Exhibit 10.2

 

FORM OF

 

COMMON STOCK PURCHASE WARRANT

 

THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 (THE
“SECURITIES ACT”) OR UNDER APPLICABLE STATE SECURITIES LAWS AND MAY NOT BE SOLD,
TRANSFERRED OR OTHERWISE DISPOSED OF UNLESS REGISTERED UNDER THE SECURITIES ACT
AND ANY APPLICABLE STATE SECURITIES LAWS OR PURSUANT TO AVAILABLE EXEMPTIONS
FROM SUCH REGISTRATION, PROVIDED THAT THE SELLER DELIVERS TO THE COMPANY AN
OPINION OF COUNSEL (WHICH OPINION IS REASONABLY SATISFACTORY TO THE COMPANY)
CONFIRMING THE AVAILABILITY OF SUCH EXEMPTION.

 

Dated: September 11, 2003

 

No.                         AXONYX INC.

 

WARRANT TO PURCHASE           SHARES OF COMMON STOCK

 

THIS CERTIFIES THAT, for value received,                 (the “Holder”) is
entitled to subscribe for and purchase                shares (as adjusted
pursuant to Section 4 hereof) of the fully paid and nonassessable Common Stock,
par value $0.001 per share (the “Shares”), of Axonyx Inc., a Nevada corporation
(the “Company”), at the price of $3.50 per share (the “Exercise Price”) (as
adjusted pursuant to Section 4 hereof), upon the terms and subject to the
conditions hereinafter set forth.

 

1.                                       Method of Exercise; Payment.

 

(a)                                  Cash Exercise.  The purchase rights
represented by this Warrant may be exercised by the Holder, in whole or in part,
at any time or from time to time, by the surrender of this Warrant (with the
notice of exercise form attached hereto as Exhibit A duly executed) at the
principal office of the Company, and by the payment to the Company, by
certified, cashier’s or other check acceptable to the Company, of an amount
equal to the aggregate Exercise Price of the shares being purchased.

 

(b)                                 Net Issue Exercise.

 

(i)                                     If, at any time which is more than one
year after the issuance date of this Warrant there is not an effective
registration statement registering the Warrant Shares for resale by the Holder
(other than as permitted by Section 5.6 of the Purchase Agreement), then in lieu
of exercising this Warrant for cash, the Holder may elect to receive, without
the payment by the Holder of any additional consideration, shares equal to the
value of this Warrant (or the portion thereof being cancelled) by surrender of
this Warrant at the principal office of the Company together with notice of such
election, in which event the Company shall issue to the Holder a number of
shares of the Company’s Common Stock computed using the following formula:

 

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X

 

=

 

Y (A-B)

 

 

 

 

A

 

 

 

 

 

Where:

 

 

 

 

 

 

 

 

 

X

 

=

 

the number of shares of Common Stock to be issued to the Holder.

Y

 

=

 

the number of shares of Common Stock purchasable under this Warrant, or if only
a portion of this Warrant is being exercised, the number of shares of Common
Stock represented by the portion of the Warrant being exercised.

A

 

=

 

the fair market value of one share of the Company’s Common Stock at the time the
net issue exercise election is made.

B

 

=

 

the Exercise Price (as adjusted to the date of such calculation).

 

(c)                                  Fair Market Value.  For purposes of this
Section 1, the fair market value of the Company’s Common Stock shall mean:

 

(i)                                     if the Company’s Common Stock is traded
on a securities exchange, the closing price on the trading day prior to the day
on which the fair market value of the securities is being determined;

 

(ii)                                  if the Company’s Common Stock is actively
traded over-the counter, the average of the closing bid and asked prices quoted
on the NASDAQ system (or similar system) on the trading day prior to the day on
which the fair market value of the securities is being determined; or

 

(iii)                               if at any time the Company’s Common Stock is
not listed on any securities exchange or quoted in the NASDAQ System or the
over-the-counter market, then as determined by the board of directors of the
Company in good faith.

 

(d)                                 Stock Certificates.  This Warrant shall be
deemed to have been exercised immediately prior to the close of business on the
date of its surrender for exercise as provided above, and the person entitled to
receive the Shares issuable upon such exercise shall be treated for all purposes
as the holder of record of such Shares as of the close of business on such
date.  As soon as practicable, but in any event no later than five days after
such date, the Company shall issue and deliver to the person or persons entitled
to receive the same a certificate or certificates for the number of whole Shares
issuable upon such exercise.  Unless this Warrant has been fully exercised or
has expired, a new Warrant representing the Shares with respect to which this
Warrant shall not have been exercised shall also be issued to the Holder within
such time.

 

2.                                                                                      
(e)                                  Limitation on Exercise.  The Holder shall
not have the right to exercise any portion of this Warrant, to the extent that
after giving effect to such issuance after exercise, the Holder (together with
the Holder’s Affiliates), as set forth on the applicable Notice of Exercise,
would beneficially own in excess of 4.99% of the number of shares of the Common
Stock outstanding immediately after giving effect to such issuance.  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 the determination of such sentence 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

 

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other securities of the Company (including, without limitation, any other
Warrants) 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 1(e), beneficial ownership shall be calculated in accordance with
Section 13(d) of the Exchange Act.  For purposes of this Section 1(e), in
determining the number of outstanding shares of Common Stock, the Holder may
rely on the number of outstanding shares of Common Stock as reflected in (x) the
Company’s most recent Form 10-Q or Form 10-K, as the case may be, (y) a more
recent public announcement by the Company or (z) any other notice by the Company
or the Company’s Transfer Agent setting forth the number of shares of Common
Stock outstanding.  Upon the written or oral request of the Holder, the Company
shall within two 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 Company 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 provisions of
this Section 1(e) may be waived by the Holder upon, at the election of the
Holder, not less than 61 days’ prior notice to the Company, and the provisions
of this Section 1(e) shall continue to apply until such 61st day (or such later
date, as determined by the Holder, as may be specified in such notice of
waiver). Each delivery of an Exercise Notice hereunder will constitute a
representation by the Holder that it has evaluated the limitation set forth in
this paragraph and determined that issuance of the full number of Warrant Shares
requested in such Exercise Notice is permitted under this paragraph.

 

3.                                       Stock Fully Paid; Reservation of
Shares.  All of the Shares issuable upon the exercise of the rights represented
by this Warrant will, upon issuance and receipt of the Exercise Price therefor,
be fully paid and nonassessable, and free from all preemptive rights, taxes,
liens and charges with respect to the issue thereof.  During the period within
which the rights represented by this Warrant may be exercised, the Company shall
at all times have authorized and reserved for issuance upon exercise of the
rights evidenced by this Warrant, sufficient shares of its Common Stock to
provide for the exercise of the rights represented by this Warrant.

 

4.                                       Adjustment of Exercise Price and Number
of Shares.  Subject to the provisions of Section 12 hereof, the number and kind
of securities purchasable upon the exercise of this Warrant and the Exercise
Price therefor shall be subject to adjustment from time to time upon the
occurrence of certain events, as follows:

 

(a)                                  Reclassification, Consolidation or Merger. 
In case of any reclassification or change of the Common Stock (other than a
change in par value, or as a result of a subdivision or combination), or in case
of any consolidation or merger of the Company with or into another corporation
(other than a merger with another corporation in which the Company is a
continuing corporation and which does not result in any reclassification or
change of outstanding securities issuable upon exercise of this Warrant), or in
case of any sale of all or substantially all of the assets of the Company, the
Company or such successor or purchasing corporation, as the case may be, shall
execute a new Warrant, providing that the holder of this Warrant shall have the
right to exercise such new Warrant, and procure upon such exercise and payment
of the same aggregate Exercise Price, in lieu of the shares of Common Stock
theretofore issuable upon exercise of this Warrant, the kind and amount of
shares of stock, other securities, money and property receivable upon such
reclassification, change, consolidation, sale of all or substantially all of the
Company’s assets or merger by a holder of  an equivalent number of shares of

 

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Common Stock.  Such new Warrant shall provide for adjustments which shall be as
nearly equivalent as may be practicable to the adjustments provided for in this
Section 3.  The provisions of this Section 3(a), subject to Section 12 hereof,
shall similarly apply to successive reclassifications, changes, consolidations,
mergers, transfers and the sale of all or substantially all of the Company’s
assets.

 

(b)                                 Stock Splits, Dividends and Combinations. 
In the event that the Company shall at any time subdivide the outstanding shares
of Common Stock or shall issue a stock dividend on its outstanding shares of
Common Stock the number of Shares issuable upon exercise of this Warrant
immediately prior to such subdivision or to the issuance of such stock dividend
shall be proportionately increased, and the Exercise Price shall be
proportionately decreased, and in the event that the Company shall at any time
combine the outstanding shares of Common Stock the number of Shares issuable
upon exercise of this Warrant immediately prior to such combination shall be
proportionately decreased, and the Exercise Price shall be proportionately
increased, effective at the close of business on the date of such subdivision,
stock dividend or combination, as the case may be.

 

5.                                       Notice of Adjustments.  Whenever the
number of Shares purchasable hereunder or the Exercise Price thereof shall be
adjusted pursuant to Section 3 hereof, the Company shall provide notice by first
class mail to the holder of this Warrant setting forth, in reasonable detail,
the event requiring the adjustment, the amount of the adjustment, the method by
which such adjustment was calculated, and the number of Shares which may be
purchased and the Exercise Price therefor after giving effect to such
adjustment.

 

6.                                       Fractional Shares.  No fractional
shares of Common Stock will be issued in connection with any exercise
hereunder.  In lieu of such fractional shares, the Company shall make a cash
payment therefor based upon the Fair Market Value of one share of Common Stock
of the Company on the date of such exercise.

 

7.                                       Representations of the Company.  The
Company represents that all corporate actions on the part of the Company, its
officers, directors and stockholders necessary for the sale and issuance of the
Shares pursuant hereto and the performance of the Company’s obligations
hereunder were taken prior to and are effective as of the effective date of this
Warrant.

 

8.                                       Representations and Warranties by the
Holder.  The Holder represents and warrants to the Company as follows:

 

(a)                                  This Warrant and the Shares issuable upon
exercise thereof are being acquired for its own account, for investment and not
with a view to, or for resale in connection with, any distribution or public
offering thereof within the meaning of the Securities Act of 1933, as amended
(the “Act”).  Upon exercise of this Warrant, the Holder shall, if so requested
by the Company, confirm in writing, in a form satisfactory to the Company, that
the securities issuable upon exercise of this Warrant are being acquired for
investment and not with a view toward distribution or resale.

 

(b)                                 The Holder understands that the Warrant and
the Shares have not been registered under the Act by reason of their issuance in
a transaction exempt from the registration and prospectus delivery requirements
of the Act pursuant to Section 4(2) thereof, and that they must be held by the
Holder indefinitely, and that the Holder must therefore bear the economic

 

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risk of such investment indefinitely, unless a subsequent disposition thereof is
registered under the Act or is exempted from such registration.

 

(c)                                  The Holder has such knowledge and
experience in financial and business matters that it is capable of evaluating
the merits and risks of the purchase of this Warrant and the Shares purchasable
pursuant to the terms of this Warrant and of protecting its interests in
connection therewith.

 

(d)                                 The Holder is able to bear the economic risk
of the purchase of the Shares pursuant to the terms of this Warrant.

 

9.                                       Restrictive Legend.

 

The Shares issuable upon exercise of this Warrant (unless registered under the
Act) shall be stamped or imprinted with a legend in the following form:

 

THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 (THE
“SECURITIES ACT”) OR UNDER APPLICABLE STATE SECURITIES LAWS AND MAY NOT BE SOLD,
TRANSFERRED OR OTHERWISE DISPOSED OF UNLESS REGISTERED UNDER THE SECURITIES ACT
AND ANY APPLICABLE STATE SECURITIES LAWS OR PURSUANT TO AVAILABLE EXEMPTIONS
FROM SUCH REGISTRATION, PROVIDED THAT THE SELLER DELIVERS TO THE COMPANY AN
OPINION OF COUNSEL (WHICH OPINION IS REASONABLY SATISFACTORY TO THE COMPANY)
CONFIRMING THE AVAILABILITY OF SUCH EXEMPTION.

 

10.                                 Restrictions Upon Transfer and Removal of
Legend.

 

(a)                                  The Company need not register a transfer of
Shares bearing the restrictive legend set forth in Section 8 hereof, unless the
conditions specified in such legend are satisfied.  The Company may also
instruct its transfer agent not to register the transfer of the Shares, unless
one of the conditions specified in the legend referred to in Section 8 hereof is
satisfied.

 

(b)                                 Notwithstanding the provisions of
Section 8(a) above, no opinion of counsel or “no-action” letter shall be
necessary for a transfer without consideration by any holder (i) to an affiliate
of the holder, (ii) if such holder is a partnership, to a partner or retired
partner of such partnership who retires after the date hereof or to the estate
of any such partner or retired partner, (iii) if such holder is a corporation,
to a stockholder of such corporation, or to any other corporation under common
control, direct or indirect, with such holder, (iv) if such holder is a limited
liability company, to a member or retired member of such limited liability
company who retires after the date hereof or to the estate of any such member or
retired member, or (v) by gift, will or intestate succession of any individual
holder to his spouse or siblings, or to the lineal descendants or ancestors of
such holder or his spouse, if the transferee agrees in writing to be subject to
the terms hereof to the same extent as if such transferee were the original
holder hereunder.

 

11.                                 Rights of Stockholders.  No holder of this
Warrant shall be entitled, as a Warrant holder, to vote or receive dividends or
be deemed the holder of Common Stock or any other

 

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securities of the Company which may at any time be issuable on the exercise
hereof for any purpose, nor shall anything contained herein be construed to
confer upon the holder of this Warrant, as such, any of the rights of a
stockholder of the Company or any right to vote for the election of directors or
upon any matter submitted to stockholders at any meeting thereof, or to give or
withhold consent to any corporate action (whether upon any recapitalization,
issuance of stock, reclassification of stock, change of par value,
consolidation, merger, conveyance, or otherwise) or to receive notice of
meetings, or to receive dividends or subscription rights or otherwise until the
Warrant shall have been exercised and the Shares purchasable upon the exercise
hereof shall have become deliverable, as provided herein.

 

12.                                 Registration Rights.  All Shares issuable
upon exercise of this Warrant shall be deemed to be “Registrable Securities” or
such other definition of securities entitled to registration rights pursuant to
Section 5 of the Common Stock and Warrant Purchase Agreement dated September 11,
2003, by and between the Company and the Holder (the “Purchase Agreement”), and
are entitled, subject to the terms and conditions of the Purchase Agreement, to
all rights granted to holders of Registrable Securities thereunder.

 

13.                                 Expiration of Warrant.  This Warrant shall
expire and shall no longer be exercisable at 5:00 p.m., New York local time, on
the date that is five (5) years after the date of issuance of this Warrant as
set forth on the first page of this Warrant.

 

14.                                 Call Provision.  Beginning one year after
the Registration Statement has become effective, the Company shall have the
right, upon five (5) business days’ prior written notice to the Holder (the
“Call Right Notice”), to call this Warrant, provided that (i) the Warrant Shares
are registered for resale pursuant to the Securities Act or are freely tradable
without restriction or legend, (ii) the Common Stock shall be listed or quoted
for trading on the Nasdaq SmallCap Market or a national securities exchange 
immediately preceding the date of the Call Right Notice and (iii) the volume
weighted average price (as reported by Bloomberg LP) for 25 of the 30 business
days immediately preceding the date of the Call Right Notice were equal to or
greater than $8.00 (subject to adjustment for reverse and forward stock splits,
stock dividends, stock combinations and other similar transactions of the Common
Stock that occur after the date of this Warrant).  If this Warrant has not been
exercised in full upon the expiration of such five (5) business day notice
period, this Warrant shall terminate automatically without any further action on
the part of the Holder or the Company.

 

15.                                 Notices, Etc.  Any request, consent, notice
or other communication required or permitted under this Warrant shall be in
writing and shall be deemed duly given and received when delivered personally or
transmitted by facsimile, or one business day after being deposited for next-day
delivery with a nationally recognized overnight delivery service, or three days
after being deposited as first class mail with the United States Postal
Services, all charges or postage prepaid, and properly addressed to the party to
receive the same.  Any party may, at any time, by providing ten days’ advance
written notice to the other party hereto, designate any other address in
substitution of the an address established pursuant to the foregoing.  The
Company’s and the Holder’s notice address shall be as set forth on the Purchase
Agreement or as may have been subsequently furnished by the Company or the
Holder, as the case may be, to the other in writing.

 

16.                                 Governing Law; Headings.  This Warrant is
being delivered in the State of New York and shall be construed and enforced in
accordance with and governed by the laws of such

 

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State.  The headings in this Warrant are for purposes of reference only, and
shall not limit or otherwise affect any of the terms hereof.

 

17.                                 Amendment; Waiver.  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.

 

18.                                 Severability.  If one or more provisions of
this Warrant are held to be unenforceable under applicable law, such
provision(s) shall be replaced with a provision that accomplishes, to the extent
possible, the original business purpose of such provision in a valid and
enforceable manner, and the balance of the Warrant shall be interpreted as if
such provision were so modified and shall be enforceable in accordance with its
terms.

 

19.                                 No Impairment.  The Company will not, by
amendment of its certificate of incorporation or bylaws, or through
reorganization, consolidation, merger, dissolution, issue or sale of securities,
sale of assets or any other voluntary 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 action as may be necessary or appropriate in order to protect
the rights of the Holder of this Warrant against impairment.  Without limiting
the generality of the foregoing, the Company (a) will not increase the par value
of any shares of stock issuable upon the exercise of this Warrant above the
amount payable therefor upon such exercise, and (b) will take all such action as
may be necessary or appropriate in order that the Company may validly issue
fully paid and non-assessable Shares upon exercise of this Warrant.

 

20.                                 Attorneys’ Fees.  In the event any party is
required to engage the services of any attorneys for the purpose of enforcing
this Warrant, or any provision thereof, the prevailing party shall be entitled
to recover its reasonable expenses and costs in enforcing this Warrant,
including attorneys’ fees.

 

21.                                 Loss or Mutilation.  Upon receipt by the
Company of evidence reasonably satisfactory to it of the ownership and the loss,
theft, destruction or mutilation of this Warrant, and of indemnity reasonably
satisfactory to it, and (in the case of mutilation) upon surrender and
cancellation of this Warrant, the Company will execute and deliver in lieu
thereof a new Warrant of like tenor.

 

22.                                 Taxes.  The Company shall pay all taxes and
other governmental charges that may be imposed in respect of the issue or
delivery of any Shares.

 

[Signatures appear on the following page.]

 

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IN WITNESS WHEREOF, this Warrant has been executed as of the date first written
above by an authorized officer of the Company and the Warrant Holder.

 

 

AXONYX INC.

 

 

 

 

 

By:

 

 

 

 

 

Name:

 

 

 

 

 

Title:

 

 

 

 

 

 

 

WARRANT HOLDER

 

 

 

 

 

By:

 

 

 

 

 

Name:

 

 

 

 

 

Title:

 

 

 

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