Exhibit 4.2


 


NEITHER THESE SECURITIES NOR THE SECURITIES INTO WHICH THESE SECURITIES
ARE EXERCISABLE HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE
COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN
EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES
ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN
AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE
SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO
SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE
COMPANY.  THESE SECURITIES AND THE SECURITIES ISSUABLE UPON EXERCISE OF
THESE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT
SECURED BY SUCH SECURITIES.


 


VALENTIS,
INC.


 


WARRANT


 


	
  Warrant No.

  	
   

  	
  Date of
  Original Issuance: March 21, 2006

  



 


Valentis, Inc., a Delaware corporation (the “Company”), hereby certifies that, for value
received, [                    ]
or its registered assigns (the “Holder”),
is entitled to purchase from the Company up to a total of [                  ]
shares of common stock, $.001 par value (the “Common
Stock”), of the Company (each such share, a “Warrant Share” and all such shares, the “Warrant Shares”) at an exercise price equal
to $3.00 per share (as adjusted from time to time as provided in Section 9, the
“Exercise Price”), at any time and
from time to time from and after the date hereof and through and including the
fifth year anniversary of the issuance date hereof (the “Expiration Date”), and subject to the
following terms and conditions:


 


This Warrant is one of a series of warrants
issued pursuant to that certain Securities Purchase Agreement of even date
herewith to which the Company and the original Holder are parties (the “Purchase Agreement”).


 


1.             Definitions.  In addition to the terms defined elsewhere in this
Warrant, capitalized terms that are not otherwise defined herein shall have the
meanings given to such terms in the Purchase Agreement.


 


1

















 


2.             Registration of Warrant. 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.


 


3.             Registration of Transfers. The Company shall register the transfer of any portion of
this Warrant in the Warrant Register, upon surrender of this Warrant, with the
Form of Assignment attached hereto duly completed and signed, to the Company at
its address specified herein.  Upon any such registration or transfer, a
new Warrant to purchase Common Stock, in substantially the form of this Warrant
(any such new Warrant, a “New Warrant”), evidencing the portion of this Warrant so
transferred shall be issued to the transferee and a New Warrant evidencing the
remaining portion of this Warrant not so transferred, if any, shall be issued
to the transferring Holder. The acceptance of the New Warrant by the transferee
thereof shall be deemed the acceptance by such transferee of all of the rights
and obligations of a holder of a Warrant. Notwithstanding the foregoing, this
Warrant is subject to the transfer restrictions set forth in Section 4.1 of the
Purchase Agreement.


 


4.             Exercise and Duration of Warrants.


 


(a)           This Warrant shall be exercisable by the registered Holder at any time
and from time to time on or after the date hereof to and including the
Expiration Date.  Subject to Section 11, at 5:00 p.m., California time on
the Expiration Date, the portion of this Warrant not exercised prior thereto
shall be and become void and of no value, provided, that if the closing sales
price of the Common Stock on the Expiration Date is greater than 102% of the
Exercise Price on the Expiration Date, then this Warrant shall be deemed to
have been exercised in full (to the extent not previously exercised) on a “cashless
exercise” basis at 5:00 p.m. California time on the Expiration Date.


 


(b)           Subject to the provisions of this Section 4(b), at any time after the
first anniversary of the Closing Date, if the: (i) VWAP (as defined below) of
the Common Stock for any thirty (30) consecutive Trading Days after such first
anniversary of the Closing Date is greater than $5.13 (as may be adjusted
pursuant to Section 9), (ii) the Warrant Shares are either registered for
resale pursuant to an effective registration statement naming the Holder as a
selling stockholder thereunder (and the prospectus thereunder is available for
use by the Holder as to all then available Warrant Shares) or freely
transferable without volume restrictions pursuant to Rule 144(k) promulgated
under the Securities Act, as determined by counsel to the Company pursuant to a
written opinion letter addressed and in form and substance reasonably
acceptable to the Holder and the transfer agent for the Common Stock, and (iii)
the Company shall have fully honored in accordance with the terms of this
Warrant all Exercise Notices delivered prior to 5:00 p.m. (California time) on
the Call Date (as defined below), then the Company may, subject to Section 11,
require cash exercise pursuant to Section 10(a) hereof of all, but not less than
all, of the portion of this Warrant for which Exercise Notices have not been
delivered by 5:00 p.m. on the Call Date.  To exercise this right, the
Company must deliver to the Holder an irrevocable 


 


2

















 


written
notice (a “Call Notice”), indicating therein that this Warrant shall be
exercised.  If the conditions for such Call are satisfied with respect to
subsections (ii) and (iii) above from the period from the date of the Call
Notice through and including the Call Date, then, subject to Section 11, this
Warrant shall be deemed to have been exercised in full on a cash basis pursuant
to Section 10(a) hereof at 5:00 p.m. (California time) on the tenth Trading Day
after the date the Call Notice is received by the Holder (such date, the “Call
Date”).  The Holder shall deliver payment in immediately available funds
of the Exercise Price for the number of Warrant Shares for which this Warrant
is required to be exercised under this subsection promptly but in any event no
later than ten business days following the Call Date. The Company covenants and
agrees that it will honor all Exercise Notices with respect to Warrant Shares
that are tendered from the time of delivery of the Call Notice through 5:00
p.m. (California time) on the Call Date. “VWAP” means on any particular Trading
Day or for any particular period, the volume weighted average trading price per
share of Common Stock on such date or for such period as reported by Bloomberg
L.P., or any successor performing similar functions.  The Company and the
Holder agree that, if and to the extent Section 11 of this Warrant would
restrict the ability of the Holder to exercise this Warrant in full in the
event of a delivery of a Call Notice, then notwithstanding anything to the
contrary set forth in the Call Notice, the Call Notice shall be deemed
automatically amended to apply only to such portion of this Warrant as may be
exercised by the Holder by the Call Date in accordance with Section 11. 
The Holder will promptly (and, in any event, prior to the Call Date) notify the
Company in writing following receipt of a Call Notice if Section 11 would
restrict its exercise of the Warrant, specifying therein the number of Warrant
Shares so restricted.


 


5.             Delivery of Warrant Shares.


 


(a)           To effect exercises hereunder, the Holder shall not be required to
physically surrender this Warrant unless the aggregate Warrant Shares
represented by this Warrant is being exercised.  Upon delivery of the
Exercise Notice to the Company (with the attached Warrant Shares Exercise Log)
at its address for notice set forth herein and upon payment of the Exercise
Price multiplied by the number of Warrant Shares that the Holder intends to
purchase hereunder, the Company shall promptly (but in no event later than
three Trading Days after the Date of Exercise (as defined herein)) issue and
deliver to the Holder, a certificate for the Warrant Shares issuable upon such
exercise, which, unless otherwise required by the Purchase Agreement, shall be
free of restrictive legends.  The Company shall, upon request of the
Holder and subsequent to the date on which a registration statement covering
the resale of the Warrant Shares has been declared effective by the Securities
and Exchange Commission, use its best efforts to deliver Warrant Shares
hereunder electronically through the Depository Trust Corporation or another
established clearing corporation performing similar functions, if available,
provided, that, the Company may, but will not be required to change its transfer
agent if its current transfer agent cannot deliver Warrant Shares
electronically through the Depository Trust Corporation.  A “Date of
Exercise” means the date on which the Holder shall have
delivered to Company: (i) the Exercise Notice (with the Warrant Exercise Log
attached to it), appropriately completed and duly signed and (ii) if such
Holder is not utilizing the cashless exercise provisions set forth in this
Warrant, payment of the Exercise Price for the number of Warrant Shares so
indicated by the Holder to be purchased.


 


3

















 


(b)           If by the third Trading Day after a Date of Exercise the Company fails
to deliver the required number of Warrant Shares in the manner required
pursuant to Section 5(a), then the Holder will have the right to rescind such
exercise.


 


(c)           If by the third Trading Day after a Date of Exercise the Company fails
to deliver the required number of Warrant Shares in the manner required
pursuant to Section 5(a), and if after such third Trading Day and prior to the
receipt of such Warrant Shares, the Holder purchases (in an open market
transaction or otherwise) shares of Common Stock to deliver in satisfaction of
a sale by the Holder of the Warrant Shares which the Holder anticipated receiving
upon such exercise (a “Buy In”), then the Company shall (1) pay in cash to the
Holder the amount by which (x) the Holder’s total purchase price (including
brokerage commissions, if any) for the shares of Common Stock so purchased
exceeds (y) the amount obtained by multiplying (A) the number of Warrant Shares
that the Company was required to deliver to the Holder in connection with the
exercise at issue by (B) the closing bid price of the Common Stock at the time
of the obligation giving rise to such purchase obligation and (2) at the option
of the Holder, either reinstate the portion of the Warrant and equivalent
number of Warrant Shares for which such exercise was not honored or deliver to
the Holder the number of shares of Common Stock that would have been issued had
the Company timely complied with its exercise and delivery obligations
hereunder.  The Holder shall provide the Company written notice indicating
the amounts payable to the Holder in respect of the Buy In.


 


(d)           The Company’s obligations to issue and deliver Warrant Shares 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 which might otherwise limit such
obligation of the Company to the Holder in connection with the issuance of
Warrant Shares.  Nothing herein shall limit a 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 certificates representing
shares of Common Stock upon exercise of the Warrant as required pursuant to the
terms hereof.


 


6.             Charges, Taxes and Expenses. Issuance and delivery of certificates for shares of
Common Stock upon exercise of this Warrant shall be made without charge to the
Holder for any issue or transfer tax, withholding tax, transfer agent fee or
other incidental tax or expense in respect of the issuance of such
certificates, all of which taxes and expenses shall be paid by the Company;
provided, however, that the Company shall not be required to pay any tax which
may be payable in respect of any transfer involved in the registration of any
certificates for Warrant Shares or Warrants in a name other than that of the
Holder.  The Holder shall be responsible for all other tax liability that
may arise as a result of holding or transferring this Warrant or receiving
Warrant Shares upon exercise hereof.


 


4

















 


7.             Replacement of Warrant. If this Warrant is mutilated, lost, stolen or destroyed,
the Company shall issue or cause to be issued in exchange and substitution for
and upon cancellation hereof, or in lieu of and substitution for this Warrant,
a New Warrant, but only upon receipt of evidence reasonably satisfactory to the
Company of such loss, theft or destruction and customary and reasonable
indemnity (which shall not include a surety bond), if requested. 
Applicants for a New Warrant under such circumstances shall also comply with
such other reasonable regulations and procedures and pay such other reasonable
third-party costs as the Company may prescribe.  If a New Warrant is
requested as a result of a mutilation of this Warrant, then the Holder shall
deliver such mutilated Warrant to the Company as a condition precedent to the
Company’s obligation to issue the New Warrant.


 


8.             Reservation of Warrant Shares. The Company covenants that it will at all times
reserve and keep available out of the aggregate of its authorized but unissued
and otherwise unreserved Common Stock, solely for the purpose of enabling it to
issue Warrant Shares upon exercise of this Warrant as herein provided, the
number of Warrant Shares which are then issuable and deliverable upon the
exercise of this entire Warrant, free from preemptive rights or any other
contingent purchase rights of persons other than the Holder (taking into
account the adjustments and restrictions of Section 9). The Company covenants
that all Warrant Shares so issuable and deliverable shall, upon issuance and
the payment of the applicable Exercise Price in accordance with the terms
hereof, be duly and validly authorized, issued and fully paid and
nonassessable.


 


9.             Certain Adjustments. The Exercise Price and number of Warrant Shares issuable
upon exercise of this Warrant are subject to adjustment from time to time as
set forth in this Section 9.


 


(a)           Stock Dividends and Splits. If the
Company, at any time while this Warrant is outstanding, (i) pays a stock
dividend on its Common Stock or otherwise makes a distribution on any class of
capital stock that is payable in shares of Common Stock, (ii) subdivides
outstanding shares of Common Stock into a larger number of shares, or (iii)
combines outstanding shares of Common Stock into a smaller number of shares,
then in each such case the Exercise Price shall be multiplied by a fraction of
which the numerator shall be the number of shares of Common Stock outstanding
immediately before such event and of which the denominator shall be the number
of shares of Common Stock outstanding immediately after such event.  Any
adjustment made pursuant to clause (i) of this paragraph shall become effective
immediately after the record date for the determination of stockholders
entitled to receive such dividend or distribution, and any adjustment pursuant
to clause (ii) or (iii) of this paragraph shall become effective immediately
after the effective date of such subdivision or combination. If any event
requiring an adjustment under this paragraph occurs during the period that an
Exercise Price is calculated hereunder, then the calculation of such Exercise
Price shall be adjusted appropriately to reflect such event.


 


(b)           Pro Rata Distributions. If the
Company, at any time while this Warrant is outstanding, distributes to all
holders of Common Stock (i) evidences of its indebtedness, (ii) any security
(other than a distribution of Common Stock covered by the preceding paragraph),
(iii) rights or warrants to subscribe for or purchase any security, or (iv) 


 


5

















 


any other
asset (in each case, “Distributed Property”), then, at the request of any Holder delivered before the 90th day
after the record date fixed for determination of stockholders entitled to
receive such distribution, the Company will deliver to such Holder, within five
Trading Days after such request (or, if later, on the effective date of such
distribution), the Distributed Property that such Holder would have been
entitled to receive in respect of the Warrant Shares for which such Holder’s
Warrant could have been exercised immediately prior to such record date. 
If such Distributed Property is not delivered to a Holder pursuant to the
preceding sentence, then upon any exercise of the Warrant that occurs after
such record date, such Holder shall be entitled to receive, in addition to the
Warrant Shares otherwise issuable upon such conversion, the Distributed
Property that such Holder would have been entitled to receive in respect of
such number of Warrant Shares had the Holder been the record holder of such Warrant
Shares immediately prior to such record date.


 


(c)           Fundamental Transactions. If, at
any time while this Warrant is outstanding, (1) the Company effects any merger
or consolidation of the Company with or into another Person, (2) the Company
effects any sale of all or substantially all of its assets in one or a series
of related transactions, (3) any tender offer or exchange offer (whether by the
Company or another Person) is completed pursuant to which holders of Common
Stock are permitted to tender or exchange their shares for other securities,
cash or property, or (4) the Company effects any reclassification of the Common
Stock or any compulsory share exchange pursuant to which the Common Stock is
effectively converted into or exchanged for other securities, cash or property
(in any such case, a “Fundamental Transaction”), then
the Holder shall have the right thereafter to receive, upon exercise of this
Warrant, the same amount and kind of securities, cash or property as it would
have been entitled to receive upon the occurrence of such Fundamental
Transaction if it had been, immediately prior to such Fundamental Transaction,
the holder of the number of Warrant Shares then issuable upon exercise in full
of this Warrant (the “Alternate Consideration”). 
For purposes of any such exercise, the determination of the Exercise Price
shall be appropriately adjusted to apply to such Alternate Consideration based
on the amount of Alternate Consideration issuable in respect of one share of
Common Stock in such Fundamental Transaction, and the Company shall apportion
the Exercise Price among the Alternate Consideration in a reasonable manner
reflecting the relative value of any different components of the Alternate
Consideration.  If holders of Common Stock are given any choice as to the
securities, cash or property to be received in a Fundamental Transaction, then
the Holder shall be given the same choice as to the Alternate Consideration it
receives upon any exercise of this Warrant following such Fundamental Transaction. 
At the Holder’s request, any successor to the Company or surviving entity in
such Fundamental Transaction shall, issue to the Holder a new warrant
substantially in the form of this Warrant and consistent with the foregoing
provisions and evidencing the Holder’s right to purchase the Alternate
Consideration for the aggregate Exercise Price upon exercise thereof. The terms
of any agreement pursuant to which a Fundamental Transaction is effected shall
include terms requiring any such successor or surviving entity to comply with
the provisions of this paragraph (c) and insuring that the Warrant (or any such
replacement security) will be similarly adjusted upon any subsequent
transaction analogous to a Fundamental Transaction.


 


(d)           Number of Warrant Shares. Simultaneously
with any adjustment to the Exercise Price pursuant to paragraphs (a) of this
Section, the number of Warrant Shares 


 


6

















 


that may
be purchased upon exercise of this Warrant shall be increased or decreased
proportionately, so that after such adjustment the aggregate Exercise Price
payable hereunder for the adjusted number of Warrant Shares shall be the same
as the aggregate Exercise Price in effect immediately prior to such adjustment.


 


(e)           Calculations. All calculations under this
Section 9 shall be made to the nearest cent or the nearest 1/100th of a share,
as applicable.  The number of shares of Common Stock outstanding at any
given time shall not include shares owned or held by or for the account of the
Company, and the disposition of any such shares shall be considered an issue or
sale of Common Stock.


 


(f)            Notice of Adjustments. Upon
the occurrence of each adjustment pursuant to this Section 9, the Company at
its expense will promptly compute such adjustment in accordance with the terms
of this Warrant and prepare a certificate setting forth such adjustment, including
a statement of the adjusted Exercise Price and adjusted number or type of
Warrant Shares or other securities issuable upon exercise of this Warrant (as
applicable), describing the transactions giving rise to such adjustments and
showing in detail the facts upon which such adjustment is based.  Upon
written request, the Company will promptly deliver a copy of each such certificate
to the Holder and to the Company’s Transfer Agent.


 


(g)           Notice of Corporate Events. If the
Company (i) declares a dividend or any other distribution of cash, securities
or other property in respect of its Common Stock, including without limitation
any granting of rights or warrants to subscribe for or purchase any capital
stock of the Company or any Subsidiary, (ii) authorizes or approves, enters
into any agreement contemplating or solicits stockholder approval for any
Fundamental Transaction or (iii) authorizes the voluntary dissolution,
liquidation or winding up of the affairs of the Company, then, except if such
notice and the contents thereof shall be deemed to constitute material
non-public information, the Company shall deliver to the Holder a notice
describing the material terms and conditions of such transaction, at least 20
calendar days prior to the applicable record or effective date on which a
Person would need to hold Common Stock in order to participate in or vote with
respect to such transaction, and the Company will take all steps reasonably
necessary in order to insure that the Holder is given the practical opportunity
to exercise this Warrant prior to such time so as to participate in or vote
with respect to such transaction; provided, however, that the failure to
deliver such notice or any defect therein shall not affect the validity of the
corporate action required to be described in such notice.  Until the
exercise of this Warrant or any portion of this Warrant, the Holder shall not
have nor exercise any rights by virtue hereof as a stockholder of the Company
(including without limitation the right to notification of stockholder meetings
or the right to receive any notice or other communication concerning the
business and affairs of the Company other than as provided in this Section 9 (g).


 


10.           Payment of Exercise Price. The Holder may pay the Exercise Price in one of the
following manners:


 


(a)           Cash Exercise. The Holder may deliver
immediately available funds; or


 


7

















 


(b)           Cashless Exercise. The Holder may notify
the Company in an Exercise Notice of its election to utilize cashless exercise,
in which event the Company shall issue to the Holder the number of Warrant
Shares determined as follows:


 


X = Y [(A-B)/A]


 


where:


 


X = the number
of Warrant Shares to be issued to the Holder.


 


Y = the number
of Warrant Shares with respect to which this Warrant is being exercised.


 


A = the
average of the closing prices for the five Trading Days immediately prior to
(but not including) the Exercise Date.


 


B = the
Exercise Price.


 


For purposes of Rule 144 promulgated under the Securities Act, it is
intended, understood and acknowledged that the Warrant Shares issued in a
cashless exercise transaction shall be deemed to have been acquired by the
Holder, and the holding period for the Warrant Shares shall be deemed to have
commenced, on the date this Warrant was originally issued.


 


11.           Limitation on Exercise. [Investors may individually elect to omit either or both of
clauses (i) and (ii) of this Section 11 upon first issuance of the Warrant at
Closing.]


 


(i)            [Notwithstanding anything to the contrary contained herein, the number
of shares of Common Stock that may be acquired by the Holder upon any exercise
of this Warrant (or otherwise in respect hereof) shall be limited to the extent
necessary to insure that, following such exercise (or other issuance), the
total number of shares of Common Stock then beneficially owned by such Holder
and its Affiliates and any other Persons whose beneficial ownership of Common
Stock would be aggregated with the Holder’s for purposes of Section 13(d) of
the Exchange Act, does not exceed 4.999% of the total number of issued and
outstanding shares of Common Stock (including for such purpose the shares of
Common Stock issuable upon such exercise).  For such purposes, beneficial
ownership shall be determined in accordance with Section 13(d) of the Exchange
Act and the rules and regulations promulgated thereunder.  Each delivery of
an Exercise Notice hereunder will constitute a representation by the Holder
that it has evaluated the limitation set forth in this paragraph and determined
that issuance of the full number of Warrant Shares requested in such Exercise
Notice is permitted under this paragraph. This provision shall not restrict the
number of shares of Common Stock which a Holder may receive or beneficially own
in order to determine the amount of securities or other consideration that such
Holder may receive in the event of a merger or other business combination or
reclassification involving the Company as contemplated in Section 9 of this
Warrant. By written notice to the Company, the Holder may waive the provisions
of this Section 


 


8

















 


but any
such waiver will not be effective until the 61st day after such notice is
delivered to the Company.]


 


(ii)           [Notwithstanding anything to the contrary contained herein, the number
of shares of Common Stock that may be acquired by the Holder upon any exercise
of this Warrant (or otherwise in respect hereof) shall be limited to the extent
necessary to insure that, following such exercise (or other issuance), the
total number of shares of Common Stock then beneficially owned by such Holder
and its Affiliates and any other Persons whose beneficial ownership of Common
Stock would be aggregated with the Holder’s for purposes of Section 13(d) of
the Exchange Act, does not exceed 9.999% of the total number of issued and
outstanding shares of Common Stock (including for such purpose the shares of
Common Stock issuable upon such exercise).  For such purposes, beneficial
ownership shall be determined in accordance with Section 13(d) of the Exchange
Act and the rules and regulations promulgated thereunder.  Each delivery
of an Exercise Notice hereunder will constitute a representation by the Holder
that it has evaluated the limitation set forth in this paragraph and determined
that issuance of the full number of Warrant Shares requested in such Exercise
Notice is permitted under this paragraph.  This provision shall not
restrict the number of shares of Common Stock which a Holder may receive or
beneficially own in order to determine the amount of securities or other
consideration that such Holder may receive in the event of a merger or other
business combination or reclassification involving the Company as contemplated
in Section 9 of this Warrant.  This restriction may not be waived.]


 


12.           No Fractional Shares. No fractional shares of Warrant Shares will be issued in
connection with any exercise of this Warrant.  In lieu of any fractional
shares which would, otherwise be issuable, the Company shall pay cash equal to
the product of such fraction multiplied by the closing price of one Warrant
Share as reported by Bloomberg L.P. (or the successor to its function of
reporting share prices) on the date of exercise.


 


13.           Exchange Act Filings. The Holder agrees and acknowledges that it shall have
sole responsibility for making any applicable filings with the U.S. Securities
and Exchange Commission pursuant to Section 13 and 16 of the Securities
Exchange Act of 1934, as amended, as a result of its acquisition of this
Warrant and the Warrant Shares and any future retention or transfer thereof.


 


14.           Notices. Any and all notices or other communications or deliveries
hereunder (including, without limitation, any Exercise Notice) shall be in
writing and shall be deemed given and effective on the earliest of (i) the date
of transmission, if such notice or communication is delivered via facsimile at
the facsimile number specified in this Section prior to 5:00 p.m. (California
time) on a Trading Day, (ii) the next Trading Day after the date of
transmission, if such notice or communication is delivered via facsimile at the
facsimile number specified in this Section on a day that is not a Trading Day
or later than 5:00 p.m. (California time) on any Trading Day, (iii) the Trading
Day following the date of mailing, if sent by nationally recognized overnight
courier service, or (iv) upon actual receipt by the party to whom such notice
is required to be given.  The addresses for such communications shall
be:  (i) if to the Company, to the address set forth in the Purchase
Agreement, or (ii) if to the Holder, to the 


 


9

















 


address or facsimile number appearing on the Warrant
Register or such other address or facsimile number as the Holder may provide to
the Company in accordance with this Section.


 


15.           Warrant Agent. The Company shall serve as warrant agent under this
Warrant.  Upon 30 days’ notice to the Holder, the Company may appoint a
new warrant agent.  Any corporation into which the Company or any new
warrant agent may be merged or any corporation resulting from any consolidation
to which the Company or any new warrant agent shall be a party or any
corporation to which the Company or any new warrant agent transfers
substantially all of its corporate trust or shareholders services business
shall be a successor warrant agent under this Warrant without any further
act.  Any such successor warrant agent shall promptly cause notice of its
succession as warrant agent to be mailed (by first class mail, postage prepaid)
to the Holder at the Holder’s last address as shown on the Warrant Register.


 


16.           Miscellaneous.


 


(a)           This Warrant shall be binding on and inure to the benefit of the
parties hereto and their respective successors and assigns.  Subject to
the preceding sentence, nothing in this Warrant shall be construed to give to
any Person other than the Company and the Holder any legal or equitable right,
remedy or cause of action under this Warrant.  This Warrant may be amended
in writing signed by the Company and the Holder and their successors and
assigns and the Warrants issued pursuant to the Purchase Agreement, including
this Warrant, may be amended in writing signed by the Company and the Holders
of no less than two-thirds of the Warrant Shares issuable upon exercise of all
such then outstanding Warrants. The Company shall provide prior notice to all Holders
of any proposed waiver or amendment.


 


(b)           All questions concerning the construction, validity, enforcement and
interpretation of this Warrant shall be governed by and construed and enforced
in accordance with the internal laws of the State of California, without regard
to the principles of conflicts of law thereof.  Each party agrees that all
legal proceedings concerning the interpretations, enforcement and defense of
this Warrant and the transactions herein contemplated (“Proceedings”) (whether brought against a party hereto or its respective
Affiliates, employees or agents) may be commenced in the state and federal
courts sitting in the City of San Francisco (the “California Courts”).  Each party hereto hereby irrevocably submits to the
non-exclusive jurisdiction of the California Courts for the adjudication of any
dispute hereunder or in connection herewith or with any transaction
contemplated hereby or discussed herein, and hereby irrevocably waives, and
agrees not to assert in any Proceeding, any claim that it is not personally
subject to the jurisdiction of any California Court, or that such Proceeding
has been commenced in an improper or inconvenient forum. Each party hereto
hereby irrevocably waives personal service of process and consents to process
being served in any such Proceeding by mailing a copy thereof via registered or
certified mail or overnight delivery (with evidence of delivery) to such party
at the address in effect for notices to it under this Warrant and agrees that
such service shall constitute good and sufficient service of process and notice
thereof.  Nothing contained herein shall be deemed to limit in any way any
right to serve process in any manner permitted by law.  Each party hereto
hereby irrevocably waives, to the fullest extent permitted by applicable law,
any and all right to trial by jury in any legal proceeding arising out of or
relating 


 


10

















 


to this
Warrant or the transactions contemplated hereby.  If either party shall
commence a Proceeding to enforce any provisions of this Warrant, then the
prevailing party in such Proceeding shall be reimbursed by the other party for
its attorney’s fees and other costs and expenses incurred with the
investigation, preparation and prosecution of such Proceeding.


 


(c)           The headings herein are for convenience only, do not constitute a part
of this Warrant and shall not be deemed to limit or affect any of the
provisions hereof.


 


(d)           In case any one or more of the provisions of this Warrant shall be
invalid or unenforceable in any respect, the validity and enforceability of the
remaining terms and provisions of this Warrant shall not in any way be affected
or impaired thereby and the parties will attempt in good faith to agree upon a
valid and enforceable provision which shall be a commercially reasonable
substitute therefor, and upon so agreeing, shall incorporate such substitute
provision in this Warrant.


 


[REMAINDER OF
PAGE INTENTIONALLY LEFT BLANK,

SIGNATURE PAGE FOLLOWS]


 


11

















 


IN WITNESS WHEREOF,
the Company has caused this Warrant to be duly executed by its authorized
officer as of the date first indicated above.


 


 


	
   

  	
  VALENTIS, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
  Benjamin F. McGraw, III, Pharm.D.

  
	
   

  	
  Title:

  	
  President and Chief Executive Officer

  
					



 


 


SIGNATURE PAGE TO VALENTIS, INC. WARRANT


 

















 


EXERCISE
NOTICE


 


To Valentis, Inc.:


 


Ladies and Gentlemen:


 


	
  o

  	
  The undersigned hereby elects to exercise the warrant issued to it by
  Valentis, Inc. (the “Company”) and dated                     
                ,
  200   Warrant No. W-       (the “Warrant”)
  and to purchase thereunder                                             
  shares of the Company’s common stock (the “Shares”) at a purchase price of                                                                       Dollars
  ($                      )
  per Share or an aggregate purchase price of                                                                         
  Dollars ($                      )
  (the “Purchase Price”).

  
	
   

  	
   

  
	
  o

  	
  The undersigned hereby elects to utilize cashless exercise option and
  convert                                 
  percent (        %) of the value of
  the Warrant pursuant to the provisions of Section 10(b) of the Warrant.

  



 


Pursuant to the terms of the Warrant the
undersigned has delivered, if applicable, the Purchase Price herewith in full
in cash or by certified check or wire transfer.


 


By its delivery of this Exercise Notice, the
undersigned represents and warrants to the Company that in giving effect to the
exercise evidenced hereby the Holder will not beneficially own in excess of the
number of shares of Common Stock (determined in accordance with Section 13(d)
of the Securities Exchange Act of 1934) permitted to be owned under Section 11
of this Warrant to which this notice relates.


 


The undersigned requests that certificates
for the shares of Common Stock issuable upon this exercise be issued in the
name of


 


	
   

  	
  Very truly yours,

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  (Signature must conform in all respects to name of

  
	
   

  	
  holder as specified on the face of the Warrant)

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Please provide social security number or

  
	
   

  	
   

  	
  Taxpayer identification number.

  
					



 

















 


Warrant Shares
Exercise Log


 


 


	
  Date

  	
   

  	
  Number of Warrant

  Shares Available to be

  Exercised

  	
   

  	
  Number of Warrant

  Shares Exercised

  	
   

  	
  Number of Warrant

  Shares Remaining to

  be Exercised

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  



 

















 


FORM OF
ASSIGNMENT


 


[To be completed and signed only upon
transfer of Warrant]


 


FOR VALUE RECEIVED, the undersigned hereby
sells, assigns and transfers unto [                                  ]
the right represented by the within Warrant to purchase [                                ]
shares of Common Stock of Valentis, Inc. to which the within Warrant relates
and appoints [                                        ]
attorney to transfer said right on the books of Valentis, Inc. with full power
of substitution in the premises.


 


 


	
  Dated:

  	
                             ,
         

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  (Signature must conform in all respects to name of

  holder as specified on the face of the Warrant)

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Address of Transferee

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  
	
  In the presence of: