EXHIBIT 10.18

NEITHER THIS WARRANT NOR THE SHARES ISSUABLE UPON THE EXERCISE HEREOF HAVE BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR STATE SECURITIES
LAWS.  THESE SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT ONLY AND NOT WITH A
VIEW TO, OR IN CONNECTION WITH, THE SALE OR DISTRIBUTION THEREOF.  THESE
SECURITIES MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION
UNLESS THE COMPANY RECEIVES AN OPINION OF COUNSEL REASONABLY ACCEPTABLE TO IT
STATING THAT SUCH SALE OR TRANSFER IS EXEMPT FROM THE REGISTRATION AND
PROSPECTUS DELIVERY REQUIREMENTS OF SAID ACT AND IS IN COMPLIANCE WITH
APPLICABLE STATE SECURITIES LAWS.  THIS WARRANT AND THE SHARES ISSUABLE UPON THE
EXERCISE HEREOF ARE SUBJECT TO CERTAIN RESTRICTIONS ON THEIR TRANSFER PURSUANT
TO TERMS SET FORTH IN THIS WARRANT.

 

Warrant to Purchase Shares

 

of Common Stock

 

(Subject to Adjustment)

GENSTAR THERAPEUTICS CORPORATION

COMMON STOCK PURCHASE WARRANT
Void after June 19, 2005

GenStar Therapeutics Corporation, a Delaware corporation (the “Company”), hereby
certifies that, for value received, CEOcast, Inc., or its permitted assigns, is
entitled, subject to the terms set forth below, to purchase from the Company at
any time or from time to time before 5:00 p.m. Pacific time, on June 19, 2005
(the “Expiration Time”), 100,000 fully paid and nonassessable shares of Common
Stock of the Company at a purchase price per share equal to the Warrant Price
(as defined herein) and otherwise in accordance with the terms hereof.  The
number and character of such shares of Common Stock and the Warrant Price
therefor are subject to adjustment as provided below.

As used herein the following terms, unless the context otherwise requires, have
the following respective meanings:

          (a)          The term “Company” shall mean GenStar Therapeutics
Corporation and any corporation that shall succeed to or assume the obligations
of the Company hereunder.

          (b)          The term “Control Transaction” shall mean (i) the sale by
the Company of all or substantially all of its assets or (ii) any transaction or
series of related transactions by the Company (including, without limitation,
any reorganization, merger or consolidation) which results in the transfer of at
least fifty percent (50%) of the outstanding voting power of the Company;
provided, however, that a reorganization, merger or similar transaction shall
not be deemed a Control Transaction if the stockholders of the Company
immediately prior to such

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transaction maintain beneficial ownership and voting control of a majority of
the outstanding voting securities of the surviving entity in the same relative
proportions as they did prior to such transaction.

          (c)          The term “holder” shall mean the holder of this Warrant
or any permitted transferee or assignee thereof.

          (d)          The term “Original Issuance Date” shall mean June 20,
2002.

          (f)           The term “Warrant” shall mean this Warrant.

          (g)          The term “Warrant Price” shall mean $0.45 per share.

          (h)          The term “Warrant Shares” shall mean the shares of Common
Stock or other securities of the Company issuable upon exercise of this Warrant,
subject to adjustment hereunder from time to time.

          1.          Initial Exercise Date; Expiration.  This Warrant may be
exercised in full at any time prior to the Expiration Time, and shall expire
immediately thereupon.  Notwithstanding the foregoing, this Warrant shall expire
and no longer be exercisable immediately prior (and subject to) the closing of
any Control Transaction.  The Company shall provide the holder of this Warrant
with at least 15 days prior notice of the occurrence of any event that would
constitute a Control Transaction.

          2.          Exercise of Warrant.

                        (a)          This Warrant may be exercised in full by
the holder hereof by surrender of this Warrant, with the form of subscription
attached hereto duly executed by such holder, to the Company at its principal
office, accompanied by payment in accordance with Section 2(b) hereof, of the
aggregate Warrant Price of the Warrant Shares to be purchased hereunder.

                        (b)          In lieu of payment in cash, payment of the
aggregate Warrant Price upon exercise of the Warrant may be made by
(i) surrender to the Company of debt or equity securities of the Company having
a fair market value equal to the aggregate exercise price of the Warrant Shares
being purchased upon such exercise (provided that for purposes of this
subparagraph, the fair market value of the Common Stock shall equal the Market
Price of the Common Stock as set forth below, and the fair market value of any
note or other debt security shall be deemed to be equal to the aggregate
outstanding principal amount thereof plus all accrued and unpaid interest
thereon) or (ii) delivery of a written notice to the Company that the holder is
exercising the Warrant by authorizing the Company to withhold from issuance a
number of Warrant Shares issuable upon such exercise of the Warrant which when
multiplied by the Market Price (as set forth below) is equal to the aggregate
Warrant Price of the Warrant Shares being purchased upon such exercise (and such
withheld shares shall no longer be issuable under this Warrant).

                        (c)          The Market Price of the Company’s Common
Stock as of a particular date (the “Determination Date”) shall be calculated as
follows:

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                                        (i)          If the Company’s Common
Stock is traded on an exchange or is quoted on the National Association of
Securities Dealers, Inc. Automated Quotation (“Nasdaq”) National Market System,
then the average of the closing or last sale prices, respectively, reported for
the twenty (20) business days immediately preceding the Determination Date;

                                        (ii)          If the Company’s Common
Stock is not traded on an exchange or on the Nasdaq National Market System but
is traded in the over-the-counter market, then the average of the means of the
closing bid and asked prices reported for the twenty (20) business days
immediately preceding the Determination Date;

                                        (iii)          If the Company’s Common
Stock is not traded on an exchange, on the Nasdaq National Market System or in
the over-the-counter market, then the fair market value of the Common Stock as
of the day immediately preceding the Determination Date, as determined by the
Company’s board of directors in good faith.

          3.          When Exercise Effective.  The exercise of this Warrant
shall be deemed to have been effected immediately prior to the close of business
on the business day on which the holder surrenders this Warrant to the Company
and satisfies all of the requirements of Section 2, and at such time the person
in whose name any certificate for Warrant Shares shall be issuable upon such
exercise, as provided in Section 2, shall be deemed to be the record holder of
such Warrant Shares for all purposes.

          4.          Delivery on Exercise.  As soon as practicable after the
exercise of this Warrant, the Company at its expense will cause to be issued in
the name of and delivered to the holder hereof, or as such holder may direct, a
certificate or certificates for the number of fully paid and nonassessable full
Warrant Shares as to which such holder shall be entitled on such exercise,
together with cash, in lieu of any fraction of a Warrant Share, equal to such
fraction of the Market Price of one full share of Common Stock.

          5.          Adjustment of Warrant Price and Number of Warrant Shares. 
Notwithstanding anything to the contrary in this Warrant:

                        (a)           Adjustments.  The Warrant Price per share
shall be subject to adjustment from time to time as follows:

                                        (i)          Stock Splits and Stock
Dividends.  If the number of shares of Common Stock outstanding at any time
after the Original Issuance Date is increased by a stock dividend payable in
shares of Common Stock or by a subdivision or split-up of shares of Common
Stock, then, on the date such payment is made or such change is effective, the
Warrant Price per share shall be proportionately decreased and the number of
Warrant Shares shall be increased in proportion to such increase of outstanding
shares.  Such adjustment shall become effective at the close of business on the
date the dividend, subdivision or split-up becomes effective.

                                        (ii)          Reverse Stock Splits.  If
the number of shares of Common Stock outstanding at any time after the Original
Issuance Date is decreased by a combination of the

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outstanding shares of Common Stock, then, on the effective date of such
combination, the Warrant Price per share shall be proportionately increased and
the number of Warrant Shares shall be decreased in proportion to such decrease
in outstanding shares.  Such adjustment shall become effective at the close of
business on the date the combination becomes effective.

                                        (iii)          Reorganization;
Reclassification.  Subject to the expiration provisions of Section 1 hereof, in
the case, at any time after the Original Issuance Date, of any capital
reorganization, or any reclassification of the stock of the Company (other than
as a result of a stock dividend or subdivision, split-up or combination of
shares), the consolidation or merger of the Company with or into another person
(other than a consolidation or merger in which the Company is the continuing
entity and which does not result in any change in the Common Stock), or a sale
or transfer of all or substantially all of the Company’s assets, this Warrant
shall, after such reorganization, reclassification, consolidation, merger or
sale, be exercisable for the kind and aggregate number of shares of stock or
other securities or property of the Company or other entity to which the Holder
would have been entitled if, immediately prior to such reorganization,
reclassification, consolidation, merger or sale, such Holder had exercised this
Warrant in full (subject to all adjustments under this Section 5).  The
provisions of this clause (vi) shall similarly apply to successive
reorganizations, reclassifications, consolidations, mergers or sales.

                                        (iv)          All calculations under
this Subsection (a) shall be made to the nearest cent or to the nearest one
hundredth (1/100) of a share, as appropriate.

                        (b)          Minimal Adjustments.  No adjustment in the
Warrant Price per share need be made if such adjustment would result in a change
in the Warrant Price per share of less than $0.01.  Any adjustment of less than
$0.01 which is not made shall be carried forward and shall be made at the time
of and together with any subsequent adjustment which, on a cumulative basis,
amounts to an adjustment of $0.01 or more in the Warrant Price per share.

          6.          Notice of Adjustments.  Whenever the number of Warrant
Shares or the Warrant Price per share shall be adjusted pursuant to Section 5
hereof, the Company shall provide notice by first class mail to the holder of
this Warrant 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 number of Warrant Shares and the Warrant Price per share
after giving effect to such adjustment. 

          7.          No Impairment.  The Company (a) will not increase the par
value of any shares of stock receivable on the exercise of this Warrant above
the amount payable therefor on such exercise, (b) will at all times reserve and
keep available a number of its authorized shares of Common Stock, free from all
preemptive rights therein, which will be sufficient to permit the exercise of
this Warrant, and (c) shall take all such action as may be necessary or
appropriate in order that all Warrant Shares as may be issued pursuant to the
valid exercise of this Warrant will, upon issuance, be duly and validly issued,
fully paid and nonassessable and free from all taxes, liens and charges with
respect to the issue thereof.

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          8.          Exchange of Warrants.  Subject to the provisions of
Section 9 below, on surrender for exchange of this Warrant, properly endorsed,
to the Company, the Company at its expense will issue and deliver to or on the
order of the holder thereof a new Warrant of like tenor, in the name of such
holder or as such holder may direct, calling in the aggregate on the face
thereof for the number of Warrant Shares called for on the face of the Warrant
so surrendered.

          9.          Replacement of Warrants.  On receipt by the Company of
evidence reasonably satisfactory to it of the loss, theft, destruction or
mutilation of this Warrant and, in the case of any such loss, theft or
destruction of this Warrant, on delivery of an indemnity agreement reasonably
satisfactory in form and amount to the Company or, in the case of any such
mutilation, on surrender and cancellation of such Warrant, the Company at its
expense will execute and deliver, in lieu thereof, a new Warrant of like tenor.

          10.          Investment Intent.  The holder hereof, by accepting this
Warrant, covenants and agrees that, at the time of exercise hereof, and at the
time of any proposed transfer of the Warrant Shares, such holder will deliver to
the Company a written statement that the securities acquired by the holder upon
exercise hereof are for the account of the holder for investment and are not
acquired with a view to, or for sale in connection with, any distribution
thereof (or any portion thereof) and with no present intention (at any such
time) of offering and distributing such securities (or any portion thereof), and
make other representations which the Company may reasonably require in order to
comply with the restrictions of state and federal securities laws relating to
the sale and disposition on “restricted securities,” as that term is defined in
Rule 144 of the Securities Act.

11.                    Transfer Restrictions.  The holder hereof acknowledges
that the Warrants and Warrant Shares may not be transferred.

12.                    Registration Rights.  The shares of Common Stock issued
or issuable upon exercise of the Warrant shall be deemed “Registrable
Securities” and the holders of such shares (the “Holders”) shall be entitled to
registration rights with respect thereto as set forth in this Section 12.  At
any time if the Company proposes to register any of its Common Stock under the
Securities Act (other than a registration on Form S-4 or S-8 or any successor
form thereto), whether or not for sale for its own account, in a manner which
would permit registration of Registrable Securities for sale for cash to the
public under the Securities Act, it will each such time give prompt written
notice to the Holder of its intention to do so at least thirty (30) days prior
to the anticipated filing date of the registration statement relating to such
registration.  Such notice shall offer each such Holder the opportunity to
include in such registration statement such number of Registrable Securities as
each such Holder may request.  Upon the written request of any such Holder made
within twenty (20) days after the receipt of the Company’s notice (which request
shall specify the number of Registrable Securities intended to be disposed of
and the intended method of disposition thereof), the Company shall use its Best
Efforts to effect the registration under the Securities Act of all Registrable
Securities which the Company has been so requested to register, to the extent
required to permit the disposition (in accordance with such intended methods
thereof) of the Registrable Securities so requested to be registered, provided
that:

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a.

if, at any time after giving such written notice of its intention to register
any of its securities and prior to the effective date of the registration
statement filed in connection with such registration, the Company shall
determine for any reason not to register such securities, the Company may, at
its election, give written notice of such determination to each Holder of
Registrable Securities and thereupon shall be relieved of its obligation to
register any Registrable Securities in connection with such registration

 

 

 

 

b.

If the registration referred to in the second sentence of this Section 12 is to
be an underwritten secondary registration on behalf of holders of securities
(other than Registrable Securities) of the Company (the “Other Holders”), and
the managing underwriter advises the Company in writing that in their good-faith
opinion such offering would be materially and adversely affected by the
inclusion therein of the Registrable Securities requested to be included
therein, the Company shall include in such registration the amount of securities
(including Registrable Securities) that such managing underwriter advises
allocated pro rata among the Other Holders and the Holders on the basis of the
number of remaining securities (including Registrable Securities) requested to
be included therein by each Other Holder and each Holder;

 

 

 

 

c.

The Company shall not be required to effect any registration of Registrable
Securities under this Section 12 incidental to the registration of any of its
securities in connection with mergers, acquisitions, dividend reinvestment plans
or stock option or other executive or employee benefit or compensation plans;
and

 

 

 

 

d.

The Company agrees to pay all Registration Expenses with respect to any
offerings pursuant to this Section 12; provided that in no event shall the
Company be responsible for underwriters’ fees and commissions payable with
respect to any Registrable Securities.

          13.          Notices.  All notices referred to in this Warrant shall
be in writing and shall be delivered personally (including by express courier)
or by first class mail, and will be deemed to have been given when so delivered
or mailed (i) to the Company, at its principal executive offices and (ii) to the
holder of this Warrant, at such holder’s address as it appears in the records of
the Company (unless otherwise indicated by such holder).

          14.          Miscellaneous.  This Warrant and any term hereof may be
changed, waived, discharged or terminated in accordance with Section 7.1 of the
Agreement.  This Warrant shall be governed by and construed and enforced in
accordance with the internal laws of the State of California. The headings in
this Warrant are for purposes of reference only, and shall not limit or
otherwise affect any of the terms hereof.

          IN WITNESS WHEREOF, the Company has caused this Warrant to be executed
and attested by its duly authorized officers and to be dated June 20, 2002.

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GENSTAR THERAPEUTICS CORPORATION

 

 

 

 

By:

 /s/  ROBERT E. SOBOL, M.D.

 

 

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Robert E. Sobol, M.D.
Chief Executive Officer

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FORM OF SUBSCRIPTION

(To be signed only on exercise of Warrant)

          TO:  GenStar Therapeutics Corporation

          The undersigned, the holder of the within Warrant, hereby irrevocably
elects to exercise the purchase rights represented by such Warrant for, and to
purchase thereunder, ____________* shares of Common Stock of GenStar
Therapeutics Corporation and herewith:

          (Check one)

 

o

makes payment of $_________ therefor; or

 

 

 

 

o

surrenders __________ shares of __________ stock of GenStar Therapeutics
Corporation or $__________ of aggregate indebtedness; or

 

 

 

 

o

elects to “net exercise” the Warrant pursuant to Section 2(b)(ii) of the Warrant
and authorizes GenStar Therapeutics Corporation  to withhold from issuance the
appropriate number of Warrant Shares as specified therein.

 

 

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(Signature must conform in all respects to name of
holder as specified on the face of the Warrant)

 

 

 

 

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(Address)

 

 

Dated:

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*Insert here the number of shares as to which the Warrant is being exercised.