GENTA INCORPORATED FORM SENIOR UNSECURED CONVERTIBLE PROMISSORY NOTE PURCHASE WARRANT
THIS
WARRANT AND THE UNDERLYING SECURITIES HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”). THEY MAY NOT BE SOLD,
OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION STATEMENT AS TO SUCH SECURITIES UNDER THE ACT OR AN OPINION OF
COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT
REQUIRED.
GENTA
INCORPORATED
FORM
SENIOR UNSECURED CONVERTIBLE PROMISSORY NOTE PURCHASE
WARRANT
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Note
Warrant No. [______]
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Issue
Date: March [ ],
2010
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THIS SENIOR UNSECURED CONVERTIBLE
PROMISSORY NOTE PURCHASE WARRANT certifies that, for value received,
[______________] (the “Holder”) is entitled,
upon the terms and subject to the limitations on exercise and the conditions
hereinafter set forth, at any time on or after the Issue Date and on or prior to
the close of business on the Expiration Date (as defined in the Purchase
Agreement (as defined below)) (the “Termination Date”)
but not thereafter, to subscribe for and purchase from Genta Incorporated, a
Delaware corporation (the “Company”), up to $[
_____________ ] in principal amount (the “Exercise Price”) of
Senior Unsecured Convertible Promissory Notes in substantially the form attached
hereto as Exhibit
A (the “Note”). This
warrant (this “Warrant”) is one of a
series of warrants of like tenor (the “Warrants”) issuable
by the Company under that certain Securities Purchase Agreement by and among the
Company and the Purchasers named therein, dated as of March __, 2010 (the “Purchase
Agreement”). The Notes issued under this Warrant shall be E
Notes (as defined in the Purchase Agreement) for all purposes under the Purchase
Agreement.
Section
1. Exercise of
Warrant.
(a) Process. Exercise
of the purchase rights represented by this Warrant may be made, in whole or in
part, at any time or times on or after the Issue Date and on or before the
Termination Date by delivery to the Company (the date of such delivery, the
“Exercise
Date”) of a duly executed facsimile copy of the Notice of Exercise
annexed hereto (or such other office or agency of the Company as it may
designate by notice in writing to the registered Holder at the address of the
Holder appearing on the books of the Company). Notwithstanding
anything herein to the contrary, the Holder shall not be required to physically
surrender this Warrant to the Company until the Holder has purchased the entire
principal amount of the Notes available hereunder and the Warrant has been
exercised in full, in which case, the Holder shall surrender this Warrant to the
Company for cancellation within three (3) Trading Days (as defined in the E
Notes) of the date the final Notice of Exercise is delivered to the
Company. Partial exercises of this Warrant resulting in purchases of
a portion of the total principal amount of the Notes available hereunder shall
have the effect of lowering the principal amount of the Notes purchasable
hereunder by the principal amount of the Notes purchased. The Holder
and the Company shall maintain records showing the principal amount of the Notes
purchased and the date of such purchases. The Company shall deliver
any objection to any Notice of Exercise within one (1) Trading Day of receipt of
such notice. In the event of any dispute or discrepancy, the records
of the Holder shall be controlling and determinative in the absence of manifest
error. The Holder may provide this Warrant, or an affidavit of lost
security, to the Company within a reasonable period after the delivery of any
Notice of Exercise related to any partial exercise of this Warrant, and the
Company, at its expense, will promptly and, in any event within three (3)
Trading Days thereafter, issue and deliver to the Holder a new Warrant of like
tenor, registered in the name of the Holder and exercisable, in the aggregate,
for the remaining principal balance of the Notes available for purchase under
this Warrant. The Holder and any assignee, by acceptance of this
Warrant, acknowledge and agree that, by reason of the provisions of this
paragraph, following the purchase of a portion of the principal amount of the
Notes hereunder, the principal amount of the Notes available for purchase
hereunder at any given time may be less than the amount stated on the face
hereof.
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(b) Cash
Exercise. This Warrant may be exercised in whole or in part at
any time prior to the Termination Date, by delivery of the following to the
Company:
(i) A
duly completed and executed Notice of Exercise in the form attached hereto;
and
(ii) The
aggregate principal amount of the Notes with respect to which this Warrant is
being exercised, in lawful money of the United States, in cash, certified check
or bank draft payable to the order of the Company (or as otherwise agreed to by
the Company).
(c) Cashless
Exercise. If at any time prior to the Termination Date the
Holder elects to exercise this Warrant and on the Trading Day prior to the
Exercise Date the Daily Closing Price (as defined in the Notes) of the Company’s
Common Stock is greater than the then applicable Conversion Price (as defined in
the Notes), the Holder of this Warrant may elect to exercise this Warrant in
whole or in part by means of a “cashless exercise.” In the event of a
“cashless exercise,” by delivery to the Company of a duly completed and executed
Notice of Exercise in the form attached hereto, the Holder shall be entitled to
receive, without payment of any consideration, a Note in the principal amount
equal to the difference between (A) the face amount of the Warrant being
exercised minus (B) the quotient of (1) the product of (x) the face amount of
the Warrant being exercised and (y) the then Conversion Price, divided by (2)
the VWCP (as defined in the E Notes) for the ten (10) consecutive Trading Day
period ending on the Trading Day immediately preceding the date of such
election.
(d) Delivery of Note,
etc.
(i) Upon
exercise of this Warrant, the Company shall promptly (but in no event later than
three (3) Trading Days after the Exercise Date) (the “Note Delivery Date”)
issue and deliver (or cause to be issued and delivered) to the Holder the Note
issuable upon such exercise. The Holder, or any person permissibly designated by
the Holder to receive the Note, shall be deemed to have become the holder of
record of such Note as of the Exercise Date.
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(ii) To
the extent permitted by law, the Company’s obligations to issue and deliver Note
in accordance with the terms hereof are absolute and unconditional, irrespective
of any action or inaction by the Holder to enforce the same, any waiver or
consent with respect to any provision hereof, the recovery of any judgment
against any person or any action to enforce the same, or any setoff,
counterclaim, recoupment, limitation or termination, or any breach or alleged
breach by the Holder or any other person of any obligation to the Company or any
violation or alleged violation of law by the Holder or any other person, and
irrespective of any other circumstance that might otherwise limit such
obligation of the Company to the Holder in connection with the issuance of Note.
Nothing herein shall limit the Holder’s right to pursue any other remedies
available to it hereunder, at law or in equity including, without limitation, a
decree of specific performance and/or injunctive relief with respect to the
Company’s failure to timely deliver the Note issuable upon exercise of the
Warrant as required pursuant to the terms hereof.
(iii) If
this Warrant shall have been exercised in part, the Company shall, at the
request of a Holder and upon surrender of this Warrant certificate, at the time
of delivery of the Note, deliver to Holder a new Warrant evidencing the rights
of Holder to purchase the unpurchased portion of the Note called for by this
Warrant, which new Warrant shall in all other respects be identical with this
Warrant.
(iv) If
the Company fails to transmit to the Holder a Note pursuant to this Section 1(d)
by the third Trading Day immediately following the Note Delivery Date, then the
Holder will have the right to rescind such exercise.
(v) Issuance
of a Note shall be made without charge to the Holder for any issue or transfer
tax or other incidental expense in respect of the issuance of such Note, all of
which taxes and expenses shall be paid by the Company, and such Note shall be
issued in the name of the Holder or in such name or names as may be directed by
the Holder; provided, however,
that in the event a Note is to be issued in a name other than the name of the
Holder, this Warrant when surrendered for exercise shall be accompanied by the
Assignment Form attached hereto duly executed by the Holder; and the Company may
require, as a condition thereto, the payment of a sum sufficient to reimburse it
for any transfer tax incidental thereto.
(e) Changes to E
Notes. If, at any time while this Warrant is outstanding, the
Company effects any transaction whereby the E Notes are amended, modified or
otherwise changed into or exchanged for other securities, then, upon any
subsequent exercise of this Warrant, the Holder shall have the right to receive
the amount and kind of such amended, modified, changed or exchanged securities
that the Holder would have been entitled to receive had the Holder exercised
this Warrant for E Notes immediately prior to such event.
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(f) Notice to Allow Exercise by
▇▇▇▇▇▇. If (A) the Company shall declare a dividend (or any
other distribution in whatever form) on the Common Stock; (B) the Company shall
declare a special nonrecurring cash dividend on or a redemption of the Common
Stock; (C) the Company shall authorize the granting to all holders of the Common
Stock rights or warrants to subscribe for or purchase any shares of capital
stock of any class or of any rights; (D) the approval of any stockholders of the
Company shall be required in connection with any reclassification of the Common
Stock, any consolidation or merger to which the Company is a party, any sale or
transfer of all or substantially all of the assets of the Company, of any
compulsory share exchange whereby the Common Stock is converted into other
securities, cash or property; (E) the Company shall authorize the voluntary or
involuntary dissolution, liquidation or winding up of the affairs of the
Company; then, in each case, the Company shall cause to be mailed to the Holder
at its last address as it shall appear upon the Warrant Register of the Company,
at least 20 calendar days prior to the applicable record or effective date
hereinafter specified, a notice stating (x) the date on which a record is to be
taken for the purpose of such dividend, distribution, redemption, rights or
warrants, or if a record is not to be taken, the date as of which the holders of
the Common Stock of record to be entitled to such dividend, distributions,
redemption, rights or warrants are to be determined or (y) the date on which
such reclassification, consolidation, merger, sale, transfer or share exchange
is expected to become effective or close, and the date as of which it is
expected that holders of the Common Stock of record shall be entitled to
exchange their shares of the Common Stock for securities, cash or other property
deliverable upon such reclassification, consolidation, merger, sale, transfer or
share exchange; provided that the failure to mail such notice or any defect
therein or in the mailing thereof shall not affect the validity of the corporate
action required to be specified in such notice. Subject to applicable
law, the Holder is entitled to exercise this Warrant during the period
commencing on the date of such notice to the effective date of the event
triggering such notice. Notwithstanding the foregoing, the delivery
of the notice described in this Section 1(f) is not intended to and shall not
bestow upon the Holder any voting rights whatsoever with respect to the
Warrant.
Section
2. Transfer of
Warrant.
(a) Transferability. Subject
to compliance with any applicable securities laws and the conditions set forth
in Section 2(d) hereof, this Warrant and all rights hereunder are transferable,
in whole or in part, upon surrender of this Warrant at the principal office of
the Company or its designated agent, together with a written assignment of this
Warrant substantially in the form attached hereto duly executed by the Holder or
its agent or attorney and funds sufficient to pay any transfer taxes payable
upon the making of such transfer. Upon such surrender and, if
required, such payment, the Company shall execute and deliver a new Warrant in
the name of the assignee or assignees and in the denomination or denominations
specified in such instrument of assignment, and shall issue to the assignor a
new Warrant evidencing the portion of this Warrant not so assigned, and this
Warrant shall promptly be cancelled. A Warrant, if properly assigned,
may be exercised by a new holder for the purchase of Notes without having a new
Warrant issued.
(b) New Warrant. This
Warrant may be divided or combined with other Warrants upon presentation hereof
at the aforesaid office of the Company, together with a written notice
specifying the names and denominations in which new Warrants are to be issued,
signed by the Holder or its agent or attorney. Subject to compliance
with Section 2(a), as to any transfer which may be involved in such division or
combination, the Company shall execute and deliver a new Warrant or Warrants in
exchange for the Warrant or Warrants to be divided or combined in accordance
with such notice. All Warrants issued on transfers or exchanges shall be dated
the original Issue Date and shall be identical with this Warrant except as to
the principal amount of Notes issuable pursuant thereto.
(c) Warrant Register. The
Company shall register this Warrant, upon records to be maintained by the
Company for that purpose (the “Warrant Register”),
in the name of the record Holder hereof from time to time. The
Company may deem and treat the registered Holder of this Warrant as the absolute
owner hereof for the purpose of any exercise hereof or any distribution to the
Holder, and for all other purposes, absent actual notice to the
contrary.
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(d) Transfer
Restrictions. If, at the time of the surrender of this Warrant in
connection with any transfer of this Warrant, the transfer of this Warrant shall
not be registered pursuant to an effective registration statement under the
Securities Act and under applicable state securities or blue sky laws, the
Company may require, as a condition of allowing such transfer, that the Holder
or transferee of this Warrant, as the case may be, furnish to the Company a
written opinion of counsel satisfactory to the Company (which opinion shall be
in form, substance and scope customary for opinions of counsel in comparable
transactions) to the effect that such transfer may be made without registration
under the Securities Act and under applicable state securities or blue sky laws,
(ii) that the transferor or transferee execute and deliver to the Company an
investment letter in form and substance acceptable to the Company and (iii) that
the transferee be an “accredited investor” as defined in Rule 501(a)(1), (a)(2),
(a)(3), (a)(7), or (a)(8) promulgated under the Securities Act or a qualified
institutional buyer as defined in Rule 144A(a)(1) promulgated under the
Securities Act.
Section
3. Investment Intent; Limited
Transferability.
(a) By
accepting this Warrant, the Holder represents to the Company that it understands
that this Warrant has not been, and any securities obtainable upon exercise of
this Warrant may not have not been registered for sale under the Securities Act
or any state securities or “blue sky” laws and are being offered and sold to the
Holder pursuant to one or more exemptions from the registration requirements of
the Securities Act and applicable State securities or “blue sky”
laws. In the absence of an effective registration of such securities
or an exemption therefrom, the Notes shall bear a legend substantially similar
to the legend set forth in the Purchase Agreement. The Holder
understands that it may have to bear the economic risk of its investment in this
Warrant and any securities obtainable upon exercise of this Warrant for an
indefinite period of time, until such securities have been registered under the
Securities Act and any applicable state securities or “blue sky” laws and
therefore cannot be sold unless subsequently registered under such laws, or an
exemption from such registration is available. The Holder further
represents to the Company, by accepting this Warrant, that it has full power and
authority to accept this Warrant and make the representations set forth
herein.
(b) The
Holder agrees and acknowledges that this Warrant may not be sold, transferred,
assigned or hypothecated by the Holder except in compliance with the provisions
of the Securities Act and any applicable State securities or “blue sky”
laws.
Section
4. Miscellaneous.
(a) Loss, Theft, Destruction or
Mutilation of Warrant. The Company covenants that upon receipt by the
Company of evidence reasonably satisfactory to it of the loss, theft,
destruction or mutilation of this Warrant or any Note, and in case of loss,
theft or destruction, of indemnity or security reasonably satisfactory to it
(which, in the case of the Warrant, shall not include the posting of any bond),
and upon surrender and cancellation of such Warrant or stock certificate, if
mutilated, the Company will make and deliver a new Warrant or Note of like tenor
and dated as of such cancellation, in lieu of such Warrant or Note.
(b) Saturdays, Sundays,
Holidays, etc. If the last or appointed day for the taking of
any action or the expiration of any right required or granted herein shall not
be a Trading Day, then such action may be taken or such right may be exercised
on the next succeeding Trading Day.
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(c) Company
Covenants.
(i) The
Company covenants that during the period the Warrant is outstanding and
exercisable, it will reserve from its authorized and unissued Common Stock a
sufficient number of shares to provide for conversion of the Notes in full,
without regard to any limitations on conversion set forth in the Notes, upon the
exercise of any purchase rights under this Warrant. The Company
further covenants that its issuance of this Warrant shall constitute full
authority to its officers who are charged with the duty of executing Notes to
execute and issue the necessary Notes upon the exercise of the purchase rights
under this Warrant. The Company will take all such reasonable action
as may be necessary to assure that such Notes may be issued as provided herein
without violation of any applicable law or regulation. The Company
covenants that all Notes which may be issued upon the exercise of the purchase
rights represented by this Warrant will, upon exercise of the purchase rights
represented by this Warrant, be duly authorized, validly issued and
nonassessable and free from all taxes, liens and charges created by the Company
in respect of the issue thereof (other than taxes in respect of any transfer
occurring contemporaneously with such issue).
(ii) The
Company shall not by any action, including, without limitation, amending its
certificate of incorporation or through any reorganization, transfer of assets,
consolidation, merger, dissolution, issue or sale of securities or any other
voluntary action, avoid or seek to avoid the observance or performance of any of
the terms of this Warrant, but will at all times in good faith assist in the
carrying out of all such terms and in the taking of all such actions as may be
necessary or appropriate to protect the rights of Holder as set forth in this
Warrant against impairment. Without limiting the generality of the
foregoing, the Company will use commercially reasonable efforts to obtain all
such authorizations, exemptions or consents from any public regulatory body
having jurisdiction thereof as may be necessary to enable the Company to perform
its obligations under this Warrant.
(d) Jurisdiction. All
questions concerning the construction, validity, enforcement and interpretation
of this Warrant shall be determined in accordance with the provisions of the
Purchase Agreement.
(e) Restrictions. The
Holder acknowledges that the Notes acquired upon the exercise of this Warrant,
if not registered, will have restrictions upon resale imposed by state and
federal securities laws:
THE
SECURITIES REPRESENTED BY THIS CERTIFICATE (THE “SECURITIES”) HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”)
OR ANY STATE SECURITIES LAWS AND MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE
DISPOSED OF UNLESS REGISTERED UNDER THE SECURITIES ACT AND UNDER APPLICABLE
STATE SECURITIES LAWS OR THE REGISTRATION OF SUCH SECURITIES UNDER THE
SECURITIES ACT AND UNDER THE PROVISIONS OF APPLICABLE STATE SECURITIES LAWS IS
NOT REQUIRED.
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(f) Non-waiver and
Expenses. No course of dealing or any delay or failure to
exercise any right hereunder on the part of Holder shall operate as a waiver of
such right or otherwise prejudice Holder’s rights, powers or remedies,
notwithstanding the fact that all rights hereunder terminate on the Termination
Date. If the Company willfully and knowingly fails to comply with any
provision of this Warrant, which results in any material damages to the Holder,
the Company shall pay to Holder such amounts as shall be sufficient to cover any
costs and expenses including, but not limited to, reasonable attorneys’ fees,
including those of appellate proceedings, incurred by Holder in collecting any
amounts due pursuant hereto or in otherwise enforcing any of its rights, powers
or remedies hereunder.
(g) Notices. Any
notice, request or other document required or permitted to be given or delivered
to the Holder by the Company shall be delivered in accordance with the notice
provisions of the Purchase Agreement.
(h) Limitation of
Liability. No provision hereof, in the absence of any
affirmative action by ▇▇▇▇▇▇ to exercise this Warrant to purchase Notes, and no
enumeration herein of the rights or privileges of Holder, shall give rise to any
liability of Holder for the Exercise Price of any Notes of the Company, whether
such liability is asserted by the Company or by creditors of the
Company.
(i) Remedies. Holder,
in addition to being entitled to exercise all rights granted by law, including
recovery of damages, will be entitled to specific performance of its rights
under this Warrant. The Company agrees that monetary damages would
not be adequate compensation for any loss incurred by reason of a breach by it
of the provisions of this Warrant and hereby agrees to waive and not to assert
the defense in any action for specific performance that a remedy at law would be
adequate.
(j) Successors and
Assigns. Subject to applicable securities laws, this Warrant
and the rights and obligations evidenced hereby shall inure to the benefit of
and be binding upon the successors of the Company and the successors and
permitted assigns of Holder. The provisions of this Warrant are
intended to be for the benefit of all Holders from time to time of this Warrant
and shall be enforceable by any such Holder or holder of Notes.
(k) Amendment;
Waiver. No provision of this Warrant may be waived or amended
on behalf of all holders of Warrants other than by a written instrument signed
by the Company and the holders holding at least 66 2/3% of the principal amount
of the Notes that may be acquired upon exercise of the then outstanding
Warrants; provided
that if any holder then
holding Warrants is materially adversely affected by such waiver or amendment on
behalf of all holders in a manner that is not similar in all material respects
to the affect on the other holders then holding Warrants, such waiver or
amendment shall not be effective without the written consent of the adversely
affected holder. Notwithstanding the foregoing, nothing provided in
this Section 4(k) shall limit an individual holder’s right to waive or amend any
provision of any Warrant on its own behalf. The Holder acknowledges
that any amendment or waiver effected in accordance with this Section 4(k) shall
be binding upon the Holder (and its permitted assigns) and the Company,
including, without limitation, an amendment or waiver that is not agreed to by
the Holder or that has an adverse effect on any or all Holders.
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(l) Severability. Wherever
possible, each provision of this Warrant shall be interpreted in such manner as
to be effective and valid under applicable law, but if any provision of this
Warrant shall be prohibited by or invalid under applicable law, such provision
shall be ineffective to the extent of such prohibition or invalidity, without
invalidating the remainder of such provisions or the remaining provisions of
this Warrant.
(m) Headings. The
headings used in this Warrant are for the convenience of reference only and
shall not, for any purpose, be deemed a part of this Warrant.
[REMAINDER
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IN
WITNESS WHEREOF, the Company has caused this Warrant to be executed by its
officer thereunto duly authorized as of the date first above
indicated.
GENTA
INCORPORATED
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By:
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Name:
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇., M.D.
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Title: Chief
Executive Officer
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EXHIBIT
A
FORM
OF NOTE
NOTICE
OF EXERCISE
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TO:
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[_______________________]
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1. [ ]
(Check if applicable) The undersigned hereby elects to purchase
________ in principal amount of Senior Unsecured Convertible Promissory Notes
(“Notes”) of
the Company pursuant to the terms of the attached Warrant, and tenders herewith
payment of the exercise price related to such principal amount in full, together
with all applicable transfer taxes, if any, in lawful money of the United
States.
Or
1. [ ]
(Check if applicable) The undersigned hereby elects to purchase
Senior Unsecured Convertible Promissory Notes (“Notes”) of the
Company as a cashless exercise of _________ of the total Exercise Price of this
Warrant.
2. Please
issue a Note in the name of the undersigned or in such other name as is
specified below:
_______________________________
The Notes
shall be delivered by physical delivery to:
_______________________________
_______________________________
_______________________________
3. Accredited
Investor. The undersigned is an “accredited investor” as
defined in Regulation D promulgated under the Securities Act of 1933, as
amended.
[SIGNATURE
OF HOLDER]
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Name of Investing Entity:
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Signature of Authorized Signatory of Investing Entity:
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Name of Authorized Signatory:
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Title of Authorized Signatory:
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Date:
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ASSIGNMENT
FORM
(To
assign the foregoing warrant, execute
this form
and supply required information.
Do not
use this form to exercise the warrant.)
FOR VALUE
RECEIVED, [____] all of or [_______] of the principal amount of the Senior
Unsecured Convertible Promissory Notes issuable upon exercise of the foregoing
Warrant and all rights evidenced thereby are hereby assigned to
_______________________________________________
whose address is
_______________________________________________________________.
_______________________________________________________________
Dated: ______________,
_______
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Holder’s Signature:
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Holder’s Address:
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Signature
Guaranteed: ___________________________________________
NOTE: The
signature to this Assignment Form must correspond with the name as it appears on
the face of the Warrant, without alteration or enlargement or any change
whatsoever, and must be guaranteed by a bank or trust
company. Officers of corporations and those acting in a fiduciary or
other representative capacity should file proper evidence of authority to assign
the foregoing Warrant.