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Exhibit 10.62
WARRANT AGREEMENT
AGREEMENT, dated as of this 20th day of May, 1997, by and
among GENTA INCORPORATED, a Delaware corporation ("Company"), CHASEMELLON
SHAREHOLDER SERVICES, L.L.C., as warrant agent ("Warrant Agent"), and PARAMOUNT
CAPITAL, INC., a New York corporation ("Paramount").
W I T N E S S E T H
WHEREAS, the Company has commenced a private placement (the
"Private Placement") of a minimum (the "Minimum Offering") of 10 Units (as
defined below) and a maximum (the "Maximum Offering") of 75 Units, with an
option in favor of Paramount, to offer up to an additional 50 Units to cover
over-allotments, each "Unit" consisting of (a) 1,000 shares of Series D
Preferred Stock (as defined below) of the Company, convertible into shares of
common stock, par value $.001 per share, of the Company, (b) redeemable warrants
(the "Class D Warrants") to purchase at any time prior to the fifth anniversary
of the Final Closing Date (as defined below) 5,000 shares of Common Stock (as
defined below) at the initial conversion price of such Series D Preferred Stock,
pursuant to a placement agency agreement dated as of May 1, 1997 (the "Placement
Agency Agreement"), between the Company and Paramount;
WHEREAS, the Company may issue up to 781,250 Class D Warrants
pursuant to the Maximum Offering and the over-allotment option;
WHEREAS, each Class D Warrant entitles the Registered Holder
(as defined below) thereof to purchase one (1) share of Common Stock;
WHEREAS, the Company desires the Warrant Agent to act on
behalf of the Company, and the Warrant Agent is willing to so act, in connection
with the issuance, registration, transfer, exchange and redemption of the Class
D Warrants, the issuance of certificates representing the Class D Warrants, the
exercise of the Class D Warrants, and the rights of the holders thereof;
NOW THEREFORE, in consideration of the premises and the mutual
agreements hereinafter set forth and for the purpose of defining the terms and
provisions of the Class D Warrants and the certificates representing the Class D
Warrants and the respective rights and obligations thereunder of the Company,
the holders of certificates representing the Class D Warrants and the Warrant
Agent, the parties hereto agree as follows:
SECTION 1. Definitions. As used herein, the following terms
shall have the following meanings, unless the context shall otherwise require:
(a) "Common Stock" shall mean stock of the Company of any
class, whether now or hereafter authorized, which has the right to participate
in the distribution of earnings and assets of the Company without limit as to
amount or percentage, which at the Initial Closing Date will consist of
4,327,752 (subject to possible adjustment resulting from rounding upwards to the
nearest whole share in connection with the one for ten reverse stock split of
the Common Stock that was effected on April 4, 1997 and possible conversions,
since April 18, 1997, of
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convertible securities issued by the Company) shares of Common Stock, par value
$.001 per share.
(b) "Closing Bid Price" for each trading day shall be the
reported per share closing bid price of the Common Stock regular way on the
Stock Market on such trading day, or, if there were no transactions on such
trading day, the average of the reported closing bid and asked prices, regular
way, of such security on the relevant Stock Market on such trading day.
(c) "Corporate Office" shall mean the office of the Warrant
Agent (or its successor) at which, at any particular time, its principal
business shall be administered, which office is located at the date hereof at
Overpeck Centre, 00 Xxxxxxxxxx Xxxx, Xxxxxxxxxx Xxxx, Xxx Xxxxxx, 00000.
(d) "Exercise Date" shall mean, as to any Class D Warrant, the
date on which the Warrant Agent shall have received both (a) the Warrant
Certificate representing such Class D Warrant, with the subscription form
thereon duly executed by the Registered Holder thereof or his attorney duly
authorized in writing, and (b) payment in cash, or by official bank or certified
check made payable to the Company, of an amount in lawful money of the United
States of America equal to the applicable Purchase Price.
(e) "Fair Market Value" of any asset (including any security)
means the fair market value thereof as mutually determined by the Company and
the Registered Holders of a majority of the Class D Warrants then outstanding.
If the Company and the Registered Holders of a majority of the Class D Warrants
then outstanding are unable to reach agreement on any valuation matter, such
valuation shall be submitted to and determined by a nationally recognized
independent investment bank selected by the board of directors of the Company
and the Registered Holders of a majority of the Class D Warrants then
outstanding (or, if such selection cannot be agreed upon promptly, or in any
event within ten days, then such valuation shall be made by a nationally
recognized independent investment banking firm selected by the American
Arbitration Association in New York City in accordance with its rules), the
costs of which valuation shall be paid for by the Company.
(f) "Final Closing Date" shall mean the final closing date of
the Private Placement.
(g) "Initial Closing Date" shall mean, as to each Class D
Warrant, the date of the initial closing of the Offering.
(h) "Initial Warrant Exercise Date" shall mean, as to each
Class D Warrant, the Final Closing Date.
(i) "Interim Closing Date" shall mean, as to each Class D
Warrant, any closing date of the Offering other than the Initial Closing Date
and the Final Closing Date.
(j) "Market Price" shall mean the average Closing Bid Price
for twenty (20) consecutive trading days, ending with the trading day prior to
the date as of which the Market Price is being determined (with appropriate
adjustments for subdivisions or combinations of shares effected during such
period), provided that if the prices referred to in the definition of
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Closing Bid Price cannot be determined for such period, "Market Price" shall
mean Fair Market Value.
(k) "Preferred Stock" shall mean the Series D Convertible
Preferred Stock of the Company, stated value $100.00 per share, par value $.001
per share which at the Initial Closing Date will consist of 223,860 authorized
shares.
(l) "Purchase Price" shall mean the purchase price to be paid
upon exercise of each Class D Warrant in accordance with the terms hereof, which
price shall be the lesser of (i) $3.00 and (ii) 50% of the Trading Price as of
the day immediately preceding (a) the Initial Closing Date, (b) any Interim
Closing Date, or (c) the Final Closing Date of the Offering, whichever is
lowest, subject to adjustment from time to time pursuant to the provisions of
Section 9, and subject to the Company's right to reduce the Purchase Price upon
notice to all warrantholders (which may be given, without limitation, prior to
the Final Closing Date).
(m) "Redemption Price" shall mean the price at which the
Company may, at its option in accordance with the terms hereof, redeem the Class
D Warrants, which price shall be $0.10 per share of Common Stock subject to such
Class D Warrants, as adjusted as provided in Section 9.
(n) "Registered Holder" shall mean, as to any Class D Warrant
and as of any particular date, the person in whose name the certificate
representing the Class D Warrant shall be registered on that date on the books
maintained by the Warrant Agent pursuant to Section 6.
(o) "Series A Preferred Stock" means the Series A Preferred
Stock described in the Restated Certificate of Incorporation of the Company (the
"Certificate of Incorporation"), as in effect on the date hereof.
(p) The "Stock Market" shall mean the principal national
securities exchange on which the Common Stock is listed or admitted to trading
or, if the Common Stock is not listed or admitted to trading on any national
securities exchange, shall mean The Nasdaq National Market System or The Nasdaq
SmallCap Market (collectively, "Nasdaq") or, if the Common Stock is not quoted
on Nasdaq, shall mean the OTC Bulletin Board or, if the Common Stock is not
quoted on the OTC Bulletin Board, shall mean the over-the-counter market as
furnished by any NASD member firm selected from time to time by the Company for
that purpose.
(q) "Trading Price" shall mean the lower of (i) the average
Closing Bid Price (with appropriate adjustments for subdivisions or combinations
of shares effected during such period) for thirty (30) consecutive trading days,
ending with the trading day prior to the date as of which the Trading Price is
being determined, and (ii) the average Closing Bid Price (with appropriate
adjustments for subdivisions or combinations of shares effected during such
period) for five (5) consecutive trading days, ending with the trading day prior
to the date as of which the Trading Price is being determined, provided that if
the prices referred to in the definition of Closing Bid Price cannot be
determined for any of such periods, "Trading Price" shall mean Fair Market
Value.
(r) A "trading day" shall mean a day on which the Stock Market
is open for the transaction of business.
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(s) "Transfer Agent" shall mean ChaseMellon Shareholder
Services, L.L.C., as the Company's transfer agent, or its authorized successor,
as such.
(t) "Warrant Expiration Date" shall mean 5:00 P.M. (New York
time) on the day prior to the fifth anniversary of the Final Closing Date or the
Redemption Date as defined in Section 8, whichever is earlier; provided that if
such date shall in the State of New York be a holiday or a day on which banks
are authorized or required to close, then 5:00 P.M. (New York time) on the next
following day which in the State of New York is neither a holiday nor a day on
which banks are authorized or required to close. Upon notice to all Registered
Holders, the Company shall have the right to extend the Warrant Expiration Date.
(u) Unless otherwise stated, section references used within
this Warrant Agreement refer to sections of this Warrant Agreement.
SECTION 2. Warrants and Issuance of Warrant Certificates.
(a) A Class D Warrant initially shall entitle the Registered
Holder of the Warrant Certificate representing such Class D Warrant to purchase
one share of Common Stock upon the exercise thereof, in accordance with the
terms hereof, subject to modification and adjustment as provided in Section 9.
(b) The Class D Warrants included in the offering of Units
will immediately be detachable and separately transferable from the shares of
Preferred Stock constituting part of such Units.
(c) Within five days after the Final Closing Date, Warrant
Certificates representing the number of Class D Warrants sold pursuant to the
Private Placement shall be executed by the Company and delivered to the Warrant
Agent. Within five days of receipt of the Warrant Certificates by the Warrant
Agent, the Warrant Agent shall send the Warrant Certificates to the Registered
Holders. The Company shall issue a written order, signed by its Chairman of the
Board, President or any Vice President and by its Secretary or an Assistant
Secretary, to the Warrant Agent directing that the Warrant Certificates shall be
countersigned, issued and delivered by the Warrant Agent in accordance with the
preceding sentence.
(d) From time to time, until the Warrant Expiration Date, the
Transfer Agent shall countersign and deliver stock certificates in required
whole number denominations representing up to an aggregate of 781,250 shares of
Common Stock, subject to adjustment as described herein, upon the exercise of
Class D Warrants in accordance with this Agreement.
(e) From time to time, until the Warrant Expiration Date, the
Warrant Agent shall countersign and deliver Warrant Certificates in required
whole number denominations to the persons entitled thereto in connection with
any transfer or exchange permitted under this Agreement; provided that no
Warrant Certificates shall be issued except (i) those initially issued
hereunder, (ii) those issued on or after the Initial Warrant Exercise Date, upon
the exercise of fewer than all Class D Warrants represented by any Warrant
Certificate, to evidence any unexercised Class D Warrants held by the exercising
Registered Holder, (iii) those issued upon any transfer or exchange pursuant to
Section 6; (iv) those issued in replacement of lost, stolen, destroyed or
mutilated Warrant Certificates pursuant to Section 7 and (v) at the option of
the
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Company, in such form as may be approved by its Board of Directors, to reflect
any adjustment to, or change in: the Purchase Price; the number of shares of
Common Stock purchasable upon exercise of the Class D Warrants; the Redemption
Price of the Class D Warrants; or the Warrant Expiration Date.
SECTION 3. Form and Execution of Warrant Certificates.
(a) The Warrant Certificates shall be substantially in the
form annexed hereto as Exhibit A (the provisions of which are hereby
incorporated herein) and may have such letters, numbers or other marks of
identification or designation and such legends, summaries or endorsements
printed, lithographed or engraved thereon as the Company may deem appropriate
and as are not inconsistent with the provisions of this Agreement, or as may be
required to comply with any law or with any rule or regulation made pursuant
thereto or with any rule or regulation of any stock exchange on which the Class
D Warrants may be listed, or to conform to usage or to the requirements of
Section 2. The Warrant Certificates shall be dated the date of issuance thereof
(whether upon initial issuance, transfer, exchange or in lieu of mutilated,
lost, stolen, or destroyed Warrant Certificates) and issued in registered form.
Warrant Certificates shall be numbered serially with the letters DW on Class D
Warrants of all denominations.
(b) Warrant Certificates shall be executed on behalf of the
Company by its Chairman of the Board, President or any Vice President and by its
Secretary or an Assistant Secretary, by manual signatures or by facsimile
signatures printed thereon. Warrant Certificates shall be manually countersigned
by the Warrant Agent and shall not be valid for any purpose unless so
countersigned. In case any officer of the Company who shall have signed any of
the Warrant Certificates shall cease to be an officer of the Company or to hold
the particular office referenced in the Warrant Certificate before the date of
issuance of the Warrant Certificates or before countersignature by the Warrant
Agent and issuance and delivery thereof, such Warrant Certificates may
nevertheless be countersigned by the Warrant Agent, issued and delivered with
the same force and effect as though the person who signed such Warrant
Certificates had not ceased to be an officer of the Company or to hold such
office. After countersignature by the Warrant Agent, Warrant Certificates shall
be delivered by the Warrant Agent to the Registered Holder without further
action by the Company, except as otherwise provided by Subsection 4(a).
SECTION 4. Exercise.
(a) Each Class D Warrant may be exercised by the Registered
Holder thereof at any time on or after the Initial Exercise Date, but not after
the Warrant Expiration Date, upon the terms and subject to the conditions set
forth herein and in the applicable Warrant Certificate. A Class D Warrant shall
be deemed to have been exercised immediately prior to the close of business on
the Exercise Date and the person entitled to receive the securities deliverable
upon such exercise shall be treated for all purposes as the holder of those
securities upon the exercise of the Class D Warrant as of the close of business
on the Exercise Date. As soon as practicable on or after the Exercise Date the
Warrant Agent shall deposit the proceeds received from the exercise of a Class D
Warrant and shall notify the Company in writing of the exercise of the Class D
Warrants. Promptly following, and in any event within five days after the date
of such notice from the Warrant Agent, the Warrant Agent, on behalf of the
Company, shall cause to be issued and delivered by the Transfer Agent, to the
person or persons entitled to receive the same,
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a certificate or certificates for the securities deliverable upon such exercise
(plus a certificate for any remaining unexercised Class D Warrants of the
Registered Holder). In the case of payment made in the form of a check drawn on
an account of Paramount or such other investment banks and brokerage houses as
the Company shall approve in writing to the Warrant Agent, certificates shall
immediately be issued without prior notice to the Company nor any delay. Upon
the exercise of any Class D Warrant and clearance of the funds received, the
Warrant Agent shall promptly remit the payment received for the Class D Warrant
(the "Warrant Proceeds") to the Company or as the Company may direct in writing,
subject to the provisions of Subsections 4(b) and 4(c).
(b) On the Exercise Date in respect of the exercise of any
Class D Warrant, the Warrant Agent shall, simultaneously with the distribution
of the Warrant Proceeds to the Company, on behalf of the Company, pay from the
Warrant Proceeds, a fee of 5% (the "Paramount Fee") of the Purchase Price to
Paramount for Class D Warrant exercises solicited by Paramount or its
representatives (of which a portion may be reallowed by Paramount to the dealer
who solicited the exercise, which may also be Paramount). In the event the
Paramount Fee is not received within seven days of the date on which the Company
receives Warrant Proceeds, then the Paramount Fee shall begin accruing interest
at an annual rate 300 basis points above prime payable by the Company to
Paramount at the time Paramount receives the Paramount Fee. Within five days
after exercise the Warrant Agent shall send Paramount a copy of the reverse side
of each Class D Warrant exercised. In addition, Paramount and the Company may at
any time during business hours, examine the records of the Warrant Agent,
including its ledger of original Warrant Certificates returned to the Warrant
Agent upon exercise of Class D Warrants. Paramount is intended by the parties
hereto to be, and is, a third-party beneficiary of this Agreement. The
provisions of this paragraph may not be modified, amended or deleted without the
prior written consent of Paramount. In addition to the foregoing, any costs
incurred by Paramount shall be promptly reimbursed by the Company.
(c) In order to enforce the provisions of Subsection 4(b)
above, in the event there is any dispute or question as to the amount or payment
of the Paramount Fee, the Warrant Agent is hereby expressly authorized to
withhold payment to the Company of the Warrant Proceeds unless and until the
Company establishes an escrow account for the purpose of depositing the entire
amount of the unpaid Paramount Fee claimed by Paramount, which amount will be
deducted from the net Warrant Proceeds to be paid to the Company. The funds
placed in the escrow account may not be released to the Company without a
written agreement from Paramount that the required Paramount Fee has been
received by Paramount. Paramount shall promptly notify the Warrant Agent by
facsimile and certified mail in the event of any such dispute or when the
Paramount Fee has been paid.
SECTION 5. Reservation of Shares; Listing; Payment of Taxes;
etc.
(a) The Company covenants that it will at all times reserve
and keep available out of its authorized Common Stock, solely for the purpose of
issue upon exercise of Class D Warrants, such number of shares of Common Stock
as shall then be issuable upon the exercise of all outstanding Class D Warrants.
The Company covenants that all shares of Common Stock which shall be issuable
upon exercise of the Class D Warrants shall, at the time of delivery (assuming
full payment of the purchase price thereof), be duly and validly issued, fully
paid,
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nonassessable and free from all issuance taxes, liens and charges with respect
to the issue thereof including, without limitation, adverse claims whatsoever
(with the exception of claims arising through the acts of the Registered Holders
themselves and except as arising from applicable Federal and state securities
laws), that the Company shall have paid all taxes, if any, in respect of the
original issuance thereof and that upon issuance such shares, to the extent
applicable, shall be listed on, or included in, the Stock Market.
(b) The Company covenants that if any securities to be
reserved for the purpose of exercise of Class D Warrants hereunder require
registration with, or the approval of, any governmental authority under any
federal securities law before such securities may be validly issued or delivered
upon such exercise, then the Company will in good faith and as expeditiously as
reasonably possible, endeavor to secure such registration or approval; provided,
however, that the Company shall have no obligation to register such securities
under the Securities Act of 1933, as amended, except as provided in the
Subscription Agreement dated as of the date hereof between the Company and each
Registered Holder. The Company will use reasonable efforts to obtain appropriate
approvals or registrations under state "blue sky" securities laws; provided,
that the Company shall not be required to qualify as a foreign corporation or
file a general or limited consent to service of process in any such
jurisdictions or make any changes in its capital structure or any other aspects
of its business or enter into any agreements with blue sky commissions,
including any agreement to escrow shares of its capital stock. With respect to
any such securities, however, Class D Warrants may not be exercised by, or
shares of Common Stock issued to, any Registered Holder in any state in which
such exercise would be unlawful.
(c) The Company shall pay all documentary, stamp or similar
taxes and other similar governmental charges that may be imposed with respect to
the issuance of Class D Warrants, or the issuance or delivery of any shares upon
exercise of the Class D Warrants; provided, however, that if the shares of
Common Stock are to be delivered in a name other than the name of the Registered
Holder of the Warrant Certificate representing any Class D Warrant being
exercised, then no such delivery shall be made unless the person requesting the
same has paid to the Warrant Agent the amount of transfer taxes or charges
incident thereto, if any.
(d) The Warrant Agent is hereby irrevocably authorized to
requisition the Company's Transfer Agent from time to time for certificates
representing shares of Common Stock issuable upon exercise of the Class D
Warrants, and the Company will authorize the Transfer Agent to comply with all
such proper requisitions. The Company will file with the Warrant Agent a
statement setting forth the name and address of the Transfer Agent of the
Company for shares of Common Stock issuable upon exercise of the Class D
Warrants.
SECTION 6. Exchange and Registration of Transfer.
(a) Warrant Certificates may be exchanged for other Warrant
Certificates representing an equal aggregate number of Class D Warrants of the
same class or may be transferred in whole or in part. Warrant Certificates to be
exchanged shall be surrendered to the Warrant Agent at its Corporate Office, and
upon satisfaction of the terms and provisions hereof, the Company shall execute,
and the Warrant Agent shall countersign, issue and deliver in
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exchange therefor, the Warrant Certificate or Certificates that the Registered
Holder making the exchange shall be entitled to receive.
(b) The Warrant Agent shall keep at its office books in which,
subject to such reasonable regulations as it may prescribe, it shall register
Warrant Certificates and any transfers thereof in accordance with its regular
practice. Upon due presentment for registration of transfer of any Warrant
Certificate at such office, the Company shall execute and the Warrant Agent
shall issue and deliver to the transferee or transferees a new Warrant
Certificate or Certificates representing an equal aggregate number of Class D
Warrants.
(c) With respect to all Warrant Certificates presented for
registration or transfer, or for exchange or exercise, the subscription form on
the reverse thereof shall be duly endorsed, or be accompanied by a written
instrument or instruments of transfer and subscription, in form satisfactory to
the Company and the Warrant Agent, duly executed by the Registered Holder or his
attorney-in-fact duly authorized in writing.
(d) A service charge may be imposed by the Warrant Agent on
holders for any exchange or registration of transfer of Warrant Certificates of
such holders. In addition, the Company may require payment by such holder of a
sum sufficient to cover any tax or governmental or other charge that may be
imposed in connection therewith.
(e) All Warrant Certificates surrendered for exercise, or for
exchange in case of mutilated Warrant Certificates, shall be promptly cancelled
by the Warrant Agent and thereafter retained by the Warrant Agent in a manner
consistent with its customary practices until termination of this Warrant
Agreement or resignation as Warrant Agent, or, with the prior written consent of
Paramount, disposed of or destroyed at the direction of the Company.
(f) Prior to due presentment for registration of transfer
thereof, the Company and the Warrant Agent may deem and treat the Registered
Holder of any Warrant Certificate as the absolute owner thereof and of each
Class D Warrant represented thereby (notwithstanding any notations of ownership
or writing thereon made by anyone other than a duly authorized officer of the
Company or the Warrant Agent) for all purposes and shall not be affected by any
notice to the contrary. The Class D Warrants, which are being offered in Units
with shares of Preferred Stock pursuant to the Placement Agency Agreement, will
immediately be detachable and separately transferable from the Preferred Stock.
SECTION 7. Loss or Mutilation. Upon receipt by the Warrant
Agent of evidence satisfactory to it of the ownership of and loss, theft,
destruction or mutilation of any Warrant Certificate and (in case of loss, theft
or destruction) of indemnity satisfactory to it, and (in the case of mutilation)
upon surrender and cancellation thereof, the Company shall execute and the
Warrant Agent shall (in the absence of notice to the Company and/or Warrant
Agent that the Warrant Certificate has been acquired by a bona fide purchaser)
countersign and deliver to the Registered Holder in lieu thereof a new Warrant
Certificate of like tenor representing an equal aggregate number of Class D
Warrants. Applicants for a substitute Warrant Certificate shall comply with such
other reasonable regulations and pay such other reasonable charges as the
Warrant Agent may prescribe.
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SECTION 8. Redemption.
(a) If there is no Series A Preferred Stock outstanding, at
any time after the first anniversary of the Final Closing Date, on no fewer than
sixty (60) days' prior written notice to Registered Holders of the Class D
Warrants being redeemed, the Company may, at its option, redeem the Class D
Warrants at the Redemption Price, provided the Closing Bid Price exceeds 300% of
the Purchase Price per share of Common Stock subject to a Class D Warrant for at
least 20 trading days in any 30 consecutive trading day period ending three days
prior to the date of notice of redemption (which shall be the date of mailing of
such notice). In addition, regardless of whether there is any Series A Preferred
Stock outstanding at any time after the first anniversary of the Final Closing
Date, on no fewer than sixty (60) days' prior written notice to Registered
Holders of the Class D Warrants being redeemed, the Company may, at its option,
redeem the Class D Warrants at the Redemption Price, provided the Closing Bid
Price exceeds 600% of the Purchase Price per share of Common Stock subject to a
Class D Warrant for at least 20 trading days in any 30 consecutive trading day
period ending three days prior to the date of notice of redemption (which shall
be the date of mailing of such notice). All outstanding Class D Warrants must be
redeemed if any are redeemed. The date fixed for redemption of the Class D
Warrants is referred to herein as the "Redemption Date."
(b) If the conditions set forth in Subsection 8(a) are met,
and the Company desires to exercise its right to redeem the Class D Warrants, it
shall request the Warrant Agent to mail a notice of redemption to each of the
Registered Holders of the Class D Warrants to be redeemed, first class, postage
prepaid, not later than the sixtieth day before the date fixed for redemption,
at their last address as shall appear on the records maintained pursuant to
Subsection 6(b). Any notice mailed in the manner provided herein shall be
conclusively presumed to have been duly given whether or not the Registered
Holder receives such notice.
(c) The notice of redemption shall specify (i) the Redemption
Price, (ii) the Redemption Date, (iii) the place where the Warrant Certificates
shall be delivered and the Redemption Price paid, (iv) that Paramount will
assist each Registered Holder of a Class D Warrant and be entitled to a
commission and reimbursement of costs in connection with the exercise thereof
and (v) that the right to exercise the Class D Warrant shall terminate at 5:00
P.M. (New York time) on the business day immediately preceding the Redemption
Date. No failure to mail such notice nor any defect therein or in the mailing
thereof shall affect the validity of the proceedings for such redemption except
as to a Registered Holder (a) to whom notice was not mailed or (b) whose notice
was defective. An affidavit of the Warrant Agent or of the Secretary or an
Assistant Secretary of the Company that notice of redemption has been mailed
shall, in the absence of fraud, be prima facie evidence of the facts stated
therein.
(d) Any right to exercise a Class D Warrant shall terminate at
5:00 P.M. (New York time) on the business day immediately preceding the
Redemption Date. On and after the Redemption Date, Holders of the Class D
Warrants shall have no further rights except to receive, upon surrender of the
Class D Warrant, the Redemption Price.
(e) From and after the Redemption Date, the Company shall, at
the place specified in the notice of redemption, upon presentation and surrender
to the Company by or on behalf of the Registered Holder thereof of one or more
Warrant Certificates evidencing Class D
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Warrants to be redeemed, deliver or cause to be delivered to or upon the written
order of such Holder a sum in cash equal to the Redemption Price of such Class D
Warrants. From and after the Redemption Date and upon the deposit or setting
aside by the Company of a sum sufficient to redeem all the Class D Warrants
called for redemption, such Class D Warrants shall expire and become void and
all rights hereunder and under the Warrant Certificates, except the right to
receive payment of the Redemption Price, shall cease.
SECTION 9. Adjustment of Purchase Price and Number of Shares
of Common Stock or Class D Warrants. Upon each adjustment of the Purchase Price
pursuant to this Section 9, the total number of shares of Common Stock
purchasable upon the exercise of each Class D Warrant shall (subject to the
provisions contained in Subsection 9(c)) be such number of shares (calculated to
the nearest tenth) purchasable at the Purchase Price in effect immediately prior
to such adjustment multiplied by a fraction, the numerator of which shall be the
Purchase Price in effect immediately prior to such adjustment and the
denominator of which shall be the Purchase Price in effect immediately after
such adjustment.
(a) Except as otherwise provided herein, in the event the
Company shall, at any time or from time to time after the date hereof, (i) sell
or issue any shares of Common Stock for a consideration per share less than
either (a) the Purchase Price in effect on the date of such sale or issuance or
(b) the Market Price of the Common Stock as of the date of the sale or issuance,
(ii) issue any shares of Common Stock as a stock dividend to the holders of
Common Stock, or (iii) subdivide or combine the outstanding shares of Common
Stock into a greater or fewer number of shares (any such sale, issuance,
subdivision or combination being herein called a "Change of Shares"), then, and
thereafter upon each further Change of Shares, the Purchase Price in effect
immediately prior to such Change of Shares shall be changed to a price (rounded
to the nearest cent) determined by multiplying the Purchase Price in effect
immediately prior thereto by a fraction, the numerator of which shall be (x) the
sum of (A) the number of shares of Common Stock outstanding immediately prior to
the sale or issuance of such additional shares or such subdivision or
combination plus (B) the number of shares of Common Stock that the aggregate
consideration received (determined as provided in Paragraph 9(g)(vi)) for the
issuance of such additional shares would purchase at the greater of (1) the
Purchase Price in effect on the date of such issuance or (2) the Market Price as
of such date, and the denominator of which shall be (y) the number of shares of
Common Stock outstanding immediately after the sale or issuance of such
additional shares or such subdivision or combination. Such adjustment shall be
made successively whenever any such issuance is made.
(b) In case of any reclassification, capital reorganization or
other change of outstanding shares of Common Stock, or in case of any
consolidation or merger of the Company with or into another entity (other than a
consolidation or merger in which the Company is the continuing entity and which
does not result in any reclassification, capital reorganization or other change
of outstanding shares of Common Stock other than the number thereof), or in case
of any sale or conveyance to another entity of the property of the Company as,
or substantially as, an entirety (other than a sale/leaseback, mortgage or other
financing transaction), the Company shall cause effective provision to be made
so that each holder of a Class D Warrant then outstanding shall have the right
thereafter, by exercising such Class D Warrant, upon the terms and conditions
specified in the Class D Warrants and in lieu of the shares of Common Stock
immediately theretofore purchasable upon exercise of the Class D Warrants, to
purchase the kind
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11
and number of shares of stock or other securities or property (including cash)
receivable upon such reclassification, capital reorganization or other change,
consolidation, merger, sale or conveyance by a holder of the number of shares of
Common Stock that might have been purchased upon exercise of such Class D
Warrant immediately prior to such reclassification, capital reorganization or
other change, consolidation, merger, sale or conveyance. Any such provision
shall include provision for adjustments that shall be as nearly equivalent as
may be practicable to the adjustments provided for in this Section 9. The
Company shall not effect any such consolidation, merger or sale unless prior to,
or simultaneously with, the consummation thereof the successor (if other than
the Company) resulting from such consolidation or merger or the entity
purchasing assets or other appropriate entity shall assume, by written
instrument executed and delivered to the Warrant Agent, the obligation to
deliver to the holder of each Class D Warrant such shares of stock, securities
or assets as, in accordance with the foregoing provisions, such holders may be
entitled to purchase and the other obligations under this Agreement. The
foregoing provisions shall similarly apply to successive reclassifications,
capital reorganizations and other changes of outstanding shares of Common Stock
and to successive consolidations, mergers, sales or conveyances.
(c) If, at any time or from time to time, the Company shall
issue or distribute to the holders of shares of Common Stock evidence of its
indebtedness, any other securities of the Company or any cash, property or other
assets (excluding an issuance or distribution governed by one of the preceding
subsections of this Section 9 and also excluding cash dividends or cash
distributions paid out of net profits legally available therefor in the full
amount thereof (any such non-excluded event being herein called a "Special
Dividend")), then in each case the Purchase Price shall be adjusted by
multiplying the Purchase Price theretofore in effect by a fraction, the
numerator of which shall be the Market Price in effect on the record date of
such issuance or distribution less the Fair Market Value of the Special Dividend
applicable to one share of Common Stock and the denominator of which shall be
such Market Price. Such adjustment shall be made whenever any such distribution
is made and shall become effective on the date of distribution retroactive to
the record date for the determination of stockholders entitled to receive such
distribution.
(d) The Company may elect, upon any adjustment of the Purchase
Price hereunder, to adjust the number of Class D Warrants outstanding, in lieu
of the adjustment in the number of shares of Common Stock purchasable upon the
exercise of each Class D Warrant as hereinabove provided, so that each Class D
Warrant outstanding after such adjustment shall represent the right to purchase
one share of Common Stock. Each Class D Warrant held of record prior to such
adjustment of the number of Class D Warrants shall become that number of Class D
Warrants (calculated to the nearest tenth) determined by multiplying the number
one by a fraction, the numerator of which shall be the Purchase Price in effect
immediately prior to such adjustment and the denominator of which shall be the
Purchase Price in effect immediately after such adjustment. Upon each adjustment
of the number of Class D Warrants pursuant to this Section 9, the Company shall,
as promptly as practicable, cause to be distributed to each Registered Holder of
Warrant Certificates on the date of such adjustment Warrant Certificates
evidencing, subject to Section 10, the number of additional Class D Warrants to
which such Holder shall be entitled as a result of such adjustment or, at the
option of the Company, cause to be distributed to such Holder in substitution
and replacement for the Warrant Certificates held by him prior to the date of
adjustment (and upon surrender thereof, if required by the Company)
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12
new Warrant Certificates evidencing the number of Class D Warrants to which such
Holder shall be entitled after such adjustment.
(e) Irrespective of any adjustments or changes in the Purchase
Price or the number of shares of Common Stock purchasable upon exercise of the
Class D Warrants, the Warrant Certificates theretofore and thereafter issued
shall, unless the Company shall exercise its option to issue new Warrant
Certificates pursuant to Subsection 2(e), continue to express the same Purchase
Price per share, number of shares purchasable thereunder and Redemption Price
therefor as when the same were originally issued.
(f) After each adjustment of the Purchase Price pursuant to
this Section 9, the Company will promptly prepare a certificate signed by the
Chairman or President, and by the Treasurer or an Assistant Treasurer or the
Secretary or an Assistant Secretary, of the Company setting forth: (i) the
Purchase Price as so adjusted, (ii) the number of shares of Common Stock
purchasable upon exercise of each Class D Warrant after such adjustment, and, if
the Company shall have elected to adjust the number of Class D Warrants pursuant
to Subsection 9(d), the number of Class D Warrants to which the registered
holder of each Class D Warrant shall then be entitled, and the adjustment in
Redemption Price resulting therefrom, and (iii) a brief statement of the facts
accounting for such adjustment. The Company will promptly file such certificate
with the Warrant Agent and cause a brief summary thereof to be sent by ordinary
first class mail to Paramount and to each Registered Holder of Class D Warrants
at his or her last address as it shall appear on the registry books of the
Warrant Agent. No failure to mail such notice nor any defect therein or in the
mailing thereof shall affect the validity of such adjustment. The affidavit of
an officer of the Warrant Agent or the Secretary or an Assistant Secretary of
the Company that such notice has been mailed shall, in the absence of fraud, be
prima facie evidence of the facts stated therein. The Warrant Agent may rely on
the information in the certificate as true and correct and has no duty or
obligation to independently verify the amounts or calculations set forth
therein.
(g) For purposes of Subsections 9(a) and 9(c), the following
provisions (i) to (v) shall also be applicable:
(i) the number of shares of Common Stock deemed
outstanding at any given time shall include all shares of capital stock
convertible into, or exchangeable for, Common Stock (on an as converted basis)
as well as all shares of Common Stock issuable upon the exercise of (x) any
convertible debt, (y) warrants outstanding on the date hereof and (z) options
outstanding on the date hereof.
(ii) No adjustment of the Purchase Price shall be
made unless such adjustment would require an increase or decrease of at least
$.01 in such price; provided that any adjustments which by reason of this
Paragraph (ii) are not required to be made shall be carried forward and shall be
made at the time of and together with the next subsequent adjustment which,
together with adjustments so carried forward, shall require an increase or
decrease of at least $.01 in the Purchase Price then in effect hereunder.
(iii) In case of (1) the sale by the Company
(including as a component of a unit) of any rights or warrants to subscribe for
or purchase, or any options for the purchase
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13
of, Common Stock or any securities convertible into or exchangeable for Common
Stock (such securities convertible, exercisable or exchangeable into Common
Stock being herein called "Convertible Securities"), or (2) the issuance by the
Company, without the receipt by the Company of any consideration therefor, of
any rights or warrants to subscribe for or purchase, or any options for the
purchase of, Common Stock or Convertible Securities, whether or not such rights,
warrants or options, or the right to convert or exchange such Convertible
Securities, are immediately exercisable, and the consideration per share for
which Common Stock is issuable upon the exercise of such rights, warrants or
options or upon the conversion or exchange of such Convertible Securities
(determined by dividing (x) the minimum aggregate consideration, as set forth in
the instrument relating thereto without regard to any antidilution or similar
provisions contained therein for a subsequent adjustment of such amount, payable
to the Company upon the exercise of such rights, warrants or options, plus the
consideration received by the Company for the issuance or sale of such rights,
warrants or options, plus, in the case of such Convertible Securities, the
minimum aggregate amount, as set forth in the instrument relating thereto
without regard to any antidilution or similar provisions contained therein for a
subsequent adjustment of such amount, of additional consideration, if any, other
than such Convertible Securities, payable upon the conversion or exchange
thereof, by (y) the total maximum number, as set forth in the instrument
relating thereto without regard to any antidilution or similar provisions
contained therein for a subsequent adjustment of such amount, of shares of
Common Stock issuable upon the exercise of such rights, warrants or options or
upon the conversion or exchange of such Convertible Securities issuable upon the
exercise of such rights, warrants or options) is less than either the Purchase
Price or the Market Price of the Common Stock as of the date of the issuance or
sale of such rights, warrants or options, then such total maximum number of
shares of Common Stock issuable upon the exercise of such rights, warrants or
options or upon the conversion or exchange of such Convertible Securities (as of
the date of the issuance or sale of such rights, warrants or options) shall be
deemed to be "Common Stock" for purposes of Subsections 9(a) and 9(c) and shall
be deemed to have been sold for an amount equal to such consideration per share
and shall cause an adjustment to be made in accordance with Subsections 9(a) and
9(c).
(iv) In case of the sale or other issuance by the
Company of any Convertible Securities, whether or not the right of conversion or
exchange thereunder is immediately exercisable, and the price per share for
which Common Stock is issuable upon the conversion or exchange of such
Convertible Securities (determined by dividing (x) the total amount of
consideration received by the Company for the sale of such Convertible
Securities, plus the minimum aggregate amount, as set forth in the instrument
relating thereto without regard to any antidilution or similar provisions
contained therein for a subsequent adjustment of such amount, of additional
consideration, if any, other than such Convertible Securities, payable upon the
conversion or exchange thereof, by (y) the total maximum number, as set forth in
the instrument relating thereto without regard to any antidilution or similar
provisions contained therein for a subsequent adjustment of such amount, of
shares of Common Stock issuable upon the conversion or exchange of such
Convertible Securities) is less than either the Purchase Price or the Market
Price of the Common Stock as of the date of the sale of such Convertible
Securities, then such total maximum number of shares of Common Stock issuable
upon the conversion or exchange of such Convertible Securities (as of the date
of the sale of such Convertible Securities) shall be deemed to be "Common Stock"
for purposes of Subsections 9(a)
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14
and 9(c) and shall be deemed to have been sold for an amount equal to such
consideration per share and shall cause an adjustment to be made in accordance
with Subsections 9(a) and 9(c).
(v) In case the Company shall modify the rights of
conversion, exchange or exercise of any of the securities referred to in
Paragraphs (iii) or (iv) of this Subsection 9(g) or any other securities of the
Company convertible, exchangeable or exercisable for shares of Common Stock, for
any reason other than an event that would require adjustment to prevent
dilution, so that the consideration per share received by the Company after such
modification is less than either the Purchase Price or the Market Price as of
the date prior to such modification, then such securities, to the extent not
theretofore exercised, converted or exchanged, shall be deemed to have expired
or terminated immediately prior to the date of such modification and the Company
shall be deemed, for purposes of calculating any adjustments pursuant to this
Section 9, to have issued such new securities upon such new terms on the date of
modification. Such adjustment shall become effective as of the date upon which
such modification shall take effect. On the expiration or cancellation of any
such right, warrant or option or the termination or cancellation of any such
right to convert or exchange any such Convertible Securities, the Purchase Price
then in effect hereunder shall forthwith be readjusted to such Purchase Price as
would have obtained (a) had the adjustments made upon the issuance or sale of
such rights, warrants, options or Convertible Securities been made upon the
basis of the issuance of only the number of shares of Common Stock theretofore
actually delivered (and the total consideration received therefor) upon the
exercise of such rights, warrants or options or upon the conversion or exchange
of such Convertible Securities and (b) had adjustments been made on the basis of
the Purchase Price as adjusted under clause (a) of this sentence for all
transactions (which would have affected such adjusted Purchase Price) made after
the issuance or sale of such rights, warrants, options or Convertible
Securities.
(vi) In case of the sale of any shares of Common
Stock, any Convertible Securities, any rights or warrants to subscribe for or
purchase, or any options for the purchase of, Common Stock or Convertible
Securities, the consideration received by the Company therefor shall be deemed
to be the gross sales price therefor without deducting therefrom any expense
paid or incurred by the Company or any underwriting discounts or commissions or
concessions paid or allowed by the Company in connection therewith. In the event
that any securities shall be issued in connection with any other securities of
the Company, together comprising one integral transaction in which no specific
consideration is allocated among the securities, then each of such securities
shall be deemed to have been issued for such consideration as the Board of
Directors of the Company determines in good faith; provided, however that if
holders of more than of 10% of the then outstanding Class D Warrants disagree
with such determination, the Company shall retain an independent investment
banking firm for the purpose of obtaining an appraisal.
(h) Notwithstanding any other provision hereof, no adjustment
to the Purchase Price of the Class D Warrants or to the number of shares of
Common Stock purchasable upon the exercise of each Class D Warrant will be made:
(i) upon the exercise of any of the options
outstanding on the date hereof under the Company's existing stock option plans;
or
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15
(ii) upon the issuance or exercise of options which
may hereafter be granted with the approval of the Board of Directors, or
exercised, under any employee benefit plan of the Corporation to officers,
directors, consultants or employees, but only with respect to such options as
are exercisable at prices no lower than the Closing Bid Price (or, if the price
referenced in the definition of Closing Bid Price cannot be determined, the Fair
Market Value) of the Common Stock as of the date of grant thereof; or
(iii) upon issuance or exercise of the Placement
Warrants or the Advisory Warrants (as defined in the Placement Agency Agreement)
(collectively, the "Paramount Warrants"), upon the conversion of the Series D
Preferred Stock underlying the Bridge Notes (as defined in the Note and Warrant
Purchase Agreement dated as of January 28, 1997 (the "Note and Warrant Purchase
Agreement")), upon the exercise of the Class A and Class B Bridge Warrants (as
defined in the Note and Warrant Purchase Agreement) or upon the issuance,
conversion or exercise of the Series D Preferred Stock or the Class D Warrants
included in the Units of the Corporation issued (A) on or prior to the Final
Closing Date or (B) pursuant to the exercise of the Paramount Warrants, or upon
the issuance, conversion or exercise of any Series D Preferred Stock or Class D
Warrants approved by Paramount; or (iv) upon the issuance or sale of Common
Stock or Convertible Securities pursuant to the exercise of any rights, options
or warrants to receive, subscribe for or purchase, or any options for the
purchase of, Common Stock or Convertible Securities, whether or not such rights,
warrants or options were outstanding on the date of the original sale of the
Class D Warrants or were thereafter issued or sold, provided that an adjustment
was either made or not required to be made in accordance with Subsections 9(a)
or 9(c) in connection with the issuance or sale of such securities or any
modification of the terms thereof; or
(v) upon the issuance or sale of Common Stock upon
conversion or exchange of any Convertible Securities, provided that any
adjustments required to be made upon the issuance or sale of such Convertible
Securities or any modification of the terms thereof were so made, and whether or
not such Convertible Securities were outstanding on the date of the original
sale of the Class D Warrants or were thereafter issued or sold.
Paragraph 9(g)(v) shall nevertheless apply to any modification of the rights of
conversion, exchange or exercise of any of the securities referred to in
Paragraphs (i), (ii) and (iii) of this Subsection 9(h).
(i) As used in this Section 9, the term "Common Stock" shall
mean and include the Company's Common Stock authorized on the date of the
original issue of the Units and shall also include any capital stock of any
class of the Company thereafter authorized which shall not be limited to a fixed
sum or percentage in respect of the rights of the holders thereof to participate
in dividends and in the distribution of assets upon the voluntary liquidation,
dissolution or winding up of the Company; provided, however, that the shares
issuable upon exercise of the Class D Warrants shall include only shares of such
class designated in the Certificate of Incorporation as Common Stock on the date
of the original issue of the Units or (i), in the case of any reclassification,
change, consolidation, merger, sale or conveyance of the character referred to
in Subsection 9(c), the stock, securities or property provided for in such
section or (ii), in the case of any reclassification or change in the
outstanding shares of Common
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16
Stock issuable upon exercise of the Class D Warrants as a result of a
subdivision or combination or consisting of a change in par value, or from par
value to no par value, or from no par value to par value, such shares of Common
Stock as so reclassified or changed.
(j) Any determination as to whether an adjustment in the
Purchase Price in effect hereunder is required pursuant to Section 9, or as to
the amount of any such adjustment, if required, shall be binding upon the
holders of the Class D Warrants and the Company if made in good faith by the
Board of Directors of the Company.
(k) Notwithstanding anything to the contrary herein, in no
case shall the Purchase Price be adjusted to an amount less than $.001 per
share, the current par value of the Common Stock for which the Class D Warrants
are exerciseable.
(l) If and whenever the Company shall grant to the holders of
Common Stock, as such, rights or warrants to subscribe for or to purchase, or
any options for the purchase of, Common Stock or securities convertible into or
exchangeable for or carrying a right, warrant or option to purchase Common
Stock, the Company may at its option elect concurrently therewith to grant to
each Registered Holder as of the record date for such transaction of the Class D
Warrants then outstanding, the rights, warrants or options to which each
Registered Holder would have been entitled if, on the record date used to
determine the stockholders entitled to the rights, warrants or options being
granted by the Company, the Registered Holder were the holder of record of the
number of whole shares of Common Stock then issuable upon exercise of his or her
Class D Warrants. If the Company shall so elect under this Subsection 9(l), then
such grant by the Company to the holders of the Class D Warrants shall be in
lieu of any adjustment which otherwise might be called for pursuant to this
Section 9.
SECTION 10. Fractional Warrants and Fractional Shares. If the
number of shares of Common Stock purchasable upon the exercise of each Class D
Warrant is adjusted pursuant to Section 9, the Company nevertheless shall not be
required to issue fractions of shares, upon exercise of the Class D Warrants or
otherwise, nor to distribute certificates that evidence fractional shares. With
respect to any fraction of a share called for upon any exercise hereof, the
Company shall pay to the Registered Holder an amount in cash equal to such
fraction multiplied by the Market Price of one share of Common Stock as of the
date of exercise.
SECTION 11. Warrant Holders Not Deemed Stockholders. No holder
of Class D Warrants shall, as such, be entitled to vote or to receive dividends
or be deemed the holder of Common Stock that may at any time be issuable upon
exercise of such Class D Warrants for any purpose whatsoever, nor shall anything
contained herein be construed to confer upon the holder of Class D Warrants, as
such, any of the rights of a stockholder of the Company or any right to vote for
the election of directors or upon any matter submitted to stockholders at any
meeting thereof, or to give or withhold consent to any corporate action (whether
upon any recapitalization, issue or reclassification of stock, change of par
value or change of stock to no par value, consolidation, merger or conveyance or
otherwise), or to receive notice of meetings, or to receive dividends or
subscription rights, until such Holder shall have exercised such Class D
Warrants and been issued shares of Common Stock in accordance with the
provisions hereof.
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SECTION 12. Rights of Action. All rights of action with
respect to this Agreement are vested in the respective Registered Holders of the
Class D Warrants, and any Registered Holder of a Class D Warrant, without
consent of the Warrant Agent or of the holder of any other Class D Warrant, may,
in his own behalf and for his own benefit, enforce against the Company his right
to exercise his Class D Warrants for the purchase of shares of Common Stock in
the manner provided in the Warrant Certificate and this Agreement.
SECTION 13. Agreement of Warrant Holders. Every holder of any
Class D Warrant, by his acceptance thereof, consents and agrees with the
Company, the Warrant Agent and every other holder of any Class D Warrant that:
(a) The Class D Warrants are transferable only on the registry
books of the Warrant Agent by the Registered Holder thereof in person or by his
or her attorney duly authorized in writing and only if the Warrant Certificates
representing such Class D Warrants are surrendered at the office of the Warrant
Agent, duly endorsed or accompanied by a proper instrument of transfer
satisfactory to the Warrant Agent, in its sole discretion, together with payment
of any applicable transfer taxes; and
(b) The Company and the Warrant Agent may deem and treat the
person in whose name the Warrant Certificate is registered as the holder and as
the absolute, true and lawful owner of the Class D Warrants represented thereby
for all purposes, and neither the Company nor the Warrant Agent shall be
affected by any notice or knowledge to the contrary, except as otherwise
expressly provided in Section 6.
SECTION 14. Cancellation of Warrant Certificates. If the
Company shall purchase or acquire any Class D Warrant or Class D Warrants, the
Warrant Certificate or Warrant Certificates evidencing the same, by redemption
or otherwise, shall thereupon be delivered to the Warrant Agent and canceled by
it and retired. The Warrant Agent shall also cancel the Warrant Certificate or
Warrant Certificates following exercise of any or all of the Class D Warrants
represented thereby or delivered to it for transfer, split up, combination or
exchange.
SECTION 15. Concerning the Warrant Agent. The Warrant Agent
acts hereunder as agent and in a ministerial capacity for the Company, and its
duties shall be determined solely by the provisions hereof. The Warrant Agent
shall not, by issuing and delivering Warrant Certificates, or by any other act
hereunder, be deemed to make any representations as to the validity, value or
authorization of the Warrant Certificates or the Class D Warrants represented
thereby or of any securities or other property delivered upon exercise of any
Class D Warrant or whether any stock issued upon exercise of any Class D Warrant
is fully paid and nonassessable.
The Warrant Agent shall not at any time be under any duty or
responsibility to any holder of Warrant Certificates to make or cause to be made
any adjustment of the Purchase Price or the Redemption Price provided in this
Agreement, or to determine whether any fact exists that may require any such
adjustments, or with respect to the nature or extent of any such adjustment,
when made, or with respect to the method employed in making the same. It shall
not (i) be liable for any recital or statement of facts contained herein or for
any action taken, suffered
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or omitted by it in reliance on any Warrant Certificate or other document or
instrument believed by it in good faith to be genuine and to have been signed or
presented by the proper party or parties, (ii) be responsible for any failure on
the part of the Company to comply with any of its covenants and obligations
contained in this Agreement or in any Warrant Certificate, or (iii) be liable
for any act or omission in connection with this Agreement except for its own
negligence or willful misconduct.
The Warrant Agent may at any time consult with counsel
satisfactory to it (who may be counsel for the Company) and shall incur no
liability or responsibility for any action taken, suffered or omitted by it in
good faith in accordance with the opinion or advice of such counsel.
Any notice, statement, instruction, request, direction, order
or demand of the Company shall be sufficiently evidenced by an instrument signed
by the Chairman of the Board, President, or any Vice President and the
Secretary, or any Assistant Secretary (unless other evidence in respect thereof
is herein specifically prescribed). The Warrant Agent shall not be liable for
any action taken, suffered or omitted by it in accordance with such notice,
statement, instruction, request, direction, order or demand believed by it to be
genuine.
The Company agrees to pay the Warrant Agent reasonable
compensation for its services hereunder and to reimburse it for its reasonable
expenses hereunder as governed by a separate agreement to be entered into
between the Warrant Agent and the Company; the Company further agrees to
indemnify the Warrant Agent and save it harmless against any and all losses,
expenses and liabilities, including judgments, costs and reasonable counsel
fees, for anything done or omitted by the Warrant Agent in the execution of its
duties and powers hereunder except losses, expenses and liabilities arising as a
result of the Warrant Agent's negligence or willful misconduct.
The Warrant Agent may resign its duties and be discharged from
all further duties and liabilities hereunder (except liabilities arising as a
result of the Warrant Agent's own negligence or willful misconduct), after
giving 30 days' prior written notice to the Company. At least 15 days prior to
the date such resignation is to become effective, the Warrant Agent shall cause
a copy of such notice of resignation to be mailed to the Registered Holders of
each Warrant Certificate at the Company's expense. Upon such resignation, or any
inability of the Warrant Agent to act as such hereunder, the Company shall
appoint a new warrant agent in writing. If the Company shall fail to make such
appointment within a period of 15 days after it has been notified in writing of
such resignation by the resigning Warrant Agent, then the Registered Holder of
any Warrant Certificate may apply to any court of competent jurisdiction for the
appointment of a new warrant agent. Any new warrant agent, whether appointed by
the Company or by such a court, shall be a bank or trust company having capital
and surplus, as shown by its last published report to its stockholders, of not
less than $10,000,000 or a stock transfer company. After acceptance in writing
of such appointment by the new warrant agent is received by the Company, such
new warrant agent shall be vested with the same powers, rights, duties and
responsibilities as if it had been originally named herein as the Warrant Agent,
without any further assurance, conveyance, act or deed; but if for any reason it
shall be necessary or expedient to execute and deliver any further assurance,
conveyance, act or deed, the same shall be done at the expense of the Company
and shall be legally and validly executed and
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19
delivered by the resigning Warrant Agent. Not later than the effective date of
any such appointment, the Company shall file notice thereof with the resigning
Warrant Agent and shall forthwith cause a copy of such notice to be mailed to
the Registered Holder of each Warrant Certificate.
Any entity into which the Warrant Agent or any new warrant
agent may be converted or merged or any entity resulting from any consolidation
to which the Warrant Agent or any new warrant agent shall be a party or any
entity succeeding to the trust business of the Warrant Agent shall be a
successor warrant agent under this Agreement without any further act, provided
that such entity is eligible for appointment as successor to the Warrant Agent
under the provisions of the preceding paragraph. Any such successor warrant
agent shall promptly cause notice of its succession as warrant agent to be
mailed to the Company and to the Registered Holder of each Warrant Certificate.
The Warrant Agent, its subsidiaries and affiliates, and any of
its or their officers or directors, may buy and hold or sell Class D Warrants or
other securities of the Company and otherwise deal with the Company in the same
manner and to the same extent and with like effects as though it were not
Warrant Agent. Nothing herein shall preclude the Warrant Agent from acting in
any other capacity for the Company or for any other legal entity.
SECTION 16. Modification of Agreement. Subject to the
provisions of Subsection 4(b), the parties hereto and the Company may by
supplemental agreement make any changes or corrections in this Agreement (i)
that they shall deem appropriate to cure any ambiguity or to correct any
defective or inconsistent provision or manifest mistake or error herein
contained; (ii) to reflect an increase in the number of Class D Warrants which
are to be governed by this Agreement resulting from a subsequent offering of
Company securities which includes Class D Warrants having the same terms and
conditions as the Class D Warrants, originally covered by or subsequently added
to this Agreement under this Section 16; or (iii) that they may deem necessary
or desirable and that shall not adversely affect the interests of the holders of
Warrant Certificates; provided, however, that this Agreement shall not otherwise
be modified, supplemented or altered in any respect except with the consent in
writing of the Registered Holders of Warrant Certificates representing more than
50% of the Class D Warrants then outstanding; and provided, further, that no
change in the number or nature of the securities purchasable upon the exercise
of any Class D Warrant, or the Purchase Price therefor, or the acceleration of
the Warrant Expiration Date, shall be made without the consent in writing of the
Registered Holder of the Warrant Certificate representing such Class D Warrant,
other than such changes as are specifically prescribed by this Agreement
(including those contemplated in Subsection 9(d)) as originally executed or are
made in compliance with applicable law.
SECTION 17. Notices. All notices, requests, consents and other
communications hereunder shall be in writing and shall be deemed to have been
made when delivered or mailed by means of first class registered or certified
mail, postage prepaid as follows: if to the Registered Holder of a Warrant
Certificate, at the address of such holder as shown on the registry books
maintained by the Warrant Agent; if to the Company, at 0000 Xxxxxxx Xxxxxxx
Xxxxx, Xxx Xxxxx, Xxxxxxxxxx, 00000, Attention: Chief Executive Officer, or at
such other address as may have been furnished to the Warrant Agent in writing by
the Company; if to the Warrant Agent, at
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20
its Corporate Office; and, if to Paramount, at Paramount Capital Inc., 000
Xxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: Xxxxxxx X. Xxxxx.
SECTION 18. Governing Law. This Agreement shall be governed
by, and construed in accordance with, the laws of the State of New York, without
reference to principles of conflict of laws.
SECTION 19. Binding Effect. This Agreement shall be binding
upon and inure to the benefit of the Company, Paramount, the Warrant Agent and
their respective successors and assigns, and the holders from time to time of
Warrant Certificates. Nothing in this Agreement is intended nor shall be
construed to confer upon any other person any right, remedy or claim, in equity
or at law, or to impose upon any other person any duty, liability or obligation.
SECTION 20. Termination. This Agreement shall terminate at the
close of business on the Warrant Expiration Date of all the Class D Warrants or
such earlier date upon which all Class D Warrants have been exercised or
redeemed, except that the Warrant Agent shall account to the Company for cash
held by it and the provisions of Section 15 shall survive such termination.
SECTION 21. Counterparts. This Agreement may be executed in
several counterparts, which taken together shall constitute a single document.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed as of the date first above written.
GENTA INCORPORATED
By: ______________________________________
Authorized Officer
CHASEMELLON SHAREHOLDER SERVICES,
as Warrant Agent
By: _____________________________________
Authorized Officer
PARAMOUNT CAPITAL, INC.
By: _____________________________________
Authorized Officer
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EXHIBIT A
[FORM OF FACE OF CLASS D WARRANT CERTIFICATE]
No. __ _______________ Class D Warrants
VOID AFTER __________________, 2002
CLASS D WARRANT CERTIFICATE FOR PURCHASE
OF COMMON STOCK
GENTA INCORPORATED
This certifies that FOR VALUE RECEIVED
_______________________________________________________________________________
______________________________ or registered assigns (the "Registered Holder")
is the owner of the number of Class D Warrants ("Class D Warrants") specified
above. Each Class D Warrant represented hereby initially entitles the Registered
Holder to purchase, subject to the terms and conditions set forth in this
Warrant Certificate and the Warrant Agreement (as hereinafter defined), one
fully paid and nonassessable share of Common Stock, par value $.001 per share
("Common Stock"), of Genta Incorporated, a Delaware corporation (the "Company"),
at any time between _______________, 1997, and the Expiration Date (as
hereinafter defined), upon the presentation and surrender of this Warrant
Certificate with the Subscription Form on the reverse hereof duly executed, at
the corporate office of ChaseMellon Shareholder Services, L.L.C., as Warrant
Agent, or its successor (the "Warrant Agent"), accompanied by payment of the
Purchase Price (as defined in the Warrant Agreement) in lawful money of the
United States of America in cash or by official bank or certified check made
payable to the Company.
This Warrant Certificate and each Class D Warrant represented
hereby are issued pursuant to, and are subject in all respects to, the terms and
conditions set forth in the Warrant Agreement (the "Warrant Agreement"), dated
as of May 20, 1997, by and among the Company, the Warrant Agent and Paramount
Capital, Inc.
In the event of certain contingencies provided for in the
Warrant Agreement, the Purchase Price or the number of shares of Common Stock
subject to purchase upon the exercise of each Class D Warrant represented hereby
are subject to modification or adjustment.
Each Class D Warrant represented hereby is exercisable at the
option of the Registered Holder, but no fractional shares of Common Stock will
be issued. In the case of the exercise of fewer than every Class D Warrant
represented hereby, the Company shall cancel this Warrant Certificate upon the
surrender hereof and shall execute and deliver a new Warrant Certificate or
Warrant Certificates of like tenor, which the Warrant Agent shall countersign,
for the balance of such Class D Warrants.
The term "Expiration Date" shall mean 5:00 P.M. (New York
time) on ____________, 2002, or such earlier date as the Class D Warrants shall
be redeemed. If such
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22
date shall in the State of New York be a holiday or a day on which banks are
authorized to close, then the Expiration Date shall mean 5:00 P.M. (New York
time) the next following day which in the State of New York is not a holiday or
a day on which banks are authorized to close. Upon notice to all Registered
Holders of the Class D Warrants, the Company shall have the right to extend the
Expiration Date.
The Registered Holder of this Class D Warrant shall have the
registration rights as provided in Section 5 of the Subscription Agreement (the
"Subscription Agreement") dated as of the date hereof between the Company and
such Registered Holder. The Class D Warrants represented hereby shall not be
exercisable by a Registered Holder in any state where such exercise would be
unlawful.
This Warrant Certificate is exchangeable, upon the surrender
hereof by the Registered Holder at the corporate office of the Warrant Agent,
for a new Warrant Certificate or Warrant Certificates of like tenor representing
an equal aggregate number of Class D Warrants, each of such new Warrant
Certificates to represent such number of Class D Warrants as shall be designated
by such Registered Holder at the time of such surrender. Upon due presentment
with any applicable transfer fee per certificate in addition to any tax or other
governmental charge imposed in connection therewith, for registration of
transfer of this Warrant Certificate at such office, a new Warrant Certificate
or Warrant Certificates representing an equal aggregate number of Class D
Warrants will be issued to the transferee in exchange therefor, subject to the
limitations provided in the Warrant Agreement.
Prior to the exercise of any Class D Warrant represented
hereby, the Registered Holder shall not be entitled to any rights of a
stockholder of the Company, including, without limitation, the right to vote or
to receive dividends or other distributions, and shall not be entitled to
receive any notice of any proceedings of the Company, except as provided in the
Warrant Agreement.
The Class D Warrants represented hereby may be redeemed at the
option of the Company, at a redemption price of $.10 per share subject to such
Class D Warrants (subject to adjustment under the circumstances set forth in
Section 9 of the Warrant Agreement) (the "Redemption Price"). Notice of
redemption shall be given not later than the sixtieth day before the date fixed
for redemption, all as provided in the Warrant Agreement. On and after the date
fixed for redemption, the Registered Holder shall have no rights with respect to
the Class D Warrants represented hereby except to receive the Redemption Price
upon surrender of this Warrant Certificate.
Prior to due presentment for registration of transfer hereof,
the Company and the Warrant Agent may deem and treat the Registered Holder as
the absolute owner hereof and of each Class D Warrant represented hereby
(notwithstanding any notations of ownership or writing hereon made by anyone
other than a duly authorized officer of the Company or the Warrant Agent) for
all purposes and shall not be affected by any notice to the contrary.
The Company has agreed to pay a fee of 5% of the Purchase
Price to Paramount Capital, Inc. under certain conditions as specified in the
Warrant Agreement upon the exercise of the Class D Warrants represented hereby.
Any costs incurred by the Placement Agent in
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23
connection with the solicitation of Class D Warrant exercises or the redemption
of Class D Warrants shall be reimbursed by the Company.
This Warrant Certificate shall be governed by and construed in
accordance with the laws of the State of New York.
This Warrant Certificate is not valid unless countersigned by
the Warrant Agent.
IN WITNESS WHEREOF, the Company has caused this Warrant
Certificate to be duly executed, manually or in facsimile, by two of its
officers thereunto duly authorized and a facsimile of its corporate seal to be
imprinted hereon.
GENTA INCORPORATED
Dated: _____________________ By: ______________________________
By: ______________________________
[seal]
Countersigned:
CHASEMELLON SHAREHOLDER SERVICES, L.L.C.,
as Warrant Agent
By: ______________________________
Authorized Officer
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24
[FORM OF REVERSE OF WARRANT CERTIFICATE]
TRANSFER FEE: $___________ PER CERTIFICATE ISSUED
SUBSCRIPTION FORM
To Be Executed by the Registered Holder
in Order to Exercise Class D Warrants
The undersigned Registered Holder hereby irrevocably elects to
exercise _________ Class D Warrants represented by this Warrant Certificate, and
to purchase the securities issuable upon the exercise of such Class D Warrants,
and requests that certificates for such securities shall be issued in the name
of
PLEASE INSERT SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER
_____________________________________________________
_____________________________________________________
_____________________________________________________
_____________________________________________________
[please print or type name and address]
and be delivered to
_____________________________________________________
_____________________________________________________
_____________________________________________________
_____________________________________________________
[please print or type name and address]
and if such number of Class D Warrants shall not be all the Class D Warrants
evidenced by this Warrant Certificate, that a new Warrant Certificate for the
balance of such Class D Warrants be registered in the name of, and delivered to,
the Registered Holder at the address stated below.
The undersigned represents that the exercise of the within
Class D Warrant was solicited by a member of the National Association of
Securities Dealers, Inc. If not solicited by an NASD member, please write
"unsolicited" in the space below. Unless
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25
otherwise indicated by listing the name of another NASD member firm, it will be
assumed that the exercise was solicited by Paramount Capital, Inc.
______________________________________________________________________________
(Name of NASD Member)
Dated: __________________________ X _______________________________________
______________________________________________________________________________
______________________________________________________________________________
Address
______________________________________________________________________________
Taxpayer Identification Number
______________________________________________________________________________
Signature Guaranteed
______________________________________________________________________________
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ASSIGNMENT
To Be Executed by the Registered Holder
in Order to Assign Class D Warrants
FOR VALUE RECEIVED, _______________________________________________ hereby
sells, assigns and transfers unto
PLEASE INSERT SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER
_____________________________________________________
_____________________________________________________
_____________________________________________________
_____________________________________________________
[please print or type name and address]
________________________________ of the Class D Warrants represented by this
Warrant Certificate, and hereby irrevocably constitutes and appoints _________
_______________________________________________________________________________
Attorney to transfer this Warrant Certificate on the books of the Company, with
full power of substitution in the premises.
Dated: _________________________ X ________________________________________
Signature Guaranteed
__________________________________________
THE SIGNATURE TO THE ASSIGNMENT OR THE SUBSCRIPTION FORM MUST CORRESPOND TO THE
NAME AS WRITTEN UPON THE FACE OF THIS WARRANT CERTIFICATE IN EVERY PARTICULAR,
WITHOUT ALTERATION OR ENLARGEMENT OR ANY CHANGE WHATSOEVER, AND MUST BE
GUARANTEED BY A MEMBER OF THE MEDALLION STAMP PROGRAM.
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