Exhibit 10.42


 


 


THESE SECURITIES
HAVE NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE
SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM
REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”) AND MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED,
ASSIGNED, PLEDGED OR HYPOTHECATED EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO
AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND
IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS.


 


COMMON STOCK PURCHASE WARRANT


 


To
Purchase up to 2,745,098 Shares of Common Stock of


 


PHARMATHENE,
INC.


 


THIS COMMON STOCK PURCHASE WARRANT (the “Warrant”) certifies that, for value received, Kelisia
Holdings Ltd., a company limited by shares established under the laws of
Cyprus, having its office at 29 Theklas
Lyssioti Street; Cassandra Centre, 2nd Floor; 3731 Limassol; Cyprus (together
with any permitted transferee, the “Holder”), an
indirect wholly owned subsidiary of Panacea Biotec Limited, a public limited
company established under the laws of India, having its registered office at
Ambala-Chandigarh Highway, Lalru-140501, Punjab, India (“PBL”),
is entitled, upon the terms and subject to the limitations on exercise and the
conditions hereinafter set forth, at any time after the date hereof (the “Initial Exercise Date”) and on or prior to 5:00 p.m.
U.S. Eastern Time on the first anniversary following the Initial Exercise Date
(the “Termination Date”) but not thereafter,
to subscribe for and purchase from PharmAthene, Inc, a Delaware corporation
(the “Company”), up to 2,745,098 shares (the “Warrant Shares”) of common stock, par value US$0.0001 per
share, of the Company (the “Common Stock”).  The purchase price of one share of Common
Stock under this Warrant shall be equal to the Exercise Price, as defined in Section 2(b).


 


Section 1.                                            Definitions.


 


“Affiliate”
means with respect to any Person, any Person that
directly or indirectly, Controls, is Controlled by, or is under common Control
with, such Person.


 


“Business Day”
means a day other than a Saturday or Sunday or a day on which banks in Delaware
are authorized or required by law to close.


 


“Control”
(including with correlative meaning, Controlled by and
under common Control with) shall mean, with respect to any Person, the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of such Person, whether through the
ownership of voting securities, by Contract or otherwise, provided that in all
events (and in addition to the above), the direct or indirect ownership of more
than 50% of the paid-up and issued voting share capital of a Person shall be deemed
to constitute control over such Person.


 

















 


“Person” means
an individual or corporation, partnership, trust, incorporated or
unincorporated association, joint venture, limited liability company, joint
stock company, government (or an agency or subdivision thereof) or other entity
of any kind, whether incorporated, registered or not.


 


Section 2.                                            Exercise.


 


(a)                                  Exercise of Warrant.  Exercise of the purchase rights represented
by this Warrant may be made, in whole or in part, at any time or times on or
after the Initial Exercise Date and on or before the Termination Date by (i) delivery
to the Company of a duly executed facsimile copy of the Notice of Exercise
annexed hereto (the “Notice of Exercise”)
(or such other office or agency of the Company as it may designate by notice in
writing to the registered Holder at the address of such Holder appearing on the
books of the Company); (ii) surrendering this Warrant to the Company; and (iii) making
payment to the Company of the aggregate Exercise Price (as defined below) for
the shares thereby purchased by wire transfer to an account designated by the
Company of same-day funds or cashier’s check drawn on a United States
bank.  The Company shall deliver any
objection to any Notice of Exercise within three Business Days of receipt of
such notice.  In the event of any dispute
or discrepancy, the records of the Company shall be controlling and
determinative in the absence of manifest error.


 


(b)                                 Exercise Price.  The per share exercise price for the Warrant
Shares shall be US$5.10, subject to adjustment hereunder (the “Exercise Price”).


 


(c)                                  Mechanics of Exercise.


 


(i)                                     Authorization of Warrant Shares.  The Company covenants that all Warrant Shares
that may be issued upon the exercise of the purchase rights represented by this
Warrant will, upon exercise of the purchase rights represented by this Warrant,
be duly authorized, validly issued, fully paid and nonassessable and free from
all taxes, liens and charges or any encumbrance of any nature whatsoever  in respect of the issue thereof.


 


(ii)                                  Delivery of Certificates Upon
Exercise.  Certificates for shares purchased hereunder
shall be transmitted by the transfer agent of the Company to the Holder by
physical delivery to the address specified by the Holder in the Notice of Exercise
within five (5) Business Days following receipt by the Company of a duly
executed Notice of Exercise, this Warrant and the aggregate Exercise Price as
set forth above (“Warrant Share Delivery Date”).  This Warrant shall be deemed to have been
exercised, the Warrant Shares shall be deemed to have been issued, and the
Holder shall be deemed to have become a holder of record of such shares for all
purposes, on the date the Exercise Price is received by the Company (the “Exercise Date”).


 


(iii)                               Delivery of New Warrants Upon
Exercise.  If this Warrant shall have been exercised in
part, the Company shall, at the request of the Holder and upon surrender of
this Warrant certificate, at the time of delivery of the certificate or
certificates representing Warrant Shares, deliver to the Holder a new Warrant
evidencing the rights of the Holder to purchase the unpurchased Warrant Shares
called for by this Warrant, which new Warrant shall, in all other respects, be
identical to this Warrant.


 


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(iv)                              No Fractional Shares or Scrip.  No fractional shares or scrip representing
fractional shares shall be issued upon the exercise of this Warrant.  As to any fraction of a share that the Holder
would otherwise be entitled to purchase upon such exercise, the Company shall
pay a cash adjustment in respect of such final fraction in an amount equal to
such fraction multiplied by the Exercise Price.


 


(v)                                 Charges, Taxes and Expenses.  Issuance of certificates for Warrant Shares shall
be made without charge to the Holder for any issue or transfer tax or other
incidental expense in respect of the issuance of such certificate, all of which
taxes and expenses shall be paid by the Company, and such certificates shall be
issued in the name of the Holder.


 


(vi)                              Closing of Books.  The Company will not close its stockholder
books or records in any manner that prevents the timely exercise of this
Warrant pursuant to the terms hereof.


 


(d)                                 Maximum Exercise.  The Holder shall not be entitled to exercise
the Warrant for any amount of Warrant Shares that, if issued, would result on
any such Exercise Date in the aggregate number of shares that the Holder would
otherwise receive pursuant to the exercise of the Warrant, together with the
3,733,334 shares of Common Stock the Holder purchased pursuant to the
Securities Purchase Agreement, dated September 30, 2008, between the
Company and the Holder (the “Securities
Purchase Agreement”), and any other shares beneficially owned by
PBL, Kelisia Holdings Ltd. and any holder of Warrant Shares or shares of Common
Stock issued pursuant to the Securities Purchase Agreement, and of their
respective officers, directors and Affiliates, equaling or exceeding twenty
percent (20%) of the number of shares of Common Stock outstanding on the date
of the Securities Purchase Agreement or on such Exercise Date.


 


Section 3.                                            Certain Adjustments.


 


(a)                                  Stock Dividends and Splits.  If the Company, at any time while this
Warrant is outstanding, (i) pays a stock dividend or otherwise makes a
distribution or distributions on shares of its Common Stock or any other equity
or equity equivalent securities payable in shares of Common Stock (which, for
avoidance of doubt, shall not include any shares of Common Stock issued by the
Company pursuant to this Warrant), (ii) subdivides outstanding shares of
Common Stock into a larger number of shares, (iii) combines (including by
way of reverse stock split) outstanding shares of Common Stock into a smaller
number of shares or (iv) issues, by reclassification of shares of the
Common Stock, any shares of capital stock of the Company, then, in each case,
the Exercise Price shall be adjusted by multiplying the Exercise Price
immediately prior to such adjustment by a fraction the numerator of which shall
be the number of shares of Common Stock (excluding treasury shares, if any)
outstanding immediately before such event and the denominator of which shall be
the number of shares of Common Stock outstanding immediately after such event,
and the number of shares issuable upon exercise of this Warrant shall be
proportionately adjusted.  Any adjustment
made pursuant to this Section 3(a) shall become effective immediately
after the record date for the determination of stockholders entitled to receive
such dividend or distribution and shall become effective immediately after the
effective date in the case of a subdivision, combination or reclassification.


 


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(b)                                 Calculations.  All calculations under this Section 3
shall be made to the nearest cent or the nearest 1/100th of a share, as the
case may be.  For purposes of this Section 3,
the number of shares of Common Stock deemed to be issued and outstanding as of
a given date shall be the sum of the number of shares of Common Stock
(excluding treasury shares, if any) issued and outstanding.


 


(c)                                  Voluntary Adjustment by Company.  The Company may, at any time during the term
of this Warrant and with the prior written approval by the Holder, reduce the
then-current Exercise Price to any amount and for any period of time deemed
appropriate by the board of directors of the Company.


 


(d)                                 Notice to Holder.


 


(i)                                     Adjustment to Exercise Price.  Whenever the Exercise Price is adjusted
pursuant to this Section 3, the Company shall within five (5) Business
Days mail to the Holder a notice setting forth the Exercise Price after such
adjustment and setting forth a brief statement of the facts requiring such
adjustment.


 


(ii)                                  Notice to Allow Exercise by
Holder.  If any of the events specified in Section 3(a)(i),
(ii), (iii) or (iv) occurs, then, in each case, the Company shall
cause to be mailed to the Holder at its last address as it shall appear upon
the Warrant Register of the Company a notice setting forth the record date or
the effective date for such event.


 


(e)                                  Further
Negotiations.  If at any time
beginning thirty (30) trading days after the Closing Date, the weighted average
closing price of the common stock of the Company on the American Stock Exchange
or any successor exchange during the preceding twenty (20) consecutive trading
days was below US$3.50 per share, the Holder may request that the Company
attend a meeting to discuss an amendment to this Warrant that could result in
an adjustment to the Exercise Price. 
Representatives of the Company shall agree to meet with the Holder and
will have such meeting at a time that is mutually convenient, but in no event
more than twenty (20) days after such request is made in writing by the
Holder.  The Company is under no
obligation to agree to any such adjustment and this provision does not modify
or limit the restrictions provided for in Section 2(d) of this
Warrant.


 


Section 4.                                            Transfer of Warrant.


 


(a)                                  Transferability.  This Warrant and all rights hereunder may be
transferred to third parties; provided that this Warrant and any rights
hereunder may not be transferred, directly or indirectly, through Affiliates or
otherwise, to (a) any individuals or entities whose business purpose is
competitive, in whole or in substantial part, with the business of the Company
(except to the extent such transfer is to PBL or any of its direct or indirect
wholly-owned subsidiaries), (b) individuals,
entities or organizations (including governments or governmental agencies or
organizations) then appearing on the list of Specially Designated National and
Blocked Persons maintained by the U.S. Office of Foreign Assets Control (“OFAC”) or entities or individuals, transfer
of such rights to whom might reasonably be expected to have an adverse effect
on the ability of the Company to bid for and receive grants or contracts from
the United States government, and (c) entities or organizations
then controlled by 


 


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such individuals or having their registered office, headquarters or
primary place of business located in a nation that is then subject to an OFAC
sanctions program.  In the event of any such transfer, the transferee
shall agree to be bound by all of the terms and conditions imposed on the
Investor under this Warrant, the Investor Rights Agreement of even date
herewith, between the Company and Kelisia Holdings Ltd. (to the extent
applicable to holders of Warrant Shares) and Section 27 of the Securities
Purchase Agreement.


 


(b)                                 Warrant Register.  The Company shall register this Warrant, upon
records to be maintained by the Company for that purpose (the “Warrant Register”), in the name of the
Holder hereof and upon receipt of written notice from Holder of any permitted
transfer, the Company shall update the Warrant Register to reflect the current
registered holder.  The Company may deem
and treat the registered Holder of this Warrant as the absolute owner hereof
for the purpose of any exercise hereof or any distribution to the Holder, and
for all other purposes.


 


Section 5.                                            Miscellaneous.


 


(a)                                  No Rights as Shareholder Until
Exercise.  This Warrant does not entitle the Holder to
any voting rights or other rights as a shareholder of the Company prior to the
exercise hereof.  Upon the surrender of
this Warrant and the payment of the aggregate Exercise Price, the Warrant
Shares so purchased shall be, and be deemed to be, issued to such Holder as the
record owner of such shares as of the close of business on the later of the
date of such surrender or payment.


 


(b)                                 Loss, Theft, Destruction or
Mutilation of Warrant.  The Company covenants that, upon receipt by
the Company of evidence reasonably satisfactory to it of the loss, theft,
destruction or mutilation of this Warrant or any stock certificate relating to
the Warrant Shares, and, in case of loss, theft or destruction, of indemnity or
security reasonably satisfactory to it (which, in the case of the Warrant,
shall not include the posting of any bond), and upon surrender and cancellation
of such Warrant or stock certificate, if mutilated, the Company will, in lieu
of such Warrant or stock certificate, make and deliver a new Warrant or stock
certificate of like tenor and dated as of such cancellation.


 


(c)                                  Saturdays, Sundays, Holidays,
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, Sunday or a legal holiday, then such action may be taken or such
right may be exercised on the next succeeding day not a Saturday, Sunday or legal
holiday.


 


(d)                                 Authorized Shares.  The Company covenants that, during the period
the Warrant is outstanding, it will reserve from its authorized and unissued
Common Stock a sufficient number of shares to provide for the issuance of the
Warrant Shares upon the exercise of any purchase rights under this
Warrant.  The Company will take all such
reasonable action as may be necessary to assure that such Warrant Shares may be
issued as provided herein without violation of any applicable law or
regulation.


 


Except and to the extent as
waived or consented to by the Holder in writing, the Company shall not by any
action, including, without limitation, amending its certificate of 


 


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incorporation
or through any reorganization, transfer of assets, consolidation, merger,
dissolution, issue or sale of securities 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 actions as may be necessary or
appropriate to protect the rights of the Holder as set forth in this Warrant
against impairment.  Without limiting the
generality of the foregoing, the Company will (a) not increase the par
value of any Warrant Shares above the amount payable therefor upon such
exercise immediately prior to such increase in par value, (b) take all
such action as may be reasonably necessary or appropriate in order that the
Company may validly and legally issue fully paid and nonassessable Warrant
Shares upon the exercise of this Warrant, and (c) use commercially
reasonable efforts to obtain all such authorizations, exemptions or consents
from any public regulatory body having jurisdiction thereof as may be necessary
to enable the Company to perform its obligations under this Warrant.


 


(e)                                  Jurisdiction.  All questions concerning the construction,
validity, enforcement and interpretation of this Warrant shall be determined in
accordance with the provisions of the Securities Purchase Agreement.


 


(f)                                    Restrictions.  The Holder acknowledges that the Warrant
Shares acquired upon the exercise of this Warrant will have restrictions upon
resale imposed by state and federal securities laws and that the certificate(s) representing
such Warrant Shares will contain a legend stating that the Warrant Shares have
not been registered under the Securities Act and, therefore, cannot be offered,
sold or transferred unless registered under the Securities Act or an exemption
from such registration is available in the opinion of counsel satisfactory to
the Company or unless registered in accordance with the Investor Right
Agreement executed by and between the Holder and the Company as of the date
hereof.


 


(g)                                 Notices.  Any notice, request or other document
required or permitted to be given or delivered to the Holder by the Company
shall be delivered in accordance with the notice provisions of the Securities
Purchase Agreement.


 


(h)                                 Limitation of Liability.  No provision hereof, in the absence of any
affirmative action by the Holder to exercise this Warrant or purchase Warrant
Shares, and no enumeration herein of the rights or privileges of the Holder,
shall give rise to any liability of the Holder for the purchase price of any
Common Stock or as a stockholder of the Company, whether such liability is
asserted by the Company or by creditors of the Company.


 


(i)                                     Successors and Assigns.  Subject to applicable securities laws, this
Warrant and the rights and obligations evidenced hereby shall inure to the
benefit of, and be binding upon, the successors of the Company and the
successors and permitted assigns of the Holder. 
The provisions of this Warrant are intended to be for the benefit of all
holders from time to time of this Warrant and shall be enforceable by any such
holder or holder of Warrant Shares.


 


(j)                                     Amendment.  This Warrant may be modified or amended or
the provisions hereof waived with the written consent of the Company and the
Holder.


 


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(k)                                  Severability.  Wherever possible, each provision of this
Warrant shall be interpreted in such manner as to be effective and valid under
applicable law, but, if any provision of this Warrant shall be prohibited by or
invalid under applicable law, such provision shall be ineffective to the extent
of such prohibition or invalidity without invalidating the remainder of such
provisions or the remaining provisions of this Warrant.


 


(l)                                     Headings.  The headings used in this Warrant are for the
convenience of reference only and shall not, for any purpose, be deemed a part
of this Warrant.


 


(m)                               Governing Law.  This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware, excluding choice-of-law
rules thereof.


 


(n)                                 Remedies.   Each party agrees that in event that a
settlement of any controversy, claim or dispute is not reached by mutual
agreement, such controversy, claim or dispute will be settled by arbitration
administered in accordance with the Commercial Arbitration Rules of the
American Arbitration Association.  The
place of arbitration will be in London, England and the arbitrator’s report
will be submitted within six (6) months of the initiation of the
arbitration process.  The applicable
federal or state court shall have jurisdiction to enforce any award or remedy
granted in the arbitration.  Each party
will bear its own costs incurred in the course of arbitration.


 


IN WITNESS WHEREOF, the Company
has caused this Warrant to be executed by its officer thereunto duly
authorized.


 


Dated:  October 10, 2008


 


	
   

  	
  PHARMATHENE,
  INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By: 

  	
       /s/ David P.
  Wright

  
	
   

  	
   

  	
  Name:  David P. Wright

  
	
   

  	
   

  	
  Title: President and CEO

  



 


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NOTICE
OF EXERCISE


 


TO:  PHARMATHENE, INC.


 


(1)                                  The undersigned
hereby elects to purchase _______ Warrant Shares of the Company pursuant to the
terms of the attached Warrant, and tenders herewith payment of the exercise
price in full, not including transfer taxes, if any.


 


Following the proposed exercise of this
Warrant, the total beneficial ownership of Common Stock held by the Holder and
its officers, directors and Affiliates will be: _______ shares of Common Stock.


 


(2)                                  Payment shall be made
by (check applicable box):


 


o wire transfer to an account designated by the
Company


 


o cashier’s check drawn on a United States bank


 


in lawful money of the United
States.


 


(3)                                  Please
issue a certificate or certificates representing said Warrant Shares in the
name of the undersigned.


 


The Warrant Shares shall be
delivered to the following address: