Exhibit 10.5
THIS WARRANT AND THE COMMON
SHARES ISSUABLE UPON EXERCISE OF THIS WARRANT HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. THIS
WARRANT AND THE COMMON SHARES ISSUABLE UPON EXERCISE OF THIS
WARRANT MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR
HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT
UNDER SAID ACT OR AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO
CERAGENIX PHARMACEUTICALS, INC. THAT SUCH REGISTRATION IS NOT
REQUIRED .
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Right to Purchase
shares of Common Stock of Ceragenix Pharmaceuticals, Inc.
(subject to adjustment as provided herein)
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CLASS A COMMON STOCK
PURCHASE WARRANT
CERAGENIX PHARMACEUTICALS, INC., a
corporation organized under the laws of the State of Delaware (the
“Company”), hereby certifies that, for value received,
,
,
Fax:
or its permitted assigns (the “Holder”), is entitled,
subject to the terms set forth below, to purchase from the Company
at any time after the Issue Date until 5:00 p.m., E.S.T on
August 20, 2013 (the “Expiration Date”), up to
fully paid and nonassessable shares of Common Stock at a per share
purchase price of $0.80. The aforedescribed purchase price
per share, as adjusted from time to time as herein provided, is
referred to herein as the “Purchase Price.” The
number and character of such shares of Common Stock and the
Purchase Price are subject to adjustment as provided herein.
The Company may reduce the Purchase Price without the consent of
the Holder. Capitalized terms used and not otherwise defined
herein shall have the meanings set forth in that certain
Subscription Agreement (the “ Subscription Agreement
”), dated November 28, 2005, as amended, entered into by
the Company and Holders of the Class A Warrants.
As used herein the following terms,
unless the context otherwise requires, have the following
respective meanings:
(a)
The term “Company” shall
include Ceragenix Pharmaceuticals, Inc. and any corporation
which shall succeed or assume the obligations of Ceragenix
Pharmaceuticals, Inc. hereunder.
(b)
The term “Common Stock”
includes (a) the Company’s Common Stock, $0.0001 par
value per share, as authorized on the date of the Subscription
Agreement, and (b) any other securities into which or for
which any of the securities described in (a) may be converted
or exchanged pursuant to a plan of recapitalization,
reorganization, merger, sale of assets or otherwise.
(c)
The term “Other
Securities” refers to any stock (other than Common Stock) and
other securities of the Company or any other person (corporate or
otherwise) which the holder of the Warrant at any time shall be
entitled to receive, or shall have received, on the exercise of the
Warrant, in lieu of or in addition to Common Stock, or which at any
time shall be issuable or shall have been issued in exchange for or
in replacement of Common Stock or Other Securities pursuant to
Section 5 or otherwise.
(d)
The term “Warrant
Shares” shall mean the Common Stock issuable upon exercise of
this Warrant.
1.
Exercise of Warrant
.
1.1.
Number of Shares Issuable upon
Exercise . From and
after the Issue Date through and including the Expiration Date, the
Holder hereof shall be entitled to receive, upon exercise of
this
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Warrant in whole in accordance with
the terms of subsection 1.2 or upon exercise of this Warrant
in part in accordance with subsection 1.3, shares of Common
Stock of the Company, subject to adjustment pursuant to
Section 4.
1.2.
Full Exercise
. This Warrant may be
exercised in full by the Holder hereof by delivery of an original
or facsimile copy of the form of subscription attached as
Exhibit A hereto (the “Subscription Form”) duly
executed by such Holder and surrender of the original Warrant
within four (4) days of exercise, to the Company at its
principal office or at the office of its Warrant Agent (as provided
hereinafter), accompanied by payment, in cash, wire transfer or by
certified or official bank check payable to the order of the
Company, in the amount obtained by multiplying the number of shares
of Common Stock for which this Warrant is then exercisable by the
Purchase Price then in effect.
1.3.
Partial Exercise
. This Warrant may be
exercised in part (but not for a fractional share) by surrender of
this Warrant in the manner and at the place provided in
subsection 1.2 except that the amount payable by the Holder on
such partial exercise shall be the amount obtained by multiplying
(a) the number of whole shares of Common Stock designated by
the Holder in the Subscription Form by (b) the Purchase
Price then in effect. On any such partial exercise, the
Company, at its expense, will forthwith issue and deliver to or
upon the order of the Holder hereof a new Warrant of like tenor, in
the name of the Holder hereof or as such Holder (upon payment by
such Holder of any applicable transfer taxes) may request, the
whole number of shares of Common Stock for which such Warrant may
still be exercised.
1.4.
Fair Market Value
. Fair Market Value of a share of
Common Stock as of a particular date (the “Determination
Date”) shall mean:
(a)
If the Company’s Common Stock
is traded on an exchange or is quoted on the National Association
of Securities Dealers, Inc. Automated Quotation
(“NASDAQ”), National Market System, the NASDAQ SmallCap
Market or the American Stock Exchange, LLC, then the closing or
last sale price, respectively, reported for the last business day
immediately preceding the Determination Date;
(b)
If the Company’s Common Stock
is not traded on an exchange or on the NASDAQ National Market
System, the NASDAQ SmallCap Market or the American Stock
Exchange, Inc., but is traded in the over-the-counter market,
then the average of the closing bid and ask prices reported for the
last business day immediately preceding the Determination
Date;
(c)
Except as provided in clause
(d) below, if the Company’s Common Stock is not publicly
traded, then as the Holder and the Company agree, or in the absence
of such an agreement, by arbitration in accordance with the
rules then standing of the American Arbitration Association,
before a single arbitrator to be chosen from a panel of persons
qualified by education and training to pass on the matter to be
decided; or
(d)
If the Determination Date is the
date of a liquidation, dissolution or winding up, or any event
deemed to be a liquidation, dissolution or winding up pursuant to
the Company’s charter, then all amounts to be payable per
share to holders of the Common Stock pursuant to the charter in the
event of such liquidation, dissolution or winding up, plus all
other amounts to be payable per share in respect of the Common
Stock in liquidation under the charter, assuming for the purposes
of this clause (d) that all of the shares of Common Stock then
issuable upon exercise of all of the Warrants are outstanding at
the Determination Date.
1.5.
Company Acknowledgment
. The Company will, at the time of
the exercise of the Warrant, upon the request of the Holder hereof
acknowledge in writing its continuing obligation to afford to such
Holder any rights to which such Holder shall continue to be
entitled after such exercise in
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accordance with the provisions of
this Warrant. If the Holder shall fail to make any such request,
such failure shall not affect the continuing obligation of the
Company to afford to such Holder any such rights.
1.6.
Trustee for Warrant
Holders . In the event
that a bank or trust company shall have been appointed as trustee
for the Holder of the Warrants pursuant to Subsection 3.2,
such bank or trust company shall have all the powers and duties of
a warrant agent (as hereinafter described) and shall accept, in its
own name for the account of the Company or such successor person as
may be entitled thereto, all amounts otherwise payable to the
Company or such successor, as the case may be, on exercise of this
Warrant pursuant to this Section 1.
1.7
Delivery of Stock Certificates,
etc. on Exercise . The
Company agrees that the shares of Common Stock purchased upon
exercise of this Warrant shall be deemed to be issued to the Holder
hereof as the record owner of such shares as of the close of
business on the date on which this Warrant shall have been
surrendered and payment made for such shares as aforesaid. As soon
as practicable after the exercise of this Warrant in full or in
part, and in any event within three (3) business days
thereafter, the Company at its expense (including the payment by it
of any applicable issue taxes) will cause to be issued in the name
of and delivered to the Holder hereof, or as such Holder (upon
payment by such Holder of any applicable transfer taxes) may direct
in compliance with applicable securities laws, a certificate or
certificates for the number of duly and validly issued, fully paid
and nonassessable shares of Common Stock (or Other Securities) to
which such Holder shall be entitled on such exercise, plus, in lieu
of any fractional share to which such Holder would otherwise be
entitled, cash equal to such fraction multiplied by the then Fair
Market Value of one full share of Common Stock, together with any
other stock or other securities and property (including cash, where
applicable) to which such Holder is entitled upon such exercise
pursuant to Section 1 or otherwise.
2.
Cashless Exercise
.
(a)
Except as described below, if a
Registration Statement (as defined in the Subscription Agreement)
(“Registration Statement”) is effective and the Holder
may sell its shares of Common Stock upon exercise hereof pursuant
to the Registration Statement, this Warrant may be exercisable in
whole or in part for cash only as set forth in Section 1
above. If no such Registration Statement is available during
the time that such Registration Statement is required to be
effective pursuant to the terms of the Subscription Agreement, then
payment upon exercise may be made at the option of the Holder
either in (i) cash, wire transfer or by certified or official
bank check payable to the order of the Company equal to the
applicable aggregate Purchase Price, (ii) by cashless exercise
in accordance with Section (b) below or (iii) by a
combination of any of the foregoing methods, for the number of
Common Stock specified in such form (as such exercise number shall
be adjusted to reflect any adjustment in the total number of shares
of Common Stock issuable to the holder per the terms of this
Warrant) and the holder shall thereupon be entitled to receive the
number of duly authorized, validly issued, fully-paid and
non-assessable shares of Common Stock (or Other Securities)
determined as provided herein.
(b)
If the Fair Market Value of one
share of Common Stock is greater than the Purchase Price (at the
date of calculation as set forth below), in lieu of exercising this
Warrant for cash, the holder may elect to receive shares equal to
the value (as determined below) of this Warrant (or the portion
thereof being cancelled) by surrender of this Warrant at the
principal office of the Company together with the properly endorsed
Subscription Form in which event the Company shall issue to
the holder a number of shares of Common Stock computed using the
following formula:
X= Y (A-B)
A
Where
X=
the number of shares of Common Stock
to be issued to the holder
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Y=
the number of shares of Common Stock
purchasable under the Warrant or, if only a portion of the Warrant
is being exercised, the portion of the Warrant being exercised (at
the date of such calculation)
A=
the Fair Market Value of one share
of the Company’s Common Stock (at the date of such
calculation)
B=
Purchase Price (as adjusted to the
date of such calculation)
(c)
The Holder may employ the cashless
exercise feature described in Section (b) above only
during the penden
