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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MAY 16, 2000
REGISTRATION NO. 333-
===============================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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NEOTHERAPEUTICS, INC.
(Exact Name of Registrant as Specified in Its Charter)
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DELAWARE 93-079187
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
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157 TECHNOLOGY DRIVE
IRVINE, CALIFORNIA 92618
(949) 788-6700
(Address, Including Zip Code and Telephone Number,
Including Area Code, of Registrant's Principal Executive Offices)
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ALVIN J. GLASKY, PH.D.
PRESIDENT AND CHIEF EXECUTIVE OFFICER
157 TECHNOLOGY DRIVE
IRVINE, CALIFORNIA 92618
(949) 788-6700
(Name, Address, Including Zip Code and Telephone Number,
Including Area Code, of Agent for Service)
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Copies to:
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Alan W. Pettis, Esq.
Latham & Watkins
650 Town Center Drive, Twentieth Floor
Costa Mesa, California 92626
(714) 540-1235
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon
as practicable after this Registration Statement becomes effective.
---------------
If the only securities being registered on this form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box.[ ]
If any of the securities being registered on this Form are to be offered
on a delayed or continuous basis pursuant to Rule 415 under the Securities Act
of 1933, other than securities offered only in connection with dividend or
interest reinvestment plans, check the following box.[X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering.[ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering.[ ]
If delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box [ ]
CALCULATION OF REGISTRATION FEE
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TITLE OF SECURITIES AMOUNT TO PROPOSED MAXIMUM PROPOSED MAXIMUM AMOUNT OF
TO BE REGISTERED BE OFFERING PRICE AGGREGATE REGISTRATION
REGISTERED(1) PER SHARE OFFERING PRICE FEE
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, par value 520,324 shares $13.45315(2) $6,999,997 $1,848.00
$.001 per share
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Common Stock issuable upon 104,000 $21.00(3) $2,184,000 $576.58
exercise of closing
warrants
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Common Stock issuable upon 1,234,568 $20.25(4) $25,000,002 $6,600.00
conversion of convertible
debentures
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Common Stock issuable upon 315,000 $19.672(5) $6,196,680 $1,635.92
exercise of Class A
Warrants
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Common Stock issuable upon 4,000,000 $33.75(6) $135,000,000 $35,640.00
exercise of Class B
Warrants
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Common Stock issuable upon 15,000 $12.98(7) $194,700 $51.40
exercise of finder's
warrants
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Common Stock issuable upon 35,000 $20.625(7) $721,875 $190.58
exercise of finder's
warrants
- -------------------------------------------------------------------------------------------------------------
Common Stock issuable upon 125,000 $15.00(7) $1,875,000 $495.00
exercise of finder's
warrants
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Total 6,348,892 $178,172,254 $47,037.48
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(1) In the event of a stock split, stock dividend, or similar transaction
involving the Company's common stock, in order to prevent dilution, the
number of shares registered shall automatically be increased to cover the
additional shares in accordance with Rule 416(a) under the Securities Act.
(2) The offering price is estimated solely for the purpose of calculating the
registration fee in accordance with Rule 457(c) using the average of the
high and low price reported by the Nasdaq National Market for the common
stock on May 12, 2000, which was approximately $13.45315 per share.
(3) The exercise price of the closing warrants, used for the purpose of
calculating the amount of the registration fee in accordance with Rule
457(g) under the Securities Act.
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(4) The conversion price of the convertible debentures, used for the purpose of
calculating the amount of the registration fee in accordance with Rule
457(g) under the Securities Act.
(5) The exercise price of the Class A Warrants, used for the purpose of
calculating the amount of the registration fee in accordance with Rule
457(g) under the Securities Act.
(6) The exercise price of the Class B Warrants, used for the purpose of
calculating the amount of the registration fee in accordance with Rule
457(g) under the Securities Act.
(7) The exercise price of the finder's warrants, used for the purpose of
calculating the amount of the registration fee in accordance with Rule
457(g) under the Securities Act.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION, ACTING
PURSUANT TO SAID SECTION 8(a), MAY DETERMINE.
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UP TO 6,348,892 SHARES OF
NEOTHERAPEUTICS, INC.
COMMON STOCK
Our common stock is traded on the Nasdaq National Market under the
symbol "NEOT." On May 12, 2000, the closing price of our common stock was $14.
This prospectus relates to the sale of up to 6,348,892 shares of our
common stock by Montrose Investments Ltd., Strong River Investments, Ltd. and
Brighton Capital, Ltd. We will not receive any of the proceeds from the sale of
these shares.
INVESTING IN OUR COMMON STOCK INVOLVES A HIGH DEGREE OF RISK. SEE "RISK
FACTORS" BEGINNING ON PAGE 1.
----------------------
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or passed upon the
accuracy or adequacy of the prospectus. Any representation to the contrary is a
criminal offense.
----------------------
The date of this prospectus is __________ ___, 2000.
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<TABLE>
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TABLE OF CONTENTS
PAGE
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ABOUT NEOTHERAPEUTICS........................................................................1
RISK FACTORS.................................................................................1
FORWARD-LOOKING STATEMENTS...................................................................6
ISSUANCE OF COMMON STOCK TO THE SELLING STOCKHOLDERS.........................................7
USE OF PROCEEDS..............................................................................8
SELLING STOCKHOLDERS.........................................................................8
PLAN OF DISTRIBUTION.........................................................................9
LEGAL MATTERS...............................................................................10
EXPERTS.................................................................................... 10
LIMITATION ON LIABILITY AND DISCLOSURE OF COMMISSION POSITION ON INDEMNIFICATION FOR
SECURITIES ACT LIABILITIES..........................................................10
WHERE YOU CAN FIND MORE INFORMATION.........................................................10
</TABLE>
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ABOUT NEOTHERAPEUTICS
NeoTherapeutics, Inc. is a development stage biopharmaceutical company
engaged in the discovery and development of novel therapeutic drugs intended to
treat neurological and psychiatric diseases and conditions, such as memory
deficits associated with Alzheimer's disease and aging, stroke, spinal cord
injuries, Parkinson's disease, migraine, depression and obesity. Our lead
product candidate, Neotrofin(TM) (AIT-082, leteprinim potassium), and other
compounds under development, are based on our patented technology. This
technology uses small synthetic molecules to create non-toxic compounds,
intended to be administered orally or by injection, that are capable of passing
through the blood-brain barrier to rapidly act upon specific target cells in
specific locations in the central nervous system, including the brain. Animal
and laboratory tests have shown that Neotrofin(TM) appears to selectively
increase the production of certain neurotrophic factors, a type of large
protein, in selected areas of the brain and in the spinal cord. These
neurotrophic factors regulate nerve cell growth and function. Our technology has
been developed to capitalize on the beneficial effects of these proteins, which
have been widely acknowledged to be closely involved in the early formation and
differentiation of the central nervous system. We believe that Neotrofin(TM)
could have therapeutic and regenerative effects.
We were incorporated in Colorado in December 1987 and reincorporated in
Delaware in June 1997. Our executive offices are located at 157 Technology
Drive, Irvine, California 92618. Our telephone number is (949) 788-6700. Our web
site address is www.neotherapeutics.com. Information contained in our web site
does not constitute part of this prospectus.
RISK FACTORS
Your investment in our common stock involves a high degree of risk. You
should consider the risks described below and the other information contained in
this prospectus carefully before deciding to invest in our common stock. If any
of the following risks actually occur, our business, financial condition and
operating results would be harmed. As a result, the trading price of our common
stock could decline, and you could lose a part or all of your investment.
OUR LOSSES WILL CONTINUE TO INCREASE AS WE EXPAND OUR DEVELOPMENT EFFORTS, AND
OUR EFFORTS MAY NEVER RESULT IN PROFITABILITY.
Our cumulative losses during the period from our inception in 1987
through March 31, 2000 were approximately $59.1 million, almost all of which
consisted of research and development and general and administrative expenses.
We lost approximately $6.2 million in 1997, $11.6 million in 1998, $26.0 million
in 1999 and approximately $9.3 million for the three months ended March 31,
2000. We expect our losses to increase in the future as we expand our clinical
trials and increase our research and development activities. We currently do not
sell any products and we may never achieve significant revenues or become
profitable. Even if we eventually generate revenues from sales, we nevertheless
expect to incur significant operating losses over the next several years.
OUR POTENTIAL DRUG PRODUCTS ARE IN AN EARLY STAGE OF CLINICAL AND PRECLINICAL
DEVELOPMENT AND MAY NOT PROVE SAFE OR EFFECTIVE ENOUGH TO OBTAIN REGULATORY
APPROVAL TO SELL ANY OF THEM.
We currently are testing our first potential drug product in human
clinical trials. Our other proposed products are in preclinical development. We
cannot be certain that our proposed products will prove to be safe or effective
in treating disorders of the central nervous system or any other diseases. All
of our potential drugs will require additional research and development, testing
and regulatory clearances before we can sell them. We cannot be certain that we
will receive regulatory approval to sell any of our potential drugs. We do not
expect to have any products commercially available for at least two years.
IF WE ARE UNABLE TO OBTAIN SUBSTANTIAL ADDITIONAL FUNDING ON ACCEPTABLE TERMS,
WE MAY HAVE TO DELAY OR ELIMINATE ONE OR MORE OF OUR DEVELOPMENT PROGRAMS.
We currently are spending cash at a rate in excess of $3.0 million per
month, and we expect this rate of spending to continue for at least the next 12
months. We believe that our existing cash and capital resources, including the
equity and debt financings obtained of approximately $8 million in February 2000
and $10 million in April 2000, plus the investors' commitment to fund up to an
additional $20 million, subject to certain restrictions, in
<PAGE> 6
the form of either convertible debentures and/or the sale of stock issued in
connection with the exercise of redeemable warrants, will satisfy our current
funding requirements for at least the next twelve months. We also sold 500,000
shares of our common stock for $7,000,000 on May 1, 2000 to a Canadian financial
institution.
We expect that we will need a minimum of $90 million to complete
development and clinical trials of Neotrofin(TM), our lead drug candidate,
before we will be able to submit it to the Food and Drug Administration for
approval for commercial sale. Our capital requirements will depend on many
factors, including:
- the progress of preclinical and clinical testing;
- the time and cost involved in obtaining regulatory approvals;
and
- our ability to establish collaborative and other arrangements
with third parties, such as licensing and manufacturing
agreements.
We expect to seek additional funding through public or private
financings or collaborative or other arrangements with third parties. We may not
obtain additional funds on acceptable terms, if at all. If adequate funds are
not available, we will have to delay or eliminate one or more of our development
programs.
COMPETITION FOR PATIENTS IN CONDUCTING CLINICAL TRIALS AND EXTENSIVE REGULATIONS
GOVERNING THE CONDUCT OF CLINICAL TRIALS MAY PREVENT OR DELAY APPROVAL OF A DRUG
CANDIDATE AND STRAIN OUR LIMITED FINANCIAL RESOURCES.
Many pharmaceutical companies are conducting clinical trials in patients
with Alzheimer's disease. As a result, we must compete with them for clinical
sites, physicians and the limited number of patients with Alzheimer's disease
who fulfill the stringent requirements for participation in clinical trials.
This competition may increase costs of our clinical trials and delay the
introduction of our potential products.
ANY FAILURE TO COMPLY WITH EXTENSIVE GOVERNMENTAL REGULATION COULD PREVENT
PRODUCT APPROVAL OR CAUSE GOVERNMENTAL AUTHORITIES TO DISALLOW OUR PRODUCTS
AFTER APPROVAL AND SUBJECT US TO CRIMINAL OR CIVIL LIABILITIES.
The U.S. Food and Drug Administration, or FDA, and comparable agencies
in foreign countries impose many requirements on the introduction of new drugs
through lengthy and detailed clinical testing procedures, and other costly and
time consuming compliance procedures. These requirements make it difficult to
estimate when Neotrofin(TM) or any other potential product will be available
commercially, if at all.
Our proprietary compounds will require substantial clinical trials and
FDA review as new drugs. Even if we successfully enroll patients in our clinical
trials, patients may not respond to our potential drug products. We think it is
prudent to expect setbacks. Failure to comply with the regulations applicable to
such testing may delay, suspend or cancel our clinical trials, or the FDA might
not accept the test results. The FDA or other regulatory agency may suspend
clinical trials at any time if it concludes that the trials expose subjects
participating in such trials to unacceptable health risks. Further, human
clinical testing may not show any current or future product candidate to be safe
and effective or the data derived therefrom may be unsuitable for submission to
the FDA or other regulatory agency.
We cannot predict with certainty when we might submit any of our
proposed products currently under development for regulatory review. Once we
submit a proposed product for review, the FDA or other regulatory agencies may
not issue their approvals on a timely basis, if at all. If we are delayed or
fail to obtain such approvals, our business may be damaged. If we fail to comply
with regulatory requirements, either prior to approval or in marketing our
products after approval, we could be subject to regulatory or judicial
enforcement actions. These actions could result in:
- product recalls or seizures;
- injunctions;
- civil penalties;
- criminal prosecution;
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- refusals to approve new products and withdrawal of existing
approvals; and
- enhanced exposure to product liabilities.
THE LOSS OF KEY RESEARCHERS OR MANAGERS COULD HINDER OUR DRUG
DEVELOPMENT PROCESS SIGNIFICANTLY AND MIGHT CAUSE OUR BUSINESS TO FAIL.
Our success depends upon the contributions of our key management and
scientific personnel, especially Dr. Alvin Glasky, our Chief Executive Officer
and Chief Scientific Officer. Our loss of the services of Dr. Glasky or any
other key personnel could delay or preclude us from achieving our business
objectives. Although we currently have key-man life insurance on Dr. Alvin
Glasky in the face amount of $2 million, the loss of Dr. Glasky's services would
damage our research and development efforts substantially.
We also will need substantial additional expertise in finance and
marketing and other areas in order to achieve our business objectives.
Competition for qualified personnel among pharmaceutical companies is intense,
and the loss of key personnel, or the inability to attract and retain the
additional skilled personnel required for the expansion of our business, could
damage our business.
IF WE CANNOT PROTECT OR ENFORCE OUR INTELLECTUAL PROPERTY RIGHTS ADEQUATELY, THE
VALUE OF OUR RESEARCH COULD DECLINE AS OUR COMPETITORS APPROPRIATE PORTIONS OF
OUR RESEARCH.
We actively pursue patent protection for our proprietary products and
technologies. We hold four U.S. patents and currently have nine U.S. patent
applications pending. In addition, we have numerous foreign patents issued and
patent applications pending corresponding to our U.S. patents. However, our
patents may not protect us against our competitors. We may have to file suit to
protect our patents or to defend our use of our patents against infringement
claims brought by others. Because we have limited cash resources, we may not be
able to afford to pursue or defend against litigation in order to protect our
patent rights.
We also rely on trade secret protection for our unpatented proprietary
technology. However, trade secrets are difficult to protect. While we enter into
proprietary information agreements with our employees and consultants, these
agreements may not successfully protect our trade secrets or other proprietary
information.
WE ARE A SMALL COMPANY RELATIVE TO OUR PRINCIPAL COMPETITORS AND OUR LIMITED
FINANCIAL AND RESEARCH RESOURCES MAY LIMIT OUR ABILITY TO DEVELOP AND MARKET NEW
PRODUCTS.
Many companies, both public and private, including well-known
pharmaceutical companies, are developing products to treat Alzheimer's disease
and certain of the other applications we are pursuing. Most of these companies
have substantially greater financial, research and development, manufacturing
and marketing experience and resources than we do. As a result, our competitors
may develop additional drugs that are more effective or less costly than any
drug which we may develop.
OUR MANAGEMENT HAS LIMITED MANUFACTURING AND MARKETING EXPERIENCE AND MAY BE
UNABLE TO MANAGE OUR GROWTH OR MANUFACTURE AND MARKET OUR PRODUCTS SUCCESSFULLY.
To date, we have engaged exclusively in the development of
pharmaceutical technology and products. Our management has substantial
experience in pharmaceutical company operations, but has limited experience in
manufacturing or procuring products in commercial quantities or in marketing
pharmaceutical products. Our management has only limited experience in
negotiating, establishing and maintaining strategic relationships, conducting
clinical trials and other later-stage phases of the regulatory approval process.
If we receive FDA approval of any of our potential products, we may
decide to establish a commercial-scale manufacturing facility for our lead
product candidate Neotrofin(TM). The establishment of such a facility will
require substantial additional funds and personnel, and we will need to comply
with extensive regulations applicable to such a facility. These requirements and
the associated growth would strain our existing management and operations. Our
ability to manage such growth depends upon the ability of our officers and key
employees to:
- broaden our management team;
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- develop additional expertise among existing management
personnel;
- attract, hire and retain skilled employees; and
- implement and improve our operational, management information
and financial control systems.
FAILURE TO OBTAIN ADEQUATE REIMBURSEMENT FROM GOVERNMENT HEALTH ADMINISTRATION
AUTHORITIES, PRIVATE HEALTH INSURERS AND OTHER ORGANIZATIONS COULD MATERIALLY
ADVERSELY AFFECT OUR FUTURE BUSINESS, RESULTS OF OPERATIONS AND FINANCIAL
CONDITION.
Our ability to market and sell our products will depend in part on the
extent to which reimbursement for the cost of our products and related
treatments will be available from government health administration authorities,
private health insurers and other organizations. Third party payers are
increasingly challenging the price of medical products and services.
Significant uncertainty exists as to the reimbursement statements of
newly approved health care products. We cannot be certain that any products
approved for marketing will be considered cost effective or that reimbursement
will be available or that allowed reimbursement will be adequate. In addition,
payers' reimbursement policies could adversely affect our ability to sell our
products on a profitable basis.
HOLDERS OF OUR CONVERTIBLE DEBENTURES AND CLASS B WARRANTS COULD ENGAGE IN SHORT
SELLING TO INCREASE THE NUMBER OF SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE
OF THE CONVERTIBLE DEBENTURES AND DECREASE THE EXERCISE PRICE OF THE CLASS B
WARRANTS. IF THIS OCCURS, THE MARKET PRICE OF OUR COMMON STOCK MAY DECLINE.
The convertible debentures are convertible at the option of the holder
at the lesser of $20.25 per share or 101% of the average of the ten lowest
closing bid prices of our common stock in the previous thirty trading days.
Consequently, the number of shares of common stock issuable upon conversion of
the convertible debentures varies with the market price of our common stock. A
greater number of shares of common stock are issuable the lower the price of our
common stock. Increased sales volume of our common stock could put downward
pressure on the market price of the shares. This fact could encourage holders of
the convertible debentures to sell short our common stock prior to conversion of
the convertible debentures, thereby potentially causing the market price to
decline and a greater number of shares to be issued. The holders of the
convertible debentures could then convert their convertible debentures and use
the shares of common stock received upon conversion to cover their short
positions. The holders of the convertible debentures could thereby profit by the
decline in the market price of the common stock caused by their short selling.
Similarly, the exercise price of our Class B Warrants if we deliver a redemption
notice is equal to the lesser of $33.75 per share (subject to adjustment for
stock splits, reverse splits and combinations) and 97% of the closing bid price
of our common stock on the trading day after the redemption notice is delivered.
This fact would give the holders of our Class B Warrants incentive to sell short
our common stock after receipt of a redemption notice, which could cause the
market price to decline. The holders of the Class B Warrants could then exercise
their Class B Warrants and use the shares of common stock received upon exercise
to cover their short positions and thereby profit by the decline in the market
price of the common stock caused by their short selling.
THE TRADING PRICE OF OUR COMMON STOCK AND THE TERMS OF OUR CONVERTIBLE
DEBENTURES AND CLASS B WARRANTS MUST COMPLY WITH THE LISTING REQUIREMENTS OF THE
NASDAQ NATIONAL MARKET OR WE COULD BE DELISTED AND THE LIQUIDITY OF OUR COMMON
STOCK WOULD DECLINE.
Our common stock is listed on the Nasdaq National Market. To remain
listed on this market, we must meet Nasdaq's listing maintenance standards and
abide by Nasdaq's rules governing listed companies. If the price of our common
stock falls below $1.00 per share for an extended period, or if we fail to meet
other Nasdaq standards or violate Nasdaq rules, our common stock could be
delisted from the Nasdaq National Market.
Nasdaq has established certain rules regarding the issuance of "future
priced securities." These rules may apply to our convertible debentures because
the number of shares of our common stock issuable upon conversion of the
debentures is based on a future price of our common stock. In addition, the
exercise price of our Class B Warrants is based in part upon a future price of
our common stock, and may be less than the greater of book value or market
value. Nasdaq's concerns regarding our convertible debentures and Class B
Warrants include the following:
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Shareholders must approve significant issuances of listed securities
at a discount to market or book value. Nasdaq rules prohibit an issuer of listed
securities from issuing 20% or more of its outstanding capital stock at less
than the greater of book value or then current market value without obtaining
prior stockholder consent. We did not obtain stockholder consent prior to
issuing the convertible debentures or the Class B Warrants.
Public interest concerns. Nasdaq may terminate the listing of a security
if necessary to prevent fraudulent and manipulative acts and practices or to
protect investors and the public interest. With respect to future priced
securities, Nasdaq has indicated that it may delist a security if the returns
with respect to the future priced security become excessive compared to the
returns being earned by public investors in the issuer's securities.
Furthermore, certain requirements for continued listing, such as the
$1.00 minimum bid price requirement, are outside of our control. Accordingly,
there is a risk that Nasdaq may delist our common stock.
If our common stock is delisted, we likely would seek to list our common
stock on the Nasdaq SmallCap Market or for quotation on the American Stock
Exchange or a regional stock exchange. However, listing or quotation on such
market or exchange could reduce the market liquidity for our common stock. If
our common stock were not listed or quoted on another market or exchange,
trading of our common stock would be conducted in the over-the-counter market on
an electronic bulletin board established for unlisted securities or in what are
commonly referred to as the "pink sheets." As a result, an investor would find
it more difficult to dispose of, or to obtain accurate quotations for the price
of, our common stock. In addition, delisting from the Nasdaq National Market and
failure to obtain listing or quotation on such other market or exchange would
subject our securities to so-called "penny stock" rules. These rules impose
additional sales practice and market-making requirements on broker-dealers who
sell and/or make a market in such securities. Consequently, if our common stock
is delisted from the Nasdaq National Market and we fail to obtain listing or
quotation on another market or exchange, broker-dealers may be less willing or
able to sell and/or make a market in our common stock and purchasers of our
common stock may have more difficulty selling their securities in the secondary
market. In either case, the market liquidity of our common stock would decline.
THERE ARE A SUBSTANTIAL NUMBER OF SHARES OF OUR COMMON STOCK ELIGIBLE FOR FUTURE
SALE IN THE PUBLIC MARKET. THE SALE OF THESE SHARES COULD CAUSE THE MARKET PRICE
OF OUR COMMON STOCK TO FALL.
There are 10,065,653 shares of our common outstanding as of May 8, 2000.
In addition, security holders held options and warrants as of May 8, 2000 which,
if exercised, would obligate us to issue up to an additional 5,591,687 shares of
common stock. A substantial number of those shares, when we issue them upon
exercise, will be available for immediate resale in the public market. In
addition, we have the ability to sell up to approximately 637,000 additional
shares of our common stock to a private investor that will be eligible for
immediate resale in the public market. Furthermore, with respect to the
convertible debenture and warrant financing that closed in April 2000,
approximately 714,285 shares will become eligible for resale upon conversion of
the convertible debenture, assuming the price of our common stock is
approximately $14 per share, which number of shares would increase if our stock
price were less. In addition, shares issued upon exercise of up to 4 million
shares which are issuable upon exercise of Class B warrants will be eligible for
immediate resale in the public market. The market price of our common stock
could fall as a result of such resales.
DILUTIVE AND OTHER EFFECTS OF FUTURE EQUITY ISSUANCES
If we issue equity securities, such issuances may have a dilutive impact
on our other stockholders. Additionally, such issuances would cause our net
income (loss) per share to decrease (increase) in future periods. As a result,
the market price of our common stock could drop. In addition, if we issue common
stock under our Equity Line Agreement, it will be issued at a discount to its
then-prevailing market price. These discounted sales could cause the market
price of our common stock to drop.
RISK OF PRODUCT LIABILITY
Although we currently carry product liability insurance, it is possible
that the amounts of such coverage will be insufficient to protect us from future
claims. Further, we cannot be certain that we will be able to obtain or maintain
additional insurance on acceptable terms for our clinical and commercial
activities or that such additional
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<PAGE> 10
insurance would be sufficient to cover any potential product liability claim or
recall. Failure to maintain sufficient insurance coverage could have a material
adverse effect on our business and results of operations.
THE USE OF HAZARDOUS MATERIALS IN OUR RESEARCH AND DEVELOPMENT EFFORTS IMPOSES
CERTAIN COMPLIANCE COSTS ON US AND MAY SUBJECT US TO LIABILITY FOR CLAIMS
ARISING FROM THE USE OR MISUSE OF THESE MATERIALS.
Our research and development efforts involve the use of hazardous
materials. We are subject to federal, state and local laws and regulations
governing the storage, use and disposal of such materials and certain waste
products. We believe that our safety procedures for handling and disposing of
such materials comply with the standards prescribed by federal, state and local
regulations. However, we cannot completely eliminate the risk of accidental
contamination or injury from these materials. If there was an accident, we could
be held liable for any damages that result. Such liability could exceed our
resources. We may incur substantially increased costs to comply with
environmental regulations if we develop our own commercial manufacturing
facility.
THE MARKET PRICE AND VOLUME OF OUR COMMON STOCK FLUCTUATES SIGNIFICANTLY AND
COULD RESULT IN SUBSTANTIAL LOSSES FOR INDIVIDUAL INVESTORS.
The stock market from time to time experiences significant price and
volume fluctuations that are unrelated to the operating performance of
particular companies. These broad market fluctuations may cause the market price
of our common stock to drop. In addition, the market price of our common stock
is highly volatile. Factors that may cause the market price of our common stock
to drop include fluctuations in our results of operations, timing and
announcements of our technological innovations or new products or those of our
competitors, FDA and foreign regulatory actions, developments with respect to
patents and proprietary rights, public concern as to the safety of products
developed by us or others, changes in health care policy in the United States
and in foreign countries, changes in stock market analyst recommendations
regarding our common stock, the pharmaceutical industry generally and general
market conditions. In addition, the market price of our common stock may drop if
our results of operations fail to meet the expectations of stock market analysts
and investors.
OUR DIRECTORS AND EXECUTIVE OFFICERS OWN A SUBSTANTIAL PERCENTAGE OF OUR COMMON
STOCK. THEIR OWNERSHIP COULD ALLOW THEM TO EXERCISE SIGNIFICANT CONTROL OVER
CORPORATE DECISIONS AND TO IMPLEMENT CORPORATE ACTS THAT ARE NOT IN THE BEST
INTERESTS OF OUR STOCKHOLDERS AS A GROUP.
Our directors and executive officers beneficially own approximately
17.3% of our outstanding common stock as of May 8, 2000. In addition, Montrose
Investments Ltd. and Strong River Investments, Inc. have agreed that they will
vote any and all shares of our common stock that they own as recommended by our
board of directors in any meeting of our stockholders. Therefore, our directors
and executive officers, if they acted together, could exert substantial control
over matters requiring approval by our stockholders. These matters would include
the election of directors and the approval of mergers or other business
combination transactions. This concentration of ownership and voting control may
discourage or prevent someone from acquiring our business.
EFFECT OF CERTAIN CHARTER AND BYLAWS PROVISIONS
Certain provisions of our Certificate of Incorporation and Bylaws may
make it more difficult for someone to acquire control of us. These provisions
may make it more difficult for stockholders to take certain corporate actions
and could delay or prevent someone from acquiring our business. These provisions
could limit the price that certain investors might be willing to pay for shares
of our common stock.
FORWARD-LOOKING STATEMENTS
This prospectus and the documents incorporated by reference into this
prospectus contain forward-looking statements that are based on current
expectations, estimates and projections about our industry, management's
beliefs, and assumptions made by management. Words such as "anticipates,"
"expects," "intends," "plans," "believes," "seeks," "estimates," and variations
of such words and similar expressions are intended to identify such
forward-looking statements. These statements are not guarantees of future
performance and are subject to certain risks, uncertainties and assumptions that
are difficult to predict; therefore, actual results may differ materially from
those expressed or forecasted in any forward-looking statements. The risks and
uncertainties include those noted in
6
<PAGE> 11
"Risk Factors" above and in the documents incorporated by reference. We
undertake no obligation to update publicly any forward-looking statements,
whether as a result of new information, future events or otherwise.
ISSUANCE OF COMMON STOCK TO THE SELLING STOCKHOLDERS
On February 25, 2000 we entered into a securities purchase agreement
with Montrose Investments Ltd. and Strong River Investments, Inc. Under that
agreement, we issued and sold the following securities for total cash
consideration of $8.0 million:
- a total of 520,324 shares of our common stock; and
- closing warrants to purchase 104,000 shares of common stock at an
exercise price of $21.00 per share.
A holder of the closing warrants cannot exercise the closing warrants if
the exercise would cause the holder, together with any affiliate of the holder,
to have beneficial ownership of more than 9.999% of our outstanding shares of
common stock. This restriction in the closing warrants can be waived by the
holder of the warrant if the holder gives us at least 61 days notice.
On April 6, 2000, we entered into a convertible debenture purchase
agreement with Montrose Investments Ltd. and Strong River Investments Inc. Under
that agreement, we issued 5% subordinated convertible debentures in the
aggregate principal amount of $10,000,000, Class A Warrants to purchase up to
315,000 shares of our common stock over five years and Class B Warrants to
purchase up to 4,000,000 shares of our common stock over two years.
The convertible debentures bear interest at the rate of 5% per annum,
payable upon conversion or maturity, in cash or shares of our common stock, and
are convertible into shares of our common stock at the option of the holder at
$20.25 per share for the first 90 days after the closing. Thereafter, they are
convertible at the option of the holder at the lesser of $20.25 per share or
101% of the average of the ten lowest closing bid prices of our common stock in
the previous thirty trading days.
Commencing ninety days after issuance, the Class B Warrants may be
exercised at the sole option of the holder at an exercise price of $33.75 per
share (subject to adjustment for stock splits, reverse splits and combinations).
We may redeem the Class B Warrants on one-day's notice at the redemption price
of $.05 per underlying share redeemed. The Class B Warrants may be exercised by
the holder within one day of delivery of a redemption notice at an exercise
price equal to the lesser of $33.75 per share (subject to adjustment for stock
splits, reverse splits and combinations) and 97% of the closing bid price of our
common stock on the trading day after the redemption notice is delivered.
The Class A Warrants are exercisable for five years at the exercise
price of $19.672 per share. Each Class A Warrant vests and becomes exercisable
(i) as to 57,500 shares upon issuance, (ii) as to 1 share for each 20 shares
issued upon exercise of the Class B Warrants held by the holder of the Class A
Warrant, up to a maximum of 75,000 shares for all Class A Warrants, (iii) as to
the difference between 25,000 shares and 1/20th of the number of shares subject
to redemption notices issued by us under the Class B Warrants held by the holder
of the Class A Warrant, if redemption notices covering fewer than 500,000 shares
are issued prior to the expiration of the Class B Warrants, and (iv) as to
25,000 shares if the Class B Warrants are canceled before any redemption notices
are issued.
Each holder of the convertible debentures, the Class A Warrants and
Class B Warrants is prohibited from using them to acquire shares of our common
stock to the extent that such acquisition would result in the holder, together
with any affiliate of the holder to have beneficial ownership of 9.999% of our
common stock This restriction may be waived by each holder on not less than 61
days' notice to us.
Pursuant to registration rights agreements we entered into with Montrose
Investments Ltd. and Strong River Investments, Inc., we have filed a
registration statement, of which this prospectus forms a part, in order to
permit the selling stockholders to resell to the public the shares of common
stock that they purchased pursuant to the securities purchase agreement and that
they acquire upon any exercise of the closing warrants, convertible debentures,
Class A Warrants and Class B Warrants. The number of shares that we have
registered is based upon the actual number of shares sold to the selling
stockholders pursuant to the securities purchase agreement, the maximum
7
<PAGE> 12
number of shares issuable upon any exercise of the Closing warrants, Class A
Warrants and Class B Warrants, and an estimate of the number of shares issuable
upon conversion of the convertible debentures.
Montrose Investments Ltd. and Strong River Investments, Inc. have agreed
that they will vote any and all shares of our common stock that they own as
recommended by our board of directors in any meeting of our stockholders.
On January 29, 1999 we issued a warrant to purchase up to 15,000 shares
of our common stock at an exercise price of $12.95 per share to Brighton Capital
Ltd. On November 19, 1999 we issued a warrant to purchase up to 35,000 shares of
our common stock an exercise price of $20.625 per share to Brighton Capital Ltd.
On February 25, 2000 and April 6, 2000 we issued to Brighton Capital Ltd.
warrants to purchase 40,000 shares of our common stock and 85,000 shares of our
common stock, respectively, each at an exercise price of $15.00. These four
warrants were issued in consideration of Brighton Capital's assistance with our
capital raising efforts. WE HAVE FILED A REGISTRATION STATEMENT, OF WHICH THIS
PROSPECTUS FORMS A PART, IN ORDER TO PERMIT THE BRIGHTON CAPITAL LTD. TO RESELL
TO THE PUBLIC THE SHARES OF COMMON STOCK THAT THEY ACQUIRE UPON ANY EXERCISE OF
THESE WARRANTS.
USE OF PROCEEDS
The proceeds from the sale of the common stock will belong to the
selling stockholders. We will not receive any proceeds from such sales.
SELLING STOCKHOLDERS
The following table sets forth information regarding beneficial
ownership of our common stock by the selling stockholders as of May 8, 2000.
Each holder of the convertible debentures, the Class A Warrants and Class B
Warrants is prohibited from using them to acquire shares of our common stock to
the extent that such acquisition would result in the holder, together with any
affiliate of the holder to have beneficial ownership of 9.999% of our common
stock following such acquisition. This restriction may be waived by each holder
on not less than 61 days' notice to us.
Since the number of shares of our common stock that will be issuable
upon conversion of the convertible debentures after July 6, 2000 is based upon
fluctuations of the market price of our common stock prior to a conversion of
these debentures the actual number of shares of our common stock that will be
issuable and beneficially owned upon conversion of such debentures cannot be
determined at this time. Because of this fluctuating characteristic, we have
agreed to register a number of shares of our common stock that exceeds the
number of our shares of common stock currently beneficially owned by the holders
of the convertible debentures. The number of shares of our common stock listed
in the table below as being beneficially owned by each selling stockholder
includes the shares of our common stock that are issuable to it, subject to the
9.999% limitation, upon conversion of the convertible debentures and exercise of
the Class A Warrants and Class B Warrants owned by it. However, the 9.999%
limitation would not prevent a selling stockholder from acquiring and selling in
excess of 9.999% of shares of our common stock through a series of acquisitions
and sales under the convertible debentures, Class A Warrants and Class B
Warrants while never beneficially owning more than 9.999% at one time.
The selling stockholders may sell up to 6,348,892 shares of our common
stock pursuant to this prospectus. HBK Management L.L.C. has voting and
investment power over the securities beneficially owned by Montrose Investments
Ltd. Enright Holding Corp., has voting and investment power over the securities
beneficially owned by Strong River Investments, Inc.
<TABLE>
<CAPTION>
Number of Shares of Common Stock
Shares of Number of Beneficially Owned
Common Stock Shares of Following the Offering(6)
Beneficially Owned % of Common Stock -------------------------
Name Before Offering Class Offered Hereby Number % of Class
- ---- --------------- ----- -------------- ----------- ------------
<S> <C> <C> <C> <C> <C>
Montrose Investments Ltd. 1,089,377(1) 9.999% 3,086,946(2) 138,420 *
Strong River Investments, Inc. 1,087,735(3) 9.999% 3,086,946(4) 78,207 *
Brighton Capital Ltd. 175,000(5) 1.709% 175,000(5) -- --
</TABLE>
- ---------------
* Less than 1%.
8
<PAGE> 13
(1) Includes 260,162 shares held by Montrose Investments Ltd. as of May 5, 2000,
582,302 shares subject to warrants exercisable within 60 days of the date
hereof and 246,913 shares held subject to convertible debentures.
(2) Includes 260,162 shares held by Montrose Investments Ltd. as of May 5, 2000,
52,000 shares issuable upon exercise of the closing warrant, 157,500 shares
issuable upon exercise of Class A Warrants, 2,000,000 shares issuable upon
exercise of Class B Warrants and 617,284 shares issuable upon conversion of
the convertible debentures.
(3) Includes 274,950 shares held by Strong River Investments, Inc. as of May 5,
2000, 565,872 shares subject to warrants exercisable within 60 days of the
date hereof and 246,913 shares held subject to convertible debentures.
(4) Includes 260,162 shares held by Strong River Investments, Inc. as of May 5,
2000, 52,000 shares issuable upon exercise of the closing warrant, 157,500
shares issuable upon exercise of Class A Warrants, 2,000,000 shares issuable
upon exercise of Class B Warrants and 617,284 shares issuable upon
conversion of the convertible debentures
(5) Includes 175,000 shares subject to currently exercisable warrants.
(6) Assumes the sale by the selling stockholders of all of the shares of common
stock available for resale under this Prospectus.
PLAN OF DISTRIBUTION
The selling stockholders and any of their pledgees, assignees and
successors-in-interest may, from time to time, sell any or all of the shares of
common stock offered hereby on any stock exchange, market or trading facility on
which the shares are traded or in private transactions. These sales may be at
fixed or negotiated prices. The selling stockholders may use any one or more of
the following methods when selling shares:
- ordinary brokerage transactions and transactions in which the broker-
dealer solicits purchasers;
- block trades in which the broker-dealer will attempt to sell the
shares as agent but may position and resell a portion of the block as
principal to facilitate the transaction;
- purchases by a broker-dealer as principal and resale by the broker-
dealer for its account;
- an exchange distribution in accordance with the rules of the
applicable exchange;
- privately negotiated transactions;
- short sales;
- broker-dealers may agree with the selling stockholders to sell a
specified number of such shares at a stipulated price per share;
- a combination of any such methods of sale; and
- any other method permitted pursuant to applicable law.
The selling stockholders may also sell shares under Rule 144 under the
Securities Act, if available, rather than under this prospectus.
The selling stockholders may also engage in short sales against the box,
puts and calls and other transactions in our securities or derivatives of our
securities and may sell or deliver shares in connection with these trades. The
selling stockholders may pledge their shares to their brokers under the margin
provisions of customer agreements. If a selling stockholder defaults on a margin
loan, the broker may, from time to time, offer and sell the pledged shares. The
selling stockholders have advised us that they have not entered into any
agreements, understandings or arrangements with any underwriters or
broker-dealers regarding the sale of their shares other than ordinary course
brokerage arrangements, nor is there an underwriter or coordinating broker
acting in connection with the proposed sale of shares by the selling
stockholders.
Broker-dealers engaged by the selling stockholders may arrange for other
brokers-dealers to participate in sales. Broker-dealers may receive commissions
or discounts from the selling stockholders, or, if any broker-dealer acts as
agent for the purchaser of shares, from the purchaser, in amounts to be
negotiated. The selling stockholders do not expect these commissions and
discounts to exceed what is customary in the types of transactions involved.
The selling stockholders and any broker-dealers or agents that are
involved in selling the shares may be deemed to be "underwriters" within the
meaning of the Securities Act in connection with such sales. In such event,
9
<PAGE> 14
any commissions received by such broker-dealers or agents and any profit on the
resale of the shares purchased by them may be deemed to be underwriting
commissions or discounts under the Securities Act.
We have agreed to pay all fees and expenses incident to the registration
of the shares, including fees and disbursements of counsel to the selling
stockholders. We have agreed to indemnify the selling stockholders against
certain losses, claims, damages and liabilities, including liabilities under the
Securities Act.
Upon notification to us by a selling stockholder that any material
arrangement has been entered into with a broker-dealer for the sale of shares
through a block trade, special offering, exchange distribution or secondary
distribution or a purchase by a broker or dealer, we will file a supplement to
this prospectus, if required, pursuant to Rule 424(b) under the Securities Act,
disclosing the following:
- the name of each such selling stockholder and of the participating
broker-dealer(s);
- the number of shares involved;
- the price at which such shares were sold;
- the commissions paid or discounts or concessions allowed to such
broker-dealer(s), where applicable;
- that such broker-dealer(s) did not conduct any investigation to
verify the information set out or incorporated by reference in this
prospectus; and
- other facts material to the transaction.
In addition, we will file a supplement to this prospectus when a selling
stockholder notifies us that a donee or pledgee intends to sell more than 500
shares of our common stock.
We have advised the selling stockholders that the anti-manipulation
provisions of Regulation M promulgated under the Securities Exchange Act of 1934
may apply to their sales of our shares offered by this prospectus.
LEGAL MATTERS
Latham & Watkins, Costa Mesa, California, will pass on the validity of
the issuance of the shares of common stock offered by this prospectus.
EXPERTS
The consolidated financial statements of the Company incorporated by
reference in this registration statement have been audited by Arthur Andersen
LLP, independent public accountants, as indicated in their report with respect
thereto, and are included herein in reliance upon the authority of said firm as
experts in giving said report. Reference is made to said report which states
that the Company is in the development stage, as described in Note 1 to the
consolidated financial statements.
LIMITATION ON LIABILITY AND DISCLOSURE OF COMMISSION POSITION ON
INDEMNIFICATION FOR SECURITIES ACT LIABILITIES
Our bylaws provide for indemnification of our directors and officers to
the fullest extent permitted by law. Insofar as indemnification for liabilities
under the Securities Act may be permitted to directors, officers or controlling
persons of the Company pursuant to the Company's Certificate of Incorporation,
as amended, bylaws and the Delaware General Corporation Law, the Company has
been informed that in the opinion of the Commission such indemnification is
against public policy as expressed in such Act and is therefore unenforceable.
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports, proxy statements and
other information with the SEC. You may read and copy any document we file at
the SEC's public reference rooms in Washington, D.C., New York, and
10
<PAGE> 15
Chicago. Please call the SEC at 1-800-SEC-0330 for further information on the
public reference rooms. Our SEC filings are also available to the public at the
SEC's web site at http://www.sec.gov.
The SEC allows us to "incorporate by reference" the information we file
with them which means that we can disclose important information to you by
referring you to those documents instead of having to repeat the information in
this prospectus. The information incorporated by reference is considered to be
part of this prospectus, and later information that we file with the SEC will
automatically update and supersede this information. We incorporate by reference
the documents listed below and any future filings made with the SEC under
Sections 13(a), 13(c), 14, or 15(d) of the Securities Exchange Act of 1934 until
the selling stockholders sell all the shares.
Our annual report on Form 10-K for the fiscal year ended December 31,
1999;
Our definitive proxy statement filed pursuant to Section 14 of the
Exchange Act in connection with our 2000 Annual Meeting of Stockholders;
Our current reports on Form 8-K filed April 3, 2000 and April 21, 2000;
Our Quarterly Report on Form 10-Q for the fiscal quarter ended March 31,
2000; and
The description of our common stock contained in the Registration of
Securities of Certain Successor Issuers filed pursuant to Section 12(g) of the
Exchange Act on Form 8-B on June 27, 1997, including any amendment or reports
filed for the purpose of updating such description.
You can request a copy of these filings, at no cost, by writing or
telephoning us at the following address:
NeoTherapeutics, Inc.
Attn: Investor Relations
157 Technology Drive
Irvine, California 92618
(949) 788-6700
You should rely only on the information contained in this prospectus or
any supplement and in the documents incorporated by reference. We have not
authorized anyone else to provide you with different information. The selling
stockholders will not make an offer of these shares in any state where the offer
is not permitted. You should not assume that the information in this prospectus
or any supplement or in the documents incorporated by reference is accurate on
any date other than the date on the front of those documents.
This prospectus is part of a registration statement we filed with the
SEC (Registration No. 333-_____). That registration statement and the exhibits
filed along with the registration statement contain more information about the
shares sold by the selling stockholders. Because information about contracts
referred to in this prospectus is not always complete, you should read the full
contracts which are filed as exhibits to the registration statement. You may
read and copy the full registration statement and its exhibits at the SEC's
public reference rooms or their web site.
11
<PAGE> 16
================================================================================
WE HAVE NOT AUTHORIZED ANY PERSON TO MAKE A STATEMENT THAT DIFFERS FROM
WHAT IS CONTAINED IN THIS PROSPECTUS. IF ANY PERSON DOES MAKE A STATEMENT THAT
DIFFERS FROM WHAT IS CONTAINED IN THIS PROSPECTUS, YOU SHOULD NOT RELY ON IT.
THIS PROSPECTUS IS NOT AN OFFER TO SELL, NOR IS IT SEEKING AN OFFER TO BUY THESE
SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED. THE
INFORMATION IN THIS PROSPECTUS IS COMPLETE AND ACCURATE AS OF ITS DATE, BUT THE
INFORMATION MAY CHANGE AFTER THAT DATE.
6,348,892 SHARES OF COMMON STOCK
NEOTHERAPEUTICS, INC.
PROSPECTUS
_______________, 2000
================================================================================
<PAGE> 17
PART II
INFORMATION NOT REQUIRED IN THE PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution.
The following sets forth the costs and expenses, all of which shall be
borne by the Registrant, in connection with the offering of the securities
pursuant to this Registration Statement:
<TABLE>
<CAPTION>
<S> <C>
Registration Fee $ 47,037.48
Accounting Fees and Expenses $ 5,000.00*
Legal Fees and Expenses $ 25,000.00*
Miscellaneous $ 5,000.00
-----------
Total $ 82,037.48*
===========
</TABLE>
* Estimated
Item 15. Indemnification of Directors and Officers.
The bylaws of the Registrant provide for indemnification of the
Registrant's directors and officers to the fullest extent permitted by law.
Insofar as indemnification for liabilities under the Securities Act may be
permitted to directors, officers or controlling persons of the Registrant
pursuant to the Registrant's Certificate of Incorporation, bylaws and the
Delaware General Corporation Law (the "DGCL"), the Registrant has been informed
that in the opinion of the Commission such indemnification is against public
policy as expressed in such Act and is therefore unenforceable.
Section 102(b)(7) of the DGCL provides that a certificate of
incorporation may include a provision which eliminates or limits the personal
liability of a director to the corporation or its stockholders for monetary
damages for breach of fiduciary duty as a director, except for liability (i) for
any breach of the director's duty of loyalty to the company or its stockholders,
(ii) for acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of law, (iii) under Section 174 of the DGCL,
relating to prohibited dividends or distributions or the repurchase or
redemption of stock or (iv) for any transaction from which the director derives
an improper personal benefit. The Registrant's Certificate of Incorporation
includes such a provision. As a result of this provision, the Registrant and its
stockholders may be unable to obtain monetary damages from a director for breach
of his or her duty of care.
Item 16. Exhibits.
<TABLE>
<CAPTION>
Exhibits Description
- -------- -----------
<S> <C>
4.1 Securities Purchase Agreement dated as of February 25, 2000, by and among
Registrant, Strong River Investments, Inc. and Montrose Investments L.P.(1)
4.2 Registration Rights Agreement dated as of February 25, 2000, by and among
Registrant, Strong River Investments, Inc. and Montrose Investments L.P.(1)
4.3 Warrant issued by Registrant to Montrose Investments L.P., dated as of February 25,
2000.(1)
4.4 Warrant issued by Registrant to Strong River Investments, Inc., dated as of
February 25, 2000.(1)
4.5 Convertible Debenture Purchase Agreement dated as of April 6, 2000, by and among
Registrant, Strong River Investments, Inc. and Montrose Investments Ltd.(2)
4.6 Registration Rights Agreement dated as of April 6, 2000, by and among Registrant,
Strong River Investments, Inc. and Montrose Investments Ltd.(2)
4.7 Form of 5% Subordinated Convertible Debenture issued by Registrant, dated as of
April 6, 2000.(2)
4.9 Class A Warrant issued by Registrant to Montrose Investments Ltd., dated as of
April 6, 2000.(2)
4.9 Class A Warrant issued by Registrant to Strong River Investments, Inc., dated as of
April 6, 2000.(2)
4.10 Class B Warrant issued by Registrant to Montrose Investments Ltd., dated as of
April 6, 2000.(2)
4.11 Class B Warrant issued by Registrant to Strong River Investments, Inc., dated as of
April 6, 2000.(2)
4.12 Letter Agreement dated as of April 6, 2000, by and among Registrant,
Strong River Investments, Inc.
</TABLE>
II-1
<PAGE> 18
<TABLE>
<CAPTION>
<S> <C>
and Montrose Investments Ltd.(2)
4.13 Warrant issued by Registrant to Brighton Capital Ltd., dated as of January 29, 1999.
4.14 Warrant issued by Registrant to Brighton Capital Ltd., dated as of November 19,
1999.
4.15 Warrant issued by Registrant to Brighton Capital Ltd., dated as of February 25,
2000.
4.16 Warrant issued by Registrant to Brighton Capital Ltd., dated as of April 6, 2000.
5.1 Opinion of Latham & Watkins.
23.1 Consent of Latham & Watkins (included in Exhibit 5).
23.2 Consent of Arthur Andersen LLP.
24.1 Power of Attorney (included on the signature page to this Registration Statement).
</TABLE>
(1) Previously filed with the Commission as an Exhibit to, and incorporated
herein by reference from, the Registrant's Current Report on Form 8-K filed
with the Commission on April 3, 2000.
(2) Previously filed with the Commission as an Exhibit to, and incorporated
herein by reference from, the Registrant's Current Report on Form 8-K filed
with the Commission on April 21, 2000.
Item 17. Undertakings.
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which it offers or sells
securities, a post-effective amendment to this registration statement to: (iii)
Include any additional or changed information on the plan of distribution.
(2) That, for the purpose of determining any liability under the
Securities Act, each post-effective amendment shall be treated as a new
registration statement of the securities offered, and the offering of the
securities at that time to be deemed the initial bona fide offering.
(3) To file a post-effective amendment to remove from
registration any of the securities that remain unsold at the end of the
offering.
(b) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to section 13(a) or section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the registrant pursuant to the foregoing provisions, or otherwise,
the registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer or controlling
person of the registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act and will
be governed by the final adjudication of such issue.
II-2
<PAGE> 19
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Irvine, State of California, on May 15, 2000.
NEOTHERAPEUTICS, INC.
By: /s/ Samuel Gulko
---------------------------------
Samuel Gulko
Chief Financial Officer
POWER OF ATTORNEY
We, the undersigned directors and officers of NeoTherapeutics, Inc., do
hereby constitute and appoint Alvin J. Glasky, Ph.D. and Samuel Gulko, or either
of them, our true and lawful attorneys-in-fact and agents, each with full power
to sign for us or any of us in our names and in any and all capacities, any and
all amendments (including post-effective amendments) to this Registration
Statement, or any related registration statement that is to be effective upon
filing pursuant to Rule 462(b) under the Securities Act of 1933, as amended, and
to file the same, with all exhibits thereto and other documents required in
connection therewith, and each of them with full power to do any and all acts
and things in our names and in any and all capacities, which such
attorneys-in-fact and agents, or either of them, may deem necessary or advisable
to enable NeoTherapeutics, Inc. to comply with the Securities Act of 1933, as
amended, and any rules, regulations, and requirements of the Securities and
Exchange Commission, in connection with this Registration Statement; and we
hereby do ratify and confirm all that the such attorneys-in-fact and agents, or
either of them, shall do or cause to be done by virtue thereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
- --------- ----- ----
<S> <C> <C>
Chief Executive Officer, President and May 15, 2000
/s/ Alvin J. Glasky Director (principal executive officer)
- ------------------------------------
Alvin J. Glasky, Ph.D.
/s/ Samuel Gulko Chief Financial Officer, Secretary May 15, 2000
- ------------------------------------ Treasurer and Director (principal
Samuel Gulko financial and accounting officer)
/s/ Mark J. Glasky Director May 15, 2000
- ------------------------------------
Mark J. Glasky
/s/ Frank M. Meeks Director May 15, 2000
- ------------------------------------
Frank M. Meeks
/s/ Paul H. Silverman Director May 15, 2000
- ------------------------------------
Paul H. Silverman, Ph.D., D.Sc.
/s/ Carol O'Cleiracain Director May 15, 2000
- ------------------------------------
Carol O'Cleireacain, Ph.D.
/s/ Eric L. Nelson Director May 15, 2000
- ------------------------------------
Eric L. Nelson, Ph.D.
</TABLE>
S-1
<PAGE> 20
<TABLE>
<CAPTION>
<S> <C> <C>
Director May 15, 2000
/s/ Stephen Runnels
- ------------------------------------
Stephen Runnels
/s/ Joseph Rubinfeld Director May 15, 2000
- ------------------------------------
Joseph Rubinfeld, Ph.D.
/s/ Armin Kessler Director May 15, 2000
- ------------------------------------
Armin Kessler
/s/ Ann Kessler Director May 15, 2000
- ------------------------------------
Ann Kessler
</TABLE>
S-2
<PAGE> 21
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibits Description
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<S> <C>
4.1 Securities Purchase Agreement dated as of February 25, 2000, by and among
Registrant, Strong River Investments, Inc. and Montrose Investments L.P.(1)
4.2 Registration Rights Agreement dated as of February 25, 2000, by and among
Registrant, Strong River Investments, Inc. and Montrose Investments L.P.(1)
4.3 Warrant issued by Registrant to Montrose Investments L.P., dated as of February 25,
2000.(1)
4.4 Warrant issued by Registrant to Strong River Investments, Inc., dated as of
February 25, 2000.(1)
4.5 Convertible Debenture Purchase Agreement dated as of April 6, 2000, by and among
Registrant, Strong River Investments, Inc. and Montrose Investments Ltd.(2)
4.6 Registration Rights Agreement dated as of April 6, 2000, by and among Registrant,
Strong River Investments, Inc. and Montrose Investments Ltd.(2)
4.7 Form of 5% Subordinated Convertible Debenture issued by Registrant, dated as of
April 6, 2000.(2)
4.9 Class A Warrant issued by Registrant to Montrose Investments Ltd., dated as of
April 6, 2000.(2)
4.9 Class A Warrant issued by Registrant to Strong River Investments, Inc., dated as of
April 6, 2000.(2)
4.10 Class B Warrant issued by Registrant to Montrose Investments Ltd., dated as of
April 6, 2000.(2)
4.11 Class B Warrant issued by Registrant to Strong River Investments, Inc., dated as of
April 6, 2000.(2)
4.12 Letter Agreement dated as of April 6, 2000, by and among Registrant, Strong River
Investments, Inc. and Montrose Investments Ltd.(2)
4.13 Warrant issued by Registrant to Brighton Capital Ltd., dated as of January 29, 1999.
4.14 Warrant issued by Registrant to Brighton Capital Ltd., dated as of November 19,
1999.
4.15 Warrant issued by Registrant to Brighton Capital Ltd., dated as of February 25,
2000.
4.16 Warrant issued by Registrant to Brighton Capital Ltd., dated as of April 6, 2000.
5.1 Opinion of Latham & Watkins.
23.1 Consent of Latham & Watkins (included in Exhibit 5).
23.2 Consent of Arthur Andersen LLP.
24.1 Power of Attorney (included on the signature page to this Registration Statement).
</TABLE>
(1) Previously filed with the Commission as an Exhibit to, and incorporated
herein by reference from, the Registrant's Current Report on Form 8-K filed
with the Commission on April 3, 2000.
(2) Previously filed with the Commission as an Exhibit to, and incorporated
herein by reference from, the Registrant's Current Report on Form 8-K filed
with the Commission on April 21, 2000.
<PAGE> 1
EXHIBIT 4.13
NEITHER THESE SECURITIES NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE
EXERCISABLE HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR
THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM
REGISTRATION UNDER SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"),
AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE
EXEMPTION FROM THE REGISTRATION REQUIREMENTS THEREUNDER AND IN COMPLIANCE WITH
APPLICABLE STATE SECURITIES OR BLUE SKY LAWS.
NEOTHERAPEUTICS, INC.
WARRANT
Dated: January 29, 1999
NeoTherapeutics, Inc., a Delaware corporation (the "Company"), hereby
certifies that, for value received, BRIGHTON CAPITAL, LTD., or its registered
assigns ("Holder"), is entitled, subject to the terms set forth below, to
purchase from the Company up to a total of 15,000 shares of Common Stock, $.001
par value per share (the "Common Stock"), of the Company (each such share, a
"Warrant Share" and all such shares, the "Warrant Shares") at an exercise price
equal to $12.98 per share (as adjusted from time to time as provided in Section
8, the "Exercise Price"), at any time and from time to time from and after the
date hereof and through and including the earlier of (i) January 29, 2004 or
(ii) the business day preceding a Redemption Date, as defined Section 4 hereof
(as applicable, the "Expiration Date"), and subject to the following terms and
conditions:
1. Registration of Warrant. The Company shall register this Warrant upon
records to be maintained by the Company for that purpose (the "Warrant
Register"), in the name of the record Holder hereof from time to time. The
Company may deem and treat the registered Holder of this Warrant as the absolute
owner hereof for the purpose of any exercise hereof or any distribution to the
Holder, and for all other purposes, and the Company shall not be affected by
notice to the contrary.
2. Registration of Transfers and Exchanges.
(a) This Warrant or the Warrant Shares issued upon any exercise
hereof may only be transferred pursuant to an effective registration statement
under the Securities Act, to the Company or pursuant to an available exemption
from or in a transaction not subject to the registration requirements of the
Securities Act. In connection with any transfer of this Warrant or any Warrant
Shares other than pursuant to an effective registration statement or to the
Company, the Company may require the transferor thereof to provide to the
Company an opinion of counsel selected by the transferor, the form and substance
of which opinion shall be reasonably satisfactory to the Company, to the effect
that such transfer does not require registration of such transferred securities
under the Securities Act. Holder agrees to the imprinting, so long as is
required by this Section 2(a), of a legend substantially similar to that first
above written on any New Warrant (as defined in Section 2(b) below) or a legend
of similar import on any Warrant Shares issued upon an
<PAGE> 2
exercise hereof. Any such transferee shall agree in writing to be bound by the
terms of this Warrant and shall have the rights of Holder under this Warrant.
(b) The Company shall register the transfer of any portion of
this Warrant in conformance with Section 2(a) in the Warrant Register, upon
surrender of this Warrant, with the Form of Assignment attached hereto duly
completed and signed, to the Company at the office specified in or pursuant to
Section 11. Upon any such registration or transfer, a new warrant to purchase
Common Stock, in substantially the form of this Warrant (any such new warrant, a
"New Warrant"), evidencing the portion of this Warrant so transferred shall be
issued to the transferee and a New Warrant evidencing the remaining portion of
this Warrant not so transferred, if any, shall be issued to the transferring
Holder. The acceptance of the New Warrant by the transferee thereof shall be
deemed the acceptance of such transferee of all of the rights and obligations of
a holder of a Warrant.
(c) This Warrant is exchangeable, upon the surrender hereof by
the Holder to the office of the Company specified in or pursuant to Section 3(b)
for one or more New Warrants, evidencing in the aggregate the right to purchase
the number of Warrant Shares which may then be purchased hereunder. Any such New
Warrant will be dated the date of such exchange.
3. Duration and Exercise of Warrant.
(a) This Warrant shall be exercisable by the then registered
Holder on any business day before 5:00 P.M., California time, at any time and
from time to time on or after the date hereof to and including the Expiration
Date. At 5:00 P.M., California time on the Expiration Date, the portion of this
Warrant not exercised prior thereto shall be and become void and of no value.
(b) Subject to Sections 2(c), 5 and 9, upon surrender of this
Warrant, with the Form of Election to Purchase attached hereto duly completed
and signed, to the Company at its address for notice set forth in Section 11 and
upon payment of the Exercise Price multiplied by the number of Warrant Shares
that the Holder intends to purchase hereunder, in the manner provided hereunder,
all as specified by the Holder in the Form of Election to Purchase, the Company
shall promptly (but in no event later than 3 business days after the Date of
Exercise (as defined herein)) issue or cause to be issued and cause to be
delivered to or upon the written order of the Holder and in such name or names
as the Holder may designate, a certificate for the Warrant Shares issuable upon
such exercise, free of restrictive legends except (i) either in the event that a
registration statement covering the resale of the Warrant Shares and naming the
Holder as a selling stockholder thereunder is not then effective or the Warrant
Shares are not freely transferable without volume restrictions pursuant to Rule
144(k) promulgated under the Securities Act of 1933, as amended (the "Securities
Act"), or (ii) if this Warrant shall have been issued pursuant to a written
agreement between the original Holder and the Company, as required by such
agreement. Any person so designated by the Holder to receive Warrant Shares
shall be deemed to have become holder of record of such Warrant Shares as of the
Date of Exercise of this Warrant.
A "Date of Exercise" means the date on which the Company shall
have received (i) this Warrant (or any New Warrant, as applicable), with the
Form of Election to Purchase attached hereto (or attached to such New Warrant)
appropriately completed and duly signed, and (ii) payment of the Exercise Price
for the number of Warrant Shares so indicated by the holder hereof to be
purchased.
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<PAGE> 3
(c) This Warrant shall be exercisable, either in its entirety or,
from time to time, for a portion of the number of Warrant Shares. If less than
all of the Warrant Shares which may be purchased under this Warrant are
exercised at any time, the Company shall issue or cause to be issued, at its
expense, a New Warrant evidencing the right to purchase the remaining number of
Warrant Shares for which no exercise has been evidenced by this Warrant.
4. Redemption.
(a) The remaining unexercised portion of this Warrant may be
completely redeemed at the option of the Company at any time prior to exercise
if, at the time notice of such redemption is given by the Company as provided in
Section 4(b) below, the Daily Price has exceeded 200% of the Exercise Price then
in effect for the 10 consecutive trading days immediately preceding the date of
such notice, at a price equal to $0.25 per Warrant Share then subject to the
unexercised portion of this Warrant (the "Redemption Price"). For the purpose of
the foregoing sentence, the term "Daily Price" shall mean, for any relevant day,
the closing bid price or closing price, as the case may be, on that day as
reported by the principal exchange, national market or quotation system on which
prices for the Common Stock are reported. On the date set for redemption in the
redemption notice (the "Redemption Date") the Holder of record of this Warrant
shall be entitled to payment of the Redemption Price upon surrender of such
redeemed Warrant to the Company at the principal office of the Company.
(b) Notice of redemption of Warrant shall be given at least 30
days prior to the Redemption Date by mailing, by registered or certified mail,
return receipt requested, a copy of such notice to the Holder of this Warrant at
the address appearing on the Warrant Register or such other address designated
in writing by the holder of record to the Company not less than 40 days prior to
the Redemption Date.
(c) From and after the Redemption Date, all rights of the Holder
(except the right to receive the Redemption Price) with respect to this Warrant
shall terminate.
(d) The Company shall pay to the Holder of this Warrant all
monies to which the Holder of this Warrant is entitled, provided such Holder
shall have surrendered this Warrant to the Company. The Holder shall have no
right to interest following the Redemption Date unless the Company shall have
defaulted in its obligation to deliver the Redemption Price.
5. Payment of Taxes. The Company will pay all documentary stamp taxes
attributable to the issuance of Warrant Shares upon the exercise of this
Warrant; provided, however, that the Company shall not be required to pay any
tax which may be payable in respect of any transfer involved in the registration
of any certificates for Warrant Shares or Warrants in a name other than that of
the Holder. The Holder shall be responsible for all other tax liability that may
arise as a result of holding or transferring this Warrant or receiving Warrant
Shares upon exercise hereof.
6. Replacement of Warrant. If this Warrant is mutilated, lost, stolen or
destroyed, the Company shall issue or cause to be issued in exchange and
substitution for and upon cancellation hereof, or in lieu of and substitution
for this Warrant, a New Warrant, but only upon receipt of evidence reasonably
satisfactory to the Company of such loss, theft or destruction and indemnity, if
requested, satisfactory to it. Applicants for a New Warrant under such
circumstances shall also comply with such other reasonable regulations and
procedures and pay such other reasonable charges as the Company may prescribe.
-3-
<PAGE> 4
7. Reservation of Warrant Shares. The Company covenants that it will at
all times reserve and keep available out of the aggregate of its authorized but
unissued Common Stock, solely for the purpose of enabling it to issue Warrant
Shares upon exercise of this Warrant as herein provided, the number of Warrant
Shares which are then issuable and deliverable upon the exercise of this entire
Warrant, free from preemptive rights or any other actual contingent purchase
rights of persons other than the Holder (taking into account the adjustments and
restrictions of Section 8). The Company covenants that all Warrant Shares that
shall be so issuable and deliverable shall, upon issuance and the payment of the
applicable Exercise Price in accordance with the terms hereof, be duly and
validly authorized, issued and fully paid and nonassessable.
8. Certain Adjustments. The Exercise Price and number of Warrant Shares
issuable upon exercise of this Warrant are subject to adjustment from time to
time as set forth in this Section 8. Upon each such adjustment of the Exercise
Price pursuant to this Section 8, the Holder shall thereafter prior to the
Expiration Date be entitled to purchase, at the Exercise Price resulting from
such adjustment, the number of Warrant Shares obtained by multiplying the
Exercise Price in effect immediately prior to such adjustment by the number of
Warrant Shares issuable upon exercise of this Warrant immediately prior to such
adjustment and dividing the product thereof by the Exercise Price resulting from
such adjustment.
(a) If the Company, at any time while this Warrant is
outstanding, (i) shall pay a stock dividend (except scheduled dividends paid on
outstanding preferred stock as of the date hereof which contain a stated
dividend rate) or otherwise make a distribution or distributions on shares of
its Common Stock or on any other class of capital stock and not the Common
Stock) payable in shares of Common Stock, (ii) subdivide outstanding shares of
Common Stock into a larger number of shares, or (iii) combine outstanding shares
of Common Stock into a smaller number of shares, the Exercise Price shall be
multiplied by a fraction of which the numerator shall be the number of shares of
Common Stock (excluding treasury shares, if any) outstanding before such event
and of which the denominator shall be the number of shares of Common Stock
(excluding treasury shares, if any) outstanding after such event. Any adjustment
made pursuant to this Section shall become effective immediately after the
record date for the determination of stockholders entitled to receive such
dividend or distribution and shall become effective immediately after the
effective date in the case of a subdivision or combination, and shall apply to
successive subdivisions and combinations.
(b) In case of any reclassification of the Common Stock, any
consolidation or merger of the Company with or into another person, the sale or
transfer of all or substantially all of the assets of the Company or any
compulsory share exchange pursuant to which the Common Stock is converted into
other securities, cash or property, then the Holder shall have the right
thereafter to exercise this Warrant only into the shares of stock and other
securities and property receivable upon or deemed to be held by holders of
Common Stock following such reclassification, consolidation, merger, sale,
transfer or share exchange, and the Holder shall be entitled upon such event to
receive such amount of securities or property equal to the amount of Warrant
Shares such Holder would have been entitled to had such Holder exercised this
Warrant immediately prior to such reclassification, consolidation, merger, sale,
transfer or share exchange. The terms of any such consolidation, merger, sale,
transfer or share exchange shall include such terms so as to continue to give to
the Holder the right to receive the securities or property set forth in this
Section 8(b) upon any exercise following any such reclassification,
consolidation, merger, sale, transfer or share exchange.
-4-
<PAGE> 5
(c) If the Company, at any time while this Warrant is
outstanding, shall distribute to all holders of Common Stock (and not to holders
of this Warrant) evidences of its indebtedness or assets or rights or warrants
to subscribe for or purchase any security (excluding those referred to in
Sections 8(a), (b) and (d)), then in each such case the Exercise Price shall be
determined by multiplying the Exercise Price in effect immediately prior to the
record date fixed for determination of stockholders entitled to receive such
distribution by a fraction of which the denominator shall be the Exercise Price
determined as of the record date mentioned above, and of which the numerator
shall be such Exercise Price on such record date less the then fair market value
at such record date of the portion of such assets or evidence of indebtedness so
distributed applicable to one outstanding share of Common Stock as determined by
the Company's independent certified public accountants that regularly examines
the financial statements of the Company (an "Appraiser").
(d) Except for (i) the granting of options or warrants to
employees, officers, directors, consultants and other service providers (but not
Strategic Partners (as defined below)), and the issuance of shares of Common
Stock upon exercise of options granted, under any stock option plan heretofore
or hereinafter duly adopted by the Company and (ii) the issuance of shares of
Common Stock issuable pursuant to the Private Equity Line of Credit Agreement
dated March 27, 1998 between the Company and Kingsbridge Capital Limited, as
described in the Company's Amendment No. 2 on Form SB-2, filed with the
Commission on August 13, 1998 (but not pursuant to any amendment or modification
thereto), if, at any time while this Warrant is outstanding, the Company shall
issue or cause to be issued rights or warrants to acquire or otherwise sell or
distribute shares of Common Stock for a consideration per share less than the
Exercise Price then in effect, then, forthwith upon such issue or sale, the
Exercise Price shall be reduced to the price (calculated to the nearest cent)
determined by multiplying the Exercise Price in effect immediately prior thereto
by a fraction, the numerator of which shall be the sum of (i) the number of
shares of Common Stock outstanding immediately prior to such issuance, and (ii)
the number of shares of Common Stock which the aggregate consideration received
(or to be received, assuming exercise or conversion in full of such rights,
warrants and convertible securities) for the issuance of such additional shares
of Common Stock would purchase at the Exercise Price, and the denominator of
which shall be the sum of the number of shares of Common Stock outstanding
immediately after the issuance of such additional shares. Such adjustment shall
be made successively whenever such an issuance is made. For purposes of this
Section 8(d), a "Strategic Partner" means any entity which is, itself or through
its subsidiaries, an operating company in a business related to the business of
the Company and in which the Company receives material benefits in addition to
the investment of funds, but shall not include any entering into a transaction
in which the Company is issuing securities primarily for the purpose of raising
capital or to an entity whose primary business is investing in securities.
(e) For the purposes of this Section 8, the following clauses
shall also be applicable:
(i) Record Date. In case the Company shall take a
record of the holders of its Common Stock for
the purpose of entitling them (A) to receive a
dividend or other distribution payable in Common
Stock or in securities convertible or
exchangeable into shares of Common Stock, or (B)
to subscribe for or purchase Common Stock or
securities convertible or exchangeable into
shares of Common Stock, then such record date
shall be deemed to be the date of the issue or
sale of the shares of Common Stock deemed to
have been issued or sold upon
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<PAGE> 6
the declaration of such dividend or the making
of such other distribution or the date of the
granting of such right of subscription or
purchase, as the case may be.
(ii) Treasury Shares. The number of shares of Common
Stock outstanding at any given time shall not
include shares owned or held by or for the
account of the Company, and the disposition of
any such shares shall be considered an issue or
sale of Common Stock.
(f) All calculations under this Section 8 shall be made to the
nearest cent or the nearest 1/100th of a share, as the case may be.
(g) Whenever the Exercise Price is adjusted pursuant to Section
8(c) above, the Holder, after receipt of the determination by the Appraiser,
shall have the right to select an additional appraiser (which shall be a
nationally recognized accounting firm), in which case the adjustment shall be
equal to the average of the adjustments recommended by each of the Appraiser and
such appraiser. The Holder shall promptly mail or cause to be mailed to the
Company, a notice setting forth the Exercise Price after such adjustment and
setting forth a brief statement of the facts requiring such adjustment. Such
adjustment shall become effective immediately after the record date mentioned
above.
(h) If:
(i) the Company shall declare a dividend (or any
other distribution) on its Common Stock; or
(ii) the Company shall declare a special nonrecurring
cash dividend on or a redemption of its Common
Stock; or
(iii) the Company shall authorize the granting to all
holders of the Common Stock rights or warrants
to subscribe for or purchase any shares of
capital stock of any class or of any rights; or
(iv) the approval of any stockholders of the Company
shall be required in connection with any
reclassification of the Common Stock of the
Company, any consolidation or merger to which
the Company is a party, any sale or transfer of
all or substantially all of the assets of the
Company, or any compulsory share exchange
whereby the Common Stock is converted into other
securities, cash or property; or
(v) the Company shall authorize the voluntary
dissolution, liquidation or winding up of the
affairs of the Company,
then the Company shall cause to be mailed to each Holder at their last addresses
as they shall appear upon the Warrant Register, at least 30 calendar days prior
to the applicable record or effective date hereinafter specified, a notice
stating (x) the date on which a record is to be taken for the purpose of such
dividend, distribution, redemption, rights or warrants, or if a record is not to
be taken, the date as of which the holders of Common Stock of record to be
entitled to such dividend, distributions, redemption, rights or warrants are to
be determined or (y) the date on which such reclassification, consolidation,
merger, sale, transfer or share exchange is expected to become effective or
close, and
-6-
<PAGE> 7
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,
sale, transfer, share exchange, dissolution, liquidation or winding up;
provided, however, that the failure to mail such notice or any defect therein or
in the mailing thereof shall not affect the validity of the corporate action
required to be specified in such notice.
9. Payment of Exercise Price. The Holder may pay the Exercise Price in
one of the following manners:
(a) Cash Exercise. The Holder shall deliver immediately available
funds; or
(b) Cashless Exercise. The Holder shall surrender this Warrant to
the Company together with a notice of cashless exercise, in which event the
Company shall issue to the Holder the number of Warrant Shares determined as
follows:
X = Y (A-B)/A
where:
X = the number of Warrant Shares to be issued to
the Holder.
Y = the number of Warrant Shares with respect to
which this Warrant is being exercised.
A = the average of the closing sale prices of the
Common Stock for the five (5) trading days
immediately prior to (but not including) the Date
of Exercise.
B = the Exercise Price.
For purposes of Rule 144 promulgated under the Securities Act, it is intended,
understood and acknowledged that the Warrant Shares issued in a cashless
exercise transaction shall be deemed to have been acquired by the Holder, and
the holding period for the Warrant Shares shall be deemed to have been
commenced, on the issue date.
10. Fractional Shares. The Company shall not be required to issue or
cause to be issued fractional Warrant Shares on the exercise of this Warrant.
The number of full Warrant Shares which shall be issuable upon the exercise of
this Warrant shall be computed on the basis of the aggregate number of Warrant
Shares purchasable on exercise of this Warrant so presented. If any fraction of
a Warrant Share would, except for the provisions of this Section 10, be issuable
on the exercise of this Warrant, the Company shall pay an amount in cash equal
to the Exercise Price multiplied by such fraction.
11. Notices. Any and all notices or other communications or deliveries
hereunder shall be in writing and shall be deemed given and effective on the
earliest of (i) the date of transmission, if such notice or communication is
delivered via facsimile at the facsimile telephone number specified in this
Section prior to 5:00 p.m. (California time) on a business day, (ii) the
business day after the date of transmission, if such notice or communication is
delivered via facsimile at the facsimile telephone number specified in this
Section later than 5:00 p.m. (California time) on any date and
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<PAGE> 8
earlier than 11:59 p.m. (California time) on such date, (iii) the business day
following the date of mailing, if sent by nationally recognized overnight
courier service, or (iv) upon actual receipt by the party to whom such notice is
required to be given. The addresses for such communications shall be: (i) if to
the Company, to 157 Technology Drive, Irvine, CA 92618, Attention: Chief
Financial Officer, or to facsimile no. (949) 788-6706, or (ii) if to the Holder,
to the Holder at the address or facsimile number appearing on the Warrant
Register or such other address or facsimile number as the Holder may provide to
the Company in accordance with this Section 11.
12. Warrant Agent. The Company shall serve as warrant agent under this
Warrant. Upon thirty (30) days' notice to the Holder, the Company may appoint a
new warrant agent. Any corporation into which the Company may be merged or any
corporation resulting from any consolidation to which the Company shall be a
party or any corporation to which the Company transfers substantially all of its
corporate assets shall be a successor warrant agent under this Warrant without
any further act. Any such successor warrant agent shall promptly cause notice of
its succession as warrant agent to be mailed (by first class mail, postage
prepaid) to the Holder at the Holder's last address as shown on the Warrant
Register.
13. Miscellaneous.
(a) This Warrant shall be binding on and inure to the benefit of
the parties hereto and their respective successors and permitted assigns. This
Warrant may be amended only in writing signed by the Company and the Holder and
their successors and assigns.
(b) Subject to Section 13(a), above, nothing in this Warrant
shall be construed to give to any person or corporation other than the Company
and the Holder any legal or equitable right, remedy or cause under this Warrant.
This Warrant shall inure to the sole and exclusive benefit of the Company and
the Holder.
(c) This Warrant shall be governed by and construed and enforced
in accordance with the internal laws of the State of California without regard
to the principles of conflicts of law thereof. The Company and the Holder hereby
irrevocably submit to the exclusive jurisdiction of the state and federal courts
sitting in Orange County California, for the adjudication of any dispute
hereunder or in connection herewith or with any transaction contemplated hereby
or discussed herein, 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, or that such suit, action or proceeding is
improper. Each of the Company and the Holder hereby irrevocably waives personal
service of process and consents to process being served in any such suit, action
or proceeding by receiving a copy thereof sent to the Company at the address in
effect for notices to it under this instrument and agrees that such service
shall constitute good and sufficient service of process and notice thereof.
Nothing contained herein shall be deemed to limit in any way any right to serve
process in any manner permitted by law.
(d) The headings herein are for convenience only, do not
constitute a part of this Warrant and shall not be deemed to limit or affect any
of the provisions hereof.
(e) In case any one or more of the provisions of this Warrant
shall be invalid or unenforceable in any respect, the validity and
enforceability of the remaining terms and provisions of this Warrant shall not
in any way be affected or impaired thereby and the parties will attempt in
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<PAGE> 9
good faith to agree upon a valid and enforceable provision which shall be a
commercially reasonable substitute therefor, and upon so agreeing, shall
incorporate such substitute provision in this Warrant.
IN WITNESS WHEREOF, the Company has caused this Warrant to be duly
executed by its authorized officer as of the date first indicated above.
NEOTHERAPEUTICS, INC.
By: /s/Samuel Gulko
----------------------------------------------------
Name: Samuel Gulko
----------------------------------------------------
Title: Chief Financial Officer, Secretary and Treasurer
-------------------------------------------------
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<PAGE> 10
FORM OF ELECTION TO PURCHASE
(To be executed by the Holder to exercise the right to purchase shares of Common
Stock under the foregoing Warrant)
To NeoTherapeutics, Inc.:
In accordance with the Warrant enclosed with this Form of Election to
Purchase, the undersigned hereby irrevocably elects to purchase __________
shares of Common Stock ("Common Stock"), $.001 par value per share, of
NeoTherapeutics, Inc. and , if such Holder is not utilizing the cashless
exercise provisions set forth in this Warrant, encloses herewith $__________ in
cash, certified or official bank check or checks, which sum represents the
aggregate Exercise Price (as defined in the Warrant) for the number of shares of
Common Stock to which this Form of Election to Purchase relates, together with
any applicable taxes payable by the undersigned pursuant to the Warrant.
The undersigned requests that certificates for the shares of Common
Stock issuable upon this exercise be issued in the name of
PLEASE INSERT SOCIAL SECURITY OR
TAX IDENTIFICATION NUMBER
------------------------------------
- --------------------------------------------------------------------------------
(Please print name and address)
If the number of shares of Common Stock issuable upon this exercise
shall not be all of the shares of Common Stock which the undersigned is entitled
to purchase in accordance with the enclosed Warrant, the undersigned requests
that a New Warrant (as defined in the Warrant) evidencing the right to purchase
the shares of Common Stock not issuable pursuant to the exercise evidenced
hereby be issued in the name of and delivered to:
- --------------------------------------------------------------------------------
(Please print name and address)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Dated: __________, ____ Name of Holder:
(Print)
-----------------------------
(By:)
--------------------------------
(Name:)
(Title:)
(Signature must conform in all
respects to name of holder as
specified on the face of the
Warrant)
<PAGE> 11
FORM OF ASSIGNMENT
[To be completed and signed only upon transfer of Warrant]
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers
unto ____________________ the right represented by the within Warrant to
purchase __________ shares of Common Stock of NeoTherapeutics, Inc. to which the
within Warrant relates and appoints ____________________ attorney to transfer
said right on the books of NeoTherapeutics, Inc. with full power of substitution
in the premises.
Dated: __________, ____
-------------------------------------------------
(Signature must conform in all respects to name
of holder as specified on the face of the Warrant)
-------------------------------------------------
Address of Transferee
-------------------------------------------------
-------------------------------------------------
In the presence of:
- --------------------------
<PAGE> 1
EXHIBIT 4.14
NEITHER THESE SECURITIES NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE
EXERCISABLE HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR
THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM
REGISTRATION UNDER SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"),
AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE
EXEMPTION FROM THE REGISTRATION REQUIREMENTS THEREUNDER AND IN COMPLIANCE WITH
APPLICABLE STATE SECURITIES OR BLUE SKY LAWS.
NEOTHERAPEUTICS, INC.
WARRANT
Dated: November 19, 1999
NeoTherapeutics, Inc., a Delaware corporation (the "Company"), hereby
certifies that, for value received, BRIGHTON CAPITAL, LTD., or its registered
assigns ("Holder"), is entitled, subject to the terms set forth below, to
purchase from the Company up to a total of 35,000 shares of Common Stock, $.001
par value per share (the "Common Stock"), of the Company (each such share, a
"Warrant Share" and all such shares, the "Warrant Shares") at an exercise price
equal to $20.625 per share (as adjusted from time to time as provided in Section
8, the "Exercise Price"), at any time and from time to time from and after the
date hereof and through and including the earlier of (i) November 19, 2004 or
(ii) the business day preceding a Redemption Date, as defined in Section 4
hereof (as applicable, the "Expiration Date"), and subject to the following
terms and conditions:
1. Registration of Warrant. The Company shall register this Warrant upon
records to be maintained by the Company for that purpose (the "Warrant
Register"), in the name of the record Holder hereof from time to time. The
Company may deem and treat the registered Holder of this Warrant as the absolute
owner hereof for the purpose of any exercise hereof or any distribution to the
Holder, and for all other purposes, and the Company shall not be affected by
notice to the contrary.
2. Registration of Transfers and Exchanges.
(a) This Warrant or the Warrant Shares issued upon any exercise hereof
may only be transferred pursuant to an effective registration statement under
the Securities Act, to the Company or pursuant to an available exemption from or
in a transaction not subject to the registration requirements of the Securities
Act. In connection with any transfer of this Warrant or any Warrant Shares other
than pursuant to an effective registration statement or to the Company, the
Company may require the transferor thereof to provide to the Company an opinion
of counsel selected by the transferor, the form and substance of which opinion
shall be reasonably satisfactory to the Company, to the effect that such
transfer does not require registration of such transferred securities under the
Securities Act. Holder agrees to the imprinting, so long as is required by this
Section 2(a), of a legend substantially similar to that first above written on
any New Warrant (as defined in Section 2(b) below) or a legend of similar import
on any Warrant Shares issued upon an
<PAGE> 2
exercise hereof. Any such transferee shall agree in writing to be bound by the
terms of this Warrant and shall have the rights of Holder under this Warrant.
(b) The Company shall register the transfer of any portion of
this Warrant in conformance with Section 2(a) in the Warrant Register, upon
surrender of this Warrant, with the Form of Assignment attached hereto duly
completed and signed, to the Company at the office specified in or pursuant to
Section 11. Upon any such registration or transfer, a new warrant to purchase
Common Stock, in substantially the form of this Warrant (any such new warrant, a
"New Warrant"), evidencing the portion of this Warrant so transferred shall be
issued to the transferee and a New Warrant evidencing the remaining portion of
this Warrant not so transferred, if any, shall be issued to the transferring
Holder. The acceptance of the New Warrant by the transferee thereof shall be
deemed the acceptance of such transferee of all of the rights and obligations of
a holder of a Warrant.
(c) This Warrant is exchangeable, upon the surrender hereof by
the Holder to the office of the Company specified in or pursuant to Section 3(b)
for one or more New Warrants, evidencing in the aggregate the right to purchase
the number of Warrant Shares which may then be purchased hereunder.
3. Duration and Exercise of Warrant.
(a) This Warrant shall be exercisable by the then registered
Holder on any business day before 5:00 P.M., California time, at any time and
from time to time on or after the date hereof to and including the Expiration
Date. At 5:00 P.M., California time on the Expiration Date, the portion of this
Warrant not exercised prior thereto shall be and become void and of no value.
(b) Subject to Sections 2(c), and 5, upon surrender of this
Warrant, with the Form of Election to Purchase attached hereto duly completed
and signed, to the Company at its address for notice set forth in Section 11 and
upon payment of the Exercise Price multiplied by the number of Warrant Shares
that the Holder intends to purchase hereunder, in the manner provided hereunder,
all as specified by the Holder in the Form of Election to Purchase, the Company
shall promptly (but in no event later than 3 business days after the Date of
Exercise (as defined herein)) issue or cause to be issued and cause to be
delivered to or upon the written order of the Holder and in such name or names
as the Holder may designate, a certificate for the Warrant Shares issuable upon
such exercise, free of restrictive legends except (i) either in the event that a
registration statement covering the resale of the Warrant Shares and naming the
Holder as a selling stockholder thereunder is not then effective or the Warrant
Shares are not freely transferable without volume restrictions pursuant to Rule
144(k) promulgated under the Securities Act of 1933, as amended (the "Securities
Act"), or (ii) if this Warrant shall have been issued pursuant to a written
agreement between the original Holder and the Company, as required by such
agreement. Any person so designated by the Holder to receive Warrant Shares
shall be deemed to have become holder of record of such Warrant Shares as of the
Date of Exercise of this Warrant.
A "Date of Exercise" means the date on which the Company shall
have received (i) this Warrant (or any New Warrant, as applicable), with the
Form of Election to Purchase attached hereto (or attached to such New Warrant)
appropriately completed and duly signed, and (ii) payment of the Exercise Price
for the number of Warrant Shares so indicated by the holder hereof to be
purchased.
-2-
<PAGE> 3
(c) This Warrant shall be exercisable, either in its entirety or,
from time to time, for a portion of the number of Warrant Shares. If less than
all of the Warrant Shares which may be purchased under this Warrant are
exercised at any time, the Company shall issue or cause to be issued, at its
expense, a New Warrant evidencing the right to purchase the remaining number of
Warrant Shares for which no exercise has been evidenced by this Warrant.
(d) Prior to the exercise of this Warrant, the Holder shall not
be entitled to any rights as a stockholder of the Company with respect to the
Warrant Shares, including (without limitation) the right to vote such shares,
receive dividends or other distributions thereon or be notified of stockholder
meetings (except as otherwise set forth in Section 8(f) herein).
4. Redemption.
(a) The remaining unexercised portion of this Warrant may be
completely redeemed at the option of the Company at any time prior to exercise
if, at the time notice of such redemption is given by the Company as provided in
Section 4(b) below, the Daily Price has exceeded $41.25 per share for any 10
consecutive trading days immediately preceding the date of such notice, at a
price equal to $0.25 per Warrant Share then subject to the unexercised portion
of this Warrant (the "Redemption Price"). For the purpose of the foregoing
sentence, the term "Daily Price" shall mean, for any relevant day, the closing
bid price or closing price of the Common Stock, as the case may be, on that day
as reported by the principal exchange, national market or quotation system on
which prices for the Common Stock are reported. On the date set for redemption
in the redemption notice (the "Redemption Date") the Holder of record of this
Warrant shall be entitled to payment of the Redemption Price upon surrender of
such redeemed Warrant to the Company at the principal office of the Company.
(b) Notice of redemption of Warrant shall be given at least 30
days prior to the Redemption Date by mailing, by registered or certified mail,
return receipt requested, a copy of such notice to the Holder of this Warrant at
the address appearing on the Warrant Register or such other address designated
in writing by the holder of record to the Company not less than 40 days prior to
the Redemption Date.
(c) From and after the Redemption Date, all rights of the Holder
(except the right to receive the Redemption Price) with respect to this Warrant
shall terminate.
(d) The Company shall pay to the Holder of this Warrant all
monies to which the Holder of this Warrant is entitled, provided such Holder
shall have surrendered this Warrant to the Company. The Holder shall have no
right to interest following the Redemption Date unless the Company shall have
defaulted in its obligation to deliver the Redemption Price.
5. Payment of Taxes. The Company will pay any documentary stamp taxes
attributable to the issuance of Warrant Shares upon the exercise of this
Warrant; provided, however, that the Company shall not be required to pay any
tax which may be payable in respect of any transfer involved in the registration
of any certificates for Warrant Shares or Warrants in a name other than that of
the Holder. The Holder shall be responsible for all other tax liability that may
arise as a result of holding or transferring this Warrant or receiving Warrant
Shares upon exercise hereof.
6. Replacement of Warrant. If this Warrant is mutilated, lost, stolen or
destroyed, the Company shall issue or cause to be issued in exchange and
substitution for and upon cancellation
-3-
<PAGE> 4
hereof, or in lieu of and substitution for this Warrant, a New Warrant, but only
upon receipt of evidence reasonably satisfactory to the Company of such loss,
theft or destruction and indemnity, if requested, satisfactory to it. Applicants
for a New Warrant under such circumstances shall also comply with such other
reasonable regulations and procedures and pay such other reasonable charges as
the Company may prescribe.
7. Reservation of Warrant Shares. The Company covenants that it will at
all times reserve and keep available out of the aggregate of its authorized but
unissued Common Stock, solely for the purpose of enabling it to issue Warrant
Shares upon exercise of this Warrant as herein provided, the number of Warrant
Shares which are then issuable and deliverable upon the exercise of this entire
Warrant, free from preemptive rights or any other actual contingent purchase
rights of persons other than the Holder (taking into account the adjustments and
restrictions of Section 8). The Company covenants that all Warrant Shares that
shall be so issuable and deliverable shall, upon issuance and the payment of the
applicable Exercise Price in accordance with the terms hereof, be duly and
validly authorized, issued and fully paid and nonassessable.
8. Certain Adjustments. The Exercise Price and number of Warrant Shares
issuable upon exercise of this Warrant are subject to adjustment from time to
time as set forth in this Section 8. Upon each such adjustment of the Exercise
Price pursuant to this Section 8, the Holder shall thereafter prior to the
Expiration Date be entitled to purchase, at the Exercise Price resulting from
such adjustment, the number of Warrant Shares obtained by multiplying the
Exercise Price in effect immediately prior to such adjustment by the number of
Warrant Shares issuable upon exercise of this Warrant immediately prior to such
adjustment and dividing the product thereof by the Exercise Price resulting from
such adjustment.
(a) If the Company, at any time while this Warrant is
outstanding, (i) shall pay a stock dividend (except scheduled dividends paid on
outstanding preferred stock as of the date hereof which contain a stated
dividend rate) or otherwise make a distribution or distributions on shares of
its Common Stock or on any other class of capital stock and not the Common
Stock) payable in shares of Common Stock, (ii) subdivide outstanding shares of
Common Stock into a larger number of shares, or (iii) combine outstanding shares
of Common Stock into a smaller number of shares, the Exercise Price shall be
multiplied by a fraction of which the numerator shall be the number of shares of
Common Stock (excluding treasury shares, if any) outstanding before such event
and the denominator shall be the number of shares of Common Stock (excluding
treasury shares, if any) outstanding after such event. Any adjustment made
pursuant to this Section shall become effective immediately after the record
date for the determination of stockholders entitled to receive such dividend or
distribution and shall become effective immediately after the effective date in
the case of a subdivision or combination, and shall apply to successive
subdivisions and combinations.
(b) In case of any reclassification of the Common Stock, any
consolidation or merger of the Company with or into another person, the sale or
transfer of all or substantially all of the assets of the Company or any
compulsory share exchange pursuant to which the Common Stock is converted into
other securities, cash or property, then the Holder shall have the right
thereafter to exercise this Warrant only into the shares of stock and other
securities and property receivable upon or deemed to be held by holders of
Common Stock following such reclassification, consolidation, merger, sale,
transfer or share exchange, and the Holder shall be entitled upon such event to
receive such amount of securities or property equal to the amount of Warrant
Shares such Holder would have been entitled to had such Holder exercised this
Warrant immediately prior to such reclassification, consolidation, merger, sale,
transfer or share exchange. The terms of any such
-4-
<PAGE> 5
consolidation, merger, sale, transfer or share exchange shall include such terms
so as to continue to give to the Holder the right to receive the securities or
property set forth in this Section 8(b) upon any exercise following any such
reclassification, consolidation, merger, sale, transfer or share exchange.
(c) If the Company, at any time while this Warrant is
outstanding, shall distribute to all holders of Common Stock (and not to holders
of this Warrant) evidences of its indebtedness or assets or rights or warrants
to subscribe for or purchase any security (excluding those referred to in
Sections 8(a), and (b)), then in each such case the Exercise Price shall be
determined by multiplying the Exercise Price in effect immediately prior to the
record date fixed for determination of stockholders entitled to receive such
distribution by a fraction of which the denominator shall be the Exercise Price
determined as of the record date mentioned above, and of which the numerator
shall be such Exercise Price on such record date less the then fair market value
at such record date of the portion of such assets or evidence of indebtedness so
distributed applicable to one outstanding share of Common Stock as determined by
the Company's independent certified public accountants that regularly examines
the financial statements of the Company (an "Appraiser").
(d) For the purposes of this Section 8, the following clauses
shall also be applicable:
(i) Record Date. In case the Company shall take a
record of the holders of its Common Stock for
the purpose of entitling them (A) to receive a
dividend or other distribution payable in Common
Stock or in securities convertible or
exchangeable into shares of Common Stock, or (B)
to subscribe for or purchase Common Stock or
securities convertible or exchangeable into
shares of Common Stock, then such record date
shall be deemed to be the date of the issue or
sale of the shares of Common Stock deemed to
have been issued or sold upon the declaration of
such dividend or the making of such other
distribution or the date of the granting of such
right of subscription or purchase, as the case
may be.
(ii) Treasury Shares. The number of shares of Common
Stock outstanding at any given time shall not
include shares owned or held by or for the
account of the Company, and the disposition of
any such shares shall be considered an issue or
sale of Common Stock.
(e) All calculations under this Section 8 shall be made to the
nearest cent or the nearest 1/100th of a share, as the case may be.
(f) If:
(i) the Company shall declare a dividend (or any
other distribution) on its Common Stock; or
(ii) the Company shall declare a special nonrecurring
cash dividend on or a redemption of its Common
Stock; or
-5-
<PAGE> 6
(iii) the Company shall authorize the granting to all
holders of the Common Stock rights or warrants
to subscribe for or purchase any shares of
capital stock of any class or of any rights; or
(iv) the approval of any stockholders of the Company
shall be required in connection with any
reclassification of the Common Stock of the
Company, any consolidation or merger to which
the Company is a party, any sale or transfer of
all or substantially all of the assets of the
Company, or any compulsory share exchange
whereby the Common Stock is converted into other
securities, cash or property; or
(v) the Company shall authorize the voluntary
dissolution, liquidation or winding up of the
affairs of the Company,
then the Company shall cause to be mailed to each Holder at their last addresses
as they shall appear upon the Warrant Register, at least 30 calendar days prior
to the applicable record or effective date hereinafter specified, a notice
stating (x) the date on which a record is to be taken for the purpose of such
dividend, distribution, redemption, rights or warrants, or if a record is not to
be taken, the date as of which the holders of Common Stock of record to be
entitled to such dividend, distributions, redemption, rights or warrants are to
be determined or (y) the date on which such reclassification, consolidation,
merger, sale, transfer or share exchange is expected to become effective or
close, 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, sale, transfer, share exchange, dissolution, liquidation
or winding up; provided, however, that the failure to mail such notice or any
defect therein or in the mailing thereof shall not affect the validity of the
corporate action required to be specified in such notice.
9. Payment of Exercise Price. The Holder shall pay the Exercise Price in
immediately available funds by certified check or bank draft payable to the
order of the Company or by wire transfer to an account designated by the
Company.
10. Fractional Shares. The Company shall not be required to issue or
cause to be issued fractional Warrant Shares on the exercise of this Warrant.
The number of full Warrant Shares which shall be issuable upon the exercise of
this Warrant shall be computed on the basis of the aggregate number of Warrant
Shares purchasable on exercise of this Warrant so presented. If any fraction of
a Warrant Share would, except for the provisions of this Section 10, be issuable
on the exercise of this Warrant, the Company shall pay an amount in cash equal
to the Exercise Price multiplied by such fraction.
11. Notices. Any and all notices or other communications or deliveries
hereunder shall be in writing and shall be deemed given and effective on the
earliest of (i) the date of transmission, if such notice or communication is
delivered via facsimile at the facsimile telephone number specified in this
Section prior to 5:00 p.m. (California time) on a business day, (ii) the
business day after the date of transmission, if such notice or communication is
delivered via facsimile at the facsimile telephone number specified in this
Section later than 5:00 p.m. (California time) on any date and earlier than
11:59 p.m. (California time) on such date, (iii) the business day following the
date of mailing, if sent by nationally recognized overnight courier service, or
(iv) upon actual receipt by the party to whom such notice is required to be
given. The addresses for such communications shall be:
-6-
<PAGE> 7
(i) if to the Company, to 157 Technology Drive, Irvine, CA 92618, Attention:
Chief Financial Officer, or to facsimile no. (949) 788-6706, or (ii) if to the
Holder, to the Holder at the address or facsimile number appearing on the
Warrant Register or such other address or facsimile number as the Holder may
provide to the Company in accordance with this Section 11.
12. Warrant Agent. The Company shall serve as warrant agent under this
Warrant. The Company may appoint a new warrant agent upon notice to the Holder
in accordance with Section 11. Any corporation into which the Company may be
merged or any corporation resulting from any consolidation to which the Company
shall be a party or any corporation to which the Company transfers substantially
all of its corporate assets shall be a successor warrant agent under this
Warrant without any further act. Any such successor warrant agent shall promptly
cause notice of its succession as warrant agent to be mailed (by first class
mail, postage prepaid) to the Holder at the Holder's last address as shown on
the Warrant Register.
13. Miscellaneous.
(a) This Warrant shall be binding on and inure to the benefit of
the parties hereto and their respective successors and permitted assigns. This
Warrant may be amended only in writing signed by the Company and the Holder and
their successors and assigns.
(b) Subject to Section 13(a), above, nothing in this Warrant
shall be construed to give to any person or corporation other than the Company
and the Holder any legal or equitable right, remedy or cause under this Warrant.
This Warrant shall inure to the sole and exclusive benefit of the Company and
the Holder.
(c) This Warrant shall be governed by and construed and enforced
in accordance with the internal laws of the State of California without regard
to the principles of conflicts of law thereof. The Company and the Holder hereby
irrevocably submit to the exclusive jurisdiction of the state and federal courts
sitting in Orange County, California, for the adjudication of any dispute
hereunder or in connection herewith or with any transaction contemplated hereby
or discussed herein, 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, or that such suit, action or proceeding is
improper. Each of the Company and the Holder hereby irrevocably waives personal
service of process and consents to process being served in any such suit, action
or proceeding by receiving a copy thereof sent to the Company at the address in
effect for notices to it under this instrument and agrees that such service
shall constitute good and sufficient service of process and notice thereof.
Nothing contained herein shall be deemed to limit in any way any right to serve
process in any manner permitted by law.
(d) The headings herein are for convenience only, do not
constitute a part of this Warrant and shall not be deemed to limit or affect any
of the provisions hereof.
(e) In case any one or more of the provisions of this Warrant
shall be invalid or unenforceable in any respect, the validity and
enforceability of the remaining terms and provisions of this Warrant shall not
in any way be affected or impaired thereby and the parties will attempt in good
faith to agree upon a valid and enforceable provision which shall be a
commercially reasonable substitute therefor, and upon so agreeing, shall
incorporate such substitute provision in this Warrant.
-7-
<PAGE> 8
IN WITNESS WHEREOF, the Company has caused this Warrant to be duly
executed by its authorized officer as of the date first indicated above.
NEOTHERAPEUTICS, INC.
By: /s/Samuel Gulko
------------------------------------------------------
Name: Samuel Gulko
----------------------------------------------------
Title: Chief Financial Officer, Secretary and Treasurer
---------------------------------------------------
-8-
<PAGE> 9
FORM OF ELECTION TO PURCHASE
(To be executed by the Holder to exercise the right to purchase shares of Common
Stock under the foregoing Warrant)
To NeoTherapeutics, Inc.:
In accordance with the Warrant enclosed with this Form of Election to
Purchase, the undersigned hereby irrevocably elects to purchase __________
shares of Common Stock ("Common Stock"), $.001 par value per share, of
NeoTherapeutics, Inc. encloses herewith $__________ in cash, certified or
official bank check or checks, which sum represents the aggregate Exercise Price
(as defined in the Warrant) for the number of shares of Common Stock to which
this Form of Election to Purchase relates, together with any applicable taxes
payable by the undersigned pursuant to the Warrant.
The undersigned requests that certificates for the shares of Common
Stock issuable upon this exercise be issued in the name of
PLEASE INSERT SOCIAL SECURITY OR
TAX IDENTIFICATION NUMBER
------------------------------------
- --------------------------------------------------------------------------------
(Please print name and address)
If the number of shares of Common Stock issuable upon this exercise
shall not be all of the shares of Common Stock which the undersigned is entitled
to purchase in accordance with the enclosed Warrant, the undersigned requests
that a New Warrant (as defined in the Warrant) evidencing the right to purchase
the shares of Common Stock not issuable pursuant to the exercise evidenced
hereby be issued in the name of and delivered to:
- --------------------------------------------------------------------------------
(Please print name and address)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Dated: __________, ____ Name of Holder:
(Print)
-----------------------------
(By:)
--------------------------------
(Name:)
(Title:)
(Signature must conform in all
respects to name of holder as
specified on the face of the
Warrant)
<PAGE> 10
FORM OF ASSIGNMENT
[To be completed and signed only upon transfer of Warrant]
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers
unto ____________________ the right represented by the Warrant enclosed with
this Form of Assignment to purchase __________ shares of Common Stock of
NeoTherapeutics, Inc. to which the Warrant relates and appoints
____________________ attorney to transfer said right on the books of
NeoTherapeutics, Inc. with full power of substitution in the premises.
Dated: __________, ____
-------------------------------------------------
(Signature must conform in all respects to name
of holder as specified on the face of the Warrant)
-------------------------------------------------
Address of Transferee
-------------------------------------------------
-------------------------------------------------
In the presence of:
- --------------------------
<PAGE> 1
EXHIBIT 4.15
NEITHER THESE SECURITIES NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE
EXERCISABLE HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR
THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM
REGISTRATION UNDER SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"),
AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE
EXEMPTION FROM THE REGISTRATION REQUIREMENTS THEREUNDER AND IN COMPLIANCE WITH
APPLICABLE STATE SECURITIES OR BLUE SKY LAWS.
NEOTHERAPEUTICS, INC.
WARRANT
Dated: February 25, 2000
NeoTherapeutics, Inc., a Delaware corporation (the "Company"), hereby
certifies that, for value received, BRIGHTON CAPITAL, LTD., or its registered
assigns ("Holder"), is entitled, subject to the terms set forth below, to
purchase from the Company up to a total of 40,000 shares of Common Stock, $.001
par value per share (the "Common Stock"), of the Company (each such share, a
"Warrant Share" and all such shares, the "Warrant Shares") at an exercise price
equal to $15.00 per share (as adjusted from time to time as provided in Section
8, the "Exercise Price"), at any time and from time to time from and after the
date hereof and through and including the earlier of (i) February 25, 2005 or
(ii) the business day preceding a Redemption Date, as defined in Section 4
hereof (as applicable, the "Expiration Date"), and subject to the following
terms and conditions:
1. Registration of Warrant. The Company shall register this Warrant upon
records to be maintained by the Company for that purpose (the "Warrant
Register"), in the name of the record Holder hereof from time to time. The
Company may deem and treat the registered Holder of this Warrant as the absolute
owner hereof for the purpose of any exercise hereof or any distribution to the
Holder, and for all other purposes, and the Company shall not be affected by
notice to the contrary.
2. Registration of Transfers and Exchanges.
(a) This Warrant or the Warrant Shares issued upon any exercise
hereof may only be transferred pursuant to an effective registration statement
under the Securities Act, to the Company or pursuant to an available exemption
from or in a transaction not subject to the registration requirements of the
Securities Act. In connection with any transfer of this Warrant or any Warrant
Shares other than pursuant to an effective registration statement or to the
Company, the Company may require the transferor thereof to provide to the
Company an opinion of counsel selected by the transferor, the form and substance
of which opinion shall be reasonably satisfactory to the Company, to the effect
that such transfer does not require registration of such transferred securities
under the Securities Act. Holder agrees to the imprinting, so long as is
required by this Section 2(a), of a legend substantially similar to that first
above written on any New Warrant (as defined in Section 2(b) below) or a legend
of similar import on any Warrant Shares issued upon an
<PAGE> 2
exercise hereof. Any such transferee shall agree in writing to be bound by the
terms of this Warrant and shall have the rights of Holder under this Warrant.
(b) The Company shall register the transfer of any portion of
this Warrant in conformance with Section 2(a) in the Warrant Register, upon
surrender of this Warrant, with the Form of Assignment attached hereto duly
completed and signed, to the Company at the office specified in or pursuant to
Section 11. Upon any such registration or transfer, a new warrant to purchase
Common Stock, in substantially the form of this Warrant (any such new warrant, a
"New Warrant"), evidencing the portion of this Warrant so transferred shall be
issued to the transferee and a New Warrant evidencing the remaining portion of
this Warrant not so transferred, if any, shall be issued to the transferring
Holder. The acceptance of the New Warrant by the transferee thereof shall be
deemed the acceptance of such transferee of all of the rights and obligations of
a holder of a Warrant.
(c) This Warrant is exchangeable, upon the surrender hereof by
the Holder to the office of the Company specified in or pursuant to Section 3(b)
for one or more New Warrants, evidencing in the aggregate the right to purchase
the number of Warrant Shares which may then be purchased hereunder.
3. Duration and Exercise of Warrant.
(a) This Warrant shall be exercisable by the then registered
Holder on any business day before 5:00 P.M., California time, at any time and
from time to time on or after the date hereof to and including the Expiration
Date. At 5:00 P.M., California time on the Expiration Date, the portion of this
Warrant not exercised prior thereto shall be and become void and of no value.
(b) Subject to Sections 2(c), and 5, upon surrender of this
Warrant, with the Form of Election to Purchase attached hereto duly completed
and signed, to the Company at its address for notice set forth in Section 11 and
upon payment of the Exercise Price multiplied by the number of Warrant Shares
that the Holder intends to purchase hereunder, in the manner provided hereunder,
all as specified by the Holder in the Form of Election to Purchase, the Company
shall promptly (but in no event later than 3 business days after the Date of
Exercise (as defined herein)) issue or cause to be issued and cause to be
delivered to or upon the written order of the Holder and in such name or names
as the Holder may designate, a certificate for the Warrant Shares issuable upon
such exercise, free of restrictive legends except (i) either in the event that a
registration statement covering the resale of the Warrant Shares and naming the
Holder as a selling stockholder thereunder is not then effective or the Warrant
Shares are not freely transferable without volume restrictions pursuant to Rule
144(k) promulgated under the Securities Act of 1933, as amended (the "Securities
Act"), or (ii) if this Warrant shall have been issued pursuant to a written
agreement between the original Holder and the Company, as required by such
agreement. Any person so designated by the Holder to receive Warrant Shares
shall be deemed to have become holder of record of such Warrant Shares as of the
Date of Exercise of this Warrant.
A "Date of Exercise" means the date on which the Company shall
have received (i) this Warrant (or any New Warrant, as applicable), with the
Form of Election to Purchase attached hereto (or attached to such New Warrant)
appropriately completed and duly signed, and (ii) payment of the Exercise Price
for the number of Warrant Shares so indicated by the holder hereof to be
purchased.
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<PAGE> 3
(c) This Warrant shall be exercisable, either in its entirety or,
from time to time, for a portion of the number of Warrant Shares. If less than
all of the Warrant Shares which may be purchased under this Warrant are
exercised at any time, the Company shall issue or cause to be issued, at its
expense, a New Warrant evidencing the right to purchase the remaining number of
Warrant Shares for which no exercise has been evidenced by this Warrant.
(d) Prior to the exercise of this Warrant, the Holder shall not
be entitled to any rights as a stockholder of the Company with respect to the
Warrant Shares, including (without limitation) the right to vote such shares,
receive dividends or other distributions thereon or be notified of stockholder
meetings (except as otherwise set forth in Section 8(f) herein).
4. Redemption.
(a) The remaining unexercised portion of this Warrant may be
completely redeemed at the option of the Company at any time prior to exercise
if, at the time notice of such redemption is given by the Company as provided in
Section 4(b) below, the Daily Price has exceeded $30.00 per share for any 10
consecutive trading days immediately preceding the date of such notice, at a
price equal to $0.25 per Warrant Share then subject to the unexercised portion
of this Warrant (the "Redemption Price"). For the purpose of the foregoing
sentence, the term "Daily Price" shall mean, for any relevant day, the closing
bid price or closing price of the Common Stock, as the case may be, on that day
as reported by the principal exchange, national market or quotation system on
which prices for the Common Stock are reported. On the date set for redemption
in the redemption notice (the "Redemption Date") the Holder of record of this
Warrant shall be entitled to payment of the Redemption Price upon surrender of
such redeemed Warrant to the Company at the principal office of the Company.
(b) Notice of redemption of Warrant shall be given at least 30
days prior to the Redemption Date by mailing, by registered or certified mail,
return receipt requested, a copy of such notice to the Holder of this Warrant at
the address appearing on the Warrant Register or such other address designated
in writing by the holder of record to the Company not less than 40 days prior to
the Redemption Date.
(c) From and after the Redemption Date, all rights of the Holder
(except the right to receive the Redemption Price) with respect to this Warrant
shall terminate.
(d) The Company shall pay to the Holder of this Warrant all
monies to which the Holder of this Warrant is entitled, provided such Holder
shall have surrendered this Warrant to the Company. The Holder shall have no
right to interest following the Redemption Date unless the Company shall have
defaulted in its obligation to deliver the Redemption Price.
5. Payment of Taxes. The Company will pay any documentary stamp taxes
attributable to the issuance of Warrant Shares upon the exercise of this
Warrant; provided, however, that the Company shall not be required to pay any
tax which may be payable in respect of any transfer involved in the registration
of any certificates for Warrant Shares or Warrants in a name other than that of
the Holder. The Holder shall be responsible for all other tax liability that may
arise as a result of holding or transferring this Warrant or receiving Warrant
Shares upon exercise hereof.
6. Replacement of Warrant. If this Warrant is mutilated, lost, stolen or
destroyed, the Company shall issue or cause to be issued in exchange and
substitution for and upon cancellation
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<PAGE> 4
hereof, or in lieu of and substitution for this Warrant, a New Warrant, but only
upon receipt of evidence reasonably satisfactory to the Company of such loss,
theft or destruction and indemnity, if requested, satisfactory to it. Applicants
for a New Warrant under such circumstances shall also comply with such other
reasonable regulations and procedures and pay such other reasonable charges as
the Company may prescribe.
7. Reservation of Warrant Shares. The Company covenants that it will at
all times reserve and keep available out of the aggregate of its authorized but
unissued Common Stock, solely for the purpose of enabling it to issue Warrant
Shares upon exercise of this Warrant as herein provided, the number of Warrant
Shares which are then issuable and deliverable upon the exercise of this entire
Warrant, free from preemptive rights or any other actual contingent purchase
rights of persons other than the Holder (taking into account the adjustments and
restrictions of Section 8). The Company covenants that all Warrant Shares that
shall be so issuable and deliverable shall, upon issuance and the payment of the
applicable Exercise Price in accordance with the terms hereof, be duly and
validly authorized, issued and fully paid and nonassessable.
8. Certain Adjustments. The Exercise Price and number of Warrant Shares
issuable upon exercise of this Warrant are subject to adjustment from time to
time as set forth in this Section 8. Upon each such adjustment of the Exercise
Price pursuant to this Section 8, the Holder shall thereafter prior to the
Expiration Date be entitled to purchase, at the Exercise Price resulting from
such adjustment, the number of Warrant Shares obtained by multiplying the
Exercise Price in effect immediately prior to such adjustment by the number of
Warrant Shares issuable upon exercise of this Warrant immediately prior to such
adjustment and dividing the product thereof by the Exercise Price resulting from
such adjustment.
(a) If the Company, at any time while this Warrant is
outstanding, (i) shall pay a stock dividend (except scheduled dividends paid on
outstanding preferred stock as of the date hereof which contain a stated
dividend rate) or otherwise make a distribution or distributions on shares of
its Common Stock or on any other class of capital stock and not the Common
Stock) payable in shares of Common Stock, (ii) subdivide outstanding shares of
Common Stock into a larger number of shares, or (iii) combine outstanding shares
of Common Stock into a smaller number of shares, the Exercise Price shall be
multiplied by a fraction of which the numerator shall be the number of shares of
Common Stock (excluding treasury shares, if any) outstanding before such event
and the denominator shall be the number of shares of Common Stock (excluding
treasury shares, if any) outstanding after such event. Any adjustment made
pursuant to this Section shall become effective immediately after the record
date for the determination of stockholders entitled to receive such dividend or
distribution and shall become effective immediately after the effective date in
the case of a subdivision or combination, and shall apply to successive
subdivisions and combinations.
(b) In case of any reclassification of the Common Stock, any
consolidation or merger of the Company with or into another person, the sale or
transfer of all or substantially all of the assets of the Company or any
compulsory share exchange pursuant to which the Common Stock is converted into
other securities, cash or property, then the Holder shall have the right
thereafter to exercise this Warrant only into the shares of stock and other
securities and property receivable upon or deemed to be held by holders of
Common Stock following such reclassification, consolidation, merger, sale,
transfer or share exchange, and the Holder shall be entitled upon such event to
receive such amount of securities or property equal to the amount of Warrant
Shares such Holder would have been entitled to had such Holder exercised this
Warrant immediately prior to such reclassification, consolidation, merger, sale,
transfer or share exchange. The terms of any such
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<PAGE> 5
consolidation, merger, sale, transfer or share exchange shall include such terms
so as to continue to give to the Holder the right to receive the securities or
property set forth in this Section 8(b) upon any exercise following any such
reclassification, consolidation, merger, sale, transfer or share exchange.
(c) If the Company, at any time while this Warrant is
outstanding, shall distribute to all holders of Common Stock (and not to holders
of this Warrant) evidences of its indebtedness or assets or rights or warrants
to subscribe for or purchase any security (excluding those referred to in
Sections 8(a), and (b)), then in each such case the Exercise Price shall be
determined by multiplying the Exercise Price in effect immediately prior to the
record date fixed for determination of stockholders entitled to receive such
distribution by a fraction of which the denominator shall be the Exercise Price
determined as of the record date mentioned above, and of which the numerator
shall be such Exercise Price on such record date less the then fair market value
at such record date of the portion of such assets or evidence of indebtedness so
distributed applicable to one outstanding share of Common Stock as determined by
the Company's independent certified public accountants that regularly examines
the financial statements of the Company (an "Appraiser").
(d) For the purposes of this Section 8, the following clauses
shall also be applicable:
(i) Record Date. In case the Company shall take a
record of the holders of its Common Stock for
the purpose of entitling them (A) to receive a
dividend or other distribution payable in Common
Stock or in securities convertible or
exchangeable into shares of Common Stock, or (B)
to subscribe for or purchase Common Stock or
securities convertible or exchangeable into
shares of Common Stock, then such record date
shall be deemed to be the date of the issue or
sale of the shares of Common Stock deemed to
have been issued or sold upon the declaration of
such dividend or the making of such other
distribution or the date of the granting of such
right of subscription or purchase, as the case
may be.
(ii) Treasury Shares. The number of shares of Common
Stock outstanding at any given time shall not
include shares owned or held by or for the
account of the Company, and the disposition of
any such shares shall be considered an issue or
sale of Common Stock.
(e) All calculations under this Section 8 shall be made to the
nearest cent or the nearest 1/100th of a share, as the case may be.
(f) If:
(i) the Company shall declare a dividend (or any
other distribution) on its Common Stock; or
(ii) the Company shall declare a special nonrecurring
cash dividend on or a redemption of its Common
Stock; or
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<PAGE> 6
(iii) the Company shall authorize the granting to all
holders of the Common Stock rights or warrants
to subscribe for or purchase any shares of
capital stock of any class or of any rights; or
(iv) the approval of any stockholders of the Company
shall be required in connection with any
reclassification of the Common Stock of the
Company, any consolidation or merger to which
the Company is a party, any sale or transfer of
all or substantially all of the assets of the
Company, or any compulsory share exchange
whereby the Common Stock is converted into other
securities, cash or property; or
(v) the Company shall authorize the voluntary
dissolution, liquidation or winding up of the
affairs of the Company,
then the Company shall cause to be mailed to each Holder at their last addresses
as they shall appear upon the Warrant Register, at least 30 calendar days prior
to the applicable record or effective date hereinafter specified, a notice
stating (x) the date on which a record is to be taken for the purpose of such
dividend, distribution, redemption, rights or warrants, or if a record is not to
be taken, the date as of which the holders of Common Stock of record to be
entitled to such dividend, distributions, redemption, rights or warrants are to
be determined or (y) the date on which such reclassification, consolidation,
merger, sale, transfer or share exchange is expected to become effective or
close, 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, sale, transfer, share exchange, dissolution, liquidation
or winding up; provided, however, that the failure to mail such notice or any
defect therein or in the mailing thereof shall not affect the validity of the
corporate action required to be specified in such notice.
9. Payment of Exercise Price. The Holder shall pay the Exercise Price in
immediately available funds by certified check or bank draft payable to the
order of the Company or by wire transfer to an account designated by the
Company.
10. Fractional Shares. The Company shall not be required to issue or
cause to be issued fractional Warrant Shares on the exercise of this Warrant.
The number of full Warrant Shares which shall be issuable upon the exercise of
this Warrant shall be computed on the basis of the aggregate number of Warrant
Shares purchasable on exercise of this Warrant so presented. If any fraction of
a Warrant Share would, except for the provisions of this Section 10, be issuable
on the exercise of this Warrant, the Company shall pay an amount in cash equal
to the Exercise Price multiplied by such fraction.
11. Notices. Any and all notices or other communications or deliveries
hereunder shall be in writing and shall be deemed given and effective on the
earliest of (i) the date of transmission, if such notice or communication is
delivered via facsimile at the facsimile telephone number specified in this
Section prior to 5:00 p.m. (California time) on a business day, (ii) the
business day after the date of transmission, if such notice or communication is
delivered via facsimile at the facsimile
telephone number specified in this Section later than 5:00 p.m.
(California time) on any date and earlier than 11:59 p.m. (California time) on
such date, (iii) the business day following the date of mailing, if sent by
nationally recognized overnight courier service, or (iv) upon actual receipt by
the party to whom such notice is required to be given. The addresses for such
communications shall be:
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<PAGE> 7
(i) if to the Company, to 157 Technology Drive, Irvine, CA 92618, Attention:
Chief Financial Officer, or to facsimile no. (949) 788-6706, or (ii) if to the
Holder, to the Holder at the address or facsimile number appearing on the
Warrant Register or such other address or facsimile number as the Holder may
provide to the Company in accordance with this Section 11.
12. Warrant Agent. The Company shall serve as warrant agent under this
Warrant. The Company may appoint a new warrant agent upon notice to the Holder
in accordance with Section 11. Any corporation into which the Company may be
merged or any corporation resulting from any consolidation to which the Company
shall be a party or any corporation to which the Company transfers substantially
all of its corporate assets shall be a successor warrant agent under this
Warrant without any further act. Any such successor warrant agent shall promptly
cause notice of its succession as warrant agent to be mailed (by first class
mail, postage prepaid) to the Holder at the Holder's last address as shown on
the Warrant Register.
13. Miscellaneous.
(a) This Warrant shall be binding on and inure to the benefit of
the parties hereto and their respective successors and permitted assigns. This
Warrant may be amended only in writing signed by the Company and the Holder and
their successors and assigns.
(b) Subject to Section 13(a), above, nothing in this Warrant
shall be construed to give to any person or corporation other than the Company
and the Holder any legal or equitable right, remedy or cause under this Warrant.
This Warrant shall inure to the sole and exclusive benefit of the Company and
the Holder.
(c) This Warrant shall be governed by and construed and enforced
in accordance with the internal laws of the State of California without regard
to the principles of conflicts of law thereof. The Company and the Holder hereby
irrevocably submit to the exclusive jurisdiction of the state and federal courts
sitting in Orange County, California, for the adjudication of any dispute
hereunder or in connection herewith or with any transaction contemplated hereby
or discussed herein, 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, or that such suit, action or proceeding is
improper. Each of the Company and the Holder hereby irrevocably waives personal
service of process and consents to process being served in any such suit, action
or proceeding by receiving a copy thereof sent to the Company at the address in
effect for notices to it under this instrument and agrees that such service
shall constitute good and sufficient service of process and notice thereof.
Nothing contained herein shall be deemed to limit in any way any right to serve
process in any manner permitted by law.
(d) The headings herein are for convenience only, do not
constitute a part of this Warrant and shall not be deemed to limit or affect any
of the provisions hereof.
(e) In case any one or more of the provisions of this Warrant
shall be invalid or unenforceable in any respect, the validity and
enforceability of the remaining terms and provisions of this Warrant shall not
in any way be affected or impaired thereby and the parties will attempt in good
faith to agree upon a valid and enforceable provision which shall be a
commercially reasonable substitute therefor, and upon so agreeing, shall
incorporate such substitute provision in this Warrant.
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<PAGE> 8
IN WITNESS WHEREOF, the Company has caused this Warrant to be duly
executed by its authorized officer as of the date first indicated above.
NEOTHERAPEUTICS, INC.
By: /s/Samuel Gulko
--------------------------------
Name: Samuel Gulko
------------------------------
Title: Chief Financial Officer
-----------------------------
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<PAGE> 9
FORM OF ELECTION TO PURCHASE
(To be executed by the Holder to exercise the right to purchase shares of Common
Stock under the foregoing Warrant)
To NeoTherapeutics, Inc.:
In accordance with the Warrant enclosed with this Form of Election to
Purchase, the undersigned hereby irrevocably elects to purchase __________
shares of Common Stock ("Common Stock"), $.001 par value per share, of
NeoTherapeutics, Inc. encloses herewith $__________ in cash, certified or
official bank check or checks, which sum represents the aggregate Exercise Price
(as defined in the Warrant) for the number of shares of Common Stock to which
this Form of Election to Purchase relates, together with any applicable taxes
payable by the undersigned pursuant to the Warrant.
The undersigned requests that certificates for the shares of Common
Stock issuable upon this exercise be issued in the name of
PLEASE INSERT SOCIAL SECURITY OR
TAX IDENTIFICATION NUMBER
------------------------------------
- --------------------------------------------------------------------------------
(Please print name and address)
If the number of shares of Common Stock issuable upon this exercise
shall not be all of the shares of Common Stock which the undersigned is entitled
to purchase in accordance with the enclosed Warrant, the undersigned requests
that a New Warrant (as defined in the Warrant) evidencing the right to purchase
the shares of Common Stock not issuable pursuant to the exercise evidenced
hereby be issued in the name of and delivered to:
- --------------------------------------------------------------------------------
(Please print name and address)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Dated: __________, ____ Name of Holder:
(Print)
-----------------------------
(By:)
--------------------------------
(Name:)
(Title:)
(Signature must conform in all
respects to name of holder as
specified on the face of the
Warrant)
<PAGE> 10
FORM OF ASSIGNMENT
[To be completed and signed only upon transfer of Warrant]
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers
unto ____________________ the right represented by the Warrant enclosed with
this Form of Assignment to purchase __________ shares of Common Stock of
NeoTherapeutics, Inc. to which the Warrant relates and appoints
____________________ attorney to transfer said right on the books of
NeoTherapeutics, Inc. with full power of substitution in the premises.
Dated: __________, ____
-------------------------------------------------
(Signature must conform in all respects to name
of holder as specified on the face of the Warrant)
-------------------------------------------------
Address of Transferee
-------------------------------------------------
-------------------------------------------------
In the presence of:
- --------------------------
<PAGE> 1
EXHIBIT 4.16
NEITHER THESE SECURITIES NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE
EXERCISABLE HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR
THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM
REGISTRATION UNDER SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"),
AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE
EXEMPTION FROM THE REGISTRATION REQUIREMENTS THEREUNDER AND IN COMPLIANCE WITH
APPLICABLE STATE SECURITIES OR BLUE SKY LAWS.
NEOTHERAPEUTICS, INC.
WARRANT
Dated: April 6, 2000
NeoTherapeutics, Inc., a Delaware corporation (the "Company"), hereby
certifies that, for value received, BRIGHTON CAPITAL, LTD., or its registered
assigns ("Holder"), is entitled, subject to the terms set forth below, to
purchase from the Company up to a total of 85,000 shares of Common Stock, $.001
par value per share (the "Common Stock"), of the Company (each such share, a
"Warrant Share" and all such shares, the "Warrant Shares") at an exercise price
equal to $15.00 per share (as adjusted from time to time as provided in Section
8, the "Exercise Price"), at any time and from time to time from and after the
date hereof and through and including the earlier of (i) April 6, 2005 or (ii)
the business day preceding a Redemption Date, as defined in Section 4 hereof (as
applicable, the "Expiration Date"), and subject to the following terms and
conditions:
1. Registration of Warrant. The Company shall register this Warrant upon
records to be maintained by the Company for that purpose (the "Warrant
Register"), in the name of the record Holder hereof from time to time. The
Company may deem and treat the registered Holder of this Warrant as the absolute
owner hereof for the purpose of any exercise hereof or any distribution to the
Holder, and for all other purposes, and the Company shall not be affected by
notice to the contrary.
2. Registration of Transfers and Exchanges.
(a) This Warrant or the Warrant Shares issued upon any exercise
hereof may only be transferred pursuant to an effective registration statement
under the Securities Act, to the Company or pursuant to an available exemption
from or in a transaction not subject to the registration requirements of the
Securities Act. In connection with any transfer of this Warrant or any Warrant
Shares other than pursuant to an effective registration statement or to the
Company, the Company may require the transferor thereof to provide to the
Company an opinion of counsel selected by the transferor, the form and substance
of which opinion shall be reasonably satisfactory to the Company, to the effect
that such transfer does not require registration of such transferred securities
under the Securities Act. Holder agrees to the imprinting, so long as is
required by this Section 2(a), of a legend substantially similar to that first
above written on any New Warrant (as defined in Section 2(b) below) or a legend
of similar import on any Warrant Shares issued upon an
<PAGE> 2
exercise hereof. Any such transferee shall agree in writing to be bound by the
terms of this Warrant and shall have the rights of Holder under this Warrant.
(b) The Company shall register the transfer of any portion of
this Warrant in conformance with Section 2(a) in the Warrant Register, upon
surrender of this Warrant, with the Form of Assignment attached hereto duly
completed and signed, to the Company at the office specified in or pursuant to
Section 11. Upon any such registration or transfer, a new warrant to purchase
Common Stock, in substantially the form of this Warrant (any such new warrant, a
"New Warrant"), evidencing the portion of this Warrant so transferred shall be
issued to the transferee and a New Warrant evidencing the remaining portion of
this Warrant not so transferred, if any, shall be issued to the transferring
Holder. The acceptance of the New Warrant by the transferee thereof shall be
deemed the acceptance of such transferee of all of the rights and obligations of
a holder of a Warrant.
(c) This Warrant is exchangeable, upon the surrender hereof by
the Holder to the office of the Company specified in or pursuant to Section 3(b)
for one or more New Warrants, evidencing in the aggregate the right to purchase
the number of Warrant Shares which may then be purchased hereunder.
3. Duration and Exercise of Warrant.
(a) This Warrant shall be exercisable by the then registered
Holder on any business day before 5:00 P.M., California time, at any time and
from time to time on or after the date hereof to and including the Expiration
Date. At 5:00 P.M., California time on the Expiration Date, the portion of this
Warrant not exercised prior thereto shall be and become void and of no value.
(b) Subject to Sections 2(c), and 5, upon surrender of this
Warrant, with the Form of Election to Purchase attached hereto duly completed
and signed, to the Company at its address for notice set forth in Section 11 and
upon payment of the Exercise Price multiplied by the number of Warrant Shares
that the Holder intends to purchase hereunder, in the manner provided hereunder,
all as specified by the Holder in the Form of Election to Purchase, the Company
shall promptly (but in no event later than 3 business days after the Date of
Exercise (as defined herein)) issue or cause to be issued and cause to be
delivered to or upon the written order of the Holder and in such name or names
as the Holder may designate, a certificate for the Warrant Shares issuable upon
such exercise, free of restrictive legends except (i) either in the event that a
registration statement covering the resale of the Warrant Shares and naming the
Holder as a selling stockholder thereunder is not then effective or the Warrant
Shares are not freely transferable without volume restrictions pursuant to Rule
144(k) promulgated under the Securities Act of 1933, as amended (the "Securities
Act"), or (ii) if this Warrant shall have been issued pursuant to a written
agreement between the original Holder and the Company, as required by such
agreement. Any person so designated by the Holder to receive Warrant Shares
shall be deemed to have become holder of record of such Warrant Shares as of the
Date of Exercise of this Warrant.
A "Date of Exercise" means the date on which the Company shall
have received (i) this Warrant (or any New Warrant, as applicable), with the
Form of Election to Purchase attached hereto (or attached to such New Warrant)
appropriately completed and duly signed, and (ii) payment of the Exercise Price
for the number of Warrant Shares so indicated by the holder hereof to be
purchased.
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<PAGE> 3
(c) This Warrant shall be exercisable, either in its entirety or,
from time to time, for a portion of the number of Warrant Shares. If less than
all of the Warrant Shares which may be purchased under this Warrant are
exercised at any time, the Company shall issue or cause to be issued, at its
expense, a New Warrant evidencing the right to purchase the remaining number of
Warrant Shares for which no exercise has been evidenced by this Warrant.
(d) Prior to the exercise of this Warrant, the Holder shall not
be entitled to any rights as a stockholder of the Company with respect to the
Warrant Shares, including (without limitation) the right to vote such shares,
receive dividends or other distributions thereon or be notified of stockholder
meetings (except as otherwise set forth in Section 8(f) herein).
4. Redemption.
(a) The remaining unexercised portion of this Warrant may be
completely redeemed at the option of the Company at any time prior to exercise
if, at the time notice of such redemption is given by the Company as provided in
Section 4(b) below, the Daily Price has exceeded $30.00 per share for any 10
consecutive trading days immediately preceding the date of such notice, at a
price equal to $0.25 per Warrant Share then subject to the unexercised portion
of this Warrant (the "Redemption Price"). For the purpose of the foregoing
sentence, the term "Daily Price" shall mean, for any relevant day, the closing
bid price or closing price of the Common Stock, as the case may be, on that day
as reported by the principal exchange, national market or quotation system on
which prices for the Common Stock are reported. On the date set for redemption
in the redemption notice (the "Redemption Date") the Holder of record of this
Warrant shall be entitled to payment of the Redemption Price upon surrender of
such redeemed Warrant to the Company at the principal office of the Company.
(b) Notice of redemption of Warrant shall be given at least 30
days prior to the Redemption Date by mailing, by registered or certified mail,
return receipt requested, a copy of such notice to the Holder of this Warrant at
the address appearing on the Warrant Register or such other address designated
in writing by the holder of record to the Company not less than 40 days prior to
the Redemption Date.
(c) From and after the Redemption Date, all rights of the Holder
(except the right to receive the Redemption Price) with respect to this Warrant
shall terminate.
(d) The Company shall pay to the Holder of this Warrant all
monies to which the Holder of this Warrant is entitled, provided such Holder
shall have surrendered this Warrant to the Company. The Holder shall have no
right to interest following the Redemption Date unless the Company shall have
defaulted in its obligation to deliver the Redemption Price.
5. Payment of Taxes. The Company will pay any documentary stamp taxes
attributable to the issuance of Warrant Shares upon the exercise of this
Warrant; provided, however, that the Company shall not be required to pay any
tax which may be payable in respect of any transfer involved in the registration
of any certificates for Warrant Shares or Warrants in a name other than that of
the Holder. The Holder shall be responsible for all other tax liability that may
arise as a result of holding or transferring this Warrant or receiving Warrant
Shares upon exercise hereof.
6. Replacement of Warrant. If this Warrant is mutilated, lost, stolen or
destroyed, the Company shall issue or cause to be issued in exchange and
substitution for and upon cancellation
-3-
<PAGE> 4
hereof, or in lieu of and substitution for this Warrant, a New Warrant, but only
upon receipt of evidence reasonably satisfactory to the Company of such loss,
theft or destruction and indemnity, if requested, satisfactory to it. Applicants
for a New Warrant under such circumstances shall also comply with such other
reasonable regulations and procedures and pay such other reasonable charges as
the Company may prescribe.
7. Reservation of Warrant Shares. The Company covenants that it will at
all times reserve and keep available out of the aggregate of its authorized but
unissued Common Stock, solely for the purpose of enabling it to issue Warrant
Shares upon exercise of this Warrant as herein provided, the number of Warrant
Shares which are then issuable and deliverable upon the exercise of this entire
Warrant, free from preemptive rights or any other actual contingent purchase
rights of persons other than the Holder (taking into account the adjustments and
restrictions of Section 8). The Company covenants that all Warrant Shares that
shall be so issuable and deliverable shall, upon issuance and the payment of the
applicable Exercise Price in accordance with the terms hereof, be duly and
validly authorized, issued and fully paid and nonassessable.
8. Certain Adjustments. The Exercise Price and number of Warrant Shares
issuable upon exercise of this Warrant are subject to adjustment from time to
time as set forth in this Section 8. Upon each such adjustment of the Exercise
Price pursuant to this Section 8, the Holder shall thereafter prior to the
Expiration Date be entitled to purchase, at the Exercise Price resulting from
such adjustment, the number of Warrant Shares obtained by multiplying the
Exercise Price in effect immediately prior to such adjustment by the number of
Warrant Shares issuable upon exercise of this Warrant immediately prior to such
adjustment and dividing the product thereof by the Exercise Price resulting from
such adjustment.
(a) If the Company, at any time while this Warrant is
outstanding, (i) shall pay a stock dividend (except scheduled dividends paid on
outstanding preferred stock as of the date hereof which contain a stated
dividend rate) or otherwise make a distribution or distributions on shares of
its Common Stock or on any other class of capital stock and not the Common
Stock) payable in shares of Common Stock, (ii) subdivide outstanding shares of
Common Stock into a larger number of shares, or (iii) combine outstanding shares
of Common Stock into a smaller number of shares, the Exercise Price shall be
multiplied by a fraction of which the numerator shall be the number of shares of
Common Stock (excluding treasury shares, if any) outstanding before such event
and the denominator shall be the number of shares of Common Stock (excluding
treasury shares, if any) outstanding after such event. Any adjustment made
pursuant to this Section shall become effective immediately after the record
date for the determination of stockholders entitled to receive such dividend or
distribution and shall become effective immediately after the effective date in
the case of a subdivision or combination, and shall apply to successive
subdivisions and combinations.
(b) In case of any reclassification of the Common Stock, any
consolidation or merger of the Company with or into another person, the sale or
transfer of all or substantially all of the assets of the Company or any
compulsory share exchange pursuant to which the Common Stock is converted into
other securities, cash or property, then the Holder shall have the right
thereafter to exercise this Warrant only into the shares of stock and other
securities and property receivable upon or deemed to be held by holders of
Common Stock following such reclassification, consolidation, merger, sale,
transfer or share exchange, and the Holder shall be entitled upon such event to
receive such amount of securities or property equal to the amount of Warrant
Shares such Holder would have been entitled to had such Holder exercised this
Warrant immediately prior to such reclassification, consolidation, merger, sale,
transfer or share exchange. The terms of any such
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<PAGE> 5
consolidation, merger, sale, transfer or share exchange shall include such terms
so as to continue to give to the Holder the right to receive the securities or
property set forth in this Section 8(b) upon any exercise following any such
reclassification, consolidation, merger, sale, transfer or share exchange.
(c) If the Company, at any time while this Warrant is
outstanding, shall distribute to all holders of Common Stock (and not to holders
of this Warrant) evidences of its indebtedness or assets or rights or warrants
to subscribe for or purchase any security (excluding those referred to in
Sections 8(a), and (b)), then in each such case the Exercise Price shall be
determined by multiplying the Exercise Price in effect immediately prior to the
record date fixed for determination of stockholders entitled to receive such
distribution by a fraction of which the denominator shall be the Exercise Price
determined as of the record date mentioned above, and of which the numerator
shall be such Exercise Price on such record date less the then fair market value
at such record date of the portion of such assets or evidence of indebtedness so
distributed applicable to one outstanding share of Common Stock as determined by
the Company's independent certified public accountants that regularly examines
the financial statements of the Company (an "Appraiser").
(d) For the purposes of this Section 8, the following clauses
shall also be applicable:
(i) Record Date. In case the Company shall take a
record of the holders of its Common Stock for
the purpose of entitling them (A) to receive a
dividend or other distribution payable in Common
Stock or in securities convertible or
exchangeable into shares of Common Stock, or (B)
to subscribe for or purchase Common Stock or
securities convertible or exchangeable into
shares of Common Stock, then such record date
shall be deemed to be the date of the issue or
sale of the shares of Common Stock deemed to
have been issued or sold upon the declaration of
such dividend or the making of such other
distribution or the date of the granting of such
right of subscription or purchase, as the case
may be.
(ii) Treasury Shares. The number of shares of Common
Stock outstanding at any given time shall not
include shares owned or held by or for the
account of the Company, and the disposition of
any such shares shall be considered an issue or
sale of Common Stock.
(e) All calculations under this Section 8 shall be made to the
nearest cent or the nearest 1/100th of a share, as the case may be.
(f) If:
(i) the Company shall declare a dividend (or any
other distribution) on its Common Stock; or
(ii) the Company shall declare a special nonrecurring
cash dividend on or a redemption of its Common
Stock; or
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<PAGE> 6
(iii) the Company shall authorize the granting to all
holders of the Common Stock rights or warrants
to subscribe for or purchase any shares of
capital stock of any class or of any rights; or
(iv) the approval of any stockholders of the Company
shall be required in connection with any
reclassification of the Common Stock of the
Company, any consolidation or merger to which
the Company is a party, any sale or transfer of
all or substantially all of the assets of the
Company, or any compulsory share exchange
whereby the Common Stock is converted into other
securities, cash or property; or
(v) the Company shall authorize the voluntary
dissolution, liquidation or winding up of the
affairs of the Company,
then the Company shall cause to be mailed to each Holder at their last addresses
as they shall appear upon the Warrant Register, at least 30 calendar days prior
to the applicable record or effective date hereinafter specified, a notice
stating (x) the date on which a record is to be taken for the purpose of such
dividend, distribution, redemption, rights or warrants, or if a record is not to
be taken, the date as of which the holders of Common Stock of record to be
entitled to such dividend, distributions, redemption, rights or warrants are to
be determined or (y) the date on which such reclassification, consolidation,
merger, sale, transfer or share exchange is expected to become effective or
close, 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, sale, transfer, share exchange, dissolution, liquidation
or winding up; provided, however, that the failure to mail such notice or any
defect therein or in the mailing thereof shall not affect the validity of the
corporate action required to be specified in such notice.
9. Payment of Exercise Price. The Holder shall pay the Exercise Price in
immediately available funds by certified check or bank draft payable to the
order of the Company or by wire transfer to an account designated by the
Company.
10. Fractional Shares. The Company shall not be required to issue or
cause to be issued fractional Warrant Shares on the exercise of this Warrant.
The number of full Warrant Shares which shall be issuable upon the exercise of
this Warrant shall be computed on the basis of the aggregate number of Warrant
Shares purchasable on exercise of this Warrant so presented. If any fraction of
a Warrant Share would, except for the provisions of this Section 10, be issuable
on the exercise of this Warrant, the Company shall pay an amount in cash equal
to the Exercise Price multiplied by such fraction.
11. Notices. Any and all notices or other communications or deliveries
hereunder shall be in writing and shall be deemed given and effective on the
earliest of (i) the date of transmission, if such notice or communication is
delivered via facsimile at the facsimile telephone number specified in this
Section prior to 5:00 p.m. (California time) on a business day, (ii) the
business day after the date of transmission, if such notice or communication is
delivered via facsimile at the facsimile telephone number specified in this
Section later than 5:00 p.m. (California time) on any date and earlier than
11:59 p.m. (California time) on such date, (iii) the business day following the
date of mailing, if sent by nationally recognized overnight courier service, or
(iv) upon actual receipt by the party to whom such notice is required to be
given. The addresses for such communications shall be:
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<PAGE> 7
(i) if to the Company, to 157 Technology Drive, Irvine, CA 92618, Attention:
Chief Financial Officer, or to facsimile no. (949) 788-6706, or (ii) if to the
Holder, to the Holder at the address or facsimile number appearing on the
Warrant Register or such other address or facsimile number as the Holder may
provide to the Company in accordance with this Section 11.
12. Warrant Agent. The Company shall serve as warrant agent under this
Warrant. The Company may appoint a new warrant agent upon notice to the Holder
in accordance with Section 11. Any corporation into which the Company may be
merged or any corporation resulting from any consolidation to which the Company
shall be a party or any corporation to which the Company transfers substantially
all of its corporate assets shall be a successor warrant agent under this
Warrant without any further act. Any such successor warrant agent shall promptly
cause notice of its succession as warrant agent to be mailed (by first class
mail, postage prepaid) to the Holder at the Holder's last address as shown on
the Warrant Register.
13. Miscellaneous.
(a) This Warrant shall be binding on and inure to the benefit of
the parties hereto and their respective successors and permitted assigns. This
Warrant may be amended only in writing signed by the Company and the Holder and
their successors and assigns.
(b) Subject to Section 13(a), above, nothing in this Warrant
shall be construed to give to any person or corporation other than the Company
and the Holder any legal or equitable right, remedy or cause under this Warrant.
This Warrant shall inure to the sole and exclusive benefit of the Company and
the Holder.
(c) This Warrant shall be governed by and construed and enforced
in accordance with the internal laws of the State of California without regard
to the principles of conflicts of law thereof. The Company and the Holder hereby
irrevocably submit to the exclusive jurisdiction of the state and federal courts
sitting in Orange County, California, for the adjudication of any dispute
hereunder or in connection herewith or with any transaction contemplated hereby
or discussed herein, 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, or that such suit, action or proceeding is
improper. Each of the Company and the Holder hereby irrevocably waives personal
service of process and consents to process being served in any such suit, action
or proceeding by receiving a copy thereof sent to the Company at the address in
effect for notices to it under this instrument and agrees that such service
shall constitute good and sufficient service of process and notice thereof.
Nothing contained herein shall be deemed to limit in any way any right to serve
process in any manner permitted by law.
(d) The headings herein are for convenience only, do not
constitute a part of this Warrant and shall not be deemed to limit or affect any
of the provisions hereof.
(e) In case any one or more of the provisions of this Warrant
shall be invalid or unenforceable in any respect, the validity and
enforceability of the remaining terms and provisions of this Warrant shall not
in any way be affected or impaired thereby and the parties will attempt in good
faith to agree upon a valid and enforceable provision which shall be a
commercially reasonable substitute therefor, and upon so agreeing, shall
incorporate such substitute provision in this Warrant.
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<PAGE> 8
IN WITNESS WHEREOF, the Company has caused this Warrant to be duly
executed by its authorized officer as of the date first indicated above.
NEOTHERAPEUTICS, INC.
By: /s/Samuel Gulko
---------------------------------
Name: Samuel Gulko
-------------------------------
Title: Chief Financial Officer
------------------------------
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<PAGE> 9
FORM OF ELECTION TO PURCHASE
(To be executed by the Holder to exercise the right to purchase shares of Common
Stock under the foregoing Warrant)
To NeoTherapeutics, Inc.:
In accordance with the Warrant enclosed with this Form of Election to
Purchase, the undersigned hereby irrevocably elects to purchase __________
shares of Common Stock ("Common Stock"), $.001 par value per share, of
NeoTherapeutics, Inc. encloses herewith $__________ in cash, certified or
official bank check or checks, which sum represents the aggregate Exercise Price
(as defined in the Warrant) for the number of shares of Common Stock to which
this Form of Election to Purchase relates, together with any applicable taxes
payable by the undersigned pursuant to the Warrant.
The undersigned requests that certificates for the shares of Common
Stock issuable upon this exercise be issued in the name of
PLEASE INSERT SOCIAL SECURITY OR
TAX IDENTIFICATION NUMBER
------------------------------------
- --------------------------------------------------------------------------------
(Please print name and address)
If the number of shares of Common Stock issuable upon this exercise
shall not be all of the shares of Common Stock which the undersigned is entitled
to purchase in accordance with the enclosed Warrant, the undersigned requests
that a New Warrant (as defined in the Warrant) evidencing the right to purchase
the shares of Common Stock not issuable pursuant to the exercise evidenced
hereby be issued in the name of and delivered to:
- --------------------------------------------------------------------------------
(Please print name and address)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Dated: __________, ____ Name of Holder:
(Print)
-----------------------------
(By:)
--------------------------------
(Name:)
(Title:)
(Signature must conform in all
respects to name of holder as
specified on the face of the
Warrant)
<PAGE> 10
FORM OF ASSIGNMENT
[To be completed and signed only upon transfer of Warrant]
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers
unto ____________________ the right represented by the Warrant enclosed with
this Form of Assignment to purchase __________ shares of Common Stock of
NeoTherapeutics, Inc. to which the Warrant relates and appoints
____________________ attorney to transfer said right on the books of
NeoTherapeutics, Inc. with full power of substitution in the premises.
Dated: __________, ____
-------------------------------------------------
(Signature must conform in all respects to name
of holder as specified on the face of the Warrant)
-------------------------------------------------
Address of Transferee
-------------------------------------------------
-------------------------------------------------
In the presence of:
- --------------------------
<PAGE> 1
[Latham & Watkins Letterhead]
EXHIBIT 5.1
May 15, 2000
NeoTherapeutics, Inc.
157 Technology Drive
Irvine, California 92612
Re: Registration of 6,348,892 shares of common stock, par
value $.001 per share, of NeoTherapeutics, Inc.,
pursuant to a Registration Statement on Form S-3
Ladies and Gentlemen:
In connection with the registration for resale of 6,348,892
shares of common stock, par value $.001 per share, of NeoTherapeutics, Inc., a
Delaware corporation (the "Company"), under the Securities Act of 1933, as
amended, on Form S-3 (the "Registration Statement"), you have requested our
opinion with respect to the matters set forth below. The shares being registered
for resale include: (i) 520,324 shares of common stock which were sold to
Montrose Investments Ltd. and Strong River Investments Ltd. (the "Investors")
pursuant to a Securities Purchase Agreement dated February 25, 2000 among the
Company and the Investors (the "Shares"); (ii) 104,000 shares of common stock
which are currently issuable upon exercise of outstanding warrants issued to the
Investors on February 25, 2000 (the "Closing Warrants"); (iii) 1,234,568 shares
of common stock which may be issuable upon conversion of convertible debentures
sold to the Investors on April 6, 2000 (the "Debentures"); (iv) 315,000 shares
of common stock which may be issuable upon exercise of Class A Warrants issued
to the Investors on April 6, 2000 (the "Class A Warrants"); (v) 4,000,000 shares
of common stock which may be issuable upon exercise of Class B Warrants issued
to the Investors on April 6, 2000 (the "Class B Warrants"); and (vi) 175,000
shares of common stock currently issuable upon exercise of finder's warrants
issued to Brighton Capital, Ltd. as of January 29, 1999, November 19, 1999,
February 25, 2000 and April 6, 2000 (the "Finder's Warrants") (the Closing
Warrants, Class A Warrants, Class B Warrants and Finder's Warrants are referred
to herein collectively as the "Warrants").
<PAGE> 2
LATHAM & WATKINS
May 15, 2000
Page 2
We have made such legal and factual examinations and inquiries,
including an examination of originals or copies certified or otherwise
identified to our satisfaction of such documents, corporate records and
instruments, as we have deemed necessary or appropriate for purposes of this
opinion.
In our examination, we have assumed the genuineness of all
signatures, the authenticity of all documents submitted to us as originals, and
the conformity to authentic original documents of all documents submitted to us
as copies.
We are opining herein as to the effect on the subject transaction
only of the General Corporation Law of the State of Delaware (including
statutory and reported decisional law), and we express no opinion with respect
to the applicability thereto, or the effect thereon, of the laws of any other
jurisdiction or, in the case of Delaware, any other laws, or as to any matters
of municipal law or the laws of any other local agencies within the state.
Subject to the foregoing, and assuming that the full
consideration for each share issuable upon exercise of the Warrants is received
by the Company in accordance with the terms of the Warrants and assuming
conversion of the Convertible Debentures in accordance with their terms, it is
our opinion that the Shares are, and the shares of common stock issuable upon
conversion of the Debentures and exercise of the Warrants, when issued, will be,
validly issued, fully paid and nonassessable securities of the Company.
This opinion is rendered only to the Company and is solely for
the benefit of the Company in connection with the transaction covered hereby.
This opinion may not be relied upon by you for any other purpose, or furnished
to, quoted to or relied upon, by any other person, firm or corporation for any
purpose, without our prior written consent.
We consent to your filing this opinion as an exhibit to the
Registration Statement and to the reference to our firm contained under the
heading "Legal Matters."
Very truly yours,
/s/ Latham & Watkins
<PAGE> 1
EXHIBIT 23.2
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation by
reference in this registration statement (File No. 333-_______) of our report
dated April 11, 2000 included in NeoTherapeutics, Inc.'s Form 10-K for the year
ended December 31, 1999 and to all references to our Firm included in this
registration statement.
/s/ARTHUR ANDERSEN LLP
Orange County, California
May 16, 2000
