<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES AND EXCHANGE ACT OF 1934
APRIL 28, 2000
DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED)
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NEOTHERAPEUTICS, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 000-28782 93-0979187
(State or other Jurisdiction (Commission File Number) (IRS Employer
of Incorporation) Identification Number)
157 TECHNOLOGY DRIVE
IRVINE, CALIFORNIA 92618
(Address of principal executive offices) (Zip Code)
(949) 788-6700
(Registrant's telephone number, including area code)
N/A
(Former Name or Former Address, if Changed Since Last Report)
<PAGE>
ITEM 5. OTHER EVENTS.
On April 28, 2000, NeoTherapeutics, Inc. (the "Company") entered into a
Securities Purchase Agreement with a Canadian financial institution for the
issuance and sale of common stock and warrants for aggregate consideration of
$7,000,000 (the "Agreement"). Pursuant to the Agreement, the Company issued and
sold to the investors a total of 500,000 shares of the Company's common stock at
a purchase price of $14.00 per share (the "Purchase Price"), and issued
five-year warrants ("Warrants") to purchase a total of 125,000 shares of common
stock at an exercise price of $17.50 per share.
In connection with this financing, the Company paid a finder's fee to an
unrelated third party consisting of cash and warrants to purchase common stock
of the Company.
ITEM 7. EXHIBITS.
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Exhibits
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4.1 Securities Purchase Agreement dated as of April 28, 2000, by
and between Registrant and Royal Canadian Growth Fund.
4.2 Registration Rights Agreement dated as of April 28, 2000, by
and among Registrant, Royal Canadian Growth Fund and Dlouhy
Investments Inc.
4.3 Warrant issued by Registrant to Royal Canadian Growth Fund,
dated as of May 1, 2000.
4.4 Warrant issued by Registrant to Dlouhy Investments Inc.,
dated as of May 1, 2000.
4.5 Letter Agreement dated as of May 1, 2000, by and between
Registrant and Royal Canadian Growth Fund.
99.1 Press Release dated May 2, 2000.
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2
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
NEOTHERAPEUTICS, INC.
Date: May 24, 2000 By: /s/ Samuel Gulko
-------------------------
Name: Samuel Gulko
Title: Chief Financial Officer
3
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EXHIBIT INDEX
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Exhibits
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<S> <C>
4.1 Securities Purchase Agreement dated as of April 28, 2000, by
and between Registrant and Royal Canadian Growth Fund.
4.2 Registration Rights Agreement dated as of April 28, 2000, by
and among Registrant, Royal Canadian Growth Fund and Dlouhy
Investments Inc.
4.3 Warrant issued by Registrant to Royal Canadian Growth Fund,
dated as of May 1, 2000.
4.4 Warrant issued by Registrant to Dlouhy Investments Inc.,
dated as of May 1, 2000.
4.5 Letter Agreement dated as of May 1, 2000, by and between
Registrant and Royal Canadian Growth Fund.
99.1 Press Release dated May 2, 2000.
</TABLE>
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EXHIBIT 4.1
NEOTHERAPEUTICS, INC.
SECURITIES PURCHASE AGREEMENT
APRIL 28, 2000
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TABLE OF CONTENTS
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PAGE
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<C> <S> <C>
1. Purchase and Sale of Units...............................................................................1
1.1 Sale and Issuance of Units......................................................................1
1.2 Closing; Delivery...............................................................................1
1.3 Definitions.....................................................................................2
2. Representations and Warranties of the Company............................................................2
2.1 Organization, Good Standing and Qualification...................................................2
2.2 Capitalization..................................................................................2
2.3 Authorization and Compliance....................................................................3
2.4 Valid Issuance of Securities....................................................................4
2.5 Governmental Consents...........................................................................4
2.6 Litigation......................................................................................4
2.7 SEC Reports.....................................................................................5
2.8 Absence of Certain Developments.................................................................5
2.9 Intellectual Property...........................................................................6
2.10 Compliance with Other Instruments and Laws; Permits.............................................6
2.11 Title to Assets.................................................................................6
2.12 Certain Fees....................................................................................6
2.13 Form S-3 Eligibility............................................................................7
2.14 Listing and Maintenance Requirements............................................................7
2.15 Private Offering................................................................................7
2.16 Disclosure......................................................................................7
3. Representations and Warranties of the Purchasers.........................................................7
3.1 Authorization...................................................................................7
3.2 Experience......................................................................................8
3.3 Purchase Entirely for Own Account...............................................................8
3.4 Disclosure of Information.......................................................................8
3.5 Restricted Securities...........................................................................8
3.6 Residence...................................................................................... 9
3.7 Further Restrictions on Disposition............................................................ 9
3.8 Legends........................................................................................ 9
3.9 Foreign Investors..............................................................................10
3.10 Offshore Transaction...........................................................................10
3.11 Certain Fees...................................................................................11
4. Conditions of the Purchasers'Obligations at Closing.....................................................12
4.1 Representations and Warranties.................................................................12
4.2 Performance....................................................................................12
4.3 Compliance Certificate.........................................................................12
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4.4 Qualifications.................................................................................12
4.5 Opinion of Company Counsel.....................................................................12
4.6 Registration Rights Agreement..................................................................12
4.7 Glasky Lock-up.................................................................................12
5. Conditions of the Company's Obligations at Closing......................................................12
5.1 Representations and Warranties.................................................................12
5.2 Performance....................................................................................13
5.3 Qualifications.................................................................................13
6. Agreements of the Company...............................................................................13
6.1 Registration Rights............................................................................13
6.2 Subsequent Issuances...........................................................................13
6.3 Furnishing of Information......................................................................14
6.4 Integration....................................................................................14
6.5 Reservation and Listing of Underlying Shares...................................................14
7. Miscellaneous...........................................................................................15
7.1 Survival of Warranties.........................................................................15
7.2 Transfer; Successors and Assigns...............................................................15
7.3 Governing Law..................................................................................15
7.4 Counterparts...................................................................................15
7.5 Titles and Subtitles...........................................................................15
7.6 Notices........................................................................................15
7.7 Currency.......................................................................................16
7.8 Attorney's Fees................................................................................16
7.9 Amendments and Waivers.........................................................................16
7.10 Severability...................................................................................16
7.11 Delays or Omissions; Remedies Cumulative.......................................................16
7.12 Entire Agreement...............................................................................16
7.13 California Corporate Securities Law............................................................17
7.14 Exculpation Among Purchasers...................................................................17
</TABLE>
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NEOTHERAPEUTICS, INC.
SECURITIES PURCHASE AGREEMENT
This Securities Purchase Agreement (this "AGREEMENT") is made
as of April 28, 2000 by and among NeoTherapeutics, Inc., a Delaware corporation
(the "COMPANY"), and the investors listed on EXHIBIT A hereto (each a
"PURCHASER" and together the "PURCHASERS").
WHEREAS, the Company desires to issue and sell units (the
"UNITS"), each consisting of four (4) shares of the Company's common stock,
$.001 par value (the "COMMON STOCK") and a warrant to purchase one (1) share of
Common Stock (the "WARRANTS"); and
WHEREAS, each Purchaser desires to purchase Units from the
Company on the terms and subject to the conditions set forth in this Agreement;
NOW, THEREFORE, in consideration of the promises and the
mutual covenants contained in this Agreement, the parties agree as follows:
1. PURCHASE AND SALE OF UNITS.
1.1 SALE AND ISSUANCE OF UNITS.
(a) Subject to the terms and conditions of this
Agreement, each Purchaser agrees, severally and not jointly, to purchase, and
the Company agrees to sell and issue to each such Purchaser, at the Closing,
that number of Units set forth opposite each such Purchaser's name on EXHIBIT A
hereto at a purchase price of $56 per Unit.
1.2 CLOSING; DELIVERY.
(a) The purchase and sale of the Shares shall take
place at the offices of Latham & Watkins, 650 Town Center Drive, Twentieth
Floor, Costa Mesa, California 92626-1925 at 10:00 a.m., on May 1, 2000, or at
such other time and place as the Company and the Purchasers scheduled to
purchase at least a majority of the Units on such date mutually agree upon,
orally or in writing (which time and place are designated as the "CLOSING").
(b) At the Closing, the Company shall deliver to each
Purchaser (i) a certificate representing the shares of Common Stock underlying
the Units being purchased by such Purchaser, (ii) a Warrant to purchase a number
of shares of Common Stock equal to the number of Units being purchased by such
Purchaser in the form attached as EXHIBIT B hereto, (iii) all other documents,
instruments and writings required to be delivered by the Company pursuant to
this Agreement, including an executed Registration Rights Agreement, dated as of
the Closing date, among the Company and the Purchasers, in the form of EXHIBIT C
hereto (the "REGISTRATION RIGHTS AGREEMENT") against (i) payment of the purchase
price therefor by check payable to the Company, by wire transfer to the
Company's bank account or any combination of the foregoing and (ii) all other
documents, instruments and writings required to be delivered by
<PAGE>
such Purchaser pursuant to this Agreement, including the executed Registration
Rights Agreement.
1.3 DEFINITIONS. For purposes of this Agreement, (i)
"AFFILIATE" has the meaning set forth in Rule 405 under the Securities Act of
1933, as amended (the "SECURITIES ACT"); and (ii) A "PERSON" means an individual
or corporation, partnership, trust, incorporated or unincorporated association,
joint venture, limited liability company, joint stock company, government (or an
agency or subdivision thereof) or other entity of any kind.
2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company
hereby represents and warrants to each Purchaser that, except as set forth on
the Schedule of Exceptions attached as EXHIBIT D hereto, as of the date
hereof and as of the Closing:
2.1 ORGANIZATION, GOOD STANDING AND QUALIFICATION. The
Company is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware and has all requisite
corporate power and authority to carry on its business as currently conducted
and as proposed to be conducted. The Company has no subsidiaries except as
set forth in Section 2.1 of the Schedule of Exceptions (the "SUBSIDIARIES").
Each Subsidiary is an entity duly organized, validly existing and in good
standing under the laws of its jurisdiction of incorporation or organization
(as applicable) with the requisite corporate power and authority to carry on
its business as currently conducted. The Company and each Subsidiary is duly
qualified to transact business and is in good standing in each jurisdiction
in which the failure so to qualify would (i) adversely affect the legality,
validity or enforceability of the Units or any of this Agreement, the
Registration Rights Agreement or the Warrant (collectively, the "TRANSACTION
DOCUMENTS"), (ii) have or result in a material adverse effect on the results
of operations, assets, prospects, or condition (financial or otherwise) of
the Company and the Subsidiaries, taken as a whole, or (iii) adversely impair
the Company's ability to perform fully on a timely basis its obligations
under any of the Transaction Documents (any of (i), (ii) or (iii), a
"MATERIAL ADVERSE EFFECT").
2.2 CAPITALIZATION.
(a) The authorized capital of the Company consists,
or will consist, immediately prior to the Closing, of: (i) 5,000,000 shares of
Preferred Stock, of which 400 shares have been designated Series A Preferred,
none of which are outstanding and (ii) 25,000,000 shares of Common Stock,
9,565,653 shares of which are issued and outstanding immediately prior to the
Closing.
(b) All of the outstanding shares of the Company's
Common Stock are duly authorized, fully paid and nonassessable and were issued
in compliance with all applicable federal and state securities laws.
(c) The Company has reserved a total of 1,651,430
shares of Common Stock for issuance to officers, directors, employees and
consultants of the Company pursuant to its 1991 and 1997 Stock Option Plans duly
adopted by the Board of Directors and approved by
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the Company's stockholders (the "STOCK PLANS"). Of such reserved shares of
Common Stock, options to purchase 1,066,075 shares have been granted and are
currently outstanding, and 500,605 shares of Common Stock remain available for
future grants under the Stock Plans. In addition, there are options to purchase
329,173 shares of Common Stock granted outside of the Stock Plans currently
outstanding.
(d) Other than the purchase and sale of the Units,
there are no outstanding options, warrants, rights (including conversion or
preemptive rights and rights of first refusal or similar rights) or agreements,
orally or in writing, for the purchase or acquisition from the Company of any of
its securities or any other agreements to participate in the profits of the
Company. No securities of the Company or any Subsidiary are entitled to
preemptive rights, rights of first refusal or similar rights, nor is any holder
of securities of the Company or any Subsidiary entitled to preemptive or similar
rights arising out of any agreement or understanding with the Company or any
Subsidiary by virtue of any of the Transaction Documents.
(e) The Company owns all of the capital stock of each
Subsidiary.
2.3 AUTHORIZATION AND COMPLIANCE.
(a) All corporate action on the part of the Company,
its officers, directors and stockholders necessary for the authorization,
execution and delivery of this Agreement and the Registration Rights Agreement
(collectively, the "AGREEMENTS"), the performance of all obligations of the
Company hereunder and thereunder and the authorization, issuance and delivery of
the Units and the Common Stock issuable upon exercise of the Warrants (together
with the Units, the "SECURITIES") has been taken or will be taken prior to the
Closing, and the Agreements, when executed and delivered by the Company, shall
constitute valid and legally binding obligations of the Company, enforceable
against the Company in accordance with their respective terms except (i) as
limited by applicable bankruptcy, insolvency, reorganization, moratorium,
fraudulent conveyance, and other laws of general application affecting
enforcement of creditors' rights generally, and as limited by laws relating to
the availability of specific performance, injunctive relief, or other equitable
remedies, or (ii) to the extent the indemnification provisions contained in the
Registration Rights Agreement may be limited by applicable federal or state
securities laws.
(b) Subject to Section 4.4 of this Agreement, neither
the execution and delivery of the Agreements nor the performance by the Company
of its obligations under the Agreements (including the issuance of the Units and
the Common Stock issuable upon exercise of the Warrants) will: (i) violate any
provisions of the Certificate of Incorporation or the By-laws of the Company;
(ii) with or without the giving of notice or the passage of time, or both,
violate, or be in conflict with, or constitute a default under, or cause or
permit the termination or the acceleration of the maturity of, any debt or
obligation of the Company; (iii) require notice to or the consent of any party
to any agreement or commitment, including, without limitation, any lease or
license to which the Company is a party, or by which it or its properties is
bound or subject; (iv) result in the creation or imposition of any security
interest, lien, or other
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<PAGE>
encumbrance upon any property or assets of the Company under any agreement or
commitment to which it is a party, or by which it or its properties is bound or
subject; or (v) violate any statute or law or any judgment, decree, order,
regulation or rule of any court or governmental authority to which the Company
or its properties is bound or subject.
2.4 VALID ISSUANCE OF SECURITIES. The shares of Common
Stock and Warrants underlying the Units when issued, sold and delivered in
accordance with the terms hereof will be duly and validly issued, fully-paid
and nonassessable, free and clear of all liens, encumbrances and rights of
first refusal if any kind ("collectively, "LIENS") and, based in part upon
the representations of the Purchasers in this Agreement, will be issued in
compliance with all applicable federal and state securities laws regarding
registration or qualification. The shares of Common Stock issuable upon
exercise of the Warrants have been duly and validly authorized and reserved
for issuance and, upon issuance in accordance with the terms of the Warrants,
shall be duly and validly issued, fully-paid and nonassessable, free and
clear of all Liens and, based in part upon the representations of the
Purchasers in this Agreement, such shares of Common Stock if issued at the
Closing would be issued in compliance with all applicable federal and state
securities laws.
2.5 GOVERNMENTAL CONSENTS. No consent, approval, order or
authorization of, or registration, qualification, designation, declaration or
filing with, any federal, state or local governmental authority on the part of
the Company is required in connection with the offer, sale or issuance of the
Units (and the Common Stock issuable upon exercise of the Warrants) or the
consummation of any other transactions contemplated by this Agreement, except
for (i) filings pursuant to Section 25102(f) of the California Corporate
Securities Law of 1968, as amended, and the rules thereunder, other applicable
state securities laws and Regulation D of the Securities Act, which filings
shall be effected within the requisite time periods, (ii) filings required under
this Agreement or the Registration Rights Agreement, (iii) filing of
application(s) with the Nasdaq National Market ("NASDAQ") for the listing of
shares of Common Stock registered pursuant to the Registration Rights Agreement
and (iv) filings required by the applicable Canadian securities regulatory
agencies.
2.6 LITIGATION. There is no action, suit, proceeding or
investigation pending or, to the Company's knowledge, currently threatened
against the Company that questions the validity of the Agreements or the right
of the Company to enter into them, or to consummate the transactions
contemplated hereby or thereby, or that might, either individually or in the
aggregate, have a Material Adverse Effect, nor is the Company aware that there
is any basis for the foregoing. The Company or the Subsidiaries are not a party
to or subject to the provisions of any order, writ, injunction, judgment or
decree of any court or government agency or instrumentality specifically
applicable to the Company or the Subsidiaries. There is no action, suit,
proceeding or investigation by the Company currently pending or which the
Company intends to initiate.
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2.7 SEC REPORTS.
(a) The Company has filed all reports required to be
filed by it under the Securities Act and the Securities Exchange Act of 1934, as
amended (the "EXCHANGE ACT") for the two years preceding the date hereof
(collectively, the "SEC REPORTS") on a timely basis or has received a valid
extension of such time for filing and has filed any such SEC Reports prior to
the expiration of such extension. As of their respective dates, the SEC Reports
complied in all material respects with the requirements of the Securities Act or
the Exchange Act, as the case may be, and the rules and regulations of the
Securities and Exchange Commission ("SEC") thereunder applicable to such reports
and registration statements. As of their respective dates, the SEC Reports did
not contain any untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which they were, or will be, made, not
misleading.
(b) The audited consolidated financial statements and
unaudited interim financial statements of the Company included in the SEC
Reports comply as to form in all material respects with applicable accounting
requirements of the Securities Act or the Exchange Act, as applicable, and with
the published rules and regulations of the SEC with respect thereto. The
financial statements and the condensed financial statements, as applicable,
included in the SEC Reports (i) have been prepared in accordance with GAAP
(except as may be indicated therein or in the notes thereto), (ii) present
fairly, in all material respects, the financial position of the Company and its
Subsidiaries as of the dates thereof and the results of their operations and
cash flows for the periods then ended subject, in the case of the unaudited
interim financial statements, to normal year-end audit adjustments and the fact
that certain information and notes have been condensed or omitted in accordance
with the Exchange Act and the rules and regulations promulgated thereunder, and
(iii) are in all material respects in agreement with the books and records of
the Company and its Subsidiaries.
2.8 ABSENCE OF CERTAIN DEVELOPMENTS. Except as
disclosed in the SEC Reports filed with the SEC prior to the date hereof or
in the Company's press releases prior to the date hereof and except for the
transactions contemplated by this Agreement, since December 31, 1999, (a)
there has been no event, occurrence or development that has or that is
reasonably likely to result in a Material Adverse Effect, (b) the Company or
the Subsidiaries have not incurred any liabilities (contingent or otherwise)
other than (i) liabilities incurred in the ordinary course of business
consistent with past practice and (ii) liabilities not required to be
reflected in the Company's financial statements pursuant to GAAP or required
to be disclosed in filings made with the Commission, (c) the Company has not
altered its method of accounting or the identity of its auditors and (d) the
Company has not declared or made any payment or distribution of cash or other
property to its stockholders or officers or directors (other than in
compliance with existing Company stock or stock option plans and existing
agreements and terms of employment) with respect to its capital stock, or
purchased, redeemed (or made any agreements to purchase or redeem) any shares
of its capital stock.
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2.9 INTELLECTUAL PROPERTY. The Company owns or possesses
sufficient legal rights to all patents, patent applications, trademarks, service
marks, tradenames, copyrights, trade secrets, licenses, information and
proprietary rights and processes necessary or material for their respective
businesses as described in the SEC Reports and which the failure to so have
would have a Material Adverse Effect (collectively, the "Intellectual Property
Rights") without, to the Company's knowledge, any conflict with, or infringement
of, the rights of others and the Company has not been notified of any conflict
or potential conflict with the rights of others. To the Company's knowledge, all
such Intellectual Property Rights are enforceable and there is no existing
infringement by any other Person of any such Intellectual Property Rights. All
patent applications that have been filed by the Company to the Patent and
Trademark Office have been duly filed by the Company and the Company have taken
all actions that are reasonably necessary to maintain the prosecution of such
patent applications. Neither the Company nor any subsidiary has received any
written communications alleging that the Company or its Subsidiaries has
violated or, by conducting their business, would violate any of the patents,
trademarks, service marks, tradenames, copyrights, trade secrets or other
proprietary rights or processes of any other Person.
2.10 COMPLIANCE WITH OTHER INSTRUMENTS AND LAWS;
PERMITS. The Company is not in violation or default of any provision of its
Certificate of Incorporation or By-Laws. The Company is not in violation of,
or default under any provision of any instrument, mortgage, deed of trust,
loan, contract, commitment, judgment, decree, order or obligation to which it
is a party or by which it or any of its properties are bound, which
violations or defaults, individually or in the aggregate, would have a
Material Adverse Effect. To the Company's knowledge, having taken all steps
to ensure compliance reasonably expected to be taken by companies engaged in
businesses similar to the business of the Company as described in the SEC
Reports, it is not in violation of any provision of any federal, state or
local statute, rule or governmental regulation, which violations,
individually or in the aggregate, would have a Material Adverse Effect. The
Company and its Subsidiaries have all franchises, permits, licenses and any
similar authority necessary for the conduct of their business as described in
the SEC Reports, the lack of which would have a Material Adverse Effect. The
Company or the Subsidiaries are not in default in any material respect under
any of such franchises, permits, licenses or other similar authority.
2.11 TITLE TO ASSETS. The Company has good and marketable
title to all of its assets which are material to its business as described in
the SEC Reports, free and clear of all mortgages, liens, loans and encumbrances,
except such encumbrances and liens which arise in the ordinary course of
business and do not individually or in the aggregate materially impair the
Company's ownership or use of such assets. With respect to the assets it leases,
the Company is in material compliance with such leases and, to its knowledge,
holds a valid leasehold interest free of any liens, claims or encumbrances.
2.12 CERTAIN FEES. Except as are payable to Brighton
Capital, Ltd. and Dlouhy Investments Inc., no fees or commissions will be
payable by the Company to any broker, financial advisor or consultant,
finder, placement agent, investment banker, bank or other Person
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with respect to the transactions contemplated by this Agreement. The Purchasers
shall have no obligation with respect to any fees that may be payable by the
Company in connection with the transactions contemplated by this Agreement.
2.13 FORM S-3 ELIGIBILITY. The Company is eligible to
register its Common Stock for resale under Form S-3 promulgated under the
Securities Act.
2.14 LISTING AND MAINTENANCE REQUIREMENTS. The Company has
not, in the two years preceding the date hereof received notice (written or
oral) from the NASDAQ or any other stock exchange, market or trading facility on
which the Common Stock is or has been listed (or on which it has been quoted) to
the effect that the Company is not in compliance with the listing or maintenance
requirements of such exchange, market or trading facility. The Company is, and
has no reason to believe that it will not in the foreseeable future continue to
be, in compliance with all such listing and maintenance requirements.
2.15 PRIVATE OFFERING. Assuming the accuracy of the
representations and warranties of the Purchasers set forth in Section 3, the
offer, issuance and sale of the Units to the Purchasers as contemplated hereby
are exempt from the registration requirements of the Securities Act. Neither the
Company nor any Person acting on its behalf has taken or is, to the knowledge of
the Company, contemplating taking any action which could subject the offering,
issuance or sale of the Units to the registration requirements of the Securities
Act including soliciting any offer to buy or sell the Units by means of any form
of general solicitation or advertising.
2.16 DISCLOSURE. All written materials provided by the
Company to the Purchasers regarding the Company, its business and the
transactions contemplated hereby, including the Exhibits to this Agreement,
furnished by or on behalf of the Company are true and correct and do not
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading.
3. REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS. Each
Purchaser, severally and not jointly, hereby represents and warrants to the
Company that as of the date hereof and as of the Closing:
3.1 AUTHORIZATION. Such Purchaser has full power and
authority to enter into the Agreements. The Agreements, when executed and
delivered by such Purchaser, will constitute valid and legally binding
obligations of such Purchaser, enforceable in accordance with their
respective terms, except (a) as limited by applicable bankruptcy, insolvency,
reorganization, moratorium, fraudulent conveyance, and any other laws of
general application affecting enforcement of creditors' rights generally, and
as limited by laws relating to the availability of a specific performance,
injunctive relief, or other equitable remedies, or (b) to the extent the
indemnification provisions contained in the Registration Rights Agreement may
be limited by applicable federal or state securities laws.
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3.2 EXPERIENCE. Such Purchaser has experience as an
investor in securities of companies in the developmental stage and
acknowledges that it can bear the economic risk of its investment in the
Securities. Such Purchaser has either (a) a pre-existing personal or business
relationship with the Company or any of its officers, directors or
controlling persons that is of a nature and duration which enables the
Purchaser to be aware of the character, business acumen and general business
and financial circumstances of the Company or (b) by reason of its business
or financial experience or the business or financial experience of its
professional advisors who are unaffiliated with and who are not compensated
by the Company or any affiliate or selling agent of the Company, directly or
indirectly, has the capacity to protect its own interests in connection with
its purchase of the Securities. Such Purchaser has the financial capacity to
bear the risk of this investment.
3.3 PURCHASE ENTIRELY FOR OWN ACCOUNT. The Securities
to be acquired by the Purchaser will be acquired for investment for the
Purchaser's own account not as a nominee or agent, and not with a view to the
resale or distribution of any part thereof, and the Purchaser has no present
intention of selling, granting any participation in, or otherwise
distributing the same. The Purchaser does not presently have any contract,
undertaking, agreement or arrangement with any Person to sell, transfer or
grant participations to such Person or to any third Person, with respect to
any of the Securities. The Purchaser has not been formed for the specific
purpose of acquiring solely the Securities.
3.4 DISCLOSURE OF INFORMATION. Such Purchaser has
received and reviewed information about the Company and has had an
opportunity to discuss the Company' business, management and financial
affairs with its management and to review the Company's facilities. Such
Purchaser understands and acknowledges that such discussions, as well as any
written information issued by the Company (i) were intended to describe the
aspects of the Company's business and prospects which the Company believes to
be material, but were not necessarily an exhaustive description, and (ii) may
have contained forward-looking statements involving known and unknown risks
and uncertainties which may cause the Company's actual results in future
periods or plans for future periods to differ materially from what was
anticipated and that no representations or warranties were or are being made
with respect to any such forward-looking statements or the probability of
achieving any of the results projected in any of such forward-looking
statements. Nothing contained in this Section 3.4 shall limit in any respect
the Company's representations and warranties contained in this Agreement.
3.5 RESTRICTED SECURITIES. The Purchaser understands
that the Securities have not been, and will not, prior to the Closing, be,
registered under the Securities Act, by reason of a specific exemption from
the registration provisions of the Securities Act which depends upon, among
other things, the bona fide nature of the investment intent and the accuracy
of the Purchaser's representations as expressed herein. The Purchaser
understands that the Securities are "restricted securities" under applicable
U.S. federal and state securities laws and that, pursuant to these laws, the
Purchaser must hold the Securities indefinitely unless they are registered
with the SEC and qualified by state authorities, or an exemption from such
registration and qualification requirements is available. The Purchaser
acknowledges that the Company has
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<PAGE>
no obligation to register or qualify the Securities for resale except as set
forth in the Registration Rights Agreement. The Purchaser further acknowledges
that if an exemption from registration or qualification is available, it may be
conditioned on various requirements including, but not limited to, the time and
manner of sale, the holding period for the Securities, and on requirements
relating to the Company which are outside of the Purchaser's control, and which
the Company is under no obligation and may not be able to satisfy. Such
Purchaser acknowledges that the Company will make a notation on its stock books
regarding the restrictions on transfers set forth in this Section 3 and will
transfer securities on the books of the Company only to the extent not
inconsistent therewith.
3.6 RESIDENCE. If the Purchaser is an individual, the
Purchaser resides in the state or province identified in the address of the
Purchaser set forth on the signature pages hereof or EXHIBIT A; if the Purchaser
is an entity, then the office or offices of the Purchaser in which its
investment decision was made is located at the address or addresses of the
Purchaser set on such signature pages or EXHIBIT A.
3.7 FURTHER RESTRICTIONS ON DISPOSITION. Without in
any way limiting the provisions of Section 3.5, such Purchaser agrees not to
make any disposition of all or any portion of the Securities unless and until
the transferee has agreed in writing for the benefit of the Company to be
bound by this Section 3 and the Agreements (provided and to the extent this
Section 3 and the Agreements are then applicable), and any of the following
conditions apply: (a) there is then in effect a registration statement under
the Securities Act covering such proposed disposition and the disposition is
made in accordance with such registration statement; or (b) (i) such
Purchaser shall have notified the Company of the proposed disposition and
shall have furnished the Company with a statement of the circumstances
surrounding the proposed disposition and (ii) if reasonably requested by the
Company, such Purchaser shall have furnished the Company with an opinion of
counsel, reasonably acceptable to the Company, that such disposition will not
require registration under the Securities Act. It is agreed that the Company
will not require opinions of counsel for transactions made pursuant to Rule
144. Notwithstanding clauses (a) and (b), no such registration statement or
opinion shall be required for a transfer by a Purchaser to her, his or its
(1) constituent partner or member, (2) former partner or member, (3) estate,
(4) spouse, sibling or the lineal descendants or ancestors of the Purchaser
or his or her spouse or (5) affiliate; provided, however, that any such
transferee agrees in writing to be subject to the terms of the Agreements
then applicable to the Purchaser.
3.8 LEGENDS. The Purchaser understands that the
Securities, and any securities issued in respect of or exchange for the
Securities, may bear one or all of the following legends until they are no
longer required by law or the provisions of this Agreement:
(a) "THE SECURITIES REPRESENTED BY THIS CERTIFICATE
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, (THE
"SECURITIES ACT") PURSUANT TO AN EXEMPTION FROM REGISTRATION CONTAINED IN
REGULATION S PROMULGATED UNDER THE SECURITIES ACT, AND MAY NOT BE TRANSFERRED
EXCEPT IN ACCORDANCE
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<PAGE>
WITH THE PROVISIONS OF REGULATION S, PURSUANT TO A REGISTRATION UNDER THE
SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM REGISTRATION. NO
HEDGING TRANSACTIONS INVOLVING THESE SECURITIES MAY BE CONDUCTED EXCEPT IN
COMPLIANCE WITH THE SECURITIES ACT."
(b) Any legend required by the Blue Sky laws of any
state to the extent such laws are applicable to the shares represented by the
certificate so legended.
The legend set forth above shall be removed by the Company from any certificate
evidencing Securities upon transfer of such Securities in compliance with Rule
144(k) under the Securities Act or upon delivery to the Company of an opinion,
in form and substance and by counsel reasonably satisfactory to the Company,
that a registration statement under the Securities Act is at that time in effect
with respect to the legended security or that such security can be freely
transferred without such a registration statement being in effect and that such
transfer will not jeopardize the exemption or exemptions from registration
pursuant to which the securities were issued.
3.9 FOREIGN INVESTORS. The Purchaser hereby represents
that it has satisfied itself as to the full observance of the laws of its
jurisdiction in connection with any invitation to subscribe for the
Securities or any use of this Agreement, including (i) the legal requirements
within its jurisdiction for the purchase of the Securities, (ii) any foreign
exchange restrictions applicable to such purchase, (iii) any governmental or
other consents that may need to be obtained, and (iv) the income tax and
other tax consequences, if any, that may be relevant to the purchase,
holding, redemption, sale, or transfer of the Securities. Such Purchaser's
subscription and payment for and continued beneficial ownership of the
Securities, will not violate any applicable securities or other laws of the
Purchaser's jurisdiction and will not require the Company to obtain any
permit, make any filing or take any other action in such jurisdiction, other
than the filing of Form 45-501F1 with the Ontario Securities Commission and
payment of the associated fee.
3.10 OFFSHORE TRANSACTION.
(a) The Purchaser is not organized under the laws of
or is not a citizen or resident of the United States and was not formed for the
purpose of investing in Regulation S securities, does not have any of its
securities registered under the Exchange Act, and is not owned by U.S. Persons
as defined in Regulation S and herein.
(b) At the time the buy order to purchase the Shares
was originated, the Purchaser was outside the United States.
(c) No offer to purchase the Shares was made in the
United States nor were any "directed selling efforts" as defined in Rule 902 of
Regulation S made in the United States.
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<PAGE>
(d) All subsequent offers and sales of the Shares
shall be made in compliance with Regulation S, pursuant to registration of the
securities under the Securities Act or pursuant to an exemption from such
registration.
(e) The Purchaser agrees that from the date hereof
until after one year after the closing of the purchase of the Shares hereunder
(the "Restrictive Period"), the Purchaser agrees, upon any offer, sale, or
transfer of the Shares (including any interests therein), the Purchaser, or any
successor, or any Professional under its direction (as defined below) (except
for sales of any Shares registered under the Securities Act or otherwise exempt
from such registration) (i) will not sell to a U.S. Person or to an account of
or for the benefit of a U.S. Person or to anyone believed to be a U.S. Person;
(ii) will not engage in any efforts to sell the Shares in the United States;
(iii) will, at the time the buy order or transfer is originated, believe the
buyer or transferee is outside the United States; (iv) will send to any
transferee who is a Professional, whether acting as agent or principal, a
confirmation or other notice stating that the Professional is subject to the
same restrictions on transfer to U.S. Persons or for the account of or benefit
of U.S. Persons during the Restrictive Period as provided herein; and (v) will
not in connection with the common stock of the Company engage in the United
States in any short selling, option writing, equity swaps, or other types of
hedging transactions or derivative transactions. The Company will not honor or
register and will not be obligated to honor or register any transfer in
violation of these provisions.
(f) For purpose hereof, in general, a "U.S. Person;"
means any natural person, resident of the United States; any partnership or
corporation organized or incorporated under the laws of the United States or any
state or territory thereof; any estate of which any executor or administrator is
a U.S. Person; any trust of which any trustee is a U.S. Person; any agency or
branch of a foreign entity located in the United States; any nondiscretionary
account or similar account, other than estate or trust, held by a dealer or
other fiduciary organized, incorporated, or (if an individual) resident of the
United States; and any partnership or corporation if organized or incorporated
under the laws of any foreign jurisdiction and formed by a U.S. Person
principally for the purpose of investing in securities and not registered under
the Securities Act unless it is organized and incorporated and owned by
"accredited investors," as defined under Rule 501(a) under the Securities Act,
who are not natural persons, estates or trusts. "U.S. Person" is further defined
in Rule 902(o) under the Securities Act.
(g) A "Professional" is a "distributor" as defined in
Rule 902(c) under the Securities Act (generally any underwriter, or other
person, who participates, pursuant to a contractual arrangement, in the
distribution of the Shares); a dealer as defined in Section 2(12) of the
Exchange Act (encompassing those who engage in the business of trading or
dealing in securities as agent, broker, or principal); or a person receiving a
selling concession, fee, or other remuneration in respect of the sale of the
Shares sold.
3.11 CERTAIN FEES. No fees or commissions will be
payable by the Purchasers to any broker, financial advisor or consultant,
finder, placement agent, investment banker, bank or other Person with respect
to the transactions contemplated by this Agreement. The Company
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<PAGE>
shall have no obligation with respect to any fees that may be payable by the
Purchasers in connection with the transactions contemplated by this Agreement.
4. CONDITIONS OF THE PURCHASERS' OBLIGATIONS AT CLOSING. The
obligations of each Purchaser to the Company under this Agreement are subject to
the fulfillment, on or before the Closing, of each of the following conditions,
unless otherwise waived by such Purchaser:
4.1 REPRESENTATIONS AND WARRANTIES. The
representations and warranties of the Company contained in Section 2 shall be
true and correct on and as of the Closing with the same effect as though such
representations and warranties had been made on and as of the date of the
Closing.
4.2 PERFORMANCE. The Company shall have performed and
complied with all covenants, agreements, obligations and conditions contained
in this Agreement that are required to be performed or complied with by it on
or before the Closing.
4.3 COMPLIANCE CERTIFICATE. The President of the
Company shall deliver to the Purchasers at the Closing a certificate
certifying that the conditions specified in Sections 4.1 and 4.2 have been
fulfilled.
4.4 QUALIFICATIONS. All authorizations, approvals or
permits, if any, of any governmental authority or regulatory body of the
United States or of any state that are required to be in effect as of the
Closing in connection with the lawful issuance and sale of the Shares
pursuant to this Agreement shall be obtained and effective as of the Closing.
4.5 OPINION OF COMPANY COUNSEL. The Purchasers shall
have received from Latham & Watkins, counsel for the Company, an opinion,
dated as of the Closing, in substantially the form of EXHIBIT E hereto.
4.6 REGISTRATION RIGHTS AGREEMENT. The Company, each
Purchaser and shall have executed and delivered the Registration Rights
Agreement.
4.7 GLASKY LOCK-UP. Dr. Alvin J. Glasky shall have
entered into a lock-up agreement in substantially the form attached as
EXHIBIT F hereto.
5. CONDITIONS OF THE COMPANY'S OBLIGATIONS AT CLOSING. The
obligations of the Company to each Purchaser under this Agreement are subject
to the fulfillment, on or before the Closing, of each of the following
conditions, unless otherwise waived:
5.1 REPRESENTATIONS AND WARRANTIES. The
representations and warranties of each Purchaser contained in Section 3 shall
be true and correct on and as of the Closing with the same effect as though
such representations and warranties had been made on and as of the Closing.
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<PAGE>
5.2 PERFORMANCE. All covenants, agreements and
conditions contained in this Agreement to be performed by the Purchasers on
or prior to the Closing shall have been performed or complied with in all
material respects.
5.3 QUALIFICATIONS. All authorizations, approvals or
permits, if any, of any governmental authority or regulatory body of the
United States or of any state that are required to be in effect as of the
Closing in connection with the lawful issuance and sale of the Units pursuant
to this Agreement shall be obtained and effective as of the Closing.
6. AGREEMENTS OF THE COMPANY.
6.1 REGISTRATION RIGHTS. In the event that the Company
fails to obtain effectiveness of a registration statement covering the resale
of the shares of Common Stock underlying the Units and issuable upon exercise
of the Warrants on or before the Effectiveness Date as defined in the
Registration Rights Agreement, the Company shall, without requiring the
payment of any additional consideration and without derogating from the
obligations of the Company pursuant to the Registration Rights Agreement, on
the day after the Effectiveness Date, issue to each Purchaser two (2)
additional shares of Common Stock for every five (5) Units purchased by such
Purchaser. Such additional shares shall be deemed for all purposes whatsoever
to be part of the Units. The Company shall not be required to issue
fractional shares pursuant to this Section 6.1, but shall pay cash in lieu of
any fractional share otherwise issuable in an amount equal to the fair market
value of a share of Common Stock on the date of such issuance multiplied by
such fraction of a share otherwise to be issued.
6.2 SUBSEQUENT ISSUANCES. For a period of ninety (90)
days following the Closing, the Company shall not, without the consent of
Dlouhy Investments, Inc., such consent not to be unreasonably withheld, issue
or sell any shares of Common Stock or any securities convertible or
exchangeable into shares of Common Stock other than: (i) options, warrants or
rights granted to employees, officers, directors, consultants or other
service providers of the Company under any stock option plan or stockholders
rights plan heretofore adopted by the Company; (ii) shares of Common Stock
issuable upon the exercise of options, warrants or rights outstanding as of
the date hereof or issued in accordance with this Section 6.2 and upon
conversion of any convertible securities of the Company outstanding as of the
date hereof or issued in accordance with this Section 6.2; (iii) securities
issued (A) to an arm's length Person in connection with a corporate alliance,
development agreement or other strategic relationship with an entity engaged
in a business related to the business of the Company or (B) in connection
with a business combination or merger involving the Company; (iv) securities
issued pursuant to a Dividend Reinvestment Plan hereafter adopted by the
Company; or (v) a public offering of the Common Stock with gross proceeds to
the Company of not less than Forty Million Dollars ($40,000,000), provided
that (A) the Purchasers are permitted to register for sale in such offering
shares of Common Stock underlying the Units and issuable upon the exercise of
the Warrants and (B) the Purchasers are not prevented from selling shares of
Common Stock pursuant to their rights under the Registration Rights Agreement
by virtue of such public offering.
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<PAGE>
6.3 FURNISHING OF INFORMATION. As long as the
Purchasers own shares of Common Stock underlying the Units or issuable upon
exercise of the Warrants, the Company covenants to file timely (or obtain
extensions in respect thereof and file within the applicable grace period)
all reports required to be filed by the Company after the date hereof
pursuant to the Exchange Act. So long as the Purchasers own shares of Common
Stock underlying the Units or issuable upon exercise of the Warrants, if the
Company is not required to file reports pursuant to such laws, it will
prepare and furnish to the Purchasers and make publicly available in
accordance with Rule 144(c) promulgated under the Securities Act such
information as is required for the Purchasers to sell the Securities under
Rule 144 promulgated under the Securities Act. The Company further covenants
that it will take such further action as any holder of Securities may
reasonably request, all to the extent required from time to time to enable
such Person to sell shares of the Company without registration under the
Securities Act within the limitation of the exemptions provided by Rule 144
promulgated under the Securities Act. Upon the request of any such Person,
the Company shall deliver to such Person a written certification of a duly
authorized officer as to whether it has complied with such requirements.
6.4 INTEGRATION. The Company shall not, and shall use
its best efforts to ensure that, no Affiliate shall, sell, offer for sale or
solicit offers to buy or otherwise negotiate in respect of any security (as
defined in Section 2 of the Securities Act) that would be integrated with the
offer or sale of the Units in a manner that would require the registration
under the Securities Act of the sale of the Units to the Purchasers or that
would be integrated with the offer or sale of the Units for purposes of the
rules and regulations of the Nasdaq Stock Market.
6.5 RESERVATION AND LISTING OF UNDERLYING SHARES.
(a) The Company shall (i) in the time and manner
required by the NASDAQ and such other national securities exchange or market or
trading or quotation facility on which the Common Stock is then listed for
trading, prepare and file with the NASDAQ (and such other national securities
exchange or market or trading or quotation facility on which the Common Stock is
then listed for trading) an additional shares listing application covering a
number of shares of Common Stock which is not less than the number of shares of
Common Stock underlying the Units and issuable upon exercise of the Warrants,
(ii) take all steps necessary to cause such shares of Common Stock to be
approved for listing in the NASDAQ (as well as on any such other national
securities exchange or market or trading or quotation facility on which the
Common Stock is then listed) as soon as possible thereafter, and (iii) provide
to the Purchasers evidence of such listing, and the Company shall maintain the
listing of its Common Stock thereon.
(b) The Company shall maintain a reserve of shares of
Common Stock for issuance upon exercise in full of the Warrants in accordance
with the Warrants, in such amount as may be required to fulfill its obligations
in full under the Warrants.
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<PAGE>
7. MISCELLANEOUS.
7.1 SURVIVAL OF WARRANTIES. Unless otherwise set forth
in this Agreement, the warranties, representations and covenants of the
Company and the Purchasers contained in or made pursuant to this Agreement
shall survive the execution and delivery of this Agreement and the Closing
for a period of eighteen (18) months following the Closing; provided,
however, that such representations and warranties are only made as of the
date of such execution and delivery and as of such Closing.
7.2 TRANSFER; SUCCESSORS AND ASSIGNS. The terms and
conditions of this Agreement shall inure to the benefit of and be binding
upon the respective successors and assigns of the parties as are permitted by
the Agreements. Nothing in this Agreement, express or implied, is intended to
confer upon any party other than the parties hereto or their respective
successors and permitted assigns any rights, remedies, obligations, or
liabilities under or by reason of this Agreement, except as expressly
provided in this Agreement.
7.3 GOVERNING LAW. This Agreement and all acts and
transactions pursuant hereto and the rights and obligations of the parties
hereto shall be governed, construed and interpreted in accordance with the
laws of the State of California, without giving effect to its principles of
conflicts of law or choice of law.
7.4 COUNTERPARTS. This Agreement may be executed in
any number of counterparts and signatures may be delivered by facsimile, each
of which may be executed by less than all Purchasers, each of which shall be
enforceable against the parties actually executing such counterparts, and all
of which together shall constitute one instrument.
7.5 TITLES AND SUBTITLES. The titles and subtitles
used in this Agreement are used for convenience only and are not to be
considered in construing or interpreting this Agreement.
7.6 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 2:00 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 2:00 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: (i) if to the Company, to 157
Technology Drive, Irvine, CA 92618, Attention: Chief Financial Officer, or to
facsimile no. (949) 788-6706, with a copy to Latham & Watkins, 650 Town
Center Drive, Suite 2000, Costa Mesa, California 92626, attention Alan W.
Pettis, Esq., or (ii) if to a Purchaser, to such Purchaser at the address or
facsimile number appearing on Exhibit A or such other address or facsimile
number as such
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<PAGE>
Purchaser may provide to the Company and the other Purchasers, with a copy to
Heller, Ehrman, White & McAuliffe, LLP, 4250 Executive Square 7th Floor, La
Jolla, California 92037, attention: Stephen C. Ferruolo, Esq.
7.7 CURRENCY. All amounts referred to herein are
expressed in United States Dollars.
7.8 ATTORNEY'S FEES. If any action at law or in equity
(including arbitration) is necessary to enforce or interpret the terms of any of
the Agreements, the prevailing party shall be entitled to reasonable attorney's
fees, costs and necessary disbursements in addition to any other relief to which
such party may be entitled.
7.9 AMENDMENTS AND WAIVERS. Any term of this Agreement
may be amended or waived (either generally or in a particular instance and
either retroactively or prospectively) only with the written consent of the
Company and the holders of at least a majority of the Common Stock issued as
part of the Units. Any amendment or waiver effected in accordance with this
Section 7.9 shall be binding upon the Purchasers and each transferee of the
Units (or the Common Stock underlying the Units or issuable upon exercise of
the Warrants), each future holder of all such securities, and the Company.
7.10 SEVERABILITY. If one or more provisions of this
Agreement are held to be unenforceable under applicable law, the parties
agree to renegotiate such provision in good faith. In the event that the
parties cannot reach a mutually agreeable and enforceable replacement for
such provision, then (a) such provision shall be excluded from this
Agreement, (b) the balance of the Agreement shall be interpreted as if such
provision were so excluded and (c) the balance of the Agreement shall be
enforceable in accordance with its terms.
7.11 DELAYS OR OMISSIONS; REMEDIES CUMULATIVE. No delay
or omission to exercise any right, power or remedy accruing to any party
under this Agreement, upon any breach or default of any other party under
this Agreement, shall impair any such right, power or remedy of such
non-breaching or non-defaulting party nor shall it be construed to be a
waiver of any such breach or default, or an acquiescence therein, or of or in
any similar breach or default thereafter occurring; nor shall any waiver of
any single breach or default be deemed a waiver of any other breach or
default theretofore or thereafter occurring. Any waiver, permit, consent or
approval of any kind or character on the part of any party of any breach or
default under this Agreement, or any waiver on the part of any party of any
provisions or conditions of this Agreement, must be in writing and shall be
effective only to the extent specifically set forth in such writing. All
remedies, either under this Agreement or by law or otherwise afforded to any
party, shall be cumulative and not alternative.
7.12 ENTIRE AGREEMENT. This Agreement and the Exhibits
hereto constitute the entire agreement among the parties hereto pertaining to
the subject matter hereof, and any and all other written or oral agreements
relating to the subject matter hereof existing among any of the parties
hereto are expressly canceled.
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<PAGE>
7.13 CALIFORNIA CORPORATE SECURITIES LAW. THE SALE OF THE
SECURITIES WHICH ARE THE SUBJECT OF THIS AGREEMENT HAS NOT BEEN QUALIFIED WITH
THE COMMISSIONER OF CORPORATIONS OF THE STATE OF CALIFORNIA AND THE ISSUANCE OF
THE SECURITIES OR THE PAYMENT OR RECEIPT OF ANY PART OF THE CONSIDERATION
THEREFOR PRIOR TO THE QUALIFICATION IS UNLAWFUL, UNLESS THE SALE OF SECURITIES
IS EXEMPT FROM THE QUALIFICATION BY SECTION 25100, 25102 OR 25105 OF THE
CALIFORNIA CORPORATIONS CODE. THE RIGHTS OF ALL PARTIES TO THIS AGREEMENT ARE
EXPRESSLY CONDITIONED UPON THE QUALIFICATION BEING OBTAINED UNLESS THE SALE IS
SO EXEMPT.
7.14 EXCULPATION AMONG PURCHASERS. Each Purchaser
acknowledges that it is not relying upon any person or entity, other than the
Company and its representatives, in making its investment or decision to
invest in the Company. Each Purchaser agrees that no Purchaser nor the
respective controlling persons, officers, directors, partners, members,
agents, or employees of any Purchaser shall be liable to any other Purchaser
for any action heretofore or hereafter taken or omitted to be taken by any of
them in connection with the purchase of the Securities.
[SIGNATURE PAGES FOLLOW]
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<PAGE>
The parties have executed this Securities Purchase Agreement as of
the date first written above.
COMPANY:
NEOTHERAPEUTICS, INC.
By: /s/ Samuel Gulko
-----------------------------------
Name: Samuel Gulko
-----------------------------------
Title: Chief Financial Officer
-----------------------------------
Address: 157 Technology Drive,
Irvine, California 92618
COMPANY SIGNATURE PAGE TO PURCHASE AGREEMENT
18
<PAGE>
PURCHASERS:
ROYAL CANADIAN GROWTH FUND
---------------------------------------------
(Print Name of Purchaser)
By: /s/ Eden Rahim /s/ John P. Embry
------------------------------------
Name: Eden Rahim John P. Embry
------------------------------------
Title: Portfolio Manager Vice President
------------------------------------
Address:
77 King St. West
---------------------------------------------
Royal Trust Tower, Suite 3800
---------------------------------------------
Toronto, Ontario M5K 1H1
---------------------------------------------
PURCHASER SIGNATURE PAGE TO PURCHASE AGREEMENT
19
<PAGE>
EXHIBITS
--------
<TABLE>
<S> <C>
Exhibit A - Schedule of Purchasers
Exhibit B - Form of Warrant
Exhibit C - Form of Registration Rights Agreement
Exhibit D - Schedule of Exceptions to Representations and Warranties
Exhibit E - Form of Legal Opinion of Latham & Watkins
Exhibit F - Form of Lock-up Agreement
</TABLE>
20
<PAGE>
EXHIBIT 4.2
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (this "AGREEMENT") is made
and entered into as of April 28, 2000, among NeoTherapeutics, Inc., a Delaware
corporation (the "COMPANY"), and the investors signatory hereto (each such
investor is a "PURCHASER" and all such investors are, collectively, the
"PURCHASERS").
This Agreement is made pursuant to the Securities Purchase
Agreement, dated as of the date hereof, among the Company and the Purchasers
(the "PURCHASE AGREEMENT").
In consideration of the mutual covenants contained in the
Purchase Agreement and in this Agreement, the Company and the Purchasers hereby
agree as follows:
1. DEFINITIONS
Capitalized terms used and not otherwise defined herein that
are defined in the Purchase Agreement shall have the meanings given such terms
in the Purchase Agreement. As used in this Agreement, the following terms shall
have the following meanings:
"ADVICE" shall have meaning set forth in Section 6(e).
"AFFILIATE" means, with respect to any Person, any other
Person that directly or indirectly controls or is controlled by or under common
control with such Person. For the purposes of this definition, "CONTROL," when
used with respect to any Person, means the possession, direct or indirect, of
the power to direct or cause the direction of the management and policies of
such Person, whether through the ownership of voting securities, by contract or
otherwise; and the terms of "AFFILIATED," "CONTROLLING" and "CONTROLLED" have
meanings correlative to the foregoing.
"AGENT'S WARRANTS" means the warrants to purchase Common Stock
of the Company issued to Dlouhy Investments Inc. in connection with the Purchase
Agreement.
"BUSINESS DAY" means any day except Saturday, Sunday and any
day which shall be a federal legal holiday or a day on which banking
institutions in the State of California generally are authorized or required by
law or other governmental action to close.
"CLOSING DATE" shall have the meaning set forth in the
Purchase Agreement.
"COMMISSION" means the Securities and Exchange Commission.
"COMMON STOCK" means the Company's common stock, $.001 par
value per share and any other securities into which such stock shall hereafter
be redistributed or recapitalized.
"EFFECTIVENESS DATE" means the 120th day following the Closing
Date.
"EFFECTIVENESS PERIOD" shall have the meaning set forth in
Section 2(a).
<PAGE>
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended.
"FILING DATE" means the 30th day following the Closing Date.
"HOLDER" or "HOLDERS" means the holder or holders, as the case
may be, from time to time of Registrable Securities.
"INDEMNIFIED PARTY" shall have the meaning set forth in
Section 5(c).
"INDEMNIFYING PARTY" shall have the meaning set forth in
Section 5(c).
"LOSSES" shall have the meaning set forth in Section 5(a).
"PERSON" means an individual or a corporation, partnership,
trust, incorporated or unincorporated association, joint venture, limited
liability company, joint stock company, government (or an agency or political
subdivision thereof) or other entity of any kind.
"PROCEEDING" means an action, claim, suit, investigation or
proceeding (including, without limitation, an investigation or partial
proceeding, such as a deposition), whether commenced or threatened.
"PROSPECTUS" means the prospectus included a Registration
Statement (including, without limitation, a prospectus that includes any
information previously omitted from a prospectus filed as part of an effective
registration statement in reliance upon Rule 430A promulgated under the
Securities Act), as amended or supplemented by any prospectus supplement, with
respect to the terms of the offering of any portion of the Registrable
Securities covered by such Registration Statement, and all other amendments and
supplements to the Prospectus, including post-effective amendments, and all
material incorporated by reference or deemed to be incorporated by reference in
such Prospectus.
"REGISTRATION DELAY PAYMENTS" shall have the meaning set forth
in Section 2(e).
"REGISTRABLE SECURITIES" means (i) the Shares and (ii) the
shares of Common Stock issuable upon exercise of the Warrants and the Agent's
Warrants.
"REGISTRATION STATEMENT" means the registration statement and
any additional registration statement contemplated by Section 2(a) and 2(f),
including (in each case) the Prospectus, amendments and supplements to such
registration statement or Prospectus, including pre- and post-effective
amendments, all exhibits thereto, and all material incorporated by reference or
deemed to be incorporated by reference in such registration statement.
"RULE 144" means Rule 144 promulgated by the Commission
pursuant to the Securities Act, as such Rule may be amended from time to time,
or any rule or regulation hereafter adopted by the Commission to replace such
Rule.
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"RULE 415" means Rule 415 promulgated by the Commission
pursuant to the Securities Act, as such Rule may be amended from time to time,
or any rule or regulation hereafter adopted by the Commission to replace such
Rule.
"RULE 424" means Rule 424 promulgated by the Commission
pursuant to the Securities Act, as such Rule may be amended from time to time,
or any rule or regulation hereafter adopted by the Commission to replace such
Rule.
"SECURITIES ACT" means the Securities Act of 1933, as amended,
and the rules and regulations promulgated thereunder.
"SHARES" means the shares of Common Stock issued to the
Purchasers on the Closing Date pursuant to the Purchase Agreement.
"SPECIAL COUNSEL" means one special counsel to the Holders for
which the Holders will be reimbursed by the Company pursuant to Section 4.
"TRANSACTION DOCUMENTS" shall have the meaning set forth in
the Purchase Agreement.
"UNDERWRITTEN REGISTRATION OR UNDERWRITTEN OFFERING" means a
registration in connection with which securities of the Company are sold to an
underwriter for reoffering to the public pursuant to an effective registration
statement.
"WARRANTS" shall have the meaning set forth in the Purchase
Agreement.
2. SHELF REGISTRATION
(a) The Company shall use its best efforts to prepare
and file with the Commission on or prior to the Filing Date a "Shelf"
Registration Statement covering all Registrable Securities for an offering to
be made on a continuous basis pursuant to Rule 415, unless the Holders shall
elect to effect an Underwritten Offering pursuant to Section 2(c) hereof. The
Registration Statement shall be on Form S-3 (except if the Company is not
then eligible to register for resale the Registrable Securities on Form S-3,
in which case such registration shall be on another appropriate form in
accordance herewith as the Holders may consent). The Company shall use its
best efforts to cause the Registration Statement to be declared effective
under the Securities Act as promptly as possible after the filing thereof,
but in any event prior to the Effectiveness Date, and shall use its best
efforts to keep such Registration Statement continuously effective under the
Securities Act until the date when all Registrable Securities covered by such
Registration Statement have been sold or may be sold without volume
restrictions pursuant to Rule 144(k) as determined by the counsel to the
Company pursuant to a written opinion letter to such effect, addressed and
acceptable to the Company's transfer agent (the "EFFECTIVENESS PERIOD"),
PROVIDED, that the Company shall not be deemed to have used its best efforts
to keep the Registration Statement effective during the Effectiveness Period
if it voluntarily takes any action that would result in the Holders not being
able to sell the Registrable Securities covered by such Registration
Statement during the Effectiveness Period, unless such
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action is required under applicable law, is taken by the Company in good faith
and for valid business reasons, or the Company has filed a post-effective
amendment to the Registration Statement and the Commission has not declared it
effective, and PROVIDED, FURTHER, that the Effectiveness Date shall be postponed
by one day for each day that the declaration of effectiveness of the
Registration is delayed where such delay in not directly caused by an act or
omission to act by the Company or is otherwise caused by events or actions of
parties beyond the Company's control, unless the Company shall fail to use its
best efforts to cure such delay.
(b) If the Holders of a majority of the Registrable
Securities then outstanding so elect, an offering of Registrable Securities
pursuant to a Registration Statement may be effected in the form of an
Underwritten Offering. In such event, and, if the managing underwriters
advise the Company and such Holders in writing that in their opinion the
amount of Registrable Securities proposed to be sold in such Underwritten
Offering exceeds the amount of Registrable Securities which can be sold in
such Underwritten Offering, there shall be included in such Underwritten
Offering the amount of such Registrable Securities which in the opinion of
such managing underwriters can be sold, and such amount shall be allocated
pro rata among the Holders proposing to sell Registrable Securities in such
Underwritten Offering.
(c) If any of the Registrable Securities are to be
sold in an Underwritten Offering, the investment banker that will administer
the offering will be selected by the Holders of a majority of the Registrable
Securities included in such offering upon consultation with the Company. No
Holder may participate in any Underwritten Offering hereunder unless such
Holder (i) agrees to sell its Registrable Securities on the basis provided in
any underwriting agreements approved by the Persons entitled hereunder to
approve such arrangements and (ii) completes and executes all questionnaires,
powers of attorney, indemnities, underwriting agreements and other documents
required under the terms of such arrangements.
3. REGISTRATION PROCEDURES
In connection with the Company's registration obligations
hereunder, the Company shall as expeditiously as possible:
(a) Prepare and file with the Commission on or prior
to the Filing Date, a Registration Statement on Form S-3 (or if the Company
is not then eligible to register for resale the Registrable Securities on
Form S-3 such registration shall be on another appropriate form in accordance
herewith, or, in connection with an Underwritten Offering hereunder, such
other form agreed to by the Company and the Holders), and use its best
efforts to cause the Registration Statement to become effective and remain
effective as provided herein; PROVIDED, HOWEVER, that not less than five (5)
Business Days prior to the filing of a Registration Statement or any related
Prospectus (other than a Prospectus filed pursuant to Rule 424) and not less
than one (1) Business Day prior to the filing of any amendment or supplement
thereto (including any document that would be incorporated or deemed to be
incorporated therein by reference), the Company shall, (i) furnish to the
Holders, their Special Counsel and any managing underwriters, copies of all
such documents proposed to be filed, which documents (other than those
incorporated or deemed to be incorporated by reference) will be subject to
the reasonable review
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of such Holders, their Special Counsel and such managing underwriters, and (ii)
cause its officers and directors, counsel and independent certified public
accountants to respond to such inquiries as shall be necessary, in the
reasonable opinion of respective counsel to such Holders and such underwriters,
to conduct a reasonable investigation within the meaning of the Securities Act.
The Company shall not file the Registration Statement or any such Prospectus or
any amendments or supplements thereto to which the Holders of a majority of the
Registrable Securities, their Special Counsel, or any managing underwriters,
shall reasonably object on a timely basis.
(b) (i) Prepare and file with the Commission such
amendments, including post-effective amendments, to the Registration
Statement as may be necessary to keep the Registration Statement continuously
effective as to the Registrable Securities for the Effectiveness Period; (ii)
cause the related Prospectus to be amended or supplemented by any required
Prospectus supplement, and as so supplemented or amended to be filed pursuant
to Rule 424 (or any similar provisions then in force); (iii) respond as
promptly as reasonably possible, and in any event within ten (10) days, to
any comments received from the Commission with respect to the Registration
Statement or any amendment thereto; and (iv) comply in all material respects
with the provisions of the Securities Act and the Exchange Act with respect
to the disposition of all Registrable Securities covered by the Registration
Statement during the applicable period in accordance with the intended
methods of disposition by the Holders thereof set forth in the Registration
Statement as so amended or in such Prospectus as so supplemented.
(c) File such supplements or attach "stickers" to the
Registration Statement or Prospectus as and when required by the Commission to
evidence a material amount of resales by a Holder pursuant to a Prospectus. In
connection therewith, if such supplements or "stickers" are periodically
required by the Commission, the Company shall, within four (4) Business Days,
file such supplements or attach such "stickers" whenever a Holder has sold 50%
of the Registrable Securities covered by the then outstanding Prospectus (as
last supplemented or "stickered") in order to cover 100% of the number of the
outstanding Registrable Securities.
(d) Notify the Holders of Registrable Securities to be
sold, their Special Counsel and any managing underwriters as promptly as
reasonably possible (and, in the case of (i)(A) below, not less than five (5)
Business Days (or, in the case of a supplement or "sticker" required to be
filed or attached pursuant to Section 3(c)(ii), within one (1) Business Day)
prior to such filing) and (if requested by any such Person) confirm such
notice in writing no later than one (1) Business Day following the day (i)(A)
when a Prospectus or any Prospectus supplement (other than a prospectus filed
under Rule 424) or post-effective amendment to the Registration Statement is
proposed to be filed; (B) when the Commission notifies the Company whether
there will be a "review" of such Registration Statement and whenever the
Commission comments in writing on such Registration Statement the Company
shall provide true and complete copies thereof and all written responses
thereto to each of the Holders; and (C) with respect to the Registration
Statement or any post-effective amendment, when the same has become
effective; (ii) of any request by the Commission or any other Federal or
state governmental authority for amendments or supplements to the
Registration Statement or Prospectus or for additional information; (iii) of
the issuance by the Commission of any stop order suspending the
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effectiveness of the Registration Statement covering any or all of the
Registrable Securities or the initiation of any Proceedings for that purpose;
(iv) and in the case of Underwritten Offerings, if at any time any of the
representations and warranties of the Company contained in any agreement
(including any underwriting agreement) contemplated hereby ceases to be true and
correct in all material respects; (v) of the receipt by the Company of any
notification with respect to the suspension of the qualification or exemption
from qualification of any of the Registrable Securities for sale in any
jurisdiction, or the initiation or threatening of any Proceeding for such
purpose; and (vi) of the occurrence of any event or passage of time that makes
the financial statements included in the Registration Statement ineligible for
inclusion therein or any statement made in the Registration Statement or
Prospectus or any document incorporated or deemed to be incorporated therein by
reference untrue in any material respect or that requires any revisions to the
Registration Statement, Prospectus or other documents so that, in the case of
the Registration Statement or the Prospectus, as the case may be, it will not
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading.
(e) Use its best efforts to avoid the issuance of, or, if
issued, obtain the withdrawal of (i) any order suspending the effectiveness of
the Registration Statement, or (ii) any suspension of the qualification (or
exemption from qualification) of any of the Registrable Securities for sale in
any jurisdiction, at the earliest practicable moment.
(f) If requested by any managing underwriter or the
Holders of a majority in interest of the Registrable Securities to be sold in
connection with an Underwritten Offering, (i) promptly incorporate in a
Prospectus supplement or post-effective amendment to the Registration
Statement such information as such managing underwriters and such Holders
reasonably agree should be included therein, and (ii) make all required
filings of such Prospectus supplement or such post-effective amendment as
soon as practicable after the Company has received notification of the
matters to be incorporated in such Prospectus supplement or post-effective
amendment; PROVIDED, HOWEVER, that the Company shall not be required to take
any action pursuant to this Section 3(f) that would, in the opinion of
counsel for the Company, violate applicable law or be materially detrimental
to the business prospects of the Company.
(g) Furnish to each Holder, their Special Counsel and
any managing underwriters, without charge, at least one conformed copy of
each Registration Statement and each amendment thereto, including financial
statements and schedules, all documents incorporated or deemed to be
incorporated therein by reference, and all exhibits to the extent requested
by such Person (including those previously furnished or incorporated by
reference) promptly after the filing of such documents with the Commission.
(h) Promptly deliver to each Holder, their Special
Counsel, and any underwriters, without charge, as many copies of the
Prospectus or Prospectuses (including each form of prospectus) and each
amendment or supplement thereto as such Persons may reasonably request; and
the Company hereby consents to the use of such Prospectus and each amendment
or supplement thereto by each of the selling Holders and any underwriters in
connection with the
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offering and sale of the Registrable Securities covered by such Prospectus and
any amendment or supplement thereto.
(i) Prior to any public offering of Registrable
Securities, use its best efforts to register or qualify or cooperate with the
selling Holders, any underwriters and their Special Counsel in connection
with the registration or qualification (or exemption from such registration
or qualification) of such Registrable Securities for offer and sale under the
securities or Blue Sky laws of such jurisdictions within the United States as
any Holder or underwriter requests in writing, to keep each such registration
or qualification (or exemption therefrom) effective during the Effectiveness
Period and to do any and all other acts or things necessary or advisable to
enable the disposition in such jurisdictions of the Registrable Securities
covered by a Registration Statement; PROVIDED, HOWEVER, that the Company
shall not be required to qualify generally to do business in any jurisdiction
where it is not then so qualified or to take any action that would subject it
to general service of process in any such jurisdiction where it is not then
so subject or subject the Company to any material tax in any such
jurisdiction where it is not then so subject.
(j) Cooperate with the Holders and any managing
underwriters to facilitate the timely preparation and delivery of
certificates representing Registrable Securities to be delivered to a
transferee pursuant to a Registration Statement, which certificates shall be
free, to the extent permitted by the Purchase Agreement and applicable
federal and state securities laws, of all restrictive legends, and to enable
such Registrable Securities to be in such denominations and registered in
such names as any such managing underwriters or Holders may request.
(k) Upon the occurrence of any event contemplated by
Section 3(d)(vi), as promptly as reasonably possible, prepare a supplement or
amendment, including a post-effective amendment, to the Registration
Statement or a supplement to the related Prospectus or any document
incorporated or deemed to be incorporated therein by reference, and file any
other required document so that, as thereafter delivered, neither the
Registration Statement nor such Prospectus will contain an untrue statement
of a material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading.
(l) Use its best efforts to cause all Registrable
Securities relating to such Registration Statement to be listed on the Nasdaq
National Market ("NASDAQ") or on any other stock market or trading facility
on which the shares of Common Stock are traded, listed or quoted (each a
"SUBSEQUENT MARKET") if requested by the Holders of a majority in interest of
the Registrable Securities being sold or any managing underwriters.
(m) In the event of an Underwritten Offering, enter
into such agreements (including an underwriting agreement in form, scope and
substance as is customary in Underwritten Offerings) and take all such other
actions in connection therewith (including those reasonably requested by any
managing underwriters and the Holders of a majority of the Registrable
Securities being sold) in order to expedite or facilitate the disposition of
such Registrable Securities, which agreements and actions shall be subject to
the reasonable approval
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of counsel of the Company, and (i) make such representations and warranties to
such Holders and such underwriters as are customarily made by issuers to
underwriters in underwritten public offerings, and confirm the same if and when
requested; (ii) in the case of an Underwritten Offering obtain and deliver
copies thereof to each Holder and the managing underwriters, if any, of opinions
of counsel to the Company and updates thereof addressed to each such
underwriter, in form, scope and substance reasonably satisfactory to any such
managing underwriters and Special Counsel to the selling Holders covering the
matters customarily covered in opinions requested in Underwritten Offerings and
such other matters as may be reasonably requested by such Special Counsel and
underwriters; (iii) in the case of an Underwritten Offering, if required by the
managing underwriters, at the time of delivery of any Registrable Securities
sold pursuant thereto, use its best reasonable efforts to obtain and deliver
copies to the Holders and the managing underwriters, if any, of "cold comfort"
letters and updates thereof from the independent certified public accountants of
the Company (and, if necessary, any other independent certified public
accountants of any subsidiary of the Company or of any business acquired by the
Company for which financial statements and financial data is, or is required to
be, included in the Registration Statement), addressed to the Company in form
and substance as are customary in connection with Underwritten Offerings; (iv)
if an underwriting agreement is entered into, the same shall contain
indemnification provisions and procedures no less favorable to the selling
Holders and the underwriters, if any, than those set forth in Section 5 (or such
other provisions and procedures acceptable to the managing underwriters, if any,
and holders of a majority of Registrable Securities participating in such
Underwritten Offering); and (v) deliver such documents and certificates as may
be reasonably requested by the Holders of a majority of the Registrable
Securities being sold, their Special Counsel and any managing underwriters to
evidence the continued validity of the representations and warranties made
pursuant to Section 3(m)(i) above and to evidence compliance with any customary
conditions contained in the underwriting agreement or other agreement entered
into by the Company.
(n) Make available for inspection by the selling
Holders, any representative of such Holders, any underwriter participating in
any disposition of Registrable Securities, and any attorney or accountant
retained by such selling Holders or underwriters, at the offices where
normally kept, during reasonable business hours and upon reasonable notice to
the Company, all financial and other records, pertinent corporate documents
and properties of the Company and its subsidiaries, and cause the officers,
directors, agents and employees of the Company and its subsidiaries to supply
all information in each case reasonably requested by any such Holder,
representative, underwriter, attorney or accountant in connection with the
Registration Statement; PROVIDED, HOWEVER, that any information that is
determined in good faith by the Company in writing to be of a confidential
nature at the time of delivery of such information shall be kept confidential
by such Persons, unless(i) disclosure of such information is required by
court or administrative order or is necessary to respond to inquiries of
regulatory authorities; (ii) disclosure of such information, in the opinion
of counsel to such Person, is required by law; (iii) such information becomes
generally available to the public other than as a result of a disclosure or
failure to safeguard by such Person; or (iv) such information becomes
available to such Person from a source other than the Company and such source
is known by such Person not to be bound by a confidentiality agreement with
the Company.
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(o) Comply with all applicable rules and regulations
of the Commission.
(p) The Company may require each selling Holder to
furnish to the Company such information regarding the distribution of such
Registrable Securities and the beneficial ownership of Common Stock held by
such Holder as the Company may from time to time reasonably request in
writing, and the Company may exclude from such registration the Registrable
Securities of any Holder who unreasonably fails to furnish such information
within a reasonable time after receiving such request.
Each Holder agrees that, other than ordinary course brokerage
arrangements, in the event it enters into any arrangement with a broker-dealer
for the sale of any Registrable Securities through a block trade, special
offering, exchange distribution or secondary distribution or a purchase by a
broker or dealer, such Holder shall promptly deliver to the Company in writing
all applicable information required in order for the Company to be able to
timely file a supplement to the Prospectus pursuant to Rule 424(b) under the
Securities Act. Such information shall include a description of (i) the name of
such Holder and of the participating broker-dealer(s), (ii) the number of
Registrable Securities involved, (iii) the price at which such Registrable
Securities were or are to be sold, and (iv) the commissions paid or to be paid
or discounts or concessions allowed or to be allowed to such broker-dealer(s),
where applicable.
4. REGISTRATION EXPENSES
(a) All fees and expenses incident to the performance
of or compliance with this Agreement by the Company, except as and to the
extent specified in Section 4(b), shall be borne by the Company whether or
not pursuant to an Underwritten Offering and whether or not the Registration
Statement is filed or becomes effective and whether or not any Registrable
Securities are sold pursuant to the Registration Statement. The fees and
expenses referred to in the foregoing sentence shall include, without
limitation, (i) all registration and filing fees (including, without
limitation, fees and expenses (A) with respect to filings required to be made
with the NASDAQ and any Subsequent Market on which the Common Stock is then
listed for trading, and (B) in compliance with state securities or Blue Sky
laws (including, without limitation, fees and disbursements of counsel for
the Holders in connection with Blue Sky qualifications or exemptions of the
Registrable Securities and determination of the eligibility of the
Registrable Securities for investment under the laws of such jurisdictions as
the managing underwriters, if any, or the Holders of a majority of
Registrable Securities may designate)), (ii) printing expenses (including,
without limitation, expenses of printing certificates for Registrable
Securities and of printing prospectuses if the printing of prospectuses is
requested by the managing underwriters, if any, or by the holders of a
majority of the Registrable Securities included in the Registration
Statement), (iii) messenger, telephone and delivery expenses of the Company,
(iv) fees and disbursements of counsel for the Company and Special Counsel
for the Holders (not to exceed $7,500), (v) Securities Act liability
insurance, if the Company so desires such insurance, and (vi) fees and
expenses of all other Persons retained by the Company in connection with the
consummation of the transactions contemplated by this Agreement. In addition,
the Company shall be responsible for all of its internal expenses incurred in
connection with the consummation of the transactions contemplated by this
Agreement (including, without
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limitation, all salaries and expenses of its officers and employees performing
legal or accounting duties), the expense of any annual audit, the fees and
expenses incurred in connection with the listing of the Registrable Securities
on any securities exchange as required hereunder.
(b) If the Holders require an Underwritten Offering
pursuant to the terms hereof, the Company shall be responsible for all costs,
fees and expenses in connection therewith, except for the fees and
disbursements of the Underwriters (including any underwriting commissions and
discounts) and their legal counsel and accountants. By way of illustration
which is not intended to diminish from the provisions of Section 4(a), the
Holders shall not be responsible for, and the Company shall be required to
pay the fees or disbursements incurred by the Company (including by its legal
counsel and accountants) in connection with, the preparation and filing of a
Registration Statement and related Prospectus for such offering, the
maintenance of such Registration Statement in accordance with the terms
hereof, the listing of the Registrable Securities in accordance with the
requirements hereof, and printing expenses incurred to comply with the
requirements hereof.
5. INDEMNIFICATION
(a) INDEMNIFICATION BY THE COMPANY. The Company shall,
notwithstanding any termination of this Agreement, indemnify and hold harmless
each Holder, the officers, directors, agents (including any underwriters
retained by such Holder in connection with the offer and sale of Registrable
Securities), investment advisors and employees of each of them, each Person who
controls any such Holder (within the meaning of Section 15 of the Securities Act
or Section 20 of the Exchange Act) and the officers, directors, agents and
employees of each such controlling Person, to the fullest extent permitted by
applicable law, from and against any and all losses, claims, damages,
liabilities, costs (including, without limitation, costs of preparation and
reasonable attorneys' fees) and expenses (collectively, "LOSSES"), as incurred,
arising out of or relating to any untrue or alleged untrue statement of a
material fact contained in the Registration Statement, any Prospectus or any
form of prospectus or in any amendment or supplement thereto or in any
preliminary prospectus, or arising out of or relating to any omission or alleged
omission of a material fact required to be stated therein or necessary to make
the statements therein (in the case of any Prospectus or form of prospectus or
supplement thereto, in light of the circumstances under which they were made)
not misleading, except to the extent, but only to the extent, that (1) such
untrue statements or omissions are based solely upon information regarding such
Holder furnished in writing to the Company by such Holder expressly for use
therein, or to the extent that such information relates to such Holder or such
Holder's proposed method of distribution of Registrable Securities and was
reviewed and expressly approved in writing by such Holder expressly for use in
the Registration Statement, such Prospectus or such form of Prospectus or in any
amendment or supplement thereto or (2) in the case of an occurrence of an event
of the type specified in Section 3(d)(ii)-(vi), the use by such Holder of an
outdated or defective Prospectus after the Company has notified such Holder in
writing that the Prospectus is outdated or defective and prior to the receipt by
such Holder of the Advice contemplated in Section 6(d). The Company shall notify
the Holders promptly of the institution, threat or assertion of any Proceeding
of which the Company is aware in connection with the transactions contemplated
by this Agreement.
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(b) INDEMNIFICATION BY HOLDERS. Each Holder shall,
severally and not jointly, indemnify and hold harmless the Company, its
directors, officers, agents and employees, each Person who controls the
Company (within the meaning of Section 15 of the Securities Act and Section
20 of the Exchange Act), and the directors, officers, agents or employees of
such controlling Persons, to the fullest extent permitted by applicable law,
from and against all Losses (as determined by a court of competent
jurisdiction in a final judgment not subject to appeal or review) arising
solely out of or based solely upon any untrue statement of a material fact
contained in the Registration Statement, any Prospectus, or any form of
prospectus, or in any amendment or supplement thereto, or arising solely out
of or based solely upon any omission of a material fact required to be stated
therein or necessary to make the statements therein not misleading to the
extent, but only to the extent, that such untrue statement or omission is
contained in any information so furnished in writing by such Holder to the
Company specifically for inclusion in the Registration Statement or such
Prospectus or to the extent that such information relates to such Holder or
such Holder's proposed method of distribution of Registrable Securities and
was reviewed and expressly approved in writing by such Holder expressly for
use in the Registration Statement, such Prospectus or such form of
Prospectus, or in any amendment or supplement thereto. In no event shall the
liability of any selling Holder hereunder be greater in amount than the
dollar amount of the net proceeds received by such Holder upon the sale of
the Registrable Securities giving rise to such indemnification obligation.
The Company shall be entitled to receive indemnities from underwriters,
selling brokers, dealer managers and similar securities industry
professionals participating in the distribution to the same extent as
provided above with respect to information so furnished in writing by such
Persons specifically for inclusion in any Prospectus or Registration
Statement.
(c) CONDUCT OF INDEMNIFICATION PROCEEDINGS. If any
Proceeding shall be brought or asserted against any Person entitled to
indemnity hereunder (an "INDEMNIFIED PARTY"), such Indemnified Party shall
promptly notify the Person from whom indemnity is sought (the "INDEMNIFYING
PARTY") in writing, and the Indemnifying Party shall assume the defense
thereof, including the employment of counsel reasonably satisfactory to the
Indemnified Party and the payment of all fees and expenses incurred in
connection with defense thereof; provided, that the failure of any
Indemnified Party to give such notice shall not relieve the Indemnifying
Party of its obligations or liabilities pursuant to this Agreement, except
(and only) to the extent that it shall be finally determined by a court of
competent jurisdiction (which determination is not subject to appeal or
further review) that such failure shall have proximately and materially
adversely prejudiced the Indemnifying Party.
An Indemnified Party shall have the right to employ separate
counsel in any such Proceeding and to participate in the defense thereof, but
the fees and expenses of such counsel shall be at the expense of such
Indemnified Party or Parties unless: (1) the Indemnifying Party has agreed in
writing to pay such fees and expenses; or (2) the Indemnifying Party shall have
failed promptly to assume the defense of such Proceeding and to employ counsel
reasonably satisfactory to such Indemnified Party in any such Proceeding; or (3)
the named parties to any such Proceeding (including any impleaded parties)
include both such Indemnified Party and the Indemnifying Party, and such
Indemnified Party shall have been advised by counsel that a conflict of interest
is likely to exist if the same counsel were to represent such Indemnified Party
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and the Indemnifying Party (in which case, if such Indemnified Party notifies
the Indemnifying Party in writing that it elects to employ separate counsel at
the expense of the Indemnifying Party, the Indemnifying Party shall not have the
right to assume the defense thereof and such counsel shall be at the expense of
the Indemnifying Party). The Indemnifying Party shall not be liable for any
settlement of any such Proceeding effected without its written consent, which
consent shall not be unreasonably withheld. No Indemnifying Party shall, without
the prior written consent of the Indemnified Party, effect any settlement of any
pending Proceeding in respect of which any Indemnified Party is a party, unless
such settlement includes an unconditional release of such Indemnified Party from
all liability on claims that are the subject matter of such Proceeding.
All fees and expenses of the Indemnified Party (including
reasonable fees and expenses to the extent incurred in connection with
investigating or preparing to defend such Proceeding in a manner not
inconsistent with this Section) shall be paid to the Indemnified Party, as
incurred, within ten (10) Business Days of written notice thereof to the
Indemnifying Party (regardless of whether it is ultimately determined that an
Indemnified Party is not entitled to indemnification hereunder; PROVIDED, that
the Indemnifying Party may require such Indemnified Party to undertake to
reimburse all such fees and expenses to the extent it is finally judicially
determined that such Indemnified Party is not entitled to indemnification
hereunder).
(d) CONTRIBUTION. If a claim for indemnification under
Section 5(a) or 5(b) is unavailable to an Indemnified Party (by reason of
public policy or otherwise), then each Indemnifying Party, in lieu of
indemnifying such Indemnified Party, shall contribute to the amount paid or
payable by such Indemnified Party as a result of such Losses, in such
proportion as is appropriate to reflect the relative fault of the
Indemnifying Party and Indemnified Party in connection with the actions,
statements or omissions that resulted in such Losses as well as any other
relevant equitable considerations. The relative fault of such Indemnifying
Party and Indemnified Party shall be determined by reference to, among other
things, whether any action in question, including any untrue or alleged
untrue statement of a material fact or omission or alleged omission of a
material fact, has been taken or made by, or relates to information supplied
by, such Indemnifying Party or Indemnified Party, and the parties' relative
intent, knowledge, access to information and opportunity to correct or
prevent such action, statement or omission. The amount paid or payable by a
party as a result of any Losses shall be deemed to include, subject to the
limitations set forth in Section 5(c), any reasonable attorneys' or other
reasonable fees or expenses incurred by such party in connection with any
Proceeding to the extent such party would have been indemnified for such fees
or expenses if the indemnification provided for in this Section was available
to such party in accordance with its terms.
The parties hereto agree that it would not be just and
equitable if contribution pursuant to this Section 5(d) were determined by PRO
RATA allocation or by any other method of allocation that does not take into
account the equitable considerations referred to in the immediately preceding
paragraph. Notwithstanding the provisions of this Section 5(d), no Holder shall
be required to contribute, in the aggregate, any amount in excess of the amount
by which the proceeds actually received by such Holder from the sale of the
Registrable Securities subject to the Proceeding exceeds the amount of any
damages that such Holder has otherwise
12
<PAGE>
been required to pay by reason of such untrue or alleged untrue statement or
omission or alleged omission. No Person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any Person who was not guilty of such fraudulent
misrepresentation.
The indemnity and contribution agreements contained in this
Section are in addition to any liability that the Indemnifying Parties may have
to the Indemnified Parties.
6. MISCELLANEOUS
(a) REMEDIES. In the event of a breach by the Company
or by a Holder, of any of their obligations under this Agreement, each Holder
or the Company, as the case may be, in addition to being entitled to exercise
all rights granted by law and under this Agreement, including recovery of
damages, will be entitled to specific performance of its rights under this
Agreement. The Company and each Holder agree that monetary damages would not
provide adequate compensation for any losses incurred by reason of a breach
by it of any of the provisions of this Agreement and hereby further agrees
that, in the event of any action for specific performance in respect of such
breach, it shall waive the defense that a remedy at law would be adequate.
(b) NO INCONSISTENT AGREEMENTS. Neither the Company
nor any of its subsidiaries has entered, as of the date hereof, nor shall the
Company or any of its subsidiaries, on or after the date of this Agreement,
enter into any agreement with respect to its securities that is inconsistent
with the rights granted to the Holders in this Agreement or otherwise
conflicts with the provisions hereof. Except as and to the extent specified
in SCHEDULE 6(b) hereto, neither the Company nor any of its subsidiaries has
previously entered into any agreement granting any registration rights with
respect to any of its securities to any Person that have not been satisfied
in full. Without limiting the generality of the foregoing, without the
written consent of the Holders of a majority of the then outstanding
Registrable Securities, the Company shall not grant to any Person the right
to request the Company to register any securities of the Company under the
Securities Act unless the rights so granted are subject in all respects to
the prior rights in full of the Holders set forth herein, and are not
otherwise in conflict or inconsistent with the provisions of this Agreement.
Notwithstanding anything herein to the contrary, the parties agree that the
granting by the Company of registration rights in connection with a fixed
priced offering of its securities in a private placement transaction with an
aggregate sum of up to $30,000,000, or any offering of its securities that
occurs after the 120th Business Day following the Closing Date will not
violate this provision.
(c) NO PIGGYBACK ON REGISTRATIONS. Except as may be
required by agreements existing as of the date hereof between the Company and
any of its security holders, neither the Company nor any of its security
holders (other than the Holders in such capacity pursuant hereto) may include
securities of the Company in the Registration Statement other than the
Registrable Securities, and the Company shall not after the date hereof enter
into any agreement providing any such right to any of its security holders.
13
<PAGE>
(d) COMPLIANCE. Each Holder covenants and agrees that
it will comply with the prospectus delivery requirements of the Securities
Act as applicable to it in connection with sales of Registrable Securities
pursuant to the Registration Statement.
(e) DISCONTINUED DISPOSITION. Each Holder agrees by its
acquisition of such Registrable Securities that, upon receipt of a notice from
the Company of the occurrence of any event of the kind described in Sections
3(d)(ii), 3(d)(iii), 3(d)(iv), 3(d)(v) or 3(d)(vi), such Holder will forthwith
discontinue disposition of such Registrable Securities under the Registration
Statement until such Holder's receipt of the copies of the supplemented
Prospectus and/or amended Registration Statement contemplated by Section 3(k),
or until it is advised in writing (the "ADVICE") by the Company that the use of
the applicable Prospectus may be resumed, and, in either case, has received
copies of any additional or supplemental filings that are incorporated or deemed
to be incorporated by reference in such Prospectus or Registration Statement.
The Company may provide appropriate stop orders to enforce the provisions of
this paragraph.
(f) AMENDMENTS AND WAIVERS. The provisions of this
Agreement, including the provisions of this sentence, may not be amended,
modified or supplemented, and waivers or consents to departures from the
provisions hereof may not be given, unless the same shall be in writing and
signed by the Company and the Holders of at least two-thirds of the then
outstanding Registrable Securities. Notwithstanding the foregoing, a waiver
or consent to depart from the provisions hereof with respect to a matter that
relates exclusively to the rights of Holders and that does not directly or
indirectly affect the rights of other Holders may be given by Holders of at
least a majority of the Registrable Securities to which such waiver or
consent relates; PROVIDED, HOWEVER, that the provisions of this sentence may
not be amended, modified, or supplemented except in accordance with the
provisions of the immediately preceding sentence.
(g) PIGGY-BACK REGISTRATIONS. If at any time when
there is not an effective Registration Statement covering all of the
Registrable Securities then outstanding and the Company shall determine to
prepare and file with the Commission a registration statement relating to an
offering described in Section 6.2(v) of the Purchase Agreement for its own
account, then the Company shall send to each Holder of Registrable Securities
written notice of such determination and, if within twenty (20) days after
receipt of such notice, any such holder shall so request in writing, the
Company shall include in such registration statement all or any part of such
Registrable Securities such holder requests to be registered. If any
registration of the Company pursuant to this Section 6(g) is for a registered
public offering involving an underwriting, the right of any Holder to
registration shall be conditioned upon such Holder's entering into an
underwriting agreement and/or lock-up agreement in customary forms with the
representative of the underwriter or underwriters.
(h) NOTICES. Any and all notices or other
communications or deliveries required or permitted to be provided 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 2:00 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
14
<PAGE>
specified in the Purchase Agreement later than 2:00 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) if sent other than by the methods set forth
in (i)-(iii) of this section, upon actual receipt by the party to whom such
notice is required to be given. The address for such notices and communications
shall be as follows:
If to the Company: NeoTherapeutics, Inc.
157 Technology Drive
Irvine, California 92618
Facsimile No.: (949) 788-6706
Attn: Chief Financial Officer
With copies to: Latham & Watkins
650 Town Center Drive, Suite 2000
Costa Mesa, CA 92626-1925
Facsimile No: (714) 755-8290
Attn: Alan W. Pettis, Esq.
If to any other Person who is
then the registered Holder: To the address of such
Holder as it appears in the
stock transfer books of the
Company or such other
address as may be
designated in writing
hereafter, in the same
manner, by such Person.
With copies to: Heller, Ehrman, White & McAuliffe, LLP
4250 Executive Square, 7th Floor
La Jolla, CA 92037
Facsimile No: (858) 450-8499
Attn: Stephen C. Ferruolo, Esq.
(i) SUCCESSORS AND ASSIGNS. This Agreement shall inure
to the benefit of and be binding upon the successors and permitted assigns of
each of the parties and shall inure to the benefit of each Holder. The
Company may not assign its rights or obligations hereunder without the prior
written consent of each Holder. Each Holder may assign their respective
rights hereunder in the manner and to the Persons as permitted under this
Agreement and the Purchase Agreement.
(j) COUNTERPARTS. This Agreement may be executed in
any number of counterparts, each of which when so executed shall be deemed to
be an original and, all of which taken together shall constitute one and the
same Agreement. In the event that any signature is delivered by facsimile
transmission, such signature shall create a valid binding obligation of the
party executing (or on whose behalf such signature is executed) the same with
the same force and effect as if such facsimile signature were the original
thereof.
15
<PAGE>
(k) GOVERNING LAW. This Agreement 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.
(l) CUMULATIVE REMEDIES. The remedies provided herein are
cumulative and not exclusive of any remedies provided by law.
(m) SEVERABILITY. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction to be
invalid, illegal, void or unenforceable, the remainder of the terms, provisions,
covenants and restrictions set forth herein shall remain in full force and
effect and shall in no way be affected, impaired or invalidated, and the parties
hereto shall use their reasonable efforts to find and employ an alternative
means to achieve the same or substantially the same result as that contemplated
by such term, provision, covenant or restriction. It is hereby stipulated and
declared to be the intention of the parties that they would have executed the
remaining terms, provisions, covenants and restrictions without including any of
such that may be hereafter declared invalid, illegal, void or unenforceable.
(n) HEADINGS. The headings in this Agreement are for
convenience of reference only and shall not limit or otherwise affect the
meaning hereof.
(o) SHARES HELD BY THE COMPANY AND ITS AFFILIATES.
Whenever the consent or approval of Holders of a specified percentage of
Registrable Securities is required hereunder, Registrable Securities held by
the Company or its Affiliates (other than any Holder or transferees or
successors or assigns thereof if such Holder is deemed to be an Affiliate
solely by reason of its holdings of such Registrable Securities) shall not be
counted in determining whether such consent or approval was given by the
Holders of such required percentage.
(p) INDEPENDENT NATURE OF PURCHASERS' OBLIGATIONS AND
RIGHTS. The obligations of each Purchaser hereunder is several and not joint
with the obligations of any other Purchaser hereunder, and neither Purchaser
shall be responsible in any way for the performance of the obligations of any
other Purchaser hereunder. Nothing contained herein or in any other agreement
or document delivered at any closing, and no action taken by any Purchaser
pursuant hereto or thereto, shall be deemed to constitute the Purchasers as a
partnership, an association, a joint venture or any other kind of entity, or
create a presumption that the Purchasers are in any way acting in concert
with respect to such obligations or the transactions contemplated by this
Agreement. Each Purchaser shall be entitled to protect and enforce its
rights, including without limitation the rights arising out of this
Agreement, and it shall not be necessary for any other Purchaser to be joined
as an additional party in any proceeding for such purpose.
(q) ENTIRE AGREEMENT. This Agreement and the Purchase
Agreement are intended by the Parties as a final expression of their agreement
and intended to be a complete and exclusive statement of the agreement and
understanding of the parties hereto in respect of the subject matter contained
herein and therein. There are no restrictions, promises, warranties or
undertakings, other than those set forth or referred to herein and therein with
respect to the registration rights granted by the Company with respect to the
securities sold pursuant to the
16
<PAGE>
Purchase Agreement. This Agreement and the Purchase Agreement supersede all
prior agreements and understandings between the parties with respect to such
subject matter.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK
SIGNATURE PAGES TO FOLLOW]
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<PAGE>
IN WITNESS WHEREOF, the parties have executed this
Registration Rights Agreement as of the date first written above.
NEOTHERAPEUTICS, INC.
/s/ Samuel Gulko
------------------------------------
Samuel Gulko
Chief Financial Officer
COMPANY SIGNATURE PAGE TO REGISTRATION RIGHTS AGREEMENT
18
<PAGE>
PURCHASERS:
Royal Canadian Growth Fund
---------------------------------------------
(Print Name of Purchaser)
By: /s/ Eden Rahim /s/ John P. Embry
------------------------------------
Name: Eden Rahim John P. Embry
------------------------------------
Title: Portfolio Manager Vice President
------------------------------------
Address:
77 King St. West
---------------------------------------------
Royal Trust Tower, Suite 3800
---------------------------------------------
Toronto, Ontario M5K 1H1
---------------------------------------------
PURCHASER SIGNATURE PAGE TO REGISTRATION RIGHTS AGREEMENT
19
<PAGE>
PURCHASERS:
Dlouhy Investments Inc.
---------------------------------------------
(Print Name of Purchaser)
By: /s/ Peter Dlouhy
------------------------------------
Name: Peter Dlouhy
------------------------------------
Title: Vice President
------------------------------------
Address:
1350 Sherbrooke St. West, Suite 1200
---------------------------------------------
Montreal, Quebec H3G 1J1
---------------------------------------------
PURCHASER SIGNATURE PAGE TO REGISTRATION RIGHTS AGREEMENT
20
<PAGE>
EXHIBIT 4.3
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, (THE "SECURITIES ACT") PURSUANT TO AN
EXEMPTION FROM REGISTRATION CONTAINED IN REGULATION S PROMULGATED UNDER THE
SECURITIES ACT, AND MAY NOT BE TRANSFERRED EXCEPT IN ACCORDANCE WITH THE
PROVISIONS OF REGULATION S, PURSUANT TO A REGISTRATION UNDER THE SECURITIES ACT
OR PURSUANT TO AN AVAILABLE EXEMPTION FROM REGISTRATION. NO HEDGING TRANSACTIONS
INVOLVING THESE SECURITIES MAY BE CONDUCTED EXCEPT IN COMPLIANCE WITH THE
SECURITIES ACT.
NEOTHERAPEUTICS, INC.
WARRANT
Dated: May 1, 2000
NeoTherapeutics, Inc., a Delaware corporation (the "Company"), hereby
certifies that, for value received, Royal Canadian Growth Fund, an Ontario
trust, or its registered assigns ("Holder"), is entitled, subject to the terms
set forth below, to purchase from the Company up to a total of 125,000 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 $17.50 per share (as adjusted from time to time as
provided in Section 7, the "Exercise Price"), at any time and from time to time
from and after the date hereof and through and including May 1, 2005 (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>
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 10. 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 4, 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 10 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 5 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
2
<PAGE>
of the Exercise Price for the number of Warrant Shares so indicated by the
holder hereof to be purchased.
(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 7(f) herein).
4. 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.
5. 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.
6. 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 7). 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.
7. 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 7.
(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
3
<PAGE>
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 adjusted by
multiplying the Exercise Price in effect immediately before such event 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. The number of Warrant shares
issuable upon exercise of this Warrant shall be adjusted upon such adjustment of
the Exercise Price by multiplying the number of Warrant shares issuable upon
exercise of this Warrant immediately prior to such adjustment by a fraction of
which the denominator shall be the number of shares of Common Stock (excluding
treasury shares, if any) outstanding before such event and the numerator 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 7(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 7(a), and (b)), then in each such case the Exercise Price shall be
reduced by subtracting from the Exercise Price in effect immediately prior to
the record date fixed for determination of stockholders entitled to receive such
distribution the fair market value on 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.
(d) All calculations under this Section 7 shall be made to the
nearest cent or the nearest 1/100th of a share, as the case may be.
(e) If:
4
<PAGE>
(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 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.
8. PAYMENT OF EXERCISE PRICE. The Holder shall pay the Exercise Price
in one of the following manners:
(a) Cash exercise. The Holder shall deliver 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; or
(b) Cashless Exercise. The Holder may 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:
5
<PAGE>
Y (A-B)
X = -------
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.
9. 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 9, 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.
10. 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 2:00 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 2:00 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: (i) if to the Company, to
157 Technology Drive, Irvine, CA 92618, Attention: Chief Financial Officer, or
to facsimile no. (949) 788-6706, with a copy to Latham & Watkins, 650 Town
Center Drive, Suite 2000, Costa Mesa, California 92626, attention Alan W.
Pettis, Esq., 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 10, with a copy to Heller, Ehrman, White & McAuliffe, LLP, 4250
Executive Square 7th Floor, La Jolla, California 92037, attention: Stephen C.
Ferruolo, Esq.
11. 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 10. 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
6
<PAGE>
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.
12. 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 12(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.
(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.
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
------------------------------------
7
<PAGE>
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>
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>
EXHIBIT 4.4
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, (THE "SECURITIES ACT") PURSUANT TO AN
EXEMPTION FROM REGISTRATION CONTAINED IN REGULATION S PROMULGATED UNDER THE
SECURITIES ACT, AND MAY NOT BE TRANSFERRED EXCEPT IN ACCORDANCE WITH THE
PROVISIONS OF REGULATION S, PURSUANT TO A REGISTRATION UNDER THE SECURITIES ACT
OR PURSUANT TO AN AVAILABLE EXEMPTION FROM REGISTRATION. NO HEDGING TRANSACTIONS
INVOLVING THESE SECURITIES MAY BE CONDUCTED EXCEPT IN COMPLIANCE WITH THE
SECURITIES ACT.
NEOTHERAPEUTICS, INC.
WARRANT
Dated: May 1, 2000
NeoTherapeutics, Inc., a Delaware corporation (the "Company"), hereby
certifies that, for value received, Dlouhy Investments, Inc. 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 $17.50 per share (as adjusted from time to time as provided in Section
7, the "Exercise Price"), at any time and from time to time from and after the
date hereof and through and including May 1, 2005 (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>
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 10. 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 4, 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 10 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 5 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
2
<PAGE>
of the Exercise Price for the number of Warrant Shares so indicated by the
holder hereof to be purchased.
(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 7(f) herein).
4. 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.
5. 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.
6. 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 7). 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.
7. 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 7.
(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
3
<PAGE>
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 adjusted by
multiplying the Exercise Price in effect immediately before such event 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. The number of Warrant shares
issuable upon exercise of this Warrant shall be adjusted upon such adjustment of
the Exercise Price by multiplying the number of Warrant shares issuable upon
exercise of this Warrant immediately prior to such adjustment by a fraction of
which the denominator shall be the number of shares of Common Stock (excluding
treasury shares, if any) outstanding before such event and the numerator 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 7(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 7(a), and (b)), then in each such case the Exercise Price shall be
reduced by subtracting from the Exercise Price in effect immediately prior to
the record date fixed for determination of stockholders entitled to receive such
distribution the fair market value on 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.
(d) All calculations under this Section 7 shall be made to the
nearest cent or the nearest 1/100th of a share, as the case may be.
(e) If:
4
<PAGE>
(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 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.
8. PAYMENT OF EXERCISE PRICE. The Holder shall pay the Exercise Price
in one of the following manners:
(a) Cash exercise. The Holder shall deliver 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; or
(b) Cashless Exercise. The Holder may 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:
5
<PAGE>
Y (A-B)
X = -------
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.
9. 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 9, 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.
10. 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 2:00 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 2:00 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: (i) if to the Company, to
157 Technology Drive, Irvine, CA 92618, Attention: Chief Financial Officer, or
to facsimile no. (949) 788-6706, with a copy to Latham & Watkins, 650 Town
Center Drive, Suite 2000, Costa Mesa, California 92626, attention Alan W.
Pettis, Esq., 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 10, with a copy to Heller, Ehrman, White & McAuliffe, LLP, 4250
Executive Square 7th Floor, La Jolla, California 92037, attention: Stephen C.
Ferruolo, Esq.
11. 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 10. 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
6
<PAGE>
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.
12. 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 12(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.
(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.
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
--------------------------------------
7
<PAGE>
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>
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>
EXHIBIT 4.5
[NeoTherapeutics Letterhead]
May 1, 2000
Royal Canadian Growth Fund
c/o Royal Bank Investment Management, Inc.
77 King St. West
Royal Trust Tower, Suite 3800
Toronto, Ontario M5K 1H1
Attention: Eden Rahim
Re: NEOTHERAPEUTICS, INC. (THE "COMPANY").
Gentlemen:
Reference is made to the Securities Purchase Agreement dated as of
April 28, 2000, (the "AGREEMENT"), by and between the Company and the Royal
Canadian Growth Fund (the "PURCHASER").
The Company and the Purchaser hereby agree that notwithstanding
anything to the contrary contained in the Agreement, the warranties,
representations and covenants of the Company and the Purchaser contained in or
made pursuant to this Agreement shall survive the execution and delivery of the
Agreement and the Closing (as defined in the Agreement) until the later of
eighteen (18) months following the Closing and the earliest date after the
Closing on which the Purchaser owns of record fewer than 250,000 shares of the
Company's common stock; provided, however, that in no event shall such
representations and warranties survive beyond the applicable statutory
limitation; and provided, further, that such representations and warranties are
only made as of the date of such execution and delivery and as of such Closing.
Except as expressly provided in the preceding paragraph, the Agreement
remains in full force and effect in accordance with their terms.
This letter 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. This letter may be executed in two
or more counterparts, all of which when taken together shall be considered one
and the same agreement and shall become effective when counterparts have been
signed by each party and delivered to the other party, it being understood that
both parties need not sign the same counterpart. In the event that any signature
is delivered by facsimile transmission, such signature shall create a valid and
binding obligation of the party executing (or on whose behalf such signature is
executed) the same with the same force and effect as if such facsimile signature
page were an original thereof.
Please indicate your agreement with the foregoing by executing a
countersigned copy of this letter and returning the same to our attention,
whereupon effective immediately thereafter this letter shall become a legally
valid and binding agreement between the Purchasers and the Company.
<PAGE>
NEOTHRAPEUTICS, INC.
By: /s/ Samuel Gulko
---------------------------
Samuel Gulko
Chief Financial Officer
Agreed and accepted
May 2, 2000
ROYAL CANADIAN GROWTH FUND
By: /s/ Eden Rahim
--------------------------
Name: Eden Rahim
--------------------------
Title: Portfolio Manager
--------------------------
<PAGE>
EXHIBIT 99.1
[LOGO]
FOR IMMEDIATE RELEASE
NEOTHERAPEUTICS COMPLETES $7 MILLION PRIVATE PLACEMENT
OF COMMON STOCK
Irvine, California - May 2, 2000 - NeoTherapeutics, Inc. (Nasdaq: NEOT; NEOTW)
today announced the completion of a sale to a major Canadian financial
institution of 500,000 shares of NeoTherapeutics Common Stock at $14.00 per
share for total proceeds of US$7 million. The investor also received a five-year
warrant to purchase up to 125,000 shares of common stock at an exercise price of
$17.50 per share. Dlouhy Investments Inc., headquartered in Montreal, Canada,
acted as the placement agent for the transaction.
"We are very pleased to include this prestigious institutional investor as a
stockholder of our Company. It is gratifying that the investor looked beyond
today's market volatility and focused on the progress we have made in the
clinical trial program for NEOTROFIN-TM- and the promise of our other product
candidates and functional genomics technology when making their investment
decision. The proceeds of this financing will add to our working capital, and
together with other recent private placements, will fund the clinical
development of NeoTherapeutics' lead product candidate, NEOTROFIN-TM-, and will
also advance the development of our other pipeline product candidates and expand
our functional genomics company NeoGene Technologies, Inc." commented Sam Gulko,
NeoTherapeutics' Chief Financial Officer.
NEOTROFIN-TM- is being developed for nerve repair and regeneration, with
Alzheimer's disease as its first clinical indication. Pre-clinical studies have
demonstrated that NEOTROFIN-TM- causes the production of multiple natural nerve
growth (neurotrophic) factors and restores function in animal models of
cognitive decline, aging, neuroprotection, and spinal cord injury. Human
clinical studies have demonstrated positive effects of NEOTROFIN-TM- on memory
and behavioral function in patients with Alzheimer's disease.
According to figures from the Alzheimer's Association, Alzheimer's disease
presently affects over 4 million people in the U.S. and approximately 12 million
patients worldwide, with associated health care costs of $80-$100 billion per
year. Currently marketed drugs, such as Aricept-Registered Trademark-, developed
by Eisai and marketed by both Eisai and Pfizer, and Exelon-Registered
Trademark-, developed and marketed by Novartis, have been approved for the
treatment of symptoms of mild to moderate Alzheimer's disease.
<PAGE>
NeoTherapeutics Completes $7 Million Private Placement of Common Stock
May 2, 2000
Page 2
NeoTherapeutics' research and development program is focused on designing and
developing small molecules capable of treating a range of neurological diseases
and conditions such as Alzheimer's and Parkinson's diseases, peripheral
neuropathy, stroke, and spinal cord injury. Additional compounds in
NeoTherapeutics' product pipeline address other health issues such as migraine
and depression. NeoGene Technologies, Inc., NeoTherapeutics' subsidiary, is a
functional genomics company engaged in the development of a broad platform of
enabling technology, receptor-targeted drug design. NeoGene Technologies is
using this technology to search for natural and synthetic compounds that can
potentially be developed as drugs for treating various diseases. For additional
Company information, visit the NeoTherapeutics web site at
www.neotherapeutics.com.
This press release contains forward-looking statements regarding future events
and the future performance of NeoTherapeutics that involve risks and
uncertainties that could cause actual results to differ materially. These risks
are described in further detail in the Company's reports filed with the
Securities and Exchange Commission.
CONTACTS:
INVESTMENT COMMUNITY: MEDIA:
Carol Gruetter Kelly Finley
NeoTherapeutics, Inc. Halsted Communications, Inc.
Tel: (949) 788-6700 Tel: (800) 600-7111 x.233
e-mail: [email protected] (323) 225-1835
e-mail: [email protected]
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