EXHIBIT 4.1
NEOTHERAPEUTICS, INC.
SECURITIES PURCHASE AGREEMENT
APRIL 28, 2000
TABLE OF CONTENTS
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PAGE
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1. Purchase and Sale of Units...............................................................................1
1.1 Sale and Issuance of Units......................................................................1
1.2 Closing; Delivery...............................................................................1
1.3 Definitions.....................................................................................2
2. Representations and Warranties of the Company............................................................2
2.1 Organization, Good Standing and Qualification...................................................2
2.2 Capitalization..................................................................................2
2.3 Authorization and Compliance....................................................................3
2.4 Valid Issuance of Securities....................................................................4
2.5 Governmental Consents...........................................................................4
2.6 Litigation......................................................................................4
2.7 SEC Reports.....................................................................................5
2.8 Absence of Certain Developments.................................................................5
2.9 Intellectual Property...........................................................................6
2.10 Compliance with Other Instruments and Laws; Permits.............................................6
2.11 Title to Assets.................................................................................6
2.12 Certain Fees....................................................................................6
2.13 Form S-3 Eligibility............................................................................7
2.14 Listing and Maintenance Requirements............................................................7
2.15 Private Offering................................................................................7
2.16 Disclosure......................................................................................7
3. Representations and Warranties of the Purchasers.........................................................7
3.1 Authorization...................................................................................7
3.2 Experience......................................................................................8
3.3 Purchase Entirely for Own Account...............................................................8
3.4 Disclosure of Information.......................................................................8
3.5 Restricted Securities...........................................................................8
3.6 Residence...................................................................................... 9
3.7 Further Restrictions on Disposition............................................................ 9
3.8 Legends........................................................................................ 9
3.9 Foreign Investors..............................................................................10
3.10 Offshore Transaction...........................................................................10
3.11 Certain Fees...................................................................................11
4. Conditions of the Purchasers'Obligations at Closing.....................................................12
4.1 Representations and Warranties.................................................................12
4.2 Performance....................................................................................12
4.3 Compliance Certificate.........................................................................12
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4.4 Qualifications.................................................................................12
4.5 Opinion of Company Counsel.....................................................................12
4.6 Registration Rights Agreement..................................................................12
4.7 Glasky Lock-up.................................................................................12
5. Conditions of the Company's Obligations at Closing......................................................12
5.1 Representations and Warranties.................................................................12
5.2 Performance....................................................................................13
5.3 Qualifications.................................................................................13
6. Agreements of the Company...............................................................................13
6.1 Registration Rights............................................................................13
6.2 Subsequent Issuances...........................................................................13
6.3 Furnishing of Information......................................................................14
6.4 Integration....................................................................................14
6.5 Reservation and Listing of Underlying Shares...................................................14
7. Miscellaneous...........................................................................................15
7.1 Survival of Warranties.........................................................................15
7.2 Transfer; Successors and Assigns...............................................................15
7.3 Governing Law..................................................................................15
7.4 Counterparts...................................................................................15
7.5 Titles and Subtitles...........................................................................15
7.6 Notices........................................................................................15
7.7 Currency.......................................................................................16
7.8 Attorney's Fees................................................................................16
7.9 Amendments and Waivers.........................................................................16
7.10 Severability...................................................................................16
7.11 Delays or Omissions; Remedies Cumulative.......................................................16
7.12 Entire Agreement...............................................................................16
7.13 California Corporate Securities Law............................................................17
7.14 Exculpation Among Purchasers...................................................................17
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NEOTHERAPEUTICS, INC.
SECURITIES PURCHASE AGREEMENT
This Securities Purchase Agreement (this "AGREEMENT") is made
as of April 28, 2000 by and among NeoTherapeutics, Inc., a Delaware corporation
(the "COMPANY"), and the investors listed on EXHIBIT A hereto (each a
"PURCHASER" and together the "PURCHASERS").
WHEREAS, the Company desires to issue and sell units (the
"UNITS"), each consisting of four (4) shares of the Company's common stock,
$.001 par value (the "COMMON STOCK") and a warrant to purchase one (1) share of
Common Stock (the "WARRANTS"); and
WHEREAS, each Purchaser desires to purchase Units from the
Company on the terms and subject to the conditions set forth in this Agreement;
NOW, THEREFORE, in consideration of the promises and the
mutual covenants contained in this Agreement, the parties agree as follows:
1. PURCHASE AND SALE OF UNITS.
1.1 SALE AND ISSUANCE OF UNITS.
(a) Subject to the terms and conditions of this
Agreement, each Purchaser agrees, severally and not jointly, to purchase, and
the Company agrees to sell and issue to each such Purchaser, at the Closing,
that number of Units set forth opposite each such Purchaser's name on EXHIBIT A
hereto at a purchase price of $56 per Unit.
1.2 CLOSING; DELIVERY.
(a) The purchase and sale of the Shares shall take
place at the offices of Latham & Watkins, 650 Town Center Drive, Twentieth
Floor, Costa Mesa, California 92626-1925 at 10:00 a.m., on May 1, 2000, or at
such other time and place as the Company and the Purchasers scheduled to
purchase at least a majority of the Units on such date mutually agree upon,
orally or in writing (which time and place are designated as the "CLOSING").
(b) At the Closing, the Company shall deliver to each
Purchaser (i) a certificate representing the shares of Common Stock underlying
the Units being purchased by such Purchaser, (ii) a Warrant to purchase a number
of shares of Common Stock equal to the number of Units being purchased by such
Purchaser in the form attached as EXHIBIT B hereto, (iii) all other documents,
instruments and writings required to be delivered by the Company pursuant to
this Agreement, including an executed Registration Rights Agreement, dated as of
the Closing date, among the Company and the Purchasers, in the form of EXHIBIT C
hereto (the "REGISTRATION RIGHTS AGREEMENT") against (i) payment of the purchase
price therefor by check payable to the Company, by wire transfer to the
Company's bank account or any combination of the foregoing and (ii) all other
documents, instruments and writings required to be delivered by
such Purchaser pursuant to this Agreement, including the executed Registration
Rights Agreement.
1.3 DEFINITIONS. For purposes of this Agreement, (i)
"AFFILIATE" has the meaning set forth in Rule 405 under the Securities Act of
1933, as amended (the "SECURITIES ACT"); and (ii) A "PERSON" means an individual
or corporation, partnership, trust, incorporated or unincorporated association,
joint venture, limited liability company, joint stock company, government (or an
agency or subdivision thereof) or other entity of any kind.
2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company
hereby represents and warrants to each Purchaser that, except as set forth on
the Schedule of Exceptions attached as EXHIBIT D hereto, as of the date
hereof and as of the Closing:
2.1 ORGANIZATION, GOOD STANDING AND QUALIFICATION. The
Company is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware and has all requisite
corporate power and authority to carry on its business as currently conducted
and as proposed to be conducted. The Company has no subsidiaries except as
set forth in Section 2.1 of the Schedule of Exceptions (the "SUBSIDIARIES").
Each Subsidiary is an entity duly organized, validly existing and in good
standing under the laws of its jurisdiction of incorporation or organization
(as applicable) with the requisite corporate power and authority to carry on
its business as currently conducted. The Company and each Subsidiary is duly
qualified to transact business and is in good standing in each jurisdiction
in which the failure so to qualify would (i) adversely affect the legality,
validity or enforceability of the Units or any of this Agreement, the
Registration Rights Agreement or the Warrant (collectively, the "TRANSACTION
DOCUMENTS"), (ii) have or result in a material adverse effect on the results
of operations, assets, prospects, or condition (financial or otherwise) of
the Company and the Subsidiaries, taken as a whole, or (iii) adversely impair
the Company's ability to perform fully on a timely basis its obligations
under any of the Transaction Documents (any of (i), (ii) or (iii), a
"MATERIAL ADVERSE EFFECT").
2.2 CAPITALIZATION.
(a) The authorized capital of the Company consists,
or will consist, immediately prior to the Closing, of: (i) 5,000,000 shares of
Preferred Stock, of which 400 shares have been designated Series A Preferred,
none of which are outstanding and (ii) 25,000,000 shares of Common Stock,
9,565,653 shares of which are issued and outstanding immediately prior to the
Closing.
(b) All of the outstanding shares of the Company's
Common Stock are duly authorized, fully paid and nonassessable and were issued
in compliance with all applicable federal and state securities laws.
(c) The Company has reserved a total of 1,651,430
shares of Common Stock for issuance to officers, directors, employees and
consultants of the Company pursuant to its 1991 and 1997 Stock Option Plans duly
adopted by the Board of Directors and approved by
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the Company's stockholders (the "STOCK PLANS"). Of such reserved shares of
Common Stock, options to purchase 1,066,075 shares have been granted and are
currently outstanding, and 500,605 shares of Common Stock remain available for
future grants under the Stock Plans. In addition, there are options to purchase
329,173 shares of Common Stock granted outside of the Stock Plans currently
outstanding.
(d) Other than the purchase and sale of the Units,
there are no outstanding options, warrants, rights (including conversion or
preemptive rights and rights of first refusal or similar rights) or agreements,
orally or in writing, for the purchase or acquisition from the Company of any of
its securities or any other agreements to participate in the profits of the
Company. No securities of the Company or any Subsidiary are entitled to
preemptive rights, rights of first refusal or similar rights, nor is any holder
of securities of the Company or any Subsidiary entitled to preemptive or similar
rights arising out of any agreement or understanding with the Company or any
Subsidiary by virtue of any of the Transaction Documents.
(e) The Company owns all of the capital stock of each
Subsidiary.
2.3 AUTHORIZATION AND COMPLIANCE.
(a) All corporate action on the part of the Company,
its officers, directors and stockholders necessary for the authorization,
execution and delivery of this Agreement and the Registration Rights Agreement
(collectively, the "AGREEMENTS"), the performance of all obligations of the
Company hereunder and thereunder and the authorization, issuance and delivery of
the Units and the Common Stock issuable upon exercise of the Warrants (together
with the Units, the "SECURITIES") has been taken or will be taken prior to the
Closing, and the Agreements, when executed and delivered by the Company, shall
constitute valid and legally binding obligations of the Company, enforceable
against the Company in accordance with their respective terms except (i) as
limited by applicable bankruptcy, insolvency, reorganization, moratorium,
fraudulent conveyance, and other laws of general application affecting
enforcement of creditors' rights generally, and as limited by laws relating to
the availability of specific performance, injunctive relief, or other equitable
remedies, or (ii) to the extent the indemnification provisions contained in the
Registration Rights Agreement may be limited by applicable federal or state
securities laws.
(b) Subject to Section 4.4 of this Agreement, neither
the execution and delivery of the Agreements nor the performance by the Company
of its obligations under the Agreements (including the issuance of the Units and
the Common Stock issuable upon exercise of the Warrants) will: (i) violate any
provisions of the Certificate of Incorporation or the By-laws of the Company;
(ii) with or without the giving of notice or the passage of time, or both,
violate, or be in conflict with, or constitute a default under, or cause or
permit the termination or the acceleration of the maturity of, any debt or
obligation of the Company; (iii) require notice to or the consent of any party
to any agreement or commitment, including, without limitation, any lease or
license to which the Company is a party, or by which it or its properties is
bound or subject; (iv) result in the creation or imposition of any security
interest, lien, or other
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encumbrance upon any property or assets of the Company under any agreement or
commitment to which it is a party, or by which it or its properties is bound or
subject; or (v) violate any statute or law or any judgment, decree, order,
regulation or rule of any court or governmental authority to which the Company
or its properties is bound or subject.
2.4 VALID ISSUANCE OF SECURITIES. The shares of Common
Stock and Warrants underlying the Units when issued, sold and delivered in
accordance with the terms hereof will be duly and validly issued, fully-paid
and nonassessable, free and clear of all liens, encumbrances and rights of
first refusal if any kind ("collectively, "LIENS") and, based in part upon
the representations of the Purchasers in this Agreement, will be issued in
compliance with all applicable federal and state securities laws regarding
registration or qualification. The shares of Common Stock issuable upon
exercise of the Warrants have been duly and validly authorized and reserved
for issuance and, upon issuance in accordance with the terms of the Warrants,
shall be duly and validly issued, fully-paid and nonassessable, free and
clear of all Liens and, based in part upon the representations of the
Purchasers in this Agreement, such shares of Common Stock if issued at the
Closing would be issued in compliance with all applicable federal and state
securities laws.
2.5 GOVERNMENTAL CONSENTS. No consent, approval, order or
authorization of, or registration, qualification, designation, declaration or
filing with, any federal, state or local governmental authority on the part of
the Company is required in connection with the offer, sale or issuance of the
Units (and the Common Stock issuable upon exercise of the Warrants) or the
consummation of any other transactions contemplated by this Agreement, except
for (i) filings pursuant to Section 25102(f) of the California Corporate
Securities Law of 1968, as amended, and the rules thereunder, other applicable
state securities laws and Regulation D of the Securities Act, which filings
shall be effected within the requisite time periods, (ii) filings required under
this Agreement or the Registration Rights Agreement, (iii) filing of
application(s) with the Nasdaq National Market ("NASDAQ") for the listing of
shares of Common Stock registered pursuant to the Registration Rights Agreement
and (iv) filings required by the applicable Canadian securities regulatory
agencies.
2.6 LITIGATION. There is no action, suit, proceeding or
investigation pending or, to the Company's knowledge, currently threatened
against the Company that questions the validity of the Agreements or the right
of the Company to enter into them, or to consummate the transactions
contemplated hereby or thereby, or that might, either individually or in the
aggregate, have a Material Adverse Effect, nor is the Company aware that there
is any basis for the foregoing. The Company or the Subsidiaries are not a party
to or subject to the provisions of any order, writ, injunction, judgment or
decree of any court or government agency or instrumentality specifically
applicable to the Company or the Subsidiaries. There is no action, suit,
proceeding or investigation by the Company currently pending or which the
Company intends to initiate.
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2.7 SEC REPORTS.
(a) The Company has filed all reports required to be
filed by it under the Securities Act and the Securities Exchange Act of 1934, as
amended (the "EXCHANGE ACT") for the two years preceding the date hereof
(collectively, the "SEC REPORTS") on a timely basis or has received a valid
extension of such time for filing and has filed any such SEC Reports prior to
the expiration of such extension. As of their respective dates, the SEC Reports
complied in all material respects with the requirements of the Securities Act or
the Exchange Act, as the case may be, and the rules and regulations of the
Securities and Exchange Commission ("SEC") thereunder applicable to such reports
and registration statements. As of their respective dates, the SEC Reports did
not contain any untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which they were, or will be, made, not
misleading.
(b) The audited consolidated financial statements and
unaudited interim financial statements of the Company included in the SEC
Reports comply as to form in all material respects with applicable accounting
requirements of the Securities Act or the Exchange Act, as applicable, and with
the published rules and regulations of the SEC with respect thereto. The
financial statements and the condensed financial statements, as applicable,
included in the SEC Reports (i) have been prepared in accordance with GAAP
(except as may be indicated therein or in the notes thereto), (ii) present
fairly, in all material respects, the financial position of the Company and its
Subsidiaries as of the dates thereof and the results of their operations and
cash flows for the periods then ended subject, in the case of the unaudited
interim financial statements, to normal year-end audit adjustments and the fact
that certain information and notes have been condensed or omitted in accordance
with the Exchange Act and the rules and regulations promulgated thereunder, and
(iii) are in all material respects in agreement with the books and records of
the Company and its Subsidiaries.
2.8 ABSENCE OF CERTAIN DEVELOPMENTS. Except as
disclosed in the SEC Reports filed with the SEC prior to the date hereof or
in the Company's press releases prior to the date hereof and except for the
transactions contemplated by this Agreement, since December 31, 1999, (a)
there has been no event, occurrence or development that has or that is
reasonably likely to result in a Material Adverse Effect, (b) the Company or
the Subsidiaries have not incurred any liabilities (contingent or otherwise)
other than (i) liabilities incurred in the ordinary course of business
consistent with past practice and (ii) liabilities not required to be
reflected in the Company's financial statements pursuant to GAAP or required
to be disclosed in filings made with the Commission, (c) the Company has not
altered its method of accounting or the identity of its auditors and (d) the
Company has not declared or made any payment or distribution of cash or other
property to its stockholders or officers or directors (other than in
compliance with existing Company stock or stock option plans and existing
agreements and terms of employment) with respect to its capital stock, or
purchased, redeemed (or made any agreements to purchase or redeem) any shares
of its capital stock.
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2.9 INTELLECTUAL PROPERTY. The Company owns or possesses
sufficient legal rights to all patents, patent applications, trademarks, service
marks, tradenames, copyrights, trade secrets, licenses, information and
proprietary rights and processes necessary or material for their respective
businesses as described in the SEC Reports and which the failure to so have
would have a Material Adverse Effect (collectively, the "Intellectual Property
Rights") without, to the Company's knowledge, any conflict with, or infringement
of, the rights of others and the Company has not been notified of any conflict
or potential conflict with the rights of others. To the Company's knowledge, all
such Intellectual Property Rights are enforceable and there is no existing
infringement by any other Person of any such Intellectual Property Rights. All
patent applications that have been filed by the Company to the Patent and
Trademark Office have been duly filed by the Company and the Company have taken
all actions that are reasonably necessary to maintain the prosecution of such
patent applications. Neither the Company nor any subsidiary has received any
written communications alleging that the Company or its Subsidiaries has
violated or, by conducting their business, would violate any of the patents,
trademarks, service marks, tradenames, copyrights, trade secrets or other
proprietary rights or processes of any other Person.
2.10 COMPLIANCE WITH OTHER INSTRUMENTS AND LAWS;
PERMITS. The Company is not in violation or default of any provision of its
Certificate of Incorporation or By-Laws. The Company is not in violation of,
or default under any provision of any instrument, mortgage, deed of trust,
loan, contract, commitment, judgment, decree, order or obligation to which it
is a party or by which it or any of its properties are bound, which
violations or defaults, individually or in the aggregate, would have a
Material Adverse Effect. To the Company's knowledge, having taken all steps
to ensure compliance reasonably expected to be taken by companies engaged in
businesses similar to the business of the Company as described in the SEC
Reports, it is not in violation of any provision of any federal, state or
local statute, rule or governmental regulation, which violations,
individually or in the aggregate, would have a Material Adverse Effect. The
Company and its Subsidiaries have all franchises, permits, licenses and any
similar authority necessary for the conduct of their business as described in
the SEC Reports, the lack of which would have a Material Adverse Effect. The
Company or the Subsidiaries are not in default in any material respect under
any of such franchises, permits, licenses or other similar authority.
2.11 TITLE TO ASSETS. The Company has good and marketable
title to all of its assets which are material to its business as described in
the SEC Reports, free and clear of all mortgages, liens, loans and encumbrances,
except such encumbrances and liens which arise in the ordinary course of
business and do not individually or in the aggregate materially impair the
Company's ownership or use of such assets. With respect to the assets it leases,
the Company is in material compliance with such leases and, to its knowledge,
holds a valid leasehold interest free of any liens, claims or encumbrances.
2.12 CERTAIN FEES. Except as are payable to Brighton
Capital, Ltd. and Dlouhy Investments Inc., no fees or commissions will be
payable by the Company to any broker, financial advisor or consultant,
finder, placement agent, investment banker, bank or other Person
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with respect to the transactions contemplated by this Agreement. The Purchasers
shall have no obligation with respect to any fees that may be payable by the
Company in connection with the transactions contemplated by this Agreement.
2.13 FORM S-3 ELIGIBILITY. The Company is eligible to
register its Common Stock for resale under Form S-3 promulgated under the
Securities Act.
2.14 LISTING AND MAINTENANCE REQUIREMENTS. The Company has
not, in the two years preceding the date hereof received notice (written or
oral) from the NASDAQ or any other stock exchange, market or trading facility on
which the Common Stock is or has been listed (or on which it has been quoted) to
the effect that the Company is not in compliance with the listing or maintenance
requirements of such exchange, market or trading facility. The Company is, and
has no reason to believe that it will not in the foreseeable future continue to
be, in compliance with all such listing and maintenance requirements.
2.15 PRIVATE OFFERING. Assuming the accuracy of the
representations and warranties of the Purchasers set forth in Section 3, the
offer, issuance and sale of the Units to the Purchasers as contemplated hereby
are exempt from the registration requirements of the Securities Act. Neither the
Company nor any Person acting on its behalf has taken or is, to the knowledge of
the Company, contemplating taking any action which could subject the offering,
issuance or sale of the Units to the registration requirements of the Securities
Act including soliciting any offer to buy or sell the Units by means of any form
of general solicitation or advertising.
2.16 DISCLOSURE. All written materials provided by the
Company to the Purchasers regarding the Company, its business and the
transactions contemplated hereby, including the Exhibits to this Agreement,
furnished by or on behalf of the Company are true and correct and do not
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading.
3. REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS. Each
Purchaser, severally and not jointly, hereby represents and warrants to the
Company that as of the date hereof and as of the Closing:
3.1 AUTHORIZATION. Such Purchaser has full power and
authority to enter into the Agreements. The Agreements, when executed and
delivered by such Purchaser, will constitute valid and legally binding
obligations of such Purchaser, enforceable in accordance with their
respective terms, except (a) as limited by applicable bankruptcy, insolvency,
reorganization, moratorium, fraudulent conveyance, and any other laws of
general application affecting enforcement of creditors' rights generally, and
as limited by laws relating to the availability of a specific performance,
injunctive relief, or other equitable remedies, or (b) to the extent the
indemnification provisions contained in the Registration Rights Agreement may
be limited by applicable federal or state securities laws.
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3.2 EXPERIENCE. Such Purchaser has experience as an
investor in securities of companies in the developmental stage and
acknowledges that it can bear the economic risk of its investment in the
Securities. Such Purchaser has either (a) a pre-existing personal or business
relationship with the Company or any of its officers, directors or
controlling persons that is of a nature and duration which enables the
Purchaser to be aware of the character, business acumen and general business
and financial circumstances of the Company or (b) by reason of its business
or financial experience or the business or financial experience of its
professional advisors who are unaffiliated with and who are not compensated
by the Company or any affiliate or selling agent of the Company, directly or
indirectly, has the capacity to protect its own interests in connection with
its purchase of the Securities. Such Purchaser has the financial capacity to
bear the risk of this investment.
3.3 PURCHASE ENTIRELY FOR OWN ACCOUNT. The Securities
to be acquired by the Purchaser will be acquired for investment for the
Purchaser's own account not as a nominee or agent, and not with a view to the
resale or distribution of any part thereof, and the Purchaser has no present
intention of selling, granting any participation in, or otherwise
distributing the same. The Purchaser does not presently have any contract,
undertaking, agreement or arrangement with any Person to sell, transfer or
grant participations to such Person or to any third Person, with respect to
any of the Securities. The Purchaser has not been formed for the specific
purpose of acquiring solely the Securities.
3.4 DISCLOSURE OF INFORMATION. Such Purchaser has
received and reviewed information about the Company and has had an
opportunity to discuss the Company' business, management and financial
affairs with its management and to review the Company's facilities. Such
Purchaser understands and acknowledges that such discussions, as well as any
written information issued by the Company (i) were intended to describe the
aspects of the Company's business and prospects which the Company believes to
be material, but were not necessarily an exhaustive description, and (ii) may
have contained forward-looking statements involving known and unknown risks
and uncertainties which may cause the Company's actual results in future
periods or plans for future periods to differ materially from what was
anticipated and that no representations or warranties were or are being made
with respect to any such forward-looking statements or the probability of
achieving any of the results projected in any of such forward-looking
statements. Nothing contained in this Section 3.4 shall limit in any respect
the Company's representations and warranties contained in this Agreement.
3.5 RESTRICTED SECURITIES. The Purchaser understands
that the Securities have not been, and will not, prior to the Closing, be,
registered under the Securities Act, by reason of a specific exemption from
the registration provisions of the Securities Act which depends upon, among
other things, the bona fide nature of the investment intent and the accuracy
of the Purchaser's representations as expressed herein. The Purchaser
understands that the Securities are "restricted securities" under applicable
U.S. federal and state securities laws and that, pursuant to these laws, the
Purchaser must hold the Securities indefinitely unless they are registered
with the SEC and qualified by state authorities, or an exemption from such
registration and qualification requirements is available. The Purchaser
acknowledges that the Company has
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no obligation to register or qualify the Securities for resale except as set
forth in the Registration Rights Agreement. The Purchaser further acknowledges
that if an exemption from registration or qualification is available, it may be
conditioned on various requirements including, but not limited to, the time and
manner of sale, the holding period for the Securities, and on requirements
relating to the Company which are outside of the Purchaser's control, and which
the Company is under no obligation and may not be able to satisfy. Such
Purchaser acknowledges that the Company will make a notation on its stock books
regarding the restrictions on transfers set forth in this Section 3 and will
transfer securities on the books of the Company only to the extent not
inconsistent therewith.
3.6 RESIDENCE. If the Purchaser is an individual, the
Purchaser resides in the state or province identified in the address of the
Purchaser set forth on the signature pages hereof or EXHIBIT A; if the Purchaser
is an entity, then the office or offices of the Purchaser in which its
investment decision was made is located at the address or addresses of the
Purchaser set on such signature pages or EXHIBIT A.
3.7 FURTHER RESTRICTIONS ON DISPOSITION. Without in
any way limiting the provisions of Section 3.5, such Purchaser agrees not to
make any disposition of all or any portion of the Securities unless and until
the transferee has agreed in writing for the benefit of the Company to be
bound by this Section 3 and the Agreements (provided and to the extent this
Section 3 and the Agreements are then applicable), and any of the following
conditions apply: (a) there is then in effect a registration statement under
the Securities Act covering such proposed disposition and the disposition is
made in accordance with such registration statement; or (b) (i) such
Purchaser shall have notified the Company of the proposed disposition and
shall have furnished the Company with a statement of the circumstances
surrounding the proposed disposition and (ii) if reasonably requested by the
Company, such Purchaser shall have furnished the Company with an opinion of
counsel, reasonably acceptable to the Company, that such disposition will not
require registration under the Securities Act. It is agreed that the Company
will not require opinions of counsel for transactions made pursuant to Rule
144. Notwithstanding clauses (a) and (b), no such registration statement or
opinion shall be required for a transfer by a Purchaser to her, his or its
(1) constituent partner or member, (2) former partner or member, (3) estate,
(4) spouse, sibling or the lineal descendants or ancestors of the Purchaser
or his or her spouse or (5) affiliate; provided, however, that any such
transferee agrees in writing to be subject to the terms of the Agreements
then applicable to the Purchaser.
3.8 LEGENDS. The Purchaser understands that the
Securities, and any securities issued in respect of or exchange for the
Securities, may bear one or all of the following legends until they are no
longer required by law or the provisions of this Agreement:
(a) "THE SECURITIES REPRESENTED BY THIS CERTIFICATE
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, (THE
"SECURITIES ACT") PURSUANT TO AN EXEMPTION FROM REGISTRATION CONTAINED IN
REGULATION S PROMULGATED UNDER THE SECURITIES ACT, AND MAY NOT BE TRANSFERRED
EXCEPT IN ACCORDANCE
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WITH THE PROVISIONS OF REGULATION S, PURSUANT TO A REGISTRATION UNDER THE
SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM REGISTRATION. NO
HEDGING TRANSACTIONS INVOLVING THESE SECURITIES MAY BE CONDUCTED EXCEPT IN
COMPLIANCE WITH THE SECURITIES ACT."
(b) Any legend required by the Blue Sky laws of any
state to the extent such laws are applicable to the shares represented by the
certificate so legended.
The legend set forth above shall be removed by the Company from any certificate
evidencing Securities upon transfer of such Securities in compliance with Rule
144(k) under the Securities Act or upon delivery to the Company of an opinion,
in form and substance and by counsel reasonably satisfactory to the Company,
that a registration statement under the Securities Act is at that time in effect
with respect to the legended security or that such security can be freely
transferred without such a registration statement being in effect and that such
transfer will not jeopardize the exemption or exemptions from registration
pursuant to which the securities were issued.
3.9 FOREIGN INVESTORS. The Purchaser hereby represents
that it has satisfied itself as to the full observance of the laws of its
jurisdiction in connection with any invitation to subscribe for the
Securities or any use of this Agreement, including (i) the legal requirements
within its jurisdiction for the purchase of the Securities, (ii) any foreign
exchange restrictions applicable to such purchase, (iii) any governmental or
other consents that may need to be obtained, and (iv) the income tax and
other tax consequences, if any, that may be relevant to the purchase,
holding, redemption, sale, or transfer of the Securities. Such Purchaser's
subscription and payment for and continued beneficial ownership of the
Securities, will not violate any applicable securities or other laws of the
Purchaser's jurisdiction and will not require the Company to obtain any
permit, make any filing or take any other action in such jurisdiction, other
than the filing of Form 45-501F1 with the Ontario Securities Commission and
payment of the associated fee.
3.10 OFFSHORE TRANSACTION.
(a) The Purchaser is not organized under the laws of
or is not a citizen or resident of the United States and was not formed for the
purpose of investing in Regulation S securities, does not have any of its
securities registered under the Exchange Act, and is not owned by U.S. Persons
as defined in Regulation S and herein.
(b) At the time the buy order to purchase the Shares
was originated, the Purchaser was outside the United States.
(c) No offer to purchase the Shares was made in the
United States nor were any "directed selling efforts" as defined in Rule 902 of
Regulation S made in the United States.
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(d) All subsequent offers and sales of the Shares
shall be made in compliance with Regulation S, pursuant to registration of the
securities under the Securities Act or pursuant to an exemption from such
registration.
(e) The Purchaser agrees that from the date hereof
until after one year after the closing of the purchase of the Shares hereunder
(the "Restrictive Period"), the Purchaser agrees, upon any offer, sale, or
transfer of the Shares (including any interests therein), the Purchaser, or any
successor, or any Professional under its direction (as defined below) (except
for sales of any Shares registered under the Securities Act or otherwise exempt
from such registration) (i) will not sell to a U.S. Person or to an account of
or for the benefit of a U.S. Person or to anyone believed to be a U.S. Person;
(ii) will not engage in any efforts to sell the Shares in the United States;
(iii) will, at the time the buy order or transfer is originated, believe the
buyer or transferee is outside the United States; (iv) will send to any
transferee who is a Professional, whether acting as agent or principal, a
confirmation or other notice stating that the Professional is subject to the
same restrictions on transfer to U.S. Persons or for the account of or benefit
of U.S. Persons during the Restrictive Period as provided herein; and (v) will
not in connection with the common stock of the Company engage in the United
States in any short selling, option writing, equity swaps, or other types of
hedging transactions or derivative transactions. The Company will not honor or
register and will not be obligated to honor or register any transfer in
violation of these provisions.
(f) For purpose hereof, in general, a "U.S. Person;"
means any natural person, resident of the United States; any partnership or
corporation organized or incorporated under the laws of the United States or any
state or territory thereof; any estate of which any executor or administrator is
a U.S. Person; any trust of which any trustee is a U.S. Person; any agency or
branch of a foreign entity located in the United States; any nondiscretionary
account or similar account, other than estate or trust, held by a dealer or
other fiduciary organized, incorporated, or (if an individual) resident of the
United States; and any partnership or corporation if organized or incorporated
under the laws of any foreign jurisdiction and formed by a U.S. Person
principally for the purpose of investing in securities and not registered under
the Securities Act unless it is organized and incorporated and owned by
"accredited investors," as defined under Rule 501(a) under the Securities Act,
who are not natural persons, estates or trusts. "U.S. Person" is further defined
in Rule 902(o) under the Securities Act.
(g) A "Professional" is a "distributor" as defined in
Rule 902(c) under the Securities Act (generally any underwriter, or other
person, who participates, pursuant to a contractual arrangement, in the
distribution of the Shares); a dealer as defined in Section 2(12) of the
Exchange Act (encompassing those who engage in the business of trading or
dealing in securities as agent, broker, or principal); or a person receiving a
selling concession, fee, or other remuneration in respect of the sale of the
Shares sold.
3.11 CERTAIN FEES. No fees or commissions will be
payable by the Purchasers to any broker, financial advisor or consultant,
finder, placement agent, investment banker, bank or other Person with respect
to the transactions contemplated by this Agreement. The Company
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shall have no obligation with respect to any fees that may be payable by the
Purchasers in connection with the transactions contemplated by this Agreement.
4. CONDITIONS OF THE PURCHASERS' OBLIGATIONS AT CLOSING. The
obligations of each Purchaser to the Company under this Agreement are subject to
the fulfillment, on or before the Closing, of each of the following conditions,
unless otherwise waived by such Purchaser:
4.1 REPRESENTATIONS AND WARRANTIES. The
representations and warranties of the Company contained in Section 2 shall be
true and correct on and as of the Closing with the same effect as though such
representations and warranties had been made on and as of the date of the
Closing.
4.2 PERFORMANCE. The Company shall have performed and
complied with all covenants, agreements, obligations and conditions contained
in this Agreement that are required to be performed or complied with by it on
or before the Closing.
4.3 COMPLIANCE CERTIFICATE. The President of the
Company shall deliver to the Purchasers at the Closing a certificate
certifying that the conditions specified in Sections 4.1 and 4.2 have been
fulfilled.
4.4 QUALIFICATIONS. All authorizations, approvals or
permits, if any, of any governmental authority or regulatory body of the
United States or of any state that are required to be in effect as of the
Closing in connection with the lawful issuance and sale of the Shares
pursuant to this Agreement shall be obtained and effective as of the Closing.
4.5 OPINION OF COMPANY COUNSEL. The Purchasers shall
have received from Latham & Watkins, counsel for the Company, an opinion,
dated as of the Closing, in substantially the form of EXHIBIT E hereto.
4.6 REGISTRATION RIGHTS AGREEMENT. The Company, each
Purchaser and shall have executed and delivered the Registration Rights
Agreement.
4.7 GLASKY LOCK-UP. Dr. Alvin J. Glasky shall have
entered into a lock-up agreement in substantially the form attached as
EXHIBIT F hereto.
5. CONDITIONS OF THE COMPANY'S OBLIGATIONS AT CLOSING. The
obligations of the Company to each Purchaser under this Agreement are subject
to the fulfillment, on or before the Closing, of each of the following
conditions, unless otherwise waived:
5.1 REPRESENTATIONS AND WARRANTIES. The
representations and warranties of each Purchaser contained in Section 3 shall
be true and correct on and as of the Closing with the same effect as though
such representations and warranties had been made on and as of the Closing.
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5.2 PERFORMANCE. All covenants, agreements and
conditions contained in this Agreement to be performed by the Purchasers on
or prior to the Closing shall have been performed or complied with in all
material respects.
5.3 QUALIFICATIONS. All authorizations, approvals or
permits, if any, of any governmental authority or regulatory body of the
United States or of any state that are required to be in effect as of the
Closing in connection with the lawful issuance and sale of the Units pursuant
to this Agreement shall be obtained and effective as of the Closing.
6. AGREEMENTS OF THE COMPANY.
6.1 REGISTRATION RIGHTS. In the event that the Company
fails to obtain effectiveness of a registration statement covering the resale
of the shares of Common Stock underlying the Units and issuable upon exercise
of the Warrants on or before the Effectiveness Date as defined in the
Registration Rights Agreement, the Company shall, without requiring the
payment of any additional consideration and without derogating from the
obligations of the Company pursuant to the Registration Rights Agreement, on
the day after the Effectiveness Date, issue to each Purchaser two (2)
additional shares of Common Stock for every five (5) Units purchased by such
Purchaser. Such additional shares shall be deemed for all purposes whatsoever
to be part of the Units. The Company shall not be required to issue
fractional shares pursuant to this Section 6.1, but shall pay cash in lieu of
any fractional share otherwise issuable in an amount equal to the fair market
value of a share of Common Stock on the date of such issuance multiplied by
such fraction of a share otherwise to be issued.
6.2 SUBSEQUENT ISSUANCES. For a period of ninety (90)
days following the Closing, the Company shall not, without the consent of
Dlouhy Investments, Inc., such consent not to be unreasonably withheld, issue
or sell any shares of Common Stock or any securities convertible or
exchangeable into shares of Common Stock other than: (i) options, warrants or
rights granted to employees, officers, directors, consultants or other
service providers of the Company under any stock option plan or stockholders
rights plan heretofore adopted by the Company; (ii) shares of Common Stock
issuable upon the exercise of options, warrants or rights outstanding as of
the date hereof or issued in accordance with this Section 6.2 and upon
conversion of any convertible securities of the Company outstanding as of the
date hereof or issued in accordance with this Section 6.2; (iii) securities
issued (A) to an arm's length Person in connection with a corporate alliance,
development agreement or other strategic relationship with an entity engaged
in a business related to the business of the Company or (B) in connection
with a business combination or merger involving the Company; (iv) securities
issued pursuant to a Dividend Reinvestment Plan hereafter adopted by the
Company; or (v) a public offering of the Common Stock with gross proceeds to
the Company of not less than Forty Million Dollars ($40,000,000), provided
that (A) the Purchasers are permitted to register for sale in such offering
shares of Common Stock underlying the Units and issuable upon the exercise of
the Warrants and (B) the Purchasers are not prevented from selling shares of
Common Stock pursuant to their rights under the Registration Rights Agreement
by virtue of such public offering.
-13-
6.3 FURNISHING OF INFORMATION. As long as the
Purchasers own shares of Common Stock underlying the Units or issuable upon
exercise of the Warrants, the Company covenants to file timely (or obtain
extensions in respect thereof and file within the applicable grace period)
all reports required to be filed by the Company after the date hereof
pursuant to the Exchange Act. So long as the Purchasers own shares of Common
Stock underlying the Units or issuable upon exercise of the Warrants, if the
Company is not required to file reports pursuant to such laws, it will
prepare and furnish to the Purchasers and make publicly available in
accordance with Rule 144(c) promulgated under the Securities Act such
information as is required for the Purchasers to sell the Securities under
Rule 144 promulgated under the Securities Act. The Company further covenants
that it will take such further action as any holder of Securities may
reasonably request, all to the extent required from time to time to enable
such Person to sell shares of the Company without registration under the
Securities Act within the limitation of the exemptions provided by Rule 144
promulgated under the Securities Act. Upon the request of any such Person,
the Company shall deliver to such Person a written certification of a duly
authorized officer as to whether it has complied with such requirements.
6.4 INTEGRATION. The Company shall not, and shall use
its best efforts to ensure that, no Affiliate shall, sell, offer for sale or
solicit offers to buy or otherwise negotiate in respect of any security (as
defined in Section 2 of the Securities Act) that would be integrated with the
offer or sale of the Units in a manner that would require the registration
under the Securities Act of the sale of the Units to the Purchasers or that
would be integrated with the offer or sale of the Units for purposes of the
rules and regulations of the Nasdaq Stock Market.
6.5 RESERVATION AND LISTING OF UNDERLYING SHARES.
(a) The Company shall (i) in the time and manner
required by the NASDAQ and such other national securities exchange or market or
trading or quotation facility on which the Common Stock is then listed for
trading, prepare and file with the NASDAQ (and such other national securities
exchange or market or trading or quotation facility on which the Common Stock is
then listed for trading) an additional shares listing application covering a
number of shares of Common Stock which is not less than the number of shares of
Common Stock underlying the Units and issuable upon exercise of the Warrants,
(ii) take all steps necessary to cause such shares of Common Stock to be
approved for listing in the NASDAQ (as well as on any such other national
securities exchange or market or trading or quotation facility on which the
Common Stock is then listed) as soon as possible thereafter, and (iii) provide
to the Purchasers evidence of such listing, and the Company shall maintain the
listing of its Common Stock thereon.
(b) The Company shall maintain a reserve of shares of
Common Stock for issuance upon exercise in full of the Warrants in accordance
with the Warrants, in such amount as may be required to fulfill its obligations
in full under the Warrants.
-14-
7. MISCELLANEOUS.
7.1 SURVIVAL OF WARRANTIES. Unless otherwise set forth
in this Agreement, the warranties, representations and covenants of the
Company and the Purchasers contained in or made pursuant to this Agreement
shall survive the execution and delivery of this Agreement and the Closing
for a period of eighteen (18) months following the Closing; provided,
however, that such representations and warranties are only made as of the
date of such execution and delivery and as of such Closing.
7.2 TRANSFER; SUCCESSORS AND ASSIGNS. The terms and
conditions of this Agreement shall inure to the benefit of and be binding
upon the respective successors and assigns of the parties as are permitted by
the Agreements. Nothing in this Agreement, express or implied, is intended to
confer upon any party other than the parties hereto or their respective
successors and permitted assigns any rights, remedies, obligations, or
liabilities under or by reason of this Agreement, except as expressly
provided in this Agreement.
7.3 GOVERNING LAW. This Agreement and all acts and
transactions pursuant hereto and the rights and obligations of the parties
hereto shall be governed, construed and interpreted in accordance with the
laws of the State of California, without giving effect to its principles of
conflicts of law or choice of law.
7.4 COUNTERPARTS. This Agreement may be executed in
any number of counterparts and signatures may be delivered by facsimile, each
of which may be executed by less than all Purchasers, each of which shall be
enforceable against the parties actually executing such counterparts, and all
of which together shall constitute one instrument.
7.5 TITLES AND SUBTITLES. The titles and subtitles
used in this Agreement are used for convenience only and are not to be
considered in construing or interpreting this Agreement.
7.6 NOTICES. Any and all notices or other
communications or deliveries hereunder shall be in writing and shall be
deemed given and effective on the earliest of (i) the date of transmission,
if such notice or communication is delivered via facsimile at the facsimile
telephone number specified in this Section prior to 2:00 p.m. (California
time) on a business day, (ii) the business day after the date of
transmission, if such notice or communication is delivered via facsimile at
the facsimile telephone number specified in this Section later than 2:00 p.m.
(California time) on any date and earlier than 11:59 p.m. (California time)
on such date, (iii) the business day following the date of mailing, if sent
by nationally recognized overnight courier service, or (iv) upon actual
receipt by the party to whom such notice is required to be given. The
addresses for such communications shall be: (i) if to the Company, to 157
Technology Drive, Irvine, CA 92618, Attention: Chief Financial Officer, or to
facsimile no. (949) 788-6706, with a copy to Latham & Watkins, 650 Town
Center Drive, Suite 2000, Costa Mesa, California 92626, attention Alan W.
Pettis, Esq., or (ii) if to a Purchaser, to such Purchaser at the address or
facsimile number appearing on Exhibit A or such other address or facsimile
number as such
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Purchaser may provide to the Company and the other Purchasers, with a copy to
Heller, Ehrman, White & McAuliffe, LLP, 4250 Executive Square 7th Floor, La
Jolla, California 92037, attention: Stephen C. Ferruolo, Esq.
7.7 CURRENCY. All amounts referred to herein are
expressed in United States Dollars.
7.8 ATTORNEY'S FEES. If any action at law or in equity
(including arbitration) is necessary to enforce or interpret the terms of any of
the Agreements, the prevailing party shall be entitled to reasonable attorney's
fees, costs and necessary disbursements in addition to any other relief to which
such party may be entitled.
7.9 AMENDMENTS AND WAIVERS. Any term of this Agreement
may be amended or waived (either generally or in a particular instance and
either retroactively or prospectively) only with the written consent of the
Company and the holders of at least a majority of the Common Stock issued as
part of the Units. Any amendment or waiver effected in accordance with this
Section 7.9 shall be binding upon the Purchasers and each transferee of the
Units (or the Common Stock underlying the Units or issuable upon exercise of
the Warrants), each future holder of all such securities, and the Company.
7.10 SEVERABILITY. If one or more provisions of this
Agreement are held to be unenforceable under applicable law, the parties
agree to renegotiate such provision in good faith. In the event that the
parties cannot reach a mutually agreeable and enforceable replacement for
such provision, then (a) such provision shall be excluded from this
Agreement, (b) the balance of the Agreement shall be interpreted as if such
provision were so excluded and (c) the balance of the Agreement shall be
enforceable in accordance with its terms.
7.11 DELAYS OR OMISSIONS; REMEDIES CUMULATIVE. No delay
or omission to exercise any right, power or remedy accruing to any party
under this Agreement, upon any breach or default of any other party under
this Agreement, shall impair any such right, power or remedy of such
non-breaching or non-defaulting party nor shall it be construed to be a
waiver of any such breach or default, or an acquiescence therein, or of or in
any similar breach or default thereafter occurring; nor shall any waiver of
any single breach or default be deemed a waiver of any other breach or
default theretofore or thereafter occurring. Any waiver, permit, consent or
approval of any kind or character on the part of any party of any breach or
default under this Agreement, or any waiver on the part of any party of any
provisions or conditions of this Agreement, must be in writing and shall be
effective only to the extent specifically set forth in such writing. All
remedies, either under this Agreement or by law or otherwise afforded to any
party, shall be cumulative and not alternative.
7.12 ENTIRE AGREEMENT. This Agreement and the Exhibits
hereto constitute the entire agreement among the parties hereto pertaining to
the subject matter hereof, and any and all other written or oral agreements
relating to the subject matter hereof existing among any of the parties
hereto are expressly canceled.
-16-
7.13 CALIFORNIA CORPORATE SECURITIES LAW. THE SALE OF THE
SECURITIES WHICH ARE THE SUBJECT OF THIS AGREEMENT HAS NOT BEEN QUALIFIED WITH
THE COMMISSIONER OF CORPORATIONS OF THE STATE OF CALIFORNIA AND THE ISSUANCE OF
THE SECURITIES OR THE PAYMENT OR RECEIPT OF ANY PART OF THE CONSIDERATION
THEREFOR PRIOR TO THE QUALIFICATION IS UNLAWFUL, UNLESS THE SALE OF SECURITIES
IS EXEMPT FROM THE QUALIFICATION BY SECTION 25100, 25102 OR 25105 OF THE
CALIFORNIA CORPORATIONS CODE. THE RIGHTS OF ALL PARTIES TO THIS AGREEMENT ARE
EXPRESSLY CONDITIONED UPON THE QUALIFICATION BEING OBTAINED UNLESS THE SALE IS
SO EXEMPT.
7.14 EXCULPATION AMONG PURCHASERS. Each Purchaser
acknowledges that it is not relying upon any person or entity, other than the
Company and its representatives, in making its investment or decision to
invest in the Company. Each Purchaser agrees that no Purchaser nor the
respective controlling persons, officers, directors, partners, members,
agents, or employees of any Purchaser shall be liable to any other Purchaser
for any action heretofore or hereafter taken or omitted to be taken by any of
them in connection with the purchase of the Securities.
[SIGNATURE PAGES FOLLOW]
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The parties have executed this Securities Purchase Agreement as of
the date first written above.
COMPANY:
NEOTHERAPEUTICS, INC.
By: /s/ Samuel Gulko
-----------------------------------
Name: Samuel Gulko
-----------------------------------
Title: Chief Financial Officer
-----------------------------------
Address: 157 Technology Drive,
Irvine, California 92618
COMPANY SIGNATURE PAGE TO PURCHASE AGREEMENT
18
PURCHASERS:
ROYAL CANADIAN GROWTH FUND
---------------------------------------------
(Print Name of Purchaser)
By: /s/ Eden Rahim /s/ John P. Embry
------------------------------------
Name: Eden Rahim John P. Embry
------------------------------------
Title: Portfolio Manager Vice President
------------------------------------
Address:
77 King St. West
---------------------------------------------
Royal Trust Tower, Suite 3800
---------------------------------------------
Toronto, Ontario M5K 1H1
---------------------------------------------
PURCHASER SIGNATURE PAGE TO PURCHASE AGREEMENT
19
EXHIBITS
--------
Exhibit A - Schedule of Purchasers
Exhibit B - Form of Warrant
Exhibit C - Form of Registration Rights Agreement
Exhibit D - Schedule of Exceptions to Representations and Warranties
Exhibit E - Form of Legal Opinion of Latham & Watkins
Exhibit F - Form of Lock-up Agreement
20