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NEITHER THIS SECURITY NOR THE SECURITIES FOR 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
NEURALSTEM, INC. Warrant Shares:
[_______] Initial
Exercise Date: December ___, 2008
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
“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 Neuralstem, Inc., a Delaware
corporation (the “Company”), up to _____________ shares
(the “Warrant Shares”) of 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.
“Affiliate” means any Person that, directly or
indirectly through one or more intermediaries, controls or is
controlled by or is under common control with a Person, as such
terms are used in and construed under Rule 405 under the Securities
Act. With respect to a Holder, any investment fund or
managed account that is managed on a discretionary basis by the
same investment manager as such Holder will be deemed to be an
Affiliate of such Holder.
“Board of Directors” means the board of directors of
the Company. “Business Day” means any day except
any Saturday, any Sunday, any day which is a federal legal holiday
in the United States or any day on which banking institutions in
the State of New York are authorized or required by law or other
governmental action to close. “Commission” means
the Securities and Exchange Commission. “Common
Stock” means the common stock of the Company, par value $0.01
per share, and any other class of securities into which such
securities may hereafter be reclassified or changed into.
“Exchange Act” means the Securities Exchange Act of
1934, as amended, and the rules and regulations promulgated
thereunder.
“Market Price” means: (a) the closing bid price
reported on the Company’s Trading Market on the Trading Day
immediately preceding any applicable measuring date, (b) if the
Company’s Common Shares are not then listed on a Trading
Market, the price offered by any acquirer in a Fundamental
Transaction, or (b) in all other cases, the fair market value
of a share of Common Stock as determined by the Company’s
Board of Directors. “Rule 144” means Rule 144
promulgated by the Commission pursuant to the Securities Act, as
such Rule may be amended from time to time, or any similar rule or
regulation hereafter adopted by the Commission having substantially
the same effect as such Rule. “Securities Act”
means the Securities Act of 1933, as amended, and the rules and
regulations promulgated thereunder. “Trading
Day” means a day on which the New York Stock Exchange is open
for trading. “Trading Market” means the
following markets or exchanges on which the Common Stock is listed
or quoted for trading on the date in question: the American Stock
Exchange, the Nasdaq Capital Market, the Nasdaq Global Market, the
Nasdaq Global Select Market, the New York Stock Exchange, the OTC
Bulletin Board, and the “Pink Sheets”.
“Transfer Agent” means American Stock Transfer and
Trust Company, the current transfer agent of the Company with a
mailing address of 59 Maiden Lane, New York, New York 10038 and a
facsimile number of (718) 921-8336, and any successor transfer
agent of the Company. 2
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 (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 the Holder appearing on
the books of the Company) of a duly executed facsimile copy of the
Notice of Exercise Form annexed hereto; and, within 3 Business 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 Business 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 1 Business Day of
receipt of such notice. In the event of any dispute or
discrepancy, the records of the Holder shall be controlling and
determinative in the absence of manifest error. 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 $1.50, subject to adjustment hereunder
(the “Exercise Price”). 3
c) Exercise
Limitations. 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 or otherwise, to the
extent that after giving effect to such issuance after exercise as
set forth on the applicable Notice of Exercise, the Holder
(together with the Holder’s Affiliates, and any other person
or entity acting as a group together with the Holder or any of the
Holder’s Affiliates), 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 the 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 the 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 Common Stock
Equivalents) subject to a limitation on conversion or exercise
analogous to the limitation contained herein beneficially owned by
the Holder or any of its affiliates. Except as set forth in
the preceding sentence, for purposes of this Section 2(c),
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 the Holder that the Company is
not representing to the Holder that such calculation is in
compliance with Section 13(d) of the Exchange Act and the 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(c) applies, the
determination of whether this Warrant is exercisable (in relation
to other securities owned by the Holder together with any
Affiliates) and of which portion of this Warrant is exercisable
shall be in the sole discretion of the Holder, and the submission
of a Notice of Exercise shall be deemed to be the Holder’s
determination of whether this Warrant is exercisable (in relation
to other securities owned by the Holder together with any
Affiliates) and of which portion of this Warrant is exercisable, in
each case subject to the Beneficial Ownership Limitation, and the
Company shall have no obligation to verify or confirm the accuracy
of such determination. In addition, a
determination as to any group status as contemplated above shall be
determined in accordance with Section 13(d) of the Exchange Act and
the rules and regulations promulgated thereunder. For
purposes of this Section 2(c), 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 periodic or annual report, as the case
may be, (y) a more recent public announcement by the Company or (z)
any other notice by the Company or the 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 five
Trading Days confirm orally and in writing to the 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 the 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 Holder, upon not less
than 61 days’ prior notice to the Company, may increase or
decrease the Beneficial Ownership Limitation provisions of this
Section 2(c), provided that the Beneficial Ownership Limitation in
no event exceeds 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 held by the
Holder and the provisions of this Section 2(c) shall continue to
apply. Any such increase or decrease will not be
effective until the 61st day after such notice is delivered to the
Company. 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(c) 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. 4
d) Mechanics
of Exercise. i. Delivery
of Certificates Upon Exercise. Certificates for shares
purchased hereunder shall be transmitted by the transfer agent by
physical delivery to the address specified by the Holder in the
Notice of Exercise within 5 Business 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 (the “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 and all
taxes required to be paid by the Holder, if any, pursuant to
Section 2(d)(v) prior to the issuance of such shares, have been
paid. ii. 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.
iii. Rescission Rights. If the
Company fails to cause the transfer agent of the Company to
transmit to the Holder a certificate or the certificates
representing the Warrant Shares pursuant to Section 2(d)(i) by the
Warrant Share Delivery Date, then, the Holder will have the right
to rescind such exercise. iv. 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. 5
v. 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. vi. 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: (i) pays a stock dividend or otherwise make
a distribution or distributions on shares of its Common Stock or
any
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