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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 8-K
Current Report Filed Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report
(Date of earliest event reported): May 21, 1999
ARONEX PHARMACEUTICALS, INC.
(Exact name of registrant as specified in its charter)
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<S> <C> <C>
Delaware 0-20111 76-0196535
(State or other jurisdiction of (Commission File Number) (I.R.S. Employer Identification No.)
incorporation or organization)
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8707 Technology Forest Place
The Woodlands, Texas 77381-1191
(Address of principal
executive offices
and zip code)
(281) 367-1666
(Registrant's telephone number,
including area code)
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ITEM 5. OTHER EVENTS
On May 21, 1999, Aronex Pharmaceuticals, Inc. (the "Company") entered
into an Amendment No. 4 to License and Development Agreement with Genzyme
Corporation ("Genzyme") to convert a $2.5 million payment into a three-year
convertible note bearing interest at 10% annum. The $2.5 million payment
obligation to Genzyme was triggered on March 29, 1999 when the Company regained
the worldwide commercial rights of ATRAGEN(R), an injectable formulation of
all-trans-retinoic acid (ATRA or tretinoin), from Genzyme. In connection with
the Amendment, the Company entered into a 10% Convertible Note payable to
Genzyme for $2.5 million. Genzyme has the right to convert the principal of the
Note into shares of common stock of the Company at a conversion price of $4.35.
Additionally, Genzyme was given a Common Stock Purchase Warrant entitling it to
purchase 50,000 shares of the Company's common stock at an exercise price of
$4.00 per share over a five-year term.
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ITEM 7. EXHIBITS
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Exhibit 10.1 -- Amendment No. 4 to License and Development Agreement dated
May 21, 1999 by and between Aronex Pharmaceuticals, Inc. and
Genzyme Corporation.
Exhibit 10.2 -- 10% Convertible Note dated May 21, 1999 by Aronex
Pharmaceuticals, Inc. made payable to Genzyme Corporation for $2.5
million.
Exhibit 10.3 -- Common Stock Purchase Warrant for 50,000 shares of Common
Stock of Aronex Pharmaceuticals, Inc. issued in the name of
Genzyme Corporation.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
ARONEX PHARMACEUTICALS, INC.
Date: May 27, 1998
By: /s/ Terance A. Murnane
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Ternace A. Murnane
Controller and Secretary
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Exhibit 10.1
AMENDMENT NO. 4
TO
LICENSE AND DEVELOPMENT AGREEMENT
This Amendment No. 4 to License and Development Agreement (this
"Amendment") is made as of the 21st day of May, 1999 (the "Effective Date") by
and between Aronex Pharmaceuticals, Inc., a Delaware corporation ("Aronex"), and
Genzyme Corporation, a Massachusetts corporation ("Genzyme"). Capitalized terms
used without definition in this Amendment shall have the meanings given to such
terms in the Development Agreement (as defined below).
RECITALS
WHEREAS, Aronex (f/k/a Argus Pharmaceuticals, Inc.) and Genzyme entered
into a License and Development Agreement dated September 10, 1993 (as
subsequently amended by amendments dated September 8, 1995, September 10, 1996
and March 27, 1997, the "Development Agreement") relating to the development,
license, manufacture, marketing and sale of pharmaceutical compositions
incorporating "AR-623" (also known as "Atragen(TM)");
WHEREAS, Genzyme has elected to terminate its Option and relinquish its
rights thereunder, effective as of March 24, 1999 (the "Election");
WHEREAS, as a result of the Election by Genzyme, Aronex is obligated
pursuant to Section 2.4 of the Development Agreement to pay Genzyme the sum of
$2,000,000 (the "Repayment Amount") on or before April 24, 1999, which has been
extended to the Effective Date, plus an additional amount of $500,000 (the
"Minimum Royalty Amount") of minimum royalty payments by April 24, 2000; and
WHEREAS, Aronex and Genzyme desire to amend the Development Agreement
(i) to restructure the Repayment Amount and the Minimum Royalty Amount owing by
Aronex as a result of such Election under Section 2.4 thereof into a convertible
note to be issued to Genzyme by Aronex, (ii) to issue Genzyme a warrant to
purchase 50,000 shares of Aronex Common Stock, and (iii) to provide Genzyme with
registration rights with respect to shares it may receive upon conversion of
such convertible note as well as shares issuable upon exercise of the warrant;
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants contained herein, Aronex and Genzyme agree as follows:
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1. RESTRUCTURING OF REPAYMENT AMOUNT AND MINIMUM ROYALTY AMOUNT.
The parties agree that the Repayment Amount and the Minimum Royalty Amount
required to be paid by Aronex to Genzyme as a result of the Election shall be
due and payable pursuant to the terms of a three-year Convertible Note from
Aronex in the form of Exhibit 2.4(a) hereto. Such Convertible Note shall provide
for interest of 10% per annum, to be payable in semi-annual payments and the
principal amount thereof to be due on the expiration of three years. In
addition, part or all of the principal of the Convertible Note may be converted,
at Genzyme's election, into shares of Common Stock of Aronex at a purchase price
of $4.35 per share, at any time and from time to time, prior to the repayment
thereof. As a result, Section 2.4 of the Development Agreement is hereby amended
by adding the following paragraph at the end thereof:
"Notwithstanding anything contained in this Section 2.4 to the
contrary, the obligation of Aronex to pay (i) $2,000,000 within thirty
days of the Option Expiration Date and (ii) $500,000 minimum royalty
within the first twelve months following the due date of the $2,000,000
amount, is hereby canceled and terminated in exchange for the issuance
by Aronex and delivery to Genzyme of (i) a Convertible Note (the
"Convertible Note") in the principal amount of $2,500,000 in the form
attached hereto as Exhibit 2.4(a) and (ii) a Common Stock Purchase
Warrant (the "Warrant") to purchase 50,000 shares of the Common Stock
of Aronex, par value $.001 per share (the "Common Stock"), at a
purchase price of $4.00 per share in the form attached hereto as
Exhibit 2.4(b)."
2. REGISTRATION RIGHTS.
The following section shall be added to the Development Agreement as
Section 11 thereof:
"11. Registration Rights.
(a) Shelf Registration. Within sixty days from the receipt of notice
from Genzyme of its interest to either exercise the Warrant or
convert a portion of the principal amount of the Convertible
Note, Aronex shall use its reasonable best efforts to prepare for
filing with the Securities and Exchange Commission (the
"Commission"), and cause to be declared effective, a "shelf"
registration statement (the "Shelf Registration") pursuant to
Rule 415 under the Securities Act of 1933, as amended (the
"Securities Act"), providing for the sale by the Stockholder (as
hereafter defined) of the Registrable Shares (as hereinafter
defined). Aronex agrees to use its reasonable best efforts to
keep such Shelf Registration continuously effective for a period
ending on the earliest of (a) the tenth anniversary of the
effective date of such Shelf Registration, (b) the date on which
all Registrable Shares covered thereby have been sold thereunder,
or (c) the date upon which all Registrable Shares are freely
transferable without restriction under the Securities Act. For
the purpose of this Section 11, "reasonable best efforts"
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shall mean the best efforts of Aronex consistent with sound and
reasonable business practices and judgment. "Registrable Shares"
means any shares of Common Stock issuable upon conversion of the
Convertible Note, (ii) any shares of Common Stock issuable upon
exercise of the Warrant, and (iii) any other shares of Common
Stock issued in respect of the shares referred to in (i) or (ii)
(because of stock splits, stock dividends, subdivisions,
combinations, reclassifications, recapitalizations, or similar
events), provided, however, that any such shares shall cease to
be Registrable Shares when such shares become eligible for resale
under Rule 144(k) of the Securities Act by persons who are not
affiliates of Aronex or upon (a) any transfer that results in the
purchaser of such shares receiving shares that are not
"restricted securities" within the meaning of Rule 144 or (b) any
transfer to a person or entity that, by virtue of Section 11(g)
hereof is not entitled to the rights set forth in this Section
11. "Stockholder" means Genzyme and any persons or entities to
whom the rights granted under this Section 11 are transferred in
accordance with Section 11(g).
(b) Registration Procedures. In connection with Aronex's obligations with
respect to the Shelf Registration, Aronex shall use its reasonable
best efforts to effect the registration in furtherance of the sale of
the Registrable Shares in accordance with the intended method or
methods of distribution thereof described in the Shelf Registration.
In connection therewith, Aronex shall, as promptly as may be
practicable:
(i) prepare and file with the Commission a registration
statement with respect to the Registrable Shares on any form for
which Aronex then qualifies or which counsel for Aronex shall
deem appropriate and which form shall be available for the
disposition of the Registrable Shares in accordance with the
intended method or methods of disposition thereof;
(ii) prepare and file with the Commission such amendments
and supplements to such registration statement and the prospectus
used in connection therewith as may be necessary to keep such
registration statement effective for the applicable period
specified in Section 11(a) above or as may be reasonably
requested by Stockholder in order to incorporate information
concerning Stockholder or its intended method of distribution,
and otherwise to comply with the provisions of the Securities Act
with respect to the disposition of all securities covered by such
registration statement.
(iii) furnish to Stockholder, prior to the filing thereof
with the Commission, a copy of such registration statement and
each amendment thereof and each supplement, if any, to the
prospectus included therein and Aronex shall use its
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reasonable best efforts to reflect in each such document, when
so filed with the Commission, such comments as Stockholder may
reasonably propose;
(iv) furnish to Stockholder a copy of such
registration statement, each amendment and supplement thereto
(in each case including all exhibits thereto but excluding all
documents incorporated by reference therein unless
specifically so requested by Stockholder) and such reasonable
number of copies of the prospectus included in such
registration statement (including each preliminary prospectus)
as Stockholder may reasonably request;
(v) use reasonable best efforts to register or
qualify the Registrable Shares under such other securities
laws or blue sky laws of such jurisdictions as Stockholder
shall reasonably request, and take any and all such actions as
may be reasonably necessary or advisable to enable Stockholder
to consummate the disposition in such jurisdictions of such
Registrable Shares;
(vi) notify Stockholder, at any time when a
prospectus relating thereto is required to be delivered under
the Securities Act within the period that Aronex is required
to keep the registration statement effective, of the happening
of any event as a result of which the prospectus included in
such registration statement (as then in effect) contains an
untrue statement of a material fact or omits to state any
material fact required to be stated therein or necessary to
make the statements therein not misleading and promptly
prepare, file with the Commission and furnish Stockholder a
reasonable number of copies of a supplement to or an amendment
of such prospectus as may be necessary so that as thereafter
declared to the purchasers of such shares, such prospectus
shall not include an entire statement of a material fact or
omit to state any material fact required to be stated therein
or necessary to make the statements therein not misleading.
(vii) advise Stockholder, promptly after receiving
notice thereof, of any stop order issued or threatened by the
Commission and use its reasonable best efforts to take all
actions required to prevent the entry of such stop order, or
to remove it if entered; and
(viii) use its reasonable best efforts to cause all
Registrable Shares included in such registration statement to
be listed, by the date of the first sale of Registrable Shares
pursuant to such registration statement, on each securities
exchange or market on which the Common Stock of Aronex is then
listed or proposed to be listed.
(ix) shall (a) make reasonably available for
inspection by Stockholder, and any attorney, accountant or
other agent retained by Stockholder all relevant financial and
other records, pertinent corporate documents and properties of
Aronex and (b) cause Aronex's officers, directors, employees,
accountants and auditors to supply all
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relevant information reasonably requested by Stockholder or
any such attorney, accountant or agent in connection with such
registration statement, in each case as may be reasonably
necessary to enable such persons to conduct a reasonable
investigation within the meaning of Section 11 of the
Securities Act.
(x) shall use its reasonable best efforts to take all
other steps necessary effect the registration of the
Registrable Shares contemplated hereby.
(c) Expenses. All expenses incident to Aronex's performance of or
compliance with the provisions of this Section 11 will be
borne by Aronex. Notwithstanding the foregoing, Stockholder
shall pay any and all underwriting fees, discounts or
commissions attributable to the sale of Registrable Shares.
(d) Indemnification.
(i) Upon the registration of Registrable Shares pursuant to
Section 11 hereof, Aronex shall, and it hereby agrees to,
indemnify and hold harmless, to the extent permitted by law,
Stockholder, its officers and directors, each underwriter of
such Registrable Shares, if any, and each person who
controls such person (within the meaning of the Securities
Act) against all losses, claims, damages, liabilities and
expenses (including reasonable attorneys' fees and expenses)
to which Stockholder, its officers, directors, each
underwriter, or such controlling persons may become subject,
insofar as such losses, claims, damages, liabilities and
expenses (or actions in respect thereof) arise out of or are
based upon any untrue statement or alleged untrue statement
of material fact contained in any such registration
statement, any prospectus or preliminary prospectus
contained therein or any amendment or supplement thereto, or
any omission or alleged omission to state therein a material
fact required to be stated therein or necessary to make the
statements therein not misleading, and will reimburse
Stockholder, each such underwriter and each such controlling
person for any legal or other expenses reasonably incurred
by them in connection with investigating or defending any
such loss, claim, damage, liability or action; except (A)
insofar as the same arise out of or are based upon an untrue
statement or omission or alleged omission so made based upon
information furnished by Stockholder, underwriter or
controlling person in writing specifically for use in such
registration statement or prospectus or (B) insofar as the
same are caused by Stockholder's or such underwriter's
failure to deliver a copy of such registration statement or
prospectus or any amendments or supplements thereto after
Aronex has furnished Stockholder or such underwriter with a
sufficient number of copies of the same.
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(ii) In connection with any registration statement under which
Registrable Shares are registered under the Securities Act
and pursuant to which Stockholder offers and sells
Registrable Shares, Stockholder shall, and it hereby agrees
to, indemnify and hold harmless, to the extent permitted by
law, each of Aronex, its officers and directors, and each
person who controls Aronex (within the meaning of the
Securities Act) and, if the offering is an underwritten
offering, the underwriters, against all losses, claims,
damages, liabilities and expenses (including reasonable
attorneys' fees and expenses) to which Aronex, its officers
and directors, underwriters, or controlling persons may
become subject, insofar as such losses, claims, damages,
liabilities and expenses (or actions in respect thereof)
arise out of or are based upon any untrue statement or
alleged untrue statement of material fact contained in any
such registration statement, any prospectus or preliminary
prospectus contained therein or any amendment or supplement
thereto, or any omission or alleged omission to state
therein a material fact required to be stated therein or
necessary to make the statements therein not misleading and
will reimburse Aronex and each such officer, director,
underwriter and controlling person for any legal or other
expenses reasonably incurred by them in connection with
investigating or defending any such loss, claim, damage,
liability or action, insofar as (A) the same arise out of or
are based upon any untrue statement or omission or alleged
omission so made based upon information furnished by
Stockholder, or an underwriter or controlling person of
Stockholder, in writing specifically for use in such
registration statement or prospectus or (B) the same are
caused by Stockholder's or such underwriter's failure to
deliver a copy of such registration statement or prospectus
or any amendments or supplements thereto after Aronex has
furnished Stockholder or such underwriter with a sufficient
number of copies of the same and provided, further, that the
liability of Stockholder under this Section 11 shall be
limited to the proportion of any such loss, claim, damage,
liability or expense which is equal to the proportion that
the public offering price of Registrable Shares sold by
Stockholder under such registration statement bears to the
total public offering price of all securities sold
thereunder, but not to exceed the amount of the proceeds
received by Stockholder from the sale of the Registrable
Shares covered by such registration statement.
(iii)Any person entitled to indemnification hereunder will (A)
give prompt notice to the indemnifying party of any claim
with respect to which it seeks indemnification (but the
failure to give such notice will not affect the right to
indemnification hereunder, unless the indemnifying party is
materially prejudiced by such failure) and (B) unless in
such indemnified party's reasonable judgment a conflict of
interest may exist between such indemnified and indemnifying
parties with respect to such claim, permit such indemnifying
party to assume the defense of such claim with counsel
selected
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by the indemnifying party and reasonably satisfactory to the
indemnified party. If such defense is not assumed by the
indemnifying party or if the indemnifying party is not
permitted to assume such defense then (x) the indemnified
party shall select counsel, which counsel must be reasonably
satisfactory to the indemnifying party and (y) the
indemnifying party will not be subject to any liability for
any settlement made without its consent (which consent will
not be unreasonably withheld). No indemnifying party will
consent to entry of any judgment or enter into any
settlement which does not include as an unconditional term
thereof the giving by the claimant or plaintiff to such
indemnified party of a release from all liability in respect
of such claim or litigation. An indemnifying party who is
not entitled to, or elects not to, assume the defense of a
claim will not be obligated to pay the fees and expenses of
more than one counsel for all parties indemnified by such
indemnifying party with respect to such claim, unless in the
reasonably judgment of any indemnified party a conflict of
interest may exist between such indemnified party and any
other of such indemnified parties with respect to such
claim, in which case the indemnifying party shall be
obligated to pay the fees and expenses of one additional
counsel, who must be reasonably satisfactory to the
indemnifying party.
(iv) Each party hereto agrees that, if for any reason the
indemnification provisions contemplated by Section 11(d)(i)
or 11(d)(ii) are unavailable or are insufficient to hold
harmless an indemnified party in respect of any losses,
claims, damages, liabilities or expenses (or actions in
respect thereof) referred to therein, then each indemnifying
party shall contribute to the amount paid or payable by such
indemnified party as a result of such losses, claims,
damages, liabilities or expenses (or actions in respect
thereof) in such proportion as is appropriate to reflect the
relative fault of the indemnifying party and the indemnified
party as well as any other relevant equitable
considerations. The relative fault of such indemnifying
party and indemnified party shall be determined by reference
to, among other things, whether the untrue or alleged untrue
statement of a material fact or omission or alleged omission
to state a material fact relates to information supplied by
such indemnifying party or indemnified party, and the
parties' relative intent, knowledge, access to information
and opportunity to correct or prevent such statement or
omission. The parties hereto agree that it would not be just
and equitable if contribution pursuant to this Section
11(d)(iv) were determined by pro rata allocation (even if
Stockholder or any underwriters or all of them were treated
as one entity for such purpose) or by any other method of
allocation which does not take into account the equitable
considerations referred to in this Section 11(d)(iv). No
person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Securities Act)
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shall be entitled to contribution from any person who was
not guilty of such fraudulent misrepresentation.
(v) The indemnification and contribution obligations and each
other provision set forth in this Section 11(d) shall remain
in full force and effect regardless of any investigation
made by or on behalf of Aronex, Stockholder, any officer or
employee of Aronex or Stockholder, any underwriter, any
officer or employee of such underwriter, or any controlling
person of any of the foregoing and shall survive the
transfer and registration of Registrable Shares by
Stockholder.
(e) Rule 144 Reporting. With a view to making available to
Stockholder the benefits of Rule 144 promulgated by the
Commission under the Securities Act, Aronex agrees to use its
reasonable best efforts to:
(i) make and keep adequate current public information with
respect to Aronex available, as those terms are used in Rule
144 under the Securities Act;
(ii) file with the Commission in a timely manner all reports and
other documents required of Aronex under the Securities Act
and the Securities Exchange Act of 1934, as amended (the
"Exchange Act"); and
(iii)furnish to Stockholder promptly upon request a written
statement by Aronex as to its compliance with the reporting
requirements of Rule 144 and the Exchange Act, a copy of the
most recent annual or quarterly report of Aronex, and such
other reports and documents of Aronex as Stockholder may
reasonably request in order to permit Stockholder to avail
itself of any rule or regulation of the Commission allowing
Stockholder to sell its Registrable Shares without
registration.
(f) Amendments and Waivers. Any provision of this Section 11 may be
amended or waived if, but only if, in the case of an amendment,
such amendment is in writing and is signed by Aronex and
Stockholder. No failure or delay by Aronex or Stockholder in
exercising any right, power or privilege hereunder shall operate
as a waiver thereof, nor shall any single or partial exercise
thereof preclude any other or further exercise thereof or the
exercise of any other right, power or privilege.
(g) Transfers of Certain Rights.
(i) The rights granted to Stockholder under this Section 11
may be transferred or succeeded to only by (i) an affiliate of Stockholder, (ii)
a person or entity that acquires substantially all of the assets of Stockholder,
or (iii) any other person or entity that acquires at least 25% of the
Registrable Shares; provided, however, that Aronex is given written notice prior
to or
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promptly following such transfer stating the name and address of the transferee
and identifying the securities with respect to which such rights are being
assigned. Such notice shall include or be accompanied by a written undertaking
by the transferee to comply with the obligations imposed on Stockholders under
this Section 11.
(ii) A transferee to whom rights are transferred pursuant to
this Section 11(g) may not again transfer such rights to any other person or
entity, other than as provided in Section 11(g)(i) above."
3. NO OTHER AMENDMENTS. Except as specifically amended hereby, the
Development Agreement shall continue in full force and effect.
IN WITNESS WHEREOF the parties hereto have executed this Amendment in
one or more copies effective as of the Effective Date.
ARONEX PHARMACEUTICALS, INC.
By: /s/ Geoffrey F. Cox
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Name: Geoffrey F. Cox
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Title: Chairman of the Board & Chief
Executive Officer
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GENZYME CORPORATION
By: /s/ Richard Douglas
---------------------------------
Name: Richard Douglas
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Title: Senior Vice President,
Corporate Development
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Exhibit 10.2
No. ___ May 21, 1999
ARONEX PHARMACEUTICALS, INC.
10% CONVERTIBLE NOTE
THE SECURITIES REPRESENTED BY THIS INSTRUMENT HAVE BEEN
ACQUIRED FOR INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE OR OTHER JURISDICTION.
WITHOUT SUCH REGISTRATION, SUCH SECURITIES MAY NOT BE SOLD, PLEDGED,
HYPOTHECATED OR OTHERWISE TRANSFERRED, EXCEPT UPON DELIVERY TO ARONEX
PHARMACEUTICALS, INC. ("COMPANY") OF AN OPINION OF COUNSEL REASONABLY
SATISFACTORY TO THE COMPANY THAT REGISTRATION IS NOT REQUIRED FOR SUCH TRANSFER,
OR SUBMISSION TO THE COMPANY OF SUCH OTHER EVIDENCE AS MAY BE SATISFACTORY TO
THE COMPANY TO THE EFFECT THAT ANY SUCH TRANSFER SHALL NOT BE IN VIOLATION OF
THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY APPLICABLE STATE OR FOREIGN
SECURITIES LAWS OR ANY RULE OR REGULATION PROMULGATED THEREUNDER.
Aronex Pharmaceuticals, Inc., a Delaware corporation
("Company"), for value received, hereby promises to pay to Genzyme Corporation,
or registered assigns, the principal amount of Two Million Five Hundred Thousand
and No/100 Dollars ($2,500,000.00) on May 21, 2002, (the "Due Date") except for
any portion of the principal amount of this Convertible Note which is converted
to shares of Common Stock of the Company pursuant to the terms of Section 1, at
the office of the Company in The Woodlands, Texas. Interest shall accrue and be
payable from the date of issuance of this Convertible Note on the unpaid
principal balance at a rate of ten percent (10%) per annum, payable
semi-annually on each September 30 and March 30 following the issuance hereof.
Except as otherwise provided herein, all sums of past-due principal and interest
shall bear interest at a rate equal to 12% or at the maximum rate of interest
permitted by applicable law, if lower. Payment shall be made prior to 12:00
noon, Boston, Massachusetts time, on the Due Date. When due, by wire transfer of
immediately available funds and shall be in coin or currency of the United
States of America which at the time of payment is legal tender for the payment
of public and private debts.
This Convertible Note may not be prepaid by the Company at any
time, in whole or in part.
The following is a statement of rights of the holder of this
Convertible Note and the conditions to which this Convertible Note is subject,
to which the holder hereof, by the acceptance of this Convertible Note, assents:
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2. Optional Conversion Rights. The holder of this Convertible
Note shall have the right to convert at any time during the term of this
Convertible Note part or all of the principal amount hereof, together with
accrued interest thereon, into shares of Common Stock of the Company (the
"Conversion Shares") at a price per share equal to $4.35 (the "Conversion
Price") subject to adjustment as provided in Section 9. Such right must be
exercised by written notice given by the holder to the Company, which notice
shall specify that portion of the principal amount and accrued interest which
the holder elects to convert and the name of the person or entity for which a
stock certificate should be issued. Any such notice given by a holder shall be
final and irrevocable, and conversion shall occur at the time such notice is
received by the Company with respect to that portion of this Convertible Note
which the holder has elected to convert. The Company shall deliver a stock
certificate to the holder within five business days following the date of
conversion with respect to that number of Conversion Shares of Common Stock
acquired by the holder pursuant to the terms hereof, and the Company shall have
no further obligation to pay any principal amount of or accrued interest on the
portion of this Convertible Note which was so converted by the holder.
3. Collection Fees. In the event of default hereunder and if
this Convertible Note is placed in the hands of any attorney for collection
(whether or not suit is filed), or if this Convertible Note is collected by suit
or legal proceedings or through bankruptcy proceedings, the Company agrees to
pay in addition to all sums then due hereon, including principal and interest,
all reasonable attorney's fees.
4. Registered Owner; Transfer. The Company and any agent of
the Company may treat the person or entity identified in the initial paragraph
of this Convertible Note as the absolute owner hereof for the purpose of
receiving payment of, or on account of, the principal or interest due hereon and
for all other purposes, and neither the Company nor any such agent shall be
affected by notice to the contrary. Subject to compliance with applicable
federal and state securities laws, this Convertible Note is transferable only on
the books of the Company (at its offices or agency to be maintained in The
Woodlands, Texas) by the registered holder in person or by attorney on surrender
of this Convertible Note properly endorsed.
5. No Recourse Against Individuals. This Convertible Note is
the obligation of the Company only, and no recourse shall be had for the payment
hereof or the interest hereon against any incorporator, shareholder, director or
officer as such (whether past, present or future) of the Company or any
successor entity whether by virtue of any constitution, statute or rule of law
or equity, or by the enforcement of any assessment of penalty, or otherwise, all
such liability of the incorporators, shareholders, directors and officers as
such being expressly waived and released by the holder hereof by the acceptance
of this Convertible Note.
6. Amendments and Waivers. The holder of this Convertible Note
may waive or otherwise consent to the amendment of any of the provisions hereof.
7. Maximum Rate of Interest. Notwithstanding any provisions to
the contrary in this Convertible Note, or in any of the documents relating
hereto, in no event shall this Convertible Note or such documents require the
payment or permit the collecting of interest in
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excess of the maximum amount permitted by the laws of the State of Texas. If any
such excess interest is contracted for, charged or received under this
Convertible Note or under the terms of any of the documents relating hereto, or
in the event the maturity of the indebtedness evidenced by this Convertible Note
is accelerated in whole or in part, or in the event that all or part of the
principal or interest of this Convertible Note shall be prepaid, so that under
any of such circumstances the amount of interest contracted for, charged or
received under this Convertible Note or under any of the documents relating
hereto, on the amount of principal actually outstanding from time to time under
this Convertible Note, shall exceed the maximum amount of interest permitted by
the laws of the State of Texas, then in any such event (a) the provisions of
this paragraph shall govern and control, (b) neither the Company nor any other
person or entity now or hereafter liable for the payment hereof, shall be
obligated to pay the amount of such interest to the extent that it is in excess
of the maximum amount of interest permitted by the laws of the State of Texas,
(c) any such excess which may have been collected shall be either applied as a
credit against the then unpaid principal amount hereof or refunded to the
Company, at the holder's option, and (d) the effective rate of interest shall be
automatically reduced to the maximum lawful rate of interest allowed under the
laws of the State of Texas as now or hereafter construed by the courts having
jurisdiction thereof. It is further agreed that without limitation of the
foregoing, all calculations of the rate of interest contracted for, charged or
received under this Convertible Note or under such other documents which are
made for the purpose of determining whether such rate exceeds the maximum lawful
rate of interest, shall be made, to the extent permitted by the laws of the
State of Texas, by amortizing, prorating, allocating and spreading during the
period of the full stated term of the indebtedness evidenced hereby, all
interest at any time contracted for, charged or received from the Company or
otherwise by the holder or holders hereof in connection with such indebtedness.
8. Restrictions on Transferability. This Convertible Note and
the Conversion Shares which may be acquired upon conversion hereof have been
acquired for investment and have not been registered under the Securities Act of
1933, as amended, or the securities laws of any state or other jurisdiction.
Without such registration, such securities may not be sold, pledged,
hypothecated or otherwise transferred, except upon delivery to the Company of an
opinion of counsel satisfactory to the Company that registration is not required
for such transfer, or submission to the Company of such other evidence as may be
reasonably satisfactory to the Company to the effect that any such transfer
shall not be in violation of the Securities Act of 1933, as amended, or any
applicable state or foreign securities laws or any rule or regulation
promulgated thereunder. Notwithstanding the above, the holder of this
Convertible Note has been provided certain registration rights with respect to
the Conversion Shares which may be acquired upon conversion hereof pursuant to
the Amendment No. 4 to License and Development Agreement of even date herewith
between the Company and such holder (the "Fourth Amendment to License
Agreement").
9. Default; Acceleration. An Event of Default exists if the
Company fails to pay interest within five days following the date due; fails to
pay principal within three days following the date due; fails to perform any
other obligations within twenty days of notice; is subject to a voluntary or
involuntary bankruptcy proceeding and such involuntary proceeding is not stayed
or dismissed within sixty days; if a default by the Company exists under the
Development Agreement between the Company and Genzyme Corporation dated
September 10, 1993, as amended, or the
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Common Stock Purchase Warrant of even date herewith issued by the Company to
Genzyme Corporation pursuant to the Amendment No. 4 to such Development
Agreement, which default, in either case, has not been remedied by the Company
prior to the expiration of any applicable grace period; or if the Common Stock
of the Company is no longer listed for trading on The Nasdaq Stock Market or
other national securities exchange. In the event of any default under this
Convertible Note by the Company, provided there is no agreement for waiver
thereof or the Company has not cured such default, then, at the option of the
holder of the Convertible Note, the Convertible Note shall thereupon become and
be due and payable, without any other presentment, demand, protest or notice of
any kind, all of which are hereby expressly waived.
10. Adjustment of Conversion Price.
(a) The Conversion Price and the number of Conversion Shares and the
number or amount of any other securities and property as hereinafter provided
into which this Convertible Note may be convertible shall be subject to
adjustment from time to time effective upon each occurrence of any of the
following events.
(b) If the Company shall declare or pay any dividend with respect to
its Common Stock payable in shares of Common Stock, subdivide the outstanding
Common Stock into a greater number of shares of Common Stock, or reduce the
number of shares of Common Stock outstanding (by stock split, reverse stock
split, reclassification or otherwise than by repurchase of its Common Stock)
(any of such events being hereinafter called a "Stock Split"), the Conversion
Price and number of Conversion Shares issuable upon conversion of this
Convertible Note shall be appropriately adjusted so as to entitle the holder
hereof to receive upon conversion of this Convertible Note, for the same
aggregate consideration provided herein, the same number of shares of Common
Stock (plus cash in lieu of fractional shares) as the holder would have received
as a result of such Stock Split had such holder converted this Convertible Note
in full immediately prior to such Stock Split.
(c) If the Company shall merge or consolidate with or into one or more
corporations or partnerships and the Company is the sole surviving corporation,
or the Company shall adopt a plan of recapitalization or reorganization in which
the Common Stock is exchanged for or changed into another class of stock or
other security or property of the Company, the holder of this Convertible Note
shall, for the same aggregate consideration provided herein, be entitled upon
conversion of this Convertible Note to receive in lieu of the number of shares
of Common Stock as to which this Convertible Note would otherwise be
convertible, the number of shares of Common Stock or other securities (plus cash
in lieu of fractional shares) or property to which such holder would have been
entitled pursuant to the terms of the agreement or plan of merger,
consolidation, recapitalization or reorganization had such holder converted this
Convertible Note in full immediately prior to such merger, consolidation,
recapitalization or reorganization.
(d) If the Company is merged or consolidated with or into one or more
corporations or partnerships under circumstances in which the Company is not the
sole surviving corporation, or if the Company sells or otherwise disposes of
substantially all its assets, and in connection with any
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<PAGE>
such merger, consolidation or sale the holders of Common Stock receive stock or
other securities convertible into equity of the surviving or acquiring
corporations or entities, or other securities or property after the effective
date of such merger, consolidation or sale, as the case may be, the holder of
this Convertible Note shall, for the same aggregate consideration provided
herein, be entitled upon conversion of this Convertible Note to receive, in lieu
of the shares of Common Stock as to which this Convertible Note would otherwise
be convertible, shares of such stock or other securities (plus cash in lieu of
fractional shares) or property as the holder of this Convertible Note would have
received pursuant to the terms of the merger, consolidation or sale had such
holder converted this Convertible Note in full immediately prior to such merger,
consolidation or sale. In the event of any consolidation, merger or sale as
described in this Section 9(d), provision shall be made in connection therewith
for the surviving or acquiring corporations or partnerships to assume all
obligations and duties of the Company hereunder or to issue a substitute note in
lieu of this Convertible Note with all such changes and adjustments in the
number or kind of shares of stock or securities or property thereafter subject
to this Convertible Note or in the Conversion Price as shall be required in
connection with this Section 9(d).
(e) If the Company, at any time after the date hereof and before the
Due Date, shall issue or sell or fix a record date for the issuance of rights,
options, warrants or convertible or exchangeable securities to all holders of
Common Stock entitling them to subscribe for or purchase Common Stock (or
securities convertible into Common Stock) at a price per share (or having a
conversion price per share), that together with the value of any consideration
paid for any such rights, options, warrants or convertible or exchangeable
securities (as determined in good faith by the Board of Directors of the
Company) is less than the fair market value of a share of Common Stock as of the
date of such issuance or sale or on such record date; then, immediately after
the date of such issuance or sale or on such record date, the holder shall have
the right to receive, upon the same terms as the holders of Common Stock, the
kind and amount of rights, options, warrants or convertible or exchangeable
securities receivable in such offerings by a holder of the number of shares of
Common Stock that the holder would have been entitled to receive upon conversion
of this Convertible Note pursuant to Section 1 hereof had such Convertible Note
been converted immediately before such issuance or the record date for such
issuance.
(f) If (other than in dissolution or liquidation) securities of the
Company (other than shares of Common Stock or securities issued pursuant to a
shareholder rights or similar plan) or assets are issued by way of a dividend on
outstanding shares of Common Stock, then the Conversion Price shall be adjusted
so that it shall equal the price determined by multiplying the Conversion Price
by a fraction, the numerator of which shall be the last sale price of the Common
Stock on such record date less the then fair market value as determined by the
Board of Directors of the company of the portion of the securities or assets
distributed applicable to one share of Common Stock, and the denominator of
which shall be such last sale price. Such adjustment shall become effective
immediately prior to the opening of business on the day following such record
date.
(g) If the Company (other than in connection with a sale described in
Section 9(d)) proposes to liquidate and dissolve, the Company shall give notice
thereof as provided in Section 10(b) hereof and shall permit the holder of this
Convertible Note to convert any unconverted
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<PAGE>
portion hereof at any time within the 10 day period following delivery of such
notice, if such holder should elect to do so, and participate as a stockholder
of the Company in connection with such dissolution.
(h) Whenever any adjustment is made as provided in any provision
of this Section 9:
(i) the Company shall compute the adjustments in
accordance with this Section 9 and shall prepare a certificate
signed by an officer of the Company setting forth the adjusted
number of shares or other securities or property and
Conversion Price, as applicable, and showing in reasonable
detail the facts upon which such adjustment is based, and such
certificate shall forthwith be filed with the Company or its
designee; and
(ii) a notice setting forth the adjusted number of
shares or other securities or property and the Conversion
Price, as applicable, shall forthwith be required, and as soon
as practicable after it is prepared, such notice shall be
delivered by the Company to the holder of record of this
Convertible Note.
(i) If at any time, as a result of any adjustment made pursuant to this
Section 9, the holder of this Convertible Note shall become entitled, upon
exercise hereof, to receive any shares other than shares of Common Stock or to
receive any other securities, the number of such other shares or securities so
receivable upon conversion of this Convertible Note shall be subject to
adjustment from time to time in a manner and on terms as nearly equivalent as
practicable to the provisions contained in this Section 9 with respect to the
Common Stock.
10. Special Agreements of the Company.
(a) The Company covenants and agrees that it will reserve and set apart
and have at all times a number of shares of authorized but unissued Common Stock
then deliverable upon the conversion of this Convertible Note or any other
rights or privileges provided for herein sufficient to enable it at any time to
fulfill all its obligations hereunder; and if at any time the number of
authorized but unissued shares of Common Stock shall not be sufficient to effect
the conversion of this Convertible Note at the Conversion Price then in effect,
the Company will take such corporate action as may, in the reasonable opinion of
its counsel, be necessary to increase its authorized shares but unissued shares
of Common Stock to such number of shares as shall be sufficient for such
purposes.
(b) In case the Company proposes
(i) to pay any dividend upon the Common Stock or
make any distribution or offer any subscription or
other rights to the holders of Common Stock, or
(ii) to effect any capital reorganization or
reclassification of capital stock of the
Company,
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<PAGE>
(iii) to effect the consolidation, merger, sale of all or
substantially all of the assets, liquidation,
dissolution or winding up of the Company,
(iv) to effect a rights offering to its stockholders, or
(v) to conduct a self-tender offer or other
repurchase of outstanding shares of Company Common
Stock, other than in connection with repurchases from
employees upon termination of their employment,
then the Company shall cause notice of any such intended action to be given to
the holder of this Convertible Note not less than 15 nor more than 60 days prior
to the date on which the transfer books of the Company shall close or a record
be taken for such dividend or distribution, or the date when such capital
reorganization, reclassification, consolidation, merger, sale, liquidation,
dissolution or winding up shall be effected, or the date of such other event, as
the case may be.
11. Notices. Any notice or other document required or permitted to be
given or delivered to the holder of this Convertible Note shall be in writing
and sent (a) by telecopy if the sender on the same day sends a confirming copy
of such notice by a recognized overnight delivery service (charges prepaid), or
(b) by registered or certified mail with return receipt requested (postage
prepaid) or (c) by a recognized overnight delivery service (with charges
prepaid).
(i) if to the Company, at Aronex Pharmaceuticals, Inc., 8707
Technology Forest Drive, The Woodlands, Texas 77381, Telecopy No.:
(281) 367-1676, or such other address as it shall have specified to
the holder of this Convertible Note in writing; or
(ii) if to a holder, at its address set forth below, or such
other address as it shall have specified to the Company in writing.
Notices given under this Section 11 shall be deemed given only when actually
received.
12. Governing Law. This Convertible Note shall be governed by
and construed in accordance with the laws of the State of Delaware, without
reference to the conflicts of law principles thereof.
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<PAGE>
IN WITNESS WHEREOF, the Company has caused this Convertible
Note to be duly executed as of the 21st day of May, 1999.
ARONEX PHARMACEUTICALS, INC.
By: /s/ Geoffrey F. Cox
----------------------------------
Name: Geoffrey F. Cox
----------------------------------
Title: Chairman of the Board & Chief
Executive Officer
----------------------------------
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Exhibit 10.3
NEITHER THIS WARRANT NOR THE SECURITIES ISSUABLE UPON EXERCISE HEREOF HAVE BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"),
OR THE SECURITIES LAWS OF ANY STATE. SUCH SECURITIES MAY NOT BE SOLD OR
OTHERWISE DISPOSED OF UNLESS PURSUANT TO A REGISTERED OFFERING OR BY TRANSFER
EXEMPT FROM REGISTRATION UNDER THE SECURITIES ACT AND APPLICABLE STATE
SECURITIES LAWS.
ARONEX PHARMACEUTICALS, INC.
Common Stock Purchase Warrant
No. ___ 50,000 Shares
This certifies that, for value received, Genzyme Corporation or
registered assigns (the "holder"), upon due exercise of this Warrant, is
entitled to purchase from Aronex Pharmaceuticals, Inc., a Delaware corporation
(the "Company"), at any time on or after May 21, 1999 (the "Initial Exercise
Date"), and before the close of business on May 21, 2004, or if not a trading
date on the New York Stock Exchange, the next following trading date (the
"Expiration Date"), all or any part of 50,000 fully paid and nonassessable
Shares (the "Warrant Shares") of the Common Stock, par value $0.001 per share,
of the Company ("Common Stock"), at a purchase price of $4.00 per share (the
"Purchase Price"), both the Purchase Price and the number of Warrant Shares
issuable upon exercise of this Warrant being subject to possible adjustment as
provided below.
This Warrant is hereinafter called the "Warrant." The holder hereof and
all subsequent holders of this Warrant shall be entitled to all rights and
benefits provided to the holder or holders hereof pursuant to the terms of this
Warrant.
SECTION 1. EXERCISE OF WARRANT. (a) The holder of this Warrant may, at
any time on or after the Initial Exercise Date and on or before the Expiration
Date, exercise this Warrant in whole at any time or in part (but not less than
10,000 Warrant Shares) from time to time for the purchase of the Warrant Shares
or other securities which such holder is then entitled to purchase hereunder
("Warrant Securities") at the Purchase Price (as hereinafter defined). In order
to exercise this Warrant in whole or in part, the holder hereof shall deliver to
the Company (i) a written notice of such holder's election to exercise this
Warrant, which notice shall specify the number of Warrant Shares to be
purchased, (ii) payment of the aggregate purchase price of the Warrant Shares
being purchased by certified or bank cashier's check, unless pursuant to a
Cashless Exercise as described in subsection (b) below, and (iii) this Warrant.
Upon receipt thereof, the Company shall, as promptly as practicable, execute or
cause to be executed and deliver to such holder a certificate or certificates
representing the aggregate number of Warrant Shares (or if applicable, other
Warrant Securities) specified in said notice. The stock certificate or
certificates so delivered shall be in the denomination of 100 shares each or
such other denominations as may be specified in said notice and shall be
registered in the name of such holder or such other name as shall be designated
in said notice.
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<PAGE>
No fractional Warrant Shares are to be issued upon the exercise of this
Warrant, but the Company shall pay a cash adjustment in respect of any fraction
of a share which would otherwise be issuable in an amount equal to the same
fraction of the Current Market Price (as defined below) of the Common Stock on
the day of exercise, as reasonably determined by the Company. If this Warrant
shall have been exercised only in part, the Company shall, at the time of
delivery of said certificate or certificates, deliver to such holder a new
Warrant evidencing the rights of such holder to purchase the remaining Warrant
Shares called for by this Warrant, which new Warrant shall in all other respects
be identical with this Warrant, or, at the request of such holder, appropriate
notation may be made on this Warrant and same returned to such holder. The
Company shall pay all expenses, taxes and other charges payable in connection
with the preparation, execution and delivery of share certificates under this
Section, except that, if such share certificates are requested to be registered
in a name or names other than the name of the holder of this Warrant, funds
sufficient to pay all stock transfer taxes which shall be payable upon the
execution and delivery of such share certificates shall be paid by the holder
hereof at the time of delivering the notice of exercise mentioned above.
The Company represents, warrants and agrees that all Warrant Shares
issuable upon any exercise of this Warrant in accordance herewith shall be
validly authorized and issued, fully paid and nonassessable.
This Warrant shall not entitle the holder hereof to any of the rights
of a stockholder of the Company prior to exercise in the manner herein provided.
(b) Notwithstanding anything in subsection (a) to the contrary, the
holder of this Warrant may elect to exercise this Warrant in part (but not for
less than 10,000 Warrant Shares) or in whole, at any time on or after the
Initial Exercise Date and on or before the Expiration Date, by the surrender of
this Warrant (with the cashless exercise form at the end hereof duly executed)
(a "Cashless Exercise") at the address set forth in Section 6 hereof. Such
presentation and surrender shall be deemed a waiver of the holder's obligation
to pay the Purchase Price, or the proportionate part thereof if this Warrant is
exercised in part. In the event of a Cashless Exercise, the Holder shall
exchange its Warrant for that number of Warrant Shares or Warrant Securities, as
the case may be, subject to such Cashless Exercise multiplied by a fraction, the
numerator of which shall be the difference between the then Current Market Price
per share of the Common Stock and the per share Purchase Price, and the
denominator of which shall be the then Current Market Price per share of the
Common Stock. For purposes of any computation under this subsection, the then
Current Market Price shall be based on the trading day prior to the Cashless
Exercise. "Current Market Price" shall be deemed to be the last sale price of
the Common Stock on the trading day prior to such date or, in case no such
reported sales take place on such day, the average of the last reported bid and
asked prices of the Common Stock on such day, in either case on the principal
national securities exchange on which the Common Stock is admitted to trading or
listed, or if not listed or admitted to trading on any such exchange, the
representative closing bid price of the Common Stock as reported by the National
Association of Securities Dealers, Inc. Automated Quotations System ("NASDAQ"),
or other similar organization if NASDAQ is no longer reporting such information,
or, if the Common Stock is not reported on NASDAQ, the high per share bid price
for the Common Stock in the over-
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<PAGE>
the-counter market as reported by the National Quotation Bureau or similar
organization, or if not so available, the fair market value of the Common Stock
as determined in good faith by the Board of Directors.
SECTION 2. TRANSFER, DIVISION AND COMBINATION. The Company shall keep
at its principal executive office a register for the registration of, and
registration of transfers of, the Warrants. The name and address of each holder
of one or more Warrants, each transfer thereof and the name and address of each
transferee of one or more Warrants shall be registered in such register. Prior
to due presentment for registration of transfer, the person in whose name any
Warrants shall be registered shall be deemed and treated as the owner and holder
thereof for all purposes hereof, and the Company shall not be affected by any
notice or knowledge to the contrary. The Company shall give to any holder of a
Warrant promptly upon request therefor, a complete and correct copy of the names
and addresses of all registered holders of Warrants.
Subject to the provisions of Section 3, upon surrender of any Warrant
at the principal executive office of the Company for registration of transfer or
exchange (and in the case of a surrender for registration of transfer, duly
endorsed or accompanied by a written instrument of transfer duly executed by the
registered holder of such Warrant or his attorney duly authorized in writing and
accompanied by the address for notices of each transferee of such Warrant or
part thereof), the Company shall execute and deliver, at the Company's expense,
one or more new Warrants (as requested by the holder thereof) in exchange
therefor, exercisable for an aggregate number of Warrant Shares equal to the
number of shares for which the surrendered Warrant is exercisable and issued to
such person or persons as such holder may request, which Warrant or Warrants
shall in all other respects be identical with this Warrant.
Upon receipt by the Company of evidence reasonably satisfactory to it
of the ownership of and the loss, theft, destruction or mutilation of any
Warrant, and (a) in the case of loss, theft or destruction, of indemnity
reasonably satisfactory to it (provided that if the holder of such Warrant is,
or is a nominee for, an original holder, such person's own unsecured agreement
of indemnity shall be deemed to be satisfactory), or (b) in the case of
mutilation, upon surrender and cancellation thereof, the Company at its own
expense shall execute and deliver, in lieu thereof, a new Warrant identical in
all respects to such lost, stolen, destroyed or mutilated Warrant.
SECTION 3. COMPLIANCE WITH SECURITIES ACT; RESTRICTIONS ON TRANSFER AND
SALE. (a) Each certificate for Warrant Shares (or other Warrant Securities)
initially issued upon the exercise of this Warrant and each certificate for
Warrant Shares (or other Warrant Securities) issued to subsequent transferees of
any such certificate shall (unless otherwise permitted by this Section 3) be
stamped or otherwise imprinted with legend in substantially the following form:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE "SECURITIES ACT") OR THE SECURITIES LAWS OF ANY STATE.
SUCH SECURITIES MAY NOT BE SOLD OR OTHERWISE DISPOSED OF
UNLESS PURSUANT TO A REGISTERED OFFERING OR BY TRANSFER
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<PAGE>
EXEMPT FROM REGISTRATION UNDER THE SECURITIES ACT AND
APPLICABLE STATE SECURITIES LAWS."
(b) The holder understands that Warrant Shares (or other Warrant
Securities) which may be acquired by it upon exercise of this Warrant shall be
entitled to certain registration rights provided for in the Amendment No. 4 to
the License and Development Agreement of even date herewith relating to the
issuance of this Warrant between the Company and the holder.
SECTION 4. ADJUSTMENT OF PURCHASE PRICE.
(a) The Purchase Price and the number of Warrant Shares and the number
or amount of any other securities and property as hereinafter provided for which
this Warrant may be exercisable shall be subject to adjustment from time to time
effective upon each occurrence of any of the following events.
(b) If the Company shall declare or pay any dividend with respect to
its Common Stock payable in shares of Common Stock, subdivide the outstanding
Common Stock into a greater number of shares of Common Stock, or reduce the
number of shares of Common Stock outstanding (by stock split, reverse stock
split, reclassification or otherwise than by repurchase of its Common Stock)
(any of such events being hereinafter called a "Stock Split"), the Purchase
Price and number of Warrant Shares issuable upon exercise of this Warrant shall
be appropriately adjusted so as to entitle the holder hereof to receive upon
exercise of this Warrant, for the same aggregate consideration provided herein,
the same number of shares of Common Stock (plus cash in lieu of fractional
shares) as the holder would have received as a result of such Stock Split had
such holder exercised this Warrant in full immediately prior to such Stock
Split.
(c) If the Company shall merge or consolidate with or into one or more
corporations or partnerships and the Company is the sole surviving corporation,
or the Company shall adopt a plan of recapitalization or reorganization in which
the Common Stock is exchanged for or changed into another class of stock or
other security or property of the Company, the holder of this Warrant shall, for
the same aggregate consideration provided herein, be entitled upon exercise of
this Warrant to receive in lieu of the number of shares of Common Stock as to
which this Warrant would otherwise be exercisable, the number of shares of
Common Stock or other securities (plus cash in lieu of fractional shares) or
property to which such holder would have been entitled pursuant to the terms of
the agreement or plan of merger, consolidation, recapitalization or
reorganization had such holder exercised this Warrant in full immediately prior
to such merger, consolidation, recapitalization or reorganization.
(d) If the Company is merged or consolidated with or into one or more
corporations or partnerships under circumstances in which the Company is not the
sole surviving corporation, or if the Company sells or otherwise disposes of
substantially all its assets, and in connection with any such merger,
consolidation or sale the holders of Common Stock receive stock or other
securities convertible into equity of the surviving or acquiring corporations or
entities, or other securities or property after the effective date of such
merger, consolidation or sale, as the case may be, the holder
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<PAGE>
of this Warrant shall, for the same aggregate consideration provided herein, be
entitled upon exercise of this Warrant to receive, in lieu of the shares of
Common Stock as to which this Warrant would otherwise be exercisable, shares of
such stock or other securities (plus cash in lieu of fractional shares) or
property as the holder of this Warrant would have received pursuant to the terms
of the merger, consolidation or sale had such holder exercised this Warrant in
full immediately prior to such merger, consolidation or sale. In the event of
any consolidation, merger or sale as described in this Section 4(d), provision
shall be made in connection therewith for the surviving or acquiring
corporations or partnerships to assume all obligations and duties of the Company
hereunder or to issue substitute warrants in lieu of this Warrant with all such
changes and adjustments in the number or kind of shares of stock or securities
or property thereafter subject to this Warrant or in the Purchase Price as shall
be required in connection with this Section 4(d).
(e) If the Company, at any time after the date hereof and before the
Expiration Date, shall issue or sell or fix a record date for the issuance of
rights, options, warrants or convertible or exchangeable securities to all
holders of Common Stock entitling them to subscribe for or purchase Common Stock
(or securities convertible into Common Stock) at a price per share (or having a
conversion price per share), that together with the value of any consideration
paid for any such rights, options, warrants or convertible or exchangeable
securities (as determined in good faith by the Board of Directors of the
Company) is less than the fair market value of a share of Common Stock as of the
date of such issuance or sale or on such record date; then, immediately after
the date of such issuance or sale or on such record date, the holder shall have
the right to receive, upon the same terms as the holders of Common Stock, the
kind and amount of rights, options, warrants or convertible or exchangeable
securities receivable in such offering by a holder of the number of shares of
Common Stock that the holder would have been entitled to receive upon exercise
of this Warrant pursuant to Section 1 hereof had such Warrant been exercised
immediately before such issuance or the record date for such issuance.
(f) If (other than in dissolution or liquidation) securities of the
Company (other than shares of Common Stock or securities issued pursuant to a
shareholder rights or similar plan) or assets are issued by way of a dividend on
outstanding shares of Common Stock, then the Purchase Price shall be adjusted so
that it shall equal the price determined by multiplying the Purchase Price by a
fraction, the numerator of which shall be the last sale price of the Common
Stock on such record date less the then fair market value as determined by the
Board of Directors of the Company of the portion of the securities or assets
distributed applicable to one share of Common Stock, and the denominator of
which shall be such last sale price. Such adjustment shall become effective
immediately prior to the opening of business on the day following such record
date.
(g) If the Company (other than in connection with a sale described in
Section 4(d)) proposes to liquidate and dissolve, the Company shall give notice
thereof as provided in Section 5(b) hereof and shall permit the holder of this
Warrant to exercise any unexercised portion hereof at any time within the 10 day
period following delivery of such notice, if such holder should elect to do so,
and participate as a stockholder of the Company in connection with such
dissolution.
(h) Whenever any adjustment is made as provided in any provision of
this Section 4:
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(i) the Company shall compute the adjustments in
accordance with this Section 4 and shall prepare a certificate
signed by an officer of the Company setting forth the adjusted
number of shares or other securities or property and Purchase
Price, as applicable, and showing in reasonable detail the
facts upon which such adjustment is based, and such
certificate shall forthwith be filed with the Company or its
designee; and
(ii) a notice setting forth the adjusted number of
shares or other securities or property and the Purchase Price,
as applicable, shall forthwith be required, and as soon as
practicable after it is prepared, such notice shall be
delivered by the Company to the holder of record of each
Warrant.
(i) If at any time, as a result of any adjustment made pursuant to this
Section 4, the holder of this Warrant shall become entitled, upon exercise
hereof, to receive any shares other than shares of Common Stock or to receive
any other securities, the number of such other shares or securities so
receivable upon exercise of this Warrant shall be subject to adjustment from
time to time in a manner and on terms as nearly equivalent as practicable to the
provisions contained in this Section 4 with respect to the Common Stock.
SECTION 5. SPECIAL AGREEMENTS OF THE COMPANY.
(a) The Company covenants and agrees that it will reserve and set apart
and have at all times a number of shares of authorized but unissued Common Stock
(and, if applicable, other Warrant Securities) then deliverable upon the
exercise of the Warrants or any other rights or privileges provided for therein
sufficient to enable it at any time to fulfill all its obligations thereunder;
and if at any time the number of authorized but unissued shares of Common Stock
shall not be sufficient to effect the exercise of this Warrant at the Purchase
Price then in effect, the Company will take such corporate action as may, in the
reasonable opinion of its counsel, be necessary to increase its authorized
shares but unissued shares of Common Stock (and, if applicable, other Warrant
Securities) to such number of shares as shall be sufficient for such purposes.
(b) In case the Company proposes
(i) to pay any dividend upon the Common Stock or make
any distribution or offer any subscription or
other rights to the holders of Common Stock, or
(ii) to effect any capital reorganization or
reclassification of capital stock of the Company,
(iii) to effect the consolidation, merger, sale of all
or substantially all of the assets, liquidation,
dissolution or winding up of the Company,
(iv) to effect a rights offering to its stockholders,
or
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<PAGE>
(v) to conduct a self-tender offer or other repurchase
of outstanding shares of Company Common Stock,
other than in connection with repurchases from
employees upon termination of their employment,
then the Company shall cause notice of any such intended action to be given to
each holder of the Warrants not less than 15 nor more than 60 days prior to the
date on which the transfer books of the Company shall close or a record be taken
for such dividend or distribution, or the date when such capital reorganization,
reclassification, consolidation, merger, sale, liquidation, dissolution or
winding up shall be effected, or the date of such other event, as the case may
be.
Section 6. Notices. Any notice or other document required or permitted
to be given or delivered to holders of Warrants and holders of Common Stock (or
other Warrant Securities) shall be in writing and sent (a) by telecopy if the
sender on the same day sends a confirming copy of such notice by a recognized
overnight delivery service (charges prepaid), or (b) by registered or certified
mail with return receipt requested (postage prepaid) or (c) by a recognized
overnight delivery service (with charges prepaid).
(i) if to the Company, at Aronex Pharmaceuticals, Inc., 8707
Technology Forest Drive, The Woodlands, Texas 77381,
Telecopy No.: (281) 367-1676, or such other address as it
shall have specified to the holders of Warrants in writing;
or
(ii) if to a holder, at its address set forth below, or such
other address as it shall have specified to the Company in
writing.
Notices given under this Section 6 shall be deemed given only when actually
received.
SECTION 7. AMENDMENT. This Warrant may not be amended, modified or
otherwise altered in any respect except by the written consent of the registered
holder of this Warrant and the Company.
SECTION 8. SUCCESSORS AND ASSIGNS. This Warrant shall be binding upon
and inure to the benefit of the Company and the holder of this Warrant and their
respective successors and permitted assigns.
SECTION 9. GOVERNING LAW. This Warrant shall be governed by and
construed in accordance with the laws of the State of Delaware, without
reference to the conflicts of law principles thereof.
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<PAGE>
IN WITNESS WHEREOF, the Company has caused this Warrant to be
signed in its name by its duly authorized officers and accepted by the holder of
this Warrant this 21st day of May, 1999.
Attest: ARONEX PHARMACEUTICALS, INC.
By: /s/ Terance A. Murnane By: /s/ Geoffrey F. Cox
------------------------------- -----------------------
Name: Terance A. Murnane Name: Geoffrey F. Cox
------------------------------- -----------------------
Title: Secretary Title: Chairman of the Board
------------------------------- & Chief Executive Officer
-------------------------
Holder:
/s/ Richard Douglas
- --------------------
Address for Notices:
- --------------------
- --------------------
- --------------------
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<PAGE>
SUBSCRIPTION
The undersigned, ___________________, pursuant to the
provisions of the foregoing Warrant, hereby agrees to subscribe for and purchase
____________________ shares of the Common Stock, par value $.001 per share, of
Aronex Pharmaceuticals, Inc. covered by said Warrant, and makes payment therefor
in full at the price per share provided by said Warrant.
Dated:__________________ Signature:____________________
Signature Guarantee: Address:______________________
________________________ Social Security No. _____________
CASHLESS EXERCISE
The undersigned ___________________, pursuant to the
provisions of the foregoing Warrant, hereby elects to exchange its Warrant for
___________________ shares of Common Stock, par value $.001 per share, of Aronex
Pharmaceuticals, Inc. pursuant to the Cashless Exercise provisions of the
Warrant.
Dated:__________________ Signature:____________________
Signature Guarantee: Address:______________________
________________________ Social Security No.:_____________
ASSIGNMENT
FOR VALUE RECEIVED _______________ hereby sells, assigns and
transfers unto ____________________ (SS#_________________) the foregoing Warrant
and all rights evidenced thereby, and does irrevocably constitute and appoint
_____________________, attorney, to transfer said Warrant on the books of Aronex
Pharmaceuticals, Inc.
Dated:__________________ Signature:____________________
Signature Guarantee: Address:______________________
________________________
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<PAGE>
PARTIAL ASSIGNMENT
FOR VALUE RECEIVED _______________ hereby assigns and
transfers unto ____________________ (SS#________________) the right to purchase
_______ shares of the Common Stock, par value $.001 per share, of Aronex
Pharmaceuticals, Inc. covered by the foregoing Warrant, and a proportionate part
of said Warrant and the rights evidenced thereby, and does irrevocably
constitute and appoint ____________________, attorney, to transfer that part of
said Warrant on the books of Aronex Pharmaceuticals, Inc.
Dated:_______________ Signature:____________________
Signature Guarantee: Address:______________________
_____________________
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