Exhibit 4.1
THIS WARRANT AND THE SHARES OF
COMMON STOCK ISSUABLE UPON EXERCISE HEREOF HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “
SECURITIES ACT ” ), OR ANY STATE SECURITIES LAWS AND
MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF UNLESS
REGISTERED UNDER THE SECURITIES ACT AND UNDER APPLICABLE STATE
SECURITIES LAWS OR THE ISSUER SHALL HAVE RECEIVED AN OPINION OF
COUNSEL REASONABLY SATISFACTORY TO THE ISSUER THAT REGISTRATION OF
SUCH SECURITIES UNDER THE SECURITIES ACT AND UNDER THE PROVISIONS
OF APPLICABLE STATE SECURITIES LAWS IS NOT REQUIRED.
WARRANT TO PURCHASE
SHARES OF COMMON STOCK
OF
AVICENA GROUP, INC.
Expires September 17,
2013
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No.: W-D-
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Number of Shares:
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Date of Issuance: September 18,
2008
FOR VALUE RECEIVED, the undersigned,
AVICENA GROUP, INC. , a Delaware corporation (together with
its successors and assigns, the “ Issuer
” ), hereby certifies that
or its registered assigns is entitled to subscribe for and
purchase, during the Term (as hereinafter defined), up to
(
) shares (subject to adjustment as hereinafter provided) of the
duly authorized, validly issued, fully paid and non-assessable
Common Stock of the Issuer, at an exercise price per share equal to
the Warrant Price then in effect, subject, however, to the
provisions and upon the terms and conditions hereinafter set forth.
Capitalized terms used in this Warrant and not otherwise defined
herein shall have the respective meanings specified in
Section 9 hereof.
1. Term . The term of this
Warrant shall commence on September 18, 2008 and shall expire
at 6:00 p.m., Eastern Time, on September 17, 2013 (such period
being the “Term” ).
2. Method of Exercise; Payment;
Issuance of New Warrant; Transfer and Exchange .
(a) Time of Exercise . The
purchase rights represented by this Warrant may be exercised in
whole or in part during the Term.
(b) Method of Exercise . The
Holder hereof may exercise this Warrant, in whole or in part, by
the surrender of this Warrant (with the exercise form attached
hereto duly executed) at the principal office of the Issuer, and by
the payment to the Issuer of an amount of consideration therefore
equal to the Warrant Price in effect on the date of such exercise
multiplied by the number of shares of Warrant Stock with respect to
which this Warrant is then being exercised, payable at such
Holder’s election (i) by certified or official bank
check or by wire transfer to an account designated by the Issuer,
(ii) by “cashless exercise” in accordance with the
provisions of subsection (c) of this
Section 2 , but only when a registration
statement under the Securities Act providing for the resale of the
Warrant Stock is not then in effect, or (iii) by a combination
of the foregoing methods of payment selected by the Holder of this
Warrant.
(c) Cashless Exercise .
Notwithstanding any provision herein to the contrary, but subject
to Section 2(b)(ii) hereof, and commencing one
(1) year following the Original Issue Date if the Per Share
Market Value of one share of Common Stock is greater than the
Warrant Price (at the date of calculation as set forth below), in
lieu of
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exercising this Warrant by payment of cash, the
Holder may exercise this Warrant by a cashless exercise by
surrender of this Warrant at the principal office of the Issuer
together with the properly endorsed Notice of Exercise, in which
event the Issuer shall issue to the Holder a number of shares of
Common Stock computed using the following formula:
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X =
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Y- (A)(Y)
B
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Where
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X =
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the number of
shares of Common Stock to be issued to the Holder.
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Y =
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the number of
shares of Common Stock purchasable upon exercise of all of the
Warrant or, if only a portion of the Warrant is being exercised,
the portion of the Warrant being exercised.
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A =
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the Warrant
Price.
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B =
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the Per Share
Market Value of one share of Common Stock.
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(d) Issuance of Stock
Certificates . In the event of any exercise of this Warrant in
accordance with and subject to the terms and conditions hereof,
certificates for the shares of Warrant Stock so purchased shall be
dated the date of such exercise and delivered to the Holder hereof
within a reasonable time, not exceeding three (3) Trading Days
after such exercise (the “ Delivery Date
”) or, at the request of the Holder (provided that a
registration statement under the Securities Act providing for the
resale of the Warrant Stock is then in effect or that the shares of
Warrant Stock are otherwise exempt from registration), issued and
delivered to the Depository Trust Company (“
DTC ”) account on the Holder’s behalf via
the Deposit Withdrawal Agent Commission System (“
DWAC ”) within a reasonable time, not exceeding
three (3) Trading Days after such exercise, and the Holder
hereof shall be deemed for all purposes to be the holder of the
shares of Warrant Stock so purchased as of the date of such
exercise. Notwithstanding the foregoing to the contrary, the Issuer
or its transfer agent shall only be obligated to issue and deliver
the shares to the DTC on a holder’s behalf via DWAC if such
exercise is in connection with a sale or other exemption from
registration by which the shares may be issued without a
restrictive legend and the Issuer and its transfer agent are
participating in DTC through the DWAC system. The Holder shall
deliver this original Warrant, or an indemnification reasonably
acceptable to the Issuer undertaking with respect to such Warrant
in the case of its loss, theft or destruction, at such time that
this Warrant is fully exercised. With respect to partial exercises
of this Warrant, the Issuer shall keep written records for the
Holder of the number of shares of Warrant Stock exercised as of
each date of exercise.
(e) Transferability of
Warrant . Subject to Section 2(f) hereof,
this Warrant may be transferred by a Holder, in whole or in part,
without the consent of the Issuer. If transferred pursuant to this
paragraph, this Warrant may be transferred on the books of the
Issuer by the Holder hereof in person or by duly authorized
attorney, upon surrender of this Warrant at the principal office of
the Issuer, properly endorsed (by the Holder executing an
assignment in the form attached hereto) and upon payment of any
necessary transfer tax or other governmental charge imposed upon
such transfer. This Warrant is exchangeable at the principal office
of the Issuer for Warrants to purchase the same aggregate number of
shares of Warrant Stock, each new Warrant to represent the right to
purchase such number of shares of Warrant Stock as the Holder
hereof shall designate at the time of such exchange. All Warrants
issued on transfers or exchanges shall be dated the Original Issue
Date and shall be identical with this Warrant except as to the
number of shares of Warrant Stock issuable pursuant
thereto.
(f) Compliance with Securities
Laws .
(i) The Holder of this Warrant, by
acceptance hereof, acknowledges that this Warrant and the shares of
Warrant Stock to be issued upon exercise hereof are being acquired
solely for the Holder’s own account and not as a nominee for
any other party, and for investment, and that the Holder will not
offer, sell or otherwise dispose of this Warrant or any shares of
Warrant Stock to be issued upon exercise hereof except pursuant to
an effective registration statement, or an exemption from
registration, under the Securities Act and any applicable state
securities laws.
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(ii) Except as provided in paragraph
(iii) below, this Warrant and all certificates representing
shares of Warrant Stock issued upon exercise hereof shall be
stamped or imprinted with a legend in substantially the following
form:
THIS WARRANT AND THE SHARES OF
COMMON STOCK ISSUABLE UPON EXERCISE HEREOF HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “
SECURITIES ACT ”), OR ANY STATE
SECURITIES LAWS AND MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE
DISPOSED OF UNLESS REGISTERED UNDER THE SECURITIES ACT AND UNDER
APPLICABLE STATE SECURITIES LAWS OR THE ISSUER SHALL HAVE RECEIVED
AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE ISSUER THAT
REGISTRATION OF SUCH SECURITIES UNDER THE SECURITIES ACT AND UNDER
THE PROVISIONS OF APPLICABLE STATE SECURITIES LAWS IS NOT
REQUIRED.
(iii) The Issuer agrees to reissue
this Warrant or certificates representing any of the Warrant Stock,
without the legend set forth above, if at such time, prior to
making any transfer of any such securities, the Holder shall give
written notice to the Issuer describing the manner and terms of
such transfer and demonstrating that the following conditions are
satisfied. Such proposed transfer will not be effected until:
(a) either (i) the Issuer has received an opinion of
counsel reasonably satisfactory to the Issuer, to the effect that
the registration of such securities under the Securities Act is not
required in connection with such proposed transfer, (ii) a
registration statement under the Securities Act covering such
proposed disposition has been filed by the Issuer with the
Securities and Exchange Commission and has become and remains
effective under the Securities Act, (iii) the Issuer has
received other evidence reasonably satisfactory to the Issuer that
such registration and qualification under the Securities Act and
state securities laws are not required, or (iv) the Holder
provides the Issuer with reasonable assurances that such security
can be sold pursuant to Rule 144 under the Securities Act; and
(b) either (i) the Issuer has received an opinion of
counsel reasonably satisfactory to the Issuer, to the effect that
registration or qualification under the securities or “blue
sky” laws of any state is not required in connection with
such proposed disposition, or (ii) compliance with applicable
state securities or “blue sky” laws has been effected
or a valid exemption exists with respect thereto. The Issuer will
respond to any such notice from a holder within three
(3) Trading Days. In the case of any proposed transfer under
this Section 2(f) , the Issuer will use
reasonable efforts to comply with any such applicable state
securities or “blue sky” laws, but shall in no event be
required, (x) to qualify to do business in any state where it
is not then qualified, (y) to take any action that would
subject it to tax or to the general service of process in any state
where it is not then subject, or (z) to comply with state
securities or “blue sky” laws of any state for which
registration by coordination is unavailable to the Issuer. The
restrictions on transfer contained in this
Section 2(f) shall be in addition to, and not by
way of limitation of, any other restrictions on transfer contained
in any other section of this Warrant. Whenever a certificate
representing the Warrant Stock is required to be issued to the
Holder without a legend, in lieu of delivering physical
certificates representing the Warrant Stock, the Issuer shall cause
its transfer agent to electronically transmit the Warrant Stock to
the Holder by crediting the account of the Holder or Holder’s
Prime Broker with DTC through its DWAC system (to the extent not
inconsistent with any provisions of this Warrant or the Purchase
Agreements).
(g) Accredited Investor
Status . In no event may the Holder exercise this Warrant in
whole or in part unless the Holder is an “accredited
investor” as defined in Regulation D under the Securities
Act.
3. Stock Fully Paid; Reservation
and Listing of Shares; Covenants; Loss, Theft, Destruction
.
(a) Stock Fully Paid . The
Issuer represents, warrants, covenants and agrees that all shares
of Warrant Stock which may be issued upon the exercise of this
Warrant or otherwise hereunder will, when issued in accordance with
the terms of this Warrant, be duly authorized, validly issued,
fully paid and non-assessable and free from all taxes, liens and
charges created by or through the Issuer. The Issuer further
covenants and agrees that it will use commercially reasonable
efforts to hold a meeting of Avicena stockholders as practicable
following the closing of the D offering and to obtain at such a
meeting the authorization and approval of Avicena’s
stockholders to amend the Certificate of Incorporation to increase
the number of shares of Common Stock authorized for issuance to
have available for the purpose of issuance upon exercise of this
Warrant a
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number of authorized but unissued shares of
Common Stock equal to at least one hundred percent (100%) of
the number of shares of Common Stock issuable upon exercise of this
Warrant without regard to any limitations on exercise.
(b) Reservation . If any
shares of Common Stock required to be reserved for issuance upon
exercise of this Warrant or as otherwise provided hereunder require
registration or qualification with any Governmental Authority under
any federal or state law before such shares may be so issued, the
Issuer will in good faith use its best efforts as expeditiously as
possible at its expense to cause such shares to be duly qualified.
If the Issuer shall list any shares of Common Stock on any
securities exchange or market it will, at its expense, list
thereon, and maintain and increase when necessary such listing, of,
all shares of Warrant Stock from time to time issued upon exercise
of this Warrant or as otherwise provided hereunder (provided that
such Warrant Stock has been registered pursuant to a registration
statement under the Securities Act then in effect), and, to the
extent permissible under the applicable securities exchange rules,
all unissued shares of Warrant Stock which are at any time issuable
hereunder, so long as any shares of Common Stock shall be so
listed. The Issuer will also so list on each securities exchange or
market, and will maintain such listing of, any other securities
which the Holder of this Warrant shall be entitled to receive upon
the exercise of this Warrant if at the time any securities of the
same class shall be listed on such securities exchange or market by
the Issuer.
(c) Covenants . The Issuer
shall not by any action including, without limitation, amending the
Certificate of Incorporation or the by-laws of the Issuer, or
through any reorganization, transfer of assets, consolidation,
merger, dissolution, issue or sale of securities or any other
action, avoid or seek to avoid the observance or performance of any
of the terms of this Warrant, but will at all times in good faith
assist in the carrying out of all such terms and in the taking of
all such actions as may be necessary or appropriate to protect the
rights of the Holder hereof against dilution (to the extent
specifically provided herein) or impairment. Without limiting the
generality of the foregoing, the Issuer will (i) not permit
the par value, if any, of its Common Stock to exceed the then
effective Warrant Price, (ii) not amend or modify any
provision of the Certificate of Incorporation or by-laws of the
Issuer in any manner that would adversely affect the rights of the
Holders of the Warrants, (iii) take all such action as may be
reasonably necessary in order that the Issuer may validly and
legally issue fully paid and nonassessable shares of Common Stock,
free and clear of any liens, claims, encumbrances and restrictions
(other than as provided herein) upon the exercise of this Warrant,
and (iv) use its best efforts to obtain all such
authorizations, exemptions or consents from any public regulatory
body having jurisdiction thereof as may be reasonably necessary to
enable the Issuer to perform its obligations under this
Warrant.
(d) Loss, Theft, Destruction of
Warrants . Upon receipt of evidence satisfactory to the Issuer
of the ownership of and the loss, theft, destruction or mutilation
of any Warrant and, in the case of any such loss, theft or
destruction, upon receipt of indemnity or security satisfactory to
the Issuer or, in the case of any such mutilation, upon surrender
and cancellation of such Warrant, the Issuer will make and deliver,
in lieu of such lost, stolen, destroyed or mutilated Warrant, a new
Warrant of like tenor and representing the right to purchase the
same number of shares of Common Stock.
4. Adjustment of Warrant
Price . The Warrant Price shall be subject to adjustment from
time to time as set forth in this Section 4 .
The Issuer shall give the Holder notice of any event described
below which requires an adjustment pursuant to this
Section 4 in accordance with the notice
provisions set forth in Section 5 .
(a) Recapitalization,
Reorganization, Reclassification, Consolidation, Merger or Sale
.
(i) In case the Issuer after the
Original Issue Date shall do any of the following (each, a “
Triggering Event ”): (a) consolidate or
merge with or into any other Person and the Issuer shall not be the
continuing or surviving corporation of such consolidation or
merger, or (b) permit any other Person to consolidate with or
merge into the Issuer and the Issuer shall be the continuing or
surviving Person but, in connection with such consolidation or
merger, any Capital Stock of the Issuer shall be changed into or
exchanged for Securities of any other Person or cash or any other
property, or (c) transfer all or substantially all of its
properties or assets to any other Person, or (d) effect a
capital reorganization or reclassification of its Capital Stock,
then, and in the case of each such Triggering Event, proper
provision shall be made to the Warrant Price and the number of
shares of Warrant Stock that may be purchased upon exercise of this
Warrant so that, upon the basis and the terms and in the manner
provided in this Warrant, the Holder of this
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Warrant shall be entitled upon the
exercise hereof at any time after the consummation of such
Triggering Event, to the extent this Warrant is not exercised prior
to such Triggering Event, to receive at the Warrant Price in effect
at the time immediately prior to the consummation of such
Triggering Event, in lieu of the Common Stock issuable upon such
exercise of this Warrant prior to such Triggering Event, the
Securities, cash and property to which such Holder would have been
entitled upon the consummation of such Triggering Event if such
Holder had exercised the rights represented by this Warrant
immediately prior to such Triggering Event (including the right of
a shareholder to elect the type of consideration it will receive
upon a Triggering Event), subject to adjustments (subsequent to
such corporate action) as nearly equivalent as possible to the
adjustments provided for elsewhere in this
Section 4 ; provided ,
however , the Holder at its option may elect to
receive an amount in cash equal to the value of this Warrant
calculated in accordance with the Black-Scholes formula.
Immediately upon the occurrence of a Triggering Event, the Issuer
shall notify the Holder in writing of such Triggering Event and
provide the calculations used in determining the number of shares
of Warrant Stock issuable upon exercise of the new warrant and the
adjusted Warrant Price. Upon the Holder’s request, the
continuing or surviving corporation as a result of such Triggering
Event shall issue to the Holder a new warrant of like tenor
evidencing the right to purchase the adjusted number of shares of
Warrant Stock and the adjusted Warrant Price pursuant to the terms
and provisions of this Section 4(a)(i) .
Notwithstanding the foregoing to the contrary, this
Section 4(a)(i) shall only apply if the
surviving entity pursuant to any such Triggering Event is a company
that has a class of equity securities registered pursuant to the
Securities Exchange Act of 1934, as amended, and its common stock
is listed or quoted on a national securities exchange, national
automated quotation system or the OTC Bulletin Board. In the event
that the surviving entity pursuant to any such Triggering Event is
not a public company that is registered pursuant to the Securities
Exchange Act of 1934, as amended, or its common stock is not listed
or quoted on a national securities exchange, national automated
quotation system or the OTC Bulletin Board, then the Holder shall
have the right to demand that the Issuer pay to the Holder an
amount in cash equal to the value of this Warrant calculated in
accordance with the Black-Scholes formula.
(ii) In the event that the Holder
has elected not to exercise this Warrant prior to the consummation
of a Triggering Event and has also elected not to receive an amount
in cash equal to the value of this Warrant calculated in accordance
with the Black-Scholes formula pursuant to the provisions of
Section 4(a)(i) above, so long as the surviving
entity pursuant to any Triggering Event is a company that has a
class of equity securities registered pursuant to the Securities
Exchange Act of 1934, as amended, and its common stock is listed or
quoted on a national securities exchange, national automated
quotation system or the OTC Bulletin Board, the surviving entity
and/or each Person (other than the Issuer) which may be required to
deliver any Securities, cash or property upon the exercise of this
Warrant as provided herein shall assume, by written instrument
delivered to, and reasonably satisfactory to, the Holder of this
Warrant, (A) the obligations of the Issuer under this Warrant
(and if the Issuer shall survive the consummation of such
Tri
