Exhibit 10.4
THIS WARRANT, AND THE SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE HEREOF,
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY
APPLICABLE FOREIGN OR STATE SECURITIES LAWS AND MAY NOT BE REOFFERED OR SOLD,
TRANSFERRED, PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF, EXCEPT PURSUANT TO
(1) REGISTRATION UNDER SUCH ACT OR LAWS OR (2) AN OPINION OF COUNSEL REASONABLY
ACCEPTABLE TO THE COMPANY TO THE EFFECT THAT SUCH REGISTRATION IS NOT REQUIRED.
IN ADDITION, THIS WARRANT AND THE SHARES OF STOCK ISSUABLE UPON CONVERSION
HEREOF, ARE ALSO SUBJECT TO SECTION 3.2 OF A BRIDGE LOAN AGREEMENT DATED
DECEMBER ____, 2001 AMONG MEDTRONIC INTERNATIONAL, LTD., RESTORAGEN, INC. AND
VARIOUS OTHER LENDERS NAMED THEREIN.
WARRANT
To Purchase Shares of Common Stock of
RESTORAGEN, INC.
December ____, 2001
Restoragen, Inc., a Delaware corporation (the "Company"), for value
received, hereby certifies that _________________________, a ____________
corporation, or its registered assigns (the "Holder") is entitled, subject to
the terms set forth below, upon exercise of this Warrant to purchase from the
Company such number of shares of Common Stock, $0.01 par value, of the Company
("Common Stock") specified in Section 2(c) below at the exercise price per
share specified in Section 2(b) below (as adjusted pursuant to the terms of
this Warrant). The shares issuable upon exercise of this Warrant, as adjusted
from time to time pursuant to the provisions of this Warrant, are hereinafter
referred to as the "Warrant Shares."
This Warrant is further subject to the following provisions, terms and
conditions:
1. Term. This Warrant may be exercised by the Holder, in whole or in part,
at any time before the close of business on the date six (6) years after the
date hereof.
2. Calculation of Warrant Shares and Exercise Price.
(a) Definitions. For purposes of this Warrant, the following terms shall
have the following meanings:
"Bridge Loan Agreement" means that certain Bridge Loan Agreement dated
December __, 2001 among the Company, Medtronic International, Ltd., and other
lenders named therein.
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"Excluded Issuances" means (i) the issuance or sale of shares of Common
Stock or Preferred Stock upon the exercise of currently outstanding options or
warrants, or (ii) the grant of options, and the issuance of Common Stock upon
the exercise thereof, to Company employees or consultants pursuant to a stock
option or equity incentive plan approved by a majority of the Company's Board
of Directors.
"Loan" means the bridge loan made by the Holder to the Company pursuant to
the Bridge Loan Agreement.
"Qualified Additional Financing" means the receipt by the Company,
subsequent to issuance of this Warrant, in one or more transactions or
agreements, of aggregate gross proceeds of at least Seventeen Million Dollars
($17,000,000) from (i) the sale of the Company's equity securities to unrelated
third parties (other than Excluded Issuances) and/or (ii) Qualified
Collaborative Financing; provided that at least Seven Million Five Hundred
Thousand Dollars ($7,500,000) of such aggregate amount shall be from sales of
equity securities to unrelated third parties. For purposes of this definition,
a third party shall be "unrelated" if neither such third party nor any
affiliate of such third party has entered into, or in connection with such
purchase of Company equity securities would enter into, any joint venture,
development, distribution, licensing, supply or similar agreement with the
Company or any Company subsidiary.
"Qualified Collaborative Financing" means (i) funding received by the
Company from collaborative partners to be used by the Company for development
to be performed by the Company on projects included within the Company's
current (as of the date of this Warrant) business plan, and (ii) funding
received by the Company from collaborative partners for development to be
performed by the Company on projects outside of the Company's current (as of
the date of this Warrant) business plan, to the extent use of such funding is
not restricted to such additional development and such funding is in excess of
the estimated cost to the Company of performing such additional development
during the first twelve months after receipt of such funding. "Qualified
Collaborative Financing" excludes loans for facility construction.
"Qualified Initial Public Offering" means the closing of a firmly
underwritten sale of Common Stock by the Company which is registered under the
Securities Act of 1933, resulting in gross proceeds to the Company of at least
$50,000,000 and the Common Stock being listed on the New York Stock Exchange or
the American Stock Exchange or being quoted on the Nasdaq Stock Market.
(b) Exercise Price. The per share warrant exercise price (the "Exercise
Price") shall equal the lower of (i) $9.00 (adjusted to reflect any stock
splits, stock dividends or combinations occurring with respect to the Common
Stock after the date hereof), or (ii) the lowest per common equivalent share
price at which the Company issues or sells (or is deemed to issue or sell
pursuant to Section 5(e) below) equity (other than Excluded Issuances) after
the date of this Warrant through and including the later of a Qualified
Additional Financing or a Qualified Initial Public Offering (adjusted to
reflect any stock splits, stock dividends or combinations occurring after the
date of such sale of equity).
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(c) Number of Warrant Shares. The number of shares which may be purchased
upon exercise of this Warrant shall equal a percentage of the quotient of (i)
$[____________], divided by (ii) the Exercise Price, which percentage shall
initially equal 50% and, commencing with the 90th day after the date hereof,
shall increase by an additional 10% for each additional 30-day period in which
the Loan remains outstanding and not converted, up to a maximum percentage of
100%. For example, if the Qualified Additional Financing is not completed until
between 150 and 179 days after the Loan, then the percentage shall be 80%.
3. Manner of Exercise. This Warrant may be exercised by the Holder, in
whole or in part (but not as to any fraction of a share of Common Stock), by
surrendering this Warrant, with the Exercise Form attached hereto as Exhibit A
filled in and duly executed by such Holder or by such Holder's duly authorized
attorney, to the Company at its principal office accompanied by payment of the
aggregate exercise price therefore (equal to the Exercise Price multiplied by
the number of shares as to which the Warrant is being exercised). The Exercise
Price may be paid in the form of a check or wire transfer of immediately
available funds.
4. Effective Date of Exercise. Each exercise of this Warrant shall be
deemed effective as of the close of business on the day on which this Warrant
is surrendered to the Company as provided in Section 3 above. At such time, the
person or persons in whose name or names any certificates for Warrant Shares
shall be issuable upon such exercise shall be deemed to have become the holder
or holders of record of the Warrant Shares represented by such certificates.
Within 10 days after the exercise of this Warrant in full or in part, the
Company will, at its expense, cause to be issued in the name of and delivered
to the Holder or such other person as the Holder may (upon payment by such
Holder of any applicable transfer taxes) direct: (i) a certificate or
certificates for the number of full Warrant Shares to which such Holder is
entitled upon such exercise, and (ii) unless this Warrant has expired, a new
Warrant or Warrants (dated the date hereof and in form identical hereto)
representing the right to purchase the remaining number of shares of Common
Stock, if any, with respect to which this Warrant has not then been exercised.
5. Protection Against Dilution.
(a) Adjustment for Stock Splits, Dividends and Combinations. If the
Company, at any time after the date of this Warrant or the date of an equity
sale upon which the Exercise Price is based, subdivides, declares a dividend
payable in, or combines the outstanding shares of Common Stock then (i) the
number of shares of Common Stock for which this Warrant may be exercised as of
immediately prior to the subdivision, combination or record date for such
dividend payable in Common Stock shall forthwith be proportionately decreased,
in the case of combination, or increased, in the case of subdivision or
dividend payable in Common Stock, and (ii) the Exercise Price in effect
immediately prior to the subdivision, combination or record date for such
dividend payable in Common Stock shall forthwith be proportionately increased,
in the case of combination, or decreased, in the case of subdivision or
dividend payable in Common Stock.
(b) Adjustment for Other Dividends and Distributions. If the Company, at
any time after the date of this Warrant or the date of an equity sale upon
which the Exercise Price is based,
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distributes to holders of Common Stock any assets (excluding cash dividends
during any fiscal year in an aggregate amount not exceeding 20% of the
Company's income from continuing operations in the immediately preceding fiscal
year) or debt securities or any rights or warrants to purchase debt securities,
assets or other securities (including Common Stock), the Exercise Price shall
be adjusted in accordance with the formula:
E1 = E x [(O x M) - F]
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O x M
where:
E1 = the adjusted Exercise Price.
E = the Exercise Price prior to adjustment pursuant
to this subsection.
M = the fair market value per share of Common
Stock before the record date mentioned
below, as determined in good faith by the
Company's Board of Directors with the
advice of the Company's investment banker.
O = the number of shares of Common Stock outstanding
on the record date mentioned below.
F = the fair market value on the record date
of the aggregate of all assets, securities,
rights or warrants distributed, as
determined in good faith by the Company's
Board of Directors with the advice of the
Company's investment banker.
The adjustment shall be made successively whenever any such distribution
is made and shall become effective immediately after the record date for
the determination of stockholders entitled to receive the distribution.
(c) Adjustment for Reorganizations, Mergers, Etc. If any capital
reorganization or reclassification of the capital stock of the Company, or
share exchange, combination, consolidation or merger of the Company with
another corporation, or the sale of all or substantially all of its assets to
another corporation shall be effected in such a way that holders of Common
Stock shall be entitled to receive stock, securities or assets with respect to
or in exchange for Common Stock, then, as a condition of such reorganization,
reclassification, share exchange, combination, consolidation, merger or sale,
lawful and adequate provision shall be made whereby the Holder shall thereafter
have the right to receive upon exercise of this Warrant, upon the basis and
upon the terms and conditions specified in this Warrant and in lieu of the
shares of the Common Stock of the Company into which this Warrant could be
exercisable, such shares of stock, securities or assets as may be issued or
payable with respect to or in exchange for a number of outstanding shares of
such Common Stock equal to the maximum number of shares of such stock issuable
upon exercise of this Warrant, and in any such case appropriate provisions
shall be made with respect to the rights and interests of Holder to the end
that the provisions
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hereof (including without limitation provisions for adjustments of the Exercise
Price and of the number of shares purchasable upon exercise of this Warrant)
shall thereafter be applicable, as nearly as may be, in relation to any shares
of stock, securities or assets thereafter deliverable upon the exercise hereof.
The Company shall not effect any such share exchange, combination,
consolidation, merger or sale, unless prior to the consummation thereof the
successor corporation (if other than the Company) resulting from such share
exchange, combination, consolidation or merger or the corporation purchasing
such assets shall assume by written instrument executed and mailed to the
Holder, at the last address of such Holder appearing on the books of the
Company, the obligation to deliver to such Holder such shares of stock,
securities or assets that, in accordance with the foregoing provisions, such
Holder may thereafter be entitled to receive upon exercise of this Warrant.
(d) Successive Adjustments and Notice. The above provisions of this
Section 5 shall similarly apply to successive stock splits, combinations,
dividends, reorganizations, reclassifications, consolidations, mergers or
sales. Notice of such event and of such adjustment to the Exercise Price
resulting from such proposed event, shall be mailed to the Holder not less than
fifteen (15) days prior to such event.
(e) Issuance of Options or Warrants. If the Company in any manner issues
or sells any options or warrants to subscribe for or to purchase Common Stock
(such options or warrants being herein called "Options") (other than Excluded
Issuances), the Company shall be deemed to have issued the shares of Common
Stock issuable upon the exercise of such Option.
6. No Voting Rights. This Warrant shall not entitle the Holder to any
voting rights or other rights as a shareholder of the Company unless and until
exercised pursuant to the provisions hereof.
7. Exercise or Transfer of Warrant or Resale of Common Stock. The Holder,
by acceptance hereof, agrees to give written notice to the Company before
exercising this Warrant, or transferring this Warrant, in whole or in part, or
transferring any shares of Common Stock issued upon the exercise hereof, of
such Holder's intention to do so, describing briefly the manner of any proposed
transfer. Such notice shall include an opinion of counsel reasonably
satisfactory to the Company that (i) the proposed exercise or transfer may be
effected without registration or qualification under the Securities Act of
1933, as amended (the "Act"), and any applicable state securities or blue sky
laws, or (ii) the proposed exercise or transfer has been registered under such
laws. Upon delivering such notice, such Holder shall be entitled to exercise or
transfer this Warrant or such Warrant Shares, all in accordance with the terms
of the notice delivered by such Holder to the Company; provided, that an
appropriate legend may be endorsed on the certificates for such shares
respecting restrictions upon transfer thereof necessary or advisable in the
opinion of counsel to the Company to prevent further transfer that would be in
violation of Section 5 of the Act and applicable state securities or blue sky
laws.
If in the opinion of counsel to the Company or other counsel reasonably
acceptable to the Company the proposed exercise, transfer or disposition of
this Warrant or the Warrant Shares described in the written notice given
pursuant to this Section 7 may not be effected without registration of this
Warrant or the Warrant Shares, the Company shall promptly give written
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notice thereof to the Holder within 10 days after the Company receives such
notice, and such holder will limit its activities in respect to such as, in the
opinion of such counsel, is permitted by law.
Further, notwithstanding anything above to the contrary, except for a
transfer to an affiliate of Holder, a non-profit organization associated with
the Holder, or a successor to substantially all of the Holder's business and
assets to which this Warrant relates, this Warrant may not be transferred
without the Company's written consent, which shall not be unreasonably
withheld.
8. Covenants of the Company. The Company covenants and agrees that all
shares that may be issued upon exercise of this Warrant will, upon issuance, be
duly authorized and issued, fully paid, nonassessable and free from all taxes,
liens and charges with respect to the issuance thereof. The Company further
covenants and agrees that the Company will at all times have authorized, and
reserved for the purpose of issuance upon exercise hereof, a sufficient number
of shares of its Common Stock to provide for the exercise of this Warrant.
9. Certain Notices. The Holder shall be entitled to receive from the
Company immediately upon declaration thereof and at least 20 days prior to the
record date for determination of shareholders entitled thereto or to vote
thereon (or, if no record date is set, prior to the event), written notice of
any event that could require an adjustment pursuant to Section 5 hereof or of
the dissolution or liquidation of the Company. All notices under this Warrant
shall be in writing and shall be delivered personally or by telecopy (receipt
confirmed) to such party (or, in the case of an entity, to an executive officer
of such party) or shall be sent by a reputable express delivery service or by
certified mail, postage prepaid with return receipt requested, addressed as
follows:
if to the Holder, to:
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Attention:
-------------------------
Fax:
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with a copy to:
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Attention:
-------------------------
Fax:
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if to the Company to:
Restoragen, Inc.
0000 X.X. 00xx Xxxxxx
Xxxxxxx, XX 00000-0000
Attention: Chief Financial Officer
Fax: (000) 000-0000
with a copy to:
Xxxxx Xxxx & Xxxxxxxx
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxx Xxxx, Esq.
Fax: (000) 000-0000
Any party may change the above-specified recipient and/or mailing address
by notice to all other parties given in the manner herein prescribed. All
notices shall be deemed given on the day when actually delivered as provided
above (if delivered personally or by telecopy) or on the day shown on the
return receipt (if delivered by mail or delivery service).
10. Registration Rights. The Holder of this Warrant and the Warrant Shares
is entitled to the rights and benefits of all of the terms, provisions and
conditions of Article 8 of the Bridge Loan Agreement. Notwithstanding the
foregoing or any provisions of such Article 8 to the contrary, the Holder
agrees not to sell or transfer any Warrant Shares for at least thirty-two (32)
days after exercise of this Warrant which resulted in the issuance of such
Warrant Shares.
11. Applicable Law. This Warrant shall be governed by and construed in
accordance with the laws of the State of Delaware, without giving effect to
principles of conflicts of laws.
IN WITNESS WHEREOF, the Company has caused this Warrant to be signed by
its authorized officer and dated as of the date stated above.
RESTORAGEN, INC.
By:
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Its:
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Exhibit A
NOTICE OF EXERCISE OF WARRANT -- To Be Executed by the Registered Holder
in Order to Exercise the Warrant
The undersigned hereby irrevocably elects to exercise the attached Warrant
to purchase, for cash pursuant to Section 2 thereof, ________________ shares of
Common Stock issuable upon the exercise of such Warrant. The undersigned
requests that certificates for such shares be issued in the name of
__________________________________. If this Warrant is not fully exercised, the
undersigned requests that a new Warrant to purchase the balance of shares
remaining purchasable hereunder be issued in the name of ______________________.
Date: ___________, 20__ ____________________________________________
[name of registered Holder]
____________________________________________
[signature]
____________________________________________
[street address]
____________________________________________
[city, state, zip]
____________________________________________
[tax identification number]
