Exhibit 10.4
NEITHER THIS SECURITY NOR THE SECURITIES INTO
WHICH THIS SECURITY IS 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. THIS SECURITY AND THE SECURITIES
ISSUABLE UPON EXERCISE OF THIS SECURITY MAY BE PLEDGED IN
CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN SECURED BY
SUCH SECURITIES.
COMMON STOCK PURCHASE
WARRANT
CERAGENIX PHARMACEUTICALS,
INC.
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Warrant Shares:
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Initial Exercise Date:
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THIS COMMON STOCK PURCHASE WARRANT
(the “ Warrant ”) certifies that, for value
received,
(the “ Holder ”), is entitled, upon the terms
and subject to the limitations on exercise and the conditions
hereinafter set forth, at any time on or after the date hereof (the
“ Initial Exercise Date ”) and on or prior to
the close of business on the five year anniversary of the Initial
Exercise Date (the “ Termination Date ”) but not
thereafter, to subscribe for and purchase from Ceragenix
Pharmaceuticals, Inc., a Delaware corporation (the “
Company ”), up to
shares (the “ Warrant Shares ”) of common stock,
par value $.0001 per share, of the Company (the “ Common
Stock ”). The purchase price of one share of Common
Stock under this Warrant shall be equal to the Exercise Price, as
defined in Section 2(b).
Section 1
.
Definitions
. Capitalized terms used and
not otherwise defined herein shall have the meanings set forth in
that certain Securities Purchase Agreement (the “ Purchase
Agreement ”), dated December 5, 2006, as amended,
among the Company and the purchasers signatory thereto.
Section 2
.
Exercise .
a)
Exercise of
Warrant . Exercise
of the purchase rights represented by this Warrant may be made, in
whole or in part, at any time or times on or after the Initial
Exercise Date and on or before the Termination Date by delivery to
the Company of a duly executed facsimile copy of the Notice of
Exercise Form annexed hereto (or such other office or agency
of the Company as it may designate by notice in writing to the
registered Holder at the address of such Holder appearing on the
books of the Company); and, within 3 Trading Days of the date said
Notice of Exercise is delivered to the Company, the Company shall
have received payment of the aggregate Exercise Price of the shares
thereby purchased by wire transfer or cashier’s check drawn
on a United States bank. Notwithstanding anything herein to
the contrary, the Holder shall not be required to physically
surrender this Warrant to the Company until the Holder has
purchased all of the Warrant Shares available hereunder and the
Warrant has been exercised in full, in which case, the Holder shall
surrender this Warrant to the Company for cancellation within 3
Trading Days of the date the final Notice of Exercise is delivered
to the Company. Partial exercises of this Warrant resulting
in purchases of a portion of the total number of Warrant Shares
available hereunder shall have the effect of lowering the
outstanding number of Warrant Shares purchasable hereunder in an
amount equal to the applicable number of Warrant Shares
purchased. The Holder and the Company shall maintain records
showing the number of Warrant Shares purchased and the date
of
such purchases. The Company
shall deliver any objection to any Notice of Exercise
Form within two (2) Business Days of receipt of such
notice. The Holder and any assignee, by acceptance of this
Warrant, acknowledge and agree that, by reason of the provisions of
this paragraph, following the purchase of a portion of the Warrant
Shares hereunder, the number of Warrant Shares available for
purchase hereunder at any given time may be less than the amount
stated on the face hereof. !
b)
Exercise Price
. The exercise price per share
of the Common Stock under this Warrant shall be $0.80 ,
subject to adjustment hereunder (the “ Exercise Price
”).
c)
Cashless Exercise
. If at any time after one
year from the date of issuance of this Warrant there is no
effective Registration Statement registering, or no current
prospectus available for, the resale of the Warrant Shares by the
Holder, then this Warrant may also be exercised at such time by
means of a “cashless exercise” in which the Holder
shall be entitled to receive a certificate for the number of
Warrant Shares equal to the quotient obtained by dividing [(A-B)
(X)] by (A), where:
(A) = the VWAP on the
Trading Day immediately preceding the date of such
election;
(B) = the Exercise Price
of this Warrant, as adjusted; and
(X) = the number of
Warrant Shares issuable upon exercise of this Warrant in accordance
with the terms of this Warrant by means of a cash exercise rather
than a cashless exercise, or if only a portion of the Warrant is
being exercised, the portion of the Warrant being exercised (at the
date of such calculation).
Notwithstanding anything herein to
the contrary, on the Termination Date, this Warrant shall be
automatically exercised via cashless exercise pursuant to this
Section 2(c).
d)
Holder’s
Restrictions . The
Company shall not effect any exercise of this Warrant, and a Holder
shall not have the right to exercise any portion of this Warrant,
pursuant to Section 2(c) or otherwise, to the extent that
after giving effect to such issuance after exercise as set forth on
the applicable Notice of Exercise, such Holder (together with such
Holder’s Affiliates, and any other person or entity acting as
a group together with such Holder or any of such Holder’s
Affiliates), as set forth on the applicable Notice of Exercise,
would beneficially own in excess of the Beneficial Ownership
Limitation (as defined below). For purposes of the foregoing
sentence, the number of shares of Common Stock beneficially owned
by such Holder and its Affiliates shall include the number of
shares of Common Stock issuable upon exercise of this Warrant with
respect to which such determination is being made, but shall
exclude the number of shares of Common Stock which would be
issuable upon (A) exercise of the remaining, nonexercised
portion of this Warrant beneficially owned by such Holder or any of
its Affiliates and (B) exercise or conversion of the
unexercised or nonconverted portion of any other securities of the
Company (including, without limitation, any other Debentures or
Warrants) subject to a limitation on conversion or exercise
analogous to the limitation contained herein beneficially owned by
such Holder or any of its affiliates. Except as set forth in
the preceding sentence, for purposes of this Section 2(d)(i),
beneficial ownership shall be calculated in accordance with
Section 13(d) of the Exchange Act and the rules and
regulations promulgated thereunder, it being acknowledged by a
Holder that the Company is not representing to such Holder that
such calculation is in compliance with Section 13(d) of
the Exchange Act and such Holder is solely responsible for any
schedules required to be filed in accordance therewith.
To the extent that the limitation contained in this
Section 2(d) applies, the determination of whether this
Warrant is exercisable (in relation to other securities owned by
such Holder together with any Affiliates) and of which a portion of
this Warrant is exercisable shall be in the sole discretion of a
Holder, and the submission of a Notice of Exercise shall be deemed
to be each Holder’s determination of whether this Warrant is
exercisable (in relation to other securities owned by such Holder
together with any Affiliates) and of which portion of this Warrant
is exercisable, in each case subject to such aggregate percentage
limitation, and the Company shall have no obligation to verify or
confirm the accuracy of such
determination. In
addition, a determination as to any group status as contemplated
above shall be determined in accordance with
Section 13(d) of the Exchange Act and the rules and
regulations promulgated thereunder. For purposes of this
Section 2(d), in determining the number of outstanding shares
of Common Stock, a Holder may rely on the number of outstanding
shares of Common Stock as reflected in (x) the Company’s
most recent Form 10-QSB or Form 10-KSB, as the case may
be, (y) a more recent public announcement by the Company or
(z) any other notice by the Company or the Company’s
Transfer Agent setting forth the number of shares of Common Stock
outstanding. Upon the written or oral request of a Holder,
the Company shall within two Trading Days confirm orally and in
writing to such Holder the number of shares of Common Stock then
outstanding. In any case, the number of outstanding shares of
Common Stock shall be determined after giving effect to the
conversion or exercise of securities of the Company, including this
Warrant, by such Holder or its Affiliates since the date as of
which such number of outstanding shares of Common Stock was
reported. The “ Beneficial Ownership Limitation
” shall be 4.99% of the number of shares of the Common Stock
outstanding immediately after giving effect to the issuance of
shares of Common Stock issuable upon exercise of this
Warrant. The Beneficial Ownership Limitation provisions of
this Section 2(d)(i) may be waived by such Holder, at the
election of such Holder, upon not less than 61 days’ prior
notice to the Company to change the Beneficial Ownership Limitation
to 9.99% of the number of shares of the Common Stock outstanding
immediately after giving effect to the issuance of shares of Common
Stock upon exercise of this Warrant, and the provisions of this
Section 2(d) shall continue to apply. Upon such a
change by a Holder of the Beneficial Ownership Limitation from such
4.99% limitation to such 9.99% limitation, the Beneficial Ownership
Limitation may not be further waived by such Holder. The
provisions of this paragraph shall be construed and implemented in
a manner otherwise than in strict conformity with the terms of this
Section 2(d)(i) to correct this paragraph (or any portion
hereof) which may be defective or inconsistent with the intended
Beneficial Ownership Limitation herein contained or to make changes
or supplements necessary or desirable to properly give effect to
such limitation. The limitations contained in this paragraph shall
apply to a successor holder of this Warrant.
e)
Mechanics of Exercise
.
i.
Authorization of Warrant Shares . The Company
covenants that all Warrant Shares which may be issued upon the
exercise of the purchase rights represented by this Warrant will,
upon exercise of the purchase rights represented by this Warrant,
be duly authorized, validly issued, fully paid and nonassessable
and free from all taxes, liens and charges created by the Company
in respect of the issue thereof (other than taxes in respect of any
transfer occurring contemporaneously with such issue).
ii.
Delivery of Certificates Upon Exercise . Certificates
for shares purchased hereunder shall be transmitted by the transfer
agent of the Company to the Holder by crediting the account of the
Holder’s prime broker with the Depository Trust Company
through its Deposit Withdrawal Agent Commission (“
DWAC ”) system if the Company is a participant in such
system, and otherwise by physical delivery to the address specified
by the Holder in the Notice of Exercise within 3 Trading Days from
the delivery to the Company of the Notice of Exercise Form,
surrender of this Warrant (if required) and payment of the
aggregate Exercise Price as set forth above (“ Warrant
Share Delivery Date ”). This Warrant shall be
deemed to have been exercised on the date the Exercise Price is
received by the Company. The Warrant Shares shall be deemed
to have been issued, and Holder or any other person so designated
to be named therein shall be deemed to have become a holder of
record of such shares for all purposes, as of the date the Warrant
has been exercised by payment to the Company of the Exercise Price
(or by cashless exercise, if permitted) and all taxes required to
be paid by the Holder, if any, pursuant to
Section 2(e)(vii) prior to the issuance of such shares,
have been paid.
iii.
Delivery of New Warrants Upon Exercise . If this
Warrant shall have been exercised in part, the Company shall, at
the request of a Holder and upon surrender of this Warrant
certificate, at the time of delivery of the certificate or
certificates representing Warrant Shares, deliver to Holder a new
Warrant evidencing the rights of Holder to purchase the unpurchased
Warrant Shares called for by this Warrant, which new Warrant shall
in all other respects be identical with this Warrant.
iv.
Rescission Rights . If the Company fails to cause its
transfer agent to transmit to the Holder a certificate or
certificates representing the Warrant Shares pursuant to this
Section 2(e)(iv) by the Warrant Share Delivery Date, then
the Holder will have the right to rescind such exercise.
v.
Compensation for Buy-In on Failure to Timely Deliver
Certificates Upon Exercise . In addition to any other
rights available to the Holder, if the Company fails to cause its
transfer agent to transmit to the Holder a certificate or
certificates representing the Warrant Shares pursuant to an
exercise on or before the Warrant Share Delivery Date, and if after
such date the Holder is required by its broker to purchase (in an
open market transaction or otherwise) or the Holder’s
brokerage firm otherwise purchases, 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 times
(B) the price at which the sell order giving rise to such
purchase obligation was executed, 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. For example, if
the Holder purchases Common Stock having a total purchase price of
$11,000 to cover a Buy-In with respect to an attempted exercise of
shares of Common Stock with an aggregate sale price giving rise to
such purchase obligation of $10,000, under clause (1) of the
immediately preceding sentence the Company shall be required to pay
the Holder $1,000. The Holder shall provide the Company written
notice indicating the amounts payable to the Holder in respect of
the Buy-In and, upon request of the Company, evidence of the amount
of such loss. 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.
vi.
No Fractional Shares or Scrip . No fractional shares
or scrip representing fractional shares shall be issued upon the
exercise of this Warrant. As to any fraction of a share which
Holder would otherwise be entitled to purchase upon such exercise,
the Company shall at its election, either pay a cash adjustment in
respect of such final fraction in an amount equal to such fraction
multiplied by the Exercise Price or round up to the next whole
share.
vii.
Charges, Taxes and Expenses . Issuance of certificates
for Warrant Shares shall be made without charge to the Holder for
any issue or transfer tax
or other incidental expense in
respect of the issuance of such certificate, all of which taxes and
expenses shall be paid by the Company, and such certificates shall
be issued in the name of the Holder or in such name or names as may
be directed by the Holder; provided , however , that
in the event certificates for Warrant Shares are to be issued in a
name other than the name of the Holder, this Warrant when
surrendered for exercise shall be accompanied by the Assignment
Form attached hereto duly executed by the Holder; and the
Company may require, as a condition thereto, the payment of a sum
sufficient to reimburse it for any transfer tax incidental
thereto.
viii.
Closing of Books . The Company will not close its
stockholder books or records in any manner which prevents the
timely exercise of this Warrant, pursuant to the terms
hereof.
Section 3
.
Certain Adjustments .
a)
Stock Dividends and
Splits . If the Company,
at any time while this Warrant is outstanding: (A) except for
dividends to the Series A Stockholders in accordance with the
terms of the Company’s Certificate of Designations,
Preferences and Rights of Series A Convertible Preferred
Stock, as amended, in effect as of the date hereof, pays a stock
dividend or otherwise make a distribution or distributions on
shares of its Common Stock or any other equity or equity equivalent
securiti
