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EXHIBIT 10.67
WARRANT AGREEMENT
AGREEMENT, dated as of this 23 day of December, 1999, by and among
GENTA INCORPORATED, a Delaware corporation (the "Company"), CHASEMELLON
SHAREHOLDER SERVICES, L.L.C., a New Jersey limited liability company, as warrant
agent (the "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 15 Units (as defined below)
and a maximum (the "Maximum Offering") of 100 Units, with an option in favor of
Paramount to offer up to an additional 15 Units to cover over-allotments, each
"Unit" consisting of (a) a number of shares of Common Stock determined by
dividing one hundred thousand dollars ($100,000) by the lesser of (i) $3.00 and
(ii) 85% of the Trading Price (as defined below) of the Common Stock on the
Nasdaq SmallCap Market (the "SmallCap Market") and (b) warrants ("Warrants") to
purchase, at any time prior to the fifth anniversary of the Final Closing Date
(as defined below), a number of shares of Common Stock equal to 25% of the
number of shares of Common Stock included in such Unit, at an initial exercise
price equal to the Trading Price (subject to adjustment upon the occurrence of
certain events), pursuant to a placement agency agreement dated as of November
9, 1999 (the "Placement Agency Agreement"), between the Company and Paramount;
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 Warrants, the
issuance of certificates representing the Warrants, the exercise of the
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 Warrants and the certificates representing the Warrants and
the respective rights and obligations thereunder of the Company, the holders of
certificates representing the 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) "Business Day" shall mean any day other than a Saturday, a Sunday
or a day on which banking institutions in the State of New York or the city in
which the office of the Warrant Agent is located are authorized or obligated by
law or executive order to close.
(b) "Close of Business" on any given day shall mean 5:00 p.m. (New York
City time) on such date; provided, however, if such date is not a Business Day
it shall mean 5:00 p.m. (New York City time) on the next succeeding Business
Day.
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(c) "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.
(d) "Common Stock" shall mean the common stock, par value $0.001 per
share, of the Company.
(e) "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, unless changed by sending
notice thereof to the Company.
(f) "Exercise Date" shall mean, as to any Warrant, the date on which
the Warrant Agent shall have received both (a) the Warrant Certificate
representing such Warrant, with the subscription form thereon duly executed by
the Registered Holder thereof or his attorney duly authorized in writing, and
(b) in the event the Registered Holder intends to exercise its Warrant other
than by cashless exercise under Section 4(b) of this Agreement, 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.
(g) "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 Warrants then outstanding. If the
Company and the Registered Holders of a majority of the 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 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.
(h) "Final Closing Date" shall mean the final closing date of the
Private Placement.
(i) "Initial Closing Date" shall mean, as to each Warrant, the date of
the initial closing of the Private Placement.
(j) "Initial Warrant Exercise Date" shall mean, as to each Warrant, the
Final Closing Date.
(k) "Interim Closing Date" shall mean, as to each Warrant, any closing
date of the Private Placement other than the Initial Closing Date and the Final
Closing Date.
(l) "Market Price" shall mean the average Closing Bid Price for five
(5) consecutive trading days ending with the trading day prior to the date as of
which the Market
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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 Closing Bid Price cannot be determined for such
period, "Market Price" shall mean Fair Market Value.
(m) "Purchase Price" shall mean, as to each Warrant, the purchase price
to be paid upon exercise of such Warrant in accordance with the terms hereof,
which price shall be the Trading Price, 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).
(n) "Redemption Price" shall mean the price at which the Company may,
at its option in accordance with the terms hereof, redeem the Warrants, which
price shall be $0.01 per share of Common Stock subject to such Warrants, as
adjusted as provided in Section 9.
(o) "Registered Holder" shall mean, as to any Warrant and as of any
particular date, the person in whose name the certificate representing the
Warrant shall be registered on that date on the books maintained by the Warrant
Agent pursuant to Section 6.
(p) "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) A "trading day" shall mean a day on which the Stock Market is open
for the transaction of business.
(r) "Trading Price" shall mean the average Closing Bid Price (with
appropriate adjustments for subdivisions or combinations of shares effected
during such period) of the Common Stock for the five or 20 consecutive trading
days immediately preceding (a) the Initial Closing Date, (b) any Interim Closing
Date or (c) the Final Closing Date of this Offering, whichever is lowest;
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.
(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, as to each Warrant, 5:00 p.m.
(New York time) on the day prior to earlier of (i) the fifth anniversary of the
Final Closing Date or (ii) the Redemption Date; 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 thereof,
the Company shall have the right to extend the Warrant Expiration Date.
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(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 Warrant initially shall entitle the Registered Holder of the
Warrant Certificate representing such 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 Warrants included in the offering of Units will immediately be
detachable and separately transferable from the shares of Common Stock
constituting part of such Units.
(c) Within five Business Days after the Final Closing Date, Warrant
Certificates representing the number of Warrants sold pursuant to the Private
Placement shall be executed by the Company and delivered to the Warrant Agent.
Within five Business Days of receipt of the Warrant Certificates by the Warrant
Agent and receipt of all necessary information, 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 of Directors, 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, upon written instruction from the Company, shall countersign and deliver
stock certificates in required whole number denominations representing the
appropriate number of shares of Common Stock upon the exercise of Warrants in
accordance with this Agreement.
(e) From time to time, until the Warrant Expiration Date, the Warrant
Agent, upon written instruction from the Company, 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 pursuant to the Private Placement, (ii) those issued on
or after the Initial Warrant Exercise Date, upon the exercise of fewer than all
Warrants represented by any Warrant Certificate, to evidence any unexercised
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 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
Warrants; the Redemption Price of the Warrants; or the Warrant Expiration Date.
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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, which do not affect the duties and
responsibilities of the Warrant Agent or the Transfer Agent, 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 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 letter "W" on Warrants of all denominations.
(b) Warrant Certificates shall be executed on behalf of the Company by
its Chairman of the Board of Directors, 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 Warrant may be exercised by the Registered Holder thereof at
any time on or after the Initial Warrant 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 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 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 Warrant and shall
notify the Company in writing of the exercise of the Warrants. Promptly
following, and in any event within five Business 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, a certificate or certificates for the
securities deliverable upon such exercise (plus a certificate for any remaining
unexercised Warrants of the Registered Holder). In the case of payment made in
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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 Warrant and receipt of
notice as to the clearance of the funds received, the Warrant Agent shall
promptly remit the payment received for the Warrant (the "Warrant Proceeds") to
the Company or as the Company may otherwise direct in writing.
(b) Beginning on the 121st day following the Final Closing Date,
provided that the registration statement referred to in Section 5 of the
Subscription Agreement, dated as of the date hereof, between the Company and the
Registered Holder is not effective, a Registered Holder may exercise all or any
part of this Warrant on a "cashless" basis by providing written notice of its
intention to do so and stating the maximum number (the "Maximum Number") of
shares of Common Stock the Registered Holder desires to purchase in
consideration of cancellation of Warrants in payment for such exercise. The
number of shares of Common Stock the Registered Holder shall receive upon such
exercise pursuant to this Section 4(b) shall be equal to the difference between
the Maximum Number and the quotient that is obtained when the product of the
Maximum Number and the Purchase Price is divided by the then Market Price per
share. The Warrant Agent shall have no duty or obligation under this subsection
unless and until it is notified by the Company that the Registered Holder may
exercise all or part of this Warrant on a "cashless" basis.
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 Warrants, such number of shares of Common Stock as shall then
be issuable upon the exercise of all outstanding Warrants. The Company covenants
that all shares of Common Stock which shall be issuable upon exercise of the
Warrants shall, at the time of delivery (assuming full payment of the purchase
price thereof), be duly and validly issued, fully paid, 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 or charges, 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 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
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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,
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. The
Warrant Agent may conclude that no such exercise would be unlawful unless and
until it has received notice otherwise from the Company.
(c) The Company shall pay all documentary, stamp or similar taxes and
other similar charges that may be imposed with respect to the issuance of
Warrants, or the issuance or delivery of any shares upon exercise of the
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 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 taxes or charges incident thereto, if any. The Warrant Agent
shall have no duty or obligation under this Section 5 unless and until it is
satisfied that all such taxes or charges have been paid.
(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 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 Warrants.
SECTION 6. Exchange and Registration of Transfer.
(a) Warrant Certificates may be exchanged for other Warrant
Certificates representing an equal aggregate number of 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 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 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 or its
attorney-in-fact duly authorized in writing.
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(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 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 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 Warrants, which are being offered in Units with shares of
Common Stock pursuant to the Placement Agency Agreement, will immediately be
detachable and separately transferable from the Common 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 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.
SECTION 8. Redemption.
(a) 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 Warrants being redeemed, the Company may, at its option, redeem the Warrants
at the Redemption Price, provided the Closing Bid Price exceeds 250% of the
Purchase Price per share of Common Stock subject to a 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 Warrants must be redeemed if any are redeemed. The date
fixed for redemption of the Warrants is referred to herein as the "Redemption
Date."
(b) If the conditions set forth in Section 8(a) are met, and the
Company desires to exercise its right to redeem the Warrants, it shall instruct
the Warrant Agent to mail, upon receipt of all necessary information, a notice
of redemption to each of the Registered Holders of the Warrants to be redeemed,
by first class, postage prepaid, not later than the sixtieth
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Business Day before the date fixed for redemption, at his or its last address as
it shall appear on the registry books of the Warrant Agent. 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 Warrant and be entitled to reimbursement of costs in
connection with the exercise thereof and (v) that the right to exercise the
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 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, Registered Holders of the Warrants shall have no
further rights except to receive, upon surrender of the 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 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 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 Warrants called for redemption, such Warrants shall expire and become null
and 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 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 Warrant shall (subject to the provisions contained in
Subsections 9(c) and 9(d)) 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
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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 Warrant then outstanding shall have the right thereafter, by
exercising such Warrant, upon the terms and conditions specified in the Warrants
and in lieu of the shares of Common Stock immediately theretofore purchasable
upon exercise of the Warrants, to purchase the kind 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 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 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
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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 Warrants outstanding, in lieu of the
adjustment in the number of shares of Common Stock purchasable upon the exercise
of each Warrant as hereinabove provided, so that each Warrant outstanding after
such adjustment shall represent the right to purchase one share of Common Stock.
Each Warrant held of record prior to such adjustment of the number of Warrants
shall become that number of 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 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 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) new Warrant Certificates evidencing the number of 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 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 of the Board of Directors 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 Warrant after such adjustment,
and, if the Company shall have elected to adjust the number of Warrants pursuant
to Subsection 9(d), the number of Warrants to which the registered holder of
each Warrant shall then be entitled, and the adjustment in Redemption Price
resulting therefrom, and (iii) a brief statement of the facts and computations
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 Warrants at his
or its last address as it
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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
facts, 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 (w) any convertible debt, (x)
warrants outstanding on the date hereof, (y) options outstanding on the date
hereof, and (z) all shares issuable pursuant to the rights, options and warrants
referred to in Subsection 9(h)(iii).
(ii) No adjustment of the Purchase Price shall be made unless
such adjustment would require an increase or decrease of at least $.05 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 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
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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) 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
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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 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 Warrants or to the number of shares of Common Stock
purchasable upon the exercise of each Warrant will be made:
(i) upon the issuance or exercise of any of the options
outstanding on the date hereof or which may hereafter be granted under any stock
option plan or any employee benefit plan of the Company, 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
(ii) upon issuance or exercise of the Placement Warrants (as
defined in the Placement Agency Agreement), upon the conversion of the Company's
Series A Convertible Preferred Stock or Series D Convertible Preferred Stock,
upon the issuance, conversion or exercise of the Common Stock or the Warrants
included in the Units of the Company issued (A) on or prior to the Final Closing
Date or (B) pursuant to the exercise of the Placement Warrants; or
(iii) 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, which securities were outstanding prior to the
date of the original issuance of the Warrants by the Company, including, without
limitation, rights, options or warrants issued in substitution of such existing
rights, options or warrants to Xx. Xxxxxx or holders of Class D Warrants, or
which were
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disclosed under the caption "Securities Outstanding/Capitalization" in the Term
Sheet related to the Private Placement"; 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, which were issued or sold after the date of the
original issuance of the Warrants by the Company, provided that an adjustment
was either made or not required to be made in accordance with Section 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
Warrants or were thereafter issued or sold.
Section 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), (iii) and (iv) of this Section 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
issuance 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 Warrants shall include only shares of such class
designated in the Certificate of Incorporation as Common Stock on the date of
the original issuance 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 Stock issuable upon exercise of the 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
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 Warrants are exercisable.
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(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
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 its
Warrants. If the Company shall so elect under this Subsection 9(l), then such
grant by the Company to the holders of the 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 Warrant is adjusted
pursuant to Section 9, the Company nevertheless shall not be required to issue
fractions of shares, upon exercise of the 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
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 Warrants for any purpose whatsoever, nor shall anything contained herein
be construed to confer upon the holder of 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 Warrants and
been issued shares of Common Stock in accordance with the provisions hereof.
SECTION 12. Rights of Action. All rights of action with respect to this
Agreement are vested in the respective Registered Holders of the Warrants, and
any Registered Holder of a Warrant, without consent of the Warrant Agent or of
the holder of any other Warrant, may, in his or its own behalf and for his or
its own benefit, enforce against the Company his or its right to exercise his or
its 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 Warrant,
by his or its acceptance thereof, consents and agrees with the Company, the
Warrant Agent and every other holder of any Warrant that:
(a) The Warrants are transferable only on the registry books of the
Warrant Agent by the Registered Holder thereof in person or by his or its
attorney duly authorized in
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writing and only if the Warrant Certificates representing such 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 taxes or charges; 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 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.
SECTION 14. Cancellation of Warrant Certificates. If the Company shall
purchase or acquire any Warrant or 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 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 Warrants represented thereby or
of any securities or other property delivered upon exercise of any Warrant or
whether any stock issued upon exercise of any Warrant is fully paid and
nonassessable.
The Warrant Agent shall not at any time be under any duty, liability 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 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 or liable 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 gross negligence or willful
misconduct, as determined by a court of competent jurisdiction.
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.
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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,
or for any delay in acting while waiting for such notice, statement,
instruction, request, direction, order or demand.
The Company agrees to pay the Warrant Agent reasonable compensation for
its services hereunder and to reimburse it for its reasonable expenses hereunder
pursuant to the fee schedule attached hereto as Exhibit B; the Company further
agrees to indemnify the Warrant Agent and save it harmless against any and all
losses, expenses and liabilities, including, but not limited to, judgments,
damages, penalties, claims, demands, settlements, costs and reasonable counsel
fees, for any action taken, suffered or omitted by the Warrant Agent in
connection with the acceptance of this Agreement and the execution of its duties
and powers hereunder, except losses, expenses and liabilities arising as a
result of the Warrant Agent's gross negligence or willful misconduct, as
determined by a court of competent jurisdiction. The indemnity provided herein
shall survive the resignation or removal of the Warrant Agent or the termination
of the Warrant Agreement and the termination and expiration of the Warrants. The
costs and expenses incurred in enforcing this right of indemnification shall be
paid by the Company. Anything to the contrary notwithstanding, in no event shall
the Warrant Agent be liable for special, punitive, indirect, consequential or
incidental loss or damage of any kind whatsoever (including, but not limited to,
lost profits), even if the Warrant Agent has been advised of the likelihood of
such loss or damage. Any liability of the Warrant Agent under this Agreement
shall be limited to the amount of fees paid by the Company to the Warrant Agent.
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 gross negligence or willful misconduct, as determined by
a court of competent jurisdiction), 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 notice of such resignation, discharge, 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 (i) an entity 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 or (ii) an affiliate of the entity described in (i)
above. 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
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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
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 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 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 Warrants which are to be governed by this
Agreement resulting from a subsequent offering of Company securities which
includes Warrants having the same terms and conditions as the 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 Warrants then
outstanding; and provided, further, that no change in the number or nature of
the securities purchasable upon the exercise of any 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 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. Upon the delivery of a certificate from an appropriate officer
of the Company which states that the proposed supplement or amendment is in
compliance with this Section 16, the Warrant Agent shall execute such supplement
or amendment, unless the Warrant Agent determines that such supplement and
amendment will increase its duties, liabilities or obligations.
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
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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 00 Xxxxxx Xxxxxx, Xxxxxxxxx, Xxxxxxxxxxxxx, 00000, Attention:
Chief Financial 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 its
Corporate Office; and, if to Paramount, at Paramount Capital, Inc., 000 Xxxxxxx
Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: Xxxxx X. Xxxxx, Esq.
Notwithstanding anything else contained in this agreement to the contrary, any
notice to the Warrant Agent shall not be deemed to have been made or received
until actually received by the Warrant Agent.
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 Warrants or such earlier date
upon which all 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.
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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,
L.L.C., as Warrant Agent
By: ___________________________________
Authorized Officer
PARAMOUNT CAPITAL, INC.
By: ___________________________________
Authorized Officer
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EXHIBIT A
[FORM OF FACE OF WARRANT CERTIFICATE]
No. W-____ _________ Warrants
VOID AFTER __________________, 2004
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 warrants ("Warrants")
specified above. Each 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 (or such smaller number as
provided under the cashless exercise provision of the Warrant Agreement), par
value $.001 per share ("Common Stock"), of Genta Incorporated, a Delaware
corporation (the "Company"), at any time between _______________, 1999, 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., a
New Jersey limited liability company, as Warrant Agent, or its successor (the
"Warrant Agent"), and, other than upon a cashless exercise, the 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 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
_______________, 1999, 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 Warrant represented hereby are subject to
modification or adjustment.
Each 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 Warrant represented hereby, the
Company shall cancel this Warrant Certificate
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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 Warrants.
The term "Expiration Date" shall mean 5:00 p.m. (New York time) on
_______________, 2004, or such earlier date as the Warrants shall be redeemed.
If such 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 Warrants, the Company shall have the right to extend the
Expiration Date.
THE REGISTERED HOLDER OF THIS 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 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 Warrants, each of such new Warrant Certificates to represent
such number of 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 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 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 Warrants represented hereby may be redeemed at the option of the
Company, at a redemption price of $0.01 per share subject to such 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 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 Warrant represented hereby (notwithstanding
any notations of ownership or writing hereon
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24
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.
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.
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25
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: _______________________________
Authorized Officer
By: _______________________________
[seal]
Countersigned:
CHASEMELLON SHAREHOLDER SERVICES, L.L.C.,
as Warrant Agent
By: ________________________________
Authorized Officer
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26
[FORM OF REVERSE OF WARRANT CERTIFICATE]
TRANSFER FEE: $___________ PER CERTIFICATE ISSUED
SUBSCRIPTION FORM
To Be Executed by the Registered Holder
in Order to Exercise Warrants
(Check One)
[ ] The undersigned Registered Holder hereby irrevocably elects to
exercise _________ Warrants represented by this Warrant Certificate, and to
purchase the securities issuable upon the exercise of such Warrants, and
requests that certificates for such securities shall be issued in the name of
[ ] The undersigned Registered Holder, pursuant to Section 4(b) of the
Warrant Agreement dated as of by and among Genta Incorporated, ChaseMellon
Shareholder Services, L.L.C, and Paramount Capital, Inc. (the "Warrant
Agreement"), hereby irrevocably elects to exchange ________ Warrants represented
by this Warrant Certificate for such number of shares of Common Stock as are
obtained by applying the provisions of Section 4(b) of the Warrant Agreement,
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 Warrants shall not be all the Warrants evidenced by this
Warrant Certificate, that a new Warrant Certificate for the balance of such
Warrants be registered in the name of, and delivered to, the Registered Holder
at the address stated below.
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27
The undersigned represents that the exercise of the within 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 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 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 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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