Exhibit 10.16

CONVERTIBLE NOTE AND WARRANT PURCHASE AGREEMENT

This Convertible Note and Warrant Purchase Agreement (the “Agreement”) is made
as of             , 2010, by and between Helix BioMedix, Inc., a Delaware
corporation (the “Company”), and the undersigned (the “Investor”).

1. Purchase and Sale; Closing.

1.1 Purchase of Note. Subject to the terms and conditions of this Agreement, the
Company agrees to sell to the Investor, and the Investor agrees to purchase from
the Company, a Convertible Promissory Note (the “Note”) in substantially the
form attached hereto as Exhibit A in the principal amount set forth on the
signature page hereto. The Note will be convertible into equity securities of
the Company upon the terms and conditions contained in the form of Note attached
hereto as Exhibit A. Shares of equity securities of the Company issued upon
conversion of the Note are referred to herein as the “Note Shares.”

1.2 Purchase of Warrant. Subject to the terms and conditions of this Agreement,
the Company agrees to sell to the Investor, and the Investor agrees to purchase
from the Company, a Warrant (the “Warrant”) in substantially the form attached
hereto as Exhibit B. The Warrant will be exercisable for shares of the Company’s
Common Stock upon the terms and conditions contained in the form of Warrant
attached hereto as Exhibit B. Shares of the Company’s Common Stock issued upon
exercise of the Warrant are referred to herein as the “Warrant Shares.” The
Note, the Warrant, the Note Shares and the Warrant Shares are sometimes
collectively referred to herein as the “Securities.”

1.3 Closing. The closing of the sale and issuance of the Note and Warrant shall
be held at such time and place upon which the Company and the Investor shall
agree (hereinafter referred to as the “Closing”). The date of the Closing is
referred to herein as the “Closing Date.”

2. Representations of the Company.

The Company represents and warrants to the Investor as follows:

2.1 Organization and Standing. The Company is a corporation duly organized and
existing under, and by virtue of, the laws of the State of Delaware and is in
good standing under such laws.

2.2 Corporate Power. The Company will have at the Closing all requisite legal
and corporate power and authority to execute and deliver this Agreement, to sell
and issue the Securities and to carry out and perform its obligations under the
terms of this Agreement.

2.3 Authorization. All corporate action on the part of the Company necessary for
the authorization, execution, delivery and performance of this Agreement by the
Company, the authorization, sale, issuance and delivery of the Note and the
Warrant and the performance of all of the Company’s obligations hereunder and
thereunder has been taken or will be taken prior to the Closing. This Agreement,
the Note and Warrant, when executed and delivered by the Company, shall
constitute valid and binding obligations of the Company, enforceable in
accordance with their respective terms, subject to laws of general application
relating to bankruptcy, insolvency and the relief of debtors and rules of law
governing specific performance, injunctive relief or other equitable remedies.
The Note Shares, when issued in compliance with the provisions of the Note, will
be validly issued, fully paid and nonassessable, and will be free of any liens
or encumbrances, assuming that the Investor takes the Note Shares with no notice
thereof, other than any liens or encumbrances created by or imposed upon the
Investor; provided, however, that the Note Shares will be

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subject to restrictions on transfer under state and/or federal securities laws.
The Warrant Shares, when issued in compliance with the provisions of the
Warrant, will be validly issued, fully paid and nonassessable, and will be free
of any liens or encumbrances, assuming that the Investor takes the Warrant
Shares with no notice thereof, other than any liens or encumbrances created by
or imposed upon the Investor; provided, however, that the Warrant Shares will be
subject to restrictions on transfer under state and/or federal securities laws.

2.4 No Finder’s Fees. No person is entitled, directly or indirectly, to
compensation from the Company by reason of any contract or understanding or
contact with the Company as a finder or broker in connection with this sale and
purchase of the Note and Warrant contemplated by this Agreement. The Company
agrees to indemnify and hold the Investor harmless against and respect of any
claim of brokerage or other commissions or similar fees relative to this
Agreement or the transactions contemplated hereby which arises as a result of a
contract or understanding made by the Company with any such broker or finder in
connection with this sale and purchase of the Note and Warrant contemplated by
this Agreement.

3. Representations of Investors. The Investor hereby represents and warrants to
the Company with respect to its purchase of the Note and Warrant as follows:

3.1 Investment. The Investor understands that the investment in the Securities
is a speculative investment and represents that it is aware of the business
affairs and financial condition of the Company and has acquired sufficient
information about the Company to reach an informed and knowledgeable decision to
acquire the Note and Warrant, and that it is purchasing the Note and Warrant for
investment for its own account only and not with a view to, or for resale in
connection with, any “distribution” within the meaning of the Securities Act of
1933, as amended (the “Securities Act”) or applicable state securities laws. The
Investor further represents that it understands that the Securities have not
been registered under the Securities Act or applicable state securities laws by
reason of specific exemptions therefrom, which exemptions depend upon, among
other things, the bona fide nature of the Investor’s investment intent as
expressed herein. The Investor acknowledges and understands that the Securities
must be held indefinitely unless subsequently registered under the Securities
Act and qualified under applicable state securities laws or unless exemptions
from such registration and qualification requirements are available and that the
Company is under no obligation to register or qualify the Securities.

3.2 Accredited Investor. The Investor is an accredited investor as defined in
Rule 501(a) of Regulation D promulgated under the Securities Act.

3.3 Access to Data. The Investor acknowledges that it has received and reviewed
this Agreement and exhibits hereto. The Investor has had an opportunity to
discuss the Company’s business, management and financial affairs with its
officers and directors. The Investor understands that such discussions as well
as any written information issued by the Company were intended to describe the
aspects of the Company’s business and prospects which it believes to be material
but were not necessarily a thorough or exhaustive description.

3.4 No Finder’s Fees. No person is entitled, directly or indirectly, to
compensation from the Investor by reason of any contract or understanding or
contact with the Investor as a finder or broker in connection with the sale and
purchase of the Note and Warrant contemplated by this Agreement. Investor agrees
to indemnify and hold the Company harmless against and in respect of any claim
for brokerage or other commissions or similar fees relative to this Agreement or
the transactions contemplated hereby which arises as a result of a contract or
understanding made by the Investor with any such broker or finder in connection
with the sale and purchase of the Note and Warrant contemplated by this
Agreement.

 

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3.5 Legends. The Investor understands that the Securities, and any securities
issued in respect thereof or exchange therefor, may bear one or all of the
following legends:

(a) “THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933 AND HAVE BEEN ACQUIRED FOR INVESTMENT AND NOT
WITH A VIEW TO, OR IN CONNECTION WITH, THE SALE OR DISTRIBUTION THEREOF. NO SUCH
SALE OR DISTRIBUTION MAY BE EFFECTED WITHOUT AN EFFECTIVE REGISTRATION STATEMENT
RELATED THERETO OR AN OPINION OF COUNSEL IN A FORM SATISFACTORY TO THE COMPANY
THAT SUCH REGISTRATION IS NOT REQUIRED UNDER THE SECURITIES ACT OF 1933.”

(b) Any legend required by the blue sky laws of any state to the extent such
laws are applicable to the Securities represented by the certificate so
legended.

4. Condition to Investor’s Obligations at Closing. The Investor’s obligation to
purchase the Note and Warrant at the Closing is subject to the fulfillment on or
prior to the Closing Date of the following condition:

4.1 Representations and Warranties Correct. The representations and warranties
made by the Company in Section 2 hereof shall be true and correct when made and
shall be true and correct on the Closing Date.

5. Conditions to the Company’s Obligations at Closing. The Company’s obligation
to sell and issue the Note and Warrant at the Closing is subject to the
fulfillment of the following conditions:

5.1 Representations and Warranties Correct. The representations and warranties
made by the Investor in Section 3 hereof shall be true and correct when made and
shall be true and correct on the Closing Date.

5.2 Qualifications. All authorizations, approvals or permits, if any, of any
governmental authority or regulatory body of the United States or of any state
that are required in connection with the lawful issuance and sale of the
Securities pursuant to this Agreement shall be obtained and effective as of the
Closing.

5.3 Board Approval. The Company’s Board of Directors shall have authorized the
sale and issuance of the Securities.

6. Miscellaneous.

6.1 Governing Law; Venue. This Agreement, the Note and the Warrant shall in all
respects be governed by and construed and enforced in accordance with the laws
of the State of Washington, as such laws apply to contracts entered into and
wholly to be performed within such state. The parties expressly stipulate that
any litigation under this Agreement shall be brought in the state courts of King
County, Washington or in the United States District Court for the Western
District of Washington. The parties agree to submit to the exclusive
jurisdiction and venue of those courts.

6.2 Successors and Assigns. Except as otherwise provided herein, the provisions
hereof shall inure to the benefit of, and be binding upon, the successors,
assigns, heirs, executors and administrators of the parties hereto, provided,
however, that the rights of the Investor to purchase the Note and Warrant shall
not be assignable without the consent of the Company and provided further that
the Company may not assign its rights hereunder.

 

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6.3 Entire Agreement; Amendment. This Agreement, the Note, the Warrant and the
other documents delivered pursuant hereto constitute the full and entire
understanding and agreement between the parties with regard to the subject
matter hereof and thereof, and no party shall be liable or bound to any other
party in any manner by any warranties, representations or covenants except as
specifically set forth herein or therein. Except as expressly provided herein,
neither this Agreement nor any term hereof may be amended, waived, discharged or
terminated other than by a written instrument signed by the party against whom
enforcement of any such amendment, waiver, discharge or termination is sought.

6.4 Notices, etc. All notices and other communications under this Agreement
shall be in writing and shall be delivered in person, via facsimile machine,
sent by documented overnight delivery service, or mailed by registered or
certified mail, return receipt requested, postage prepaid, addressed (a) if to
the Investor, at the address of the Investor set forth on the signature page of
this Agreement, or (b) if to the Company, to the attention of its President at
its principal offices at 22118 20th Avenue SE, Suite 204, Bothell, WA 98021.
Unless otherwise specified in this Agreement, all such notices and other written
communications shall be effective (and considered delivered and received for the
purposes of this Agreement) (i) if delivered, upon delivery, (ii) if by
facsimile machine during normal business hours upon transmission with
confirmation of receipt by the receiving party’s facsimile terminal and if not
sent during normal business hours, then on the next day, (iii) if sent by
documented overnight delivery service, on the date following the date on which
such notice is delivered to such overnight delivery service for mailing, or
(iv) if mailed via first-class regular mail, three (3) day after depositing in
the U.S. Mail.

6.5 Expenses; Attorneys Fees. Each of the Company and the Investor shall each
bear its own expenses incurred on its behalf with respect to this Agreement and
the transactions contemplated hereby. Notwithstanding the foregoing, if any
action at law or in equity (including arbitration) is necessary to enforce or
interpret the terms of this Agreement, the Note or the Warrant, the prevailing
party shall be entitled to reasonable attorney’s fees, costs and necessary
disbursements in addition to any other relief to which such party may be
entitled.

6.6 Counterparts. This Agreement may be executed in any number of counterparts,
each of which shall be enforceable against the party or parties actually
executing such counterparts, and all of which together shall constitute one
instrument.

6.7 Titles and Subtitles. The titles and subtitles used in this Agreement are
used for convenience only and are not considered in construing or interpreting
this Agreement.

[Remainder of Page Intentionally Left Blank]

 

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The foregoing Agreement is hereby executed as of the date first above written.

 

COMPANY: HELIX BIOMEDIX, INC.

By:  

 

  R. Stephen Beatty, President and   Chief Executive Officer

 

INVESTOR :

 

 

 

 

Print name Investment Amount: $          

 

By:  

 

Signature

Its:  

 

Title

Address:  

 

 

Facsimile:  

 

Soc. Sec. No. or Tax ID:  

 

[Signature Page to Convertible Note and Warrant Purchase Agreement]

 

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THIS NOTE AND THE SECURITIES ISSUABLE UPON CONVERSION HEREOF HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR ANY
STATE SECURITIES LAWS. THEY MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED,
HYPOTHECATED OR OTHERWISE TRANSFERRED IN THE ABSENCE OF A REGISTRATION STATEMENT
IN EFFECT WITH RESPECT TO THE SECURITIES UNDER SUCH ACT AND APPLICABLE STATE
SECURITIES LAWS OR UNLESS (i) SOLD PURSUANT TO AN EXEMPTION FROM REGISTRATION
UNDER SUCH ACT AND APPLICABLE STATE SECURITIES LAWS AND (ii) AT THE OPTION OF
THE COMPANY, AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE COMPANY THAT
SUCH REGISTRATION IS NOT REQUIRED HAS BEEN DELIVERED TO THE COMPANY.

HELIX BIOMEDIX, INC.

CONVERTIBLE PROMISSORY NOTE

March 5, 2010

 

$[        ]    Bothell, Washington

FOR VALUE RECEIVED, Helix BioMedix, Inc., a Delaware corporation (“Company”),
promises to pay to [        ] (“Holder”), or his registered assigns, the
principal sum of [        ] Dollars ($[        ]), or such lesser amount as
shall then equal the outstanding principal amount hereof, together with interest
from the date of this Note on the unpaid principal balance at a rate equal to
eight percent (8%) per annum, computed on the basis of the actual number of days
elapsed. All unpaid principal, together with any then unpaid and accrued
interest and other amounts payable hereunder, shall be due and payable on the
earlier of (i) July 1, 2013 (the “Maturity Date”) or (ii) when such amounts are
declared due and payable by the Holder or made automatically due and payable, in
each case upon or after the occurrence of an Event of Default (as defined
below). This Note is issued pursuant to the Convertible Note Purchase Agreement
of even date herewith (as amended, modified or supplemented, the “Purchase
Agreement”) between Company and the Investor (as defined in the Purchase
Agreement) and is one of several convertible promissory notes issued on or about
the date hereof (the “Notes”).

The following is a statement of the rights of Holder and the conditions to which
this Note is subject, and to which the Holder hereof, by the acceptance of this
Note, agrees:

1. Definitions. As used in this Note, the following capitalized terms have the
following meanings:

(a) “Company” includes the corporation initially executing this Note and any
Person which shall succeed to or assume the obligations of Company under this
Note.

(b) “Holder” shall mean the Person specified in the introductory paragraph of
this Note or any Person who shall at the time be the registered holder of this
Note.

(c) “Person” shall mean and include an individual, a partnership, a corporation
(including a business trust), a joint stock company, a limited liability
company, an unincorporated association, a joint venture or other entity or a
governmental authority.

2. Interest. Accrued interest on this Note shall be payable at such time as the
outstanding principal amount hereof shall be paid in full.

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3. Events of Default. The occurrence of any of the following shall constitute an
“Event of Default” under this Note:

(a) Failure to Pay. Company shall fail in any material respect to pay any
principal payment, any interest or other payment required under the terms of
this Note on the date due and such payment shall not have been made within
fifteen (15) days of Company’s receipt of Holder’s written notice to Company of
such failure to pay; or

(b) Breaches of Covenants. Company shall fail in any material respect to observe
or perform any covenant, obligation, condition or agreement contained in this
Note (other than those covenants specified in Section 3(a) hereof) and such
failure shall continue for thirty (30) days after Company’s receipt of Holder’s
written notice to Company thereof; or

(c) Representations and Warranties. Any representation or warranty made by
Company to Holder in this Note shall be untrue in any material respect when
made; or

(d) Voluntary Bankruptcy or Insolvency Proceedings. Company shall (i) apply for
or consent to the appointment of a receiver, trustee, liquidator or custodian of
itself or of all or a substantial part of its property, (ii) admit in writing
its inability to pay its debts generally as they mature, (iii) make a general
assignment for the benefit of its or any of its creditors, (iv) be dissolved or
liquidated in full or in part, (v) commence a voluntary case or other proceeding
seeking liquidation, reorganization or other relief with respect to itself or
its debts under any bankruptcy, insolvency or other similar law now or hereafter
in effect or consent to any such relief or to the appointment of or taking
possession of its property by any official in an involuntary case or other
proceeding commenced against it, or (vi) take any action for the purpose of
effecting any of the foregoing; or

(e) Involuntary Bankruptcy or Insolvency Proceedings. Proceedings for the
appointment of a receiver, trustee, liquidator or custodian of Company or of all
or a substantial part of the property thereof, or an involuntary case or other
proceedings seeking liquidation, reorganization or other relief with respect to
Company or the debts thereof under any bankruptcy, insolvency or other similar
law now or hereafter in effect shall be commenced and an order for relief
entered or such proceeding shall not be dismissed or discharged within
sixty (60) days of commencement; or

(f) Cross Default. Upon an “Event of Default” under those certain convertible
promissory notes issued by the Company on February 14, 2008, February 10, 2009
and March 5, 2009 (as defined therein).

4. Rights of Holder upon Default. Upon the occurrence or existence of any Event
of Default (other than an Event of Default referred to in Sections 3(d) and 3(e)
hereof) and at any time thereafter during the continuance of such Event of
Default, Holder may, by written notice to Company, declare all outstanding
obligations payable by Company hereunder to be immediately due and payable
without presentment, demand, protest or any other notice of any kind, all of
which are hereby expressly waived, anything contained herein to the contrary
notwithstanding. Upon the occurrence or existence of any Event of Default
described in Sections 3(d) and 3(e) hereof, immediately and without notice, all
outstanding obligations payable by Company hereunder shall automatically become
immediately due and payable, without presentment, demand, protest or any other
notice of any kind, all of which are hereby expressly waived, anything contained
herein to the contrary notwithstanding. In addition to the foregoing remedies,
upon the occurrence or existence of any Event of Default, Holder may exercise
any other right, power or remedy permitted to it by law, either by suit in
equity or by action at law, or both.

 

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5. Conversion.

(a) Automatic Conversion upon Equity Financing. Upon the closing (or first in a
series of closings) of the next equity financing in which Company sells shares
of its equity securities (the “Equity Securities”) for an aggregate
consideration of at least $7,500,000 (including the aggregate principal and
accrued interest due on the Notes) (the “Equity Financing”), the principal and
accrued interest due on this Note shall automatically be converted into shares
of the Equity Securities as set forth in Section 5(d) below. The conversion
shall be deemed to have occurred as of the date of such closing or the date of
the first closing in a series of closings. As a condition precedent (which may
be waived by the Company) to conversion of this Note as provided for in this
Section 5(a), the Holder will be required to execute the definitive Stock
Purchase Agreement and such other agreements prepared in connection with the
Equity Financing. The number of shares of Equity Securities into which this Note
shall be automatically converted shall be determined by dividing the principal
and accrued interest due on this Note as of the date of conversion by an amount
equal to the lesser of (i) the per share price of the Equity Securities issued
and sold in the Equity Financing and (ii) $0.80.

(b) Automatic Conversion upon Corporate Transaction. Upon the closing of a sale
of substantially all of the Company’s assets or a merger or consolidation of the
Company in which the Company’s stockholders will hold, in the aggregate, less
than 50% of the voting power of the combined entity, the principal and accrued
interest due on this Note shall automatically be converted into shares of the
Company’s Common Stock as set forth in Section 5(d) below. The conversion shall
be deemed to have occurred as of the date of such closing. The number of shares
of Common Stock into which this Note shall be automatically converted shall be
determined by dividing the principal and accrued interest due on this Note as of
the date of conversion by an amount equal to the lesser of (i) the per share
price attributed to the Company’s Common Stock in connection with such
transaction and (ii) $0.80.

(c) Voluntary Conversion at Maturity Date. At and as of the Maturity Date, to
the extent this Note is still outstanding and has not otherwise been converted
or repaid in full, the Holder will have the option, in its sole discretion, to
convert this Note into shares of the Company’s Common Stock. The number of
shares of Common Stock into which this Note may be voluntarily converted shall
be determined by dividing the principal and accrued interest due on this Note as
of the date of conversion by $0.80.

(d) Issuance of Securities on Conversion. As soon as practicable after
conversion of this Note, Company, at its expense, will cause to be issued in the
name of and delivered to the Holder a certificate or certificates representing
the number of fully paid and nonassessable shares of the Equity Securities or
Common Stock (as applicable) to which Holder shall be entitled upon such
conversion. No fractional shares will be issued upon conversion of this Note.

(e) Termination of Rights. All rights with respect to this Note shall terminate
upon conversion hereof in accordance with this Section 5, whether or not this
Note has been surrendered. Notwithstanding the foregoing, the Holder agrees to
surrender this Note to Company for cancellation as soon as is practicable
following conversion of this Note.

6. Successors and Assigns. Subject to the restrictions on transfer described in
Section 8 below, the rights and obligations of Company and Holder shall be
binding upon and benefit the successors, assigns, heirs, administrators and
transferees of the parties.

7. Waiver and Amendment. Any provision of this Note may be amended, waived or
modified upon the written consent of Company and Holder.

 

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8. Transfer of this Note or Securities Issuable Upon Conversion Hereof. With
respect to any contemplated offer, sale or other disposition of this Note or
securities into which such Note may be converted, the Holder will first give
written notice to Company prior thereto, describing briefly the manner thereof,
together with a written opinion of the Holder’s counsel to the effect that such
offer, sale or other disposition may be effected without registration or
qualification under any federal or state law then in effect. Promptly upon
receiving such written notice and reasonably satisfactory opinion, if so
requested, Company, as promptly as practicable, shall notify the Holder that the
Holder may sell or otherwise dispose of this Note or such securities, all in
accordance with the terms of the notice delivered to Company. If a determination
has been made pursuant to this Section 8 that the opinion of counsel for the
Holder is not reasonably satisfactory to Company, then Company shall so notify
the Holder promptly after such determination has been made. The Note thus
transferred and each certificate representing the securities thus transferred
shall bear a legend as to the applicable restrictions on transferability in
order to ensure compliance with the Securities Act of 1933, as amended (the
“Act”), unless in the opinion of counsel for Company such legend is not required
in order to ensure compliance with the Act. Company may issue stop transfer
instructions to its transfer agent in connection with such restrictions.

9. Notices. All notices and other communications under this Note shall be in
writing and shall be delivered in person, via facsimile machine, sent by
documented overnight delivery service, or mailed by registered or certified
mail, return receipt requested, postage prepaid, addressed (a) if to the Holder,
at the address of the Holder set forth in the Purchase Agreement, or (b) if to
the Company, to the attention of its President at its principal offices at 22118
20th Avenue SE, Suite 204, Bothell, WA 98021. Unless otherwise specified in this
Note, all such notices and other written communications shall be effective (and
considered delivered and received for the purposes of this Note) (i) if
delivered, upon delivery, (ii) if by facsimile machine during normal business
hours upon transmission with confirmation of receipt by the receiving party’s
facsimile terminal and if not sent during normal business hours, then on the
next day, (iii) if sent by documented overnight delivery service, on the date
following the date on which such notice is delivered to such overnight delivery
service for mailing, or (iv) if mailed via first-class regular mail, three
(3) day after depositing in the U.S. Mail.

10. No Stockholder Rights. Nothing contained in this Note shall be construed as
conferring upon the Holder or any other person the right to vote or to consent
or to receive notice as a stockholder in respect of meetings of stockholder for
the election of directors of Company or any other matters or any rights
whatsoever as a stockholder of Company; and no dividends or interest shall be
payable or accrued in respect of this Note or the interest represented hereby or
the equity securities obtainable hereunder until, and only to the extent that,
this Note shall have been converted.

11. Payment; Prepayment.

(a) Payment shall be made in lawful tender of the United States.

(b) Company shall have the right to prepay at any time, without penalty, in
whole or in part, the unpaid principal and interest due on this Note.

12. Governing Law; Venue. This Note and all actions arising out of or in
connection with this Note shall be governed by and construed in accordance with
the laws of the State of Washington, without regard to the conflicts of law
provisions of the State of Washington or of any other state. The parties
expressly stipulate that any litigation under this Agreement shall be brought in
the state courts of King County, Washington or in the United States District
Court for the Western District of Washington. The parties agree to submit to the
exclusive jurisdiction and venue of those courts.

 

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ORAL AGREEMENTS OR ORAL COMMITMENTS TO LOAN MONEY, EXTEND CREDIT, OR TO FORBEAR
FROM ENFORCING REPAYMENT OF A DEBT ARE NOT ENFORCEABLE UNDER WASHINGTON LAW.

IN WITNESS WHEREOF, Company has caused this Note to be issued as of the date
first written above.

 

HELIX BIOMEDIX, INC., a Delaware corporation By:  

 

  R. Stephen Beatty, President and   Chief Executive Officer

Acknowledged and Agreed:

HOLDER:

 

 

[                             ]

Address:

   

 

Facsimile:

 

 

[Signature Page to Convertible Promissory Note]

 

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THIS WARRANT AND THE SECURITIES ISSUABLE UPON THE EXERCISE HEREOF HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR ANY
STATE SECURITIES LAWS. THEY MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED,
HYPOTHECATED OR OTHERWISE TRANSFERRED IN THE ABSENCE OF A REGISTRATION STATEMENT
IN EFFECT WITH RESPECT TO THE SECURITIES UNDER SUCH ACT AND APPLICABLE STATE
SECURITIES LAWS OR UNLESS (i) SOLD PURSUANT TO AN EXEMPTION FROM REGISTRATION
UNDER SUCH ACT AND APPLICABLE STATE SECURITIES LAWS AND (ii) AT THE OPTION OF
THE COMPANY, AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE COMPANY THAT
SUCH REGISTRATION IS NOT REQUIRED HAS BEEN DELIVERED TO THE COMPANY.

 

Holder(s): [                            ]    Warrant Number: W-[        ]    No.
of Shares For Which this Warrant is Initially Exercisable: [        ] Issue
Date: March 5, 2010    Termination Date: March 5, 2015

WARRANT FOR THE

PURCHASE OF SHARES OF COMMON STOCK

OF

HELIX BIOMEDIX, INC.

THIS CERTIFIES THAT, for valuable consideration, the undersigned, together with
her successors and permitted assigns (the “Holder”) is entitled to purchase,
subject to the terms set forth below, up to [    ] shares of duly authorized,
validly issued, fully paid and nonassessable shares of common stock, $0.001 par
value per share (the “Common Stock”), of Helix BioMedix, Inc., a Delaware
corporation (the “Company”).

1. Exercise of Warrant. The terms and conditions upon which this Warrant may be
exercised, and the Common Stock covered hereby (the “Warrant Stock”) may be
purchased, are as follows:

(a) Term. Subject to the terms hereof, the purchase right represented by this
Warrant may be exercised in whole or in part, but not as to a fractional share
of Warrant Stock, at any time and from time to time until March 5, 2015.

(b) Number of Shares. The number of shares of Common Stock for which this
Warrant is initially exercisable is the amount set forth above the Holder’s
signature and on page one of this Warrant, which number is subject to adjustment
pursuant to Section 2 of this Warrant.

(c) Purchase Price. The per share purchase price for the shares of Common Stock
to be issued upon exercise of this Warrant shall be equal to $0.80 per share
(the “Warrant Price”).

(d) Method of Exercise. The exercise of the purchase rights evidenced by this
Warrant shall be effected by (a) the surrender of the Warrant, together with a
duly executed copy of the form of a subscription attached hereto, to the Company
at its principal offices at 22118 20th Avenue SE, Suite 204, Bothell, WA 98021
(or such other office or agency of the Company as it may designate by notice in
writing to the Holder at the address of the Holder appearing on the books of the
Company) and (b) the delivery of the purchase price in an amount equal to the
number of shares for which the purchase rights hereunder are being exercised
multiplied by the Warrant Price, which amount may be paid by cashier’s check
payable to the Company’s order or by wire transfer to the Company’s account.
Each exercise of this Warrant shall be deemed to have been effected immediately
prior to the close of business

 

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on the day on which this Warrant shall have been surrendered to the Company
together with the purchase price as provided herein or at such later date as may
be specified in the executed form of subscription, and at such time the person
or persons in whose name or names any certificate or certificates for shares of
Common Stock shall be issuable upon such exercise as provided herein shall be
deemed to have become the holder or holders of record thereof.

(e) Exercise by Exchange. In addition to and without limiting the rights of the
Holder under the terms hereof, at the Holder’s option, and if approved by the
Company, this Warrant may be exercised during the term specified under
Section 1(a) by being exchanged in whole or in part prior to its expiration for
a number of shares of Common Stock having an aggregate fair market value on the
date of such exercise equal to the difference between (x) the fair market value
of the number of shares of Common Stock subject to this Warrant designated by
the Holder hereof on the date of the exercise and (y) the aggregate Warrant
Price for such shares in effect at such times. The following formula illustrates
how many shares would then be issued upon exercise pursuant to this
Section 1(e):

 

Let:    FMV    =    Fair market value per share of Common Stock at date of
exercise.    WP    =    Warrant Price at date of exercise.    N    =    Number
of shares desired to be exercised.    X    =    Number of shares issued upon
exercise. Therefore:    X    =   

(FMV)(N)-(WP)(N)

              FMV

Upon any such exercise, the number of shares of Common Stock purchasable upon
exercise of this Warrant shall be reduced by such designated number of shares of
Common Stock and, if a balance of purchasable shares of Common Stock remains
after such exercise, the Company shall execute and deliver to the Holder hereof
a new warrant for such balance of shares of Common Stock.

No payment to the Company of any cash or other consideration shall be required
from the Holder of this Warrant in connection with any exercise of this Warrant
by exchange pursuant to this Section 1(e). Such exchange shall be effective upon
the date of receipt by the Company of the original Warrant surrendered for
cancellation and a written request from the Holder hereof that the exchange
pursuant to this section be made, or at such later date as may be specified in
such request.

For the purposes of this Warrant, the “fair market value” of any number of
shares of Common Stock shall mean:

(i) as long as the Common Stock is traded on the Over-The-Counter Bulletin Board
(or equivalent recognized source of quotations), an amount equal to the average
of the high and low reported trading prices of one share of such securities for
the three (3) trading days prior to the surrender of this Warrant for exchange
in accordance with the terms hereof; or

(ii) in all other cases, the fair value as determined in good faith by the Board
of Directors of the Company and reasonably agreed to by the Holder.

(f) Issuance of Shares. As soon as reasonably practicable after each exercise of
this Warrant, in whole or in part, the Company at its expense 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,

 

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(i) a certificate or certificates for the number of duly authorized validly
issued, fully paid and nonassessable shares of Common Stock to which such Holder
shall be entitled upon such exercise, and

(ii) in case such exercise is in part only, a new warrant or warrants of like
tenor, calling in the aggregate on the face or faces thereof for the number of
shares of Common Stock (without giving effect to any adjustment thereof) to the
number of such shares called for on the face of this Warrant minus the number of
such shares designated by the Holder upon such exercise as provided herein.

2. Certain Adjustments.

(a) Mergers, Consolidations or Sale of Assets. If at any time after the date
hereof while this Warrant remains outstanding and unexpired there shall be a
capital reorganization (other than a combination or subdivision of Warrant Stock
otherwise provided for herein), or a merger or consolidation of the Company with
or into another corporation, or the sale of the Company’s properties and assets
as, or substantially as, an entirety to any other person, then, as a part of
such reorganization, merger, consolidation or sale, lawful provision shall be
made so that the Holder shall thereafter be entitled to receive upon exercise of
this Warrant, during the period specified in this Warrant and upon payment of
the purchase price, the number of shares of stock or other securities, cash or
property of the Company or the successor corporation resulting from such
reorganization, merger, consolidation or sale, to which a Holder of the Common
Stock deliverable upon exercise of this Warrant would have been entitled under
the provisions of the agreement in such reorganization, merger, consolidation or
sale if this Warrant had been exercised immediately before that reorganization,
merger, consolidation or sale. In any such case, appropriate adjustment (as
determined reasonably and in good faith by the Company’s Board of Directors)
shall be made in the application of the provisions of this Warrant with respect
to the rights and interests of the Holder after the reorganization, merger,
consolidation or sale to the end that the provisions of this Warrant (including
adjustment of the Warrant Price then in effect and the number of shares of
Warrant Stock) shall be applicable after that event, as near as reasonably may
be, in relation to any shares or other property deliverable after that event
upon exercise of this Warrant.

(b) Splits and Subdivisions; Dividends. In the event the Company should at any
time or from time to time while this Warrant remains outstanding and unexpired
effect or fix a record date for the effectuation of a split or subdivision of
the outstanding shares of its Common Stock or the determination of the holders
of Common Stock entitled to receive a dividend or other distribution payable in
additional shares of Common Stock or other securities or warrants, options or
other rights convertible into, or entitling the holder thereof to receive
directly or indirectly, additional shares of Common Stock (hereinafter referred
to as the “Common Stock Equivalents”) without payment of any consideration by
such holder for the additional shares of Common Stock or Common Stock
Equivalents (including the additional shares of Common Stock issuable upon
conversion or exercise thereof), then, as of such record date (or the date of
distribution, split or subdivision if no record date is fixed), the per share
Warrant Price shall be appropriately increased in proportion to such increase
(or potential increase) of outstanding shares.

(c) Combination of Shares. If the number of shares of Common Stock outstanding
at any time after the date hereof is decreased by a combination of the
outstanding shares of Common Stock, the per share purchase price shall be
appropriately increased and the number of shares of Warrant Stock shall be
appropriately decreased in proportion to such decrease in outstanding shares.

 

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(d) Certificate as to Adjustments. In the case of each adjustment or
readjustment of the Warrant Price pursuant to this Section 2, the Company at its
expense will promptly compute such adjustment or readjustment in accordance with
the terms hereof and cause a certificate, signed by the Company’s principal
financial officer, setting forth such adjustment or readjustment and showing in
detail the facts upon which such adjustment or readjustment is based to be
delivered to the Holder of this Warrant. The Company will furnish or cause to be
furnished to such Holder a certificate setting forth:

(i) Such adjustments and readjustments;

(ii) The purchase price at the time in effect and how it was calculated; and

(iii) The number of shares of Warrant Stock and the amount, if any, of other
property at the time receivable upon the exercise of the Warrant.

(e) Notices of Record Date, etc. In the event of:

(i) Any taking by the Company of a record of the holders of any class of
securities of the Company for the purpose of determining the holders thereof who
are entitled to receive any dividend (other than a cash dividend payable at the
same rate as that of the last such cash dividend theretofore paid) or other
distribution, or any right to subscribe for, purchase or otherwise acquire any
shares of stock of any class or any other securities or property, or to receive
any other right; or

(ii) Any capital reorganization of the Company, any reclassification or
recapitalization of the capital stock of the Company or any transfer of all or
substantially all of assets of the Company to any other person or any
consolidation or merger involving the Company; or

(iii) Any voluntary or involuntary dissolution, liquidation or winding-up of the
Company; the Company will mail to the Holder of this Warrant at least ten
(10) business days prior to the earliest date specified therein, a notice
specifying:

(1) The date on which any such record is to be taken for the purpose of such
dividend, distribution or right, and the amount and character of such dividend,
distribution or right; and

(2) The date on which any such reorganization, reclassification, transfer,
consolidation, merger, dissolution, liquidation or winding-up is expected to
become effective and the record date for determining stockholders entitled to
vote thereon and the time.

3. Fractional Shares. No fractional shares shall be issued in connection with
any exercise of this Warrant. In lieu of the issuance of such fractional share,
the Company shall make a cash payment equal to the then fair market value of
such fractional share as determined in good faith by the Company’s Board of
Directors.

4. No Privilege of Stock Ownership. Prior to the exercise of this Warrant, the
Holder shall not be entitled, by virtue of holding this Warrant, to any rights
of a stockholder of the Company, including (without limitation) the right to
vote, receive dividends or other distributions, exercise preemptive rights or be
notified of stockholder meetings, and such Holder shall not be entitled to any
notice or other communication concerning the business or affairs of the Company.
Nothing in this Section 4, however, shall limit the right of the Holder to be
provided the notices described in Section 2 hereof, or to participate in
distributions described in Section 2 hereof if the Holder exercises this
Warrant.

 

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5. Limitation of Liability. Except as otherwise provided herein, in the absence
of affirmative action by the Holder hereof to purchase the Warrant Stock, no
mere enumeration herein of the rights or privileges of the Holder hereof shall
give rise to any obligation of such Holder to purchase any securities or any
liability of such Holder for the purchase price or as a stockholder of the
Company, whether such obligation or liability is asserted by the Company or by
creditors of the Company.

6. Representations and Warranties of the Holder. The Holder represents and
warrants to the Company as follows:

(a) Purchase Entirely for Own Account. This Warrant is issued to the Holder in
reliance upon such Holder’s representation to the Company, which by the Holder’s
execution of this Warrant the Holder hereby confirms, that the Warrant and
Warrant Stock are being acquired for investment for the Holder’s own account,
not as a nominee or agent, and not with a view to the resale or distribution of
any part thereof in violation of the federal or state securities laws.

(b) Investment Experience. The Holder represents that it can bear the economic
risk of its investment and has such knowledge and experience in financial or
business matters that it is capable of evaluating the merits and risks of the
investment in the Warrant and the Warrant Stock. If an entity, the Holder also
represents it has not been organized solely for the purpose of acquiring the
Warrant or the Warrant Stock.

(c) Restricted Securities. The Holder understands that the Warrant being issued
hereunder and the Warrant Stock to be purchased hereunder are characterized as
“restricted securities” under the federal securities laws inasmuch as they are
being acquired from the Company in a transaction not involving a public offering
and that under such laws and applicable regulations such securities may be
resold without registration under the Securities Act of 1933, as amended (the
“Securities Act”), only in certain limited circumstances. In this connection,
the Holder represents that it is familiar with Securities and Exchange
Commission Rule 144, as presently in effect, and understands the resale
limitations imposed thereby and by the Securities Act.

(d) Legends. It is understood that the certificates evidencing the Warrant Stock
may bear a legend substantially in the following form:

“THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE “ACT”), OR ANY STATE SECURITIES LAWS (COLLECTIVELY, THE “SECURITIES
LAWS”). THEY MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED, HYPOTHECATED OR
OTHERWISE TRANSFERRED IN THE ABSENCE OF A REGISTRATION STATEMENT IN EFFECT WITH
RESPECT TO THE SECURITIES UNDER THE SECURITIES LAWS (i) UNLESS SOLD PURSUANT TO
AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES LAWS AND (ii) THE COMPANY,
IF IT SO REQUESTS, HAS RECEIVED AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO
THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED.”

In addition, the certificates evidencing the Warrant Stock may bear any legend
required by the Company’s charter documents or the laws of the State of
Washington and any other state in which the securities will be issued.

 

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7. Transfers and Exchanges.

(a) The Holder may not sell, hypothecate, pledge or otherwise dispose of any
interest in the Warrant or the Warrant Stock unless such transfer would not
violate any provision of this Section 7.

(b) Subject to the conditions of this Section 7, upon delivery to the Company of
a duly completed and executed Assignment in substantially the form attached
hereto, a new warrant shall be issued to the transferee therein named. All new
warrants issued in connection with transfers or exchanges shall not require the
signature of the new Holder hereof and shall be identical in form and provision
to this Warrant except as to the number of shares.

(c) It shall be a condition to any transfer of this Warrant that the transferee
shall be an accredited investor, within the meaning of the Securities Act, and
that the Company shall have received, at the time of such transfer or exercise
(i) a representation letter, or at the option of the Company, a legal opinion,
in form and substance reasonably satisfactory to the Company and its counsel,
reciting the pertinent circumstances surrounding the proposed transfer and
stating that such transfer is exempt from the prospectus and registration
requirements of the Securities Act and applicable state securities laws and
(ii) a statement in writing from, and signed by, any proposed transferees
containing the same representations and warranties as set forth in Section 6
hereof and agreeing to be bound by the provisions of this Section 7, such
statement to be in the form of Assignment attached hereto. Notwithstanding the
foregoing, as long as the transfer of this Warrant is in compliance with
applicable securities laws and there are no significant issues of fact (such as
whether or not the Holder is an “affiliate,” as such term is defined in Rule 144
of the Securities Act) or unusual questions of law, the requirement of a
representation letter or legal opinion shall not apply to (a) the transfer of
this Warrant or any part thereof to a partnership of which the Holder is a
partner or to the beneficial owners or affiliates of such partnership, (b) the
transfer of this Warrant or any part thereof to beneficial owners, employees or
affiliates of the Holder, (c) bona fide gifts to a member of a Holder’s
immediate family or trustee for a member of a Holder’s immediate family,
(d) transfers by will upon the death of a Holder, or (e) transfers pursuant to a
divorce or dissolution of the marriage of a Holder.

(d) Ownership of Warrants. The Company may treat the person in whose name any
Warrant is registered on the register kept by the Company or its transfer agent
as the owner and Holder thereof for all purposes, notwithstanding any notice to
the contrary. A Warrant, if properly assigned, may be exercised by a new Holder
without a new Warrant first having been issued. Nothing in this Section 7(d)
shall relieve the Holder of his obligations under Section 7(c) hereof.

8. Successors and Assigns. The terms and provisions of this Warrant shall be
binding upon the Company and the Holder and their respective successors and
assigns, subject at all times to the restrictions set forth herein.

9. Loss, Theft, Destruction or Mutilation of Warrant. Upon receipt by the
Company of evidence reasonably satisfactory to it and its counsel of the loss,
theft, destruction or mutilation of this Warrant, and in case of loss, theft or
destruction, of indemnity or security reasonably satisfactory to the Company,
and upon reimbursement to the Company of all reasonable expenses incidental
thereto, and upon surrender and cancellation of this Warrant, if mutilated, the
Company will make and deliver a new warrant of like tenor and dated as of such
cancellation, in lieu of this Warrant.

10. Saturdays, Sundays, Holiday, etc. If the last or appointed day for the
taking of any action or the expiration of any right required or granted herein
shall be a Saturday or Sunday or shall be a legal holiday in the State of
Washington, then such action may be taken or such right may be exercised on the
next succeeding day not a Saturday, Sunday or legal holiday.

 

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11. Amendments and Waivers. Any term of this Warrant may be amended and the
observance of any term of this Warrant may be waived (either generally or in a
particular instance and either retroactively or prospectively) only with the
written consent of the Company and the Holder. Any such amendment or waiver
shall be binding on the parties.

12. Governing Law; Venue. The terms and conditions of this Warrant shall be
governed by and construed in accordance with the law of the State of Washington,
without regard to conflict of law provisions. The parties expressly stipulate
that any litigation under this Warrant shall be brought in the state courts of
King County, Washington or in the United States District Court for the Western
District of Washington. The parties agree to submit to the exclusive
jurisdiction and venue of those courts.

13. Notices. All notices and other communications under this Warrant shall be in
writing and shall be delivered in person, via facsimile machine, sent by
documented overnight delivery service, or mailed by registered or certified
mail, return receipt requested, postage prepaid, addressed (a) if to the Holder,
at the registered address of such Holder as set forth in the register kept at
the principal office of the Company, or (b) if to the Company, to the attention
of its President at its principal offices at 22118 20th Avenue SE, Suite 204,
Bothell, WA 98021, provided that the exercise of any Warrant shall be effected
in the manner provided in Section 1. Unless otherwise specified in this Warrant,
all such notices and other written communications shall be effective (and
considered delivered and received for the purposes of this Agreement) (i) if
delivered, upon delivery, (ii) if by facsimile machine during normal business
hours upon transmission with confirmation of receipt by the receiving party’s
facsimile terminal and if not sent during normal business hours, then on the
next day, (iii) if sent by documented overnight delivery service, on the date
following the date on which such notice is delivered to such overnight delivery
service for mailing, or (iv) if mailed via first-class regular mail, three
(3) day after depositing in the U.S. Mail.

[Remainder of Page Intentionally Left Blank]

 

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IN WITNESS WHEREOF, the parties have executed this Warrant effective as of the
date first written above.

 

THE COMPANY:

HELIX BIOMEDIX, INC.,

a Delaware corporation

By:  

 

Name:   R. Stephen Beatty,   President and Chief Executive Officer

Address:   22118 20th Avenue SE, Suite 204   Bothell, WA 98021 Telephone:  
(425) 402-8400 Facsimile:   (425) 806-2999

Number of shares for which this warrant is initially exercisable: [    ] HOLDER:

 

[                             ]

Address:  

 

 

Facsimile:  

 

Soc. Sec. No. or Tax ID:  

 

 

8

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SUBSCRIPTION

Helix BioMedix, Inc.

22118 20th Avenue SE, Suite 204

Bothell, WA 98021

Ladies and Gentlemen:

The undersigned hereby elects to purchase, pursuant to the provisions of the
Warrant dated March 5, 2010, held by the undersigned,      shares of Common
Stock of Helix BioMedix, Inc., a Delaware corporation, and tenders herewith
payment of the purchase price of such shares in full.

The undersigned hereby confirms and acknowledges the investment representations
and warranties made in Section 6 of the Warrant and accepts such shares subject
to the restrictions of the Warrant, copies of which are available from the
Secretary of the Company.

 

Date:  

 

     Print Name(s):   

 

         

 

       Signature:   

 

       Title if applicable:   

 

       Signature:   

 

       Title if applicable:   

 

       Address:   

 

         

 

Warrant Subscription

--------------------------------------------------------------------------------

FORM OF ASSIGNMENT

 

The undersigned hereby assigns this Warrant to

 

 

 

(Print or type name, address and zip code of assignee)

Please insert Social Security or other identifying number of assignee:

 

 

and irrevocably appoints              as agent to transfer this Warrant on the
books of the Company. The agent may substitute another to act for him or it.

Date:                     

Signed:

 

 

 

 

(All owners must sign exactly as name(s) appear(s) on the front of this Warrant)

The undersigned assignee hereby confirms and acknowledges the investment
representations and warranties made in Section 6 of the Warrant and agrees to be
bound by the obligations set forth in the Warrant, copies of which are available
from the Secretary of the Company.

 

Date:     By:  

 

    Name:  

 

    Title:  

 

Warrant Form of Assignment