ex4_1.htm


Exhibit 4.1


 


THIS WARRANT AND THE SECURITIES ISSUABLE UPON EXERCISE HEREOF HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 (THE “SECURITIES ACT”) AND SUCH SECURITIES MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT RELATED THERETO OR AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED UNDER THE SECURITIES ACT OR ANY APPLICABLE STATE SECURITIES LAWS.


 


COMMON STOCK PURCHASE WARRANT


 


To Purchase Shares of Common Stock of


 


DARA BIOSCIENCES, INC.


 



	December 11, 2014 	Warrant Number W2014-12112b





 


THIS COMMON STOCK PURCHASE WARRANT (this “Warrant”) certifies that The General Hospital Corporation d/b/a Massachusetts General Hospital (“Holder”) is entitled to purchase from DARA BioSciences, Inc., a Delaware corporation (the “Company”), at an initial Exercise Price (as defined below) of $0.83 per share, One Hundred Twenty-Five Thousand (125,000) shares (the “Aggregate Number”) of Common Stock (as defined below).  The Exercise Price and Aggregate Number are subject to adjustment as set forth in Section 4.


 


Section 1.                      Definitions.


 


“Aggregate Exercise Price” is defined in Section 3(a).


 


“Aggregate Number” is defined in the opening paragraph.


 


 “Business Day” means any day that is not a Saturday, Sunday or any other day on which banks are required or authorized by law to be closed in Raleigh, North Carolina.


 


“Capital Transaction” means any merger, consolidation, share exchange, recapitalization, reorganization, business combination, or other similar event, as a result of which shares of Common Stock shall be changed into the same or a different number of shares of another class or classes of stock or securities of the Company or another Person.


 


“Charter” means the Certificate of Incorporation of the Company, as amended or supplemented.


 


“Common Stock” means the Common Stock of the Company, $0.01 par value or any other capital stock into which the foregoing is reclassified or reconstituted.


 


“Company” is defined in the opening paragraph.


 




  





  











  




 




“Convertible Securities” means evidences of indebtedness, shares of stock or other securities that, directly or indirectly, are exchangeable for or exercisable or convertible into Common Stock.


 


“Election to Purchase” is defined in Section 3(a).


 


“Exercise Amount” is defined in Section 3(a).


 


“Exercise Price” means the price per share of Common Stock at which shares of Common Stock are purchasable pursuant to this Warrant.


 


“Expiration Date” means the eighth (8th) anniversary of the date hereof; provided, however, that if the such eighth (8th) anniversary is not a Business Day, then the Expiration Date shall mean the first Business Day following the eighth (8th) anniversary of the date hereof.


 


“Holder” is defined in the opening paragraph.


 


“Other Securities” shall mean any stock and other securities of the Company or any other Person which Holder at any time shall be entitled to receive, upon the exercise of this Warrant or pursuant to Section 4, in lieu of or in addition to Common Stock.


 


“Person” means any individual, corporation, limited liability company, partnership, company, sole proprietorship, joint venture, trust, estate, association, organization, labor union or other entity.


 


“Phase 2b Trial Completion Date” means the date of the completion of the final study report of a clinical trial in which KRN5500 is demonstrated to meet the pre-specified endpoints contained in the final Statistical Analysis Plan with a well-tolerated dose demonstrated to have clinical significance (change in NRS score of > 2) and statistical significance (p < 0.05) over placebo.


 


“Stock Combination” is defined in Section 4(a)(ii).


 


“Stock Dividend” is defined in Section 4(a)(i).


 


“Stock Subdivision” is defined in Section 4(a)(i).


 


“Warrant” is defined in the opening paragraph.


 


“Warrant Shares” means (a) the shares of Common Stock or Other Securities issued or issuable hereunder and, (b) all other shares of the Company’s capital stock issued with respect to such shares by way of stock dividend, stock split or other reclassification or in connection with any Capital Transaction, or acquired by way of any rights offering or similar offering made in respect of the capital stock referred to in this clause (b) or the foregoing clause (a).


 




  





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Section 2.                      Exchange and Amendment Agreement.  This Warrant is being issued pursuant to that certain Exchange and Amendment Agreement, dated December 11, 2014, by and among the Company and DARA Therapeutics, Inc., on the one hand, and the Holder, on the other hand.


 


Section 3.                      Exercise.


 


(a)           Right to Exercise; Exercise Amount.  The Warrant Shares shall vest upon, and the Holder shall not be entitled to exercise this Warrant with respect to such Warrant Shares until, the Phase 2b Trial Completion Date. Once the Warrant Shares have vested pursuant to this Section 3(a), the Holder may exercise this Warrant in whole or in part at any time and from time to time up until the close of business on the Expiration Date (but not thereafter) by delivering this Warrant to the Company, together with a duly executed Election to Purchase in the form attached hereto as Exhibit A (the “Election to Purchase”), and payment of the Exercise Price for each share to be purchased.  For the avoidance of doubt, if the Expiration Date occurs prior to the Phase 2b Trial Completion Date, this Warrant shall not be exercisable.  The aggregate Exercise Price (the “Aggregate Exercise Price”) to be paid for the shares to be purchased (the “Exercise Amount”) shall equal the product of (i) the Exercise Amount multiplied by (ii) the Exercise Price.


 


(b)           Payment of Aggregate Exercise Price.  Payment of the Aggregate Exercise Price shall be made to the Company in cash or other immediately available funds or as provided in Section 3(f) or a combination thereof.


 


(c)           Issuance of Shares of Common Stock.  Upon receipt by the Company of this Warrant accompanied by an Election to Purchase and payment of the Aggregate Exercise Price, Holder shall be deemed to be the holder of record of the shares of Common Stock issuable upon such exercise, notwithstanding that certificates representing such shares of Common Stock may not then be actually delivered.  Upon such surrender of this Warrant and payment of the Aggregate Exercise Price, the Company shall issue and deliver as soon as practicable to, or upon the written order of, Holder (and in such name or names as Holder may designate) a certificate or certificates for the Exercise Amount.


 


(d)           Fractional Shares.  The Company shall deliver whole shares of Common Stock upon exercise of this Warrant (rounded down to the nearest whole number).


 


(e)           Partial Exercise.  Following any partial exercise of this Warrant, the Company shall issue to Holder a Warrant in like form for the unexercised portion thereof.


 


(f)           Cashless Exercise.  In lieu of exercising this Warrant by payment of the Exercise Price in cash for the Warrant Shares in accordance with Section 3(b) hereof, the Holder may if Common Stock is publicly traded at such time, elect to make a cashless exercise of this Warrant by surrendering Warrant Shares with a fair market value equal to Aggregate Exercise Price of the Warrant Shares subject to such exercise, as determined below, by the surrender of this Warrant to the Company (with the notice of exercise form attached hereto as Exhibit A duly executed), at the principal office of the Company.  Thereupon, the Company shall issue to such Holder such whole number of fully paid and nonassessable Warrant Shares as is computed using the following formula (rounded down to the nearest whole number):


 




  





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	X =  	Y (A - B)
	A





 




Where


 



	
  

	
X =

	
The number of Shares to be issued to the Holder.







 



	
  

	
Y =

	
The number of Shares purchasable under this Warrant or, if only a portion of the Warrant is being exercised, the portion of the Warrant being cancelled (at the date of such calculation).







 



	
  

	
A =

	
The fair market value of one (1) Share (at the date of such calculation).








 



	
  

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





 




Section 4.              Adjustments to Exercise Price and Aggregate Number.  The Exercise Price and the Aggregate Number shall be adjusted as provided in this Section 4.  Upon each adjustment of the Exercise Price, the Aggregate Number shall be adjusted by multiplying the Aggregate Number then in effect by a fraction, the numerator of which shall be the Exercise Price immediately prior to such adjustment, and the denominator of which shall be the Exercise Price immediately following such adjustment.


 


(a)           Stock Dividends, Subdivisions and Combinations.  If at any time:


 


(i)           the number of shares of Common Stock outstanding is increased by a stock dividend payable in shares of Common Stock (a “Stock Dividend”) or by a subdivision or split-up of shares of Common Stock (a “Stock Subdivision”), then, following the record date for the determination of holders of Common Stock entitled to receive such Stock Dividend, or to be affected by such Stock Subdivision, the Exercise Price shall be appropriately decreased so that the Aggregate Number shall be increased in proportion to such increase in outstanding shares.


 


(ii)           the number of shares of Common Stock outstanding is decreased by a combination of the outstanding shares of Common Stock into a smaller number of shares of Common Stock (a “Stock Combination”), then, following the record date to determine shares affected by such Stock Combination, the Exercise Price shall be appropriately increased so that the Aggregate Number shall be decreased in proportion to such decrease in outstanding shares.


 


(b)           Adjustment Upon Reclassifications, Reorganizations, Consolidations or Mergers.  If, at any time, there shall occur any Capital Transaction, then Holder thereafter shall have the right to receive upon exercise of this Warrant, upon the basis and upon the terms and conditions specified herein and in lieu of the shares of Common Stock immediately theretofore issuable upon exercise, such stock, securities, cash or other assets which Holder would have been entitled to assuming full exercise of this Warrant immediately prior thereto, at an Exercise Price economically equivalent to the Exercise Price in effect immediately prior thereto.


 




  





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Section 5.              Reservation of Shares; Validly Issued Shares. The Company will at all times reserve and keep available out of its authorized shares solely for the purpose of issuance upon the exercise of this Warrant as herein provided, such number of its duly authorized shares of Common Stock, or Other Securities deliverable upon the exercise of this Warrant, as shall be sufficient to enable the Company at any time to fulfill all of its obligations hereunder.  The Company covenants and agrees that the shares of Common Stock or Other Securities which shall be so issuable will, upon issuance, be duly authorized and issued, fully paid and non-assessable, free from all taxes, liens and charges with respect to the issue or delivery thereof and otherwise free of all other security interests, encumbrances and claims of any nature whatsoever other than those created by Holder.


 


Section 6.              Transfers of the Warrant.


 


(a)           Register.  The Company shall initially record this Warrant on a register to be maintained by the Company with its other stock books and, subject to Section 6(b), thereafter shall transfer this Warrant on such register when this Warrant is:  (i) surrendered for transfer in accordance with the terms hereof, and (ii) properly endorsed and accompanied by appropriate instructions.  Upon any such transfer, a new Warrant or Warrants shall be issued to the transferee and Holder (in the event that this Warrant is only partially transferred) and the surrendered Warrant shall be canceled.


 


(b)           Transfers.  Subject to the securities law restrictions set forth in the legend on the first page of this Warrant, Holder may at any time freely transfer this Warrant and the Warrant Shares in whole or in part.


 


Section 7.              Miscellaneous.


 


(a)           No Voting Rights.  Prior to the exercise of this Warrant, Holder shall not be entitled to any voting or other rights as a stockholder of the Company as a result of being a holder of the Warrant.


 


(b)           Replacement Warrant.  If this Warrant is mutilated, lost, stolen or destroyed, the Company shall issue and deliver in exchange and substitution for and upon cancellation of the mutilated Warrant, or in lieu of and in substitution for the Warrant lost, stolen or destroyed, a new Warrant in like form and representing an equivalent right or interest, but only upon receipt of evidence reasonably satisfactory to the Company of such loss, theft or destruction of such Warrant and upon receipt of indemnity reasonably satisfactory to the Company.


 


(c)           Delays, Omissions and Indulgences.  No delay or omission to exercise any right, power or remedy accruing to Holder upon any breach or default of the Company hereunder shall impair any such right, power or remedy, nor shall it be construed to be a waiver of any such breach or default, or any acquiescence therein, or of or in any similar breach or default thereafter occurring; nor shall any waiver of any single breach or default be deemed a waiver of any other breach or default theretofore or thereafter occurring.


 




  





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(d)           Notices.  Any notice pursuant to this Warrant must be in writing and will be deemed effectively given on the earliest of the date (i) three (3) Business Days after such notice is sent by registered U.S. mail, return receipt requested, (ii) one (1) Business Day after receipt of confirmation if such notice is sent by facsimile, (iii) one (1) Business Day after delivery of such notice into the custody and control of an overnight courier service for next day delivery, (iv) one (1) Business Day after delivery of such notice in person and (v) such notice is received; in each case to the appropriate address below (or to such other address as a Person may designate by notice hereunder):


 



	
  

	
(A)

	
if to the Company:







 



	
  

	
DARA BioSciences, Inc.








	
  

	
8601 Six Forks Road, Suite 160








	
  

	
Raleigh, NC  27615








	
  

	
Attention: Chief Executive Officer








	
  

	
Fax No.:  (919) 861-0239







 



	
  

	
With a copy to:







 



	
  

	
K&L Gates LLP








	
  

	
4350 Lassiter at North Hills, Suite 300








	
  

	
Raleigh, North Carolina 27609








	
  

	
Attention:  D. Scott Coward, Esq.








	
  

	
Fax No.:  (919) 516-2028













	
  

	
(B)

	
If to the Holder hereunder to the address set forth on the corporate records of the Company.







 


(e)           Successors and Assigns.  This Warrant shall be binding upon and inure to the benefit of the Company and Holder and their respective successors and assigns, provided that the Company shall have no right to assign its rights, or to delegate its obligations, hereunder without the prior written consent of Holder.


 


(f)           Amendments and Waivers.  No amendment of any provision of this Warrant will be valid unless the amendment is in writing and signed by Holder and the Company.  No waiver of any provision of this Warrant will be valid unless the waiver is in writing and signed by the waiving party.  The failure of any Person at any time to require performance of any provision of this Warrant will not affect its rights at a later time to enforce such provision.  No waiver by any Person of any breach of this Warrant will be deemed to extend to any other breach hereunder or affect in any way any rights arising by virtue of any other such occurrence.


 


(g)           Severability.  Any provision of this Warrant that is determined by any court of competent jurisdiction to be invalid or unenforceable will not affect the validity or enforceability of any other provision hereof or the invalid or unenforceable provision in any other situation or in any other jurisdiction. Any provision of this Warrant held invalid or unenforceable only in part or degree will remain in full force and effect to the extent not held invalid or unenforceable.


 




  





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(h)          Governing Law.  This Warrant will be governed by the laws of the State of North Carolina without giving effect to any choice or conflict of law principles of any jurisdiction.


 


(i)           Entire Agreement.  This Warrant constitutes the entire agreement between the Company and the Holder with respect to the subject matter hereof and thereof and supersede all prior agreements (whether written or oral and whether express or implied) between the Company and the Holder to the extent related to the subject matter hereof and thereof.


 


[signature page follows]


 




  





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IN WITNESS WHEREOF, the Company has caused this Warrant to be duly executed as of the date first above written.


 



	 	DARA BIOSCIENCES, INC.
	 	 
	 	By: 	 
	 	 	
Name:


	 	 	
Title:







 




  





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EXHIBIT A


 


FORM OF ELECTION TO PURCHASE


 


To:           DARA BioSciences, Inc.


 


1.           The undersigned, pursuant to the provisions of the attached Warrant, hereby elects to exercise such Warrant with respect to ________ shares of Common Stock (the “Exercise Amount”) and tenders herewith full payment of the exercise price.  Capitalized terms used but not otherwise defined herein have the meanings ascribed thereto in the attached Warrant.


 


2.           Payment shall take the form of (check the applicable box):


 


o          in lawful money of the United States; or


 


o          the cancellation of such number of Warrant Shares as is necessary, in accordance with the formula set forth in Section 3(f), to exercise this Warrant with respect to the maximum number of Warrant Shares purchasable pursuant to the cashless exercise procedure set forth in Section 3(f).


 


3.           Please issue a certificate or certificates representing the shares issuable in respect hereof under the terms of the attached Warrant, as follows:


 


 




	 	 	 
	 	
(Name of Record Holder/Transferee)

	 





 




and deliver such certificate or certificates to the following address:



 




	 	
 

	 
	 	
 


 

	 
	 	
 


 

	 
	 	 	 
	 	
(Address of Record Holder/Transferee)

	 









 


4.           The undersigned represents that the aforesaid shares are being acquired for the account of the undersigned for investment and not with a view to, or for resale in connection with, the distribution thereof and that the undersigned has no present intention of distributing or reselling such shares.


 




  





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5.           If the Exercise Amount is less than all of the shares of Common Stock purchasable hereunder, please issue a new warrant representing the remaining balance of such shares, as follows:


 



 




	 	 	 
	 	
(Name of Record Holder/Transferee)

	 





 






and deliver such warrant to the following address:


 






	 	
 

	 
	 	
 


 

	 
	 	
 


 

	 
	 	 	 
	 	
(Address of Record Holder/Transferee)

	 









 




In witness whereof, the undersigned Holder has caused this Election to Purchase to be executed as of this _____ day of __________, ______.


 



 




	 	 	 	 
	 	(Name of Holder)	 
	 	 	 	 
	 	 	 	 
	 	 	 	 
	 	 By:	 	 
	 	Name:	 	 
	 	Title:	 	 









 


 


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