 such change in the Conversion Price shall thereupon
be given effect.
10. The Company shall not issue any fraction of a share of
Common Stock upon any conversion, but shall pay in cash therefor at
the Conversion Price then in effect multiplied by such fraction.
11. Notice of Adjustments of Conversion Rate. Whenever the
Conversion Price is adjusted as provided herein, the Company shall
promptly (and, in any event, not later than the fifteenth (15th) day
following the occurrence of the event requiring such adjustment)
compute the adjusted Conversion Price in accordance herewith and
shall prepare a report setting forth such adjustment. The Company
will promptly (and, in any event, not later than such fifteenth
(15th) day) furnish a copy of each such report and such verification
to the holder of any Series A Preferred Share. The Company will also
keep copies of all such reports and such
22
verifications at its principal office, and will cause the same to be
available for inspection at such office during normal business hours
by the holder of any Series A Preferred Shares.
12. Notice of Certain Corporate Action. In case:
(1) the Company shall declare a dividend (or any other
distribution) on its Common Stock payable otherwise than in
cash out of its earned surplus; or
(2) (a) of any reclassification of the Common Stock of
the Company, or (b) of any consolidation, merger or share
exchange to which the Company is a party and for which
approval of any stockholders of the Company is required, or
(c) of the conveyance, transfer, sale or lease of all or
substantially all of the assets of the Company; or
(3) of the voluntary or involuntary dissolution,
liquidation or winding up of the Company;
then the Company, ten (10) business days prior to the applicable
record, expiration or effective date hereinafter specified, shall
give to each holder of Series A Preferred Shares a notice stating
(x) the date on which a record is to be taken for the purpose of
such dividend, distribution, rights or warrants, or, if a record is
not to be taken, the effective date as of which the holders of
Common Stock of record to be entitled to such dividend,
distribution, rights or warrants are to be determined, (y) the date
on which such reclassification, consolidation, merger, share
exchange, 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, share exchange, conveyance,
transfer, sale, lease, dissolution, liquidation or winding up.
H. On presentation and surrender to the Company (or at any office or
agency maintained for the transfer of the Series A Preferred Shares) of
the certificates of Series A Preferred Shares so to be converted, duly
endorsed in blank for transfer or accompanied by proper instruments of
assignment or transfer in blank (a "Conversion Notice"), with signatures
guaranteed, the holder of such Series A Preferred Shares shall be
entitled, subject to the limitations herein contained, to receive in
exchange therefor a certificate or certificates for fully paid and
nonassessable shares, which certificates shall be delivered by the fifth
trading day after the date of delivery of the Conversion Notice, and cash
for fractional shares, of Common Stock on the foregoing basis. The Series
A Preferred Shares shall be deemed to have been converted, and the person
converting the same to have become the holder of record of Common Stock,
for all purposes as of the date of delivery of the Conversion Notice.
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I. The Company shall, so long as any of the Series A Preferred
Shares are outstanding, reserve and keep available out of its authorized
and unissued Common Stock, solely for the purpose of effecting the
conversion of the Series A Preferred Shares outstanding, such number of
shares of Common Stock as it shall reasonably believe shall from time to
time be sufficient to effect the conversion of all of the Series A
Preferred Shares then outstanding.
J. The Company shall pay any and all taxes which may be imposed upon
it with respect to the issuance and delivery of Common Stock upon the
conversion of the Series A Preferred Shares as herein provided. The
Company shall not be required in any event to pay any transfer or other
taxes by reason of the issuance of such Common Stock in names other than
those in which the Series A Preferred Shares surrendered for conversion
are registered on the Company's records, and no such conversion or
issuance of Common Stock shall be made unless and until the person
requesting such issuance has paid to the Company the amount of any such
tax, or has established to the satisfaction of the Company and its
transfer agent, if any, that such tax has been paid.
IV. Voting Rights. Holders of Series A Preferred Shares shall have no
voting rights, except as required by law, by Section 7 hereof and, to the extent
permitted by applicable laws and regulations, as provided in this Section 3. If
during any fiscal year of the Company, the Company shall be in arrears in the
payment of any dividend on the Series A Preferred Shares for a period of six
months or more during such fiscal year, then at the annual meeting of
shareholders relating to such fiscal year, the holders of the Series A Preferred
Shares shall have the right to designate a nominee for director to be included
on the slate of the Company's nominees for directors for such annual meeting of
shareholders, and further, shall have the right, voting as a class, to elect
such nominee as a director of the Company at such annual meeting of
shareholders.
V. Redemption. The Company may, but shall not be obligated to, at any
time, and from time to time, redeem on the terms and conditions herein provided,
the whole or any part of the Series A Preferred Shares then outstanding at a
redemption price of $120 per Preferred Share, plus accrued and unpaid dividends
thereon, in accordance with the following procedures:
A. In case of redemption of only part of the Series A Preferred
Shares at any time outstanding, the Company shall designate the amount of Series
A Preferred Shares so to be redeemed and shall redeem such Series A Preferred
Shares ratably from each tranche.
B. Notice of every redemption shall be given by mail to every holder
of record of any Series A Preferred Shares then to be redeemed, at least thirty
(30), but no more than ninety (90), days prior to the date fixed as the date for
the redemption thereof, at the respective addresses of such holders as the same
shall appear on the stock transfer books of the Company. The notice shall state
that the Series A Preferred Shares shall be redeemed by the Company at the
redemption price specified above, upon the surrender for cancellation, at the
time and place designated in such notice, of the certificates representing the
Series A Preferred Shares to be redeemed, properly endorsed in blank for
transfer, or accompanied by proper instruments of assignment and transfer in
blank, with signatures guaranteed, and bearing all necessary transfer tax stamps
thereto affixed and canceled. On
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and after the date specified in the notice described above, each holder of
Series A Preferred Shares called for redemption shall be entitled to receive
therefor the specified redemption price upon presentation and surrender at the
place designated in such notice of the certificates for Series A Preferred
Shares called for redemption, properly endorsed in blank for transfer or
accompanied by proper instruments of assignment or transfer in blank, with
signatures guaranteed, and bearing all necessary transfer tax stamps thereto
affixed and canceled.
C. If the Company shall give notice of redemption as aforesaid (and
unless the Company shall fail to pay the redemption price of the Series A
Preferred Shares presented for redemption in accordance with such notice), all
Series A Preferred Shares called for redemption shall be deemed to have been
redeemed on the date specified in such notice, whether or not the certificates
for such Series A Preferred Shares shall be surrendered for redemption, and such
Series A Preferred Shares so called for redemption shall from and after such
date cease to represent any interest whatsoever in the Company or its property,
and the holders thereof shall have no rights other than the right to receive
such redemption price without any interest thereof from and after such date.
VI. Liquidation, Dissolution, Winding Up. In the event of any voluntary or
involuntary liquidation, dissolution or winding up of the Company, the holders
of the Series A Preferred Shares shall be entitled to receive in cash out of the
assets of the Company, whether from capital or from earnings, available for
distribution to its stockholders (the "Preferred Funds"), before any amount
shall be paid to the holders of the Common Stock or holders of shares of other
classes or series of capital stock of the Company (the "Junior Shares"), an
amount equal to the Stated Value per Series A Preferred Share outstanding plus
accrued and unpaid dividends thereon, provided that, if the Preferred Funds are
insufficient to pay the full amount due to the holders of Series A Preferred
Shares, then each holder of Series A Preferred Shares shall receive a percentage
of the Preferred Funds equal to the full amount of Preferred Funds payable to
such holder as a percentage of the full amount of Preferred Funds payable to all
holders of Series A Preferred Shares. The purchase or redemption by the Company
of stock of any class, in any manner permitted by law, shall not, for the
purposes hereof, be regarded as a liquidation, dissolution or winding up of the
Company. Notwithstanding the foregoing, to the extent that Series A Preferred
Shares shall be converted or redeemed, as the case may be, the Company may issue
shares of other classes or series of preferred stock of the Company that are of
equal rank with the Series A Preferred Shares (the "Pari Passu Shares"), and
such Pari Passu Shares shall be entitled to distributions of the Preferred Funds
on the same basis as the Series A Preferred Shares. Neither the consolidation
nor merger of the Company with or into any other corporation or corporations,
nor the sale or transfer by the Company of less than substantially all of its
assets, shall, for the purposes hereof, be deemed to be a liquidation,
dissolution or winding up of the Company. No holder of Series A Preferred Shares
shall be entitled to receive any amounts with respect thereto upon any
liquidation, dissolution or winding up of the Company other than the amounts
provided for herein.
VII. Preferred Rank. Except with respect to any Pari Passu Shares that the
Company may issue from time to time pursuant to Section 5, all Series A
Preferred Shares shall be of senior rank to all Junior Shares in respect to the
preferences as to dividends and distributions and payments upon the liquidation,
dissolution or winding up of the Company. In the event dividends on the Series A
Preferred Shares are in arrears, the Company shall not be entitled to pay
dividends on any, Junior
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Shares or Pari Passu Shares. The rights of the Junior Shares shall be subject to
the preferences and relative rights of the Series A Preferred Shares.
Notwithstanding the foregoing, the Company may authorize and issue additional or
other preferred stock which is of junior rank, or equal rank as permitted by
Section 5, with the Series A Preferred Shares in respect of the preferences as
to dividends and distributions and payments upon the liquidation, dissolution or
winding up of the Company; provided, however, that for so long as the Series A
Preferred Shares remain outstanding the Company shall not issue any capital
stock which is senior in rank to the Series A Preferred Shares in respect of any
of the foregoing preferences. In the event of the merger or consolidation of the
Company with or into another corporation, the Series A Preferred Shares shall
maintain their relative powers, designations and preferences provided for
herein.
VIII. Vote to Change the Terms of Series A Preferred Shares. The
affirmative vote at a meeting duly called for such purpose or the written
consent without a meeting of the holders of not less than two-thirds (2/3) of
the then outstanding Series A Preferred Shares shall be required to amend,
alter, change or repeal any of the powers, designations, preferences and rights
of the Series A Preferred Shares.
IN WITNESS WHEREOF, the Company has caused this certificate to be signed
by, its President, and its Secretary, this 3rd day of December 1997.
IMCLONE SYSTEMS INCORPORATED
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
---------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-------------------------------
Title: President & CEO
------------------------------
ATTEST
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
---------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇
-------------------------------
Title: Secretary
------------------------------
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