EXHIBIT 4.46
THIS WARRANT HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR ANY APPLICABLE STATE SECURITIES LAWS, AND MAY NOT BE SOLD, OFFERED
FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF A REGISTRATION STATEMENT IN
EFFECT WITH RESPECT TO THE WARRANT UNDER SUCH ACT AND APPLICABLE LAWS OR SOME
OTHER EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF SUCH ACT AND APPLICABLE
LAWS OR AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION
IS NOT REQUIRED.
No. NEOT 017
Warrant to Purchase 250,000
Shares of Common Stock
(subject to adjustment)
NEOTHERAPEUTICS, INC.
WARRANT TO PURCHASE 250,000 SHARES
OF COMMON STOCK
NeoTherapeutics, Inc., a Delaware corporation (the "COMPANY"), hereby
certifies that, for value received, ▇▇▇▇▇▇▇▇▇ & Company, Inc., a Delaware
corporation, or its registered transferees, successors or assigns (each, a
"HOLDER"), is entitled to subscribe for and purchase up to Two Hundred Fifty
Thousand (250,000) shares of the fully paid and nonassessable Common Stock (as
adjusted pursuant to Section 4 hereof, the "WARRANT SHARES") of the Company, at
a purchase price per share determined as set forth in Section 1 below (such
price, as adjusted pursuant to Section 4 hereof, the "WARRANT PRICE"), subject
to the provisions and upon the terms and conditions hereinafter set forth in
this warrant (the "WARRANT"). As used herein, (a) the term "COMMON STOCK" shall
mean the Company's presently authorized Common Stock, par value $.001 per share,
and any stock into or for which such Common Stock may hereafter be converted or
exchanged, and (b) the term "DATE OF GRANT" shall mean December 13, 2001. The
term "WARRANT" shall include any warrant issued upon transfer or partial
exercise of this Warrant, unless the context clearly requires otherwise. This
Warrant is being issued pursuant to that certain engagement letter of even date
herewith between the Company and ▇▇▇▇▇▇▇▇▇ & Company, Inc. (the "ENGAGEMENT
LETTER").
1. Term, Vesting, Exercise Price.
(a) Term. The purchase right represented by this Warrant is
exercisable, in whole or in part, for up to the number of Warrant Shares then
vested pursuant to Section 1(b) below, at any time and from time to time from
the Date of Grant through and including the close of business on the fifth
anniversary of the date of vesting hereunder of the Warrant Shares with respect
to which exercise is sought (each an "EXPIRATION DATE").
(b) Vesting. This Warrant shall vest and become exercisable with
respect to the number of Warrant Shares and at the Warrant Price(s) per share
determined as follows:
(i) 125,000 Warrant Shares shall be vested as of the Date of
Grant, with the Warrant Price applicable to such Warrant Shares at an exercise
price per share equal to the average of the closing sale prices of the Common
Stock, as reported in the Wall Street Journal, for the ten (10) consecutive
trading days immediately preceding (but not including) the Date of Grant.
(ii) Until an aggregate of 125,000 Warrant Shares have vested
under this Section 1(b)(ii) and Section 1(b)(iii), upon each closing of an
Equity Offering (as defined in the Engagement Letter) with respect to which
▇▇▇▇▇▇▇▇▇ & Company, Inc., acts as financial advisor to the Company pursuant to
the Engagement Letter, this Warrant shall vest with respect to a number of
Warrant Shares equal to the product of 125,000 multiplied by a fraction, the
numerator of which shall be the gross proceeds received by the Company upon such
closing, and the denominator of which shall be $15,000,000; provided that in no
event shall more than 125,000 Warrant Shares in aggregate vest pursuant to this
Section 1(b)(ii) and Section 1(b)(iii). The Warrant Price applicable to Warrant
Shares vesting under this Section 1(b)(ii) shall be equal to the purchase price
per share of Common Stock established in the applicable Equity Offering.
(iii) Upon the closing of a Debt Financing or a Combination (each
as defined in the Engagement Letter) with respect to which ▇▇▇▇▇▇▇▇▇ & Company,
Inc., acts as financial advisor to the Company pursuant to the Engagement
Letter, this Warrant shall vest with respect to all then unvested Warrant
Shares, at a Warrant Price applicable to such Warrant Shares equal to that
determined in Section 1(b)(i) above.
(iv) Upon any adjustment to the number of Warrant Shares
purchasable hereunder pursuant to Section 4(g) below, the number of Warrant
Shares vesting under this Section 1 shall be correspondingly adjusted.
2. Exercise.
(a) Method of Exercise; Payment; Issuance of New Warrant. Subject to
Section 1 hereof, the purchase right represented by this Warrant may be
exercised by the holder hereof, in whole or in part and from time to time, from
and after the Date of Grant by the surrender of this Warrant (with the notice of
exercise form attached hereto as Exhibit A duly executed) at the principal
office of the Company, and, except as otherwise provided for herein, by the
payment to the Company of an amount in cash or by check equal to the then
applicable Warrant Price multiplied by the number of Warrant Shares then being
purchased. The person or persons in whose name(s) any certificate(s)
representing shares of Common Stock shall be issuable upon exercise of this
Warrant shall be deemed to have become the holder(s) of record of, and shall be
treated for all purposes as the record holder(s) of, the shares represented
thereby (and such shares shall be deemed to have been issued) immediately prior
to the close of business on the date or dates upon which this Warrant is
exercised if exercised prior to the close of business on such date; otherwise,
the date of record shall be the next business day. In the event of any exercise
of the rights represented by this Warrant, certificates for the shares of Common
Stock so
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purchased shall be delivered to the holder hereof as soon as possible and in any
event within fifteen (15) days after such exercise and, unless this Warrant has
been fully exercised, a new Warrant representing the portion of the Warrant
Shares, if any, with respect to which this Warrant shall not then have been
exercised shall also be issued to the holder hereof as soon as possible and in
any event within such fifteen (15)-day period.
(b) Net Issue Exercise. In addition to and without limiting the
rights of the holder under the terms of this Warrant, the holder may elect to
receive shares equal to the value (as determined below) of this Warrant (or the
portion thereof being cancelled) by surrender of this Warrant at the principal
office of the Company (with the notice of exercise form and notice of such
election attached hereto as Exhibit A duly executed) in which event the Company
shall issue to the holder a number of Warrant Shares computed using the
following formula:
X = Y (A - B)
----------
A
Where: X = the number of shares of Common Stock to be
issued to the holder
Y = the number of shares of Common Stock
purchasable under the Warrant or, if only a
portion of the Warrant is being exercised,
the portion of the Warrant being cancelled
A = the fair market value of one (1) share
of Common Stock
B = the Warrant Price
For purposes of this Section 2(b), "fair market value" of a share of Common
Stock shall have the meaning set forth in Section 4(g) below.
3. Stock Fully Paid; Reservation of Shares. All Warrant Shares that may
be issued upon the exercise of the rights represented by this Warrant will, upon
issuance pursuant to the terms and conditions herein, be fully paid and
nonassessable, and free from all taxes, liens, charges, and pre-emptive rights
with respect to the issue thereof. The Company shall pay all transfer taxes, if
any, attributable to the issuance of the Warrant Shares upon the exercise of
this Warrant. During the period within which the rights represented by this
Warrant may be exercised, the Company will at all times have authorized, and
reserved for the purpose of the issue upon exercise of the purchase rights
evidenced by this Warrant, a sufficient number of shares of its Common Stock to
provide for the exercise of the rights represented by this Warrant.
4. Adjustment of Warrant Price and Number of Shares. The number and kind
of securities purchasable upon the exercise of this Warrant and the Warrant
Price shall be subject to adjustment from time to time upon the occurrence of
certain events, as follows:
(a) Adjustments for Dividends in Stock. If the Company at any time
while this Warrant, or any portion thereof, remains outstanding and unexpired
declares any dividend,
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or authorizes any other distribution, upon any stock of the Company of any
class, payable in Additional Shares of Common Stock (as defined below) (except
for any distribution specifically provided for in Section 4(b), Section 4(c),
Section 4(d) or Section 4(e)), then the Warrant Price shall be adjusted, from
and after the date of determination of stockholders entitled to receive such
dividend or distribution, to that price determined by multiplying the Warrant
Price in effect immediately prior to such date of determination by a fraction
(1) the numerator of which shall be the number of shares of Common Stock issued
and outstanding immediately prior to such dividend or distribution, and (2) the
denominator of which shall be the total number of shares of Common Stock issued
and outstanding immediately after such dividend or distribution. The term
"ADDITIONAL SHARES OF COMMON STOCK" as used in this Warrant shall mean any
shares of Common Stock issued or issuable by the Company after the date of this
Warrant, except for the Warrant Shares.
(b) Subdivision or Combination of Shares. If the Company at any time
while this Warrant, or any portion thereof, remains outstanding and unexpired
shall split, subdivide or combine its outstanding shares of Common Stock, into a
different number of shares of Common Stock, the Warrant Price shall be adjusted,
from and after the date of such split, subdivision or combination, to that price
determined by multiplying the Warrant Price in effect immediately prior to such
date by a fraction (1) the numerator of which shall be the number of shares of
Common Stock issued and outstanding immediately prior to such split, subdivision
or combination, and (2) the denominator of which shall be the total number of
shares of Common Stock issued and outstanding immediately after such split,
subdivision or combination.
(c) Certain Distributions. If the Company at any time while this
Warrant, or any portion thereof, remains outstanding and unexpired shall declare
a dividend or otherwise make a distribution to the holders of its Common Stock
and not to the holder of this Warrant (other than dividends, distributions or
issuances referred to in Section 4(a), Section 4(b), Section 4(d), and Section
4(e)), in the form of: (1) cash or other property; (2) any evidence of
indebtedness, any shares of its capital stock or any other securities or
property of any nature whatsoever (including securities of a subsidiary), or (3)
any warrants or other rights to subscribe for or purchase any evidences of
indebtedness, any shares of its capital stock, or any other securities or
property of any nature whatsoever (including securities of a subsidiary), then
the Warrant Price shall be adjusted by multiplying the Warrant Price in effect
immediately prior to the record date for such event by a fraction (A) the
numerator of which shall be the fair market value per share of Common Stock on
such record date (determined in accordance with Section 4(g) below), less the
amount allocated to one share of Common Stock of any such cash so distributed
and the fair value (determined in accordance with Section 4(g) below), of any
evidences of indebtedness, shares of capital stock, other securities or
property, or warrants or other subscriptions or purchase rights so distributed,
and (B) the denominator of which shall be such fair market value per share of
Common Stock (determined in accordance with Section 4(g) below). Such adjustment
shall be made successively whenever such a record date is fixed; and in the
event that such distribution is not so made, the Warrant Price shall again be
adjusted to be the Warrant Price which would then be in effect if such record
date had not been fixed, but such subsequent adjustment shall not affect the
number of Warrant Shares issued upon any exercise of this Warrant prior to the
date such subsequent adjustment was made.
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(d) Merger ; Sale of Assets; Reclassification. If at any time while
this Warrant, or any portion thereof, remains outstanding and unexpired there
shall be (1) a reorganization or reclassification (other than a combination,
reclassification, exchange or subdivision of shares otherwise provided for
herein), (2) a merger or consolidation of the Company with or into another
corporation in which the Company is not the surviving entity, or a reverse
triangular merger in which the Company is the surviving entity but the shares of
the Company's capital stock outstanding immediately prior to the merger are
converted by virtue of the merger into other property, whether in the form of
securities, cash, or otherwise, or (3) a sale or transfer of the Company's
properties and assets as, or substantially as, an entirety to any other person,
then, as a part of such reorganization, reclassification, merger, consolidation,
sale or transfer, lawful provision shall be made so that the holder of this
Warrant shall thereafter be entitled to receive upon exercise of this Warrant,
during the period specified herein and upon payment of the Warrant Price then in
effect, the number of shares of stock or other securities or property of the
successor corporation (or the Company, as applicable) resulting from such
reorganization, reclassification, merger, consolidation, sale or transfer that a
holder of the shares deliverable upon exercise of this Warrant would have been
entitled to receive in such reorganization, reclassification, merger,
consolidation, sale or transfer if this Warrant had been exercised immediately
before such reorganization, merger, consolidation, sale or transfer, all subject
to further adjustment as provided in this Section 4. The foregoing provisions of
this Section 4(d) shall similarly apply to successive reorganizations,
reclassification, mergers, consolidations, sales and transfers and to the stock
or securities of any other corporation that are at the time receivable upon the
exercise of this Warrant. If the per-share consideration payable to the holder
hereof for shares in connection with any such transaction is in a form other
than cash or marketable securities, then the value of such consideration shall
be determined in the manner set forth under Section 4(g). At the time of such
event, the successor or acquiring corporation (if other than the Company) shall
expressly assume the due and punctual performance of each and every covenant and
condition of this Warrant to be performed and observed by the Company and all
the obligations and liabilities hereunder, subject to such modifications as may
be deemed appropriate (as determined in good faith by the Board of Directors of
the Company) in order to provide for adjustments of shares of Common Stock for
which this Warrant is exercisable. These adjustments shall be as nearly
equivalent as practicable to the adjustments provided in this Section 4. In all
events, appropriate adjustment (as determined in good faith by the Company's
Board of Directors) shall be made in the application of the provisions of this
Warrant with respect to the rights and interests of the holder after the
transaction, to the end that the provisions of this Warrant shall be applicable
after that event, as near as reasonably may be, in relation to any shares or
other property deliverable after that event upon exercise of this Warrant.
(e) Dissolution, Liquidation and Wind-Up. In case the Company shall,
at any time prior to the expiration of this Warrant, dissolve, liquidate or wind
up its affairs in a transaction not otherwise covered by Section 4(c) or Section
4(d), the holder of this Warrant shall be entitled, upon the exercise of this
Warrant, to receive in lieu of the shares of Common Stock of the Company which
such holder would have been entitled to receive, the same kind and amount of
assets as would have been issued, distributed or paid to such holder upon any
such dissolution, liquidation or winding up with respect to such shares of
Common Stock of the Company, had such holder been the holder of record of the
Warrant Shares receivable upon the
5
exercise of this Warrant on the record date for the determination of those
persons entitled to receive any such liquidating distribution. After such
dissolution, liquidation or winding up which shall result in any cash
distribution in excess of the Warrant Price provided for by this Warrant, the
holder of this Warrant may, at such holder's option, exercise the same without
making payment of the Warrant Price, and in such case the Company shall, upon
the distribution to the holder, consider that said Warrant Price has been paid
in full to it and in making settlement to the holder, shall deduct from the
amount payable to the holder of this Warrant an amount equal to such Warrant
Price.
(f) Adjustment of Number of Shares. Upon each adjustment in the
Warrant Price, other than an adjustment made pursuant to Section 4(c) above, the
number of Warrant Shares purchasable hereunder shall be adjusted, to the nearest
whole share, to the product obtained by (1) multiplying the number of Warrant
Shares purchasable immediately prior to such adjustment in the Warrant Price, by
(2) a fraction, the numerator of which shall be the Warrant Price immediately
prior to such adjustment and the denominator of which shall be the Warrant Price
immediately thereafter.
(g) Determination of Fair Market Value. For purposes of this Warrant
"FAIR MARKET VALUE" as of a particular date (the "DETERMINATION DATE") shall
mean (1) for any security if such security is traded on a national securities
exchange (an "EXCHANGE"), the weighted average (based on daily trading volume)
of the mid-point between the daily high and low trading prices of the security
on each of the last five (5) consecutive trading days prior to the Determination
Date reported on such Exchange, (2) for any security that is not traded on an
Exchange but which is quoted on the Nasdaq Stock Market ("NASDAQ"), the weighted
average (based on daily trading volume) of the mid-point between the daily high
and low trading prices reported on NASDAQ on each of the last five (5)
consecutive trading days (or if the relevant price or quotation did not exist on
any of such days, the relevant price or quotation on the next preceding business
day on which there was such a price or quotation, for a total of five trading
days) prior to the Determination Date, or (3) for any security or any other
asset, if no price can be determined on the basis of the above methods of
valuation, then the judgment of valuation shall be determined in good faith by
the Board of Directors of the Company, which determination shall be described in
a duly adopted board resolution certified by the Company's Secretary or
Assistant Secretary. If the Board of Directors of the Company is unable to
determine any Valuation (as defined below), or if the holders of at least
fifty-one percent (51%) of all of the Warrant Shares issuable under outstanding
Warrants (collectively, the "REQUESTING HOLDERS") disagree with the Board's
determination of any Valuation by written notice delivered to the Company within
five (5) business days after the determination thereof by the Board of Directors
of the Company is communicated to holders of the Warrants affected thereby,
which notice specifies a majority-in-interest of the Requesting Holders'
determination of such Valuation, then, unless the Company accepts the Valuation
so proposed and the Company and a majority-in-interest of the Requesting Holders
agree upon a valuation within five (5) business days thereafter, the Company and
(in the event of a disagreement by the Requesting Holders) a
majority-in-interest of the Requesting Holders shall select a mutually
acceptable investment banking firm of national reputation which has not had a
material relationship with the Company or any officer of the Company within the
preceding two (2) years, which shall determine such Valuation. Such investment
banking firm's determination of such Valuation shall be final,
6
binding and conclusive on the Company and the holders of all of the Warrants
issued hereunder and then outstanding, to the extent of the issuance or
distribution to which such Valuation applies. If the Board of Directors of the
Company was unable to determine such Valuation, all costs and fees of such
investment banking firm shall be borne by the Company. If the Requesting Holders
disagreed with the Board's determination of such Valuation, the party whose
determination of such Valuation differed from the Valuation determined by such
investment banking firm by the greatest amount shall bear all costs and fees of
such investment banking firm. For purposes of this Section 4(g), the term
"VALUATION" shall mean the determination, to be made initially by the Board of
Directors of the Company, of the fair market value of any asset pursuant to
clause (3) above in this paragraph.
5. Notice of Adjustments. Whenever the Warrant Price or the number of
Warrant Shares purchasable hereunder shall be adjusted pursuant to Section 4
hereof, the Company shall make a certificate signed by its chief financial
officer setting forth, in reasonable detail, the event requiring the adjustment,
the amount of the adjustment, the method by which such adjustment was
calculated, and the Warrant Price and the number of Warrant Shares purchasable
hereunder after giving effect to such adjustment, which shall be mailed, by
first class mail, postage prepaid, to the holder of this Warrant.
6. Fractional Shares. No fractional shares of Common Stock will be issued
in connection with any exercise hereunder, but in lieu of such fractional shares
the Company shall make a cash payment therefor based on the fair market value
(as determined in accordance with Section 4(g) above) of a share of Common Stock
on the date of exercise.
7. Transfer of Warrant.
(a) Warrant Register. The Company will maintain a register (the
"WARRANT REGISTER") containing the names and addresses of the holder or holders
of the Warrants. Any holder of this Warrant, or any portion thereof may change
his or her address as shown on the Warrant Register by written notice to the
Company requesting such change. Any notice or written communication required or
permitted to be given to the holder may be delivered or given by mail to such
holder as shown on the Warrant Register and at the address shown on the Warrant
Register. Until this Warrant is transferred on the Warrant Register of the
Company, the Company may treat the holder as shown on the Warrant Register as
the absolute owner of this Warrant for all purposes, notwithstanding any notice
to the contrary.
(b) Warrant Agent. The Company may, by written notice to the holder,
appoint an agent for the purpose of maintaining the Warrant Register referred to
in Section 7(a) above, issuing the Common Stock or other securities then
issuable upon the exercise of this Warrant, exchanging this Warrant, replacing
this Warrant, or any or all of the foregoing. Thereafter, any such registration,
issuance, exchange, or replacement, as the case may be, shall be made at the
office of such agent.
(c) Transferability and Nonnegotiability of Warrant. This Warrant may
not be transferred or assigned in whole or in part without compliance with all
applicable federal and state securities laws by the transferor and the
transferee (including the delivery of investment
7
representation letters and legal opinions reasonably satisfactory to the
Company, if such are requested by the Company). Subject to the provisions of
this Warrant with respect to compliance with the Securities Act of 1933, as
amended (the "SECURITIES ACT"), title to this Warrant may be transferred by
endorsement (by the holder executing the Assignment Form attached hereto as
Exhibit B) and delivery in the same manner as a negotiable instrument
transferable by endorsement and delivery.
(d) Exchange of Warrant Upon a Transfer. On surrender of this Warrant
for exchange, properly endorsed on the Assignment Form and subject to the
provisions of this Warrant with respect to compliance with the Securities Act
and with the limitations on assignments and transfers contained in this Section
7, the Company at its expense shall issue to or on the order of the holder a new
warrant or warrants of like tenor, in the name of the holder or as the holder
may direct, for the number of shares issuable upon exercise hereof.
(e) Compliance with Securities Laws.
(i) The holder of this Warrant, by acceptance hereof,
acknowledges that this Warrant and the shares of Common Stock to be issued upon
exercise hereof or conversion thereof are being acquired solely for the holder's
own account and not as a nominee for any other party, and for investment, and
that the holder will not offer, sell or otherwise dispose of this Warrant or any
shares of Common Stock to be issued upon exercise hereof or conversion thereof
except under circumstances that will not result in a violation of the Securities
Act or any state securities laws. Upon exercise of this Warrant, the holder
shall, if requested by the Company, confirm in writing, in a form satisfactory
to the Company, that the shares of Common Stock so purchased are being acquired
solely for the holder's own account and not as a nominee for any other party,
for investment, and not with a view toward distribution or resale that would
violate the Securities Act.
(ii) The Warrant Shares and any other securities issued upon
exercise hereof or conversion thereof shall be stamped or imprinted with a
legend in substantially the following form (in addition to any legend required
by state securities laws):
THE SECURITIES REPRESENTED HEREBY HAVE BEEN ACQUIRED FOR INVESTMENT AND
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR
ANY APPLICABLE STATE SECURITIES LAWS. SUCH SECURITIES AND ANY SECURITIES
ISSUED HEREUNDER OR THEREUNDER MAY NOT BE SOLD OR TRANSFERRED IN THE
ABSENCE OF SUCH REGISTRATION OR AN EXEMPTION THEREFROM UNDER SAID ACT AND
APPLICABLE LAWS.
8. Replacement of Warrants or Stock Certificates. The Company covenants
to the holder hereof that, upon receipt of evidence reasonably satisfactory to
the Company of the loss, theft, destruction or mutilation of this Warrant or any
stock certificate and, in the case of any loss, theft or destruction, upon
receipt of an executed lost securities bond or indemnity reasonably satisfactory
to the Company, or in the case of any such mutilation upon surrender and
cancellation of such Warrant or stock certificate, the Company will make and
deliver a new
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Warrant or stock certificate, of like tenor, in lieu of the lost, stolen,
destroyed or mutilated Warrant or stock certificate.
9. Rights as Stockholders; Information. No holder of this Warrant, as
such, shall be entitled to vote or receive dividends or be deemed the holder of
Common Stock or any other securities of the Company which may at any time be
issuable on the exercise hereof for any purpose, nor shall anything contained
herein be construed to confer upon the holder of this Warrant, as such, any of
the rights of a stockholder of the Company or any right to vote for the election
of the directors or upon any matter submitted to stockholders at any meeting
thereof, or to receive notice of meetings, or to receive dividends or
subscription rights or otherwise, until this Warrant shall have been exercised
and the Warrant Shares purchasable upon the exercise hereof shall have become
deliverable, as provided herein.
10. Registration.
(a) Definitions.
For purposes of this Section 10 the following terms have the
following definitions:
"REGISTRABLE STOCK" means (i) all Warrant Shares which are
issuable pursuant to the Warrants, whether or not the Warrants have in fact been
exercised and whether or not such Warrant Shares have in fact been issued, (ii)
all Warrant Shares acquired by holders pursuant to the Warrants, and (iii) any
shares of Common Stock, whether or not such shares of Common Stock have in fact
been issued, and stock or other securities of the Company issued upon conversion
of, in a stock split or reclassification of, or a stock dividend or other
distribution on, or in substitution or exchange for, or otherwise in connection
with, such Warrant Shares. Notwithstanding the foregoing, securities shall only
be treated as Registrable Stock if and so long as they have not been (A) sold
pursuant to an effective registration statement or to or through a broker or
dealer or underwriter in a public distribution or a public securities
transaction, or (B) sold in a transaction exempt from the registration and
prospectus delivery requirements of the Securities Act under Section 4(1)
thereof so that all transfer restrictions, and restrictive legends with respect
thereto, if any, are removed upon the consummation of such sale.
"COMMISSION" means the U.S. Securities and Exchange Commission.
"EXCHANGE ACT" means the Securities and Exchange Act of 1934, as
amended.
"PARTICIPATING HOLDERS" means holders of Registrable Stock
included in a registration statement filed with the Commission pursuant to this
Section 10.
(b) Required Registration.
(1) Demand Registration. After twelve (12) months following the
Date of Grant, if the Company shall receive a written request therefor from any
holder or holders of at least 25% of the Registrable Stock, the Company shall
promptly prepare and file a
9
registration statement under the Securities Act covering the Registrable Stock
which is the subject of such request and not then covered by an effective
registration statement and shall use its commercially reasonable efforts to
cause such registration statement to become effective as expeditiously as
possible. Upon the receipt of such request, the Company shall promptly give
written notice to all holders of Registrable Stock that such registration is to
be effected. The Company shall include in such registration statement such
Registrable Stock for which it has received written requests to register such
shares by the holders thereof within thirty (30) days after the effectiveness of
the Company's written notice to such other holders. Notwithstanding the above,
the Company shall not be obligated to effect any such registration,
qualification or compliance, pursuant to this Section 10(b)(1): (i) if the
holders, together with the holders of any other securities of the Company
entitled to inclusion in such registration, propose to sell Registrable Stock
and such other securities (if any) at an aggregate price to the public (net of
any underwriters' discounts or commissions) of less than two hundred fifty
thousand dollars ($250,000); or (ii) if the Company shall furnish to the holders
a certificate signed by the President of the Company stating that in the good
faith judgment of the Board of Directors of the Company, it would be seriously
detrimental to the Company and its stockholders for such registration to be
effected at such time, in which event the Company shall have the right to defer
the filing of the registration statement for a period of not more than 180 days
after receipt of the request of the holder or holders under this Section
10(b)(1). The Company is obligated to effect only one registration pursuant to
this Section 10(b)(1).
(2) Underwritten Offering. In the event of a firm commitment
underwritten offering pursuant to Section 10(b)(1), if the managing underwriter
of such offering shall advise the holders in writing that, in its good faith
opinion, the distribution of a specified portion of the securities requested to
be included in the registration would materially adversely affect the
distribution of such securities by increasing the aggregate amount of the
offering in excess of the maximum amount of securities which such managing
underwriter believes can reasonably be sold in the contemplated distribution,
then the securities to be included in the registration shall be included in the
following order: (A) first, the Registrable Stock requested to be included in
such registration by the holders of Registrable Stock, and if two or more
holders of Registrable Stock are included in the registration, pro rata among
the holders on the basis of the number of Registrable Stock owned by each such
holder, (B) second, the Registrable Stock requested to be included in such
registration by any holders other than the holders who made the request for the
registration, pro rata among such holders on the basis of the number of
Registrable Stock owned by each such holder and (C) securities proposed to be
included by the Company or other Company security holders in such proportion as
they shall agree.
(c) Incidental Registration (Piggy-Back Registration Rights). Each
time the Company shall determine to file a registration statement under the
Securities Act (other than on Form S-8 or Form S-4) in connection with the
proposed offer and sale for money of any of its securities by it or by any of
its security holders, the Company will give written notice of its determination
to all holders of Registrable Stock. Upon the written request of a holder of any
Registrable Stock, the Company will cause all such Registrable Stock, the
holders of which have so requested registration thereof, to be included in such
registration statement, all to the extent requisite to permit the sale or other
disposition by the prospective seller or sellers of the Registrable Stock to be
so registered in accordance with the terms of the proposed offering. If
10
the registration statement is to cover an underwritten distribution, the Company
shall use its commercially reasonable efforts to cause the Registrable Stock
requested for inclusion pursuant to this Section 10(c) to be included in the
underwriting on the same terms and conditions as the securities otherwise being
sold through the underwriters. In the event of a firm commitment underwriting,
if the managing underwriter of such offering shall advise holders in writing
that, in its good faith opinion, distribution of a specified portion of the
securities requested to be included in the registration statement would
materially adversely affect the distribution of such securities by increasing
the aggregate amount of the offering in excess of the maximum amount of
securities which such managing underwriter believes can reasonably be sold in
the contemplated distribution, then the securities to be included in the
registration shall be included in the following order: (1) first, the securities
the Company and, if the registration statement is being filed pursuant to the
exercise by any Company security holder of demand registration rights, such
Company security holders propose to include in the underwritten offering, (2)
second, Registrable Stock requested to be included in such registration by
holders of Registrable Stock, and if two or more holders of Registrable Stock
are included in the registration pro rata among the holders are the basis of the
number of shares or Registrable Stock owned by each such holder, and (3) third,
all other shares of securities requested to be included by any other security
holder of the Company. Notwithstanding anything to the contrary contained
herein, the Company shall have the right to terminate or withdraw any
registration initiated by it to which this Section 10(c) applies prior to the
effectiveness of such registration.
(d) Registration Procedures. If and whenever the Company is required
by the provisions of Section 10(b) or Section 10(c) to effect the registration
of Registrable Stock under the Securities Act, the Company will, at its expense,
as expeditiously as possible:
(1) In accordance with the Securities Act and the rules and
regulations of the Commission, prepare and file with the Commission a
registration statement on the form of registration statement appropriate with
respect to such securities and use its commercially reasonable efforts to cause
such registration statement to become and remain effective until the earlier of
(A) the date on which the securities covered by such registration statement have
been sold, or (B) one hundred eighty (180) days after the effective date
thereof, and prepare and file with the Commission such amendments to such
registration statement and supplements to the prospectus contained therein as
may be necessary to keep such registration statement effective and such
registration statement and prospectus accurate and complete until the securities
covered by such registration statement have been sold;
(2) If the offering is to be underwritten, in whole or in part,
enter into a written underwriting agreement with participating holders in such
offering and the underwriter in customary form and substance, reasonably
satisfactory to the Company, the managing underwriter of the public offering and
the holders of the Registrable Stock participating in such offering;
(3) Furnish to participating holders and to the underwriters of
the securities being registered such reasonable number of copies of the
registration statement, preliminary prospectus, final prospectus and such other
documents as such underwriters and holders may reasonably request in order to
facilitate the public offering of such securities;
11
(4) Use its commercially reasonable efforts to register or
qualify the securities covered by such registration statement under such state
securities or blue sky laws of such jurisdictions as such participating holders
and underwriters may reasonably request, provided that the Company shall not be
required in connection therewith or as a condition thereto to qualify to do
business or file a general consent to service of process in such states or
jurisdictions;
(5) Notify participating holders, promptly after it shall
receive notice thereof, of the date and time when such registration statement
and each post-effective amendment thereto has become effective or a supplement
to any prospectus forming a part of such registration statement has been filed;
(6) Notify participating holders promptly of any request by the
Commission for the amending or supplementing of such registration statement or
prospectus or for additional information;
(7) Prepare and file with the Commission, promptly upon the
request of any participating holders, any amendments or supplements to such
registration statement or prospectus which, in the opinion of counsel for such
holders, is required under the Securities Act or the rules and regulations
thereunder in connection with the distribution of the Registrable Stock by such
holders;
(8) Prepare and promptly file with the Commission, and promptly
notify participating holders of the filing of, such amendments or supplements to
such registration statement or prospectus as may be necessary to correct any
statements or omissions if, at the time when a prospectus relating to such
securities is required to be delivered under the Securities Act, any event has
occurred as the result of which any such prospectus or any other prospectus as
then in effect may include an untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary to make the
statements therein not misleading;
(9) In case any of participating holders or any underwriter for
any such holders is required to deliver a prospectus at a time when the
prospectus then in circulation is not in compliance with the Securities Act or
the rules and regulations of the Commission, prepare promptly upon request such
amendments or supplements to such registration statement and such prospectus as
may be necessary in order for such prospectus to comply with the requirements of
the Securities Act and such rules and regulations;
(10) Advise participating holders, promptly after it shall
receive notice or obtain knowledge thereof, of the issuance of any stop order by
the Commission suspending the effectiveness of such registration statement or
the initiation or threatening of any proceeding for that purpose and promptly
use its best efforts to prevent the issuance of any stop order or to obtain its
withdrawal if such stop order should be issued;
(11) If requested by the managing underwriter or underwriters or
a participating holder in connection with an underwritten offering, immediately
incorporate in a prospectus supplement or post-effective amendment such
information as the managing
12
underwriters and the participating holders of a majority of the Registrable
Stock being sold agree should be included therein relating to the plan of
distribution with respect to such Registrable Stock, including information with
respect to the Registrable Stock being sold to such underwriters, the purchase
price being paid therefor by such underwriters and with respect to any other
terms of the underwritten (or best efforts underwritten) offering of the
Registrable Stock to be sold in such offering; and make all required filings of
such prospectus supplement or post-effective amendment as soon as notified of
the matters to be incorporated in such prospectus supplement or post-effective
amendment;
(12) Cooperate with the participating holders and the managing
underwriters, if any, to facilitate the timely preparation and delivery of
certificates representing Registrable Stock to be sold and not bearing any
restrictive legends; and enable such Registrable Stock to be in such
denominations and registered in such names as the managing underwriters may
request at least two business days prior to any sale of Registrable Stock to the
underwriters;
(13) Make available for inspection by a representative of
participating holders of a majority of the Registrable Stock, any underwriter
participating in any disposition pursuant to a registration statement, and any
attorney or accountant retained by the participating holders or underwriter, all
financial and other records, pertinent corporate documents and properties of the
Company, and cause the Company's officers, directors and employees to supply all
information reasonably requested by any such representative, underwriter,
attorney or accountant in connection with the preparation of the registration
statement; provided, that any records, information or documents that are
designated by the Company in writing as confidential shall be kept confidential
by such persons unless disclosure of such records, information or documents is
required by court or administrative order;
(14) Not file any amendment or supplement to such registration
statement or prospectus to which participating holders of a majority of the
Registrable Stock has objected on the grounds that such amendment or supplement
does not comply in all material respects with the requirements of the Securities
Act or the rules and regulations thereunder, after having been furnished with a
copy thereof at least five (5) business days prior to the filing thereof;
provided, however, that the failure of such holders or their counsel to review
or object to any amendment or supplement to such registration statement or
prospectus shall not affect the rights of such holders or any controlling person
or persons thereof or any underwriter or underwriters therefor under Section
10(g) hereof; and
(15) At the request of any participating holder (A) furnish to
such holder on the effective date of the registration statement or, if such
registration includes an underwritten public offering, at the closing provided
for in the underwriting agreement, an opinion, dated such date, of the counsel
representing the Company for the purposes of such registration, addressed to the
underwriters, if any, and to the holder or holders making such request, covering
such matters with respect to the registration statement, the prospectus and each
amendment or supplement thereto, proceedings under state and federal securities
laws, other matters relating to the Company, the securities being registered and
the offer and sale of such securities as are customarily the subject of opinions
of issuer's counsel provided to underwriters in underwritten public offerings,
and (B) use its commercially reasonable efforts to furnish to
13
such holder letters dated each such effective date and such closing date, from
the independent certified public accountants of the Company, addressed to the
underwriters, if any, and to the holder or holders making such request (to the
extent the then applicable standards of professional conduct permit such letters
to be addressed to the holder) in form and substance as is customarily given by
independent certified public accountants to underwriters in an underwritten
public offering.
(e) Furnish Information. It shall be a condition precedent to the
obligations of the Company to take any action pursuant to this Section 10 with
respect to the Registrable Stock of any holder that such holder shall furnish to
the Company such information regarding itself, the Registrable Stock held by it,
and the intended method of disposition of such securities as shall be required
to effect the registration of the holder's Registrable Stock.
(f) Expenses of Registration. All expenses incident to the Company's
performance of or compliance with this Warrant, including, without limitation,
the following shall be borne by the Company, regardless of whether the
registration statement becomes effective:
(1) All registration and filing fees (including those with
respect to filings required to be made with the National Association of
Securities Dealers, Inc.);
(2) Fees and expenses of compliance with all securities or blue
sky laws (including fees and disbursements of counsel for the underwriters or
participating holders in connection with blue sky qualifications of the
Registrable Stock and in determination of their eligibility for investment under
the laws of such jurisdictions as the managing underwriters or participating
holders of a majority of the Registrable Stock being sold may designate);
(3) Printing, messenger, telephone, facsimile and delivery
expenses;
(4) Fees and disbursements of counsel for the Company, the
underwriters and for participating holders as hereinafter provided;
(5) Fees and disbursements of all independent certified public
accountants of the Company (including the expenses of any special audit and
"comfort" letters required by or incident to such performance);
(6) Fees and disbursements of underwriters (excluding discounts,
commissions or fees of underwriters, selling brokers, dealer managers or similar
securities industry professionals relating to the distribution of the
Registrable Stock or legal expenses of any person other than the Company and the
selling holders); and
(7) Fees and expenses of other persons retained by the Company.
The Company will, in any event, pay its internal expenses
(including without limitation, all salaries and expenses of its officers and
employees performing legal or accounting duties), the expense of any annual
audit, the fees and expenses incurred in connection with the listing of the
securities to be registered on each securities exchange on which
14
similar securities issued by the Company are then listed, rating agency fees and
the fees and expenses of any person, including special experts, retained by the
Company.
In connection with the registration statement required
hereunder, the Company will reimburse the participating holders of Registrable
Stock being registered pursuant to the registration statement for the reasonable
fees and disbursements, not to exceed $5,000 for each registration, of not more
than one counsel chosen by the holders of a majority of such Registrable Stock.
(g) Indemnification.
(1) The Company hereby agrees to indemnify each of the
participating holders of Registrable Stock included on an registration statement
and their officers and directors and each person, if any, who controls any
thereof within the meaning of Section 15 of the Securities Act and their
respective successors against all claims, losses, damages and liabilities (or
actions in respect thereof), joint or several, arising out of or based on any
untrue statement (or alleged untrue statement) of a material fact contained in
any registration statement, preliminary or final prospectus, or other document
incident to any such registration, qualification or compliance (or in any
related registration statement, notification or the like) or any omission (or
alleged omission) to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading, or any violation by
the Company of any rule or regulation promulgated under the Securities Act
applicable to the Company and relating to action or inaction required of the
Company in connection with any such registration, qualification or compliance,
and to reimburse the holders of Registrable Stock (including officers and
directors of the same and controlling persons) for any legal and any other
expenses reasonably incurred in connection with investigating or defending any
such claim, loss, damage, liability or action, provided, however, that the
Company will not be liable in any such case to the extent that any such claim,
loss, damage or liability arises out of or is based on any untrue statement or
omission based upon written information furnished to the Company by holders of
Registrable Stock in an instrument duly executed by them and stated to be
specifically for use therein.
(2) Participating holders of Registrable Stock whose shares are
included in a registration statement, severally and not jointly, agree to
indemnify the Company and its officers and directors and each person, if any,
who controls any thereof within the meaning of Section 15 of the Securities Act
and their respective successors against all claims, losses, damages and
liabilities (or actions in respect thereof), joint or several, arising out of or
based on any untrue statement of a material fact contained in any registration
statement, preliminary or final prospectus or other document incident to any
such registration, qualification or compliance relating to the Warrants or the
securities purchased pursuant to the Warrants (or in any related registration
statement, notification or the like) or any omission (or alleged omission) to
state therein a material fact required to be stated therein or necessary to make
the statements therein not misleading, and to reimburse the Company and each
other person indemnified pursuant to this Section 10(g) for any legal and any
other expenses reasonably incurred in connection with investigating or defending
any such claim, loss, damage, liability or action provided, however, that this
Section 10(g) shall apply only if (and only to the extent that) such statement
or omission was made in reliance upon information (including, without
limitation,
15
written negative responses to inquiries) furnished to the Company by an
instrument duly executed by participating holders of Registrable Stock and
stated to be specifically for use in such prospectus, or other document (or
related registration statement, notification or the like) or any amendment or
supplement thereto; provided further, that in no case shall any participating
holder of Registrable Stock be responsible for any amount in excess of the
amount of net proceeds received by such participating holders from the offering
of the securities.
(3) Promptly after receipt by an indemnified party of notice of
the commencement of any action or proceeding involving a claim referred to in
this Section 10(g), such indemnified party shall, if a claim in respect thereof
is to be made against an indemnifying party, give written notice to the latter
of the commencement of such action; provided, however, that the failure of any
indemnified party to give notice as provided herein shall not relieve the
indemnifying party of its obligations under the preceding subdivisions of this
Section 10(g), except to the extent that the indemnifying party is actually
prejudiced by such failure to give notice. In case any such action is brought
against an indemnified party, unless in such indemnified party's reasonable
judgment a conflict of interest between such indemnified and indemnifying
parties may exist in respect of such claim, the indemnifying party shall be
entitled to participate in and to assume the defense thereof, jointly with any
other indemnifying party similarly notified, to the extent that the indemnifying
party may wish, with counsel reasonably satisfactory to such indemnified party,
and after notice from the indemnifying party to such indemnified party of its
election so to assume the defense thereof, the indemnifying party shall not be
liable to such indemnified party for any legal or other expenses subsequently
incurred by the latter in connection with the defense thereof other than
reasonable costs of investigation. If, in the indemnified party's reasonable
judgment a conflict of interest between such indemnified and indemnifying
parties may exist in respect of such claim, the indemnified party may assume the
defense of such claim, jointly with any other indemnified party that reasonably
determines such conflict of interest to exist, and the indemnifying party shall
be liable to such indemnified parties for the reasonable legal fees and expenses
of one counsel for all such indemnified parties and for other expenses
reasonably incurred in connection with the defense thereof incurred by the
indemnified party. No indemnifying party shall, without the consent of the
indemnified party, consent to entry of any judgment or enter into any settlement
of any such action which does not include as an unconditional term thereof the
giving by the claimant or plaintiff to such indemnified party of a release from
all liability, or a covenant not to ▇▇▇, in respect of such claim or litigation.
No indemnified party shall consent to entry of any judgment or enter into any
settlement of any such action the defense of which has been assumed by an
indemnifying party without the consent of such indemnifying party.
(4) Indemnification and contribution similar to that specified
in this Section 10(g) (with appropriate modifications) shall be given by the
Company and each participating holder of Registrable Stock included in a
registration statement with respect to any required registration or other
qualification of Registrable Stock under any Federal or state law or regulation
of any governmental authority, other than the Securities Act.
(5) The indemnification required by this Section 10(g) shall be
made by periodic payments of the amount thereof during the course of the
investigation or defense, as and when bills are received or expense, loss,
damage or liability is incurred.
16
(6) If the indemnification provided for in this Section 10(g)
from the indemnifying party is unavailable to an indemnified party hereunder in
respect of any losses, claims, damages, liabilities, or expenses referred to
herein, then the indemnifying party, in lieu of indemnifying such indemnified
party, shall contribute to the amount paid or payable by such indemnified party
as a result of losses, claims, damages, liabilities, or expenses in such
proportion as is appropriate to reflect the relative fault of the indemnifying
party and indemnified party in connection with the actions which resulted in
such losses, claims, damages, liabilities, or expenses, as well as any other
relevant equitable considerations. The relative fault of such indemnifying party
and indemnified party shall be determined by reference to, among other things,
whether any action in question, including any untrue or alleged untrue statement
of a material fact or omission or alleged omission to state a material fact, has
been made by, or relates to information supplied by, such indemnifying party or
indemnified party, and the parties' relative intent, knowledge, access to
information, and opportunity to correct or prevent such action. The amount paid
or payable by a party as a result of the losses, claims, damages, liabilities,
and expenses referred to above shall be deemed to include any legal or other
fees or expenses reasonably incurred by such party in connection with any
investigation or proceeding. In no event shall the liability of any person or
entity hereunder be greater in amount than the dollar amount of the proceeds
received by such person or entity upon the sale of the Registrable Stock giving
rise to such contribution obligation. The parties hereto agree that it would not
be just and equitable if contribution pursuant to this Section 10(g)(6) were
determined by pro rata allocation or by any other method of allocation which
does not take into account the equitable considerations referred to in this
Section 10(g)(6). No person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person or entity who was not guilty of such fraudulent
misrepresentation.
(h) Assignment of Rights; Termination. The rights granted under this
Section 10 may be assigned to the transferee of any of the Warrant or
Registrable Stock. No holder shall be entitled to exercise any registration
right provided for in this Section 10 at such time as Rule 144 or another
similar exemption under the Securities Act is available for the sale during a
three-month period without registration of all of the Registrable Stock
otherwise proposed to be registered by such Holder pursuant to this Section 10.
11. Special Agreements of the Company.
(a) Avoidance of Certain Actions. The Company will not, by amendment
of its articles of incorporation, certificate of incorporation or any other
charter document through any reorganization, transfer of assets, consolidation,
merger, issue or sale of securities or otherwise, avoid or take any action which
would have the effect of avoiding the observance or performance of any of the
terms to be observed or performed hereunder by the Company.
(b) Securing Governmental Approvals. If any shares of Common Stock
required to be reserved for the purposes of exercise of this Warrant require
registration with or approval of any governmental authority under any federal
law (other than the Securities Act) or under any state law before such shares
may be issued upon exercise of this Warrant, the Company will, at its expense,
as expeditiously as possible, cause such shares to be duly registered or
approved, as the case may be.
17
(c) Listing on Securities Exchanges. If, and so long as, any class of
the Company's Common Stock shall be listed on any national securities exchange
(as defined in the Exchange Act) or NASDAQ, the Company will, at its expense,
obtain and maintain the approval for listing upon official notice of issuance of
all Warrant Shares and maintain the listing of Warrant Shares after their
issuance; and the Company will so list on such national securities exchange or
NASDAQ, will register under the Exchange Act (or any similar statute then in
effect), and will maintain such listing of, any other securities that at any
time are issuable upon exercise of this Warrant if and at the time any
securities of the same class shall be listed on such national securities
exchange or NASDAQ by the Company.
(d) Notices of Stock Dividends, Subscriptions, Reclassifications,
Consolidations, Mergers, etc. If at any time: (1) the Company shall declare a
cash dividend (or an increase in the then existing dividend rate), or declare a
dividend on Common Stock payable otherwise than in cash out of its net earnings
after taxes for the prior fiscal year; or (2) the Company shall authorize the
granting to the holders of Common Stock of rights to subscribe for or purchase
any shares of capital stock of any class or of any other rights; or (3) there
shall be any capital reorganization, or reclassification, or redemption of the
capital stock of the Company, or consolidation or merger of the Company with, or
sale of all or substantially all of its assets to, another corporation or firm;
or (4) there shall be a voluntary or involuntary dissolution, liquidation or
winding up of the Company, then the Company shall give to the holders at the
addresses of such holders as shown on the books of the Company, at least fifteen
(15) days prior to the applicable record date hereinafter specified, a written
notice summarizing such action or event and stating the record date for any such
dividend or rights (or, if a record date is not to be selected, the date as of
which the holders of Common Stock of record entitled to such dividend or rights
are to be determined), the date on which any such reorganization,
reclassification, consolidation, merger, sale of assets, dissolution,
liquidation or winding up is expected to become effective, and the date as of
which it is expected the holders of Common Stock of record shall be entitled to
effect any exchange of their shares of Common Stock for cash (or cash
equivalent), securities or other property deliverable upon any such
reorganization, reclassification, consolidation, merger, sale of assets,
dissolution, liquidation or winding up.
(e) Reporting Requirements Under Exchange Act. The Company shall
timely file such information, documents and reports as the Commission may
require or prescribe under Section 13 or Section 15(d) (whichever is applicable)
of the Exchange Act. The Company shall upon request furnish any holder of
Registrable Stock (1) a written statement by the Company that it has complied
with such reporting requirements, (2) a copy of the most recent annual or
quarterly report of the Company, and (3) such other reports and documents filed
by the Company with the Commission as such holder may reasonably request in
availing itself of an exemption for the sale of Registrable Stock without
registration under the Securities Act. The Company acknowledges and agrees that
the purpose of the requirements contained in this Section 11(e) is to enable any
such holder to comply with the current public information requirement contained
in Rule 144 under the Securities Act should such holder ever wish to dispose of
any of the securities of the Company acquired by it without registration under
the Securities Act in reliance upon Rule 144 (or any other similar exemptive
provision). In addition, the Company shall take such other measures and file
such other information, documents and reports as shall hereafter be
18
required by the Commission as a condition to the availability of Rule 144 and
Rule 144A under the Securities Act (or any similar exemptive provision hereafter
in effect).
(f) Preemptive Rights. If at any time prior to the exercise or
expiration of all of the Warrants, the Company offers any shares of its Common
Stock to the holders of its Common Stock as a class for subscription in
accordance with preemptive or other rights of those stockholders, the holder
shall be entitled to subscribe for the same number of shares of Common Stock as
the holder would have been entitled to purchase, upon exercising the Warrants
and becoming a stockholder of the Company, immediately prior to the record or
effective date with respect to the preemptive or other rights. Notwithstanding
the foregoing, in no event shall the holder be entitled to exercise preemptive
rights to the extent that complying with such preemptive rights would cause the
Company to violate any law, regulation or rule applicable to the Company or such
offering, including without limitation federal or state securities laws and the
rules and regulations thereunder.
12. Modification and Waiver. This Warrant and any provision hereof may be
changed, waived, discharged or terminated only by an instrument in writing
signed by the party against which enforcement of the same is sought.
13. Notices. Unless otherwise specifically provided herein, all
communications under this Warrant shall be in writing and shall be deemed to
have been duly given (a) on the date of service if served personally on the
party to whom notice is to be given, (b) on the day of transmission if sent by
facsimile transmission to a number provided to a party specifically for such
purposes, and telephonic confirmation of receipt is obtained promptly after
completion of transmission, (c) on the day after delivery to Federal Express or
similar overnight courier, or (d) on the fifth day after mailing, if mailed to
the party to whom notice is to be given, by first class mail, registered or
certified, postage prepaid, and properly addressed, return receipt requested, to
each such holder at its address as shown on the books of the Company or to the
Company at the address indicated therefor on the signature page of this Warrant.
Any party hereto may change its address for purposes of this Section 13 by
giving the other party written notice of the new address in the manner set forth
herein.
14. Binding Effect on Successors. This Warrant shall be binding upon any
person or entity succeeding the Company by merger, consolidation or acquisition
of all or substantially all of the Company's assets, and all of the obligations
of the Company relating to the Common Stock issuable upon the exercise or
conversion of this Warrant shall survive the exercise, conversion and
termination of this Warrant and all of the covenants and agreements of the
Company shall inure to the benefit of the successors and assigns of the holder
hereof. The Company will, at the time of the exercise or conversion of this
Warrant, in whole or in part, upon request of the holder hereof but at the
Company's expense, acknowledge in writing its continuing obligation to the
holder hereof in respect of any rights to which the holder hereof shall continue
to be entitled after such exercise or conversion in accordance with this
Warrant; provided, that the failure of the holder hereof to make any such
request shall not affect the continuing obligation of the Company to the holder
hereof in respect of such rights.
19
15. Descriptive Headings. The descriptive headings of the several
paragraphs of this Warrant are inserted for convenience only and do not
constitute a part of this Warrant.
16. Governing Law. The validity, interpretation and performance of this
Warrant shall be governed by, and construed in accordance with, the laws of the
State of California applicable to contracts made and to be performed entirely
within such State, regardless of the law that might be applied under principles
of conflicts of law.
17. Survival of Representations, Warranties and Agreements. Each of the
respective agreements of each of the Company and the holder hereof contained
herein shall survive indefinitely until, by their respective terms, they are no
longer operative. Without limiting the generality of the foregoing sentence, the
provisions contained in Section 10 above shall survive the exercise or
conversion of this Warrant (or any part hereof) and the termination or
expiration of any other rights hereunder.
18. Remedies. In case any covenant or agreement contained in this Warrant
shall have been breached, the holders hereof (in the case of a breach by the
Company), or the Company (in the case of a breach by a holder), may proceed to
protect and enforce their or its rights either by suit in equity and/or by
action at law, including, but not limited to, an action for damages as a result
of any such breach and/or an action for specific performance of any such
covenant or agreement contained in this Warrant.
19. Acceptance. Receipt of this Warrant by the holder hereof shall
constitute acceptance of and agreement to the foregoing terms and conditions.
[Signature page follows.]
20
IN WITNESS WHEREOF, the Company has caused this Warrant to be executed on
its behalf by one of its officers thereunto duly authorized.
NEOTHERAPEUTICS, INC.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇
-------------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇
-------------------------------------
Title: Senior Vice President, Finance, Chief
-------------------------------------
Financial Officer, Secretary and
Treasurer
Address: ▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Dated: as of December 13, 2001
21
EXHIBIT A
NOTICE OF EXERCISE
To: NEOTHERAPEUTICS, INC.
1. The undersigned hereby:
[ ] Elects to purchase _____ shares of Common Stock of
______________________, pursuant to the terms of Section 2(a) of the attached
Warrant, and tenders herewith payment of the purchase price of such shares in
full.
[ ] Elects to exercise this Warrant for the purchase of ___
shares of Common Stock, pursuant to the terms of Section 2(b) of the attached
Warrant.
2. Please issue a certificate or certificates representing said
shares in the name of the undersigned or in such other name or names as are
specified below:
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(Name)
------------------------------------
(Address)
3. The undersigned represents that the aforesaid shares are being
acquired for the account of the undersigned for investment and not with a view
to, or for resale in connection with, the distribution thereof and that the
undersigned has no present intention of distributing or reselling such shares.
In support thereof, the undersigned has executed an Investment Representation
Statement attached hereto as Schedule 1.
(Signature) (Date)
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4. Please issue a new Warrant for the unexercised portion of the
attached Warrant in the name of the undersigned or in such other name as is
specified below:
--------------------------------------
Date: By: (Warrantholder)
----------------------- --------------------------------------
Name: (Print)
-------------------------
Its:
---------------------------------
A-1
EXHIBIT B
FORM OF ASSIGNMENT
FOR VALUE RECEIVED, the undersigned registered owner of this Warrant hereby
sells, assigns and transfers unto the Assignee named below all of the rights of
the undersigned under the within Warrant, with respect to the number of shares
of Common Stock set forth below:
NAME OF ASSIGNEE ADDRESS NO. OF SHARES
and does hereby irrevocably constitute and appoint ___________ Attorney to make
such transfer on the books of NeoTherapeutics, Inc., maintained for the purpose,
with full power of substitution in the premises.
Dated:
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Signature of holder
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Name
------------------------------------
Title
By signing below, the Assignee acknowledges that this Warrant and the
shares of stock to be issued upon exercise hereof or conversion thereof are
being acquired for investment and that the Assignee will not offer, sell or
otherwise dispose of this Warrant or any shares of stock to be issued upon
exercise hereof or conversion thereof except under circumstances which will not
result in a violation of the Securities Act of 1933, as amended, or any state
securities laws. Further, the Assignee acknowledges that upon exercise of this
Warrant, the Assignee shall, if requested by the Company, confirm in writing, in
a form satisfactory to the Company, that the shares of stock so purchased are
being acquired for investment and not with a view toward distribution or resale.
Dated:
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Signature of Assignee
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Name
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Title
B-1