Exhibit 10.4

 

FORM OF WARRANT

 

NEITHER THE ISSUANCE AND SALE OF THE SECURITY REPRESENTED BY THIS WARRANT NOR
THE SECURITIES INTO WHICH THIS WARRANT IS EXERCISABLE HAVE BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. 
THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED (I) IN
THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, AND APPLICABLE STATE SECURITIES LAWS, OR
(B) AN OPINION OF COUNSEL, IN A FORM REASONABLY ACCEPTABLE TO THE COMPANY, THAT
REGISTRATION IS NOT REQUIRED UNDER SAID ACT AND APPLICABLE STATE SECURITIES LAWS
OR (II) UNLESS SOLD PURSUANT TO RULE 144 OR RULE 144A UNDER SAID ACT. 
NOTWITHSTANDING THE FOREGOING, THE SECURITIES MAY BE PLEDGED IN CONNECTION WITH
A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED BY THE
SECURITIES.

 

SUPERGEN, INC.

 

WARRANT TO PURCHASE COMMON STOCK

 

Number of Shares:
Date of Issuance: February 26, 2003 (“Issuance Date”)

 

SuperGen, Inc., a Delaware corporation (the “Company”), hereby certifies that,
for Ten United States Dollars ($10.00) and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
                              , the registered holder hereof or its permitted
assigns, is entitled, subject to the terms set forth below, to purchase from the
Company, at the Exercise Price (as defined below) then in effect, upon surrender
of this Warrant to Purchase Common Stock (including all Warrants to Purchase
Common Stock issued in exchange, transfer or replacement hereof, the “Warrant”),
at any time or times on or after the date hereof, but not after 11:59 P.M., New
York City Time, on the Expiration Date (as defined below),
                              (                    )(1) fully paid nonassessable
shares of Common Stock (as defined below) (the “Warrant Shares”).  Except as
otherwise defined herein, capitalized terms in this Warrant shall have the
meanings set forth in Section 15.  This Warrant is one of the Warrants to
Purchase Common Stock (the “SPA Warrants”) issued pursuant to Section 1 of that
certain Securities Purchase Agreement, dated as of February 26, 2003 (the
“Initial Issuance Date”), among the Company and the purchasers (the
“Purchasers”) referred to therein (the “Securities Purchase Agreement”).

 

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(1)           Number of shares of Common Stock for each $1,000 of principal
amount of Notes purchased on the Closing Date equal to the quotient of (a) $329
divided by (b) $3.50.

 

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1.             EXERCISE OF WARRANT.

 

(A)           MECHANICS OF EXERCISE.  SUBJECT TO THE TERMS AND CONDITIONS HEREOF
(INCLUDING, WITHOUT LIMITATION, THE LIMITATIONS SET FORTH IN SECTION 1(F)), THIS
WARRANT MAY BE EXERCISED BY THE HOLDER HEREOF ON ANY DAY, IN WHOLE OR IN PART,
BY (I) DELIVERY OF A WRITTEN NOTICE, IN THE FORM ATTACHED HERETO AS EXHIBIT A
(THE “EXERCISE NOTICE”), OF SUCH HOLDER’S ELECTION TO EXERCISE THIS WARRANT,
(II) (A) PAYMENT TO THE COMPANY OF AN AMOUNT EQUAL TO THE APPLICABLE EXERCISE
PRICE MULTIPLIED BY THE NUMBER OF WARRANT SHARES AS TO WHICH THIS WARRANT IS
BEING EXERCISED (THE “AGGREGATE EXERCISE PRICE”) IN CASH BY WIRE TRANSFER OF
IMMEDIATELY AVAILABLE FUNDS, (B) CASHIER’S CHECK DRAWN ON A UNITED STATES BANK
OR (C) BY NOTIFYING THE COMPANY THAT THIS WARRANT IS BEING EXERCISED PURSUANT TO
A CASHLESS EXERCISE (AS DEFINED IN SECTION 1(D)) AND (III) THE SURRENDER TO A
COMMON CARRIER FOR OVERNIGHT DELIVERY TO THE COMPANY, OR AS SOON AS PRACTICABLE
FOLLOWING THE DATE THE HOLDER OF THIS WARRANT DELIVERS THE EXERCISE NOTICE TO
THE COMPANY, OF THIS WARRANT (OR AN INDEMNIFICATION UNDERTAKING WITH RESPECT TO
THIS WARRANT IN THE CASE OF ITS LOSS, THEFT OR DESTRUCTION).  ON OR BEFORE THE
THIRD BUSINESS DAY FOLLOWING THE DATE ON WHICH THE COMPANY HAS RECEIVED EACH OF
THE EXERCISE NOTICE, THE AGGREGATE EXERCISE PRICE (OR NOTICE OF A CASHLESS
EXERCISE) AND THIS WARRANT (OR AN INDEMNIFICATION UNDERTAKING WITH RESPECT TO
THIS WARRANT IN THE CASE OF ITS LOSS, THEFT OR DESTRUCTION) (THE “EXERCISE
DELIVERY DOCUMENTS”), THE COMPANY SHALL (X) ISSUE AND DELIVER TO THE ADDRESS AS
SPECIFIED IN THE EXERCISE NOTICE, A CERTIFICATE, REGISTERED IN THE NAME OF THE
HOLDER OF THIS WARRANT OR ITS DESIGNEE, FOR THE NUMBER OF SHARES OF COMMON STOCK
TO WHICH THE HOLDER OF THIS WARRANT IS ENTITLED PURSUANT TO SUCH EXERCISE, OR
(Y) PROVIDED THAT THE COMPANY’S TRANSFER AGENT (THE “TRANSFER AGENT”) IS
PARTICIPATING IN THE DEPOSITORY TRUST COMPANY (“DTC”) FAST AUTOMATED SECURITIES
TRANSFER PROGRAM, UPON THE REQUEST OF THE HOLDER, CREDIT SUCH AGGREGATE NUMBER
OF SHARES OF COMMON STOCK TO WHICH THE HOLDER OF THIS WARRANT IS ENTITLED
PURSUANT TO SUCH EXERCISE TO THE HOLDER’S OR ITS DESIGNEE’S BALANCE ACCOUNT WITH
DTC THROUGH ITS DEPOSIT WITHDRAWAL AGENT COMMISSION SYSTEM.  UPON DELIVERY OF
THE EXERCISE NOTICE, THIS WARRANT AND THE AGGREGATE EXERCISE PRICE REFERRED TO
IN CLAUSE (II)(A) ABOVE OR NOTIFICATION TO THE COMPANY OF A CASHLESS EXERCISE
REFERRED TO IN SECTION 1(D), THE HOLDER OF THIS WARRANT SHALL BE DEEMED FOR ALL
CORPORATE PURPOSES TO HAVE BECOME THE HOLDER OF RECORD OF THE WARRANT SHARES
WITH RESPECT TO WHICH THIS WARRANT HAS BEEN EXERCISED, IRRESPECTIVE OF THE DATE
OF DELIVERY OF THIS WARRANT AS REQUIRED BY CLAUSE (III) ABOVE OR THE
CERTIFICATES EVIDENCING SUCH WARRANT SHARES.  IF THE NUMBER OF WARRANT SHARES
REPRESENTED BY THIS WARRANT SUBMITTED FOR EXERCISE PURSUANT TO THIS SECTION 1(A)
IS GREATER THAN THE NUMBER OF WARRANT SHARES BEING ACQUIRED UPON AN EXERCISE,
THEN THE COMPANY SHALL AS SOON AS PRACTICABLE AND IN NO EVENT LATER THAN FIVE
BUSINESS DAYS AFTER ANY EXERCISE AND AT ITS OWN EXPENSE, ISSUE A NEW WARRANT (IN
ACCORDANCE WITH SECTION 7(D)) REPRESENTING THE RIGHT TO PURCHASE THE NUMBER OF
WARRANT SHARES PURCHASABLE IMMEDIATELY PRIOR TO SUCH EXERCISE UNDER THIS
WARRANT, LESS THE NUMBER OF WARRANT SHARES WITH RESPECT TO WHICH THIS WARRANT IS
EXERCISED.  NO FRACTIONAL SHARES OF COMMON STOCK ARE TO BE ISSUED UPON THE
EXERCISE OF THIS WARRANT, BUT RATHER THE NUMBER OF SHARES OF COMMON STOCK TO BE
ISSUED SHALL BE ROUNDED UP TO THE NEAREST WHOLE NUMBER.  THE COMPANY SHALL PAY
ANY AND ALL TAXES, INCLUDING WITHOUT LIMITATION, ALL DOCUMENTARY STAMP, TRANSFER
OR SIMILAR TAXES, OR OTHER INCIDENTAL EXPENSE THAT MAY BE PAYABLE WITH RESPECT
TO THE ISSUANCE AND DELIVERY OF WARRANT SHARES UPON EXERCISE OF THIS WARRANT.

 

(B)           EXERCISE PRICE.  FOR PURPOSES OF THIS WARRANT, “EXERCISE PRICE”
MEANS $5.00 SUBJECT TO ADJUSTMENT AS PROVIDED HEREIN.

 

(C)           COMPANY’S FAILURE TO TIMELY DELIVER SECURITIES.  SUBJECT TO
SECTION 1(F), IF THE COMPANY SHALL FAIL FOR ANY REASON OR FOR NO REASON TO ISSUE
TO THE HOLDER WITHIN THREE

 

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BUSINESS DAYS OF RECEIPT OF THE EXERCISE DELIVERY DOCUMENTS, A CERTIFICATE FOR
THE NUMBER OF SHARES OF COMMON STOCK TO WHICH THE HOLDER IS ENTITLED OR TO
CREDIT THE HOLDER’S BALANCE ACCOUNT WITH DTC FOR SUCH NUMBER OF SHARES OF COMMON
STOCK TO WHICH THE HOLDER IS ENTITLED UPON THE HOLDER’S EXERCISE OF THIS
WARRANT, THE COMPANY SHALL PAY AS ADDITIONAL DAMAGES IN CASH TO SUCH HOLDER ON
EACH DAY AFTER SUCH THIRD BUSINESS DAY THAT THE ISSUANCE OF SUCH COMMON STOCK IS
NOT TIMELY EFFECTED AN AMOUNT EQUAL TO 1.0% OF THE PRODUCT OF (A) THE SUM OF THE
NUMBER OF SHARES OF COMMON STOCK NOT ISSUED TO THE HOLDER ON A TIMELY BASIS AND
TO WHICH THE HOLDER IS ENTITLED AND (B) THE CLOSING SALE PRICE OF THE COMMON
STOCK ON THE TRADING DAY IMMEDIATELY PRECEDING THE LAST POSSIBLE DATE WHICH THE
COMPANY COULD HAVE ISSUED SUCH COMMON STOCK TO THE HOLDER WITHOUT VIOLATING
SECTION 1(A).

 

(D)           CASHLESS EXERCISE.  NOTWITHSTANDING ANYTHING CONTAINED HEREIN TO
THE CONTRARY, THE HOLDER OF THIS WARRANT MAY, IN ITS SOLE DISCRETION, EXERCISE
THIS WARRANT IN WHOLE OR IN PART AND, IN LIEU OF MAKING THE CASH PAYMENT
OTHERWISE CONTEMPLATED TO BE MADE TO THE COMPANY UPON SUCH EXERCISE IN PAYMENT
OF THE AGGREGATE EXERCISE PRICE, ELECT INSTEAD TO RECEIVE UPON SUCH EXERCISE THE
“NET NUMBER” OF SHARES OF COMMON STOCK DETERMINED ACCORDING TO THE FOLLOWING
FORMULA (A “CASHLESS EXERCISE”):

 

Net Number =

(A x B) - (A x C)

 

 

 

B

 

 

 

For purposes of the foregoing formula:

 

A= the total number of shares with respect to which this Warrant is then being
exercised.

 

B= the Closing Sale Price of the Common Stock (as reported by Bloomberg) on the
date immediately preceding the date of the Exercise Notice.

 

C= the Exercise Price then in effect for the applicable Warrant Shares at the
time of such exercise.

 

(E)           DISPUTES.  IN THE CASE OF A DISPUTE AS TO THE DETERMINATION OF THE
EXERCISE PRICE OR THE ARITHMETIC CALCULATION OF THE WARRANT SHARES, THE COMPANY
SHALL PROMPTLY ISSUE TO THE HOLDER THE NUMBER OF WARRANT SHARES THAT ARE NOT
DISPUTED AND RESOLVE SUCH DISPUTE IN ACCORDANCE WITH SECTION 12.

 

(F)            LIMITATIONS ON EXERCISES.

 

(I)            BENEFICIAL OWNERSHIP.  THE COMPANY SHALL NOT EFFECT THE EXERCISE
OF THIS WARRANT, AND NO PERSON (AS DEFINED BELOW) WHO IS A HOLDER OF THIS
WARRANT SHALL HAVE THE RIGHT TO EXERCISE THIS WARRANT, TO THE EXTENT THAT AFTER
GIVING EFFECT TO SUCH EXERCISE, SUCH PERSON (TOGETHER WITH SUCH PERSON’S
AFFILIATES) WOULD BENEFICIALLY OWN IN EXCESS OF 4.99% OF THE SHARES OF THE
COMMON STOCK OUTSTANDING IMMEDIATELY AFTER GIVING EFFECT TO SUCH EXERCISE.  FOR
PURPOSES OF THE FOREGOING SENTENCE, THE AGGREGATE NUMBER OF SHARES OF COMMON
STOCK BENEFICIALLY OWNED BY SUCH PERSON AND ITS AFFILIATES SHALL INCLUDE THE

 

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NUMBER OF SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE OF THIS WARRANT WITH
RESPECT TO WHICH THE DETERMINATION OF SUCH SENTENCE IS BEING MADE, BUT SHALL
EXCLUDE SHARES OF COMMON STOCK WHICH WOULD BE ISSUABLE UPON (I) EXERCISE OF THE
REMAINING, UNEXERCISED PORTION OF THIS WARRANT BENEFICIALLY OWNED BY SUCH PERSON
AND ITS AFFILIATES AND (II) EXERCISE OR CONVERSION OF THE UNEXERCISED OR
UNCONVERTED PORTION OF ANY OTHER SECURITIES OF THE COMPANY BENEFICIALLY OWNED BY
SUCH PERSON AND ITS AFFILIATES (INCLUDING, WITHOUT LIMITATION, ANY DEBENTURES,
CONVERTIBLE NOTES OR CONVERTIBLE PREFERRED STOCK OR WARRANTS) SUBJECT TO A
LIMITATION ON CONVERSION OR EXERCISE ANALOGOUS TO THE LIMITATION CONTAINED
HEREIN.  EXCEPT AS SET FORTH IN THE PRECEDING SENTENCE, FOR PURPOSES OF THIS
PARAGRAPH, BENEFICIAL OWNERSHIP SHALL BE CALCULATED IN ACCORDANCE WITH SECTION
13(D) OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.  FOR PURPOSES OF THIS
WARRANT, IN DETERMINING THE NUMBER OF OUTSTANDING SHARES OF COMMON STOCK, A
HOLDER MAY RELY ON THE NUMBER OF OUTSTANDING SHARES OF COMMON STOCK AS REFLECTED
IN (1) THE COMPANY’S MOST RECENT FORM 10-Q, FORM 10-K OR OTHER PUBLIC FILING
WITH THE SECURITIES AND EXCHANGE COMMISSION, AS THE CASE MAY BE, (2) A MORE
RECENT PUBLIC ANNOUNCEMENT BY THE COMPANY OR (3) ANY OTHER NOTICE BY THE COMPANY
OR ITS TRANSFER AGENT SETTING FORTH THE NUMBER OF SHARES OF COMMON STOCK
OUTSTANDING.  FOR ANY REASON AT ANY TIME, UPON THE WRITTEN OR ORAL REQUEST OF
THE HOLDER OF THIS WARRANT, THE COMPANY SHALL WITHIN TWO BUSINESS DAYS CONFIRM
ORALLY AND IN WRITING TO THE HOLDER OF THIS WARRANT THE NUMBER OF SHARES OF
COMMON STOCK THEN OUTSTANDING.  IN ANY CASE, THE NUMBER OF OUTSTANDING SHARES OF
COMMON STOCK SHALL BE DETERMINED AFTER GIVING EFFECT TO THE CONVERSION OR
EXERCISE OF SECURITIES OF THE COMPANY, INCLUDING THE SPA SECURITIES AND THE SPA
WARRANTS, BY THE HOLDER OF THIS WARRANT AND ITS AFFILIATES SINCE THE DATE AS OF
WHICH SUCH NUMBER OF OUTSTANDING SHARES OF COMMON STOCK WAS REPORTED.

 

(II)           PRINCIPAL MARKET REGULATION.  THE COMPANY SHALL NOT BE OBLIGATED
TO ISSUE ANY SHARES OF COMMON STOCK UPON EXERCISE OF THIS WARRANT IF THE
ISSUANCE OF SUCH SHARES OF COMMON STOCK WOULD EXCEED THAT NUMBER OF SHARES OF
COMMON STOCK WHICH THE COMPANY MAY ISSUE UPON EXERCISE OF THIS WARRANT
(INCLUDING, AS APPLICABLE, ANY SHARES OF COMMON STOCK ISSUED UPON CONVERSION OF
OR AS PAYMENT OF ANY INTEREST UNDER THE SPA SECURITIES) WITHOUT BREACHING THE
COMPANY’S OBLIGATIONS UNDER THE RULES OR REGULATIONS OF THE PRINCIPAL MARKET
(THE “EXCHANGE CAP”), EXCEPT THAT SUCH LIMITATION SHALL NOT APPLY IN THE EVENT
THAT THE COMPANY (A) OBTAINS THE APPROVAL OF ITS STOCKHOLDERS AS REQUIRED BY THE
APPLICABLE RULES OF THE PRINCIPAL MARKET FOR ISSUANCES OF COMMON STOCK IN EXCESS
OF SUCH AMOUNT OR (B) OBTAINS A WRITTEN OPINION FROM OUTSIDE COUNSEL TO THE
COMPANY THAT SUCH APPROVAL IS NOT REQUIRED, WHICH OPINION SHALL BE REASONABLY
SATISFACTORY TO THE HOLDERS OF THE SPA WARRANTS REPRESENTING AT LEAST A MAJORITY
OF THE SHARES OF COMMON STOCK UNDERLYING THE SPA WARRANTS THEN OUTSTANDING. 
UNTIL SUCH APPROVAL OR WRITTEN OPINION IS OBTAINED, NO HOLDER SHALL BE ISSUED,
UPON EXERCISE OF ANY SPA WARRANTS, SHARES OF COMMON STOCK IN AN AMOUNT GREATER
THAN THE PRODUCT OF THE EXCHANGE CAP MULTIPLIED BY A FRACTION, THE NUMERATOR OF
WHICH IS THE TOTAL NUMBER OF SHARES OF COMMON STOCK UNDERLYING THE SPA WARRANTS
ISSUED TO SUCH PURCHASER PURSUANT TO THE SECURITIES PURCHASE AGREEMENT ON THE
INITIAL ISSUANCE DATE AND THE DENOMINATOR OF WHICH IS THE AGGREGATE NUMBER OF
SHARES OF COMMON STOCK UNDERLYING ALL THE SPA WARRANTS ISSUED TO THE PURCHASERS
PURSUANT TO THE SECURITIES PURCHASE AGREEMENT ON THE INITIAL ISSUANCE DATE (WITH
RESPECT TO EACH PURCHASER, THE “EXCHANGE CAP ALLOCATION”).  IN THE EVENT THAT
ANY PURCHASER SHALL SELL OR OTHERWISE TRANSFER ANY OF SUCH PURCHASER’S SPA
WARRANTS, THE

 

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TRANSFEREE SHALL BE ALLOCATED A PRO RATA PORTION OF SUCH PURCHASER’S EXCHANGE
CAP ALLOCATION, AND THE RESTRICTIONS OF THE PRIOR SENTENCE SHALL APPLY TO SUCH
TRANSFEREE WITH RESPECT TO THE PORTION OF THE EXCHANGE CAP ALLOCATION ALLOCATED
TO SUCH TRANSFEREE.  IN THE EVENT THAT ANY HOLDER OF SPA WARRANTS SHALL EXERCISE
ALL OF SUCH HOLDER’S SPA WARRANTS INTO A NUMBER OF SHARES OF COMMON STOCK WHICH,
IN THE AGGREGATE, IS LESS THAN SUCH HOLDER’S EXCHANGE CAP ALLOCATION, THEN THE
DIFFERENCE BETWEEN SUCH HOLDER’S EXCHANGE CAP ALLOCATION AND THE NUMBER OF
SHARES OF COMMON STOCK ACTUALLY ISSUED TO SUCH HOLDER SHALL BE ALLOCATED TO THE
RESPECTIVE EXCHANGE CAP ALLOCATIONS OF THE REMAINING HOLDERS OF SPA WARRANTS ON
A PRO RATA BASIS IN PROPORTION TO THE SHARES OF COMMON STOCK UNDERLYING THE SPA
WARRANTS THEN HELD BY EACH SUCH HOLDER.  IN THE EVENT THAT THE COMPANY IS
PROHIBITED FROM ISSUING ANY WARRANT SHARES FOR WHICH AN EXERCISE NOTICE HAS BEEN
RECEIVED AS A RESULT OF THE OPERATION OF THIS SECTION 1(F)(II), THE COMPANY
SHALL PAY CASH IN EXCHANGE FOR CANCELLATION OF SUCH WARRANT SHARES, AT A PRICE
PER WARRANT SHARE EQUAL TO THE DIFFERENCE BETWEEN THE CLOSING SALE PRICE AND THE
EXERCISE PRICE AS OF THE DATE OF THE ATTEMPTED EXERCISE.

 

2.             ADJUSTMENT OF EXERCISE PRICE AND NUMBER OF WARRANT SHARES.  THE
EXERCISE PRICE AND THE NUMBER OF WARRANT SHARES SHALL BE ADJUSTED FROM TIME TO
TIME AS FOLLOWS:

 

(A)           ADJUSTMENT UPON SUBDIVISION OR COMBINATION OF COMMON STOCK.  IF
THE COMPANY AT ANY TIME AFTER THE DATE OF ISSUANCE OF THIS WARRANT SUBDIVIDES
(BY ANY STOCK SPLIT, STOCK DIVIDEND, RECAPITALIZATION OR OTHERWISE) ONE OR MORE
CLASSES OF ITS OUTSTANDING SHARES OF COMMON STOCK INTO A GREATER NUMBER OF
SHARES, THE EXERCISE PRICE IN EFFECT IMMEDIATELY PRIOR TO SUCH SUBDIVISION WILL
BE PROPORTIONATELY REDUCED AND THE NUMBER OF WARRANT SHARES WILL BE
PROPORTIONATELY INCREASED.  IF THE COMPANY AT ANY TIME AFTER THE DATE OF
ISSUANCE OF THIS WARRANT COMBINES (BY COMBINATION, REVERSE STOCK SPLIT OR
OTHERWISE) ONE OR MORE CLASSES OF ITS OUTSTANDING SHARES OF COMMON STOCK INTO A
SMALLER NUMBER OF SHARES, THE EXERCISE PRICE IN EFFECT IMMEDIATELY PRIOR TO SUCH
COMBINATION WILL BE PROPORTIONATELY INCREASED AND THE NUMBER OF WARRANT SHARES
WILL BE PROPORTIONATELY DECREASED.  ANY ADJUSTMENT UNDER THIS SECTION 2(A) SHALL
BECOME EFFECTIVE AT THE CLOSE OF BUSINESS ON THE DATE THE SUBDIVISION OR
COMBINATION BECOMES EFFECTIVE.

 

(B)           OTHER CONSIDERATIONS.  ALL CALCULATIONS UNDER THIS SECTION 2 SHALL
BE MADE BY THE COMPANY IN GOOD FAITH.

 

3.             RIGHTS UPON DISTRIBUTION OF ASSETS.  IF THE COMPANY SHALL DECLARE
OR MAKE ANY DIVIDEND OR OTHER DISTRIBUTION OF ITS ASSETS (OR RIGHTS TO ACQUIRE
ITS ASSETS) TO HOLDERS OF COMMON STOCK, BY WAY OF RETURN OF CAPITAL OR OTHERWISE
(INCLUDING, WITHOUT LIMITATION, ANY DISTRIBUTION OF CASH, STOCK OR OTHER
SECURITIES, PROPERTY OR OPTIONS BY WAY OF A DIVIDEND, SPIN OFF,
RECLASSIFICATION, CORPORATE REARRANGEMENT OR OTHER SIMILAR TRANSACTION) (A
“DISTRIBUTION”), AT ANY TIME AFTER THE ISSUANCE OF THIS WARRANT, THEN, IN EACH
SUCH CASE:

 

(A)           ANY EXERCISE PRICE IN EFFECT IMMEDIATELY PRIOR TO THE CLOSE OF
BUSINESS ON THE RECORD DATE FIXED FOR THE DETERMINATION OF HOLDERS OF COMMON
STOCK ENTITLED TO RECEIVE THE DISTRIBUTION SHALL BE REDUCED, EFFECTIVE AS OF THE
CLOSE OF BUSINESS ON SUCH RECORD DATE, TO A PRICE DETERMINED BY MULTIPLYING SUCH
EXERCISE PRICE BY A FRACTION OF WHICH (I) THE NUMERATOR SHALL BE

 

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THE CLOSING BID PRICE OF THE COMMON STOCK ON THE TRADING DAY IMMEDIATELY
PRECEDING SUCH RECORD DATE MINUS THE VALUE OF THE DISTRIBUTION (AS DETERMINED IN
GOOD FAITH BY THE COMPANY’S BOARD OF DIRECTORS) APPLICABLE TO ONE SHARE OF
COMMON STOCK, AND (II) THE DENOMINATOR SHALL BE THE CLOSING BID PRICE OF THE
COMMON STOCK ON THE TRADING DAY IMMEDIATELY PRECEDING SUCH RECORD DATE; AND

 

(B)           THE NUMBER OF WARRANT SHARES SHALL BE INCREASED TO A NUMBER OF
SHARES EQUAL TO THE NUMBER OF SHARES OF COMMON STOCK OBTAINABLE IMMEDIATELY
PRIOR TO THE CLOSE OF BUSINESS ON THE RECORD DATE FIXED FOR THE DETERMINATION OF
HOLDERS OF COMMON STOCK ENTITLED TO RECEIVE THE DISTRIBUTION MULTIPLIED BY THE
RECIPROCAL OF THE FRACTION SET FORTH IN THE IMMEDIATELY PRECEDING PARAGRAPH (A);
PROVIDED THAT IN THE EVENT THAT THE DISTRIBUTION IS OF COMMON STOCK (“OTHER
COMMON STOCK”) OF A COMPANY WHOSE COMMON STOCK IS TRADED ON A NATIONAL
SECURITIES EXCHANGE OR A NATIONAL AUTOMATED QUOTATION SYSTEM, THEN THE HOLDER OF
THIS WARRANT MAY ELECT TO RECEIVE A WARRANT TO PURCHASE OTHER COMMON STOCK IN
LIEU OF AN INCREASE IN THE NUMBER OF WARRANT SHARES, THE TERMS OF WHICH SHALL BE
IDENTICAL TO THOSE OF THIS WARRANT, EXCEPT THAT SUCH WARRANT SHALL BE
EXERCISABLE INTO THE NUMBER OF SHARES OF OTHER COMMON STOCK THAT WOULD HAVE BEEN
PAYABLE TO THE HOLDER OF THIS WARRANT PURSUANT TO THE DISTRIBUTION HAD THE
HOLDER EXERCISED THIS WARRANT IMMEDIATELY PRIOR TO SUCH RECORD DATE AND WITH AN
AGGREGATE EXERCISE PRICE EQUAL TO THE PRODUCT OF THE AMOUNT BY WHICH THE
EXERCISE PRICE OF THIS WARRANT WAS DECREASED WITH RESPECT TO THE DISTRIBUTION
PURSUANT TO THE TERMS OF THE IMMEDIATELY PRECEDING PARAGRAPH (A) AND THE NUMBER
OF WARRANT SHARES CALCULATED IN ACCORDANCE WITH THE FIRST PART OF THIS PARAGRAPH
(B).

 

4.             PURCHASE RIGHTS; ORGANIC CHANGE.

 

(A)           PURCHASE RIGHTS.  IF AT ANY TIME THE COMPANY GRANTS, ISSUES OR
SELLS ANY OPTIONS, CONVERTIBLE SECURITIES OR RIGHTS TO PURCHASE STOCK, WARRANTS,
SECURITIES OR OTHER PROPERTY PRO RATA TO THE RECORD HOLDERS OF ANY CLASS OF
COMMON STOCK (THE “PURCHASE RIGHTS”), THEN THE HOLDER OF THIS WARRANT WILL BE
ENTITLED TO ACQUIRE, UPON THE TERMS APPLICABLE TO SUCH PURCHASE RIGHTS, THE
AGGREGATE PURCHASE RIGHTS WHICH SUCH HOLDER COULD HAVE ACQUIRED IF SUCH HOLDER
HAD HELD THE NUMBER OF SHARES OF COMMON STOCK ACQUIRABLE UPON COMPLETE EXERCISE
OF THIS WARRANT (WITHOUT REGARD TO ANY LIMITATIONS ON THE EXERCISE OF THIS
WARRANT) IMMEDIATELY BEFORE THE DATE ON WHICH A RECORD IS TAKEN FOR THE GRANT,
ISSUANCE OR SALE OF SUCH PURCHASE RIGHTS, OR, IF NO SUCH RECORD IS TAKEN, THE
DATE AS OF WHICH THE RECORD HOLDERS OF COMMON STOCK ARE TO BE DETERMINED FOR THE
GRANT, ISSUE OR SALE OF SUCH PURCHASE RIGHTS.

 

(B)           ORGANIC CHANGE.  ANY RECAPITALIZATION, REORGANIZATION,
RECLASSIFICATION, CONSOLIDATION, MERGER, SALE OF ALL OR SUBSTANTIALLY ALL OF THE
COMPANY’S ASSETS TO ANOTHER PERSON OR OTHER TRANSACTION, IN EACH CASE WHICH IS
EFFECTED IN SUCH A WAY THAT HOLDERS OF COMMON STOCK ARE ENTITLED TO RECEIVE
SECURITIES OR ASSETS WITH RESPECT TO OR IN EXCHANGE FOR COMMON STOCK IS REFERRED
TO HEREIN AS AN “ORGANIC CHANGE.”  SUBJECT TO SECTION 4(C) OF THE SECURITIES
PURCHASE AGREEMENT, PRIOR TO THE CONSUMMATION OF ANY (I) SALE OF ALL OR
SUBSTANTIALLY ALL OF THE COMPANY’S ASSETS TO AN ACQUIRING PERSON OR (II) OTHER
ORGANIC CHANGE FOLLOWING WHICH THE COMPANY IS NOT A SURVIVING ENTITY, THE
COMPANY WILL SECURE FROM THE PERSON PURCHASING SUCH ASSETS OR THE PERSON ISSUING
THE SECURITIES OR PROVIDING THE ASSETS IN SUCH ORGANIC CHANGE (IN EACH CASE, THE
“ACQUIRING ENTITY”) A REASONABLY SATISFACTORY WRITTEN AGREEMENT TO DELIVER TO
THE HOLDER OF THIS WARRANT IN EXCHANGE FOR THIS WARRANT, (A) A SECURITY OF THE
ACQUIRING ENTITY EVIDENCED BY A WRITTEN INSTRUMENT SUBSTANTIALLY SIMILAR IN FORM
AND SUBSTANCE TO THIS WARRANT (INCLUDING AN

 

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adjusted exercise price equal to the value for the Common Stock reflected by the
terms of such consolidation, merger or sale, and exercisable for a corresponding
number of shares of Common Stock acquirable and receivable upon exercise of this
Warrant (without regard to any limitations on the exercise of this Warrant), if
the value so reflected is less than the Exercise Price in effect immediately
prior to such consolidation, merger or sale) and (B) if the Acquiring Entity
does not have its common stock listed and traded on the Principal Market or The
New York Stock Exchange, Inc., if so requested by the holder of this Warrant by
notice delivered on or before the 90th day after the consummation of such
Organic Change, cash payable within five Business Days after such request (or,
if later, on the effective date of such Organic Change) equal to the value of
the remaining unexercised portion of this Warrant as determined in accordance
with the Black-Sholes option pricing formula which payment, to the extent
permitted by applicable law, shall have priority to payments by the Company or
the Acquiring Entity, as applicable, to the stockholders of the Company in
connection with such Organic Change.  Prior to the consummation of any other
Organic Change, the Company shall make appropriate provision (in form and
substance reasonably satisfactory to the holders of SPA Warrants representing at
least a majority of the shares of Common Stock obtainable upon exercise of the
SPA Warrants then outstanding) to insure that the holder of this Warrant
thereafter will have the right to acquire and receive in lieu of or in addition
to (as the case may be) the shares of Common Stock immediately theretofore
acquirable and receivable upon the exercise of this Warrant (without regard to
any limitations on the exercise of this Warrant), such shares of stock,
securities or assets that would have been issued or payable in such Organic
Change with respect to or in exchange for the number of shares of Common Stock
which would have been acquirable and receivable upon the exercise of this
Warrant as of the date of such Organic Change (without regard to any limitations
on the exercise of this Warrant).

 

5.             NONCIRCUMVENTION.  THE COMPANY HEREBY COVENANTS AND AGREES THAT
THE COMPANY WILL NOT, BY AMENDMENT OF 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, AND WILL AT ALL TIMES IN GOOD FAITH CARRY OUT ALL THE PROVISIONS OF
THIS WARRANT AND TAKE ALL ACTION AS MAY BE REQUIRED TO PROTECT THE RIGHTS OF THE
HOLDER OF THIS WARRANT.  WITHOUT LIMITING THE GENERALITY OF THE FOREGOING, THE
COMPANY (I) WILL NOT INCREASE THE PAR VALUE OF ANY SHARES OF COMMON STOCK
RECEIVABLE UPON THE EXERCISE OF THIS WARRANT ABOVE THE EXERCISE PRICE THEN IN
EFFECT, (II) WILL TAKE ALL SUCH ACTIONS AS MAY BE NECESSARY OR APPROPRIATE IN
ORDER THAT THE COMPANY MAY VALIDLY AND LEGALLY ISSUE FULLY PAID AND
NONASSESSABLE SHARES OF COMMON STOCK UPON THE EXERCISE OF THIS WARRANT, AND
(III) WILL, SO LONG AS ANY OF THE SPA WARRANTS ARE OUTSTANDING, TAKE ALL ACTION
NECESSARY TO RESERVE AND KEEP AVAILABLE OUT OF ITS AUTHORIZED AND UNISSUED
COMMON STOCK, SOLELY FOR THE PURPOSE OF EFFECTING THE EXERCISE OF THE SPA
WARRANTS, 100% OF THE NUMBER OF SHARES OF COMMON STOCK AS SHALL FROM TIME TO
TIME BE NECESSARY TO EFFECT THE EXERCISE OF THE SPA WARRANTS THEN OUTSTANDING
(WITHOUT REGARD TO ANY LIMITATIONS ON EXERCISE).

 

6.             WARRANT HOLDER NOT DEEMED A STOCKHOLDER.  EXCEPT AS OTHERWISE
SPECIFICALLY PROVIDED HEREIN, NO HOLDER, SOLELY IN SUCH PERSON’S CAPACITY AS A
HOLDER OF THIS WARRANT, SHALL BE ENTITLED TO VOTE OR RECEIVE DIVIDENDS OR BE
DEEMED THE HOLDER OF SHARES OF THE COMPANY FOR ANY PURPOSE, NOR SHALL ANYTHING
CONTAINED IN THIS WARRANT BE CONSTRUED TO CONFER UPON THE HOLDER HEREOF, SOLELY
IN SUCH PERSON’S CAPACITY AS A HOLDER OF THIS WARRANT, ANY OF

 

7

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THE RIGHTS OF A SHAREHOLDER OF THE COMPANY OR ANY RIGHT TO VOTE, GIVE OR
WITHHOLD CONSENT TO ANY CORPORATE ACTION (WHETHER ANY REORGANIZATION, ISSUE OF
STOCK, RECLASSIFICATION OF STOCK, CONSOLIDATION, MERGER, CONVEYANCE OR
OTHERWISE), RECEIVE NOTICE OF MEETINGS, RECEIVE DIVIDENDS OR SUBSCRIPTION
RIGHTS, OR OTHERWISE, PRIOR TO THE ISSUANCE TO THE HOLDER OF THIS WARRANT OF THE
WARRANT SHARES WHICH SUCH PERSON IS THEN ENTITLED TO RECEIVE UPON THE DUE
EXERCISE OF THIS WARRANT.  IN ADDITION, NOTHING CONTAINED IN THIS WARRANT SHALL
BE CONSTRUED AS IMPOSING ANY LIABILITIES ON SUCH HOLDER TO PURCHASE ANY
SECURITIES (UPON EXERCISE OF THIS WARRANT OR OTHERWISE) OR AS A STOCKHOLDER OF
THE COMPANY, WHETHER SUCH LIABILITIES ARE ASSERTED BY THE COMPANY OR BY
CREDITORS OF THE COMPANY.  NOTWITHSTANDING THIS SECTION 6, THE COMPANY WILL
PROVIDE THE HOLDER OF THIS WARRANT WITH COPIES OF THE SAME NOTICES AND OTHER
INFORMATION GIVEN TO THE STOCKHOLDERS OF THE COMPANY GENERALLY,
CONTEMPORANEOUSLY WITH THE GIVING THEREOF TO THE STOCKHOLDERS.

 

7.             REISSUANCE OF WARRANTS.

 

(A)           TRANSFER OF WARRANT.  IF THIS WARRANT IS TO BE TRANSFERRED, THE
HOLDER SHALL SURRENDER THIS WARRANT TO THE COMPANY, WHEREUPON THE COMPANY WILL
FORTHWITH ISSUE AND DELIVER UPON THE ORDER OF THE HOLDER OF THIS WARRANT A NEW
WARRANT (IN ACCORDANCE WITH SECTION 7(D)), REGISTERED AS THE HOLDER OF THIS
WARRANT MAY REQUEST, REPRESENTING THE RIGHT TO PURCHASE THE NUMBER OF WARRANT
SHARES BEING TRANSFERRED BY THE HOLDER AND, IF LESS THEN THE TOTAL NUMBER OF
WARRANT SHARES THEN UNDERLYING THIS WARRANT IS BEING TRANSFERRED, A NEW WARRANT
(IN ACCORDANCE WITH SECTION 7(D)) TO THE HOLDER OF THIS WARRANT REPRESENTING THE
RIGHT TO PURCHASE THE NUMBER OF WARRANT SHARES NOT BEING TRANSFERRED.

 

(B)           LOST, STOLEN OR MUTILATED WARRANT.  UPON RECEIPT BY THE COMPANY OF
EVIDENCE REASONABLY SATISFACTORY TO THE COMPANY OF THE LOSS, THEFT, DESTRUCTION
OR MUTILATION OF THIS WARRANT, AND, IN THE CASE OF LOSS, THEFT OR DESTRUCTION,
OF ANY INDEMNIFICATION UNDERTAKING BY THE HOLDER OF THIS WARRANT TO THE COMPANY
IN CUSTOMARY FORM AND, IN THE CASE OF MUTILATION, UPON SURRENDER AND
CANCELLATION OF THIS WARRANT, THE COMPANY SHALL EXECUTE AND DELIVER TO THE
HOLDER A NEW WARRANT (IN ACCORDANCE WITH SECTION 7(D)) REPRESENTING THE RIGHT TO
PURCHASE THE WARRANT SHARES THEN UNDERLYING THIS WARRANT.

 

(C)           WARRANT EXCHANGEABLE FOR MULTIPLE WARRANTS.  THIS WARRANT IS
EXCHANGEABLE, UPON THE SURRENDER HEREOF BY THE HOLDER OF THIS WARRANT AT THE
PRINCIPAL OFFICE OF THE COMPANY, FOR A NEW WARRANT OR WARRANTS (IN ACCORDANCE
WITH SECTION 7(D)) REPRESENTING IN THE AGGREGATE THE RIGHT TO PURCHASE THE
NUMBER OF WARRANT SHARES THEN UNDERLYING THIS WARRANT, AND EACH SUCH NEW WARRANT
WILL REPRESENT THE RIGHT TO PURCHASE SUCH PORTION OF SUCH WARRANT SHARES AS IS
DESIGNATED BY THE HOLDER OF THIS WARRANT AT THE TIME OF SUCH SURRENDER;
PROVIDED, HOWEVER, THAT NO WARRANTS FOR FRACTIONAL SHARES OF COMMON STOCK SHALL
BE GIVEN.

 

(D)           ISSUANCE OF NEW WARRANTS.  WHENEVER THE COMPANY IS REQUIRED TO
ISSUE A NEW WARRANT PURSUANT TO THE TERMS OF THIS WARRANT, SUCH NEW WARRANT (I)
SHALL BE OF LIKE TENOR WITH THIS WARRANT, (II) SHALL REPRESENT, AS INDICATED ON
THE FACE OF SUCH NEW WARRANT, THE RIGHT TO PURCHASE THE WARRANT SHARES THEN
UNDERLYING THIS WARRANT (OR IN THE CASE OF A NEW WARRANT BEING ISSUED PURSUANT
TO SECTION 7(A) OR SECTION 7(C), THE WARRANT SHARES DESIGNATED BY THE HOLDER OF
THIS WARRANT WHICH, WHEN ADDED TO THE NUMBER OF SHARES OF COMMON STOCK
UNDERLYING THE OTHER NEW WARRANTS ISSUED IN CONNECTION WITH SUCH ISSUANCE, DOES
NOT EXCEED THE NUMBER OF WARRANT SHARES THEN UNDERLYING THIS WARRANT), (III)
SHALL HAVE AN ISSUANCE DATE, AS INDICATED ON THE FACE OF

 

8

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SUCH NEW WARRANT, WHICH IS THE SAME AS THE ISSUANCE DATE, AND (IV) SHALL HAVE
THE SAME RIGHTS AND CONDITIONS AS THIS WARRANT.

 

8.             NOTICES.  WHENEVER NOTICE IS REQUIRED TO BE GIVEN UNDER THIS
WARRANT, UNLESS OTHERWISE PROVIDED HEREIN, SUCH NOTICE SHALL BE GIVEN IN
ACCORDANCE WITH SECTION 9(F) OF THE SECURITIES PURCHASE AGREEMENT.  THE COMPANY
SHALL PROVIDE THE HOLDER OF THIS WARRANT WITH PROMPT WRITTEN NOTICE OF ALL
ACTIONS TAKEN PURSUANT TO THIS WARRANT, INCLUDING IN REASONABLE DETAIL A
DESCRIPTION OF SUCH ACTION AND THE REASON THEREFORE.  WITHOUT LIMITING THE
GENERALITY OF THE FOREGOING, THE COMPANY WILL GIVE WRITTEN NOTICE TO THE HOLDER
OF THIS WARRANT (I) IMMEDIATELY UPON ANY ADJUSTMENT OF THE EXERCISE PRICE OR
NUMBER OF WARRANT SHARES OR NUMBER OR KIND OF SECURITIES PURCHASABLE UPON
EXERCISE OF THIS WARRANT, SETTING FORTH IN REASONABLE DETAIL, AND CERTIFYING,
THE FACTS REQUIRING SUCH ADJUSTMENT AND THE CALCULATION OF SUCH ADJUSTMENT AND
(II) AT LEAST TEN DAYS PRIOR TO THE DATE ON WHICH THE COMPANY CLOSES ITS BOOKS
OR TAKES A RECORD, OR IN THE EVENT THAT THE COMPANY DOES NOT SO CLOSE ITS BOOKS
OR TAKE A RECORD, AT LEAST TEN DAYS PRIOR TO THE DATE OF ANY SUCH EVENT, (A)
WITH RESPECT TO ANY DIVIDEND OR DISTRIBUTION UPON THE COMMON STOCK, (B) WITH
RESPECT TO ANY GRANTS, ISSUES OR SALES OF ANY OPTIONS, CONVERTIBLE SECURITIES OR
RIGHTS TO PURCHASE STOCK, WARRANTS, SECURITIES OR OTHER PROPERTY TO HOLDERS OF
COMMON STOCK OR (C) FOR DETERMINING RIGHTS TO VOTE WITH RESPECT TO ANY CHANGE OF
CONTROL (AS DEFINED IN THE SPA SECURITIES), DISSOLUTION OR LIQUIDATION, PROVIDED
IN EACH CASE THAT SUCH INFORMATION SHALL BE MADE KNOWN TO THE PUBLIC PRIOR TO OR
IN CONJUNCTION WITH SUCH NOTICE BEING PROVIDED TO SUCH HOLDER.  NOTWITHSTANDING
THE FOREGOING, SECTION 4(I) OF THE SECURITIES PURCHASE AGREEMENT SHALL APPLY TO
ALL NOTICES GIVEN PURSUANT TO THIS WARRANT.

 

9.             AMENDMENT AND WAIVER.  EXCEPT AS OTHERWISE PROVIDED HEREIN, THE
PROVISIONS OF THIS WARRANT MAY BE AMENDED AND THE COMPANY MAY TAKE ANY ACTION
HEREIN PROHIBITED, OR OMIT TO PERFORM ANY ACT HEREIN REQUIRED TO BE PERFORMED BY
IT, ONLY IF THE COMPANY HAS OBTAINED THE WRITTEN CONSENT OF THE HOLDERS OF SPA
WARRANTS REPRESENTING AT LEAST A MAJORITY OF THE SHARES OF COMMON STOCK
OBTAINABLE UPON EXERCISE OF THE SPA WARRANTS THEN OUTSTANDING; PROVIDED THAT NO
SUCH ACTION MAY INCREASE THE EXERCISE PRICE OF ANY SPA WARRANT OR DECREASE THE
NUMBER OF SHARES OR CLASS OF STOCK OBTAINABLE UPON EXERCISE OF ANY SPA WARRANT
WITHOUT THE WRITTEN CONSENT OF THE HOLDER OF THIS WARRANT.  NO SUCH AMENDMENT
SHALL BE EFFECTIVE TO THE EXTENT THAT IT APPLIES TO LESS THAN ALL OF THE HOLDERS
OF THE SPA WARRANTS THEN OUTSTANDING, AND ANY AMENDMENT MADE IN CONFORMITY WITH
THE PROVISIONS OF THIS SECTION 9 SHALL BE BIDING ON ALL HOLDERS OF THE SPA
WARRANTS THEN OUTSTANDING.

 

10.           GOVERNING LAW.  THIS WARRANT SHALL BE CONSTRUED AND ENFORCED IN
ACCOR­DANCE WITH, AND ALL QUESTIONS CONCERNING THE CONSTRUCTION, VALIDITY,
INTERPRETATION AND PERFORMANCE OF THIS WARRANT SHALL BE GOVERNED BY, THE
INTERNAL LAWS OF THE STATE OF NEW YORK, WITHOUT GIVING EFFECT TO ANY CHOICE OF
LAW OR CONFLICT OF LAW PROVISION OR RULE (WHETHER OF THE STATE OF NEW YORK OR
ANY OTHER JURISDICTIONS) THAT WOULD CAUSE THE APPLICATION OF THE LAWS OF ANY
JURISDICTIONS OTHER THAN THE STATE OF NEW YORK.

 

11.           CONSTRUCTION; HEADINGS.  THIS WARRANT SHALL BE DEEMED TO BE
JOINTLY DRAFTED BY THE COMPANY AND ALL THE HOLDERS OF SPA WARRANTS AND SHALL NOT
BE CONSTRUED AGAINST ANY PERSON AS THE DRAFTER HEREOF.  THE HEADINGS OF THIS
WARRANT ARE FOR CONVENIENCE OF REFERENCE AND SHALL NOT FORM PART OF, OR AFFECT
THE INTERPRETATION OF, THIS WARRANT.

 

9

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12.           DISPUTE RESOLUTION.  IN THE CASE OF A DISPUTE AS TO THE
DETERMINATION OF THE EXERCISE PRICE OR THE ARITHMETIC CALCULATION OF THE WARRANT
SHARES, THE COMPANY SHALL SUBMIT THE DISPUTED DETERMINATIONS OR ARITHMETIC
CALCULATIONS VIA FACSIMILE WITHIN TWO BUSINESS DAYS OF RECEIPT OF THE EXERCISE
NOTICE GIVING RISE TO SUCH DISPUTE, AS THE CASE MAY BE, TO THE HOLDER OF THIS
WARRANT.  IF THE HOLDER OF THIS WARRANT AND THE COMPANY ARE UNABLE TO AGREE UPON
SUCH DETERMINATION OR CALCULATION OF THE EXERCISE PRICE OR THE WARRANT SHARES
WITHIN THREE BUSINESS DAYS OF SUCH DISPUTED DETERMINATION OR ARITHMETIC
CALCULATION BEING SUBMITTED TO THE HOLDER OF THIS WARRANT, THEN THE COMPANY
SHALL, WITHIN TWO BUSINESS DAYS SUBMIT VIA FACSIMILE (A) THE DISPUTED
DETERMINATION OF THE EXERCISE PRICE TO AN INDEPENDENT, REPUTABLE INVESTMENT BANK
SELECTED BY THE COMPANY AND APPROVED BY THE HOLDER OF THIS WARRANT OR (B) THE
DISPUTED ARITHMETIC CALCULATION OF THE WARRANT SHARES TO THE COMPANY’S
INDEPENDENT, OUTSIDE ACCOUNTANT.  THE COMPANY SHALL CAUSE THE INVESTMENT BANK OR
THE ACCOUNTANT, AS THE CASE MAY BE, TO PERFORM THE DETERMINATIONS OR
CALCULATIONS AND NOTIFY THE COMPANY AND THE HOLDER OF THIS WARRANT OF THE
RESULTS NO LATER THAN TEN BUSINESS DAYS FROM THE TIME IT RECEIVES THE DISPUTED
DETERMINATIONS OR CALCULATIONS.  SUCH INVESTMENT BANK’S OR ACCOUNTANT’S
DETERMINATION OR CALCULATION, AS THE CASE MAY BE, SHALL BE BINDING UPON ALL
PARTIES ABSENT DEMONSTRABLE ERROR.

 

13.           REMEDIES, OTHER OBLIGATIONS, BREACHES AND INJUNCTIVE RELIEF.  THE
REMEDIES PROVIDED IN THIS WARRANT SHALL BE CUMULATIVE AND IN ADDITION TO ALL
OTHER REMEDIES AVAILABLE UNDER THIS WARRANT, THE SECURITIES PURCHASE AGREEMENT,
THE PLEDGE AGREEMENT (AS DEFINED IN THE SECURITIES PURCHASE AGREEMENT), THE SPA
SECURITIES AND THE REGISTRATION RIGHTS AGREEMENT, AT LAW OR IN EQUITY (INCLUDING
A DECREE OF SPECIFIC PERFORMANCE AND/OR OTHER INJUNCTIVE RELIEF), AND NOTHING
HEREIN SHALL LIMIT THE RIGHT OF THE HOLDER OF THIS WARRANT RIGHT TO PURSUE
ACTUAL DAMAGES FOR ANY FAILURE BY THE COMPANY TO COMPLY WITH THE TERMS OF THIS
WARRANT. THE COMPANY ACKNOWLEDGES THAT A BREACH BY IT OF ITS OBLIGATIONS
HEREUNDER WILL CAUSE IRREPARABLE HARM TO THE HOLDER OF THIS WARRANT AND THAT THE
REMEDY AT LAW FOR ANY SUCH BREACH MAY BE INADEQUATE.  THE COMPANY THEREFORE
AGREES THAT, IN THE EVENT OF ANY SUCH BREACH OR THREATENED BREACH, THE HOLDER OF
THIS WARRANT SHALL BE ENTITLED, IN ADDITION TO ALL OTHER AVAILABLE REMEDIES, TO
AN INJUNCTION RESTRAINING ANY BREACH, WITHOUT THE NECESSITY OF SHOWING ECONOMIC
LOSS AND WITHOUT ANY BOND OR OTHER SECURITY BEING REQUIRED.

 

14.           TRANSFER.          THIS WARRANT MAY BE OFFERED FOR SALE, SOLD,
TRANSFERRED OR ASSIGNED WITHOUT THE CONSENT OF THE COMPANY, EXCEPT TO
“ACCREDITED INVESTORS” AS THAT TERM IS DEFINED IN RULE 501(A) OF REGULATION D AS
PROMULGATED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND AS MAY OTHERWISE
BE REQUIRED BY SECTION 2(I) OF THE SECURITIES PURCHASE AGREEMENT.

 

15.           CERTAIN DEFINITIONS.  FOR PURPOSES OF THIS WARRANT, THE FOLLOWING
TERMS SHALL HAVE THE FOLLOWING MEANINGS:

 

(A)           “BLOOMBERG” MEANS BLOOMBERG FINANCIAL MARKETS.

 

(B)           “BUSINESS DAY” MEANS ANY DAY OTHER THAN SATURDAY, SUNDAY OR OTHER
DAY ON WHICH COMMERCIAL BANKS IN THE CITY OF NEW YORK ARE AUTHORIZED OR REQUIRED
BY LAW TO REMAIN CLOSED.

 

(C)           “CLOSING BID PRICE” AND “CLOSING SALE PRICE” MEANS, FOR ANY
SECURITY AS OF ANY DATE, THE LAST CLOSING BID PRICE AND LAST CLOSING TRADE
PRICE, RESPECTIVELY, FOR SUCH SECURITY ON THE PRINCIPAL MARKET, AS REPORTED BY
BLOOMBERG, OR, IF THE PRINCIPAL MARKET BEGINS TO OPERATE

 

10

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ON AN EXTENDED HOURS BASIS AND DOES NOT DESIGNATE THE CLOSING BID PRICE OR THE
CLOSING TRADE PRICE, AS THE CASE MAY BE, THEN THE LAST BID PRICE OR LAST TRADE
PRICE, RESPECTIVELY, OF SUCH SECURITY PRIOR TO 4:00:00 P.M., NEW YORK CITY TIME,
AS REPORTED BY BLOOMBERG, OR, IF THE PRINCIPAL MARKET IS NOT THE PRINCIPAL
SECURITIES EXCHANGE OR TRADING MARKET FOR SUCH SECURITY, THE LAST CLOSING BID
PRICE OR LAST TRADE PRICE, RESPECTIVELY, OF SUCH SECURITY ON THE PRINCIPAL
SECURITIES EXCHANGE OR TRADING MARKET WHERE SUCH SECURITY IS LISTED OR TRADED AS
REPORTED BY BLOOMBERG, OR IF THE FOREGOING DO NOT APPLY, THE LAST CLOSING BID
PRICE OR LAST TRADE PRICE, RESPECTIVELY, OF SUCH SECURITY IN THE
OVER-THE-COUNTER MARKET ON THE ELECTRONIC BULLETIN BOARD FOR SUCH SECURITY AS
REPORTED BY BLOOMBERG, OR, IF NO CLOSING BID PRICE OR LAST TRADE PRICE,
RESPECTIVELY, IS REPORTED FOR SUCH SECURITY BY BLOOMBERG, THE AVERAGE OF THE BID
PRICES, OR THE ASK PRICES, RESPECTIVELY, OF ANY MARKET MAKERS FOR SUCH SECURITY
AS REPORTED IN THE “PINK SHEETS” BY PINK SHEETS LLC (FORMERLY THE NATIONAL
QUOTATION BUREAU, INC.).  IF THE CLOSING BID PRICE OR THE CLOSING SALE PRICE
CANNOT BE CALCULATED FOR A SECURITY ON A PARTICULAR DATE ON ANY OF THE FOREGOING
BASES, THE CLOSING BID PRICE OR THE CLOSING SALE PRICE, AS THE CASE MAY BE, OF
SUCH SECURITY ON SUCH DATE SHALL BE THE FAIR MARKET VALUE AS MUTUALLY DETERMINED
BY THE COMPANY AND THE HOLDER.  IF THE COMPANY AND THE HOLDER ARE UNABLE TO
AGREE UPON THE FAIR MARKET VALUE OF SUCH SECURITY, THEN SUCH DISPUTE SHALL BE
RESOLVED PURSUANT TO SECTION 12.  ALL SUCH DETERMINATIONS TO BE APPROPRIATELY
ADJUSTED FOR ANY STOCK DIVIDEND, STOCK SPLIT, STOCK COMBINATION OR OTHER SIMILAR
TRANSACTION DURING THE APPLICABLE CALCULATION PERIOD.

 

(D)           “COMMON STOCK” MEANS (I) THE COMPANY’S COMMON STOCK, PAR VALUE
$.001 PER SHARE, AND (II) ANY CAPITAL STOCK INTO WHICH SUCH COMMON STOCK SHALL
HAVE BEEN CHANGED OR ANY CAPITAL STOCK RESULTING FROM A RECLASSIFICATION OF SUCH
COMMON STOCK.

 

(E)           “CONVERTIBLE SECURITIES” MEANS ANY STOCK OR SECURITIES (OTHER THAN
OPTIONS) DIRECTLY OR INDIRECTLY CONVERTIBLE INTO OR EXERCISABLE OR EXCHANGEABLE
FOR COMMON STOCK.

 

(F)            “EXPIRATION DATE” MEANS FEBRUARY 26, 2008, OR, IF SUCH DATE FALLS
ON A DAY OTHER THAN A BUSINESS DAY OR ON WHICH TRADING DOES NOT TAKE PLACE ON
THE PRINCIPAL MARKET (A “HOLIDAY”), THE NEXT DATE THAT IS NOT A HOLIDAY.

 

(G)           “OPTIONS” MEANS ANY RIGHTS, WARRANTS OR OPTIONS TO SUBSCRIBE FOR
OR PURCHASE COMMON STOCK OR CONVERTIBLE SECURITIES.

 

(H)           “PERSON” MEANS AN INDIVIDUAL, A LIMITED LIABILITY COMPANY, A
PARTNERSHIP, A JOINT VENTURE, A CORPORATION, A TRUST, AN UNINCORPORATED
ORGANIZATION, ANY OTHER ENTITY AND A GOVERNMENT OR ANY DEPARTMENT OR AGENCY
THEREOF.

 

(I)            “PRINCIPAL MARKET” MEANS THE NASDAQ NATIONAL MARKET.

 

(J)            “REGISTRATION RIGHTS AGREEMENT” MEANS THAT CERTAIN REGISTRATION
RIGHTS AGREEMENT BETWEEN THE COMPANY AND THE PURCHASERS.

 

(K)           “SPA SECURITIES” MEANS THE SENIOR EXCHANGEABLE CONVERTIBLE NOTES
ISSUED PURSUANT TO THE SECURITIES PURCHASE AGREEMENT.

 

11

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[Signature Page Follows]

 

12

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IN WITNESS WHEREOF, the Company has caused this Warrant to Purchase Common Stock
to be duly executed as of the Issuance Date set out above.

 

 

SUPERGEN, INC.

 

 

 

 

 

 

 

By:

/s/ JOSEPH RUBINFELD

 

 

 

Name:  Joseph Rubinfeld

 

 

Title:  President/Chief Executive Officer

 

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EXHIBIT A-1

 

EXERCISE NOTICE

 

TO BE EXECUTED BY THE REGISTERED HOLDER TO EXERCISE THIS
WARRANT TO PURCHASE COMMON STOCK

 

SUPERGEN, INC.

 

The undersigned holder hereby exercises the right to purchase
                         of the shares of Common Stock (“Warrant Shares”) of
SuperGen, Inc., a Delaware corporation (the “Company”), evidenced by the
attached Warrant to Purchase Common Stock (the “Warrant”), and tenders herewith
payment to the Company of the aggregate exercise price in full, equal to
$                       , together with all applicable transfer taxes, if any.

 

Please issue the Warrant Shares in the following name and to the following
address:

 

Issue to:

 

 

Facsimile Number:

 

 

Authorization:

 

 

Account Number:               

 

  (if electronic book entry transfer)

 

Transaction Code Number:

 

  (if electronic book entry transfer)

 

To the extent the foregoing exercise is for less than the full number of Warrant
Shares issuable pursuant to the Warrant, a replacement Warrant representing the
remainder of the Warrant Shares issuable (and otherwise of like form, tenor and
effect) shall be delivered to holder.

 

The undersigned confirms the continuing validity of, and reaffirms as of the
date hereof, the representations and warranties set forth in Section 2 of the
Securities Purchase Agreement, dated as of February 26, 2003, by and among the
Company and the Buyers named therein.

 

The undersigned agrees to comply with the prospectus delivery requirements (to
the extent applicable) under the applicable securities laws in connection with
any transfer of the aforesaid Warrant Shares.

 

Date:                                   ,                 

 

 

 

 

Name of Registered Holder

 

By:

 

 

 

Name:

 

 

Title:

 

 

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EXHIBIT A-2

 

EXERCISE NOTICE

 

TO BE EXECUTED BY THE REGISTERED HOLDER TO EXERCISE THIS WARRANT TO PURCHASE
COMMON STOCK PURSUANT TO CASHLESS EXERCISE PROVISIONS

 

SUPERGEN, INC.

Gentlemen:

 

The undersigned, registered holder of the Warrant to Purchase Common Stock
delivered herewith, hereby irrevocably exercises such Warrant for, and purchases
thereunder, shares of the Common Stock (“Warrant Shares”) of SuperGen, Inc., a
Delaware corporation, as provided below.  Capitalized terms used herein, unless
otherwise defined herein, shall have the meanings given in the Warrant.  The
portion of the Exercise Price to be applied toward the purchase of the Warrant
Shares pursuant to this Exercise Notice is $           .  Such exercise shall be
pursuant to the cashless exercise provisions of Section 1 of the Warrant;
therefore, holder makes no payment with respect to this Exercise Notice.  The
number of shares to be issued pursuant to this exercise shall be determined by
reference to the formula in Section 1 of the Warrant which, by reference to
Section 1, requires the use of the Closing Sale Price of the Company’s Common
Stock on the day immediately preceding the date of this Exercise Notice.  The
Closing Sale Price of the Company’s Common Stock has been determined by holder
to be $             , which figure is acceptable to holder for calculations of
the number of Warrant Shares issuable pursuant to this Exercise Notice.

 

Please issue the Warrant Shares in the following name and to the following
address:

 

 

Issue to:

 

 

Facsimile Number:

 

 

Authorization:

 

 

Account Number:               

 

  (if electronic book entry transfer)

 

Transaction Code Number:

 

  (if electronic book entry transfer)

 

To the extent the foregoing exercise is for less than the full number of Warrant
Shares issuable pursuant to the Warrant, a replacement Warrant representing the
remainder of the

 

--------------------------------------------------------------------------------

 

Warrant Shares issuable (and otherwise of like form, tenor and effect) shall be
delivered to holder.

 

The undersigned confirms the continuing validity of, and reaffirms as of the
date hereof, the representations and warranties set forth in Section 2 of the
Securities Purchase Agreement, dated as of February 26, 2003, by and among the
Company and the Buyers named therein.

 

The undersigned agrees to comply with the prospectus delivery requirements (to
the extent applicable) under the applicable securities laws in connection with
any transfer of the aforesaid Warrant Shares.

 

Date:                                   ,                      

 

 

 

 

Name of Registered Holder

 

By:

 

 

 

Name:

 

 

Title:

 

 

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ACKNOWLEDGMENT

 

The Company hereby acknowledges this Exercise Notice and hereby directs Mellon
Investor Services LLC to issue the above indicated number of shares of Common
Stock in accordance with the Transfer Agent Instructions dated February 26, 2003
from the Company and acknowledged and agreed to by Mellon Investor Services LLC.

 

 

SUPERGEN, INC.

 

 

 

 

 

 

 

 

 

 

By:

 

 

 

Name:

 

 

Title:

 

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