1

 
Notice of Exercise is delivered to the Company, the Company shall have received payment of theaggregate Exercise Price of the shares thereby purchased by wire transfer or cashier’s check drawnon a United States bank. Notwithstanding anything herein to the contrary, the Holder shall not berequired to physically surrender this Warrant to the Company until the Holder has purchased all ofthe Warrant Shares 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 3 Trading Days ofthe date the final Notice of Exercise is delivered to the Company. Partial exercises of thisWarrant resulting in purchases of a portion of the total number of Warrant Shares availablehereunder shall have the effect of lowering the outstanding number of Warrant Shares purchasablehereunder in an amount equal to the applicable number of Warrant Shares purchased. The Holder andthe Company shall maintain records showing the number of Warrant Shares purchased and the date ofsuch purchases. The Company shall deliver any objection to any Notice of Exercise Form within 1Business Day of receipt of such notice. In the event of any dispute or discrepancy, the records ofthe Holder shall be controlling and determinative in the absence of manifest error. **The Holder andany assignee, by acceptance of this Warrant, acknowledge and agree that, by reason of theprovisions of this paragraph, following the purchase of a portion of the Warrant Shares hereunder,the number of Warrant Shares available for purchase hereunder at any given time may be less thanthe amount stated on the face hereof.**For purposes of clarity, if at any time during the term ofthis Warrant, there is not an effective Registration Statement registering the Warrant Shares, thenthe Company shall have the right to issue unregistered shares hereunder.          (b) Exercise Price. The exercise price per share of the Common Stock under thisWarrant shall be $0.02 per share, subject to adjustment hereunder (the “Exercise Price”).          (c) Cashless Exercise. If at any time after one (1) year from the related Closing,there is no effective Registration Statement registering, or no current prospectus available for,the resale of the Warrant Shares by the Holder, then this Warrant may also be exercised at suchtime by means of a “cashless exercise” in which the Holder shall be entitled to receive acertificate for the number of Warrant Shares equal to the quotient obtained by dividing [(A-B) (X)]by (A), where:         (A) = the VWAP on the Trading Day immediately preceding the date of such election;         (B) = the Exercise Price of this Warrant, as adjusted; and         (X) = the number of Warrant Shares issuable upon exercise of this Warrant in accordance with the terms of this Warrant by means of a cashexercise rather than a cashless exercise.          (d) Exercise Limitations.               (i) Holder’s Restrictions. The Company shall not effect any exercise of this Warrant,and a Holder shall not have the right to exercise any portion of this Warrant, pursuant to Section2 or otherwise, to the extent that after giving effect to such issuance after exercise as set forthon the applicable Notice of Exercise, such Holder (together with such
2

 
Holder’s Affiliates, and any other person or entity acting as a group together with suchHolder or any of such Holder’s Affiliates), would beneficially own in excess of the BeneficialOwnership Limitation (as defined below). For purposes of the foregoing sentence, the number ofshares of Common Stock beneficially owned by such Holder and its Affiliates shall include thenumber of shares of Common Stock issuable upon exercise of this Warrant with respect to which suchdetermination is being made, but shall exclude the number of shares of Common Stock which would beissuable upon (A) exercise of the remaining, nonexercised portion of this Warrant beneficiallyowned by such Holder or any of its Affiliates and (B) exercise or conversion of the unexercised ornonconverted portion of any other securities of the Company (including, without limitation, anyother Common Stock Equivalents) subject to a limitation on conversion or exercise analogous to thelimitation contained herein beneficially owned by such Holder or any of its affiliates. Except asset forth in the preceding sentence, for purposes of this Section 2(d)(i), beneficial ownershipshall be calculated in accordance with Section 13(d) of the Exchange Act and the rules andregulations promulgated thereunder, it being acknowledged by the Holder that the Company is notrepresenting to such Holder that such calculation is in compliance with Section 13(d) of theExchange Act and such Holder is solely responsible for any schedules required to be filed inaccordance therewith. To the extent that the limitation contained in this Section 2(d)(i)applies, the determination of whether this Warrant is exercisable (in relation to other securitiesowned by such Holder together with any Affiliates) and of which portion of this Warrant isexercisable shall be in the sole discretion of the Holder, and the submission of a Notice ofExercise shall be deemed to be the Holder’s determination of whether this Warrant is exercisable(in relation to other securities owned by such Holder together with any Affiliates) and of whichportion of this Warrant is exercisable, in each case subject the Beneficial Ownership Limitation,and the Company shall have no obligation to verify or confirm the accuracy of such determination.In addition, a determination as to any group status as contemplated above shall be determined inaccordance with Section 13(d) of the Exchange Act and the rules and regulations promulgatedthereunder. For purposes of this Section 2(d)(i), in determining the number of outstanding sharesof Common Stock, a Holder may rely on the number of outstanding shares of Common Stock as reflectedin (x) the Company’s most recent Annual Report on Form 10-K or Quarterly Report on Form 10-Q, orsuch similar form, as the case may be, or (y) any other notice provided by the Company or theCompany’s Transfer Agent within 30 days of the date of transfer setting forth the number of sharesof Common Stock outstanding. Upon the written or oral request of a Holder, the Company shallwithin two Trading Days confirm orally and in writing to such Holder the number of shares of CommonStock then outstanding. In any case, the number of outstanding shares of Common Stock shall bedetermined after giving effect to the conversion or exercise of securities of the Company,including this Warrant, by such Holder or its Affiliates since the date as of which such number ofoutstanding shares of Common Stock was reported. The “Beneficial Ownership Limitation”shall be 4.999% of the number of shares of the Common Stock outstanding immediately after givingeffect to the issuance of shares of Common Stock issuable upon exercise of this Warrant. TheBeneficial Ownership Limitation provisions of this Section 2(d)(i) may be waived by such Holder, atthe election of such Holder, upon not less than 61 days’ prior notice to the Company to change theBeneficial Ownership Limitation to 9.999% of the number of shares of the Common Stock outstandingimmediately after giving effect to the issuance of shares of Common Stock upon exercise of thisWarrant, and the provisions of this Section 2(d)(i) shall continue to apply. Upon such a change bya Holder of the Beneficial Ownership Limitation from such
3

 
4.999% limitation to such 9.999% limitation, the Beneficial Ownership Limitation may not befurther waived by such Holder. The provisions of this paragraph shall be construed and implementedin a manner otherwise than in strict conformity with the terms of this Section 2(d)(i) to correctthis paragraph (or any portion hereof) which may be defective or inconsistent with the intendedBeneficial Ownership Limitation herein contained or to make changes or supplements necessary ordesirable to properly give effect to such limitation. The limitations contained in this paragraphshall apply to a successor holder of this Warrant.          (e) Mechanics of Exercise.               (i) Delivery of Certificates Upon Exercise. Certificates for shares purchasedhereunder shall be transmitted by the transfer agent of the Company to the Holder by crediting theaccount of the Holder’s prime broker with the Depository Trust Company through its DepositWithdrawal Agent Commission (“DWAC”) system if the Company is a participant in such systemand there is an effective Registration Statement permitting the resale of the Warrant Shares by theHolder, and otherwise by physical delivery to the address specified by the Holder in the Notice ofExercise within three (3) Trading Days from the receipt by the Company of the Notice of ExerciseForm, surrender of this Warrant and payment of the aggregate Exercise Price as set forth above(“Warrant Share Delivery Date”). This Warrant shall be deemed to have been exercised onthe date the Exercise Price is received by the Company, if such date is after Notice of ExerciseForm and this Warrant are received by the Company. The Warrant Shares shall be deemed to have beenissued, and Holder or any other person so designated to be named therein shall be deemed to havebecome a holder of record of such shares for all purposes, as of the date the Warrant has beenexercised by payment to the Company of the Exercise Price (or by cashless exercise, if permitted)and all taxes required to be paid by the Holder, if any, pursuant to Section 2(e)(vi) prior to theissuance of such shares, have been paid.               (ii) Delivery of New Warrants Upon Exercise. If this Warrant shall have beenexercised in part, the Company shall, at the request of a Holder and upon surrender of this Warrantcertificate, at the time of delivery of the certificate or certificates representing WarrantShares, deliver to Holder a new Warrant evidencing the rights of Holder to purchase the unpurchasedWarrant Shares called for by this Warrant, which new Warrant shall in all other respects beidentical with this Warrant.               (iii) Rescission Rights. If the Company fails to cause its transfer agent to transmitto the Holder a certificate or certificates representing the Warrant Shares pursuant to thisSection 2(e)(iii) by the second Trading Day immediately following the Warrant Share Delivery Date,then the Holder will have the right to rescind such exercise.               (iv) Compensation for Buy-In on Failure to Timely Deliver Certificates Upon Exercise.In addition to any other rights available to the Holder, if the Company fails to cause its transferagent to transmit to the Holder a certificate or certificates representing the Warrant Sharespursuant to an exercise on or before the Warrant Share Delivery Date, and if after such date theHolder is required by its broker to purchase (in an open market transaction or otherwise) or theHolder’s brokerage firm otherwise purchases, shares of Common Stock to deliver in satisfaction of asale 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
4

 
the amount by which (x) the Holder’s total purchase price (including brokerage commissions, ifany) 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 connectionwith the exercise at issue times (B) the price at which the sell order giving rise to such purchaseobligation was executed, and (2) at the option of the Holder, either reinstate the portion of theWarrant and equivalent number of Warrant Shares for which such exercise was not honored or deliverto the Holder the number of shares of Common Stock that would have been issued had the Companytimely complied with its exercise and delivery obligations hereunder. For example, if the Holderpurchases Common Stock having a total purchase price of $11,000 to cover a Buy-In with respect toan attempted exercise of shares of Common Stock with an aggregate sale price giving rise to suchpurchase obligation of $10,000, under clause (1) of the immediately preceding sentence the Companyshall be required to pay the Holder $1,000. The Holder shall provide the Company written noticeindicating the amounts payable to the Holder in respect of the Buy-In and, upon request of theCompany, evidence of the amount of such loss. Nothing herein shall limit a Holder’s right topursue any other remedies available to it hereunder, at law or in equity including, withoutlimitation, a decree of specific performance and/or injunctive relief with respect to the Company’sfailure to timely deliver certificates representing shares of Common Stock upon exercise of theWarrant as required pursuant to the terms hereof.               (v) No Fractional Shares or Scrip. No fractional shares or scrip representingfractional shares shall be issued upon the exercise of this Warrant. As to any fraction of a sharewhich Holder would otherwise be entitled to purchase upon such exercise, the Company shall at itselection, either pay a cash adjustment in respect of such final fraction in an amount equal to suchfraction multiplied by the Exercise Price or round up to the next whole share.               (vi) Charges, Taxes and Expenses. Issuance of certificates for Warrant Shares shallbe made without charge to the Holder for any issue or transfer tax or other incidental expense inrespect of the issuance of such certificate, all of which taxes and expenses shall be paid by theCompany, and such certificates shall be issued in the name of the Holder or in such name or namesas may be directed by the Holder; provided, however, that in the event certificatesfor Warrant Shares are to be issued in a name other than the name of the Holder, this Warrant whensurrendered for exercise shall be accompanied by the Assignment Form attached hereto duly executedby the Holder; and the Company may require, as a condition thereto, the payment of a sum sufficientto reimburse it for any transfer tax incidental thereto.          (f) Closing of Books. The Company will not close its stockholder books or records inany manner which prevents the timely exercise of this Warrant, pursuant to the terms hereof.     Section 3.Certain Adjustments.          (a) Stock Dividends and Splits. If the Company, at any time while this Warrant isoutstanding: (A) pays a stock dividend or otherwise make a distribution or distributions on sharesof its Common Stock or any other equity or equity equivalent securities payable in shares of CommonStock (which, for avoidance of doubt, shall not include any shares
5

 
of Common Stock issued by the Company upon exercise of this Warrant), (B) subdividesoutstanding shares of Common Stock into a larger number of shares, (C) combines (including by wayof reverse stock split) outstanding shares of Common Stock into a smaller number of shares, or (D)issues by reclassification of shares of the Common Stock any shares of capital stock of theCompany, then in each case the Exercise Price shall be multiplied by a fraction of which thenumerator shall be the number of shares of Common Stock (excluding treasury shares, if any)outstanding immediately before such event and of which the denominator shall be the number ofshares of Common Stock outstanding immediately after such event and the number of shares issuableupon exercise of this Warrant shall be proportionately adjusted such that the aggregate ExercisePrice of this Warrant shall remain unchanged. Any adjustment made pursuant to this Section 3(a)shall become effective immediately after the record date for the determination of stockholdersentitled to receive such dividend or distribution and shall become effective immediately after theeffective date in the case of a subdivision, combination or re-classification.          (b) Pro Rata Distributions. If the Company, at any time while this Warrant isoutstanding, shall distribute to all holders of Common Stock (and not to Holders of the Warrants)evidences of its indebtedness or assets (including cash and cash dividends) or rights or warrantsto subscribe for or purchase any security other than the Common Stock, then in each such case theExercise Price shall be adjusted by multiplying the Exercise Price in effect immediately prior tothe record date fixed for determination of stockholders entitled to receive such distribution by afraction of which the denominator shall be the VWAP determined as of the record date mentionedabove, and of which the numerator shall be such VWAP on such record date less the then per sharefair market value at such record date of the portion of such assets or evidence of indebtedness sodistributed applicable to one outstanding share of the Common Stock (determined by dividing theamount distributed by the then issued and outstanding shares of Common Stock) as determined by theBoard of Directors in good faith. In either case the adjustments shall be described in a statementprovided to the Holder of the portion of assets or evidences of indebtedness so distributed or suchsubscription rights applicable to one share of Common Stock. Such adjustment shall be madewhenever any such distribution is made and shall become effective immediately after the record datementioned above.          (c) Fundamental Transaction. If, at any time while this Warrant is outstanding, (A)the Company effects any merger or consolidation of the Company with or into another Person, (B) theCompany effects any sale of all or substantially all of its assets in one or a series of relatedtransactions, (C) any tender offer or exchange offer (whether by the Company or another Person) iscompleted pursuant to which holders of Common Stock are permitted to tender or exchange theirshares for other securities, cash or property, or (D) the Company effects any reclassification ofthe Common Stock or any compulsory share exchange pursuant to which the Common Stock is effectivelyconverted into or exchanged for other securities, cash or property (each “FundamentalTransaction”), then, upon any subsequent exercise of this Warrant, the Holder shall have theright to receive, for each Warrant Share that would have been issuable upon such exerciseimmediately prior to the occurrence of such Fundamental Transaction, the number of shares of CommonStock of the successor or acquiring corporation or of the Company, if it is the survivingcorporation, and any additional consideration (the “Alternate Consideration”) receivable asa result of such merger, consolidation or disposition of assets by a holder of the number of sharesof Common Stock for which this Warrant is exercisable immediately prior to such event. For purposesof any such exercise, the determination of the
6

 
Exercise Price shall be appropriately adjusted to apply to such Alternate Consideration basedon the amount of Alternate Consideration issuable in respect of one share of Common Stock in suchFundamental Transaction, and the Company shall apportion the Exercise Price among the AlternateConsideration in a reasonable manner reflecting the relative value of any different components ofthe 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 thesame choice as to the Alternate Consideration it receives upon any exercise of this Warrantfollowing such Fundamental Transaction. To the extent necessary to effectuate the foregoingprovisions, any successor to the Company or surviving entity in such Fundamental Transaction shallissue to the Holder a new warrant consistent with the foregoing provisions and evidencing theHolder’s right to exercise such warrant into Alternate Consideration. The terms of any agreementpursuant to which a Fundamental Transaction is effected shall include terms requiring any suchsuccessor or surviving entity to comply with the provisions of this Section 3(c) and insuring thatthis Warrant (or any such replacement security) will be similarly adjusted upon any subsequenttransaction analogous to a Fundamental Transaction.          (d) Calculations. All calculations under this Section 3 shall be made to the nearestcent or the nearest 1/100th of a share, as the case may be. For purposes of this Section 3, thenumber of shares of Common Stock deemed to be issued and outstanding as of a given date shall bethe sum of the number of shares of Common Stock (excluding treasury shares, if any) issued andoutstanding at the close of the Trading Day on or, if not applicable, most recently preceding, suchgiven date.          (e) Minimum Adjustment. Notwithstanding anything in this Warrant to the contrary, noadjustment in the Exercise Price shall be required unless such adjustment would require an increaseor decrease of at least $0.01 per share of Common Stock; provided, however, thatany adjustments which by reason of this Subsection 3(e) are not required to be made shall becarried forward and taken into account in any subsequent adjustment; provided,further, however, that adjustments shall be required and made in accordance with theprovisions of this Section 3 (other than this Subsection 3(e)) not later than such time as may berequired in order to preserve the tax-free nature of a distribution, if any, to the Holder of thisWarrant or the Warrant Shares. Notwithstanding anything in this Section 3 to the contrary, theCompany shall be entitled to make such reductions in the Exercise Price, in addition to thoserequired by this Section 3, as it in its discretion shall deem to be advisable in order that anystock dividend, subdivision of shares or distribution of rights to purchase stock or securitiesconvertible or exchangeable for stock hereafter made by the Company to its stockholders shall notbe taxable.          (f) Notice to Holder. (i) Adjustment to Exercise Price. Wheneverthe Exercise Price is adjusted pursuant to any provision of thisSection 3, the Company shall promptly mail to the Holder a noticesetting forth the Exercise Price after such adjustment and settingforth a brief statement of the facts requiring such adjustment.  (ii) Notice to Allow Exercise by Holder. If(A) the Company shall declare a dividend (or any other distribution inwhatever form) on
7

 
   the Common Stock; (B) the Company shall declare a specialnonrecurring cash dividend on or a redemption of the Common Stock;(C) the Company shall authorize the granting to all holders of theCommon Stock rights or warrants to subscribe for or purchase anyshares of capital stock of any class or of any rights; (D) theapproval of any stockholders of the Company shall be required inconnection with any reclassification of the Common Stock, anyconsolidation or merger to which the Company is a party, any sale ortransfer of all or substantially all of the assets of the Company, ofany compulsory share exchange whereby the Common Stock is convertedinto other securities, cash or property; (E) the Company shallauthorize the voluntary or involuntary dissolution, liquidation orwinding up of the affairs of the Company; then, in each case, theCompany shall cause to be mailed to the Holder at its last address asit shall appear upon the Warrant Register of the Company, at least 20calendar days prior to the applicable record or effective datehereinafter specified, a notice stating (x) the date on which arecord 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 beentitled to such dividend, distributions, redemption, rights orwarrants are to be determined or (y) the date on which suchreclassification, consolidation, merger, sale, transfer or shareexchange is expected to become effective or close, and the date as ofwhich it is expected that holders of the Common Stock of record shallbe entitled to exchange their shares of the Common Stock forsecurities, cash or other property deliverable upon suchreclassification, consolidation, merger, sale, transfer or shareexchange; provided that the failure to mail such notice or any defecttherein or in the mailing thereof shall not affect the validity ofthe corporate action required to be specified in such notice.Subject to applicable law, the Holder is entitled to exercise thisWarrant during the period commencing on the date of such notice tothe effective date of the event triggering such notice.Notwithstanding the foregoing, the delivery of the notice describedin this Section 3(g) is not intended to and shall not bestow upon theHolder any voting rights whatsoever with respect to outstandingunexercised Warrants.     Section 4.Transfer of Warrant.          (a) Transferability. Subject to compliance with any applicable securities laws andthe conditions set forth in Section 4(d) hereof, this Warrant and all rights hereunder (including,without limitation, any registration rights) are transferable, in whole or in part, upon surrenderof this Warrant at the principal office of the Company or its designated agent, together with awritten assignment of this Warrant substantially in the form attached hereto duly executed by theHolder or its agent or attorney and funds sufficient to pay any transfer taxes payable upon
8

 
the making of such transfer. Upon such surrender and, if required, such payment, the Companyshall execute and deliver a new Warrant or Warrants in the name of the assignee or assignees and inthe denomination or denominations specified in such instrument of assignment, and shall issue tothe assignor a new Warrant evidencing the portion of this Warrant not so assigned, and this Warrantshall promptly be cancelled. A Warrant, if properly assigned, may be exercised by a new holder forthe purchase of Warrant Shares without having a new Warrant issued.          (b) New Warrants. This Warrant may be divided or combined with other Warrants uponpresentation hereof at the aforesaid office of the Company, together with a written noticespecifying the names and denominations in which new Warrants are to be issued, signed by the Holderor its agent or attorney. Subject to compliance with Section 4(a), as to any transfer which may beinvolved in such division or combination, the Company shall execute and deliver a new Warrant orWarrants in exchange for the Warrant or Warrants to be divided or combined in accordance with suchnotice. All Warrants issued on transfers or exchanges shall be dated the original Issue Date andshall be identical with this Warrant except as to the number of Warrant Shares issuable pursuantthereto.          (c) Warrant Register. The Company shall register this Warrant, upon records to bemaintained by the Company for that purpose (the “Warrant Register”), in the name of therecord Holder hereof from time to time. The Company may deem and treat the registered Holder ofthis Warrant as the absolute owner hereof for the purpose of any exercise hereof or anydistribution to the Holder, and for all other purposes, absent actual notice to the contrary.          (d) Transfer Restrictions. If, at the time of the surrender of this Warrant inconnection with any transfer of this Warrant, the transfer of this Warrant shall not be registeredpursuant to an effective registration statement under the Securities Act and under applicable statesecurities 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 writtenopinion of counsel satisfactory to the Company (which opinion shall be in form, substance and scopecustomary for opinions of counsel in comparable transactions) to the effect that such transfer maybe made without registration under the Securities Act and under applicable state securities or bluesky laws, (ii) that the transferor or transferee execute and deliver to the Company an investmentletter 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) promulgatedunder the Securities Act or a qualified institutional buyer as defined in Rule 144A(a)(1)promulgated under the Securities Act.     Section 5.Investment Intent; Limited Transferability.          (a) By accepting this Warrant, the Holder represents to the Company that it understands thatthis Warrant has not been, and any securities obtainable upon exercise of this Warrant may not havenot been registered for sale under the Securities Act or any state securities or “blue sky” lawsand are being offered and sold to the Holder pursuant to one or more exemptions from theregistration 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, anycertificates for such securities shall bear a legend substantially similar to the legend set forthin the Purchase Agreement. The Holder understands that it may have to
9

 
bear the economic risk of its investment in this Warrant and any securities obtainable uponexercise of this Warrant for an indefinite period of time, until such securities have beenregistered under the Securities Act and any applicable state securities or “blue sky” laws andtherefore cannot be sold unless subsequently registered under such laws, or an exemption from suchregistration is available. The Holder further represents to the Company, by accepting thisWarrant, that it has full power and authority to accept this Warrant and make the representationsset 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 SecuritiesAct and any applicable State securities or “blue sky” laws.     Section 6.Miscellaneous.          (a) No Rights as Shareholder Until Exercise. This Warrant does not entitle the Holderto any voting rights or other rights as a shareholder of the Company prior to the exercise hereof.Upon the surrender of this Warrant and the payment of the aggregate Exercise Price (or by means ofa cashless exercise), the Warrant Shares so purchased shall be and be deemed to be issued to suchHolder as the record owner of such shares as of the close of business on the later of the date ofsuch surrender and payment.          (b) Loss, Theft, Destruction or Mutilation of Warrant. The Company covenants that uponreceipt by the Company of evidence reasonably satisfactory to it of the loss, theft, destruction ormutilation of this Warrant or any stock certificate relating to the Warrant Shares, and in case ofloss, theft or destruction, of indemnity or security reasonably satisfactory to it (which, in thecase of the Warrant, shall not include the posting of any bond), and upon surrender andcancellation of such Warrant or stock certificate, if mutilated, the Company will make and delivera new Warrant or stock certificate of like tenor and dated as of such cancellation, in lieu of suchWarrant or stock certificate.          (c) Saturdays, Sundays, Holidays, etc. If the last or appointed day for the taking ofany action or the expiration of any right required or granted herein shall not be a Business Day,then such action may be taken or such right may be exercised on the next succeeding Business Day.          (d) Authorized Shares.     The Company covenants that during the period the Warrant is outstanding, itwill reserve from its authorized and unissued Common Stock a sufficient number ofshares to provide for the issuance of the Warrant Shares upon the exercise of anypurchase rights under this Warrant. The Company further covenants that its issuanceof this Warrant shall constitute full authority to its officers who are charged withthe duty of executing stock certificates to execute and issue the necessarycertificates for the Warrant Shares upon the exercise of the purchase rights underthis Warrant. The Company will take all such reasonable action as may be necessaryto assure that such Warrant Shares may be issued as provided herein withoutviolation of any applicable law or regulation, or
10

 
of any requirements of the Trading Market upon which the Common Stock may belisted. The Company covenants that all Warrant Shares which may be issued upon theexercise of the purchase rights represented by this Warrant will, upon exercise ofthe purchase rights represented by this Warrant, be duly authorized, validly issued,fully paid and nonassessable and free from all taxes, liens and charges created bythe Company in respect of the issue thereof (other than taxes in respect of anytransfer occurring contemporaneously with such issue).     Except and to the extent as waived or consented to by the Holder, the Companyshall not by any action, including, without limitation, amending its certificate ofincorporation 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 thisWarrant, but will at all times in good faith assist in the carrying out of all suchterms and in the taking of all such actions as may be necessary or appropriate toprotect the rights of Holder as set forth in this Warrant against impairment.Without limiting the generality of the foregoing, the Company will (a) not increasethe par value of any Warrant Shares above the amount payable therefor upon suchexercise immediately prior to such increase in par value, (b) take all such actionas may be necessary or appropriate in order that the Company may validly and legallyissue fully paid and nonassessable Warrant Shares upon the exercise of this Warrant,and (c) use commercially reasonable efforts to obtain all such authorizations,exemptions or consents from any public regulatory body having jurisdiction thereofas may be necessary to enable the Company to perform its obligations under thisWarrant.     Before taking any action which would result in an adjustment in the number ofWarrant Shares for which this Warrant is exercisable or in the Exercise Price, theCompany shall obtain all such authorizations or exemptions thereof, or consentsthereto, as may be necessary from any public regulatory body or bodies havingjurisdiction thereof.          (e) Jurisdiction. All questions concerning the construction, validity, enforcement andinterpretation of this Warrant shall be determined in accordance with the provisions of thePurchase Agreement.          (f) Restrictions. The Holder acknowledges that the Warrant Shares acquired upon theexercise of this Warrant, if not registered, will have restrictions upon resale imposed by stateand federal securities laws:THESE SECURITIES HAVE NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGECOMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTIONFROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIESACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVEREGISTRATION STATEMENT UNDER THE SECURITIES ACT OR
11

 
PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THEREGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLESTATE SECURITIES OR “BLUE SKY” LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TOTHE TRANSFEROR REASONABLY ACCEPTABLE TO THE COMPANY TO SUCH EFFECT, THE SUBSTANCE OFWHICH SHALL BE REASONABLY ACCEPTABLE TO THE COMPANY, IF REQUESTED BY THE COMPANY.THESE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OROTHER LOAN SECURED BY SUCH SECURITIES.          (g) Nonwaiver and Expenses. No course of dealing or any delay or failure to exerciseany right hereunder on the part of Holder shall operate as a waiver of such right or otherwiseprejudice Holder’s rights, powers or remedies, notwithstanding the fact that all rights hereunderterminate on the Termination Date. If the Company willfully and knowingly fails to comply with anyprovision of this Warrant, which results in any material damages to the Holder, the Company shallpay to Holder such amounts as shall be sufficient to cover any costs and expenses including, butnot limited to, reasonable attorneys’ fees, including those of appellate proceedings, incurred byHolder in collecting any amounts due pursuant hereto or in otherwise enforcing any of its rights,powers or remedies hereunder.          (h) Notices. Any notice, request or other document required or permitted to be givenor delivered to the Holder by the Company shall be delivered in accordance with the noticeprovisions of the Purchase Agreement.          (i) Limitation of Liability. No provision hereof, in the absence of any affirmativeaction by Holder to exercise this Warrant to purchase Warrant Shares, and no enumeration herein ofthe rights or privileges of Holder, shall give rise to any liability of Holder for the purchaseprice of any Common Stock or as a stockholder of the Company, whether such liability is asserted bythe Company or by creditors of the Company.          (j) Remedies. Holder, in addition to being entitled to exercise all rights granted bylaw, including recovery of damages, will be entitled to specific performance of its rights underthis Warrant. The Company agrees that monetary damages would not be adequate compensation for anyloss incurred by reason of a breach by it of the provisions of this Warrant and hereby agrees towaive and not to assert the defense in any action for specific performance that a remedy at lawwould be adequate.          (k) Successors and Assigns. Subject to applicable securities laws, this Warrant andthe rights and obligations evidenced hereby shall inure to the benefit of and be binding upon thesuccessors of the Company and the successors and permitted assigns of Holder. The provisions ofthis Warrant are intended to be for the benefit of all Holders from time to time of this Warrantand shall be enforceable by any such Holder or holder of Warrant Shares.          (l) Amendment. This Warrant may be modified or amended or the provisions hereofwaived with the written consent of the Company and the Holder.
12

 
          (m) Severability. Wherever possible, each provision of this Warrant shall beinterpreted in such manner as to be effective and valid under applicable law, but if any provisionof this Warrant shall be prohibited by or invalid under applicable law, such provision shall beineffective to the extent of such prohibition or invalidity, without invalidating the remainder ofsuch provisions or the remaining provisions of this Warrant.          (n) Headings. The headings used in this Warrant are for the convenience of referenceonly and shall not, for any purpose, be deemed a part of this Warrant.** ** ** ** **
13

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