EXHIBIT 4.1
COMMON STOCK PURCHASE
WARRANT
To Purchase up to $12,000,000 in
Shares of Common Stock of
CELL THERAPEUTICS,
INC.
THIS COMMON STOCK PURCHASE WARRANT
(the “ Warrant ”) certifies that, for value
received, Midsummer Investment, Ltd. (the “ Holder
”) is entitled, upon the terms and subject to the limitations
on exercise and the conditions hereinafter set forth, from time to
time on or after the first Closing Date (as defined in the Purchase
Agreement, defined below), subject to any suspension of such
exercise pursuant to a Suspension Notice issued under the Purchase
Agreement, until the earliest of (a) the termination of the
Securities Purchase Agreement according to its terms, (b) the
date when this Warrant has been exercised in full or (c) the
day before the date on which the indicated additional exercise of
the Warrant would (if not limited by Section 3(b) of this
Warrant) result in the aggregate exercise of this Warrant for
common stock, no par value (the “ Common Stock
”) of Cell Therapeutics, Inc., a Washington corporation
(the “ Company ”) in excess of 19.9% of the
number of shares of the Common Stock outstanding on the date of
this Warrant (the earliest such date, the “ Termination
Date ”) but not thereafter, to subscribe for and purchase
from the Company, up to $12,000,000 in aggregate exercise price
(the “ Warrant Amount ”) of shares of Common
Stock to be issued on exercise of this Warrant (the “
Warrant Shares ”). The purchase price of one share of
Common Stock under this Warrant shall be determined at the time of
each exercise of this Warrant based on the Per Share Exercise
Price, as set forth in Section 2(b) below.
Section 1
. Definitions . Capitalized
terms used and not otherwise defined herein shall have the meanings
set forth in that certain Securities Purchase Agreement, dated
July 29, 2008 (the “ Purchase Agreement ”),
among the Company and the Holder.
Section 2
. Exercise .
a) Exercise of Warrant .
Exercise of the purchase rights represented by this Warrant may be
made, in whole or in part, from time to time on one or more Closing
Dates as determined under the terms of the Purchase Agreement and
on or before the Termination Date. The Warrant Shares shall be
exercised by delivery to the Company of a duly executed facsimile
copy of the Notice of Exercise Form annexed hereto (or such other
office or agency of the Company as it may designate by notice in
writing to the registered Holder at the address of such Holder
appearing on the books of the Company); provided ,
however , the Company shall have received payment of the
aggregate Exercise Price of the shares thereby purchased by wire
transfer on the relevant Closing Date; provided ,
further , that if this Warrant is exercised in full, the
Holder shall have surrendered this Warrant to the Company.
Notwithstanding anything herein to the contrary, the Holder shall
not be required to physically surrender this Warrant to the Company
until the Holder has purchased all of the Warrant Shares available
hereunder and the Warrant has been exercised in full. Partial
exercises of this Warrant resulting in purchases of a portion of
the total number of Warrant Shares available hereunder shall have
the effect of lowering the outstanding Warrant Amount for which
this Warrant is
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exercisable in an amount equal to
the applicable aggregate purchase price of the Warrant Shares
purchased on that Closing Date. The Holder and the Company shall
maintain records showing the number of Warrant Shares purchased,
the aggregate purchase price of such Warrant Shares and the date of
such purchases. The Company shall deliver any objection to any
Notice of Exercise Form within one Business Day of receipt of such
notice. In the event of any dispute or discrepancy, the records of
the Holder shall be controlling and determinative in the absence of
manifest error. The Holder and any assignee, by acceptance of
this Warrant, acknowledge and agree that, by reason of the
provisions of this paragraph, following the purchase of a portion
of the Warrant Shares hereunder, the Warrant Amount for which this
Warrant is exercisable at any given time may be less than the
amount stated on the face hereof .
b) Exercise Price . The
exercise price of the Common Stock under this Warrant shall be the
Per Share Purchase Price as determined for that Closing Date under
the terms of the Purchase Agreement (the “ Exercise
Price ”).
c) Mechanics of Exercise
.
i. Authorization of Warrant
Shares . The Company covenants that all Warrant Shares which
may be issued upon the exercise of the purchase rights represented
by this Warrant will, upon exercise of the purchase rights
represented by this Warrant and payment of the Exercise Price
therefor, be duly authorized, validly issued, fully paid and
nonassessable and free from all taxes, liens and charges in respect
of the issue thereof (other than taxes in respect of any transfer
occurring contemporaneously with such issue).
ii. Delivery of Warrant Shares
Upon Exercise . Warrant Shares shall be transmitted by the
transfer agent of the Company to the Holder by crediting the
account of the Holder’s prime broker with the Depository
Trust Company through its Deposit Withdrawal Agent Commission
(“ DWAC ”) system. The Warrant Shares will be
delivered to the Holder on the Closing Date, as determined in
accordance with the Purchase Agreement, provided that the Company
has received the Notice of Exercise Form, surrender of this Warrant
(if required) and evidence of payment of the aggregate Exercise
Price as set forth above on or prior to the Closing Date. Warrant
Shares shall be issued free of all legends on the Closing Date.
This Warrant shall be deemed to have been exercised on the Closing
Date upon receipt by the Company of the Exercise Price. The Warrant
Shares shall be deemed to have been issued, and Holder or any other
person so designated to be named therein shall be deemed to have
become a holder of record of such shares for all purposes, as of
the Closing Date at the time the Warrant has been exercised by
payment to the Company of the Exercise Price and all taxes required
to be paid by the Holder, if any, pursuant to
Section 2(c)(vii) prior to the issuance of such shares, have
been paid. If the Company fails for any reason to deliver to the
Holder the Warrant Shares subject to a Notice of Exercise by the
applicable Closing, the Company shall pay to the Holder, in cash,
as liquidated damages and not as a penalty, for each $1,000 of
Warrant Shares subject to such exercise (based on the VWAP of the
Common Stock on the date
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of the applicable Notice of
Exercise), $10 per Trading Day (increasing to $20 per Trading Day
on the fifth Trading Day after such liquidated damages begin to
accrue) for each Trading Day after such Warrant Share Delivery Date
until such Warrant Shares are delivered.
iii. Delivery of New Warrant Upon
Exercise . If this Warrant shall have been exercised in part,
no new Warrant certificate need be issued, however, the Company
shall, at the request of a Holder and upon surrender of this
Warrant certificate, at the time of delivery of the certificate or
certificates representing Warrant Shares, deliver to Holder a new
Warrant evidencing the rights of Holder to purchase the remaining
Warrant Amount called for by this Warrant, which new Warrant shall
in all other respects be identical with this Warrant.
iv. Rescission Rights . If
the Company fails to cause its transfer agent to transmit to the
Holder the Warrant Shares pursuant to this Section 2(c) by the
Closing Date, then the Holder will have the right to rescind such
exercise.
v. Compensation for Buy-In on
Failure to Timely Deliver Warrant Shares Upon Exercise . In
addition to any other rights available to the Holder, if the
Company fails to cause its transfer agent to transmit to the Holder
the Warrant Shares pursuant to an exercise on or before the second
Business Day following the Closing Date pursuant to this
Section 2(c) (including, but not limited to, reasons related
to a suspension of the Registration Statement), and if after such
date the Holder is required by its broker to purchase (in an open
market transaction or otherwise) shares of Common Stock to deliver
in satisfaction of a sale by the Holder of the Warrant Shares which
the Holder anticipated receiving upon such exercise (a “
Buy-In” ), then the Company shall (1) pay in cash
to the Holder the amount by which (x) the Holder’s total
purchase price (including brokerage commissions, if any) for the
shares of Common Stock so purchased exceeds (y) the amount
obtained by multiplying (A) the number of Warrant Shares that
the Company was required to deliver to the Holder in connection
with the exercise at issue times (B) the price at which the
sell order giving rise to such purchase obligation was executed,
and (2) at the option of the Holder, either reinstate the
portion of the Warrant and equivalent Warrant Amount for which such
exercise was not honored or deliver to the Holder the number of
shares of Common Stock that would have been issued had the Company
timely complied with its exercise and delivery obligations
hereunder. For example, if the Holder purchases Common Stock having
a total purchase price of $11,000 to cover a Buy-In with respect to
an attempted exercise of shares of Common Stock with an aggregate
sale price giving rise to such purchase obligation of $10,000,
under clause (1) of the immediately preceding sentence the
Company shall be required to pay the Holder $1,000. The Holder
shall provide the Company written notice indicating the amounts
payable to the Holder in respect of the Buy-In, together with
applicable confirmations and other evidence reasonably requested by
the Company. Nothing herein shall limit a Holder’s right to
pursue any other remedies available to it hereunder, at law or in
equity including, without limitation, a decree of specific
performance and/or injunctive relief with respect to the
Company’s failure to timely deliver Warrant Shares upon
exercise of the Warrant as required pursuant to the terms
hereof.
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vi. No Fractional Shares or
Scrip . This Warrant may not be exercised for fractional shares
or scrip representing fractional shares.
vii. Charges, Taxes and
Expenses . Issuance of Warrant Shares shall be made without
charge to the Holder for any issue or transfer tax or other
incidental expense in respect of the issuance of such Warrant
Shares, all of which taxes and expenses shall be paid by the
Company; provided , however , that in the event
Warrant Shares are to be issued in a name other than the name of
the Holder, this Warrant when surrendered for exercise shall be
accompanied by the Assignment Form attached hereto duly executed by
the Holder; and the Company may require, as a condition thereto,
the payment of a sum sufficient to reimburse it for any transfer
tax incidental thereto.
viii. Closing of Books . The
Company will not close its stockholder books or records in any
manner which prevents the timely exercise of this Warrant, pursuant
to the terms hereof.
d) Exercise Limitations . The
Company shall not effect any exercise of this Warrant, and a Holder
shall not have the right to exercise any portion of this Warrant,
pursuant to Section 2 or otherwise, to the extent that after
giving effect to such exercise as set forth on the applicable
Notice of Exercise, the Holder (together with the Holder’s
Affiliates, and any other person or entity acting as a group
together with the Holder or any of the Holder’s Affiliates),
would beneficially own in excess of the Beneficial Ownership
Limitation (as defined below). For purposes of the foregoing
sentence, the number of shares of Common Stock beneficially owned
by the Holder and its Affiliates shall include the number of shares
of Common Stock issuable upon exercise of this Warrant with respect
to the Notice of Exercise for which such determination is being
made, but shall exclude the number of shares of Common Stock which
would be issuable upon (A)
