THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 OR
ANY APPLICABLE STATE SECURITIES LAWS. THEY MAY NOT BE SOLD, OFFERED FOR SALE,
PLEDGED OR HYPOTHECATED OR OTHERWISE TRANSFERRED IN THE ABSENCE OF A
REGISTRATION STATEMENT IN EFFECT WITH RESPECT TO THE SECURITIES UNDER SUCH ACT
OR AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS
NOT REQUIRED OR UNLESS SOLD PURSUANT TO RULE 144 OF SUCH ACT. ANY SUCH TRANSFER
MAY ALSO BE SUBJECT TO APPLICABLE STATE SECURITIES LAWS.
GENTA INCORPORATED
WARRANT FOR THE PURCHASE OF SHARES OF
-------------------------------------
COMMON STOCK
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NO. 1 32,500 SHARES
FOR VALUE RECEIVED, GENTA INCORPORATED, a Delaware corporation
(the "Company"), hereby certifies that THE ARIES FUND, A CAYMAN ISLAND TRUST, or
its permitted assigns, is entitled to purchase from the Company, at any time or
from time to time commencing on June 6, 1997, and prior to 5:00 P.M., New York
City time, on June 6, 2002 (the "Termination Date"), thirty-two-thousand
five-hundred (32,500) fully paid and non-assessable shares of the Common Stock,
$.001 par value per share, of the Company at an exercise price equal two dollars
and fifty cents ($2.50) (Hereinafter, (i) said Common Stock, together with any
other equity securities which may be issued by the Company with respect thereto
or in substitution therefor, is referred to as the "Common Stock", (ii) the
shares of the Common Stock purchasable hereunder or under any other Warrant (as
hereinafter defined) are referred to as the "Warrant Shares", (iii) the
aggregate purchase price payable for the Warrant Shares hereunder is referred to
as the "Aggregate Warrant Price", (iv) the price payable for each of the Warrant
Shares hereunder is referred to as the "Per Share Warrant Price", (v) this
Warrant, all similar Warrants issued on the date hereof and all warrants
hereafter issued in exchange or substitution for this Warrant or such similar
Warrants are referred to as the "Warrants" and (vi) the holder of this Warrant
is referred to as the "Holder" and the holder of this Warrant and all other
Warrants or Warrant Shares issued upon the exercise of any Warrant are referred
to as the "Holders"). The Aggregate Warrant Price is not subject to adjustment.
The Per Share Warrant Price is subject to adjustment as hereinafter provided; in
the event of any such adjustment, the number of Warrant Shares shall be adjusted
by dividing the Aggregate Warrant Price by the Per Share Warrant Price in effect
immediately after such adjustment.
1. Exercise of Warrant.
(a) This Warrant may be exercised, in whole at any time or in
part from time to time, commencing on June 6, 1997 and prior to the Termination
Date, by the holder:
(i) by the surrender of this Warrant (with the subscription form
at the end hereof duly executed) at the address set forth in
Subsection 9(a) hereof, together with proper payment of the
Aggregate Warrant Price, or the proportionate part thereof if this
Warrant is exercised in part, with payment for Warrant Shares made
by certified or official bank check payable to the order of the
Company; or
(ii) by the surrender of this Warrant (with the cashless exercise
form at the end hereof duly executed) (a "Cashless Exercise") at
the address set forth in Subsection 9(a) hereof. Such presentation
and surrender shall be deemed a waiver of the Holder's obligation
to pay the Aggregate Warrant Price, or the proportionate part
thereof if this Warrant is exercised in part. In the event of a
Cashless Exercise, the Holder shall exchange its Warrant for that
number of Warrant Shares subject to such Cashless Exercise
multiplied by a fraction, the numerator of which shall be the
difference between the then current Market Price per share (as
hereinafter defined) of Common Stock and the Per Share Warrant
Price, and the denominator of which shall be the then current
Market Price per share of Common Stock. The then current market
price per share of the Common Stock at any date (the "Market
Price") shall be deemed to be the last sale price of the Common
Stock on the business day prior to the date of the Cashless
Exercise or, in case no such reported sales take place on such
day, the average of the last reported bid and asked prices of the
Common Stock on such day, in either case on the principal national
securities exchange on which the Common Stock is admitted to
trading or listed, or if not listed or admitted to trading on any
such exchange, the representative closing bid price of the Common
Stock as reported by the NASDAQ Bulletin Board (?NASDAQ?), or
other similar organization if NASDAQ is no longer reporting such
information, or if not so available, the fair market price of the
Common Stock as determined in good faith by the Board of
Directors.
(b) If this Warrant is exercised in part, this Warrant must be
exercised for a number of whole shares of the Common Stock and the Holder is
entitled to receive a new Warrant covering the Warrant Shares which have not
been exercised and setting forth the proportionate part of the Aggregate Warrant
Price applicable to such Warrant Shares. Upon surrender of this Warrant, the
Company will (i) issue a certificate or certificates in the name of the Holder
for the largest number of whole shares of the Common Stock to which the Holder
shall be entitled and, if this Warrant is exercised in whole, in lieu of any
fractional share of the Common Stock to which the Holder shall be entitled, pay
to the Holder cash in an amount equal to the fair value of such fractional share
(determined in such reasonable manner as the Board of Directors of the Company
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shall determine), and (ii) deliver the other securities and properties
receivable upon the exercise of this Warrant, if any, or the proportionate part
thereof if this Warrant is exercised in part, pursuant to the provisions of this
Warrant.
2. Reservation of Warrant Shares; Listing. The Company agrees
that, prior to the expiration of this Warrant, the Company will at all times (a)
have authorized and in reserve, and will keep available, solely for issuance or
delivery upon the exercise of this Warrant, the shares of the Common Stock and
other securities and properties as from time to time shall be receivable upon
the exercise of this Warrant, free and clear of all restrictions on sale or
transfer, except for the restrictions on sale or transfer set forth in the
Securities Act of 1933, as amended (the "Act"), and restrictions created by or
on behalf of the Holder, and free and clear of all preemptive rights and rights
of first refusal; and (b) when the Company prepares and files a registration
statement covering the shares of Common Stock issued or issuable upon exercise
of this Warrant with the Securities and Exchange Commission (the "SEC") which
registration statement is declared effective by the SEC under the Act and the
Company lists its Common Stock on any national securities exchange or other
quotation system, it will use its reasonable best efforts to cause the shares of
Common Stock subject to this Warrant to be listed on such exchange or quotation
system.
3. Protection Against Dilution.
(a) If, at any time or from time to time after the date of
this Warrant, 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 a subdivision, combination or
reclassification, or dividend or distribution payable in shares of Common Stock,
referred to in Subsection 3(b), and also excluding cash dividends or cash
distributions paid out of net profits legally available therefor in the full
amount thereof, which together with the value of other dividends and
distributions made substantially concurrently therewith or pursuant to a plan
which includes payment thereof, is equivalent to not more than five percent (5%)
of the Company's net worth) (any such non-excluded event being herein called a
"Special Dividend"), the Per Share Warrant Price shall be adjusted by
multiplying the Per Share Warrant Price then in effect by a fraction, the
numerator of which shall be the then current Market Price of the Common Stock
less the fair market value (as determined in good faith by the Company's Board
of Directors) of the evidence of indebtedness, cash, securities or property, or
other assets issued or distributed in such Special Dividend applicable to one
share of Common Stock and the denominator of which shall be the then current
Market Price of the Common Stock. An adjustment made pursuant to this Subsection
3(a) shall become effective immediately after the record date of any such
Special Dividend.
(b) In case the Company shall hereafter (i) pay a dividend or
make a distribution on its capital stock in shares of Common Stock, (ii)
subdivide its outstanding shares of Common Stock into a greater number of
shares, (iii) combine its outstanding shares of Common Stock into a smaller
number of shares or (iv) issue by reclassification of its Common Stock any
shares of capital stock of the Company, the Per Share Warrant
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Price shall be adjusted to be equal to a fraction, the numerator of which shall
be the Aggregate Warrant Price and the denominator of which shall be the number
of shares of Common Stock or other capital stock of the Company which he would
have owned immediately following such action had such Warrant been exercised
immediately prior thereto. An adjustment made pursuant to this Subsection 3(b)
shall become effective immediately after the record date in the case of a
dividend or distribution and shall become effective immediately after the
effective date in the case of a subdivision, combination or reclassification.
(c) Except as provided in Subsections 3(a) and 3(d), in case
the Company shall hereafter issue or sell any Common Stock, any securities
convertible into Common Stock or any rights, options or warrants to purchase
Common Stock or securities convertible into Common Stock, in each case for a
price per share or entitling the holders thereof to purchase Common Stock at a
price per share (determined by dividing (i) the total amount, if any, received
or receivable by the Company in consideration of the issuance or sale of such
securities plus the total consideration, if any, payable to the Company upon
exercise or conversion thereof (the "Total Consideration") by (ii) the number of
additional shares of Common Stock issuable upon exercise or conversion of such
securities) less than either the then current Market Price of the Common Stock
or the current Per Share Warrant Price in effect on the date of such issuance or
sale, the Per Share Warrant Price shall be adjusted by multiplying the Per Share
Warrant Price then in effect by a fraction, the numerator of which shall be (x)
the sum of (A) the number of shares of Common Stock outstanding on the date of
such issuance or sale plus (B) the Total Consideration divided by either the
current Market Price of the Common Stock or the current Per Share Warrant Price,
whichever is greater, and the denominator of which shall be (y) the number of
shares of Common Stock outstanding on the date of such issuance or sale plus the
maximum number of additional shares of Common Stock issued, sold or issuable
upon exercise or conversion of such securities.
(d) No adjustment in the Per Share Warrant Price shall be
required in the case of the issuance by the Company of (i) Common Stock pursuant
to the exercise or conversion of any Warrant or any other options, warrants or
any convertible securities currently outstanding or outstanding as a result of
securities issued in connection with the Company?s current private placement
offering pursuant to the Confidential Term Sheet dated May 20, 1997 (as
hereafter supplemented and amended, the ?Term Sheet?) pursuant to a private
placement of the Company?s securities (an ?Offering?); provided, that the
exercise price or conversion price at which such options, warrants or
convertible securities are exercised or converted, as the case may be, is equal
to the exercise price or conversion price in effect as of the date of this
Warrant or as of the date of issuance with respect to securities issued pursuant
to an Offering (except for standard anti-dilution adjustments) and (ii) shares
of Common Stock issued or sold pursuant to stock purchase or stock option plans
or other similar arrangements that are approved by the Company's Board of
Directors.
(e) In case of any capital reorganization or reclassification,
or any consolidation or merger to which the Company is a party other than a
merger or consolidation in which the Company is the continuing corporation, or
in case of any sale
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or conveyance to another entity of the property of the Company as an entirety or
substantially as an entirety, or in the case of any statutory exchange of
securities with another corporation (including any exchange effected in
connection with a merger of a third corporation into the Company), the Holder of
this Warrant shall have the right thereafter to receive on the exercise of this
Warrant the kind and amount of securities, cash or other property which the
Holder would have owned or have been entitled to receive immediately after such
reorganization, reclassification, consolidation, merger, statutory exchange,
sale or conveyance had this Warrant been exercised immediately prior to the
effective date of such reorganization, reclassification, consolidation, merger,
statutory exchange, sale or conveyance and in any such case, if necessary,
appropriate adjustment shall be made in the application of the provisions set
forth in this Section 3 with respect to the rights and interests thereafter of
the Holder of this Warrant to the end that the provisions set forth in this
Section 3 shall thereafter correspondingly be made applicable, as nearly as may
reasonably be, in relation to any shares of stock or other securities or
property thereafter deliverable on the exercise of this Warrant. The above
provisions of this Subsection 3(e) shall similarly apply to successive
reorganizations, reclassifications, consolidations, mergers, statutory
exchanges, sales or conveyances. The issuer of any shares of stock or other
securities or property thereafter deliverable on the exercise of this Warrant
shall be responsible for all of the agreements and obligations of the Company
hereunder. Notice of any such reorganization, reclassification, consolidation,
merger, statutory exchange, sale or conveyance and of said provisions so
proposed to be made, shall be mailed to the Holders of the Warrants not less
than thirty (30) days prior to such event. A sale of all or substantially all of
the assets of the Company for a consideration consisting primarily of securities
shall be deemed a consolidation or merger for the foregoing purposes.
(f) In case any event shall occur as to which the other provisions of
this Section 3 are not strictly applicable but as to which the failure to make
any adjustment would not fairly protect the purchase rights represented by this
Warrant in accordance with the essential intent and principles hereof then, in
each such case, the Holders of Warrants representing the right to purchase a
majority of the Warrant Shares subject to all outstanding Warrants may appoint a
firm of independent public accountants of recognized national standing
reasonably acceptable to the Company, which shall give their opinion as to the
adjustment, if any, on a basis consistent with the essential intent and
principles established herein, necessary to preserve the purchase rights
represented by the Warrants. Upon receipt of such opinion, the Company will
promptly mail a copy thereof to the Holder of this Warrant and shall make the
adjustments described therein. The fees and expenses of such independent public
accountants shall be borne by the Company.
(g) No adjustment in the Per Share Warrant Price shall be
required unless such adjustment would require an increase or decrease of at
least $0.05 per share of Common Stock; provided, however, that any adjustments
which by reason of this Subsection 3(g) are not required to be made shall be
carried forward and taken into account in any subsequent adjustment; provided,
further, however, that adjustments shall be required and made in accordance with
the provisions of this Section 3 (other than this Subsection 3(g)) not later
than such time as may be required in order to preserve the tax-free nature of a
distribution to the Holder of this Warrant or Common Stock issuable upon
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the exercise hereof. All calculations under this Section 3 shall be made to the
nearest cent or to the nearest 1/100th of a share, as the case may be. Anything
in this Section 3 to the contrary notwithstanding, the Company shall be entitled
to make such reductions in the Per Share Warrant Price, in addition to those
required by this Section 3, as it in its discretion shall deem to be advisable
in order that any stock dividend, subdivision of shares or distribution of
rights to purchase stock or securities convertible or exchangeable for stock
hereafter made by the Company to its stockholders shall not be taxable.
(h) Whenever the Per Share Warrant Price is adjusted as
provided in this Section 3 and upon any modification of the rights of a Holder
of Warrants in accordance with this Section 3, the Chief Financial Officer of
the Company shall promptly prepare a certificate setting forth the Per Share
Warrant Price and the number of Warrant Shares after such adjustment or the
effect of such modification and a brief statement of the facts requiring such
adjustment or modification and the manner of computing the same and cause copies
of such certificate to be mailed to the Holders of the Warrants. In the event of
a dispute with respect to any adjustment required pursuant to Section 3, the
Holder may appoint, at the Company?s expense, an independent financial advisor
(e.g. an investment banking or accounting firm)reasonably acceptable to the
Company to calculate such adjustment. Such determination shall be binding upon
the Holder and the Company.
(i) If the Board of Directors of the Company shall declare any
dividend or other distribution with respect to the Common Stock, the Company
shall mail notice thereof to the Holders of the Warrants not less than 15 days
prior to the record date fixed for determining stockholders entitled to
participate in such dividend or other distribution.
(j) If, as a result of an adjustment made pursuant to this
Section 3, the Holder of any Warrant thereafter surrendered for exercise shall
become entitled to receive shares of two or more classes of capital stock or
shares of Common Stock and other capital stock of the Company, the Board of
Directors (whose determination shall be conclusive and shall be described in a
written notice to the Holder of any Warrant promptly after such adjustment)
shall determine the allocation of the adjusted Per Share Warrant Price between
or among shares or such classes of capital stock or shares of Common Stock and
other capital stock.
4. Fully Paid Stock; Taxes. The Company agrees that the shares
of the Common Stock represented by each and every certificate of Warrant Shares
delivered on the exercise of this Warrant be validly issued and outstanding,
fully paid and nonassessable, and not subject to preemptive rights or rights of
first refusal, and the Company will take all such actions as may be necessary to
assure that the par value or stated value, if any, per share of the Common Stock
is at all times equal to or less than the then Per Share Warrant Price. The
Company further covenants and agrees that it will pay, when due and payable, any
and all Federal and state stamp, original issue or similar taxes which may be
payable in respect of the issue of any Warrant Share or any certificate thereof.
5. Registration Under Securities Act of 1933.
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(a) The Company shall include the Warrant Shares on the Shelf
Registration Statement (as defined in the Term Sheet) and the Holder shall
otherwise have the registration rights set forth in Section 5 of the
subscription agreement (the "Subscription Agreement") to be entered into between
the purchasers of units (as described in the Term Sheet) and the Company. By
acceptance of this Warrant, the Holder agrees that it shall have the same
obligations, and otherwise comply with, the provisions in such Section 5 of the
Subscription Agreement to same extent as if it were a party thereto. To the
extent that no Final Closing Date (as defined in the Subscription Agreement)
occurs or the Offering is terminated, the rights granted to Holder hereunder to
have its shares registered shall begin as of December 6, 1997 on the same terms
as provided in Section 5 of the Subscription Agreement.
(b) Until all Warrant Shares have been sold under a
Registration Statement or pursuant to Rule 144, the Company shall use its
reasonable best efforts to file with the Securities and Exchange Commission all
current reports and the information as may be necessary to enable the Holder to
effect sales of its shares in reliance upon Rule 144 promulgated under the Act.
6. Limited Transferability. This Warrant may not be sold,
transferred, assigned or hypothecated by the Holder except in compliance with
the provisions of the Act and the applicable state securities "blue sky" laws.
The Company may treat the registered Holder of this Warrant as he or it appears
on the Company's books at any time as the Holder for all purposes. The Company
shall permit any Holder of a Warrant or his duly authorized attorney, upon
written request during ordinary business hours, to inspect and copy or make
extracts from its books showing the registered holders of Warrants. All warrants
issued upon the transfer or assignment of this Warrant will be dated the same
date as this Warrant, and all rights of the holder thereof shall be identical to
those of the Holder.
7. Loss, etc., of Warrant. Upon receipt of evidence
satisfactory to the Company of the loss, theft, destruction or mutilation of
this Warrant, and of indemnity reasonably satisfactory to the Company, if lost,
stolen or destroyed, and upon surrender and cancellation of this Warrant, if
mutilated, the Company shall execute and deliver to the Holder a new Warrant of
like date, tenor and denomination.
8. Warrant Holder Not Shareholder. Except as otherwise
provided herein, this Warrant does not confer upon the Holder any right to vote
or to consent to or receive notice as a stockholder of the Company, as such, in
respect of any matters whatsoever, or any other rights or liabilities as a
stockholder, prior to the exercise hereof.
9. Communication. No notice or other communication under this
Warrant shall be effective unless, but any notice or other communication shall
be effective and shall be deemed to have been given if, the same is in writing
and is mailed by first-class mail, postage prepaid, addressed to:
(a) the Company at 0000 Xxxxxxx Xxxxxxx Xxxxx, Xxx Xxxxx, XX
00000:
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President or other address as the Company has designated in writing to the
Holder, or
(b) the Holder at c/o Paramount Capital Asset Management,
Inc., 000 Xxxxxxx Xxxxxx, Xxx Xxxx, XX, 00000, Attn: Xxxxxxx X. Xxxxxxxxx, M.D.
or other such address as the Holder has designated in writing to the Company.
10. Headings. The headings of this Warrant have been inserted
as a matter of convenience and shall not affect the construction hereof.
11. Applicable Law. This Warrant shall be governed by and
construed in accordance with the law of the State of New York without giving
effect to the principles of conflicts of law thereof.
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IN WITNESS WHEREOF, the Company has caused this Warrant to be signed by
its President and its corporate seal to be hereunto affixed and attested by its
Secretary this 6th day of June 1997.
GENTA INCORPORATED
By: ______________________________
Name:
Title:
ATTEST:
-------------------------------
Secretary
[Corporate Seal]
SUBSCRIPTION
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The undersigned, ___________________, pursuant to the
provisions of the foregoing Warrant, hereby agrees to subscribe for and purchase
____________________ shares of the Common Stock, par value $.001 per share, of
Genta Incorporated covered by said Warrant, and makes payment therefor in full
at the price per share provided by said Warrant.
Dated:_______________ Signature:____________________
Address:______________________
CASHLESS EXERCISE
-----------------
The undersigned ___________________, pursuant to the
provisions of the foregoing Warrant, hereby elects to exchange its Warrant for
___________________ shares of Common Stock, par value $.001 per share, of Genta
Incorporated pursuant to the Cashless Exercise provisions of the Warrant.
Dated:_______________ Signature:____________________
Address:______________________
ASSIGNMENT
----------
FOR VALUE RECEIVED _______________ hereby sells, assigns and
transfers unto ____________________ the foregoing Warrant and all rights
evidenced thereby, and does irrevocably constitute and appoint
_____________________, attorney, to transfer said Warrant on the books of Genta
Incorporated.
Dated:_______________ Signature:____________________
ADDRESS:______________________
PARTIAL ASSIGNMENT
------------------
FOR VALUE RECEIVED _______________ hereby assigns and
transfers unto ____________________ the right to purchase _______ shares of the
Common Stock, par value $.001 per share, of Genta Incorporated covered by the
foregoing Warrant, and a proportionate part of said Warrant and the rights
evidenced thereby, and does irrevocably constitute and appoint
____________________, attorney, to transfer that part of said Warrant on the
books of Genta Incorporated.
Dated:_______________ Signature:____________________
ADDRESS:______________________
