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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): September 17, 1996
GENTA INCORPORATED
(Exact name of registrant as specified in its charter)
Commission file number 0-19635
DELAWARE 33-0326866
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification Number)
3550 GENERAL ATOMICS COURT, SAN DIEGO, CA 92121
(Address of principal executive offices)
(Zip Code)
(619) 455-2700
(Registrant's telephone number, including area code)
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GENTA INCORPORATED
FORM 8-K
CURRENT REPORT
TABLE OF CONTENTS
Page
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Item 5. Other Events 3
Item 7. Financial Statements and Exhibits 3
Signature 4
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ITEM 5. OTHER EVENTS
Genta Incorporated (the "Company") announced on September 17, 1996 that
it had raised gross proceeds of $2.0 million (approximately $1.9 million net
of offering fees and costs) through the sale of 4% convertible debentures due
August 1, 1997 (the "4% Convertible Debentures") to investors in a private
placement outside of the United States (the "U.S."). The 4% Convertible
Debentures are convertible, at the option of the holders, beginning in
October 1996, into shares of the Company's Common Stock at a conversion price
equal to 75% of the average Nasdaq closing bid price of Company Common Stock
for a specified period. Terms of the 4% Convertible Debentures also provide
for interest payable in shares of the Company's Common Stock.
The Company believes that proceeds from the offering may be adequate to
finance the Company's operations and cover potential restructuring costs into
November, 1996. The Company is in discussions with potential corporate
partners, certain of the holders of its Preferred Stock and other entities
regarding collaborative agreements, restructurings, licensings, asset sales
and other financing arrangements, and is actively seeking additional
financing. There can be no assurance that such collaborative agreements,
restructurings, licensings, assets sales or other sources of funding will be
available on favorable terms, if at all. If additional funding is
unavailable, the Company will be forced to license or sell certain of its
assets and technology, scale back or eliminate some or all of its development
programs and further reduce its workforce and spending.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(c) Exhibits
10.1 Form of Regulation S Securities Subscription Agreement entered
into between the Company and certain purchasers of the 4%
Convertible Debentures.
10.2 Form of 4% Convertible Debenture Due August 1, 1997.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
GENTA INCORPORATED
Date: September 24, 1996 /s/ Howard Sampson
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Howard Sampson
Vice President, Chief Financial
Officer and Assistant Secretary
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EXHIBIT INDEX
Exhibit
Number Description Page
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10.1 Form of Regulation S Securities Subscription Agreement
entered into between the Companyand certain purchasers of the 4%
Convertible Debentures of the Company. 6
10.2 Form of 4% Convertible Debenture Due August 1, 1997. 18
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EXHIBIT 10.1
REGULATION S SECURITIES SUBSCRIPTION AGREEMENT
GENTA INCORPORATED
THESE SECURITIES HAVE NOT BEEN REGISTERED WITH THE UNITED STATES SECURITIES
AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE BECAUSE THEY
ARE BELIEVED TO BE EXEMPT FROM REGISTRATION UNDER REGULATION S PROMULGATED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"). THIS SUBSCRIPTION AGREEMENT
SHALL NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY THE
SECURITIES IN ANY JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION WOULD BE
UNLAWFUL.
This Regulation S Securities Subscription Agreement (the "Agreement") is
executed by the undersigned (the "Subscriber") in connection with the offer and
the subscription of the undersigned to purchase an aggregate of $________ of 4%
Convertible Debentures (the "Debentures") of GENTA INCORPORATED, a Delaware
corporation (the "Company"), at a price of $________. The terms and provisions
of the Debentures are set forth in the form of Debenture certificate attached
hereto as Exhibit A. This Agreement and the offer and sale of the Debentures
contemplated hereby are being made in reliance upon the provisions of Regulation
S ("Regulation S") under the Securities Act of 1933, as amended (the "Act").
The Subscriber, in order to induce the Company to enter into the transaction
contemplated hereby and acknowledging that the Company will rely thereon
represents, warrants and agrees as follows:
1. OFFER TO SUBSCRIBE; PURCHASE PRICE. The Subscriber hereby offers to
purchase and subscribes for the Debentures for an aggregate price of
$____________. The closing of the transaction contemplated hereby (the
"Closing") shall be deemed to occur when this Agreement has been executed
by both Subscriber and Company. Payment shall be made at the Closing by
delivering immediately available funds in United States dollars by wire
transfer for simultaneous closing by delivery of securities versus payment.
The Company agrees to deliver certificates representing the Debentures
subscribed for at the Closing. The date on which the Closing occurs is
hereafter referred to as the Closing Date.
2. SUBSCRIBER REPRESENTATIONS; ACCESS TO INFORMATION; INDEPENDENT
INVESTIGATION.
a) OFFSHORE TRANSACTION. Subscriber represents and warrants to
the Company that (i) Subscriber is not a "U.S. person" as that term is
defined in Rule 902(o) of Regulation S; (ii) the Subscriber is not,
and on the Closing Date will not be, an affiliate of the Company;
(iii) at the execution of this Subscription Agreement, Subscriber was
outside the United States and no offer
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to purchase the Debentures was made in the United States; (iv) the
Subscriber agrees that all offers and sales of the Debentures prior to
the expiration of a period commencing on the closing and ending forty
(40) days thereafter (the "Restricted Period") shall not be made to
U.S. persons or for the account or benefit of U.S. persons and shall
otherwise be made in compliance with the provisions of Regulation S;
(v) Subscriber is not a distributor or dealer; (vi) the transactions
contemplated hereby (a) have not been and will not be pre-arranged by
the Subscriber with a purchaser located in the Unites Sates or a
purchaser which is a U.S. person, and (b) are not and will not be part
of a plan or scheme by the Subscriber to evade the registration
provisions of the Act; (vii) the Subscriber shall take all reasonable
steps to ensure its compliance with Regulation S and shall promptly
send to each purchaser (x) who acts as a distributor, underwriter,
dealer or other person participating pursuant to a contractual
arrangement in the distribution of the Debentures or receiving a
selling concession, fee or other remuneration in respect of any of the
Debentures, or (y) who purchases prior to the expiration of the
Restricted Period, a confirmation or other notice to the purchaser
stating that the purchaser is subject to the same restrictions on
offers and sales as the Subscriber pursuant to Section 903(c)(2)(iv)
of Regulation S; and (viii) none of the Subscriber, its affiliates or
persons acting on their behalf have conducted and shall not conduct
any "directed selling efforts" as that term is defined in rule 902(b)
of Regulation S; nor has the Subscriber, its affiliates or persons
acting on their behalf have conducted any general solicitations
relating to the offer and sale of any of the Debentures in the United
States or elsewhere.
b) BENEFICIAL OWNER. Subscriber is purchasing the Debentures for
its own account or for the account of beneficiaries for whom
Subscriber has full investment discretion with respect to the
Debentures and whom Subscriber has full authority to bind, so that
such beneficiary is bound hereby as if such beneficiary were a direct
Subscriber hereunder and all representations, warranties and
agreements herein were made directly by such beneficiary.
c) DIRECTED SELLING EFFORTS. Subscriber will not engage in any
activity for the purpose of, or that could reasonably be expected to
have the effect of, conditioning the market in the United States for
any of the Debentures sold hereunder. To the best knowledge of the
Subscriber, neither the Company nor any person acting for the Company
has conducted any "directed selling efforts" as that term is defined
in Rule 902 of Regulation S.
d) SHORT POSITION. Neither Subscriber nor any of its affiliates
will directly or indirectly maintain any short position in any
securities of the Company until after the end of the Restricted
Period.
e) INDEPENDENT INVESTIGATION. Subscriber in electing to
subscribe for the Debentures hereunder, has relied solely upon the
representations and warranties of the Company set forth in the
Agreement and on independent investigation
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made by it and its representatives, if any, and Subscriber has been
given no oral or written representation or assurances from the Company
or any representative of the Company other than as set forth in this
agreement or in a document executed by a duly authorized
representative of the Company making reference to this Agreement.
f) NO GOVERNMENT RECOMMENDATION OR APPROVAL. Subscriber
understands that no United States federal or state agency, or similar
agency of any other country, has passed upon or made any
recommendation or endorsement of the Company, this transaction or the
purchase of the Debentures.
3. THE COMPANY REPRESENTS, COVENANTS AND WARRANTS THE FOLLOWING:
a) REPORTING COMPANY STATUS. The Company is a corporation duly
organized, validly existing and in good standing under the laws of the
State of Delaware and is duly qualified as a foreign corporation in
all jurisdictions in which the failure to so qualify would have a
material adverse effect on the Company and its subsidiaries taken as a
whole. The Company is a "Reporting Issuer" as defined by Rule 902 of
Regulation S. The Company has registered its Common Stock pursuant to
Section 12 of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), and the Common Stock is listed and trades on the
Nasdaq National Market. The Company has filed all material required
to be filed pursuant to all reporting obligations under either Section
13(a) or 15(d) of the Exchange Act for a period of at least twelve
(12) months immediately preceding the offer or sale of the Debentures.
b) CONCERNING THE DEBENTURES. The issuance, sale and delivery of
the Debentures, except for the conversion factor of the Debentures,
are within the Company s corporate powers and have been duly
authorized by all required corporate action on the part of the Company
and its stockholders and when such securities are issued, sold and
delivered in accordance with the terms hereof and the Debentures for
the consideration expressed herein and in the Debentures, such
securities will be duly and validly issued, fully paid and
nonassessable. There are no preemptive rights of any shareholders of
the Company.
c) OFFSHORE TRANSACTION. The Company has not offered or sold the
Debentures to any person in the United States, or, to the best
knowledge of the Company, any identifiable groups of U.S. citizens
abroad, or any U.S. person as that term is defined in Regulation S.
At the time the buy order for the Debentures was originated the
Company and/or its agents reasonably believed Subscriber was outside
the United States and was not a U.S. person.
d) PREARRANGED SALE. The Company and/or its agents believe that
the transaction contemplated hereby has not been pre-arranged with a
buyer in the United States.
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e) NO DIRECTED SELLING EFFORTS. The Company has not conducted
any "directed selling efforts" as that term is defined in Rule 902 of
Regulation S nor has the Company conducted any general solicitation
relating to the offer and sale of the Debentures to persons resident
within the United States or any other U.S. person as that term is
defined in rule 902 of Regulation S.
f) SUBSCRIPTION AGREEMENT. This Agreement has been duly
authorized, validly executed and delivered on behalf of the Company
and is a valid and binding agreement enforceable against the Company
in accordance with its terms, subject to general principles of equity
and to bankruptcy or other laws affecting the enforcement of
creditors' rights generally.
g) NON-CONTRAVENTION. The execution and delivery of this
Agreement and the consummation of the issuance of the Debentures,
other than the conversion provision thereof, and the transactions
contemplated by this Agreement and the Debentures do not and will not
conflict with or result in a breach by the Company of any of the terms
or provisions of, or constitute a default under, the Articles of
Incorporation or By-laws of the Company, or any indenture, mortgage,
deed of trust, or other material agreement or instrument to which the
Company is a party or by which it or any of its properties or assets
are bound, or any existing applicable law, rule or regulation of the
United States of any state thereof or any applicable decree, judgment
or order of any Federal or State court, Federal or State regulatory
body, administrative agency or other United States governmental body
having jurisdiction over the Company or any of its properties or
assets.
h) LITIGATION. There is no action, suit or proceeding before or
by any court or governmental agency or body, domestic or foreign, now
pending or, to the knowledge of the Company, threatened, against or
affecting the Company, or any of its properties, which might result in
any material adverse change in the condition (financial or otherwise)
or in the earnings, business affairs or business prospects of the
Company, or which might materially and adversely affect the properties
or assets thereof.
i) NO DEFAULT. The Company is not in default in the performance
or observance of any material obligation, agreement, covenant or
condition contained in any indenture, mortgage, deed of trust or other
material instrument or agreement to which it is a party or by which it
or its property may be bound; and neither the execution, nor the
delivery by the Company, nor the performance by the Company of its
obligations under this Agreement or the Debentures, other than the
conversion provision thereof, will conflict with or result in the
breach or violation of any of the terms or provisions of, or
constitute a default or result in the creation or imposition of any
lien or charge on any assets or properties of the Company under, any
material indenture, mortgage, deed of trust or other material
agreement or instrument to which the Company is a party or by which it
is bound or any statute or the Certificate of Incorporation or By-laws
of the
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Company, or any decree, judgment, order, rule or regulation of any
court or governmental agency or body having jurisdiction over the
Company or its properties.
j) SEC FILINGS. None of the Company's filings with the
Securities and Exchange Commission since January 1, 1995 contained, at
the time they were filed, any untrue statement of a material fact or
omit to state any material fact required to be stated therein or
necessary to make the statement therein in light of the circumstances
under which they were made, not misleading. The Company has since
January 1, 1995 timely filed all requisite forms, reports and exhibits
thereto with the Securities and Exchange Commission.
k) FULL DISCLOSURE. There is no fact known to the Company (other
than general economic conditions known to the public generally) that
has not been disclosed in writing to the Subscriber that (i) could
reasonably be expected to have a material adverse effect on the
condition (financial or otherwise) or in the earnings, business
affairs, business prospects, properties or assets of the Company or
(ii) could reasonably be expected to materially and adversely affect
the ability of the Company to perform its obligations pursuant to this
Agreement.
4. COVENANTS OF THE COMPANY. For so long as any Debentures held by
the Subscriber remain outstanding, the Company covenants and
agrees with the Subscriber that:
a) It will use its reasonable best efforts to maintain the
listing of its Common Stock on the Nasdaq National Market and to
increase its authorized common stock to permit the conversion of the
Debentures in accordance with the provisions thereof.
b) Except as otherwise expressly provided in Section 6, it will
not issue stop transfer instructions to its transfer agent with
respect to and will not place a restrictive legend on the certificates
representing the Debentures or the shares of Common Stock issuable
upon the conversion thereof.
c) It will permit the Subscriber to exercise its right to convert
the Debentures by telecopying an executed and completed Notice of
Conversion to the Company and delivering the original Notice of
Conversion and the certificate representing the Debentures to the
Company by express courier. Each date on which a Notice of Conversion
is telecopied to and received by the Company in accordance with the
provisions hereof shall be deemed a conversion date. The Company will
transmit the certificates representing shares of Common Stock issuable
upon conversion of any Debentures (together with the certificates
representing the Debentures not so converted) to the Subscriber via
express courier, by electronic transfer or otherwise within three
business days after the conversion date if the Company has received
the original Notice of Conversion and Debentures certificate being so
converted by such date. In addition to any other remedies which may
be available to the Subscriber, in the event that the
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Company fails for any reason to effect delivery of such shares of
Common Stock within such three business day period, the Subscriber
will be entitled to revoke the relevant Notice of Conversion by
delivering a notice to such effect to the Company whereupon the
Company and the Subscriber shall each be restored to their respective
positions immediately prior to delivery of such Notice of Conversion.
5. RESTRICTIONS ON CONVERSION OF DEBENTURES. The Subscriber or any
subsequent holder of the Debentures (the "Holder") shall be
prohibited from converting any portion of the Debentures which
would result in the Subscriber or the Holder being deemed the
beneficial owner, in accordance with the provisions of Rule 13d-3
of the Securities Exchange Act of 1934, as amended, of five
percent (5%) or more of the then issued and outstanding Common
Stock of the Company or which would result in the Debentures
being converted into an aggregate of more than _______ shares of
Common Stock.
6. SHARES TO BE ISSUED WITHOUT RESTRICTIVE LEGEND. All shares of
Common Stock issuable upon conversion of the Debentures shall be
issued without restrictive legend, in the name of the Subscriber
or such non-U.S. persons as may be designated by the Subscriber
prior to the Closing. The Company warrants that no stop transfer
instructions, other than with respect to transfers to U.S.
Persons of the certificates representing such Debentures during
the Restricted Period, have been given or will be given and that
from and after the expiration of the Restricted Period the
Debentures and the shares of Common Stock issuable upon the
conversion thereof shall be freely transferable on the books and
records of the Company. Nothing in this Section 6, however,
shall affect in any way the Subscriber's obligations and
agreements to comply with all applicable securities laws upon
resale of the Debentures.
7. RELIANCE ON REPRESENTATIONS. The Subscriber understands that the
offer and sale of the Debentures are not being registered under
the Act. The Company an the Subscriber are relying on the rules
governing offers and sales made outside the United States
pursuant to Regulation S.
8. RESALES. Subscriber acknowledges and agrees that the Debentures
may only be resold (a) in compliance with Regulation S; (b)
pursuant to a Registration Statement under the Act; or (c)
pursuant to an exemption from registration under the Act other
than Regulation S.
9. CONFIDENTIALITY. Each of the Company and the Subscriber agrees
to keep confidential and not to disclose to or use for the
benefit of any third party the terms of this Agreement or any
other information which at any time is communicated by the other
party as being confidential without the prior written approval of
the other party; provided, however, that this
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provision shall not apply to information which, at the time of
disclosure, is already part of the public domain (except by
breach of this Agreement) and information which is required to be
disclosed by law.
10. INDEMNIFICATION. Each of the Company and the Subscriber agrees
to indemnify the other and to hold the other harmless from and
against any and all losses, damages, liabilities, costs and
expenses (including reasonable attorneys' fees) which the other
may sustain or incur in connection with the breach by the
indemnifying party of any representation, warranty or covenant
made by it in this Agreement.
11. REGISTRATION. After the expiration of the Restricted Period, if
the Company fails to issue to the Subscriber or the Subscriber s
transferees certificates for shares of Common Stock issuable upon
conversation of the Debentures bearing no restrictive legend and
free of stop transfer instructions for any reason other than the
Company's reasonable good faith belief that the representations
and warranties made by the Subscriber in this Agreement were
untrue when made, then the Company shall be required, at the
request of the Subscriber and the Company's expense, to effect
the registration of such shares of Common Stock under the Act,
and relevant Blue Sky laws as promptly as is practicable. The
Company and the Subscriber shall cooperate in good faith in
connection with the furnishing of information required for such
registration and the taking of such other actions as may be
legally or commercially necessary in order to effect such
registration. The Company shall file a registration statement
within 30 days of Subscriber's written demand therefore and shall
use its best efforts to cause such registration statement to
become effective as soon as practicable thereafter. Such best
efforts shall include, but not be limited to, promptly responding
to all comments received from the staff of the Securities and
Exchange Commission, providing Subscriber's counsel with a
contemporaneous copy of all written communications from and to
the staff of the Securities and Exchange Commission with respect
to such registration statement and promptly preparing and filing
amendments to such registration statement which are responsive to
the comments received from the staff of the Securities and
Exchange Commission. Once declared effective by the Securities
and Exchange Commission, the Company shall cause such
registration statement to remain effective until the earlier of
(i) the sale by the Subscriber of all shares of Common Stock so
registered or (ii) 120 days after the effective date of such
registration statement. In the event that the Company has not
effected the registration of such shares of Common Stock under
the Act and relevant Blue Sky laws within 90 days after the date
of the Subscriber's demand therefore, the Company shall pay to
the Subscriber by wire transfer, as liquidated damages for such
failure and not as a penalty, an amount in cash equal to ______.
Such payment shall be made to the Subscriber immediately upon
expiration of
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the 90-day period referenced in the preceding sentence if the
registration of such shares of Common Stock is not effected by
such date; provided, however, that the payment of such liquidated
damages shall not relieve the Company from its obligations to
register such shares of Common Stock pursuant to this Section 11.
12. NOTICES. Any notice to be given or to be served upon any party
to this Agreement in connection with this Agreement must be in
writing and will be deemed to have been given and received upon
confirmed receipt, if sent by facsimile, or two (2) days after it
has been submitted for delivery by Federal Express or an
equivalent carrier, charges prepaid and addressed to the
following addresses with a confirmation of delivery:
If to the Company, to:
Genta Incorporated
3550 General Atomics Court
San Diego, California 92121
Attention: Howard Sampson
Chief Financial Officer
Phone No.: (619) 455-2700
Fax No.: (619) 455-2712
If to the Subscriber, to:
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Any party may, at any time by giving notice to the other party,
designate any other address in substitution of an address established
pursuant to the foregoing to which such notice will be given.
13. MULTIPLE COUNTERPARTS. This Agreement may be executed in several
counterparts, each of which will be deemed to be an original but
all of which will constitute one in the same instrument.
However, in enforcing any party s rights under this agreement it
will be necessary to produce only one copy of this Agreement
signed by the party to be charged.
14. CERTAIN AGREEMENTS. The Company covenants and agrees that it
will not (I) enter into any subsequent Regulation D or Regulation
S transaction with any third party until the expiration of a
period of 30 days from the closing date or (ii) enter into any
subsequent Regulation D or Regulation S transaction with any
third party within a period of 30 days following
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the foregoing 30-day period without first offering the Subscriber
the opportunity (which shall remain open for a period of five
business days from the date the Subscriber receives notice
thereof) to purchase up to all of such additional Regulation D or
Regulation S securities (in the discretion of the Subscriber) on
the terms and provisions on which the Company proposes to offer
such additional Regulation D or Regulation S securities to such
third parties. In the event that the Subscriber declines to
participate in any such investment, the Company shall provide the
Subscriber with prompt written notice of the consummation of any
such transaction with a third party, specifying the material
terms thereof. However, clauses 14(i) and 14(ii) will not apply
to (i) the issuance of securities in connection with a merger,
consolidation, sale of assets, disposition of a business, product
or license by the Company, strategic alliance, private placement
by a nationally recognized investment banking firm (including
__________________), public offering, securities issued at the
then current market price, in exercise of options or (ii) the
exchange of the capital stock of the Company for assets, stock or
other joint venture interests.
15. GOVERNING LAW. This Agreement will be construed and enforced in
accordance with and governed by the laws of the State of New
York, except for matters arising under the Act, without reference
to principles of conflicts of law. Each of the parties consents
to the jurisdiction of the federal courts whose districts
encompass any part of the State of New York or the state courts
of the State of New York in connection with any dispute arising
under this Agreement and hereby waives, to the maximum extent
permitted by law, any objection, including any objection based on
FORUM NON CONVENIENS, to the bringing of any such proceeding in
such jurisdictions. Each party hereby agrees that if another
party to this Agreement obtains a judgment against it in such a
proceeding, the party which obtained such judgment may enforce
same by summary judgment in the courts of any country having
jurisdiction over the party against whom such judgment was
obtained, and each party hereby waives any defenses available to
it under local law and agrees to the enforcement of such a
judgment. Each party to this Agreement irrevocably consents to
the service of process in any such proceeding by the mailing of
copies thereof by registered or certified mail, postage prepaid,
to such party at its address set forth herein. Nothing herein
shall affect the right of any party to serve process in any other
manner permitted by law.
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The undersigned acknowledges that this Agreement shall not be effective unless
and until accepted by the Company as indicated below.
Dated this ______ day of September, 1996.
----------------------------------------
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
THIS SUBSCRIPTION IS ACCEPTED BY THE COMPANY ON THE ____ DAY OF SEPTEMBER 1996.
GENTA INCORPORATED
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
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EXHIBIT 10.2
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT") AND WERE ISSUED
PURSUANT TO AN EXEMPTION FROM THE REGISTRATION PROVISIONS OF THE ACT UNDER
REGULATION S. SUCH SECURITIES MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE
DISPOSED OF UNLESS THERE IS AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT
COVERING SUCH SECURITIES OR THE ISSUER RECEIVES AN OPINION OF COUNSEL FOR THE
HOLDER OF THE SECURITIES, REASONABLY ACCEPTABLE TO THE ISSUER, TO THE EFFECT
THAT SUCH SALE, TRANSFER OR OTHER DISPOSITION IS EXEMPT FROM THE REGISTRATION
REQUIREMENTS OF THE ACT.
No. R-1 US$_________
GENTA INCORPORATED
4% CONVERTIBLE DEBENTURE DUE AUGUST 1, 1997
THIS DEBENTURE is one of a duly authorized issue of Debentures of
Genta Incorporated, a corporation duly organized and existing under the laws of
the State of Delaware (the "Company"), designated as its 4% Convertible
Debenture Due August 1, 1997, in an aggregate principal amount not exceeding
US$________.
FOR VALUE RECEIVED, the Company promises to pay to ___________, the
registered holder hereof (the "Holder"), the principal sum of US$________, on
August 1, 1997 (the "Maturity Date") and to pay interest on the principal sum
outstanding from time to time in arrears on the Maturity Date or, if earlier, on
each Conversion Date (as hereinafter defined), at the rate of 4% per annum,
computed on the basis of the actual number of days elapsed in a 365-day year.
Accrual of interest shall commence on the date hereof until payment in full of
the principal sum has been made or duly provided for. All accrued and unpaid
interest shall bear interest at the same rate from and after the due date of the
interest payment until so paid. The interest so payable, less any amounts
required by law to be deducted or withheld, will be paid on the Maturity Date
or, if earlier, on each Conversion Date, to the person in whose name this
Debenture (or one or more predecessor Debentures) is registered on the records
of the Company regarding registration and transfers of the Debentures (the
"Debenture Register") on the Conversion Date or tenth day prior to the Maturity
Date, as the case may be; provided, however, that the Company's obligation to a
transferee of this Debenture arises only if such transfer, sale or other
disposition is made in accordance with the terms and conditions of the
Securities Subscription Agreement executed by the original Holder in connection
with the purchase of this Debenture (the "Subscription Agreement"). The
principal of, and interest on, this Debenture are payable in such coin or
currency of the United States of America as at the time of payment is legal
tender for payment of public and private debts or in accordance with
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paragraph 4 herein, at the address last appearing on the Debenture Register of
the Company as designated in writing by the Holder from time to time. The
forwarding of the Company's check, subject to collection, or the delivery of
shares of Common Stock, shall constitute a payment of interest and principal
hereunder and shall satisfy and discharge the liability for principal and
interest on this Debenture to the extent of the sum represented by such check or
number and amount of shares of Common Stock.
This Debenture is subject to the following additional provisions:
1. The Debentures are issuable in denominations of ______________
(US$________) and integral multiples thereof. The Debentures are exchangeable
for an equal aggregate principal amount of Debentures of different authorized
denominations, as requested by the Holders surrendering the same. No service
charge will be made for such registration or transfer or exchange.
2. The Company shall be entitled to withhold from all payments of
principal of, and interest on, this Debenture any amounts required to be
withheld under the applicable provisions of the United States income tax laws or
other applicable laws at the time of such payments.
3. This Debenture has been issued subject to investment
representations of the original purchaser hereof and may be transferred or
exchanged only in compliance with the Securities Act of 1933, as amended (the
"Act"). Prior to due presentment for transfer of this Debenture, the Company
and any agent of the Company may treat the person in whose name this Debenture
is duly registered on the Debenture Register as the owner hereof for the purpose
of receiving payment as herein provided and for all other purposes, whether or
not this Debenture be overdue, and neither the Company nor any such agent shall
be affected by notice to the contrary.
4. The Holder of this Debenture shall, at any time during the
period commencing on and after October 23, 1996, convert up to One Hundred
Percent (100%) of the principal amount of this Debenture (in increments of
not less than One Hundred Thousand Dollars ($100,000)) into shares of common
stock, par value $.001 per share (the "Common Stock"), of the Company at a
conversion price for each share of Common Stock equal to Seventy Five Percent
(75%) of the Market Price of the Company's Common Stock; provided, however,
that in no event may the aggregate number of shares of Common Stock issuable
upon the conversion of the 4% Convertible Debentures Due August 1, 1997 by
the Holder exceed ____________ shares. In the event that the aggregate
number of shares of Common Stock issued upon the conversion of the 4%
Convertible Debentures Due August 1, 1997 equals _______ shares, the Holder
shall be entitled to receive upon any subsequent conversions of such
Debentures cash in lieu of shares of Common Stock in an amount equal to the
product of (x) the number of shares of Common Stock which would otherwise be
issuable upon the conversion of such Debentures and (y) the Market Price of
the Common Stock. For purposes of this Section 4, the Market Price shall be
the average of the closing bid prices of the Common Stock over the five
consecutive trading days ending on the trading day immediately preceding the
Conversion Date, as reported by the National Association of Securities
Automated Quotation
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System ("NASDAQ"), or the average of the closing bid prices of the Common Stock
in the over-the-counter market over the five consecutive trading days ending on
the trading day immediately preceding the Conversion Date or, in the event the
Common Stock is listed on a national stock exchange, the Market Price shall be
the average of the closing prices of the Common Stock on such exchange, as
reported in THE WALL STREET JOURNAL, over the five consecutive trading days
ending on the trading day immediately preceding the Conversion Date or, in the
event that the Common Stock is not listed on any exchange or quoted on the
Nasdaq Stock Market, the average of the closing prices of the Common Stock on
any trading market in which quotes can be obtained over the five consecutive
trading days ending on the trading day immediately preceding the Conversion
Date. Such conversion shall be effectuated by surrendering the Debentures to be
converted to the Company with the form of conversion notice attached hereto as
Exhibit A, executed by the Holder of the Debenture evidencing such Holder's
intention to convert this Debenture or a specified portion (as above provided)
hereof. The amount of accrued but unpaid interest as of the Conversion Date
shall be subject to conversion and paid in shares of Common Stock valued at the
Market Price. No fraction of shares of the Common Stock or scrip representing
fractions of shares will be issued on conversion, but the number of shares of
the Common Stock issuable shall be rounded to the nearest whole share. The date
on which notice of conversion is given shall be deemed to be the date on which
the Holder has delivered this Debenture, with the conversion notice duly
executed, to the Company, or if earlier, the date set forth in such notice of
conversion if the Debenture is received by the Company within three business
days thereafter. Such date is referred to herein as the "Conversion Date."
Facsimile delivery of the conversion notice shall be accepted by the Company.
Certificates representing Common Stock upon conversion will be delivered to the
Holder within three (3) business days from the date the notice of conversion is
delivered to the Company.
5. Any of the following shall constitute an "Event of Default":
a. The Company shall default in the payment of principal or interest
on this Debenture as and when the same shall be due and payable
and such default shall continue for five (5) business days after
the due date thereof; or
b. Any of the representations or warranties made by the Company
herein, in the Subscription Agreement, or in any certificate or
financial or other written statements heretofore or hereafter
furnished by or on behalf of the Company in connection with the
execution and delivery of this Debenture or the Subscription
Agreement shall be false or misleading in any material respect at
the time made; or
c. The Company shall fail to perform or observe, in any material
respect, any other covenant, term, provision, condition,
agreement or obligation of the Company under this Debenture or
the Subscription Agreement and such failure shall continue
uncured for a period of five (5) business days after the first
date on which such failure arises (it being understood that in
the case of defaults which can not reasonably be cured within a
5-day
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period no grace period shall be necessary as a precondition to
the failure to perform such covenant constituting an Event of
Default); or
d. The Company shall (1) make an assignment for the benefit of
creditors or commence proceedings for its dissolution; or (2)
apply for or consent to the appointment of a trustee, liquidator
or receiver for its or for a substantial part of its property or
business; or
e. A trustee, liquidator or receiver shall be appointed for the
Company or for a substantial part of its property or business
without its consent and shall not be discharged within sixty (60)
days after such appointment; or
f. Bankruptcy, reorganization, insolvency or liquidation proceedings
or other proceedings for relief under any bankruptcy law or any
law for the relief of debtors shall be instituted by or against
the Company and, if instituted against the Company, shall not be
dismissed within sixty (60) days after such institution or the
Company shall by any action or answer approve of, consent to, or
acquiesce in any such proceeding or admit the material
allegations of, or default in answering a petition filed in any
such proceeding; or
g. The Company shall have its Common Stock delisted from the Nasdaq
National Market and the Nasdaq SmallCap Market or suspended from
trading thereon, and shall not have its Common Stock relisted or
have such suspension lifted, as the case may be, within five (5)
days; or
h. The Company shall default on the payment of any material
indebtedness for borrowed money beyond any applicable grace
period; or
i. Any judgment, levy or attachment shall be rendered against the
Company or any of its assets or properties in an amount in excess
of $100,000 and such judgment, levy or attachment shall not be
dismissed, stayed, bonded or discharged within thirty (30) days
of the date of entry thereof; or
j. The Company shall be a party to any merger or consolidation or
shall dispose of all or substantially all of its assets in one or
more transactions or shall redeem more than a DE MINIMIS amount
of its outstanding shares of capital stock; or
k. The stockholders of the Company shall not have approved the
increase in the authorized number of shares of Common Stock to
one hundred fifty million at the special meeting of stockholders
to be held on September 19, 1996.
Upon the occurrence of any Event of Default or at any time thereafter, and in
each and every such case, unless such Event of Default shall have been waived in
writing by the Holder (which
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waiver shall not be deemed to be a waiver of any subsequent Event of Default) at
the option of the Holder and in the Holder's sole discretion, the Holder may,
upon written notice to the Company, consider this Debenture immediately due and
payable in an amount equal to the product of (x) the number of shares of Common
Stock into which this Debenture is then convertible and (y) the Market Price of
the Common Stock, together with any accrued and unpaid interest thereon, without
presentment, demand, protest or notice of any kind, all of which are hereby
expressly waived, anything herein or in any note or other instruments contained
to the contrary notwithstanding, and the Holder may immediately, and without
expiration of any period of grace, enforce any and all of the Holder's rights or
remedies afforded by law.
6. No provision of this Debenture shall alter or impair the
obligation of the Company, which is absolute and unconditional, to pay the
principal of, and interest on, this Debenture at the time, place, and rate, and
in the coin or currency, herein prescribed. This Debenture and all other
Debentures now or hereafter issued of similar terms are direct obligations of
the Company. This Debenture ranks equally with all other Debentures now or
hereafter issued under the terms set forth herein.
7. No recourse shall be had for the payment of the principal of, or
the interest on, this Debenture, or for any claim based hereon, or otherwise in
respect hereof, against any incorporator, shareholder, officer or director, as
such, past, present or future, of the Company or any successor corporation,
whether by virtue of any constitution, statute or rule of law, or by the
enforcement of any assessment or penalty or otherwise, all such liability being,
by the acceptance hereof and as part of the consideration for the issue hereof,
expressly waived and released.
8. This Debenture will be construed and enforced in accordance with
and governed by the laws of the State of New York, except for matters arising
under the Act, without reference to principles of conflicts of law. Each of the
parties consents to the jurisdiction of the federal courts whose districts
encompass any part of the State of New York or the state courts of the State of
New York in connection with any dispute arising under this Debenture and hereby
waives, to the maximum extent permitted by law, any objection, including any
objection based on FORUM NON CONVENIENS, to the bringing of any such proceeding
in such jurisdictions. Each party hereby agrees that if another party to this
Debenture obtains a judgment against it in such a proceeding, the party which
obtained such judgment may enforce same by summary judgment in the courts of any
country having jurisdiction over the party against whom such judgment was
obtained, and each party hereby waives any defenses available to it under local
law and agrees to the enforcement of such a judgment. Each party to this
Debenture irrevocably consents to the service of process in any such proceeding
by the mailing of copies thereof by registered or certified mail, postage
prepaid, to such party at its address set forth herein. Nothing herein shall
affect the right of any party to serve process in any other manner permitted by
law.
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IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed by an officer thereunto duly authorized.
GENTA INCORPORATED
By:
-------------------------------------
Name:
-----------------------------------
Title:
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Dated: September ___, 1996.
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EXHIBIT A
NOTICE OF CONVERSION
(To be Executed by the Registered Holder
in order to Convert the Debenture)
The undersigned hereby irrevocably elects to convert the above
Debenture No.____ into Shares of Common Stock of Genta Incorporated (the
"Company") according to the conditions of the Debentures, as of the date written
below.
Date of Conversion
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Applicable Conversion Price
- ------------------------------
Signature
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Address:
* This original Debenture and Notice of Conversion must be received by the
Company by the third business day following the Date of Conversion.
