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EXHIBIT 4.3
WARRANT
THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
U.S. SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY OTHER
APPLICABLE SECURITIES LAWS AND HAVE BEEN ISSUED IN RELIANCE UPON AN EXEMPTION
FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND SUCH OTHER
SECURITIES LAWS. NEITHER THIS SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN
MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED, HYPOTHECATED
OR OTHERWISE DISPOSED OF, EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OR PURSUANT TO A TRANSACTION WHICH IS EXEMPT FROM, OR
NOT SUBJECT TO, SUCH REGISTRATION. THE HOLDER OF THIS CERTIFICATE IS THE
BENEFICIARY OF CERTAIN OBLIGATIONS OF THE COMPANY SET FORTH IN A PRIVATE EQUITY
LINE OF CREDIT AGREEMENT, DATED AS OF MARCH 27, 1998, BETWEEN NEOTHERAPEUTICS,
INC. AND KINGSBRIDGE CAPITAL LIMITED. A COPY OF THE PORTION OF THE AFORESAID
AGREEMENT EVIDENCING SUCH OBLIGATIONS MAY BE OBTAINED FROM THE COMPANY'S
EXECUTIVE OFFICES.
MARCH 27, 1998
Warrant to Purchase up to 25,000 Shares of Common Stock of Neotherapeutics, Inc.
Neotherapeutics, Inc., a Delaware corporation (the "Company"), hereby agrees
that Kingsbridge Capital Limited (the "Investor") or any other Warrant Holder is
entitled, on the terms and conditions set forth below, to purchase from the
Company at any time during the Exercise Period up to 25,000 fully paid and
nonassessable shares of Common Stock, par value $.001 per share, of the Company
(the "Common Stock"), as the same may be adjusted from time to time pursuant to
Section 6 hereof, at the Exercise Price (hereinafter defined), as the same may
be adjusted pursuant to Section 6 hereof. The resale of the shares of Common
Stock or other securities issuable upon exercise or exchange of this Warrant is
subject to the provisions of the Registration Rights Agreement (as defined
below).
Section 1. Definitions.
"Agreement" shall mean the Private Equity Line of Credit
Agreement, dated the date hereof, between the Company and the Investor.
"Capital Shares" shall mean the Common Stock and any shares of
any other class of common stock whether now or hereafter authorized, having the
right to participate in the distribution of earnings and assets of the Company.
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"Date of Exercise" shall mean the date that the advance copy of
the Exercise Form is sent by facsimile to the Company, provided that the
original Warrant and Exercise Form are received by the Company within reasonable
time thereafter. If the Warrant Holder has not sent advance notice by facsimile,
the Date of Exercise shall be the date the original Exercise Form is received by
the Company.
"Exercise Period" shall mean that period beginning on the 181st
day after the Subscription Date and continuing until the expiration of the
three-year period thereafter; provided that such period shall be extended one
day for each day after such 181st day after the Subscription Date, that a
Registration Statement is not effective during the period such Registration
Statement is required to be effective pursuant to the Registration Rights
Agreement.
"Exercise Price" as of the date hereof shall mean one hundred
thirty percent (130%) of the average of the lowest intra-day prices of the
Common Stock over the five (5) days preceding the Subscription Date and shall
hereafter be subject to the adjustments provided for in Section 6 of this
Warrant. "Lowest intra-day price" shall mean the lowest trade price per share of
the Common Stock (as reported by NASDAQ) during any Trading Day.
"Per Share Warrant Value" shall mean the difference resulting
from subtracting the Exercise Price from the Bid Price of one share of Common
Stock on the Trading Day next preceding the Date of Exercise.
"Registration Rights Agreement" shall mean the registration
rights agreement, dated the date hereof between the Company and the Investor.
"Subscription Date" shall mean the date on which the Agreement is
executed and delivered by the parties hereto.
"Warrant Holder" shall mean the Investor or any assignee or
transferee of all or any portion of this Warrant; and
other capitalized terms used but not defined herein shall have
their respective meanings set forth in the Agreement.
Section 2. Exercise; Cashless Exercise.
(a) Method of Exercise. Subject to the provisions of
paragraph (e) below, this Warrant may be exercised in whole or in part (but not
as to a fractional share of Common Stock), at any time and from time to time
during the Exercise Period, by the Warrant Holder by (i) surrender of this
Warrant, with the form of exercise attached hereto as Exhibit A duly executed by
the Warrant Holder (the "Exercise Notice"), to the Company at the address set
forth in Section 13 hereof, accompanied by payment of the Purchase Price
multiplied by the number of
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shares of Common Stock for which this Warrant is being exercised (the "Exercise
Price") or (ii) telecopying an executed and completed Exercise Notice to the
Company and delivering to the Company within three business days thereafter the
original Exercise Notice, this Warrant and the Exercise Price. Each date on
which an Exercise Notice is received by the Company in accordance with clause
(i) and each date on which the Exercise Notice is telecopied to the Company in
accordance with clause (ii) above shall be deemed an "Exercise Date".
(b) Payment of Exercise Price. Subject to paragraph (c)
below, payment of the Exercise Price shall be made by check or bank draft
payable to the order of the Company or by wire transfer to an account designated
by the Company. If the amount of the payment received by the Company is less
than the Exercise Price, the Warrant Holder will be notified of the deficiency
and shall make payment in that amount within five (5) business days. In the
event the payment exceeds the Exercise Price, the Company will refund the excess
to the Warrant Holder within three (3) business days of receipt.
(c) Cashless Exercise. As an alternative to payment of the
Exercise Price in accordance with paragraph (b) above, the Warrant Holder may
elect to effect a cashless exercise by so indicating on the Exercise Notice and
including a calculation of the number of shares of Common Stock to be issued
upon such exercise in accordance with the terms hereof (a "Cashless Exercise").
In the event of a Cashless Exercise, the Warrant Holder shall surrender this
Warrant for that number of shares of Common Stock determined by (i) multiplying
the number of Warrant Shares for which this Warrant is being exercised by the
Per Share Warrant Value and (ii) dividing the product by the Bid Price of one
share of the Common Stock on the Trading Day next preceding the Date of
Exercise.
(d) Replacement Warrant. In the event that the Warrant is
not exercised in full, the number of Warrant Shares shall be reduced by the
number of such Warrant Shares for which this Warrant is exercised, and the
Company, at its expense, shall forthwith issue and deliver to or upon the order
of the Warrant Holder a new Warrant of like tenor in the name of the Warrant
Holder or as the Warrant Holder may request, reflecting such adjusted number of
Warrant Shares.
(e) Cancellation by the Company. If: (i) the Company shall
have delivered a Put Notice to the Investor; (ii) the Company shall have
delivered into escrow one or more certificates representing the Put Shares to be
purchased by the Investor in respect of such Put Notice and (iii) the Investor
and the Company mutually agree that the Company has satisfied all of the
conditions set forth in Section 7.2 of the Agreement, and the Investor shall not
have delivered the Investment Amount into escrow within five (5) days of the
Closing Date in respect of such Put Notice, then the Company may, by written
notice to the Investor, cancel this Warrant and terminate any and all of the
Investor's rights hereunder. Upon receipt of such written notice, the Investor
shall, at the sole discretion of the Company, either (x) return this Warrant to
the Company by overnight courier service or (y) destroy this Warrant. Any
dispute relating to the satisfaction of the conditions set forth in Section 7.2
of the Agreement shall be resolved in
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accordance with the terms of Section 11.3(c) of the Agreement.
Section 3. Ten Percent Limitation. The Warrant Holder may not
exercise this Warrant such that the number of Warrant Shares to be received
pursuant to such exercise aggregated with all other shares of Common Stock then
owned by the Warrant Holder beneficially or deemed beneficially owned by the
Warrant Holder would result in the Warrant Holder owning more than 9.9% of all
of such Common Stock as would be outstanding on such Closing Date, as determined
in accordance with Section 16 of the Exchange Act and the rules and regulations
promulgated thereunder. As of any date prior to the Date of Exercise, the
aggregate number of shares of Common Stock into which this Warrant is
exercisable, together with all other shares of Common Stock then beneficially
owned (as such term is defined in Rule 16a-1 under the Exchange Act) by such
Warrant Holder and its affiliates, shall not exceed 9.9% of the total
outstanding shares of Common Stock as of such date.
Section 4. Delivery of Stock Certificates.
(a) Subject to the terms and conditions of this Warrant, as soon
as practicable after the exercise of this Warrant in full or in part, and in any
event within three (3) Trading Days thereafter, the Company at its expense
(including, without limitation, the payment by it of any applicable issue taxes)
will cause to be issued in the name of and delivered to the Warrant Holder, or
as the Warrant Holder may lawfully direct, a certificate or certificates for the
number of validly issued, fully paid and non-assessable Warrant Shares to which
the Warrant Holder shall be entitled on such exercise, together with any other
stock or other securities or property (including cash, where applicable) to
which the Warrant Holder is entitled upon such exercise in accordance with the
provisions hereof.
(b) This Warrant may not be exercised as to fractional shares of
Common Stock. In the event that the exercise of this Warrant, in full or in
part, would result in the issuance of any fractional share of Common Stock, then
in such event the Warrant Holder shall receive in cash an amount equal to the
Bid Price of such fractional share within three (3) Trading Days.
Section 5. Representations, Warranties and Covenants of the
Company.
(a) The Company shall take all necessary action and proceedings
as may be required and permitted by applicable law, rule and regulation for the
legal and valid issuance of this Warrant and the Warrant Shares to the Warrant
Holder.
(b) From the date hereof through the last date on which this
Warrant is exercisable, the Company shall take all steps reasonably necessary
and within its control to insure that the Common Stock remains listed or quoted
on the Principal Market.
(c) The Warrant Shares, when issued in accordance with the terms
hereof,
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will be duly authorized and, when paid for or issued in accordance with the
terms hereof, shall be validly issued, fully paid and non-assessable.
(d) The Company has authorized and reserved for issuance to the
Warrant Holder the requisite number of shares of Common Stock to be issued
pursuant to this Warrant. The Company shall at all times reserve and keep
available, solely for issuance and delivery as Warrant Shares hereunder, such
shares of Common Stock as shall from time to time be issuable as Warrant Shares.
Section 6. Adjustment of the Exercise Price. The Exercise Price
and, accordingly, the number of Warrant Shares issuable upon exercise of the
Warrant, shall be subject to adjustment from time to time upon the happening of
certain events as follows:
(a) Reclassification, Consolidation, Merger or Mandatory Share
Exchange. If the Company, at any time while this Warrant is unexpired and not
exercised in full, (i) reclassifies or changes its Outstanding Capital Shares
(other than a change in par value, or from par value to no par value per share,
or from no par value per share to par value or as a result of a subdivision or
combination of outstanding securities issuable upon exercise of the Warrant) or
(ii) consolidates, merges or effects a mandatory share exchange with or into
another corporation (other than a merger or mandatory share exchange with
another corporation in which the Company is a continuing corporation and that
does not result in any reclassification or change, other than a change in par
value, or from par value to no par value per share, or from no par value per
share to par value, or as a result of a subdivision or combination of
Outstanding Capital Shares issuable upon exercise of the Warrant) at any time
while this Warrant is unexpired and not exercised in full, then in any such
event the Company, or such successor or purchasing corporation, as the case may
be, shall, without payment of any additional consideration therefore, amend this
Warrant or issue a new Warrant providing that the Warrant Holder shall have
rights not less favorable to the holder than those then applicable to this
Warrant and to receive upon exercise under such amendment of this Warrant or new
Warrant, in lieu of each share of Common Stock theretofore issuable upon
exercise of the Warrant hereunder, the kind and amount of shares of stock, other
securities, money or property receivable upon such reclassification, change,
consolidation, merger, mandatory share exchange, sale or transfer by the holder
of one share of Common Stock issuable upon exercise of the Warrant had the
Warrant been exercised immediately prior to such reclassification, change,
consolidation, merger, mandatory share exchange or sale or transfer. Such
amended Warrant shall provide for adjustments which shall be as nearly
equivalent as may be practicable to the adjustments provided for in this Section
6.1. The provisions of this subsection (a) shall similarly apply to successive
reclassifications, changes, consolidations, mergers, mandatory share exchanges
and sales and transfers.
(b) Subdivision or Combination of Shares. If the Company, at any
time while this Warrant is unexpired and not exercised in full, shall subdivide
its Common Stock, the Exercise Price shall be proportionately reduced as of the
effective date of such subdivision, or, if the Company shall take a record of
holders of its Common Stock for the purpose of so
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subdividing, as of such record date, whichever is earlier. If the Company, at
any time while this Warrant is unexpired and not exercised in full, shall
combine its Common Stock, the Exercise Price shall be proportionately increased
as of the effective date of such combination, or, if the Company shall take a
record of holders of its Common Stock for the purpose of so combining, as of
such record date, whichever is earlier.
(c) Stock Dividends. If the Company, at any while this Warrant is
unexpired and not exercised in full, shall pay a dividend in its Capital Shares,
or make any other distribution of its Capital Shares, then the Exercise Price
shall be adjusted, as of the date the Company shall take a record of the holders
of its Capital Shares for the purpose of receiving such dividend or other
distribution (or if no such record is taken, as at the date of such payment or
other distribution), to that price determined by multiplying the Exercise Price
in effect immediately prior to such payment or other distribution by a fraction:
1. the numerator of which shall be the total number of
Outstanding Capital Shares immediately prior to such dividend or distribution,
and
2. the denominator of which shall be the total number of
Outstanding Capital Shares immediately after such dividend or distribution. The
provisions of this subsection (c) shall not apply under any of the circumstances
for which an adjustment is provided in subsections (a) or (b).
(d) Issuance of Additional Capital Shares. If the Company, at any time
while this Warrant is unexpired and not exercised in full, shall issue any
additional Capital Shares ("Additional Capital Shares"), otherwise than as
provided in the foregoing subsections (a) through (c) above, at a price per
share less, or for other consideration lower, than the Bid Price in effect
immediately prior to such issuance, or without consideration, then upon such
issuance the Exercise Price shall be reduced to that price determined by
multiplying the Exercise Price in effect immediately prior to such event by a
fraction:
1. the numerator of which shall be the number of Outstanding
Capital Shares immediately prior to the issuance of the Additional Capital
Shares plus the number of Capital Shares that the aggregate consideration for
the total number of such Additional Capital Shares so issued would purchase at
the then effective Bid Price, and
2. the denominator of which shall be the number of Outstanding
Capital Shares immediately after the issuance of the Additional Capital Shares.
The provisions of this subsection (d) shall not apply under any of the
circumstances for which an adjustment is provided in subsections (a), (b) or
(c). The provisions of this subsection (d) shall not apply to the issuance of
any Additional Capital Shares that are issued pursuant to the exercise of any
warrants, options or other subscription or purchase rights or pursuant to the
exercise of any conversion or exchange rights in any convertible or exchangeable
securities, or to any shares issued pursuant to the Agreement.
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(e) Issuance of Warrants, Options or Other Rights. If the
Company, at any time while this Warrant is unexpired and not exercised in full,
shall issue any warrants, options or other rights to subscribe for or purchase
any Additional Capital Shares and the price per share for which Additional
Capital Shares may at any time thereafter be issuable pursuant to such warrants,
options or other rights shall be less than the Bid Price in effect immediately
prior to such issuance, then, upon the issuance of such warrants, options or
other rights, the Exercise Price shall be adjusted as provided in subsection (d)
hereof on the basis that:
1. the maximum number of Additional Capital Shares issuable on
the date of determination (subject to adjustment on the date(s) of exercise)
pursuant to all such warrants, options or other rights shall be deemed to have
been issued as of the date of actual issuance of such warrants, options or other
rights, and
2. the aggregate consideration for such maximum number of
Additional Capital Shares issuable pursuant to such warrants, options or other
rights, shall be deemed to be the consideration received by the Company for the
issuance of such warrants, options, or other rights plus the minimum
consideration to be received by the Company for the issuance of Additional
Capital Shares pursuant to such warrants, options, or other rights.
(f) Issuance of Convertible or Exchangeable Securities. If the
Company, at any time while this Warrant is unexpired and not exercised in full,
shall issue any securities convertible into or exchangeable for Capital Shares
and the consideration per share for which Additional Capital Shares may at any
time thereafter be issuable pursuant to the terms of such convertible or
exchangeable securities shall be less than the Bid Price in effect immediately
prior to such issuance, then, upon the issuance of such convertible or
exchangeable securities, the Exercise Price shall be adjusted as provided in
subsection (d) hereof on the basis that:
1. the maximum number of Additional Capital Shares necessary on
the date of determination (subject to adjustment on the date(s) of conversion or
exchange) to effect the conversion or exchange of all such convertible or
exchangeable securities shall be deemed to have been issued as of the date of
issuance of such convertible or exchangeable securities, and
2. the aggregate consideration for such maximum number of
Additional Capital Shares shall be deemed to be the consideration received by
the Company for the issuance of such convertible or exchangeable securities plus
the minimum consideration received by the Company for the issuance of such
Additional Capital Shares pursuant to the terms of such convertible or
exchangeable securities.
No adjustment of the Exercise Price shall be made under this
subsection (f) upon the issuance of any convertible or exchangeable securities
that are issued pursuant to the exercise of any warrants, options or other
subscription or purchase rights therefor, if the issuance of such warrants,
options or other rights was subject to subsection (e) hereof.
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(g) Adjustment of Number of Shares. Upon each adjustment of the
Exercise Price pursuant to any provisions of this Section 6.1, the number of
Warrant Shares issuable hereunder at the option of the Warrant Holder shall be
calculated, to the nearest one hundredth of a whole share, multiplying the
number of Warrant Shares issuable prior to an adjustment by a fraction:
1. the numerator of which shall be the Exercise Price before any
adjustment pursuant to this Section 6.1; and
2. the denominator of which shall be the Exercise Price after
such adjustment.
(h) Liquidating Dividends, Etc. If the Company, at any while this
Warrant is unexpired and not exercised in full, makes a distribution of its
assets or evidences of indebtedness to the holders of its Capital Shares as a
dividend in liquidation or by way of return of capital or other than as a
dividend payable out of earnings or surplus legally available for dividends
under applicable law or any distribution to such holders made in respect of the
sale of all or substantially all of the Company's assets (other than under the
circumstances provided for in the foregoing subsections (a) through (g)) while
an exercise is pending, then the Warrant Holder shall be entitled to receive
upon such exercise of the Warrant in addition to the Warrant Shares receivable
in connection therewith, and without payment of any consideration other than the
Exercise Price, an amount in cash equal to the value of such distribution per
Capital Share multiplied by the number of Warrant Shares that, on the record
date for such distribution, are issuable upon such exercise of the Warrant (with
no further adjustment being made following any event which causes a subsequent
adjustment in the number of Warrant Shares issuable), and an appropriate
provision therefor shall be made a part of any such distribution. The value of a
distribution that is paid in other than cash shall be determined in good faith
by the Board of Directors of the Company.
(i) Other Provisions Applicable to Adjustments Under this
Section. The following provisions will be applicable to the making of
adjustments in a Exercise Price hereinabove provided in this Section 6.1:
1. Computation of Consideration. To the extent that any
Additional Capital Shares or any convertible or exchangeable securities or any
warrants, options or other rights to subscribe for or purchase any Additional
Capital Shares or any convertible or exchangeable securities shall be issued for
a cash consideration, the consideration received by the Company therefor shall
be deemed to be the amount of the cash received by the Company therefor, or, if
such Additional Capital Shares or convertible or exchangeable securities are
offered by the Company for subscription, the subscription price, or, if such
Additional Capital Shares or convertible or exchangeable securities are sold to
or through underwriters or dealers for public offering without a subscription
offering, the initial public offering price, in any such case
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excluding any amounts paid or incurred by the Company for and in the
underwriting of, or otherwise in connection with the issue thereof. To the
extent that such issuance shall be for a consideration other than cash, then,
the amount of such consideration shall be deemed to be the fair value of such
consideration at the time of such issuance as determined in good faith by the
Company's Board of Directors. The consideration for any Additional Capital
Shares issuable pursuant to any warrants, options or other rights to subscribe
for or purchase the same shall be the consideration received by the Company for
issuing such warrants, options or other rights, plus the additional
consideration payable to the Company upon the exercise of such warrants, options
or other rights. The consideration for any Additional Capital Shares issuable
pursuant to the terms of any convertible or exchangeable securities shall be the
consideration paid or payable to the Company in respect of the subscription for
or purchase of such convertible or exchangeable securities, plus the additional
consideration, if any, payable to the Company upon the exercise of the right of
conversion or exchange in such convertible or exchangeable securities. In case
of the issuance at any time of any Additional Capital Shares or convertible or
exchangeable securities in payment or satisfaction of any dividend upon any
class of stock preferred as to dividends in a fixed amount, the Company shall be
deemed to have received for such Additional Capital Shares or convertible or
exchangeable securities a consideration equal to the amount of such dividend so
paid or satisfied.
2. Readjustment of Exercise Price. Upon the expiration of the
right to convert or exchange any convertible or exchangeable securities, or upon
the expiration of any rights, options or warrants, the issuance of which
convertible or exchangeable securities, rights, options or warrants effected an
adjustment in Exercise Price, if any such convertible or exchangeable securities
shall not have been converted or exchanged, or if any such rights, options or
warrants shall not have been exercised, the number of Capital Shares deemed to
be issued and Outstanding by reason of the fact that they were issuable upon
conversion or exchange of any such convertible or exchangeable securities or
upon exercise of any such rights, options, or warrants shall no longer be
computed as set forth above, and such Exercise Price shall forthwith be
readjusted and thereafter be the price that it would have been (but reflecting
any other adjustments in the Exercise Price made pursuant to the provisions of
this Section 6.1 after the issuance of such convertible or exchangeable
securities, rights, options or warrants) had the adjustment of the Exercise
Price made upon the issuance or sale of such convertible or exchangeable
securities or issuance of rights, options or warrants been made on the basis of
the issuance only of the number of Additional Capital Shares actually issued
upon conversion or exchange of such convertible or exchangeable securities, or
upon the exercise of such rights, options or warrants, and thereupon only the
number of Additional Capital Shares actually so issued, if any, shall be deemed
to have been issued and only the consideration actually received by the Company
(computed as set forth in sub-subsection (1. hereof) shall be deemed to have
been received by the Company. If the purchase price provided for in any rights,
options or warrants, or the additional consideration (if any) payable upon the
conversion or exchange of any convertible or exchangeable securities, or the
rate at which any convertible or exchangeable securities are convertible into or
exchangeable for Capital Shares changes at any time (other than under or by
reason of provisions designed to protect against dilution), the Exercise Price
in effect
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at the time of the change shall be adjusted to the Exercise Price that would
have been in effect at such time had such rights, options, warrants or
convertible or exchangeable securities still outstanding provided for such
changed purchase price, additional consideration or conversion rate, as the case
may be, at the time initially granted, issued or sold.
3. Other Action Affecting Capital Shares. In case after the date
hereof the Company shall take any action affecting the number of Outstanding
Capital Shares, other than an action described in any of the foregoing
subsections (a) through (h) hereof, inclusive, which in the opinion of the
Company's Board of Directors would have a materially adverse effect upon the
rights of the Warrant Holder at the time of exercise of the Warrant, the
Exercise Price shall be adjusted in such manner and at such time as the Board or
Directors on the advice of the Company's independent public accountants may in
good faith determine to be equitable in the circumstances.
(j) In the event the Company shall, at a time while the Warrant
is unexpired and outstanding, take any action which pursuant to subsections (a)
through (h) of this Section 6.1 may result in an adjustment of the Exercise
Price, the Company shall give to the Warrant Holder at its last address known to
the Company written notice of such action ten (10) days in advance of its
effective date in order to afford to the Warrant Holder an opportunity to
exercise the Warrant prior to such action becoming effective.
Section 6.1 Notice of Adjustments. Whenever the Exercise Price or
number of Warrant Shares shall be adjusted pursuant to Section 6.1 hereof, the
Company shall promptly make a certificate signed by its President or a Vice
President and by its Treasurer or Assistant Treasurer or its Secretary or
Assistant Secretary, setting forth in reasonable detail the event requiring the
adjustment, the amount of the adjustment, the method by which such adjustment
was calculated (including a description of the basis on which the Company's
Board of Directors made any determination hereunder), and the Exercise Price and
number of Warrant Shares purchasable at that Exercise Price after giving effect
to such adjustment, and shall promptly cause copies of such certificate to be
mailed (by first class and postage prepaid) to the Holder of the Warrant. In the
event the Company shall, at a time while the Warrant is unexpired and not
exercised in full, take any action that pursuant to subsections (a) through (g)
of Section 6.1 may result in an adjustment of the Exercise Price, the Company
shall give to the Holder of the Warrant at its last address known to the Company
written notice of such action ten (10) days in advance of its effective date in
order to afford to the Holder of the Warrant an opportunity to exercise the
Warrant prior to such action becoming effective.
Section 7. No Impairment. The Company will not, by amendment of
its Articles of Incorporation or By-Laws or through any reorganization, transfer
of assets, consolidation, merger, dissolution, issue or sale of securities or
any other voluntary action, avoid or seek to avoid the observance or performance
of any of the terms of this Warrant, but will at all times in good faith assist
in the carrying out of all such terms and in the taking of all such action as
may be necessary or appropriate in order to protect the rights of the Warrant
Holder against
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impairment. Without limiting the generality of the foregoing, the Company (a)
will not increase the par value of any Warrant Shares above the amount payable
therefor on such exercise, and (b) will take all such action as may be
reasonably necessary or appropriate in order that the Company may validly and
legally issue fully paid and nonassessable Warrant Shares on the exercise of
this Warrant.
Section 8. Rights As Stockholder. Prior to exercise of this
Warrant, the Warrant Holder shall not be entitled to any rights as a stockholder
of the Company with respect to the Warrant Shares, including (without
limitation) the right to vote such shares, receive dividends or other
distributions thereon or be notified of stockholder meetings. However, in the
event of any taking by the Company of a record of the holders of any class of
securities for the purpose of determining the holders thereof who are entitled
to receive any dividend (other than a cash dividend) or other distribution, any
right to subscribe for, purchase or otherwise acquire any shares of stock of any
class or any other securities or property, or to receive any other right, the
Company shall mail to each Warrant Holder, at least ten (10) days prior to the
date specified therein, a notice specifying the date on which any such record is
to be taken for the purpose of such dividend, distribution or right, and the
amount and character of such dividend, distribution or right.
Section 9. Replacement of Warrant. Upon receipt of evidence
reasonably satisfactory to the Company of the loss, theft, destruction or
mutilation of the Warrant and, in the case of any such loss, theft or
destruction of the Warrant, upon delivery of an indemnity agreement or security
reasonably satisfactory in form and amount to the Company or, in the case of any
such mutilation, on surrender and cancellation of such Warrant, the Company at
its expense will execute and deliver, in lieu thereof, a new Warrant of like
tenor.
Section 10. Choice of Law. This Agreement shall be construed
under the laws of the State of New York.
Section 11. Entire Agreement; Amendments. This Warrant, the
Registration Rights Agreement, and the Agreement contain the entire
understanding of the parties with respect to the matters covered hereby and
thereby. No provision of this Warrant may be waived or amended other than by a
written instrument signed by the party against whom enforcement of any such
amendment or waiver is sought.
Section 12. Restricted Securities.
(a) Registration or Exemption Required. This Warrant has been
issued in a transaction exempt from the registration requirements of the
Securities Act in reliance upon the provisions of Section 4(2) promulgated by
the SEC under the Securities Act. This Warrant and the Warrant Shares issuable
upon exercise of this Warrant may not be resold except pursuant to an effective
registration statement or an exemption to the registration requirements of the
Securities Act and applicable state laws.
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(b) Legend. Any replacement Warrants issued pursuant to Section 2
hereof and any Warrant Shares issued upon exercise hereof, shall bear the
following legend:
"THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"), OR ANY OTHER APPLICABLE SECURITIES LAWS AND
HAVE BEEN ISSUED IN RELIANCE UPON AN EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND SUCH OTHER
SECURITIES LAWS. NEITHER THIS SECURITY NOR ANY INTEREST OR
PARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED,
TRANSFERRED, PLEDGED, ENCUMBERED, HYPOTHECATED OR OTHERWISE
DISPOSED OF, EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO A TRANSACTION
WHICH IS EXEMPT FROM, OR NOT SUBJECT TO, SUCH REGISTRATION. THE
HOLDER OF THIS CERTIFICATE IS THE BENEFICIARY OF CERTAIN
OBLIGATIONS OF THE COMPANY SET FORTH IN A PRIVATE EQUITY LINE OF
CREDIT AGREEMENT, DATED AS OF MARCH 27, 1998, BETWEEN
NEOTHERAPEUTICS, INC. AND KINGSBRIDGE CAPITAL LIMITED. A COPY OF
THE PORTION OF THE AFORESAID AGREEMENT EVIDENCING SUCH
OBLIGATIONS MAY BE OBTAINED FROM THE COMPANY'S EXECUTIVE
OFFICES."
Removal of such legend shall be in accordance with the legend removal provisions
in the Agreement.
(c) No Other Legend or Stock Transfer Restrictions. No legend
other than the one specified in Section 12(b) has been or shall be placed on the
share certificates representing the Warrant Shares and no instructions or "stop
transfer orders," so called, "stock transfer restrictions" or other restrictions
have been or shall be given to the Company's transfer agent with respect thereto
other than as expressly set forth in this Section 12.
(d) Assignment. Assuming the conditions of Section 12(a) above
regarding registration or exemption have been satisfied, the Warrant Holder may
sell, transfer, assign, pledge or otherwise dispose of this Warrant, in whole or
in part. The Warrant Holder shall deliver a written notice to Company,
substantially in the form of the Assignment attached hereto as Exhibit B,
indicating the person or persons to whom the Warrant shall be assigned and the
respective number of warrants to be assigned to each assignee. The Company shall
effect the assignment within ten (10) days, and shall deliver to the assignee(s)
designated by the Warrant Holder a Warrant or Warrants of like tenor and terms
for the appropriate number of shares.
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(e) Investor's Compliance. Nothing in this Section 12 shall
affect in any way the Investor' s obligations under any agreement to comply with
all applicable securities laws upon resale of the Common Stock.
Section 13. Notices. All notices, demands, requests, consents,
approvals, and other communications required or permitted hereunder shall be in
writing and shall be (i) personally served, (ii) deposited in the mail,
registered or certified, return receipt requested, postage prepaid, (iii)
delivered by reputable air courier service with charges prepaid, or (iv)
transmitted by hand delivery, telegram or facsimile, addressed as set forth
below or to such other address as such party shall have specified most recently
by written notice. Any notice or other communication required or permitted to be
given hereunder shall be deemed effective (a) upon hand delivery or delivery by
facsimile (with accurate confirmation generated by the transmitting facsimile
machine) at the address or number designated below (if delivered on a business
day during normal business hours where such notice is to be received), or the
first business day following such delivery (if delivered other than on a
business day during normal business hours where such notice is to be received)
or (b) on the second business day following the date of mailing by express
courier service, fully prepaid, addressed to such address, or upon actual
receipt of such mailing, whichever shall first occur. The addresses for such
communications shall be:
If to the Company:
Neotherapeutics, Inc,
157 Technology Drive
Attention: Alvin J. Glasky
Irvine, California 92618
Telephone: (714) 788-6700
Facsimile: (714) 788-6706
with a copy (which shall not constitute notice) to:
Stradling, Yocca, Carlson & Rauth
660 Newport Center Drive, Suite 1600
Newport Beach, California 92660
Attention: Craig Carlson
Telephone: (714) 725-4000
Facsimile: (714) 725-4100
if to the Investor:
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Adam Gurney
Kingsbridge Capital Limited
Main Street
Kilcullen, County Kildare
Republic of Ireland
Telephone: 011-353-45-481-811
Facsimile: 011-353-45-482-003
with a copy (which shall not constitute notice) to:
Rogers & Wells LLP
200 Park Avenue, 52nd Floor
New York, NY 10166
Attention: Sara Hanks, Esq.
Telephone: (212) 878-8000
Facsimile: (212) 878-8375
Either party hereto may from time to time change its address or facsimile number
for notices under this Section 13 by giving at least ten (10) days' prior
written notice of such changed address or facsimile number to the other party
hereto.
Section 14. Miscellaneous. This Warrant and any term hereof may
be changed, waived, discharged or terminated only by an instrument in writing
signed by the party against which enforcement of such change, waiver, discharge
or termination is sought. The headings in this Warrant are for purposes of
reference only, and shall not limit or otherwise affect any of the terms hereof.
The invalidity or unenforceability of any provision hereof shall in no way
affect the validity or enforceability of any other provision.
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IN WITNESS WHEREOF, this Warrant was duly executed by the
undersigned, thereunto duly authorized, as of the date first set forth above.
NEOTHERAPEUTICS, INC.
By: /s/ Alvin J. Glasky
--------------------------------
Alvin J. Glasky
President
Attested:
By: /s/Samuel Gulko
--------------------------------
Name: Samuel Gulko
Title: Assistant Secretary
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EXHIBIT A TO THE WARRANT
EXERCISE FORM
NEOTHERAPEUTICS, INC.
The undersigned hereby irrevocably exercises the right to purchase
__________________ shares of Common Stock of Neotherapeutics, Inc., a Delaware
corporation, evidenced by the attached Warrant, and herewith makes payment of
the Exercise Price with respect to such shares in full in the form of [cash or
check in the amount of $________], [______] Warrant Shares, which represent the
amount of Warrant Shares as provided in the attached Warrant to be canceled in
connection with such exercise], all in accordance with the conditions and
provisions of said Warrant.
The undersigned requests that stock certificates for such Warrant Shares
be issued, and a Warrant representing any unexercised portion hereof be issued,
pursuant to this Warrant in the name of the registered Holder and delivered to
the undersigned at the address set forth below.
Dated:_______________________________________
_____________________________________________
Signature of Registered Holder
Name of Registered Holder (Print)
_____________________________________________
Address
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NOTICE
The signature to the foregoing Exercise Form must correspond to the name
as written upon the face of the attached Warrant in every particular, without
alteration or enlargement or any change whatsoever.
A-ii
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EXHIBIT B TO THE WARRANT
ASSIGNMENT
(To be executed by the registered Warrant Holder desiring to transfer the
Warrant)
FOR VALUED RECEIVED, the undersigned Warrant Holder of the attached
Warrant hereby sells, assigns and transfers unto the persons below named the
right to purchase ______________ shares of the Common Stock of Neotherapeutics,
Inc. evidenced by the attached Warrant and does hereby irrevocably constitute
and appoint ______________________ attorney to transfer the said Warrant on the
books of the Company, with full power of substitution in the premises.
Dated:
______________________________
Signature
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Fill in for new Registration of Warrant:
_________________________________________
Name
_________________________________________
Address
_________________________________________
Please print name and address of assignee
(including zip code number)
B-ii
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NOTICE
The signature to the foregoing Assignment must correspond to the name as
written upon the face of the attached Warrant in every particular, without
alteration or enlargement or any change whatsoever.
B-iii