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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JANUARY 2, 2001
REGISTRATION NO. 333-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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NEOTHERAPEUTICS, INC.
(Exact Name of Registrant as Specified in Its Charter)
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DELAWARE 93-079187
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
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157 TECHNOLOGY DRIVE
IRVINE, CALIFORNIA 92618
(949) 788-6700
(Address, Including Zip Code and Telephone Number,
Including Area Code, of Registrant's Principal Executive Offices)
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ALVIN J. GLASKY, PH.D.
CHIEF EXECUTIVE OFFICER
157 TECHNOLOGY DRIVE
IRVINE, CALIFORNIA 92618
(949) 788-6700
(Name, Address, Including Zip Code and Telephone Number,
Including Area Code, of Agent for Service)
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Copies to:
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Alan W. Pettis, Esq.
Latham & Watkins
650 Town Center Drive, Twentieth Floor
Costa Mesa, California 92626
(714) 540-1235
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: From
time to time after the effective date of this Registration Statement as
determined by market conditions.
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If the only securities being registered on this form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
If any of the securities being registered on this form are to be offered
on a delayed or continuous basis pursuant to Rule 415 under the Securities Act
of 1933, other than securities offered only in connection with dividend or
interest reinvestment plans, check the following box. [X]
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement of the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box. [ ]
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CALCULATION OF REGISTRATION FEE
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PROPOSED MAXIMUM
AMOUNT TO BE AGGREGATE OFFERING AMOUNT OF
TITLE OF SECURITIES TO BE REGISTERED (1) REGISTERED (2) PRICE (2) REGISTRATION FEE
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Debt Securities (3)...............................
Common Stock, $.001 par value per share (4).......
Preferred Stock, $.001 par value per share (5)....
Depositary Shares representing Preferred
Stock (6).........................................
Warrants (7)......................................
Total........................................ $50,000,000 $50,000,000 $12,500 (8)
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(Footnotes on following page)
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THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
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(Footnotes from previous page)
(1) This Registration Statement also covers contracts which may be issued by
the Registrant under which the counterparty may be required to purchase
Debt Securities, Common Stock, Preferred Stock or Depository Shares.
(2) In no event will the aggregate maximum offering price of all securities
registered under this Registration Statement exceed $50,000,000. Any
securities registered hereunder may be sold separately or as units with
other securities registered hereunder.
(3) Subject to footnote (2), there are being registered hereunder an
indeterminate number of Debt Securities as may be sold from time to time
by NeoTherapeutics, Inc.
(4) Subject to footnote (2), there are being registered hereunder shares of
Common Stock as may be sold, from time to time, by NeoTherapeutics, Inc.
There is also being registered hereunder an indeterminate number of
shares of Common Stock that may be issued upon conversion, as
applicable, of Preferred Stock or Depository Shares registered hereunder
or upon exercise of warrants registered hereunder, as the case may be.
(5) Subject to footnote (2), there are being registered hereunder shares of
Preferred Stock, as may be sold, from time to time, by NeoTherapeutics,
Inc. or as may be issued upon the exercise of warrants registered
hereunder.
(6) To be represented by Depository Receipts representing an interest in all
or a specified portion of a share of Preferred Stock.
(7) Subject to footnote (2), there are being registered hereunder warrants
representing rights to purchase Debt Securities, Depositary Shares,
Preferred Stock or Common Stock (as shall be designated by the Company
at the time of any such offering) registered hereunder.
(8) Calculated pursuant to Rule 457(o) of the rules and regulations under
the Securities Act of 1933, as amended.
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INFORMATION CONTAINED IN THIS PROSPECTUS IS SUBJECT TO COMPLETION OR AMENDMENT.
A REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
PROSPECTUS
$50,000,000
NEOTHERAPEUTICS, INC.
Debt Securities, Common Stock, Preferred Stock,
Depositary Shares and warrants
We may from time to time offer in one or more series or classes:
- debt securities,
- shares of our common stock,
- shares of our preferred stock,
- shares of our preferred stock represented by depositary shares, and
- warrants to purchase debt securities, depositary shares, common stock
or preferred stock.
The securities will have a maximum aggregate public offering price of
$50,000,000 (or its equivalent in another currency based on the exchange rate at
the time of sale). The securities may be offered, separately or together, in
separate series, in amounts, at prices and on terms to be set forth in one or
more supplements to this prospectus.
The securities may be offered directly, through agents or through
underwriters or dealers. If any agents or underwriters are involved in the sale
of any of the securities, their names, and any applicable purchase price, fee,
commission or discount arrangement between or among them, will be set forth in
the accompanying prospectus supplement. No securities may be sold under this
prospectus without delivery of the applicable prospectus supplement.
Our common stock is traded on the Nasdaq National Market under the
symbol "NEOT."
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INVESTING IN OUR COMMON STOCK INVOLVES A HIGH DEGREE OF RISK. SEE "RISK
FACTORS" BEGINNING ON PAGE 2.
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Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or passed upon the
accuracy or adequacy of the prospectus. Any representation to the contrary is a
criminal offense.
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THE DATE OF THIS PROSPECTUS IS __________ ___, 2000.
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NO DEALER, SALESPERSON OR OTHER INDIVIDUAL HAS BEEN AUTHORIZED TO GIVE
ANY INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN CONTAINED OR
INCORPORATED BY REFERENCE IN THIS PROSPECTUS, AND IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED
BY NEOTHERAPEUTICS, INC. OR ANY UNDERWRITER. THIS PROSPECTUS DOES NOT CONSTITUTE
AN OFFER OR SOLICITATION BY ANYONE IN ANY JURISDICTION IN WHICH SUCH OFFER OR
SOLICITATION IS NOT AUTHORIZED OR IN WHICH THE PERSON MAKING SUCH OFFER IS NOT
QUALIFIED TO DO SO OR TO ANYONE TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR
SOLICITATION. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE
HEREUNDER SHALL, UNDER ANY CIRCUMSTANCE, CREATE ANY IMPLICATION THAT THERE HAS
NOT BEEN ANY CHANGE IN THE AFFAIRS OF NEOTHERAPEUTICS SINCE THE DATE HEREOF.
TABLE OF CONTENTS
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PAGE
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ABOUT THIS PROSPECTUS.............................................................1
WHERE YOU CAN FIND MORE INFORMATION...............................................1
ABOUT NEOTHERAPEUTICS.............................................................2
RISK FACTORS......................................................................2
FORWARD-LOOKING STATEMENTS........................................................8
RATIO OF EARNINGS TO FIXED CHARGES................................................9
USE OF PROCEEDS...................................................................9
PLAN OF DISTRIBUTION..............................................................9
DESCRIPTION OF COMMON STOCK......................................................19
DESCRIPTION OF PREFERRED STOCK...................................................20
DESCRIPTION OF DEPOSITARY SHARES.................................................21
DESCRIPTION OF WARRANTS..........................................................24
CERTAIN PROVISIONS OF DELAWARE LAW AND OF THE COMPANY'S CHARTER AND BYLAWS.......25
VALIDITY OF SECURITIES...........................................................26
EXPERTS..........................................................................26
LIMITATION ON LIABILITY AND DISCLOSURE OF COMMISSION POSITION ON
INDEMNIFICATION FOR SECURITIES ACT LIABILITIES..............................26
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ABOUT THIS PROSPECTUS
This prospectus is a part of a registration statement that we filed with
the Securities and Exchange Commission utilizing a "shelf" registration process.
Under this shelf registration process, we may sell any combination of the
securities described in this prospectus in one or more offerings up to a total
dollar amount of $50,000,000. This prospectus provides you with a general
description of the securities we may offer. Each time we sell securities, we
will provide a prospectus supplement that will contain specific information
about the terms of that offering. The prospectus supplement may also add, update
or change information contained in this prospectus. You should read both this
prospectus and any prospectus supplement together with additional information
described under the next heading "Where You Can Find More Information."
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports, proxy statements and
other information with the SEC. You may read and copy any document we file at
the SEC's public reference rooms in Washington, D.C., New York, and Chicago.
Please call the SEC at 1-800-SEC-0330 for further information on the public
reference rooms. Our SEC filings are also available to the public at the SEC's
web site at http://www.sec.gov.
The SEC allows us to "incorporate by reference" the information we file
with them which means that we can disclose important information to you by
referring you to those documents instead of having to repeat the information in
this prospectus. The information incorporated by reference is considered to be
part of this prospectus, and later information that we file with the SEC will
automatically update and supersede this information. We incorporate by reference
the documents listed below and any future filings made with the SEC under
Sections 13(a), 13(c), 14, or 15(d) of the Securities Exchange Act of 1934 until
we sell all of the securities.
Our annual report on Form 10-K for the fiscal year ended December 31,
1999;
Our Quarterly Report on Form 10-Q for the fiscal quarter ended September
30, 2000;
Our Quarterly Report on Form 10-Q for the fiscal quarter ended June 30,
2000;
Our Quarterly Report on Form 10-Q for the fiscal quarter ended March 31,
2000;
Our current reports on Form 8-K filed April 3, 2000, April 21, 2000, May
25, 2000, November 13, 2000, December 26, 2000 and December 28, 2000;
Our definitive proxy statement filed pursuant to Section 14 of the
Exchange Act in connection with our 2000 Annual Meeting of Stockholders; and
The description of our common stock contained in the Registration of
Securities of Certain Successor Issuers filed pursuant to Section 12(g) of the
Exchange Act on Form 8-B on June 27, 1997, including any amendment or reports
filed for the purpose of updating such description.
You can request a copy of these filings, at no cost, by writing or
telephoning us at the following address:
NeoTherapeutics, Inc.
Attn: Investor Relations
157 Technology Drive
Irvine, California 92618
(949) 788-6700
You should rely only on the information contained in this prospectus or
any supplement and in the documents incorporated by reference. We have not
authorized anyone else to provide you with different information. We will not
make an offer of these securities in any state where the offer is not permitted.
You should not assume that the information in this prospectus or any supplement
or in the documents incorporated by reference is accurate on any date other than
the date on the front of those documents.
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This prospectus is part of a registration statement we filed with the
SEC (Registration No. 333-______). That registration statement and the exhibits
filed along with the registration statement contain more information about the
securities sold by us. Because information about contracts referred to in this
prospectus is not always complete, you should read the full contracts which are
filed as exhibits to the registration statement. You may read and copy the full
registration statement and its exhibits at the SEC's public reference rooms or
their web site.
ABOUT NEOTHERAPEUTICS
NeoTherapeutics, Inc. is a development stage biopharmaceutical company
engaged in the discovery and development of novel therapeutic drugs intended to
treat neurological and psychiatric diseases and conditions, such as memory
deficits associated with Alzheimer's disease and aging, stroke, spinal cord
injuries, Parkinson's disease, migraine, depression and obesity. Our lead
product candidate, Neotrofin(TM) (AIT-082, leteprinim potassium), and other
compounds under development, are based on our patented technology. This
technology uses small synthetic molecules to create non-toxic compounds,
intended to be administered orally or by injection, that are capable of passing
through the blood-brain barrier to rapidly act upon specific target cells in
specific locations in the central nervous system, including the brain. Animal
and laboratory tests have shown that Neotrofin(TM) appears to selectively
increase the production of certain neurotrophic factors, a type of large
protein, in selected areas of the brain and in the spinal cord. These
neurotrophic factors regulate nerve cell growth and function. Our technology has
been developed to capitalize on the beneficial effects of these proteins, which
have been widely acknowledged to be closely involved in the early formation and
differentiation of the central nervous system. We believe that Neotrofin(TM)
could have therapeutic and regenerative effects. NeoGene Technologies, Inc., a
subsidiary of NeoTherapeutics, Inc., is engaged in functional genemics research.
On November 16, 2000, we formed another subsidiary, NeoOncoRx, Inc., for the
purpose of in-licensing anti-cancer compounds which are in the clinical trial
stages of development.
We were incorporated in Colorado in December 1987 and reincorporated in
Delaware in June 1997. Our executive offices are located at 157 Technology
Drive, Irvine, California 92618. Our telephone number is (949) 788-6700. Our web
site address is www.neotherapeutics.com. Information contained in our web site
does not constitute part of this prospectus.
RISK FACTORS
Your investment in our securities involves a high degree of risk. You
should consider the risks described below and the other information contained in
this prospectus carefully before deciding to invest in our securities. If any of
the following risks actually occur, our business, financial condition and
operating results would be harmed. As a result, the trading price of our
securities could decline, and you could lose a part or all of your investment.
OUR LOSSES WILL CONTINUE TO INCREASE AS WE EXPAND OUR DEVELOPMENT EFFORTS, AND
OUR EFFORTS MAY NEVER RESULT IN PROFITABILITY.
Our cumulative losses during the period from our inception in 1987
through September 30, 2000 were approximately $84.7 million, almost all of which
consisted of research and development and general and administrative expenses.
We lost approximately $6.2 million in 1997, $11.6 million in 1998, $26.0 million
in 1999 and approximately $34.9 million for the nine months ended September 30,
2000. We expect our losses to increase in the future as we expand our clinical
trials and increase our research and development activities. We currently do not
sell any products and we may never achieve significant revenues or become
profitable. Even if we eventually generate revenues from sales, we nevertheless
expect to incur significant operating losses over the next several years.
OUR POTENTIAL DRUG PRODUCTS ARE IN AN EARLY STAGE OF CLINICAL AND PRECLINICAL
DEVELOPMENT AND MAY NOT PROVE SAFE OR EFFECTIVE ENOUGH TO OBTAIN REGULATORY
APPROVAL TO SELL ANY OF THEM.
We currently are testing our first potential drug product in human
clinical trials. Our other proposed products are in preclinical development. We
cannot be certain that any of our potential or proposed products will prove to
be safe or effective in treating disorders of the central nervous system or any
other diseases. All of our potential drugs will require additional research and
development, testing and regulatory clearances before we can
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sell them. We cannot be certain that we will receive regulatory approval to sell
any of our potential drugs. We do not expect to have any products commercially
available for at least two years.
IF WE ARE UNABLE TO OBTAIN SUBSTANTIAL ADDITIONAL FUNDING ON ACCEPTABLE TERMS,
WE MAY HAVE TO DELAY OR ELIMINATE ONE OR MORE OF OUR DEVELOPMENT PROGRAMS.
We currently are spending cash at a rate in excess of approximately $2.3
million per month, and we expect this rate of spending to continue for at least
the following 12 months. We believe that, assuming that the market price of our
common stock is at least $5.00 per share and assuming that the holders of our
Class B Warrants continue to exercise our Class B Warrants in response to our
call notices, our existing cash and capital resources will satisfy our current
funding requirements for at least the next twelve months. If the market price of
our common stock is less than $5.00 per share, we may not be able to use our
Class B Warrants as a financing source, and we may have to seek additional
funding within three months. We may not be able to obtain additional funds on
acceptable terms or at all. If adequate funds are not available, we will have to
delay or eliminate one or more of our development programs.
We expect that we will need substantial additional funds to complete
development and clinical trials of Neotrofin(TM), our lead drug candidate,
before we will be able to submit it to the Food and Drug Administration for
approval for commercial sale. Our capital requirements will depend on many
factors, including:
- continued scientific progress in research and development;
- the progress of preclinical and clinical testing;
- the cost involved in filing, prosecuting and enforcing patent claims;
- the effect of competing technological developments;
- the cost of manufacturing scale-up;
- the cost of commercialization activities;
- the time and cost involved in obtaining regulatory approvals; and
- our ability to establish collaborative and other arrangements with
third parties, such as licensing and manufacturing agreements.
We expect to seek additional funding through public or private
financings or collaborative or other arrangements with third parties. We may not
obtain additional funds on acceptable terms, if at all. If adequate funds are
not available, we will have to delay or eliminate one or more of our development
programs.
COMPETITION FOR PATIENTS IN CONDUCTING CLINICAL TRIALS AND EXTENSIVE REGULATIONS
GOVERNING THE CONDUCT OF CLINICAL TRIALS MAY PREVENT OR DELAY APPROVAL OF A DRUG
CANDIDATE AND STRAIN OUR LIMITED FINANCIAL RESOURCES.
Many pharmaceutical companies are conducting clinical trials in patients
with Alzheimer's disease. As a result, we must compete with them for clinical
sites, physicians and the limited number of patients with Alzheimer's disease
who fulfill the stringent requirements for participation in clinical trials.
This competition may increase costs of our clinical trials and delay the
introduction of our potential products.
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ANY FAILURE TO COMPLY WITH EXTENSIVE GOVERNMENTAL REGULATION COULD PREVENT OR
DELAY PRODUCT APPROVAL OR CAUSE GOVERNMENTAL AUTHORITIES TO DISALLOW OUR
PRODUCTS AFTER APPROVAL AND SUBJECT US TO CRIMINAL OR CIVIL LIABILITIES.
The U.S. Food and Drug Administration, or FDA, and comparable agencies
in foreign countries impose many requirements on the introduction of new drugs
through lengthy and detailed clinical testing procedures, and other costly and
time consuming compliance procedures. These requirements make it difficult to
estimate when Neotrofin(TM) or any other potential product will be available
commercially, if at all.
Our proprietary compounds will require substantial clinical trials and
FDA review as new drugs. Even if we successfully enroll patients in our clinical
trials, patients may not respond to our potential drug products. We think it is
prudent to expect setbacks. Failure to comply with the regulations applicable to
such testing may delay, suspend or cancel our clinical trials, or the FDA might
not accept the test results. The FDA, or any comparable regulatory agency in
another country, may suspend clinical trials at any time if it concludes that
the trials expose subjects participating in such trials to unacceptable health
risks. Further, human clinical testing may not show any current or future
product candidate to be safe and effective to the satisfaction of the FDA or
comparable regulatory agencies or the data derived therefrom may be unsuitable
for submission to the FDA or other regulatory agencies.
We cannot predict with certainty when we might submit any of our
proposed products currently under development for regulatory review. Once we
submit a proposed product for review, the FDA or other regulatory agencies may
not issue their approvals on a timely basis, if at all. If we are delayed or
fail to obtain such approvals, our business may be damaged. If we fail to comply
with regulatory requirements, either prior to approval or in marketing our
products after approval, we could be subject to regulatory or judicial
enforcement actions. These actions could result in:
- product recalls or seizures;
- injunctions;
- civil penalties;
- criminal prosecution;
- refusals to approve new products and withdrawal of existing
approvals; and
- enhanced exposure to product liabilities.
THE LOSS OF KEY RESEARCHERS OR MANAGERS COULD HINDER OUR DRUG DEVELOPMENT
PROCESS SIGNIFICANTLY AND MIGHT CAUSE OUR BUSINESS TO FAIL.
Our success depends upon the contributions of our key management and
scientific personnel, especially Dr. Alvin Glasky, our Chief Executive Officer
and Chief Scientific Officer. Our loss of the services of Dr. Glasky or any
other key personnel could delay or preclude us from achieving our business
objectives. Although we currently have key-man life insurance on Dr. Alvin
Glasky in the face amount of $2 million, the loss of Dr. Glasky's services would
damage our research and development efforts substantially.
We also will need substantial additional expertise in finance and
marketing and other areas in order to achieve our business objectives.
Competition for qualified personnel among pharmaceutical companies is intense,
and the loss of key personnel, or the inability to attract and retain the
additional skilled personnel required for the expansion of our business, could
damage our business.
IF WE CANNOT PROTECT OR ENFORCE OUR INTELLECTUAL PROPERTY RIGHTS ADEQUATELY, THE
VALUE OF OUR RESEARCH COULD DECLINE AS OUR COMPETITORS APPROPRIATE PORTIONS OF
OUR RESEARCH.
We actively pursue patent protection for our proprietary products and
technologies. We hold four U.S. patents and currently have thirteen U.S. patent
applications pending. In addition, we have numerous foreign patents issued and
patent applications pending corresponding to our U.S. patents. However, our
patents may not protect us
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against our competitors. We may have to file suit to protect our patents or to
defend our use of our patents against infringement claims brought by others.
Because we have limited cash resources, we may not be able to afford to pursue
or defend against litigation in order to protect our patent rights.
We also rely on trade secret protection for our unpatented proprietary
technology. However, trade secrets are difficult to protect. While we enter into
proprietary information agreements with our employees and consultants, these
agreements may not successfully protect our trade secrets or other proprietary
information.
WE ARE A SMALL COMPANY RELATIVE TO OUR PRINCIPAL COMPETITORS AND OUR LIMITED
FINANCIAL AND RESEARCH RESOURCES MAY LIMIT OUR ABILITY TO DEVELOP AND MARKET NEW
PRODUCTS.
Many companies, both public and private, including well-known
pharmaceutical companies, are developing products to treat Alzheimer's disease
and certain of the other applications we are pursuing. Most of these companies
have substantially greater financial, research and development, manufacturing
and marketing experience and resources than we do. As a result, our competitors
may develop additional drugs that are more effective or less costly than any
drug which we may develop.
OUR MANAGEMENT HAS LIMITED MANUFACTURING AND MARKETING EXPERIENCE AND MAY BE
UNABLE TO MANAGE OUR GROWTH OR MANUFACTURE AND MARKET OUR PRODUCTS SUCCESSFULLY.
To date, we have engaged exclusively in the development of
pharmaceutical technology and products. Our management has substantial
experience in pharmaceutical company operations, but has limited experience in
manufacturing or procuring products in commercial quantities or in marketing
pharmaceutical products. Our management has only limited experience in
negotiating, establishing and maintaining strategic relationships, conducting
clinical trials and other later-stage phases of the regulatory approval process.
If we receive FDA approval of any of our potential products, we may
decide to establish a commercial-scale manufacturing facility for our products.
The establishment of such a facility will require substantial additional funds
and personnel, and we will need to comply with extensive regulations applicable
to such a facility. These requirements and the associated growth would strain
our existing management and operations. Our ability to manage such growth
depends upon the ability of our officers and key employees to:
- broaden our management team;
- develop additional expertise among existing management personnel;
- attract, hire and retain skilled employees; and
- implement and improve our operational, management information and
financial control systems.
FAILURE TO OBTAIN ADEQUATE REIMBURSEMENT FROM GOVERNMENT HEALTH ADMINISTRATION
AUTHORITIES, PRIVATE HEALTH INSURERS AND OTHER ORGANIZATIONS COULD MATERIALLY
ADVERSELY AFFECT OUR FUTURE BUSINESS, RESULTS OF OPERATIONS AND FINANCIAL
CONDITION.
Our ability to market and sell our products will depend in part on the
extent to which reimbursement for the cost of our products and related
treatments will be available from government health administration authorities,
private health insurers and other organizations. Third party payers are
increasingly challenging the price of medical products and services.
Significant uncertainty exists as to the reimbursement statements of
newly approved health care products. We cannot be certain that any products
approved for marketing will be considered cost effective or that reimbursement
will be available or that allowed reimbursement will be adequate. In addition,
payers' reimbursement policies could adversely affect our ability to sell our
products on a profitable basis.
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HOLDERS OF OUR CONVERTIBLE PREFERRED STOCK AND WARRANTS COULD ENGAGE IN SHORT
SELLING TO INCREASE THE NUMBER OF SHARES OF SECURITIES ISSUABLE UPON CONVERSION
OR EXERCISE OF THE SECURITIES AND DECREASE THE EXERCISE PRICE OF THE WARRANTS.
IF THIS OCCURS, THE MARKET PRICE OF OUR SECURITIES MAY DECLINE.
The holders of shares of preferred stock issued by our subsidiary,
NeoGene Technologies, Inc., have rights to exchange those shares for shares of
our convertible preferred stock or convertible debentures. If those exchange
rights are exercised, the number of shares of securities issuable upon
conversion of the convertible preferred stock or debentures will vary with the
market price of our securities. The shares or debentures will generally be
convertible at a conversion price equal to 101% of the average of the lowest ten
closing bid prices of our securities in the previous 30 trading days.
Consequently, the number of shares of securities issuable upon conversion of the
convertible preferred stock or debentures will vary with the market price of our
stock. A greater number of shares of securities are issuable the lower the price
of our securities. Increased sales volume of our securities could put downward
pressure on the market price of the shares. This fact could encourage holders of
the securities to sell short our securities prior to conversion of the
securities, thereby potentially causing the market price to decline and a
greater number of shares to be issued. The holders of the securities could then
convert their securities and use the shares of securities received upon
conversion to cover their short positions. The holders of the securities could
thereby profit by the decline in the market price of the securities caused by
their short selling.
Similarly, the exercise price of our outstanding Class B Warrants, if we
deliver a redemption notice, is equal to the lesser of $33.75 per share (subject
to adjustment for stock splits, reverse splits and combinations) and 97% of the
closing bid price of our securities on the trading day after the redemption
notice is delivered. This fact could give the holders of our Class B Warrants
incentive to sell short our securities after receipt of a redemption notice,
which could cause the market price to decline. The holders of the Class B
Warrants could then exercise their Class B Warrants and use the shares of
securities received upon exercise to cover their short positions and thereby
profit by the decline in the market price of the securities caused by their
short selling. The holders of our outstanding Adjustable Warrants could also
engage in short selling because the number of shares of securities issuable at
each vesting date, if any, will be determined by a formula based on the ten
lowest closing bid prices of our securities during the 30 consecutive trading
days prior to each vesting date. The first vesting date is expected to be
January 31, 2001. A greater number of shares of securities are issuable upon
exercise of the Adjustable Warrants the lower the price of our securities. Any
short selling by the holders of our Adjustable Warrants may affect the market
price of our stock as well.
Additionally, it is important to note that a significant amount of the
NeoGene preferred stock and our warrants are owned by two investors. This fact
gives these investors greater influence over the market price of our stock.
THE TRADING PRICE OF OUR SECURITIES AND THE TERMS OF OUR CONVERTIBLE SECURITIES
AND WARRANTS MUST COMPLY WITH THE LISTING REQUIREMENTS OF THE NASDAQ NATIONAL
MARKET OR WE COULD BE DELISTED AND THE LIQUIDITY OF OUR SECURITIES WOULD
DECLINE.
Our securities is listed on the Nasdaq National Market. To remain listed
on this market, we must meet Nasdaq's listing maintenance standards and abide by
Nasdaq's rules governing listed companies. If the price of our securities falls
below $1.00 per share for an extended period, or if we fail to meet other Nasdaq
standards or violate Nasdaq rules, our securities could be delisted from the
Nasdaq National Market.
Nasdaq has established certain rules regarding the issuance of "future
priced securities." These rules may apply to our outstanding Adjustable Warrants
because the number of shares of our securities issuable upon exercise of the
securities is based on a future price of our securities. In addition, the
exercise price of our outstanding Class B Warrants is based in part upon a
future price of our securities, and may be less than the greater of book value
or market value. Nasdaq's concerns regarding these securities include the
following:
Stockholders must approve significant issuances of listed securities at
a discount to market or book value. Nasdaq rules prohibit an issuer of listed
securities from issuing 20% or more of its outstanding capital stock at less
than the greater of book value or then current market value without obtaining
prior stockholder consent. We did not obtain stockholder consent prior to
issuing our outstanding Adjustable Warrants.
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<PAGE> 11
Public interest concerns. Nasdaq may terminate the listing of a security
if necessary to prevent fraudulent and manipulative acts and practices or to
protect investors and the public interest. With respect to future priced
securities, Nasdaq has indicated that it may delist a security if the returns
with respect to the future priced security become excessive compared to the
returns being earned by public investors in the issuer's securities.
Furthermore, certain requirements for continued listing, such as the
$1.00 minimum bid price requirement, are outside of our control. Accordingly,
there is a risk that Nasdaq may delist our securities.
If our securities is delisted, we likely would seek to list our
securities on the Nasdaq SmallCap Market or for quotation on the American Stock
Exchange or a regional stock exchange. However, listing or quotation on such
market or exchange could reduce the market liquidity for our securities. If our
securities were not listed or quoted on another market or exchange, trading of
our securities would be conducted in the over-the-counter market on an
electronic bulletin board established for unlisted securities or in what are
commonly referred to as the "pink sheets." As a result, an investor would find
it more difficult to dispose of, or to obtain accurate quotations for the price
of, our securities. In addition, delisting from the Nasdaq National Market and
failure to obtain listing or quotation on such other market or exchange would
subject our securities to so-called "penny stock" rules. These rules impose
additional sales practice and market-making requirements on broker-dealers who
sell and/or make a market in such securities. Consequently, if our securities is
delisted from the Nasdaq National Market and we fail to obtain listing or
quotation on another market or exchange, broker-dealers may be less willing or
able to sell and/or make a market in our securities and purchasers of our
securities may have more difficulty selling their securities in the secondary
market. In either case, the market liquidity of our securities would decline.
THERE ARE A SUBSTANTIAL NUMBER OF SHARES OF OUR SECURITIES ELIGIBLE FOR FUTURE
SALE IN THE PUBLIC MARKET. THE SALE OF THESE SHARES COULD CAUSE THE MARKET PRICE
OF OUR SECURITIES TO FALL.
There were 13,307,227 shares of our common outstanding as of December
13, 2000. In addition, security holders held options and warrants as of December
13, 2000 which, if exercised, would obligate us to issue up to an additional
11,313,412 shares of securities. A substantial number of those shares, when we
issue them upon exercise, will be available for immediate resale in the public
market. In addition, we have the ability to sell up to approximately $7.5
million of our securities to a private investor that will be eligible for
immediate resale in the public market. Furthermore, with respect to the
convertible debenture and warrant financing that closed in April 2000,
approximately 3.4 million shares issued upon exercise of Class B Warrants and
over 300,000 Class A warrants will be eligible for immediate resale in the
public market. The market price of our securities could fall as a result of such
resales.
ANY FUTURE EQUITY ISSUANCES BY US MAY HAVE DILUTIVE AND OTHER EFFECTS ON OUR
EXISTING STOCKHOLDERS.
If we issue equity securities, such issuances may have a dilutive impact
on our other stockholders. Additionally, such issuances would cause our net
income or loss per share to decrease in future periods. As a result, the market
price of our securities could drop. In addition, if we issue securities under
our Equity Line Agreement, it will be issued at a discount to its
then-prevailing market price. These discounted sales could cause the market
price of our securities to drop.
WE MAY BE SUBJECT TO PRODUCT LIABILITY CLAIMS, AND MAY NOT HAVE SUFFICIENT
PRODUCT LIABILITY INSURANCE.
Although we currently carry product liability insurance, it is possible
that the amounts of such coverage will be insufficient to protect us from future
claims. Further, we cannot be certain that we will be able to obtain or maintain
additional insurance on acceptable terms for our clinical and commercial
activities or that such additional insurance would be sufficient to cover any
potential product liability claim or recall. Failure to maintain sufficient
insurance coverage could have a material adverse effect on our business and
results of operations.
THE USE OF HAZARDOUS MATERIALS IN OUR RESEARCH AND DEVELOPMENT EFFORTS IMPOSES
CERTAIN COMPLIANCE COSTS ON US AND MAY SUBJECT US TO LIABILITY FOR CLAIMS
ARISING FROM THE USE OR MISUSE OF THESE MATERIALS.
Our research and development efforts involve the use of hazardous
materials. We are subject to federal, state and local laws and regulations
governing the storage, use and disposal of such materials and certain waste
products. We believe that our safety procedures for handling and disposing of
such materials comply with the
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<PAGE> 12
standards prescribed by federal, state and local regulations. However, we cannot
completely eliminate the risk of accidental contamination or injury from these
materials. If there was an accident, we could be held liable for any damages
that result. Such liability could exceed our resources. We may incur
substantially increased costs to comply with environmental regulations if we
develop our own commercial manufacturing facility.
THE MARKET PRICE AND VOLUME OF OUR SECURITIES FLUCTUATES SIGNIFICANTLY AND COULD
RESULT IN SUBSTANTIAL LOSSES FOR INDIVIDUAL INVESTORS.
The stock market from time to time experiences significant price and
volume fluctuations that are unrelated to the operating performance of
particular companies. These broad market fluctuations may cause the market price
of our securities to drop. In addition, the market price of our securities is
highly volatile. Factors that may cause the market price of our securities to
drop include fluctuations in our results of operations, timing and announcements
of our technological innovations or new products or those of our competitors,
FDA and foreign regulatory actions, developments with respect to patents and
proprietary rights, public concern as to the safety of products developed by us
or others, changes in health care policy in the United States and in foreign
countries, changes in stock market analyst recommendations regarding our
securities, the pharmaceutical industry generally and general market conditions.
In addition, the market price of our securities may drop if our results of
operations fail to meet the expectations of stock market analysts and investors.
OUR DIRECTORS AND EXECUTIVE OFFICERS OWN A SUBSTANTIAL PERCENTAGE OF OUR
SECURITIES. THEIR OWNERSHIP COULD ALLOW THEM TO EXERCISE SIGNIFICANT CONTROL
OVER CORPORATE DECISIONS AND TO IMPLEMENT CORPORATE ACTS THAT ARE NOT IN THE
BEST INTERESTS OF OUR STOCKHOLDERS AS A GROUP.
Our directors and executive officers beneficially own approximately
13.8% of our outstanding securities as of December 13, 2000. In addition,
several of our stockholders, including Montrose Investments Ltd. and Strong
River Investments, Inc. have agreed that they will vote any and all shares of
our securities that they own as recommended by our board of directors in any
meeting of our stockholders. Therefore, our directors and executive officers, if
they acted together, could exert substantial influence over matters requiring
approval by our stockholders. These matters would include the election of
directors and the approval of mergers or other business combination
transactions. This concentration of ownership and voting power may discourage or
prevent someone from acquiring our business.
EFFECT OF CERTAIN CHARTER AND BYLAWS PROVISIONS.
Certain provisions of our Certificate of Incorporation and Bylaws may
make it more difficult for someone to acquire control of us. These provisions
may make it more difficult for stockholders to take certain corporate actions
and could delay or discourage prevent someone from acquiring our business. These
provisions could limit the price that certain investors might be willing to pay
for shares of our securities.
FORWARD-LOOKING STATEMENTS
This prospectus and the documents incorporated by reference into this
prospectus contain forward-looking statements that are based on current
expectations, estimates and projections about our industry, management's
beliefs, and assumptions made by management. Words such as "anticipates,"
"expects," "intends," "plans," "believes," "seeks," "estimates," and variations
of such words and similar expressions are intended to identify such
forward-looking statements. These statements are not guarantees of future
performance and are subject to certain risks, uncertainties and assumptions that
are difficult to predict; therefore, actual results may differ materially from
those expressed or forecasted in any forward-looking statements. The risks and
uncertainties include those noted in "Risk Factors" above and in the documents
incorporated by reference. We undertake no obligation to update publicly any
forward-looking statements, whether as a result of new information, future
events or otherwise.
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<PAGE> 13
RATIO OF EARNINGS TO FIXED CHARGES
The following table sets forth ratios of earnings to fixed charges for
the periods shown.
<TABLE>
<CAPTION>
NINE MONTHS
ENDED
SEPTEMBER 30,
2000 YEAR ENDED DECEMBER 31,
------------------- --------------------------------------------------------------------
1999 1998 1997 1996 1995
----------- ---------- ----------- ---------- ----------
<S> <C> <C> <C> <C> <C>
N/A(1) N/A(1) N/A(1) N/A(1) N/A(1) N/A(1)
</TABLE>
----------
(1) Earnings have been inadequate to cover fixed charges. The dollar amount of
the coverage deficiency was approximately $35,395,000 for the nine months
ended September 30, 2000 and $25,990,000, $11,605,000, $6,162,000,
$1,039,000 and $895,000 for the years ended December 31, 1999, 1998, 1997,
1996, 1995, respectively.
The following table sets forth ratios of earnings to fixed charges and
preferred dividend for the periods shown.
<TABLE>
<CAPTION>
NINE MONTHS
ENDED
SEPTEMBER 30,
2000 YEAR ENDED DECEMBER 31,
------------------- --------------------------------------------------------------------
1999 1998 1997 1996 1995
----------- ---------- ----------- ---------- ----------
<S> <C> <C> <C> <C> <C>
N/A(1) N/A(1) N/A(1) N/A(1) N/A(1) N/A(1)
</TABLE>
----------
(1) Earnings have been inadequate to cover fixed charges and preferred
dividends. The dollar amount of the coverage deficiency was approximately
$35,395,000 for the nine months ended September 30, 2000 and $26,217,000,
$11,605,000, $6,162,000, $1,039,000 and $895,000 for the years ended December
31, 1999, 1998, 1997, 1996, 1995, respectively.
The ratios of earnings to fixed charges were computed by dividing
earnings by fixed charges. For this purpose, earnings consist of pre-tax loss
before minority interest in loss of consolidated subsidiary and fixed charges
included in the determination of pre-tax loss. Fixed charges consist of interest
costs, whether expensed or capitalized, the amortization of debt discount and
issuance costs, the interest factor of rental expense and preference security
dividends of consolidated subsidiary. Preference security dividends of
consolidated subsidiary are presented on a pre-tax basis, assuming a 40% tax
rate. The ratio of earnings to fixed charges and preferred dividends is
calculated in a similar manner to the ratio of earnings to fixed charges, except
that preference security dividends of NeoTherapeutics are included in fixed
charges on a pre-tax basis, assuming a 40% tax rate. The deficiency amount is
the amount of earnings required for a ratio of 1.0x.
USE OF PROCEEDS
Unless otherwise indicated in the applicable prospectus supplement, we
anticipate that any net proceeds from the sale of the securities will be used
for general corporate purposes which may include but are not limited to working
capital, capital expenditures, research and development and general and
administrative expenses. Net proceeds from the sale of the offered securities
initially may be temporarily invested in short-term interest-bearing securities.
PLAN OF DISTRIBUTION
We may sell the securities directly to our stockholders, directly to one
or more purchasers, through agents, to or through one or more dealers, to or
through underwriters or through a combination of any such methods of sale.
We may distribute the securities from time to time in one or more
transactions:
- at a fixed price or prices, which may be changed;
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<PAGE> 14
- at market prices prevailing at the time of sale;
- at prices related to such prevailing market prices; or
- at negotiated prices.
Offers to purchase the securities being offered hereby may be solicited
directly by us or by agents designated by us from time to time. Any such agent,
who may be deemed to be our "underwriter" as that term is defined in the
Securities Act, involved in the offer or sale of such securities will be named,
and any commissions payable by us to such agent will be set forth, in the
applicable prospectus supplement.
If a dealer is utilized in the sale of the securities, we will sell the
securities to the dealer, as principal. The dealer, who may be deemed to be an
"underwriter" as that term is defined in the Securities Act, may then resell the
securities to the public at varying prices to be determined by the dealer at the
time of resale.
If an underwriter is, or underwriters are, utilized in the sale, we will
execute an underwriting agreement with such underwriters at the time of sale to
them and the names of the underwriters will be set forth in the applicable
prospectus supplement, which will be used by the underwriter to make resales of
the securities to the public. In connection with the sale of the securities,
such underwriter may be deemed to have received compensation from us in the form
of underwriting discounts or commissions and may also receive commissions from
purchasers of the securities for whom they may act as agents. Underwriters may
also sell the securities to or through dealers, and such dealers may receive
compensation in the form of discounts, concessions or commissions from the
underwriters and/or commissions from the purchasers for whom they may act as
agents. Any underwriting compensation paid by us to underwriters in connection
with the offering of securities, and any discounts, concessions or commission
allowed by underwriters to participating dealers, will be set forth in the
applicable prospectus supplement.
If so indicated in the applicable prospectus supplement, we will
authorize underwriters, dealers or other persons to solicit offers by certain
institutions to purchase the securities offered hereby pursuant to contracts
providing for payment and delivery on a future date or dates set forth in the
applicable prospectus supplement. Institutions with which such contracts may be
made include commercial and savings banks, insurance companies, pension funds,
investment companies, educational and charitable institutions and others. The
obligations of any purchasers under any such contract will not be subject to any
conditions except that (a) the purchase of such securities shall not at the time
of delivery be prohibited under the laws of the jurisdiction to which such
purchaser is subject and (b) if the securities are also being sold to
underwriters, we shall have sold to such underwriters the securities offered
hereby which are not sold for delayed delivery. The underwriters, dealers and
such other persons will not have any responsibility in respect of the validity
or performance of such contracts. The applicable prospectus supplement relating
to such contracts will set forth the price to be paid for securities pursuant to
such contracts, the commission payable for solicitation of such contracts and
the date or dates in the future for delivery of the securities pursuant to such
contracts.
We may enter into agreements to indemnify underwriters, dealers and
agents who participate in the distribution of securities against certain
liabilities, including liabilities under the Securities Act.
DESCRIPTION OF DEBT SECURITIES
This prospectus describes certain general terms and provisions of our
debt securities. When we offer to sell a particular series of debt securities,
we will describe the specific terms of the series in a supplement to this
prospectus. We will also indicate in the supplement whether the general terms
and provisions described in this prospectus apply to a particular series of debt
securities.
The debt securities offered hereby will be issued under an indenture
between us and the trustee named therein. The indenture is subject to, and
governed by, the Trust Indenture Act of 1939, as amended (the "TIA"). We have
filed a copy of the form of indenture as an exhibit to the registration
statement and you should read the indenture for provisions that may be important
to you. We have summarized select portions of the indenture below. The summary
is not complete. Capitalized terms used in the summary below have the meanings
specified in the indenture.
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<PAGE> 15
GENERAL
The terms of each series of debt securities will be established by or
pursuant to a resolution of our board of directors and detailed or determined in
the manner provided in an officers' certificate or by a supplemental indenture.
The particular terms of each series of debt securities will be described in a
prospectus supplement relating to the series, including any pricing supplement.
We can issue an unlimited amount of debt securities under the indenture
that may be in one or more series with the same or various maturities, at par,
at a premium, or at a discount. We will set forth in a prospectus supplement,
including any pricing supplement, relating to any series of debt securities
being offered, the initial offering price, the aggregate principal amount and
the following terms of the debt securities:
- the title of the debt securities;
- the price or prices (expressed as a percentage of the aggregate
principal amount) at which we will sell the debt securities;
- any limit on the aggregate principal amount of the debt securities;
- the date or dates on which we will pay the principal on the debt
securities;
- the rate or rates (which may be fixed or variable) per annum or the
method used to determine the rate or rates (including any commodity,
commodity index, stock exchange index or financial index) at which
the debt securities will bear interest, the date or dates from which
interest will accrue, the date or dates on which interest will
commence and be payable and any regular record date for the interest
payable on any interest payment date;
- the place or places where principal of, premium, and interest on the
debt securities will be payable;
- the terms and conditions upon which we may redeem the debt
securities;
- any obligation we have to redeem or purchase the debt securities
pursuant to an sinking fund or analogous provisions or at the option
of a holder of debt securities;
- the dates on which and the price or prices at which we will
repurchase the debt securities at the option of the holders of debt
securities and other detailed terms and provisions of these
repurchase obligations;
- the denominations in which the debt securities will be issued, if
other than denominations of $1,000 and any integral multiple thereof;
- whether the debt securities will be issued in the form of
certificated debt securities or global debt securities;
- the portion of principal amount of the debt securities payable upon
declaration of acceleration of the maturity date, if other than the
principal amount;
- the currency of denomination of the debt securities;
- the designation of the currency, currencies or currency unit in which
payment of principal of, and premium and interest on the debt
securities will be made;
- if payments of principal of, or premium or interest on the debt
securities will be made in one or more currencies or currency units
other than that or those in which the debt securities are
denominated, the manner in which the exchange rate with respect to
these payments will be determined;
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<PAGE> 16
- the manner in which the amounts of payment of principal of, and
premium or interest on the debt securities will be determined, if
these amounts may be determined by reference to an index based on a
currency or currencies other than that in which the debt securities
are denominated or designated to be payable or by reference to a
commodity, commodity index, stock exchange index or financial index;
- any provisions relating to any security provided for the debt
securities;
- any addition to or change in the Events of Default described in this
prospectus or in the indenture with respect to the debt securities
and any change in the acceleration provisions described in this
prospectus or in the indenture with respect to the debt securities;
- any addition to or change in the covenants described in this
prospectus or in the indenture with respect to the debt securities;
- any other terms of the debt securities, which may modify or delete
any provision of the indenture as it applies to that series; and
- any depositaries, interest rate calculation agents, exchange rate
calculation agents or other agents with respect to the debt
securities.
We may issue debt securities that provide for an amount less than their
stated principal amount to be due and payable upon declaration of acceleration
of their maturity pursuant to the terms of the indenture. We will provide you
with information on the federal income tax considerations and other special
considerations applicable to any of these debt securities in the applicable
prospectus supplement.
If we denominate the purchase price of any of the debt securities in a
foreign currency or currencies or a foreign currency unit or units, or if the
principal of and any premium and interest on any series of debt securities is
payable in a foreign currency or currencies or a foreign currency unit or units,
we will provide you with information on the restrictions, elections, general tax
considerations, specific terms and other information with respect to that issue
of debt securities and such foreign currency or currencies or foreign currency
unit or units in the applicable prospectus supplement.
PAYMENT OF INTEREST AND EXCHANGE
Each debt security will be represented by either one or more global
securities registered in the name of a clearing agency registered under the
Securities Exchange Act of 1934, as amended, as Depositary, or a nominee of the
Depositary (we will refer to any debt security represented by a global debt
security as a "book-entry debt security"), or a certificate issued in definitive
registered form (we will refer to any debt security represented by a
certificated security as a "certificated debt security"), as described in the
applicable prospectus supplement. Except as described under "Global Debt
Securities and Book-Entry System" below, book-entry debt securities will not be
issuable in certificated form.
DEBT SECURITIES. You may transfer or exchange certificated debt
securities at the trustee's office or paying agencies in accordance with the
terms of the indenture. No service charge will be made for any transfer or
exchange of certificated debt securities, but we may require payment of a sum
sufficient to cover any tax or other governmental charge payable in connection
with a transfer or exchange.
You may transfer certificated debt securities and the right to receive
the principal of, and premium and interest on certificated debt securities only
by surrendering the old certificate representing those certificated debt
securities and either we or the trustee will reissue the old certificate to the
new holder or we or the trustee will issue a new certificate to the new holder.
GLOBAL DEBT SECURITIES AND BOOK-ENTRY SYSTEM. Each global debt security
representing book-entry debt securities will be deposited with, or on behalf of,
the Depositary, and registered in the name of the Depositary or a nominee of the
Depositary.
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<PAGE> 17
We expect that the Depositary will follow substantially the following
procedures with respect to book-entry debt securities.
Ownership of beneficial interests in book-entry debt securities will be
limited to persons that have accounts with the Depositary for the related global
debt security, otherwise referred to as participants, or persons that may hold
interests through participants. Upon the issuance of a global debt security, the
Depositary will credit, on its book-entry registration and transfer system, the
participants' accounts with the respective principal amounts of the book-entry
debt securities represented by the global debt security beneficially owned by
such participants. The accounts to be credited will be designated by any
dealers, underwriters or agents participating in the distribution of the
book-entry debt securities. Ownership of book-entry debt securities will be
shown on, and the transfer of the ownership interests will be effected only
through, records maintained by the Depositary for the related global debt
security (with respect to interests of participants) and on the records of
participants (with respect to interests of persons holding through
participants). The laws of some states may require that certain purchasers of
securities take physical delivery of such securities in definitive form. These
laws may impair the ability to own, transfer or pledge beneficial interests in
book-entry debt securities.
So long as the Depositary for a global debt security, or its nominee, is
the registered owner of that global debt security, the Depositary or its
nominee, as the case may be, will be considered the sole owner or holder of the
book-entry debt securities represented by such global debt security for all
purposes under the indenture. Except as described herein, beneficial owners of
book-entry debt securities will not be entitled to have securities registered in
their names, will not receive or be entitled to receive physical delivery of a
certificate in definitive form representing securities and will not be
considered the owners or holders of those securities under the indenture.
Accordingly, to exercise any rights of a holder under the indenture, each person
beneficially owning book-entry debt securities must rely on the procedures of
the Depositary for the related global debt security and, if that person is not a
participant, on the procedures of the participant through which that person owns
its interest.
We understand, however, that under existing industry practice, the
Depositary will authorize the persons on whose behalf it holds a global debt
security to exercise certain rights of holders of debt securities, and the
indenture provides that we, the trustee and our respective agents will treat as
the holder of a debt security the persons specified in a written statement of
the Depositary with respect to that global debt security for purposes of
obtaining any consents or directions required to be given by holders of the debt
securities pursuant to the indenture.
We will make payments of principal of, and premium and interest on
book-entry debt securities to the Depositary or its nominee, as the case may be,
as the registered holder of the related global debt security. NeoTherapeutics,
the trustee and any other agent of ours or agent of the trustee will not have
any responsibility or liability for any aspect of the records relating to or
payments made on account of beneficial ownership interests in a global debt
security or for maintaining, supervising or reviewing any records relating to
such beneficial ownership interests.
We expect that the Depositary, upon receipt of any payment of principal
of, or premium or interest on a global debt security, will immediately credit
participants' accounts with payments in amounts proportionate to the respective
amounts of book-entry debt securities held by each participant as shown on the
records of the Depositary. We also expect that payments by participants to
owners of beneficial interests in book-entry debt securities held through those
participants will be governed by standing customer instructions and customary
practices, as is now the case with the securities held for the accounts of
customers in bearer form or registered in "street name," and will be the
responsibility of those participants.
We will issue certificated debt securities in exchange for each global
debt security if the Depositary is at any time unwilling or unable to continue
as Depositary or ceases to be a clearing agency registered under the Exchange
Act, and a successor Depositary registered as a clearing agency under the
Exchange Act is not appointed by us within 90 days. In addition, we may at any
time and in our sole discretion determine not to have any of the book-entry debt
securities of any series represented by one or more global debt securities and,
in that event, we will issue certificated debt securities in exchange for the
global debt securities of that series. Global debt securities will also be
exchangeable by the holders for certificated debt securities if an Event of
Default with respect to the book- entry debt securities represented by those
global debt securities has occurred and is continuing. Any certificated debt
securities issued in exchange for a global debt security will be registered in
such name or names as the Depositary shall instruct the trustee. We expect that
such instructions will be based upon directions received by the
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<PAGE> 18
Depositary from participants with respect to ownership of book-entry debt
securities relating to such global debt security.
We have obtained the foregoing information in this section concerning
the Depositary and the Depositary's book-entry system from sources we believe to
be reliable, but we take no responsibility for the accuracy of this information.
REDEMPTION
We will describe in the applicable prospectus supplement the terms and
conditions, if any, upon which the debt securities are redeemable. These terms
will include:
- provisions regarding whether redemption will be at our option or the
option of the holders;
- the time for delivery and required content of a notice of redemption
to the trustee and the holders;
- the manner of selection of debt securities to be redeemed; and
- provisions regarding the payment of the redemption price.
CONSOLIDATION, MERGER AND SALE OF ASSETS
We may not consolidate with or merge into, or convey, transfer or lease
all or substantially all of our properties and assets to, any person (a
"successor person"), and we may not permit any person to merge into, or convey,
transfer or lease its properties and assets substantially as an entirety to us,
unless:
- the successor person is a corporation, partnership, trust or other
entity organized and validly existing under the laws of any U.S.
domestic jurisdiction and expressly assumes our obligations on the
debt securities and under the indenture;
- immediately after giving effect to the transaction, no Event of
Default, and no event which, after notice or lapse of time, or both,
would become an Event of Default, shall have occurred and be
continuing under the indenture; and
- we deliver to the trustee an officer's certificate and legal opinion
covering compliance with the conditions listed above.
COVENANTS
In addition to our obligation to make payments of principal and interest
on the debt securities in accordance with their terms, the indenture contains
covenants requiring us to:
- deliver to the trustee, within 15 days of filing, copies of all
filings made by us with the Securities and Exchange Commission
pursuant to Section 13 or 15(d) of the Securities Exchange Act;
- deliver to the trustee, within 90 days after the end of each of our
fiscal years, an officer's certificate stating that we have fulfilled
our obligations under the indenture during the preceding fiscal year;
- to the extent we may lawfully do so, refrain from claiming or taking
advantage of any stay, extension or usury law which may affect our
obligations under the indenture or the debt securities;
- preserve our corporate existence, except as permitted under
"--Consolidation, Merger and Sale of Assets," and preserve our
rights, licenses and franchises, and the existence of our significant
subsidiaries, unless our board of directors determines that it is no
longer desirable in the conduct of our business to preserve those
rights, license or franchises, or to preserve the existence of any
significant subsidiary; and
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<PAGE> 19
- pay when due all taxes, assessments and governmental levies, except
those that we contest in good faith.
Unless we state otherwise in (a) the applicable prospectus supplement
and in a supplement to the indenture, (b) a board resolution, or (c) an
officers' certificate delivered pursuant to the indenture, the debt securities
will not contain any other restrictive covenants, including covenants
restricting us or any of our subsidiaries from incurring, issuing, assuming or
guarantying any indebtedness secured by a lien on any of our or our
subsidiaries' property or capital stock, or restricting us or any of our
subsidiaries from entering into any sale and leaseback transactions.
EVENTS OF DEFAULT
"Event of Default" means with respect to any series of debt securities,
any of the following:
- default in the payment of any interest upon any debt security of that
series when it becomes due and payable, and continuance of that
default for a period of 30 days (unless the entire amount of such
payment is deposited by us with the trustee or with a paying agent
prior to the expiration of the 30-day period);
- default in the payment of principal of or premium on any debt
security of that series when due and payable;
- default in the deposit of any sinking fund payment, when and as due
in respect of any debt security of that series;
- default in the performance or breach of any other covenant or
warranty by us in the indenture (other than a covenant or warranty
that has been included in the indenture solely for the benefit of a
series of debt securities other than that series), which default
continues uncured for a period of 60 days after we receive written
notice from the trustee or we and the trustee receive written notice
from the holders of at least 25% in principal amount of the
outstanding debt securities of that series as provided in the
indenture;
- an event of default under any of our debt (including a default with
respect to debt securities of any series other than that series) or
any subsidiary, whether that debt exists today or is created at a
later date, if
- the default results from our failure to pay the debt when it
becomes due;
- the principal amount of the debt, together with the principal
amount of any other debt in default for failure to pay principal
at stated final maturity or the maturity of which has been
accelerated, at any time exceeds a specified amount; and
- the debt is not discharged or the acceleration is not rescinded
or annulled within 10 days after we receive written notice as
provided in the indenture;
- events of bankruptcy, insolvency or reorganization as provided in the
indenture; and
- any other Event of Default provided with respect to debt securities
of that series that is described in the applicable prospectus
supplement accompanying this prospectus.
No Event of Default with respect to a particular series of debt
securities (except as to events of bankruptcy, insolvency or reorganization
described in the indenture) necessarily constitutes an Event of Default with
respect to any other series of debt securities. An Event of Default may also be
an event of default under our bank credit agreements in existence from time to
time and under certain guaranties by us of any subsidiary indebtedness. In
addition, certain Events of Default or an acceleration under the indenture may
also be an event of default under some of our other indebtedness outstanding
from time to time.
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If an Event of Default with respect to debt securities of any series at
the time outstanding occurs and is continuing, then the trustee or the holders
of not less than 25% in principal amount of the outstanding debt securities of
that series may, by written notice to us (and to the trustee if given by the
holders), declare to be due and payable immediately the principal (or, if the
debt securities of that series are discount securities, that portion of the
principal amount as may be specified in the terms of that series) and premium of
all debt securities of that series. In the case of an Event of Default resulting
from events of bankruptcy, insolvency or reorganization, the principal (or the
specified amount) and premium of all outstanding debt securities will become and
be immediately due and payable without any declaration or other act by the
trustee or any holder of outstanding debt securities. At any time after a
declaration of acceleration with respect to debt securities of any series has
been made, but before the trustee has obtained a judgment or decree for payment
of the money due, the holders of a majority in principal amount of the
outstanding debt securities of that series may, subject to our having paid or
deposited with the trustee a sum sufficient to pay overdue interest and
principal which has become due other than by acceleration and certain other
conditions, rescind and annul the acceleration if all Events of Default, other
than the non-payment of accelerated principal and premium with respect to debt
securities of that series, have been cured or waived as provided in the
indenture. For information as to waiver of defaults see the discussion under
"Modification and Waiver" below. We refer you to the prospectus supplement
relating to any series of debt securities that are discount securities for the
particular provisions relating to acceleration of a portion of the principal
amount of the discount securities upon the occurrence of an Event of Default and
the continuation of an Event of Default.
The indenture provides that the trustee will be under no obligation to
exercise any of its rights or powers under the indenture at the request of any
holder of outstanding debt securities, unless the trustee receives indemnity
satisfactory to it against any loss, liability or expense. Subject to the rights
of the trustee, the holders of a majority in principal amount of the outstanding
debt securities of any series shall have the right to direct the time, method
and place of conducting any proceeding for any remedy available to the trustee
or exercising any trust or power conferred on the trustee with respect to the
debt securities of that series.
No holder of any debt security of any series will have any right to
institute any proceeding judicial or otherwise, with respect to the indenture or
for the appointment of a receiver or trustee, or for any remedy under the
indenture, unless:
- that holder has previously given to the trustee written notice of a
continuing Event of Default with respect to debt securities of that
series; and
- the holders of at least 25% in principal amount of the outstanding
debt securities of that series have made written request, and offered
reasonable indemnity, to the trustee to institute such proceeding as
trustee, and the trustee shall not have received from the holders of
a majority in principal amount of the outstanding debt securities of
that series a direction inconsistent with that request and has failed
to institute the proceeding within 60 days.
Notwithstanding the foregoing, the holder of any debt security will have
an absolute and unconditional right to receive payment of the principal of, and
premium and any interest on, that debt security on or after the due dates
expressed in that debt security and to institute suit for the enforcement of
payment.
The indenture provides that the trustee may withhold notice to the
holders of debt securities of any series of any Default or Event of Default
(except in payment on any debt securities of that series) with respect to debt
securities of that series if it in good faith determines that withholding notice
is in the interest of the holders of those debt securities.
CONVERSION RIGHTS
We will describe in the applicable prospectus supplement the terms and
conditions, if any, upon which the debt securities are convertible into common
stock or preferred stock. Those terms will include:
- whether the debt securities are convertible into common stock or
preferred stock;
- the conversion price, or manner of calculation;
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- the conversion period;
- provisions regarding whether conversion will be at our option or the
option of the holders;
- the events requiring an adjustment of the conversion price; and
- provisions affecting conversion in the event of the redemption of the
debt securities.
MODIFICATION AND WAIVER
We and the trustee may modify and amend the indenture with the consent
of the holders of at least a majority in principal amount of the outstanding
debt securities of each series affected by the modifications or amendments. We
and the trustee may not make any modification or amendment without the consent
of the holder of each affected debt security then outstanding if that amendment
will:
- change the amount of debt securities whose holders must consent to an
amendment or waiver;
- reduce the rate of or extend the time for payment of interest
(including default interest) on any debt security;
- reduce the principal of or premium on or change the fixed maturity of
any debt security or reduce the amount of, or postpone the date fixed
for, the payment of any sinking fund or analogous obligation with
respect to any series of debt securities;
- reduce the principal amount of discount securities payable upon
acceleration of maturity;
- waive a default in the payment of the principal of, or premium or
interest on any debt security (except a rescission of acceleration of
the debt securities of any series by the holders of at least a
majority in aggregate principal amount of the then outstanding debt
securities of that series and a waiver of the payment default that
resulted from that acceleration);
- make the principal of, or premium or interest on any debt security
payable in currency other than that stated in the debt security;
- make any change to provisions of the indenture relating to, among
other things, the right of holders of debt securities to receive
payment of the principal of, and premium and interest on those debt
securities and to institute suit for the enforcement of any payment
and to waivers or amendments; or
- waive a redemption payment with respect to any debt security or
change any of the provisions with respect to the redemption of any
debt securities.
Except for waivers having the effects listed immediately above, the
holders of at least a majority in principal amount of the outstanding debt
securities of any series may on behalf of the holders of all debt securities of
that series waive our compliance with provisions of the indenture. The holders
of a majority in principal amount of the outstanding debt securities of any
series may on behalf of the holders of all the debt securities of that series
waive any past default under the indenture with respect to that series and its
consequences, except a default in the payment of the principal of, or premium or
any interest on any debt security of that series; provided, however, that the
holders of a majority in principal amount of the outstanding debt securities of
any series may rescind an acceleration and its consequences, including any
related payment default that resulted from the acceleration.
DEFEASANCE OF DEBT SECURITIES AND CERTAIN COVENANTS IN CERTAIN CIRCUMSTANCES
LEGAL DEFEASANCE. The indenture provides that, unless otherwise provided
by the terms of the applicable series of debt securities, we may be discharged
from any and all obligations in respect of the debt securities of any series
(except for obligations to register the transfer or exchange of debt securities
of the series, to replace stolen, lost or mutilated debt securities of the
series, and to maintain paying agencies and provisions relating to the treatment
of funds held by paying agents). We will be so discharged upon the deposit with
the trustee, in trust, of
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money and/or U.S. government obligations or, in the case of debt securities
denominated in a single currency other than U.S. dollars, foreign government
obligations, that, through the payment of interest and principal in accordance
with their terms, will provide money in an amount sufficient in the opinion of a
nationally recognized firm of independent public accountants to pay and
discharge each installment of principal, premium and interest on and any
mandatory sinking fund payments in respect of the debt securities of that series
on the stated maturity of such payments in accordance with the terms of the
indenture and those debt securities.
This discharge may occur only if, among other things, we have delivered
to the trustee an officers' certificate and an opinion of counsel stating that
we have received from, or there has been published by, the United States
Internal Revenue Service a ruling or, since the date of execution of the
indenture, there has been a change in the applicable United States federal
income tax law, in either case to the effect that holders of the debt securities
of such series will not recognize income, gain or loss for United States federal
income tax purposes as a result of the deposit, defeasance and discharge and
will be subject to United States federal income tax on the same amount and in
the same manner and at the same times as would have been the case if the
deposit, defeasance and discharge had not occurred.
DEFEASANCE OF CERTAIN COVENANTS. The indenture provides that, unless
otherwise provided by the terms of the applicable series of debt securities,
upon compliance with conditions specified in the indenture:
- we may omit to comply with the restrictive covenants contained in
Sections 4.2 through 4.6 and Section 5.1 of the indenture, as well as
any additional covenants contained in a supplement to the indenture,
a board resolution or an officers' certificate delivered pursuant to
the indenture; and
- Events of Default under Section 6.1(e) of the indenture will not
constitute a Default or an Event of Default with respect to the debt
securities of that series.
The conditions include:
- depositing with the trustee money and/or U.S. government obligations
or, in the case of debt securities denominated in a single currency
other than U.S. dollars, foreign government obligations, that,
through the payment of interest and principal in accordance with
their terms, will provide money in an amount sufficient in the
opinion of a nationally recognized firm of independent public
accountants to pay principal, premium and interest on and any
mandatory sinking fund payments in respect of the debt securities of
that series on the stated maturity of those payments in accordance
with the terms of the indenture and those debt securities; and
- delivering to the trustee an opinion of counsel to the effect that
the holders of the debt securities of that series will not recognize
income, gain or loss for United States federal income tax purposes as
a result of the deposit and related covenant defeasance and will be
subject to united states federal income tax in the same amount and in
the same manner and at the same times as would have been the case if
the deposit and related covenant defeasance had not occurred.
COVENANT DEFEASANCE AND EVENTS OF DEFAULT. In the event we exercise our
option not to comply with certain covenants of the indenture with respect to any
series of debt securities and the debt securities of that series are declared
due and payable because of the occurrence of any Event of Default, the amount of
money and/or U.S. government obligations or foreign government obligations on
deposit with the trustee will be sufficient to pay amounts due on the debt
securities of that series at the time of their stated maturity but may not be
sufficient to pay amounts due on the debt securities of that series at the time
of the acceleration resulting from the Event of Default. However, we will remain
liable for those payments.
"Foreign government obligations" means, with respect to debt securities
of any series that are denominated in a currency other than U.S. Dollars:
- direct obligations of the government that issued or caused to be
issued such currency for the payment of which obligations its full
faith and credit is pledged, which are not callable or redeemable at
the option of the issuer thereof; or
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- obligations of a person controlled or supervised by or acting as an
agency or instrumentality of that government the timely payment of
which is unconditionally guaranteed as a full faith and credit
obligation by that government, which are not callable or redeemable
at the option of the issuer thereof.
GOVERNING LAW
The indenture and the debt securities will be governed by, and construed
in accordance with, the internal laws of the State of New York.
DESCRIPTION OF COMMON STOCK
The following summary of the terms of our common stock does not purport
to be complete and is subject to and qualified in its entirety by reference to
our Charter and Bylaws, copies of which are on file with the Commission as
exhibits to registration statements previously filed by us. See "Available
Information."
We have authority to issue 25,000,000 shares of common stock, $.001 par
value per share. As of December 13, 2000, we had 13,307,227 shares of common
stock outstanding.
GENERAL
The following description of our common stock sets forth general terms
and provisions of the our common stock to which any prospectus supplement may
relate, including a prospectus supplement providing that shares of our common
stock will be issuable upon conversion of debt securities, preferred stock or
depository shares or upon the exercise of warrants issued by us.
TERMS
Holders of our common stock are entitled to one vote per share on all
matters to be voted upon by the stockholders. Our board of directors is divided
into three classes, with the term of each class expiring every third year at the
annual meeting of stockholders. The number of directors is distributed equally
between the three classes. Stockholders do not have rights to cumulate their
votes in the election of directors under our Certificate of Incorporation, or
the provisions of the Delaware General Corporation Law and our management
presently does not intend to extend cumulative voting rights to stockholders.
However, under Section 2115 of the California Corporations Code, specific
provisions of the California General Corporation Law, including mandatory
cumulative voting rights of stockholders, are made applicable to
"pseudo-California" corporations incorporated under laws of other states which
meet certain tests. The tests are (i) that the average of specified property,
payroll and sales factors (generally relating to the extent of activities in
California) exceed 50% on a consolidated basis during the corporation's latest
full income year, and (ii) that more than one-half of the corporation's
outstanding voting securities are held of record by persons having addresses in
California. We do not believe we meet such tests. If we were required to
implement cumulative voting for the election of directors, the existence of a
classified Board of Directors may have the effect of delaying or preventing
changes in control or in management because a greater number of shares would be
required to elect any one director.
Subject to the preferences that may be applicable to the holders of
outstanding shares of preferred stock, if any, the holders of our common stock
are entitled to receive such lawful dividends as may be declared by the Board of
Directors. In the event of liquidation, dissolution or winding up of
NeoTherapeutics, and subject to the rights of the holders of outstanding shares
of Preferred Stock, if any, the holders of shares of our common stock shall be
entitled to receive pro rata all of our remaining assets available for
distribution to our stockholders. There are no preemption, redemption or sinking
fund provisions applicable to the common stock. All outstanding shares of our
common stock are fully paid and nonassessable.
TRANSFER AGENT AND REGISTRAR
The transfer agent and registrar for the common stock is U.S. Stock
Transfer Corporation.
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DESCRIPTION OF PREFERRED STOCK
We have authority to issue 5,000,000 shares of preferred stock, $.001
par value per share. As of December 13, 2000, we had no shares of preferred
stock outstanding.
GENERAL
Under our Certificate of Incorporation, our board of directors is
authorized generally without stockholder approval to issue shares of preferred
stock from time to time, in one or more classes or series. Prior to the issuance
of shares of each series, the board of directors is required by the Delaware
General Corporation Law and our Certificate of Incorporation to adopt
resolutions and file a certificate of designation with the Secretary of State of
the State of Delaware. The certificate of designation fixes for each class or
series the designations, powers, preferences, rights, qualifications,
limitations and restrictions, including, but not limited to, the following:
- the number of shares constituting each class or series;
- voting rights;
- rights and terms of redemption (including sinking fund provisions);
- dividend rights and rates;
- dissolution;
- terms concerning the distribution of assets;
- conversion or exchange terms;
- redemption prices; and
- liquidation preferences.
All shares of preferred stock offered hereby will, when issued, be fully
paid and nonassessable and will not have any preemptive or similar rights. Our
board of directors could authorize the issuance of shares of preferred stock
with terms and conditions which could have the effect of discouraging a takeover
or other transaction that might involve a premium price for holders of the
shares or which holders might believe to be in their best interests.
We will set forth in a prospectus supplement relating to the class or
series of preferred stock being offered the following terms:
- the title and stated value of the preferred stock;
- the number of shares of the preferred stock offered, the liquidation
preference per share and the offering price of the preferred stock;
- the dividend rate(s), period(s) and/or payment date(s) or method(s)
of calculation applicable to the preferred stock;
- whether dividends are cumulative or non-cumulative and, if
cumulative, the date from which dividends on the preferred stock will
accumulate;
- the procedures for any auction and remarketing, if any, for the
preferred stock;
- the provisions for a sinking fund, if any, for the preferred stock;
- the provision for redemption, if applicable, of the preferred stock;
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- any listing of the preferred stock on any securities exchange;
- the terms and conditions, if applicable, upon which the preferred
stock will be convertible into common stock, including the conversion
price (or manner of calculation) and conversion period;
- voting rights, if any, of the preferred stock;
- whether interests in the preferred stock will be represented by
depositary shares;
- a discussion of any material and/or special United States Federal
income tax considerations applicable to the preferred stock;
- the relative ranking and preferences of the preferred stock as to
dividend rights and rights upon the liquidation, dissolution or
winding up of our affairs;
- any limitations on issuance of any class or series of preferred stock
ranking senior to or on a parity with the class or series of
preferred stock as to dividend rights and rights upon liquidation,
dissolution or winding up of our affairs; and
- any other specific terms, preferences, rights, limitations or
restrictions of the preferred stock.
RANK
Unless we specify otherwise in the applicable prospectus supplement, the
preferred stock will rank, with respect to dividends and upon our liquidation,
dissolution or winding up:
- senior to all classes or series of our common stock and to all of our
equity securities ranking junior to the preferred stock;
- on a parity with all of our equity securities the terms of which
specifically provide that the equity securities rank on a parity with
the preferred stock; and
- junior to all of our equity securities the terms of which
specifically provide that the equity securities rank senior to the
preferred stock.
The term "equity securities" does not include convertible debt securities.
TRANSFER AGENT AND REGISTRAR
The transfer agent and registrar for any series or class of preferred
stock will be set forth in the applicable prospectus supplement.
DESCRIPTION OF DEPOSITARY SHARES
GENERAL
We may issue depositary shares, each of which will represent a
fractional interest of a share of a particular class or series of preferred
stock, as specified in the applicable prospectus supplement. Shares of a class
or series of preferred stock represented by depositary shares will be deposited
under a separate deposit agreement among us, the depositary named therein and
the holders from time to time of the depositary receipts issued by the
depositary which will evidence the depositary shares. Subject to the terms of
the deposit agreement, each owner of a depositary receipt will be entitled, in
proportion to the fractional interest of a share of a particular class or series
of preferred stock represented by the depositary shares evidenced by the
depositary receipt, to all the rights and preferences of the class or series of
the preferred stock represented by the depositary shares (including dividend,
voting, conversion, redemption and liquidation rights).
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The depositary shares will be evidenced by depositary receipts issued
pursuant to the applicable deposit agreement. Immediately following the issuance
and delivery of the preferred stock by us to a depositary, we will cause the
depositary to issue the receipts on our behalf. Copies of the applicable form of
deposit agreement and depositary receipt may be obtained from us upon request,
and the statements made hereunder relating to the deposit agreement and the
depositary receipt to be issued thereunder are summaries of certain anticipated
provisions thereof and do not purport to be complete and are subject to, and
qualified in their entirety by reference to, all of the provisions of the
applicable deposit agreement and related depositary receipts.
DIVIDENDS AND OTHER DISTRIBUTIONS
The depositary will distribute all cash dividends or other cash
distributions received in respect of a class or series of preferred stock to the
record holders of depositary receipts evidencing the related depositary shares
in proportion to the number of depositary receipts owned by the holders, subject
to the holders' obligations to file proofs, certificates and other information
and to pay certain charges and expenses to the depositary.
If we make a distribution other than in cash, the depositary will
distribute any property it receives to the record holders of depositary
receipts, subject to the holders' obligations to file proofs, certificates and
other information and to pay certain charges and expenses to the depositary,
unless the depositary determines that it is not feasible to make such
distribution, in which case the depositary may, with our approval, sell the
property and distribute the net proceeds from the sale to the holders.
WITHDRAWAL OF STOCK
The holders of depositary receipts will be entitled to receive whole or
fractional shares of preferred stock, and any applicable money or other
property, represented by the corresponding depositary shares upon surrender of
the depositary receipts at the corporate trust office of the depositary (unless
the related depositary shares have previously been called for redemption or
converted). Holders of depositary receipts will be entitled to receive whole or
fractional shares of the related class or series of preferred stock on the basis
of the proportion of preferred stock represented by each depositary share as
specified in the applicable prospectus supplement, but those holders will not
thereafter be entitled to receive depositary shares for those shares of
preferred stock. If the holder delivers depositary receipts evidencing more
depositary shares than correspond to the number of shares of preferred stock to
be withdrawn, the depositary will deliver to the holder at the same time a new
depositary receipt evidencing the remainder of the depositary shares.
REDEMPTION OF DEPOSITARY SHARES
Whenever we redeem shares of preferred stock held by the depositary, the
depositary will redeem as of the same redemption date the number of the
depositary shares representing shares of the class or series of preferred stock
to be redeemed, if we first pay to the depositary the full redemption price of
the preferred stock plus any accrued and unpaid dividends on the preferred stock
to the date of redemption. If fewer than all the depositary shares are to be
redeemed, the depositary shares to be redeemed will be selected pro rata (as
nearly as may be practicable without creating fractional depositary shares) or
by any other equitable method determined by us.
From and after the date fixed for redemption, all dividends in respect
of the shares of a class or series of preferred stock called for redemption will
cease to accrue, the depositary shares called for redemption will no longer be
deemed to be outstanding and all rights of the holders of the depositary
receipts evidencing the depositary shares called for redemption will cease,
except the right to receive any moneys payable upon redemption and any money or
other property to which the holders of the depositary receipts were entitled
upon such redemption.
VOTING OF THE PREFERRED STOCK
Upon receipt of notice of any meeting at which the holders of a class or
series of preferred stock deposited with the depositary are entitled to vote,
the depositary will deliver the information contained in the notice to the
record holders of the depositary receipts evidencing the applicable depositary
shares. Each record holder of depositary receipts evidencing depositary shares
on the record date set for the relevant class or series of preferred stock may
instruct the depositary to exercise the voting rights pertaining to the amount
of preferred stock represented by the holder's depositary shares. If the record
holder provides no instructions, the depositary will
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abstain from voting the preferred stock represented by the depositary shares.
The depositary will not be responsible for any failure to carry out any
instruction to vote, or for the manner or effect of any vote made, as long as
any such action or non-action is in good faith and does not result from
negligence or willful misconduct of the depositary.
LIQUIDATION PREFERENCE
In the event we liquidate, dissolve or wind up, whether voluntarily or
involuntarily, the holders of the depositary receipts will be entitled to the
fraction of the liquidation preference accorded each share of preferred stock
represented by the depositary share evidenced by the depositary receipt as set
forth in the applicable prospectus supplement.
CONVERSION OF PREFERRED STOCK
We may provide in the applicable prospectus supplement relating to an
offering of depositary shares that holders may surrender the depositary receipts
to the applicable depositary with written instructions to cause conversion of a
class or series of preferred stock represented by the depositary shares
evidenced by the applicable depositary receipts into whole shares of common
stock, other shares of a class or series of our preferred stock or other shares
of stock, and we have agreed to carry out the conversion on the same terms as
are applicable to the underlying preferred stock. If the depositary shares
evidenced by a depositary receipt are to be converted in part only, a depositary
receipt or receipts will be issued for any depositary shares not to be
converted. No fractional shares of common stock will be issued upon conversion,
and if conversion will result in a fractional share being issued, we will pay an
amount in cash equal to the value of the fractional interest based upon the
closing price of the common stock on the last business day prior to the
conversion.
AMENDMENT AND TERMINATION OF A DEPOSIT AGREEMENT
The form of depositary receipt evidencing depositary shares which
represent the preferred stock and any provision of the deposit agreement may at
any time be amended by agreement between us and the depositary. However, any
amendment that materially and adversely alters the rights of the holders of
depositary receipts or that would be materially or adversely inconsistent with
the rights granted to the holders of the related preferred stock will not be
effective unless such amendment has been approved by the existing holders of at
least two-thirds of the applicable depositary shares evidenced by the applicable
depositary receipts then outstanding. No amendment shall impair the right,
subject to exceptions in the deposit agreements, of any holder of depositary
receipts to surrender any depositary receipt with instructions to deliver to the
holder the related class or series of preferred stock and all money and other
property, if any, represented thereby, except in order to comply with law. Every
holder of an outstanding depositary receipt at the time any amendment becomes
effective shall be deemed, by continuing to hold the depositary receipt, to
consent and agree to such amendment and to be bound by the applicable deposit
agreement as amended.
We may terminate the deposit agreement upon not less than 30 days' prior
written notice to the depositary if a majority of each class or series of
preferred stock subject to the deposit agreement consents to the termination,
whereupon the depositary will deliver or make available to each holder of
depositary receipts, upon surrender of the depositary receipt, the number of
whole or fractional shares of preferred stock represented by the depositary
shares evidenced by the surrendered depositary receipts together with any other
property held by depositary with respect to such depositary receipts. In
addition, the deposit agreement will automatically terminate if:
- all outstanding depositary shares have been redeemed;
- there has been a final distribution in respect of each class or
series of preferred stock in connection with any liquidation,
dissolution or winding up of NeoTherapeutics and that distribution
shall have been made to the holders of the relevant depositary
receipts; or
- each share of the related preferred stock has been converted into
shares of escrow stock not represented by depositary shares.
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CHARGES OF A PREFERRED STOCK DEPOSITARY
We will pay all transfer and other taxes and governmental charges
arising solely from the existence of the deposit agreement. In addition, we will
pay the fees and expenses of the depositary in connection with the performance
of its duties under the deposit agreement. However, holders of depositary
receipts will pay the fees and expenses of the depositary for any duties
requested by the holders to be performed which are outside of those expressly
provided for in the deposit agreement.
RESIGNATION AND REMOVAL OF DEPOSITARY
The depositary may resign at any time by delivering us notice of its
election to do so, and we may at any time remove the depositary, any such
resignation or removal to take effect upon the appointment of a successor
depositary. A successor depositary must be appointed within 60 days after
delivery of the notice of resignation or removal and must be a bank or trust
company having its principal office in the United States and having a combined
capital and surplus of at least $50,000,000.
MISCELLANEOUS
The depositary will forward to holders of depositary receipts any
reports and communications from us which are received by the depositary relating
to the related preferred stock.
We and the depositary will not be liable if we or they are prevented
from or delayed in, by law or any circumstances beyond our or their control,
performing our or their obligations under the deposit agreement. Our obligations
and those of the depositary under the deposit agreement will be limited to
performing our respective duties in good faith and without negligence (in the
case of any action or inaction in the voting of a class or series of preferred
stock represented by the depositary shares), gross negligence or willful
misconduct, and we and the depositary will not be obligated to prosecute or
defend any legal proceeding in respect of any depositary receipts, depositary
shares or shares of a class or series of preferred stock represented thereby
unless satisfactory indemnity is furnished. We and the depositary may rely on
written advice of counsel or accountants, or information provided by persons
presenting shares of preferred stock represented thereby for deposit, holders of
depositary receipts or other persons believed in good faith to be competent to
give such information, and on documents believed in good faith to be genuine and
signed by a proper party.
In the event a depositary shall receive conflicting claims, requests or
instructions from any holders of depositary receipts, on the one hand, and the
Company, on the other hand, the preferred stock depositary shall be entitled to
act on such claims, requests or instructions received by the Company.
DESCRIPTION OF WARRANTS
As of December 13, 2000, we had warrants to purchase 8,784,849 shares of
our common stock outstanding (other than options issued under our stock option
plans and non-qualified options issued to our employees and consultants outside
of our stock option plans). We may issue warrants for the purchase of debt
securities, depositary shares, securities or preferred stock. We may issue
warrants independently or together with any other offered securities offered by
any prospectus supplement and may be attached to or separate from the other
offered securities. Each series of warrants will be issued under a separate
warrant agreement to be entered into by us with a warrant agent specified in the
applicable prospectus supplement. The warrant agent will act solely as our agent
in connection with the series of warrants and will not assume any obligation or
relationship of agency or trust for or with any provisions of the warrants.
Further terms of the warrants and the applicable warrant agreements will be set
forth in the applicable prospectus supplement.
The applicable prospectus supplement will describe the terms of the
warrants in respect of which this prospectus is being delivered, including,
where applicable, the following:
- the title of the warrants;
- the aggregate number of the warrants;
24
<PAGE> 29
- the price or prices at which the warrants will be issued;
- the designation, terms and number of shares of debt securities,
depositary shares, preferred stock or securities purchasable upon
exercise of the warrants;
- the designation and terms of the offered securities, if any, with
which the warrants are issued and the number of the warrants issued
with each the offered security;
- the date, if any, on and after which the warrants and the related
debt securities, depositary shares, preferred stock or securities
will be separately transferable;
- the price at which each share of debt securities, depositary shares,
preferred stock or securities purchasable upon exercise of the
warrants may be purchased;
- the date on which the right to exercise the warrants shall commence
and expires;
- the minimum or maximum amount of the warrants which may be exercised
at any one time;
- information with respect to book-entry procedures, if any;
- a discussion of certain federal income tax considerations;
- any other terms of the warrants, including terms, procedures and
limitations relating to the exchange and exercise of the warrants.
CERTAIN PROVISIONS OF DELAWARE LAW AND OF
THE COMPANY'S CHARTER AND BYLAWS
The following paragraphs summarize certain provisions of the Delaware
General Corporation Law and the Company's Charter and Bylaws. The summary does
not purport to be complete and is subject to and qualified in its entirety by
reference to the DGCL and to the Company's Charter and Bylaws, copies of which
are on file with the commission as exhibits to registration statements
previously filed by the Company. See "Available Information."
Our Certificate of Incorporation and Bylaws contain provisions that,
together with the ownership position of the officers, directors and their
affiliates, could discourage potential takeover attempts and make it more
difficult for stockholders to change management, which could adversely affect
the market place of our common stock.
Our Certificate of Incorporation limits the personal liability of our
directors to NeoTherapeutics and our stockholders to the fullest extent
permitted by the Delaware General Corporation Law, or DGCL. The inclusion of
this provision in our Certificate of Incorporation may reduce the likelihood of
derivative litigation against directors and may discourage or deter stockholders
or management from bringing a lawsuit against directors for breach of their duty
of care.
Our Bylaws provide that special meetings of stockholders can be called
only by the Board of Directors, the Chairman of the Board of Directors or the
Chief Executive Officer. Stockholders are not permitted to call a special
meeting and cannot require the Board of Directors to call a special meeting. Any
vacancy on the Board of Directors resulting from death, resignation, removal or
otherwise or newly created directorships may be filled only by vote of the
majority of directors then in office, or by a sole remaining director. Our
Bylaws also provide for a classified board. See "Description of Common Stock."
We are subject to the "business combination" statute of the DGCL, an
anti-takeover law enacted in 1988. In general, Section 203 of the DGCL prohibits
a publicly-held Delaware corporation from engaging in a "business combination"
with an "interested stockholder," for a period of three years after the date of
the transaction in which a person became an "interested stockholder," unless:
- prior to such date the board of directors of the corporation approved
either the "business combination" or the transaction which resulted
in the stockholder becoming an "interested stockholder,"
25
<PAGE> 30
- upon consummation of the transaction which resulted in the
stockholder becoming an "interested stockholder," the "interested
stockholder" owned at least 85% of the voting stock of the
corporation outstanding at the time the transaction commenced,
excluding for purposes of determining the number of shares
outstanding those shares owned (1) by persons who are directors and
also officers and (2) employee stock plans in which employee
participants do not have the right to determine confidentially
whether shares held subject to the plan will be tendered in a tender
or exchange offer, or
- on or subsequent to such date the "business combination" is approved
by the board of directors and authorized at an annual or special
meeting of stockholders by the affirmative vote of a least 66% of the
outstanding voting stock which is not owned by the "interested
stockholder."
A "business combination" includes mergers, stock or asset sales and
other transactions resulting in a financial benefit to the "interested
stockholders." An "interested stockholder" is a person who, together with
affiliates and associates, owns (or within three years, did own) 15% or more of
the corporation's voting stock. Although Section 203 permits us to elect not to
be governed by its provisions, we have not made this election. As a result of
the application of Section 203, potential acquirers of NeoTherapeutics may be
discouraged from attempting to effect an acquisition transaction with us,
thereby possibly depriving holders of our securities of certain opportunities to
sell or otherwise dispose of such securities at above-market prices pursuant to
such transactions.
VALIDITY OF SECURITIES
Latham & Watkins, Costa Mesa, California, will pass on the validity of
the issuance of all securities offered by this prospectus.
EXPERTS
The financial statements incorporated by reference in this registration
statement, to the extent and for the periods indicated in their report, have
been audited by Arthur Andersen LLP, independent public accountants, and are
included herein in reliance upon the authority of said firm as experts in giving
said report. Reference is made to said report which states that the Company is
in the development stage, as described in Note 1 to the consolidated financial
statements.
LIMITATION ON LIABILITY AND DISCLOSURE OF COMMISSION POSITION ON
INDEMNIFICATION FOR SECURITIES ACT LIABILITIES
Our bylaws provide for indemnification of our directors and officers to
the fullest extent permitted by law. Insofar as indemnification for liabilities
under the Securities Act may be permitted to directors, officers or controlling
persons of the Company pursuant to the Company's Certificate of Incorporation,
as amended, bylaws and the Delaware General Corporation Law, the Company has
been informed that in the opinion of the Commission such indemnification is
against public policy as expressed in such Act and is therefore unenforceable.
26
<PAGE> 31
PART II
INFORMATION NOT REQUIRED IN THE PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following sets forth the costs and expenses, all of which shall be
borne by the Registrant, in connection with the offering of the securities
pursuant to this Registration Statement:
<TABLE>
<S> <C>
Registration Fee $ 12,500.00
Accounting Fees and Expenses $ 5,000.00*
Legal Fees and Expenses $ 20,000.00*
Miscellaneous $ 5,000.00*
-----------
Total $ 42,500.00*
===========
</TABLE>
* Estimated
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The bylaws of the Registrant provide for indemnification of the
Registrant's directors and officers to the fullest extent permitted by law.
Insofar as indemnification for liabilities under the Securities Act may be
permitted to directors, officers or controlling persons of the Registrant
pursuant to the Registrant's Certificate of Incorporation, bylaws and the
Delaware General Corporation Law (the "DGCL"), the Registrant has been informed
that in the opinion of the Commission such indemnification is against public
policy as expressed in such Act and is therefore unenforceable.
Section 102(b)(7) of the DGCL provides that a certificate of
incorporation may include a provision which eliminates or limits the personal
liability of a director to the corporation or its stockholders for monetary
damages for breach of fiduciary duty as a director, except for liability (i) for
any breach of the director's duty of loyalty to the company or its stockholders,
(ii) for acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of law, (iii) under Section 174 of the DGCL,
relating to prohibited dividends or distributions or the repurchase or
redemption of stock or (iv) for any transaction from which the director derives
an improper personal benefit. The Registrant's Certificate of Incorporation
includes such a provision. As a result of this provision, the Registrant and its
stockholders may be unable to obtain monetary damages from a director for breach
of his or her duty of care.
ITEM 16. EXHIBITS
<TABLE>
<S> <C>
1.1* Form of Underwriting Agreement between the Company and the
Representatives
1.2* Form of Debt Underwriting Agreement
4.1 Form of Indenture
4.2* Form of Warrant Agreement
4.3* Form of Deposit Agreement
5.1* Opinion of Latham & Watkins regarding the validity of the
securities being registered
12.1 Calculation of Ratio of Earnings to Fixed Charges
23.1 Consent of Arthur Andersen LLP
23.2 Consent of Latham & Watkins
24.1 Power of Attorney (included on the signature page to this
Registration Statement)
25.1* Statement of Eligibility of Trustee
</TABLE>
------------------
* To be filed by amendment or incorporated by reference in connection
with the offering of the applicable offered securities.
II-1
<PAGE> 32
ITEM 17. UNDERTAKINGS
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the registrant pursuant to the foregoing provisions, or otherwise, the
registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the registrant of expenses
incurred or paid by a director, officer or controlling person of the registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
The undersigned Registrant hereby undertakes that:
(1) To file, during any period in which offers or sales are being made,
a post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising
after the effective date of the registration statement (or the most
recent post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in this registration statement. Notwithstanding the foregoing, any
increase or decrease in volume of securities offered (if the total
dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high and of the estimated
maximum offering price may be reflected in the form of prospectus filed
with the Commission pursuant to Rule 424(b) if, in the aggregate the
changes in volume and price represent no more than 20 percent change in
the maximum aggregate offering price set forth in the "Calculation of
Registration Fee" table in the effective registration statement; and
(iii) To include any material information with respect to the
plan of distribution not previously disclosed in this registration
statement or any material change to such information in this
registration statement;
Provided, however, that subparagraphs (i) and (ii) do not apply
if the information required to be included in a post-effective amendment
by those paragraphs is contained in the periodic reports filed by the
Registrant pursuant to Section 13 or Section 15(d) of the Securities
Exchange Act of 1934 that are incorporated by reference in this
registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed to be
a new registration statement relating to the securities offered herein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the termination of
the offering.
The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to section 13(a) or section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
The undersigned Registrant hereby further undertakes to deliver or cause
to be delivered with the prospectus, to each person to whom the prospectus is
sent or given, the latest annual report to security holders that is incorporated
by reference in the prospectus and furnished pursuant to and meeting the
requirements of Rule 14a-3 or Rule 14c-3 under the Exchange Act; and, where
interim financial information required to be presented by Article 3
II-2
<PAGE> 33
of Regulation S-X is not set forth in the Prospectus, to deliver, or cause to be
delivered to each person to whom the prospectus is sent or given, the latest
quarterly report that is specifically incorporated by reference in the
prospectus to provide such interim financial information.
The undersigned Registrant hereby further undertakes that:
(1) For purposes of determining any liability under the Securities Act
of 1933, the information omitted from the form of prospectus filed as part of
this registration statement in reliance under Rule 430A and contained in a form
of prospectus filed by the Registrant pursuant to Rule 424(b)(1) or (4), or
497(h) under the Securities Act of 1933 shall be deemed to be part of this
registration statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the Securities
Act of 1933, each post-effective amendment that contains a form of prospectus
shall be deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
If and when applicable, the undersigned Registrant, hereby further
undertakes to file an application for the purpose of determining the eligibility
of the Trustee to act under subsection (a) of Section 310 of the Trust Indenture
Act in accordance with the rules and regulations prescribed by the Commission
under Section 305(b)(2) of the Act.
II-3
<PAGE> 34
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Irvine, State of California, on December 28, 2000.
NEOTHERAPEUTICS, INC.
By: /s/ Samuel Gulko
------------------------------------
Samuel Gulko
Chief Financial Officer
POWER OF ATTORNEY
We, the undersigned directors and officers of NeoTherapeutics, Inc., do
hereby constitute and appoint Alvin J. Glasky, Ph.D. and Samuel Gulko, or either
of them, our true and lawful attorneys-in-fact and agents, each with full power
to sign for us or any of us in our names and in any and all capacities, any and
all amendments (including post-effective amendments) to this Registration
Statement, or any related registration statement that is to be effective upon
filing pursuant to Rule 462(b) under the Securities Act of 1933, as amended, and
to file the same, with all exhibits thereto and other documents required in
connection therewith, and each of them with full power to do any and all acts
and things in our names and in any and all capacities, which such
attorneys-in-fact and agents, or either of them, may deem necessary or advisable
to enable NeoTherapeutics, Inc. to comply with the Securities Act of 1933, as
amended, and any rules, regulations, and requirements of the Securities and
Exchange Commission, in connection with this Registration Statement; and we
hereby do ratify and confirm all that the such attorneys-in-fact and agents, or
either of them, shall do or cause to be done by virtue thereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ Alvin J. Glasky Chief Executive Officer and December 28, 2000
---------------------------------- Director (principal executive
Alvin J. Glasky, Ph.D. officer)
/s/ Samuel Gulko Chief Financial Officer, Secretary, December 28, 2000
---------------------------------- Treasurer and Director (principal
Samuel Gulko financial and accounting officer)
/s/ Mark J. Glasky Director December 28, 2000
----------------------------------
Mark J. Glasky
/s/ Frank M. Meeks Director December 28, 2000
----------------------------------
Frank M. Meeks
/s/ Paul H. Silverman Director December 28, 2000
----------------------------------
Paul H. Silverman, Ph.D., D.Sc.
/s/ Carol O'Cleiracain Director December 28, 2000
----------------------------------
Carol O'Cleireacain, Ph.D.
/s/ Eric L. Nelson Director December 28, 2000
----------------------------------
Eric L. Nelson, Ph.D.
</TABLE>
II-4
<PAGE> 35
<TABLE>
<S> <C> <C>
/s/ Stephen Runnels Director December 28, 2000
----------------------------------
Stephen Runnels
/s/ Joseph Rubinfeld Director December 28, 2000
----------------------------------
Joseph Rubinfeld, Ph.D.
/s/ Armin Kessler Director December 28, 2000
----------------------------------
Armin Kessler
/s/ Ann Kessler Director December 28, 2000
----------------------------------
Ann Kessler
</TABLE>
II-5
<PAGE> 36
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit
-------
<S> <C>
1.1* Form of Underwriting Agreement between the Company and the
Representatives
1.2* Form of Debt Underwriting Agreement
4.1 Form of Indenture
4.2* Form of Warrant Agreement
4.3* Form of Deposit Agreement
5.1* Opinion of Latham & Watkins regarding the validity of the securities
being registered
12.1 Calculation of Ratio of Earnings to Fixed Charges
23.1 Consent of Arthur Andersen LLP
23.2 Consent of Latham & Watkins
24.1 Power of Attorney (included on the signature page to this
Registration Statement)
25.1* Statement of Eligibility of Trustee
</TABLE>
----------
* To be filed by amendment or incorporated by reference in connection with the
offering of the applicable offered securities.
