THIS WARRANT AND THE SHARES ISSUABLE HEREUNDER HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD, PLEDGED, OR
OTHERWISE TRANSFERRED WITHOUT AN EFFECTIVE REGISTRATION THEREOF UNDER SUCH ACT
OR PURSUANT TO RULE 144 OR AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE
CORPORATION AND ITS COUNSEL, THAT SUCH REGISTRATION IS NOT REQUIRED.
WARRANT TO PURCHASE STOCK
Issuer: TolerRx, Inc., a Delaware corporation
Number of Shares: 65,000, subject to adjustment
Class of Stock: Common Stock, $.001 par value per share
Exercise Price: $0.10 per share, subject to adjustment
Issue Date: February 23, 2001
Expiration Date: As set forth below
THIS WARRANT CERTIFIES THAT, for the agreed upon value of $1.00 and
for other good and valuable consideration, this Warrant is issued to SILICON
VALLEY BANK (the "Holder") by TOLERRX, INC., a Delaware corporation (the
"Company").
Subject to the terms and conditions hereinafter set forth, the Holder is
entitled upon surrender of this Warrant and the duly executed subscription form
annexed hereto as APPENDIX 1, at the office of the Company, 000 Xxxxxxxxxxxxx
Xxxxxx, Xxxxxxxxx, XX 00000, or such other office as the Company shall notify
the Holder of in writing, to purchase from the Company Sixty-Five Thousand
(65,000) fully paid and non-assessable shares (the "Shares") of the Company's
Common Stock, $.001 par value per share (the "Class"), at a purchase price per
Share of Ten Cents ($0.10) (the "Exercise Price"). Until such time as this
Warrant is exercised in full or expires, the Exercise Price and the number
Shares are subject to adjustment from time to time as hereinafter provided. This
Warrant may be exercised in whole or in part at any time and from time to time
until 5:00 PM, Eastern time February 23, 2011 (the "Expiration Date").
If on the Commitment Termination Date (as defined in that certain Loan
and Security Agreement of even date herewith between the Company and the Holder
("Loan Agreement")), the total amount of the advances made to the Company
pursuant to the Loan Agreement has not exceeded Six Hundred Thousand Dollars
($600,000), then the number of Shares that this Warrant is exercisable for shall
automatically be reduced by Fifteen Thousand (15,000) shares. Accordingly, prior
to the Commitment Termination Date, the total number of Shares for which this
Warrant shall be exercisable shall equal Fifty Thousand (50,000) (subject to
adjustment in accordance with the provision of Section 2 of this Warrant upon
any adjustment that effects the number of Shares) and, shall automatically
increase to Sixty-Five Thousand (65,000) (subject to adjustment in accordance
with the provision of Section 2 of this Warrant upon any adjustment that effects
the number of Shares) in the event that the total amount of the advances made to
the Company pursuant to the Loan
Agreement has exceeded Six Hundred Thousand Dollars ($600,000) on the Commitment
Termination Date.
ARTICLE 1. EXERCISE.
1.1 METHOD OF EXERCISE. Holder may exercise this Warrant by
delivering a duly executed Notice of Exercise in substantially the form attached
as APPENDIX 1 to the principal office of the Company. Unless Holder is
exercising the conversion right set forth in Section 1.2, Holder shall also
deliver to the Company a check for the aggregate Exercise Price for the Shares
being purchased.
1.2 CONVERSION RIGHT. In lieu of exercising this Warrant as
specified in Section 1.1, Holder may from time to time convert this Warrant, in
whole or in part, into a number of Shares determined by dividing (a) the
aggregate fair market value of the Shares or other securities otherwise issuable
upon exercise of this Warrant minus the aggregate Exercise Price of such Shares
by (b) the fair market value of one Share. The fair market value of the Shares
shall be determined pursuant to Section 1.4.
1.3 INTENTIONALLY OMITTED.
1.4 FAIR MARKET VALUE.
1.4.1 If shares of the Class (or shares of the Company's
stock into which shares of the Class are convertible or exchangeable) are traded
on a nationally recognized securities exchange or over the counter market, the
fair market value of a Share shall be the average closing price of a share of
the Class (or the closing price of a share of the Company's stock for which
shares of the Class are convertible or exchangeable) reported for the fourteen
(14) business days immediately before Holder delivers its Notice of Exercise to
the Company.
1.4.2 If shares of the Class (or shares of the Company's
stock into which shares of the Class are convertible or exchangeable) are not
traded on a nationally recognized securities exchange or over the counter
market, the Board of Directors of the Company shall determine fair market value
in its reasonable good faith judgment. The foregoing notwithstanding, if Holder
advises the Board of Directors in writing that Holder disagrees with such
determination, then the Company and Holder shall promptly agree upon a reputable
investment banking firm to undertake such valuation. If the valuation of such
investment banking firm is ten percent (10%) greater than that determined by the
Board of Directors, then all fees and expenses of such investment banking firm
shall be paid by the Company. In all other circumstances, such fees and expenses
shall be paid by Holder. The valuation determined by such investment banking
firm shall be conclusive in any event.
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1.5 DELIVERY OF CERTIFICATE AND NEW WARRANT. Promptly after
Holder exercises or converts this Warrant, the Company shall deliver to Holder
certificates for the Shares acquired and, if this Warrant has not been fully
exercised or converted and has not expired, a new Warrant representing the
Shares not so acquired.
1.6 REPLACEMENT OF WARRANTS. On receipt of evidence reasonably
satisfactory to the Company of the loss, theft, destruction or mutilation of
this Warrant and, in the case of loss, theft or destruction, on delivery of an
indemnity agreement reasonably satisfactory in form and amount to the Company
or, in the case of mutilation, on surrender and cancellation of this Warrant,
the Company at its expense shall execute and deliver, in lieu of this Warrant, a
new warrant of like tenor.
1.7 REPURCHASE ON SALE, MERGER, OR CONSOLIDATION OF THE
COMPANY.
1.7.1. "ACQUISITION". For the purpose of this Warrant,
"Acquisition" means any sale, transfer, exclusive license, or other disposition
of all or substantially all of the assets of the Company, or any acquisition,
reorganization, consolidation, or merger of the Company where the holders of the
Company's outstanding voting equity securities immediately prior to the
transaction beneficially own less than 50.1% of the outstanding voting equity
securities of the surviving or successor entity immediately following the
transaction.
1.7.2. ASSUMPTION OF WARRANT. Upon the closing of any
Acquisition the successor or surviving entity shall assume the obligations of
this Warrant, and this Warrant shall be exercisable for the same securities and
property as would be payable for the Shares issuable upon exercise of the
unexercised portion of this Warrant as if such Shares were outstanding on the
record date for the Acquisition and subsequent closing. The Exercise Price shall
be adjusted accordingly, and the Exercise Price and number and class of Shares
shall continue to be subject to adjustment from time to time in accordance with
the provisions hereof.
1.7.3 PURCHASE RIGHT. Notwithstanding the foregoing, upon
the closing of any Acquisition, at the election of Holder, the Company shall
purchase the unexercised portion of this Warrant for cash for an amount equal to
(a) the fair market value of any consideration that would have been received by
Holder in consideration for the Shares had Holder exercised the unexercised
portion of this Warrant immediately before the record date for determining the
shareholders entitled to participate in the proceeds of the Acquisition, less
(b) the aggregate Exercise Price of the Shares, but in no event less than zero.
ARTICLE 2. ADJUSTMENTS TO THE SHARES.
2.1 STOCK DIVIDENDS, SPLITS, ETC. If the Company declares or
pays a dividend on the outstanding shares of the Class, payable in Common Stock
or other securities, or subdivides the outstanding Common Stock into a greater
amount of Common Stock of the outstanding shares of the Class into a greater
number of shares of the Class, or subdivides the shares of the Class in a
transaction that increases the amount of Common Stock into which such shares are
convertible, then
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upon exercise of this Warrant, for each Share acquired, Holder shall receive,
without cost to Holder, the total number and kind of securities to which Holder
would have been entitled had Holder owned the Shares of record as of the date
the dividend or subdivision occurred.
2.2 RECLASSIFICATION, EXCHANGE OR SUBSTITUTION. Upon any
reclassification, exchange, substitution, reorganization or other event that
results in a change of the number and/or class of the securities issuable upon
exercise or conversion of this Warrant, Holder shall be entitled to receive,
upon exercise or conversion of this Warrant, the number and kind of securities
and property that Holder would have received for the Shares if this Warrant had
been exercised immediately before such reclassification, exchange, substitution,
reorganization or other event. The Company or its successor shall promptly issue
to Holder a new Warrant for such new securities or other property. The new
Warrant shall provide for adjustments which shall be as nearly equivalent as may
be practicable to the adjustments provided for in this Article 2 including,
without limitation, adjustments to the Exercise Price and to the number of
securities or property issuable upon exercise of the new Warrant. The provisions
of this Section 2.2 shall similarly apply to successive reclassifications,
exchanges, substitutions, reorganizations or other events.
2.3 ADJUSTMENTS FOR COMBINATIONS, ETC. If the outstanding
shares of the Class are combined or consolidated, by reclassification or
otherwise, into a lesser number of shares, the Exercise Price shall be
proportionately increased and the number of Shares for which this Warrant is
exercisable shall be proportionately decreased.
2.4 NO IMPAIRMENT. The Company shall not, by amendment of the
Certificate of Incorporation (the "Certificate") or its by-laws or through a
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 to be observed or performed under
this Warrant by the Company, but shall at all times in good faith assist in
carrying out all of the provisions of this Article 2 and in taking all such
action as may be necessary or appropriate to protect Holder's rights under this
Article against impairment.
2.5 FRACTIONAL SHARES. No fractional Shares shall be issuable
upon exercise or conversion of the Warrant and the number of Shares to be issued
shall be rounded up to the nearest whole Share.
2.6 CERTIFICATE AS TO ADJUSTMENTS. Upon each adjustment of the
Exercise Price, number of class of Shares or number of shares of Common Stock or
other securities for which the Shares are convertible or exchangeable, the
Company at its expense shall promptly compute such adjustment, and furnish
Holder with a certificate of its Chief Financial Officer setting forth such
adjustment and the facts upon which such adjustment is based. The Company shall,
upon written request, furnish Holder a certificate setting forth the Exercise
Price, number and class of Shares and conversion ratio in effect upon the date
thereof and the series of adjustments leading to such Exercise Price, number and
class of Shares and conversion ratio.
-4-
ARTICLE 3. REPRESENTATIONS AND COVENANTS OF THE COMPANY.
3.1 REPRESENTATIONS AND WARRANTIES. The Company hereby
represents and warrants to the Holder as follows:
(a) All Shares which may be issued upon the due exercise
of this Warrant, and all Common Stock or other securities, if any, issuable upon
due conversion of the Shares, shall, upon issuance, be duly authorized, validly
issued, fully paid and non-assessable, and free of any liens and encumbrances
except for restrictions on transfer provided for herein or under applicable
federal and state securities laws.
(b) The execution and delivery by the Company of this
Warrant and the performance of all obligations of the Company hereunder,
including the issuance to Holder of the right to acquire the Shares, have been
duly authorized by all necessary corporate action on the part of the Company,
and this
Warrant Agreement is not inconsistent with the Certificate and/or the
Company's by-laws, does not contravene any law or governmental rule, regulation
or order applicable to it, does not and will not contravene any provision of, or
constitute a default under, any material indenture, mortgage, contract or other
instrument to which it is a party or by which it is bound, and constitutes a
legal, valid and binding agreement of the Company, enforceable in accordance
with its terms.
(c) The authorized capital stock of the Company consists
of Twenty Three Million Thirty Five Thousand (23,035,000) shares, consisting of
Fourteen Million (14,000,000) shares of Common Stock, $.001 par value per share,
and Nine Million Thirty Five Thousand (9,035,000) shares of preferred stock,
$.001 par value per share. SCHEDULE 3.1(c) sets forth all of the outstanding
shares of common stock and preferred stock and outstanding options, warrants,
convertible securities, convertible debentures, and rights to acquire, subscribe
for, and/or purchase any Common Stock, preferred stock and/or other capital
stock of the Company or any securities or debentures convertible into or
exchangeable for Common Stock, preferred stock and/or other capital stock of the
Company.
(d) The Company covenants that it shall at all times
cause to be reserved and kept available out of its authorized and unissued
shares such number of shares of its Common Stock and other securities as will be
sufficient to permit the exercise in full of this Warrant.
3.2 NOTICE OF CERTAIN EVENTS. If the Company proposes at any
time (a) to declare any dividend or distribution upon any of its capital stock,
whether in cash, property, stock, or other securities and whether or not a
regular cash dividend; (b) to offer for subscription pro rata to the holders of
any class or series of its stock any additional shares of stock of any class or
series or other rights; (c) to effect any reclassification or recapitalization
of any of its securities; or (d) to merge or consolidate with or into any other
corporation, or sell, lease, license, or convey all or substantially all of its
assets, or to liquidate, dissolve or wind up, then, in connection with each such
event, the Company shall give Holder (1) at least 20 days prior written notice
of the date on which a record will
-5-
be taken for such dividend, distribution, or subscription rights (and specifying
the date on which the holders of securities of the Company shall be entitled to
receive such dividend, distribution or rights) or for determining rights to
vote, if any, in respect of the matters referred to in (c) and (d) above; (2) in
the case of the matters referred to in (c) and (d) above at least 20 days prior
written notice of the date when the same will take place (and specifying the
date on which the holders of securities of the Company will be entitled to
exchange their securities of the Company for securities or other property
deliverable upon the occurrence of such event); and (3) in the case of the
matter referred to in (e) above, the same notice as is given to the holders of
such registration rights.
3.3 INFORMATION RIGHTS. So long as the Holder holds this
Warrant and/or any of the Shares, the Company shall deliver to the Holder (a)
within one-hundred and twenty (120) days after the end of each fiscal year of
the Company, the annual audited financial statements of the Company certified by
independent public accountants of recognized standing and (b) such other
financial statements required under and in accordance with any loan documents
between Holder and the Company or if there are no such requirements (or if the
subject loan(s) no longer are outstanding), then within forty-five (45) days
after the end of each of the first three quarters of each fiscal year, the
Company's quarterly, unaudited financial statements.
3.4 REGISTRATION UNDER SECURITIES ACT OF 1933, AS AMENDED. The
Shares shall have certain registration rights as set forth in that certain
Registration Rights Agreement of even date herewith between Holder and the
Company (the "Registration Rights Agreement"). The Company represents and
warrants to Holder that the Company's execution, delivery and performance of the
Registration Rights Agreement (a) has been duly authorized by all necessary
corporate action of the Company's Board of Directors and shareholders, (b) will
not violate the Certificate or the Company's by-laws, each as amended, (c) will
not violate or cause a breach or default (or an event which with the passage of
time or the giving of notice or both, would constitute a breach or default)
under any agreement, instrument, mortgage, deed of trust or other arrangement
to which the Company is a party or by which it or any of its assets is subject
or bound, and (d) does not require the approval, consent or waiver of or by any
shareholder, registration rights holder or other third party which approval,
consent or waiver has not been obtained as of the date of issuance of this
Warrant.
ARTICLE 4. MISCELLANEOUS.
4.1 AUTOMATIC CONVERSION UPON EXPIRATION. In the event that,
upon the Expiration Date, the fair market value of one Share (or other security
issuable upon the exercise hereof) as determined in accordance with Section 1.4
above is greater than the Exercise Price in effect on such date, then this
Warrant shall automatically be deemed on and as of such date to be converted
pursuant to Section 1.2 above as to all Shares (or such other securities) for
which it shall not previously have been exercised or converted, and the Company
shall promptly deliver a certificate representing the Shares (or such other
securities) issued upon such conversion to the Holder.
-6-
4.2 LEGENDS. This Warrant and the Shares (and the securities
issuable, directly or indirectly, upon conversion of the Shares, if any) shall
be imprinted with a legend in substantially the following form:
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED, AND MAY NOT BE SOLD, PLEDGED OR OTHERWISE
TRANSFERRED WITHOUT AN EFFECTIVE REGISTRATION THEREOF UNDER
SUCH ACT OR PURSUANT TO RULE 144 OR AN OPINION OF COUNSEL
REASONABLY SATISFACTORY TO THE CORPORATION AND ITS COUNSEL THAT
SUCH REGISTRATION IS NOT REQUIRED.
4.3 COMPLIANCE WITH SECURITIES LAWS ON TRANSFER. This Warrant
and the Shares (and the securities issuable, directly or indirectly, upon
conversion of the Shares, if any) may not be transferred or assigned in whole or
in part without compliance with applicable federal and state securities laws by
the transferor and the transferee (including, without limitation, the delivery
of investment representation letters and legal opinions reasonably satisfactory
to the Company, as reasonably requested by the Company). The Company shall not
require Holder to provide an opinion of counsel if the transfer is to an
affiliate of Holder or if (a) there is no material question as to the
availability of current information as referenced in Rule 144(c), (b) Holder
represents that it has complied with Rule 144(d) and (e) in reasonable detail,
(c) the selling broker represents that it has complied with Rule 144(f), and (d)
the Company is provided with a copy of Holder's notice of proposed sale.
4.4 TRANSFER PROCEDURE. Subject to the provisions of Section
4.3, Holder may transfer all or part of this Warrant and/or the Shares issuable
upon exercise of this Warrant (or the securities issuable, directly or
indirectly, upon conversion of the Shares, if any) at any time to Silicon Valley
Bancshares or The Silicon Valley Bank Foundation, or, to any other transferee by
giving the Company notice of the portion of the Warrant being transferred
setting forth the name, address and taxpayer identification number of the
transferee and surrendering this Warrant to the Company for reissuance to the
transferee(s) (and Holder if applicable).
4.5 NOTICES. All notices and other communications from the
Company to the Holder, or vice versa, shall be deemed delivered and effective
when given personally or sent by electronic facsimile transmission, express
overnight courier service, or mailed by first-class registered or certified
mail, postage prepaid, at such address as may have been furnished to the Company
or the Holder, as the case may be, in writing by the Company or such holder from
time to time, but in all cases, unless instructed in writing otherwise, the
Company shall deliver a copy of all notices to Holder to Silicon Valley Bank,
Treasury Department, 0000 Xxxxxx Xxxxx, XX-000, Xxxxx Xxxxx, Xxxxxxxxxx 00000.
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4.6 WAIVER. This Warrant and any term hereof may be changed,
waived, discharged or terminated only by an instrument in writing signed by the
party against which enforcement of such change, waiver, discharge or termination
is sought.
4.7 ATTORNEYS FEES. In the event of any dispute between the
parties concerning the terms and provisions of this Warrant, the party
prevailing in such dispute shall be entitled to collect from the other party all
costs incurred in such dispute, including reasonable attorneys' fees.
4.8 GOVERNING LAW. This Warrant shall be governed by and
construed in accordance with the laws of the Commonwealth of
Massachusetts,
without giving effect to its principles regarding conflicts of law.
"COMPANY"
ATTEST: TOLERRX, INC.
By: [ILLEGIBLE] By: /s/ X.X. Xxxxxxx
--------------------------------- ------------------------------------
Name: [ILLEGIBLE] Name: X.X. Xxxxxxx
------------------------------- ----------------------------------
Title: Mgr. Marketing Title: CEO
------------------------------ ---------------------------------
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APPENDIX I
NOTICE OF EXERCISE
1. The undersigned hereby elects to purchase _______shares of the
_____________stock of ______________ pursuant to Section 1.1 of the attached
Warrant, and tenders herewith payment of the Exercise Price of such shares in
full.
1. The undersigned hereby elects to convert the attached Warrant into
Shares in the manner specified in Section 1.2 of the attached Warrant. This
conversion is exercised with respect to ________ of shares of the
________________ Stock of __________________.
[Strike paragraph that does not apply.]
2. Please issue a certificate or certificates representing said
shares in the name of the undersigned or in such other name as is specified
below:
--------------------------------
(Name)
-------------------------------
-------------------------------
(Address)
3. The undersigned represents it is acquiring the shares solely for
its own account and not as a nominee for any other party and not with a view
toward the resale or distribution thereof except in compliance with applicable
securities laws.
----------------------------------------
(Signature)
------------------
(Date)
