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: [    ]

  



        Valetis, 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:


        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 Securities Purchase Agreement of even date herewith to which the Company
and the original Holder are parties (the “Purchase
Agreement”).


        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.


 


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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(ii), at 6:30 p.m., New York City 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 6:30 P.M. New York City 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 each of 30 consecutive Trading Days after such first
anniversary is greater than $5.00 (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 6:30 p.m. (New York City 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 6:30 p.m. on the Call Date. To exercise this right,
the Company must deliver to the Holder an irrevocable written notice (a “Call
Notice”), indicating therein that this Warrant shall be exercised. If the
conditions for such Call are satisfied 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 6:30 p.m. (New York
City 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 Forms of Election
to Purchase with respect to Warrant Shares that are tendered from the time of
delivery of the Call Notice through 6:30 p.m. (New York City 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


 


2

















 


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.


        (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


 


3

















 


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.


        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) 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


 


4

















 


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)    Subsequent Equity Sales.


          (i)  If,
prior to the first year anniversary of the issuance date hereof, the Company
issues any shares of Common Stock or the Company or any subsidiary thereof
issues any rights, warrants, options or other securities or debt that is
convertible into, exchangeable for (any such securities, “Common Stock Equivalents”) entitling any
Person to acquire shares of Common Stock at a price per share less than the
average of the closing bid prices per share of Common Stock during the
immediately preceding five (5) Trading Days (the “Threshold Price”) (if the holder of the
Common Stock or Common Stock Equivalent so issued shall at any time, whether by
operation of purchase price adjustments, reset provisions, floating conversion,
exercise or exchange prices or otherwise, or due to warrants, options or rights
issued in connection with such issuance, be entitled to receive shares of
Common Stock at a price less than the Threshold Price, such issuance shall be
deemed to have occurred for less than the Threshold Price), then, at the option
of the Holder for such exercises as it shall indicate, the Exercise Price shall
be multiplied by a fraction, the numerator of which shall be the number of
shares of Common Stock outstanding immediately prior to the issuance of such


 


5

















 


shares of Common Stock or such Common Stock
Equivalents plus the number of shares of Common Stock which the offering price
for such shares of Common Stock or Common Stock Equivalents would purchase at
the Exercise Price, and the denominator of which shall be the sum of the number
of shares of Common Stock outstanding immediately prior to such issuance plus
the number of shares of Common Stock so issued or issuable. Such adjustment
shall be made whenever such Common Stock or Common Stock Equivalents are
issued. The Company shall notify the Holder in writing, no later than the fifth
(5th) Trading Day immediately following the issuance of any Common
Stock or Common Stock Equivalent subject to this section, indicating therein
the applicable issuance price, or of applicable reset price, exchange price,
conversion price and other pricing terms.


         (ii)  If,
prior to the first year anniversary of the issuance date hereof, the Company or
any Subsidiary issues Common Stock Equivalents at a price per share that floats
or resets or otherwise varies or is subject to adjustment based on market
prices of the Common Stock (a “Floating Price
Security”), then for purposes of applying the preceding paragraph in
connection with any subsequent exercise, the Exercise Price will be determined
separately on each Exercise Date and will be deemed to equal the lowest price
per share at which any holder of such Floating Price Security is entitled to
acquire shares of Common Stock on such Exercise Date (regardless of whether any
such holder actually acquires any shares on such date).


        (iii)  Notwithstanding
the foregoing, no adjustment will be made under this Section 9(d) as a
result of: (i) the issuance of the Securities, (ii) the issuance of
securities upon the exercise or conversion of any Common Stock or Common Stock
Equivalents issued by the Company prior to the date hereof (but will apply to
any amendments, modifications and reissuances thereof), (iii) the grant of
options or warrants, or the issuance of additional securities, under any duly
authorized Company stock option, restricted stock plan or stock purchase plan
whether now existing or approved by the Company and its stockholders in the
future (but not as to any amendments or other modifications to the number of
Common Stock issuable thereunder, the terms set forth therein, or the exercise
price set forth therein, unless such amendments or other modifications are
approved by the company’s shareholders) or (iv) pursuant to one or more
Strategic Transactions.


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


        (f)    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.


        (g)    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.


 


6

















 


        (h)    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 (h).


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


        (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


 


7

















 


(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 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 6:30 p.m. (New York
City 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 6:30 p.m. (New York City 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 address or
facsimile number appearing on the Warrant Register or such


 


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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 only in writing signed by the
Company and the Holder and their successors and assigns.


        (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 New York, 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 New York, Borough of Manhattan (the “New York Courts”). Each party hereto hereby
irrevocably submits to the non-exclusive jurisdiction of the New York 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 New York 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 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.


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