Exhibit 10.24


LIMITED STANDSTILL AGREEMENT


This AGREEMENT (the “Agreement”) is made as of the 5th day of December, 2006, by Osmotics
Corporation, a Colorado corporation (“Holder” or “Osmotics”), in connection
with Holder’s ownership of shares of Ceragenix Pharmaceuticals, Inc., a
Delaware corporation (the “Company”). 
Defined terms not otherwise defined herein shall have the meanings set
forth in the Subscription Agreement (as defined below).


NOW, THEREFORE, for good and valuable consideration,
the sufficiency and receipt of which consideration are hereby acknowledged,
Holder agrees as follows:


1.             Background.


a.             Holder
is the actual and/or beneficial owner of the following shares of the Common
Stock, $0.0001 par value, of the Company (“Common Stock”) and rights to
purchase shares of Common Stock:


 




	
  Description

  	
   

  	
  Shares

  	
   

  
	
  Common
  Stock in Escrow for Benefit of Osmotics Stockholders (the “Escrow Shares”)

  	
   

  	
  10,700,000

  	
   

  
	
  Common Stock (the
  “Registered Shares”)

  	
   

  	
  341,768

  	
   

  
	
  Series A Convertible
  Preferred Stock (the “Series A Shares”)

  	
   

  	
  1,000,000

  	
   

  
	
  Common Stock Purchase
  Warrant

  	
   

  	
  1,057,161

  	
   

  
	
  Total

  	
   

  	
  13,098,929

  	
   

  






 


b.             Holder
acknowledges that the Company has entered into or will enter into a securities
purchase agreement (the “Subscription Agreement”) with each purchaser (the “Purchasers”)
of the Company’s convertible debentures and warrants, providing for the sale to
the Purchasers of an aggregate of up to $5,000,000 of principal amount of
convertible debentures and warrants (the “Offering”).  Holder understands that, as a condition to
proceeding with the Offering, the Purchasers have required, and the Company has
agreed to obtain, an agreement from Holder to refrain from selling any securities
of the Company during the period commencing on the date of execution of the
Subscription Agreement until the later of: (i) September 30, 2009 or (ii) the two
year anniversary of the date a registration statement registering an Exchange
Transaction (as defined below) is declared effective by the Commission (such period,
the “Restriction Period”). As used herein, the Escrow Shares, the Series A
Shares or the shares of Common Stock received upon conversion of the Series A
Shares are collectively referred to as the “Covered Securities”.  Notwithstanding anything herein to the
contrary, the restrictions on Transfer set forth in Section 2 below shall
terminate at such time that the Debentures have been paid or converted in full
and are no longer outstanding.


2.             Share
Restriction.


a.             Holder
hereby agrees that during the Restriction Period, Holder shall not offer, sell,
contract to sell, hypothecate, pledge or otherwise dispose of (or enter into
any 









 



 


transaction which is designed to, or might reasonably be expected to,
result in the disposition (whether by actual disposition or effective economic
disposition due to cash settlement or otherwise) by the undersigned or any
Affiliate of the Holder or any person in privity with the Holder or any
Affiliate of the Holder), directly or indirectly, including the filing (or
participation in the filing) of a registration statement with the Commission in
respect of, or establish or increase a put equivalent position or liquidate or
decrease a call equivalent position within the meaning of Section 16 of the
Exchange Act (each, a “Transfer”) with respect to, any Common Stock or Common
Stock Equivalents beneficially owned, held or hereafter acquired by the Holder.


                                b.             Notwithstanding the foregoing, the
undersigned Holder shall be permitted to make Transfers of Common Stock and
Common Stock Equivalents held by the Holder during the Restriction Period
expressly in accordance with the following (collectively, the “Sale
Allowances”):


(i)
Following the Effective Date, in connection with an exchange offer that is
registered with the Commission that is made to all stockholders and/or
debtholders of the Holder, pursuant to which all of the Covered Securities will
be issued to the stockholders and/or debtholders of the Holder (an “Exchange
Transaction”); provided, however, that it shall
be a condition to any such Exchange Transaction that the stockholders and/or
debtholders of the Holder accepting such exchange offer agree in writing to be
bound by the terms of this Agreement during the Restriction Period.  It shall be a condition precedent to the consummation
of such Exchange Transaction that the Series A Shares are converted into shares
of Common Stock prior to the effectiveness thereof, provided, that
Osmotics may exchange Series A Shares with its debtholders without conversion,
subject to the limitation that no Series A Shares will be registered with the
Commission (although the Company may register the shares of Common Stock to be
received upon conversion of the Series A Shares), and subject to the condition
that such Series A Shares (and Common Stock issuable upon conversion thereof)
remain subject to the restrictions on Transfers set forth herein during the
Restriction Period.


(ii)  Following the consummation
of the Exchange Transaction, during the 12-month period immediately following
the effective date of the registration statement filed in connection with such
Exchange Transaction, each stockholder and/or debtholder (or former stockholder
and/or debtholder) of the Holder that receives Covered Securities (such
stockholders and/or debtholders, the “Osmotic Stockholders”) in such Exchange
Transaction shall be permitted to make Transfers of the Covered Securities held
by such Osmotic Stockholder, on a monthly basis in an amount equal to up to 1/12th of 34% of the shares of Covered
Securities such Osmotic Stockholder received in the Exchange Transaction (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 Agreement), per calendar month (the Holder acknowledges
and agrees that the foregoing limits on Transfers are non-cumulative and may
not be carried over from month to month).


(iii)  Following the consummation
of the Exchange Transaction, during the 12-month period immediately following
the 12-month anniversary of the effective date of 



 2
 






 



 


the registration statement filed in connection with
such Exchange Transaction, each Osmotic Stockholder shall be permitted to make
Transfers of the shares of the Covered Securities held by such Osmotic
Stockholder, on a monthly basis in an amount equal to up to 1/12th of 66% of the shares of the
Covered Securities such Osmotic Stockholder received in the Exchange
Transaction (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 Agreement), per calendar month (the Holder
acknowledges and agrees that the foregoing limits on Transfers are
non-cumulative and may not be carried over from month to month).


(iv)          Following the
consummation of the Exchange Transaction, in the event the Company consummates
a firm commitment underwritten public offering of its securities with a
nationally recognized and reputable underwriter with gross cash proceeds to the
Company of at least $5,000,000 (a “Qualified Public Offering”), each Osmotics
Stockholder shall be permitted to include shares of Covered Securities owned by
it in such Qualified Public Offering to the extent the managing underwriter in
such Qualified Public Offering permits the inclusion of such securities.  With respect to the Osmotics Stockholders
that participate in the Qualified Public Offering: (i) they will be subject to
customary a lock-up provision limiting their transactions in the Company’s
securities in the form requested by the managing underwriter for the Qualified
Public Offering; and (ii) the restrictions on Transfer of the Covered
Securities provided in this Agreement will terminate in the event that the
managing underwriter of the Qualified Public Offering requires such Osmotic
Stockholders to enter into a lock-up provision that is more restrictive than
the terms hereunder and longer in duration than the Restricted Period hereunder.


(v)           At any time
following the date hereof, the Holder may Transfer any of the Registered Shares
to a Purchaser or any Note Holder.  In
addition, during the Restricted Period, after the expiration of any notice,
right of first refusal or similar right that remains unexercised by a Purchaser
or a Note Holder, the Holder may publicly sell up to an amount of Registered
Shares on any Trading Day that is equal to or less than 15% of trading volume
of the Common Stock on the principal Trading Market on the Trading Day
immediately preceding the date of such sale.


c.             The
Company shall implement all necessary procedures to enforce the limitations of
this Agreement upon the Holder and all of Holder’s shareholders or debtholders
receiving securities of the Company in an Exchange Transaction, which may
include the engagement of a trustee or other agent to effectuate the
process.  In addition, certificates
evidencing shares of Common Stock or Common Stock Equivalents subject to the
terms of this Agreement shall include the following legend (in addition to a
customary Securities Act legend) during the Restriction Period:


“THE SECURITIES EVIDENCED BY THIS CERTIFICATE ARE SUBJECT TO THE TERMS
OF A LOCK-UP AGREEMENT DATED DECEMBER        ,
2006, AND MAY ONLY BE SOLD, TRANSFERRED, ASSIGNED OR OTHERWISE DISPOSED IN
ACCORDANCE WITH THE TERMS THEREOF PURSUANT TO A WRITTEN A OPINION OF COUNSEL
ACCEPTABLE TO THE COMPANY AND ITS TRANSFER 



 3
 






 



 


AGENT THAT SUCH TRANSACTION IS IN COMPLIANCE WITH THE TERMS OF SUCH
LOCK UP AGREEMENT.”


d.             Holder
further agrees that the Company is authorized to and the Company agrees to
place “stop orders” on its books and to prevent any transfer of shares of
Common Stock or other securities of the Company held by Holder in violation of
this Agreement.  In addition, in order to
enforce this Agreement, the Company shall impose irrevocable stop-transfer
instructions preventing its transfer agent from effecting any actions in
violation of this Agreement. Any subsequent issuance to and/or acquisition of
shares or the right to acquire shares of Common Stock or Common Stock
Equivalents by Holder will be subject to the provisions of this Agreement.


3.             Miscellaneous.


a.             At
any time, and from time to time, after the signing of this Agreement Holder
will execute such additional instruments and take such action as may be
reasonably requested by the Purchasers to carry out the intent and purposes of
this Agreement.


b.             This
Agreement shall be governed, construed and enforced in accordance with the laws
of the State of New York without regard to conflicts of laws principles that
would result in the application of the substantive laws of another
jurisdiction, except to the extent that the securities laws of the state in
which Holder resides and federal securities laws may apply.  Any proceeding brought to enforce this
Agreement may be brought exclusively in courts sitting in New York County, New
York.


c.             This
Agreement contains the entire agreement of the Holder with respect to the
subject matter hereof.


d.             This
Agreement shall be binding upon Holder, its legal representatives, successors
and assigns.


e.             This
Agreement may be signed and delivered by facsimile and such facsimile signed
and delivered shall be enforceable.


f.              The
Company agrees not to take any action or allow any act to be taken which would
be inconsistent with this Agreement.


g.             The
Holder acknowledges that the execution, delivery and performance of this
Agreement is a material inducement to each Purchaser to complete the
transactions contemplated by the Subscription Agreement and that each Purchaser
(which shall be a third party beneficiary of this Agreement) and the Company
shall be entitled to specific performance of the undersigned’s obligations
hereunder.


i.              The Holder hereby
represents that it has the power and authority to execute, deliver and perform
this Agreement, that it has received adequate consideration therefor and that
the Holder will indirectly benefit from the closing of the transactions
contemplated by 



 4
 






 



 


the
Subscription Agreement.


j.              This
Agreement may not be amended or otherwise modified in any respect without the
prior written consent of the Holder, the Company and each Purchaser.


[BALANCE OF PAGE INTENTIONALLY
LEFT BLANK.  SIGNATURE PAGE FOLLOWS]



 5
 






 



 


IN WITNESS WHEREOF, and
intending to be legally bound hereby, Holder and the Company have executed this
Agreement as of the day and year first above written.


	
  

  	
  HOLDER:

  
	
   

  	
   

  
	
   

  	
  OSMOTICS CORPORATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  ACCEPTED AND AGREED:

  
	
   

  	
   

  
	
   

  	
  COMPANY:

  
	
   

  	
   

  
	
   

  	
  CERAGENIX PHARMACEUTICALS, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Title:

  	
   

  
					



 



 6