EXHIBIT 10.22
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACTTHESE
SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
FROM TIME TO TIME (THE "1933 ACT"). THEY MAY NOT BE SOLD, OFFERED FOR SALE,
PLEDGED, OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT
RELATED THERETO OR AN OPINION OF COUNSEL (WHICH MAY BE COMPANY COUNSEL)
REASONABLY SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED
UNDER THE 1933 ACT OR IN COMPLIANCE WITH RULE 144 UNDER THE 1933 ACT.
WARRANT AGREEMENT
To Purchase Shares of the Common Stock of
INSPIRE PHARMACEUTICALS, INC.
Dated as of December 17, 1999 (the "Effective Date")
WHEREAS, Inspire Pharmaceuticals, Inc., a Delaware corporation (the
"Company") has entered into a Series G Preferred Stock and Warrant Purchase
Agreement dated as of December 17, 1999 (the "Agreement"), with Genentech, Inc.,
a Delaware corporation, or its successors or assigns (the "Warrantholder"); and
WHEREAS, pursuant to the terms of the Agreement, the Company is required to
grant to Warrantholder the right to purchase certain shares of its Common Stock
(the "Warrant");
NOW, THEREFORE, in consideration of mutual covenants and agreements
contained herein, the Company and Warrantholder agree as follows:
1. GRANT OF THE RIGHT TO PURCHASE COMMON STOCK.
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The Company hereby grants to the Warrantholder, and the Warrantholder is
entitled, upon the terms and subject to the conditions set forth in this Warrant
Agreement, to subscribe to and purchase, from the Company, 444,444 fully paid
and non-assessable shares of the Company's Common Stock ("Common Stock") at a
purchase price of $4.50 per share (the "Exercise Price"). The number and
purchase price of such shares are subject to adjustment as provided in Section
8.
2. TERM OF THE WARRANT AGREEMENT.
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Except as otherwise provided for in this Warrant Agreement, the term of
this Warrant Agreement and the right to purchase Common Stock as granted in this
Warrant Agreement shall commence on the Effective Date and shall be exercisable
for a period of five (5) years.
3. EXERCISE OF THE PURCHASE RIGHTS.
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(a) Exercise. The purchase rights set forth in this Warrant Agreement are
exercisable by the Warrantholder, in whole or in part, at any time, or from time
to time, prior to the expiration of the term set forth in Section 2, by
tendering to the Company at its principal office a notice of exercise in the
form attached hereto as Exhibit I (the "Notice of Exercise"), duly completed and
executed. Promptly upon receipt of the Notice of Exercise, the payment of the
purchase price in accordance with the terms set
forth below and execution of the Agreement to be Bound as provided in Section
3(c), and in no event later than ten (10) business days thereafter, the Company
shall issue to the Warrantholder a certificate for the number of shares of
Common Stock purchased and shall execute the Notice of Exercise indicating the
number of shares which remain subject to future purchases, if any.
(b) Payment of Exercise Price. The Exercise Price may be paid at the
Warrantholder's election either (i) by cash or check, or (ii) by surrender of
Warrants ("Net Issuance") as determined below. If the Warrantholder elects the
Net Issuance method, the Company will issue Common Stock in accordance with the
following formula:
X = Y(A-B)
------
A
Where:X = the number of shares of Common Stock to be issued to the
Warrantholder.
Y = the number of shares of Common Stock requested to be
exercised under this Warrant Agreement.
A = the fair market value of one (1) share of Common Stock.
B = the Exercise Price.
As used in this Section 2, current fair market value of Common Stock shall
mean with respect to each share of Common Stock:
(i) if the exercise is in connection with an initial public
offering, and if the Company's Registration Statement relating to such public
offering has been declared effective by the SEC, then the initial "Price to
Public" specified in the final prospectus with respect to the offering;
(ii) if this Warrant is exercised after, and not in connection
with, the Company's initial public offering, and:
(A) if traded on a securities exchange or the Nasdaq National
Market System ("NASDAQ SYSTEM"), the fair market value shall be deemed to be the
average of the closing or last reported sale prices on such exchange or market
over a twenty-one (21) day period ending three days before the day the current
fair market value of the securities is being determined; or
(B) if actively traded over-the-counter, the fair market value
shall be deemed to be the average of the closing bid and asked prices quoted on
the NASDAQ System (or similar system) over the twenty-one (21) day period ending
three days before the day the current fair market value of the securities is
being determined;
(iii) if at any time the Common Stock is not listed on any securities
exchange or quoted in the NASDAQ System or the over-the-counter market, the
current fair market value of Common Stock shall be the highest price per share
which the Company could obtain from a willing buyer (not a current employee or
director) for shares of Common Stock sold by the Company, from authorized but
unissued shares, as determined in good faith by its Board of Directors, unless
the Company shall become subject to a merger, acquisition or other consolidation
pursuant to which the Company is not the surviving party, in which case the fair
market value of Common Stock shall be
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deemed to be the value received by the holders of the Company's Common Stock on
a common equivalent basis pursuant to such merger or acquisition.
(c) Agreement to be Bound to Stockholders' Agreement and Investors' Rights
Agreement. It shall be a condition to the Warrantholder's right to purchase
shares under this Warrant Agreement that the Warrantholder shall have executed
and delivered to the Company a counterpart of the Second Amended and Restated
Stockholders Agreement among the Company and certain of its stockholders dated
April 8, 1997, as amended (the "Stockholders' Agreement") pursuant to which the
Warrantholder shall be subject to all provisions therein applicable to holders
of Common Stock of the Company except Section 4 thereof relating to rights of
first refusal and co-sale, and a counterpart of the Investors' Rights Agreement,
as amended, among the Company and certain of its preferred stockholders dated
October 29, 1999 (the "Investors' Rights Agreement") pursuant to which the
Warrantholder shall be subject to all provisions therein applicable to holders
of Registrable Securities (as defined therein) that convert from the Series G
Stock.
(d) Reissue of Warrant After Partial Exercise. Upon partial exercise by
either cash or Net Issuance, the Company shall promptly issue an amended Warrant
Agreement representing the remaining number of shares purchasable hereunder. All
other terms and conditions of such amended Warrant Agreement shall be identical
to those contained herein, including, but not limited to the Effective Date
hereof.
4. RESERVATION OF SHARES.
---------------------
(a) Authorization and Reservation of Shares. During the term of this
Warrant Agreement, the Company will at all times have authorized and reserved a
sufficient number of shares of its Common Stock to provide for the exercise of
the rights to purchase Common Stock as provided for in this Warrant Agreement.
(b) Registration or Listing. If any shares of Common Stock required to be
reserved hereunder require registration with or approval of any governmental
authority under any Federal or state law (other than any registration under the
1933 Act, as then in effect, or any similar Federal statute then enforced, or
any state securities law, required by reason of any transfer involved in such
conversion), or listing on any domestic securities exchange, before such shares
may be issued upon exercise, the Company will, at its expense and as
expeditiously as possible, use its best efforts to cause such shares to be duly
registered, listed or approved for listing on such domestic securities exchange,
as the case may be.
5. NO FRACTIONAL SHARES OR SCRIP.
-----------------------------
No fractional shares or scrip representing fractional shares shall be
issued upon the exercise of this Warrant, but in lieu of such fractional shares
the Company shall make a cash payment therefor upon the basis of the Exercise
Price then in effect.
6. NO RIGHTS AS SHAREHOLDER.
------------------------
This Warrant Agreement does not entitle the Warrantholder to any voting
rights or other rights as a shareholder of the Company prior to the exercise of
the Warrant.
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7. WARRANTHOLDER REGISTRY.
----------------------
The Company shall maintain a registry showing the name and address of the
registered holder of this Warrant Agreement.
8. ADJUSTMENT RIGHTS.
-----------------
The purchase price per share and the number of shares of Common Stock
purchasable hereunder are subject to adjustment, as follows:
(a) Merger and Sale of Assets. If at any time there shall be a capital
reorganization of the shares of the Company's Common Stock (other than a
combination, reclassification, exchange or subdivision of shares otherwise
provided for herein), or a merger or consolidation of the Company with or into
another corporation when the Company is not the surviving corporation, or the
sale of all or substantially all of the Company's properties and assets to any
other person (hereinafter referred to as a "Merger Event"), then, as part of
such Merger Event, lawful provision shall be made so that the Warrantholder
shall thereafter be entitled to receive, upon exercise of the Warrant, the
number of shares of Common Stock or other securities of the successor
corporation resulting from such Merger Event, equivalent in value to that which
would have been issuable if Warrantholder had exercised this Warrant immediately
prior to the Merger Event. In any such case, appropriate adjustment (as
determined in good faith by the Company's Board of Directors) shall be made in
the application of the provisions of this Warrant Agreement with respect to the
rights and interest of the Warrantholder after the Merger Event to the end that
the provisions of this Warrant Agreement (including adjustments of the Exercise
Price and number of shares of Common Stock purchasable) shall be applicable to
the greatest extent possible.
(b) Reclassification of Shares. If the Company at any time shall, by
combination, reclassification, exchange or subdivision of securities or
otherwise, change any of the securities as to which purchase rights under this
Warrant Agreement exist into the same or a different number of securities of any
other class or classes, this Warrant Agreement shall thereafter represent the
right to acquire such number and kind of securities as would have been issuable
as the result of such change with respect to the securities which were subject
to the purchase rights under this Warrant Agreement immediately prior to such
combination, reclassification, exchange, subdivision or other change.
(c) Subdivision or Combination of Shares. If the Company at any time
shall combine or subdivide its Common Stock, the Exercise Price and number of
shares subject to purchase hereunder shall be proportionately decreased in the
case of a subdivision, or proportionately increased in the case of a
combination. Any adjustment under this Section 8(c) shall become effective at
the close of business on the date the subdivision or combination becomes
effective.
(d) Stock Dividends. If the Company at any time shall pay a dividend
payable in, or make any other distribution of capital stock (except any
distribution specifically provided for in the foregoing subsections (a) or (b))
on the Company's Common Stock, then the Exercise Price shall be adjusted, from
and after the record date of such dividend or distribution, to that price
determined by multiplying the Exercise Price in effect immediately prior to such
record date by a fraction (i) the numerator of which shall be the total number
of all shares of the Company's Common Stock outstanding immediately prior to
such dividend or distribution, and (ii) the denominator of which shall be the
total number of all shares of the Company's Common Stock outstanding immediately
after such dividend or distribution. The Warrantholder shall thereafter be
entitled to purchase, at the Exercise Price resulting from such adjustment, the
number of shares of Common Stock (calculated to the nearest whole share)
obtained by
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multiplying the Exercise Price in effect immediately prior to such adjustment by
the number of shares of Common Stock subject to this Warrant immediately prior
to such adjustment and dividing the product thereof by the Exercise Price
resulting from such adjustment. Any adjustment under this Section 8(d) shall
become effective at the close of business on the record date of such dividend,
or in the event that no record date is fixed, upon the making of such dividend.
(e) Notice of Adjustments. If: (i) the Company shall declare any dividend
or distribution upon its stock, whether in cash, property, stock or other
securities; (ii) there shall be any Merger Event; or (iii) there shall be any
voluntary or involuntary dissolution, liquidation or winding up of the Company;
then, in connection with each such event, the Company shall send to the
Warrantholder: (A) at least twenty (20) days' prior written notice of the date
on which the books of the Company shall close or a record shall be taken for
such dividend, distribution, subscription rights (specifying the date on which
the holders of Common Stock shall be entitled thereto) or for determining rights
to vote in respect of such Merger Event, dissolution, liquidation or winding up;
and (B) in the case of any such Merger Event, dissolution, liquidation or
winding up, at least twenty (20) days' prior written notice of the date when the
same shall take place (and specifying the date on which the holders of Common
Stock shall be entitled to exchange their Common Stock for securities or other
property deliverable upon such Merger Event, dissolution, liquidation or winding
up). In the case of a public offering, the Company shall give Warrantholder at
least twenty (20) days' written notice prior to the effective date of such
offering.
Each such written notice shall set forth, in reasonable detail: (i) the
event requiring the adjustment, (ii) the amount of the adjustment, (iii) the
method by which such adjustment was calculated, (iv) the Exercise Price, and (v)
the number of shares subject to purchase hereunder after giving effect to such
adjustment, and shall be given by first class mail, postage prepaid, addressed
to the Warrantholder, at the address as shown on the books of the Company.
(f) Timely Notice. Failure to timely provide such notice required by
Section 8(e) shall entitle Warrantholder to retain the benefit of the applicable
notice period notwithstanding anything to the contrary contained in any
insufficient notice received by Warrantholder. The notice period shall begin on
the date Warrantholder actually receives a written notice containing all the
information specified above.
9. MISCELLANEOUS.
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(a) Assignment; Binding Effect.
(i) This Warrant Agreement and all rights hereunder are
transferable in whole or in part by the Warrantholder to any person or entity
upon written notice to the Company. The transfer shall be recorded on the books
of the Company upon the surrender of this Warrant Agreement, with the Transfer
Notice attached as Exhibit III hereto duly executed, to the Company at its
principal offices. In the event of a partial transfer, the Company shall issue
to the Warrantholders one or more appropriate new Warrant Agreements.
(ii) Except as otherwise provided herein, the terms and conditions
of this Warrant Agreement shall inure to the benefit of and be binding upon the
respective successors and permitted assigns of the parties (including
transferees of the warrant). Nothing in this Warrant Agreement, express or
implied, is intended to confer upon any party other than the parties hereto or
their respective
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successors and permitted assigns any rights, remedies, obligations, or
liabilities under or by reason of this Warrant Agreement, except as expressly
provided in this Warrant Agreement.
(b) Governing Law. This Warrant Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware without regard to
principles of conflicts of law.
(c) Counterparts. This Warrant Agreement may be executed in two or
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
(d) Captions. The captions used in this Warrant Agreement are for
convenience only and are not to be considered in construing or interpreting this
Warrant Agreement.
(e) Notices. Any notice or request required or permitted to be
given under or in connection with this Warrant Agreement shall be deemed to have
been sufficiently given if in writing and personally delivered or sent by
certified mail (return receipt requested), facsimile transmission (receipt
verified), or overnight express courier service (signature required), prepaid,
to the party for which such notice is intended, at the address set forth for
such party below:
(i) In the case of the Company, to:
Inspire Pharmaceuticals, Inc.
0000 Xxxxxxx Xxxxxxxxx, Xxxxx 000
Xxxxxx, Xxxxx Xxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxxx, Ph.D.
Facsimile No.: (000) 000-0000
(ii) In the case of the Warrantholder, to:
Genentech, Inc.
0 XXX Xxx, Xxxxxxxx 00
Xxxxx Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
Attention: Corporate Secretary
Facsimile No.: (000) 000-0000
or to such other address for such party as it shall have specified by like
notice to the other party, provided that notices of a change of address shall be
effective only upon receipt thereof. If delivered personally or by facsimile
transmission, the date of delivery shall be deemed to be the date on which such
notice or request was given. If sent by overnight express courier service, the
date of delivery shall be deemed to be the next business day after such notice
or request was deposited with such service. If sent by certified mail, the date
of delivery shall be deemed to be the fifth business day after such notice or
request was deposited with the U.S. Postal Service.
(f) Remedies. In the event of any default under this Warrant Agreement,
the non-defaulting party may proceed to protect and enforce its rights either by
suit in equity and/or by action at law, including but not limited to an action
for damages as a result of any such default, and/or an action for specific
performance for any default where Warrantholder will not have an adequate remedy
at law and where damages will not be readily ascertainable. The Company
expressly agrees that it shall not oppose an application by the Warrantholder or
any other person entitled to the benefit of this Warrant Agreement
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requiring specific performance of any or all provisions hereof or enjoining the
Company from continuing to commit any such breach of this Warrant Agreement.
(g) No Impairment of Rights. The Company will not, by amendment of its
Certificate of Incorporation or through any other means, avoid or seek to avoid
the observance or performance of any of the terms of this Warrant Agreement, 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 in order to
protect the rights of the Warrantholder against impairment.
(h) Amendments and Waivers. Except as otherwise expressly set forth in
this Warrant Agreement, any term of this Warrant Agreement may be amended and
the observance of any term of this Warrant Agreement may be waived (either
generally or in a particular instance and either retroactively or
prospectively), with the written consent of the Company and the Warrantholder.
No waivers of or exceptions to any term, condition or provision of this Warrant
Agreement, in any one or more instances, shall be deemed to be, or construed as,
a further or continuing waiver of any such term, condition or provision.
(i) Severability. If one or more provisions of this Warrant Agreement are
held to be unenforceable under applicable law, such provision shall be excluded
from this Warrant Agreement and the balance of the Warrant Agreement shall be
interpreted as if such provision were so excluded and shall be enforceable in
accordance with its terms.
(j) Entire Agreement. This Warrant Agreement and the documents referred
to herein constitute the entire agreement among the parties 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.
* * *
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IN WITNESS WHEREOF, the parties hereto have caused this Warrant Agreement
to be executed by its officers thereunto duly authorized as of the Effective
Date.
Company: INSPIRE PHARMACEUTICALS, INC.
By: /s/ Xxxxxxx X. Xxxxxxx
-----------------------------------
Name: Xxxxxxx X. Xxxxxxx, Ph.D.
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Title: President and CEO
---------------------------------
Warrantholder: GENENTECH, INC.
By: /s/ Xxxxxx X. Xxxxxxxx
------------------------------------
Name: Xxxxxx X. Xxxxxxxx, Ph.D.
Title: President and Chairman of the Board
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EXHIBIT I
NOTICE OF EXERCISE
To: Inspire Pharmaceuticals, Inc.:
(1) The undersigned Warrantholder hereby elects to purchase _____ shares of the
Common Stock of Inspire Pharmaceuticals, Inc. pursuant to the terms of the
Warrant Agreement dated December 17, 1999 (the "Warrant Agreement") between
Inspire Pharmaceuticals, Inc. and the Warrantholder, and tenders herewith
payment of the purchase price for such shares in full, together with all
applicable transfer taxes, if any.
(2) In connection with the exercise of its rights to purchase the Common Stock
of Inspire Pharmaceuticals, Inc., the undersigned hereby makes the
following representations and warranties:
(a) Investment Purpose. The right to acquire Common Stock or the Common
Stock issuable upon exercise of the Warrantholder's rights contained
in the Warrant Agreement will be acquired for investment and not with
a view to the sale or distribution of any part thereof, and the
Warrantholder has no present intention of selling or engaging in any
public distribution of the same except pursuant to a registration or
exemption.
(b) Private Issue. The Warrantholder understands (i) that the Common
Stock issuable upon exercise of this Warrant is not registered under
the 1933 Act or qualified under applicable state securities laws on
the ground that the issuance contemplated by this Warrant Agreement
will be exempt from the registration and qualifications requirements
thereof, and (ii) that the Company's reliance on such exemption is
predicated on the representations set forth in this Section.
(c) Disposition of Warrantholder's Rights. In no event will the
Warrantholder make a disposition of any of its rights to acquire
Common Stock or Common Stock issuable upon exercise of such rights
unless and until (i) it shall have notified the Company of the
proposed disposition, and (ii) if requested by the Company, it shall
have furnished the Company with an opinion of counsel (which counsel
may either be inside or outside counsel to the Warrantholder)
satisfactory to the Company and its counsel to the effect that (A)
appropriate action necessary for compliance with the 1933 Act has been
taken, or (B) an exemption from the registration requirements of the
1933 Act has been taken, or (B) an exemption from the registration
requirements of the 1933 Act is available. The Company agrees that an
opinion of counsel will not be required for sales made in accordance
with Rule 144, except in unusual circumstances. Notwithstanding the
foregoing, the restrictions imposed upon the transferability of any of
its rights to acquire Common Stock or Common Stock issuable on the
exercise of such rights do not apply to transfers from the beneficial
owner of any of the aforementioned securities to its nominee or from
such nominee to its beneficial owner, and shall terminate as to any
particular share of Common Stock when (1) such security shall have
been effectively registered under the 1933 Act and sold by the holder
thereof in accordance with such registration or (2) such security
shall have been sold without registration in compliance with Rule 144
under the 1933 Act, or (3) a letter shall have been issued to the
Warrantholder at its request by the staff of the Securities and
Exchange Commission or a
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ruling shall have been issued to the Warrantholders at its request by
such Commission stating that no action shall be recommended by such
staff or taken by such Commission, as the case may be, if such
security is transferred without registration under the 1933 Act in
accordance with the conditions set forth in such letter or ruling and
such letter or ruling specifies that no subsequent restrictions on
transfer are required. Whenever the restrictions imposed hereunder
shall terminate, as provided in this Section, the Warrantholder or
holder of a share of Common Stock then outstanding as to which such
restrictions have terminated shall be entitled to receive from the
Company, without expense to such holder, one or more new certificates
for the Warrant or for such shares of Common Stock not bearing any
restrictive legend.
(d) Financial Risk. The Warrantholder has such knowledge and experience
in financial and business matters as to be capable of evaluating the
merits and risks of its investment, and has the ability to bear the
economic risks of its investment.
(e) Risk of No Registration. The Warrantholder understands that if the
Company does not register with the Securities and Exchange Commission
pursuant to Section 12 of the 1933 Act, or file reports pursuant to
Section 15(d) of the Securities Exchange Act of 1934, as amended from
time to time, or if a registration statement covering the securities
under the 1933 Act is not in effect when it desires to sell (i) the
rights to purchase Common Stock pursuant to this Warrant Agreement, or
(ii) the Common Stock issuable upon exercise of the right to purchase,
it may be required to hold such securities for an indefinite period.
The Warrantholder also understands that any sale of its rights of the
Warrantholder to purchase Common Stock in reliance upon Rule 144 under
the 1933 Act may be made only in accordance with the terms and
conditions of that Rule.
(3) Please issue a certificate or certificates representing said shares of
Common Stock in the name of the undersigned or in such other name as is
specified below.
Name:________________________________________
Address: ____________________________________
_____________________________________________
Warrantholder: GENENTECH, INC.
By: _____________________________________________
Name: ___________________________________________
Title: __________________________________________
Date: ___________________________________________
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EXHIBIT II
ACKNOWLEDGMENT OF EXERCISE
The undersigned ________, _________, hereby acknowledge receipt of the
"Notice of Exercise" from to purchase _____ shares of the Common Stock of
Inspire Pharmaceuticals, Inc. pursuant to the terms of the Warrant Agreement,
and further acknowledges that _____ shares remain subject to purchase under the
terms of the Warrant Agreement.
INSPIRE PHARMACEUTICALS, INC.
By: _________________________________
Name: _______________________________
Title: ______________________________
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EXHIBIT III
TRANSFER NOTICE
(To transfer or assign the foregoing Warrant Agreement execute this form
and supply required information. Do not use this form to purchase shares.)
FOR VALUE RECEIVED, the foregoing Warrant Agreement and all rights
evidenced thereby are hereby transferred and assigned to:
Print Name: ______________________________________
Address: _________________________________________
__________________________________________________
Dated: ___________________________________________
Holder's Signature: ______________________________
Holder's Address: ________________________________
__________________________________________________
Signature Guaranteed: ____________________________
NOTE: The signature to this transfer notice must correspond with the name as it
appears on the face of the Warrant Agreement, without alteration or
enlargement or any change whatever. Officers of corporations and those
acting in a fiduciary or other representative capacity should file proper
evidence of authority to assign the foregoing Warrant Agreement.
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