Exhibit 4.4
THIS WARRANT AND THE SHARES ISSUABLE HEREUNDER HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR THE SECURITIES LAWS OF
ANY STATE AND, EXCEPT AND PURSUANT TO THE PROVISIONS OF ARTICLE 5 BELOW, MAY NOT
BE OFFERED, SOLD OR OTHERWISE TRANSFERRED, PLEDGED OR HYPOTHECATED UNLESS AND
UNTIL REGISTERED UNDER SAID ACT AND APPLICABLE STATE SECURITIES LAW OR, IN THE
OPINION OF LEGAL COUNSEL IN FORM AND SUBSTANCE SATISFACTORY TO THE ISSUER OF
THESE SECURITIES, SUCH OFFER, SALE OR TRANSFER, PLEDGE OR HYPOTHECATION IS
EXEMPT FROM REGISTRATION.
WARRANT TO PURCHASE STOCK
Corporation: INTEGRITY PHARMACEUTICAL CORPORATION
Initial Number
of Shares: 35,715 (such number subject to adjustment as provided herein)
Class of Stock: Series D Preferred Stock
Initial Exercise Price: $1.75 per Share (subject to adjustment as provided herein)
Issue Date: April 24, 2003
Expiration Date: April 24, 2008
THIS WARRANT CERTIFIES THAT, for the agreed upon value of $1.00 and for
other good and valuable consideration, SILICON VALLEY BANK ("Holder") is
entitled to purchase the number of fully paid and nonassessable shares of the
class of securities (the "Shares") of the corporation (the "Company") at the
initial exercise price per Share (the "Warrant Price") all as set forth above
and as adjusted pursuant to Article 2 of this Warrant, subject to the provisions
and upon the terms and conditions set forth in this Warrant.
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 Article 1.2, Holder shall also deliver to the
Company a check, wire transfer (to an account designated by the Company), or
other from of payment acceptable to the Company for the aggregate Warrant 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 Warrant 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 1.3.
1.3 Fair Market Value. If the Company's common stock is traded in a
public market and the Shares are common stock, the fair market value of each
Share shall be the closing price of a Share reported for the business day
immediately before Holder delivers its Notice of Exercise to the Company (or in
the instance where the Warrant is exercised immediately prior to the
effectiveness of the Company's initial public offering, the "price to public"
per share price specified in the final prospectus relating to such offering). If
the Company's common stock is traded in a public market and the Shares are
preferred stock, the fair market value of a Share shall be the closing price of
a share of the Company's common stock reported for the business day immediately
before Holder delivers its Notice of Exercise to the Company (or, in the
instance where the Warrant is exercised immediately prior to the effectiveness
of the
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Company's initial public offering, the initial "price to public" per share price
specified in the final prospectus relating to such offering), in both cases,
multiplied by the number of shares of the Company's common stock into which a
Share is convertible. If the Company's common stock is not traded in a public
market, the Board of Directors of the Company shall determine fair market value
in its reasonable good faith judgment.
1.4 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.
1.5 Replacement of Warrants. Upon 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, upon delivery of an
indemnity agreement reasonably satisfactory in form and amount to the Company
or, in the case of mutilation, upon surrender and cancellation of this Warrant,
the Company shall execute and deliver, in lieu of this Warrant, a new warrant of
like tenor.
1.6 Assumption on Sale, Merger, or Consolidation of the Company.
1.6.1 "Acquisition". For the purpose of this Warrant,
"Acquisition" means any sale, license, or other disposition of all or
substantially all of the assets of the Company, or any reorganization,
consolidation, or merger of the Company where the holders of the Company's
securities before the transaction beneficially own less than 50% of the
outstanding voting securities of the surviving entity after the transaction.
1.6.2 Treatment of Warrant at Acquisition.
A) Upon the written request of the Company, Holder agrees that, in the event of
an Acquisition in which the sole consideration is cash, either (a) Holder shall
exercise its conversion or purchase right under this Warrant and such exercise
will be deemed effective immediately prior to the consummation of such
Acquisition or (b) if Holder elects not to exercise the Warrant, this Warrant
will expire upon the consummation of such Acquisition. The Company shall provide
the Holder with written notice of its request relating to the foregoing
(together with such reasonable information as the Holder may request in
connection with such contemplated Acquisition giving rise to such notice), which
is to be delivered to Holder not less than ten (10) days prior to the closing of
the proposed Acquisition.
B) Upon the written request of the Company, Holder agrees that, in the event of
an Acquisition that is an "arms length" sale of all or substantially all of the
Company's assets (and only its assets) to a third party that is not an Affiliate
(as defined below) of the Company (a "True Asset Sale"), either (a) Holder shall
exercise its conversion or purchase right under this Warrant and such exercise
will be deemed effective immediately prior to the consummation of such
Acquisition or (b) if Holder elects not to exercise the Warrant, this Warrant
will continue until the Expiration Date if the Company continues as a going
concern following the closing of any such True Asset Sale. The Company shall
provide the Holder with written notice of its request relating to the foregoing
(together with such reasonable information as the Holder may request in
connection with such contemplated Acquisition giving rise to such notice), which
is to be delivered to Holder not less than ten (10) days prior to the closing of
the proposed Acquisition.
C) Upon the closing of any Acquisition other than those particularly described
in subsections (A) and (B) above, the successor entity shall assume the
obligations of this Warrant, and this Warrant shall be exercisable for the same
securities, cash, and property as would be payable for the Shares issuable upon
exercise of the unexercised portion of this Warrant as if such Shares
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were outstanding on the record date for the Acquisition and subsequent closing.
The Warrant Price and/or number of Shares shall be adjusted accordingly.
As used herein "Affiliate" shall mean any person or entity that owns or controls
directly or indirectly ten (10) percent or more of the stock of Company, any
person or entity that controls or is controlled by or is under common control
with such persons or entities, and each of such person's or entity's officers,
directors, joint venturers or partners, as applicable.
ARTICLE 2. ADJUSTMENTS TO THE SHARES.
2.1 Stock Dividends, Splits, Etc. If the Company declares or pays a
dividend on its common stock (or the Shares if the Shares are securities other
than common stock) payable in common stock, or other securities, subdivides the
outstanding common stock into a greater amount of common stock, or, if the
Shares are securities other than common stock, subdivides the Shares in a
transaction that increases the amount of common stock into which the Shares are
convertible, then upon exercise or conversion 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. If the
outstanding shares are combined or consolidated, by reclassification or
otherwise, into a lesser number of shares, the Warrant Price shall be
proportionately increased.
2.2 Reclassification, Exchange, Combinations or Substitution. Upon any
reclassification, exchange, substitution, 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, or
other event. Such an event shall include any automatic conversion of the
outstanding or issuable securities of the Company of the same class or series as
the Shares to common stock pursuant to the terms of the Company's Articles or
Certificate (as applicable) of Incorporation upon the closing of a registered
public offering of the Company's common stock. The Company or its successor
shall promptly issue to Holder an amendment to this Warrant setting forth the
number and kind of such new securities or other property issuable upon exercise
or conversion of this Warrant as a result of such reclassification, exchange,
substitution or other event that results in a change of the number and/or class
of securities issuable upon exercise or conversion of this Warrant. The
amendment to this 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 Warrant Price and to the
number of securities or property issuable upon exercise of the new Warrant. The
provisions of this Article 2.2 shall similarly apply to successive
reclassifications, exchanges, substitutions, or other events.
2.3 Adjustments for Diluting Issuances. The Warrant Price and the
number of Shares issuable upon exercise of this Warrant or, if the Shares are
Preferred Stock, the number of shares of common stock issuable upon conversion
of the Shares, shall be subject to adjustment, from time to time in the manner
set forth in the Company's Articles or Certificate of Incorporation as if the
Shares were issued and outstanding on and as of the date of any such required
adjustment The previsions set forth for the Shares in the Company's Articles or
Certificate (as applicable) of Incorporation relating to the above in effect as
of the Issue Date may not be amended, modified or waived, without the prior
written consent of Holder unless such amendment, modification or waiver affects
the rights associated with the Shares in the same manner as such amendment,
modification or waiver affects the rights associated with all other shares of
the same series and class as the Shares granted to the Holder.
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2.4 No Impairment. The Company shall not, by amendment of its Articles
or Certificate (as applicable) of Incorporation or the Rights Agreement (as
defined in Section 3 below) 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 of all the provisions of
this this Warrant (including without limitation this Article 2) and in taking
all such action as may be necessary or appropriate to protect Holder's rights
under this Warrant (including without limitation this Article 2) 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 down to the nearest whole Share. If a fractional share interest
arises upon any exercise or conversion of the Warrant, the Company shall
eliminate such fractional share interest by paying Holder the amount computed by
multiplying the fractional interest by the fair market value of a full Share.
2.6 Certificate as to Adjustments. Upon each adjustment of the Warrant
Price, the Company shall promptly notify Holder in writing, and, at the
Company's expense, 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 Warrant Price in effect
upon the date thereof and the series of adjustments leading to such Warrant
Price.
ARTICLE 3. REPRESENTATIONS AND COVENANTS OF THE COMPANY.
3.1 Representations and Warranties. The Company represents and
warrants to the Holder as follows:
(a) [reserved]
(b) All Shares which may be issued upon the exercise or
conversion of the purchase right represented by this Warrant, and all
securities, if any, issuable upon conversion of the Shares in accordance
herewith, shall, upon issuance, be duly authorized, validly issued, fully paid
and nonassessable, and free of any liens and encumbrances except for
restrictions on transfer provided for herein or under applicable federal and
state securities laws.
(c) The Capitalization Table previously provided to Holder
remains true and complete as of the Issue Date.
3.2 Notice of Certain Events. If the Company proposes at any time (a)
to declare any dividend or distribution upon its common 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 common stock; (d) to
merge or consolidate with or into any other corporation, or sell, lease,
exclusively license, or convey all or substantially all of its assets, or to
liquidate, dissolve or wind up; or (e) offer holders of registration rights the
opportunity to participate in an underwritten public offering of the Company's
securities for cash, then, in connection with each such event, the Company shall
give Holder (1) at least 10 days prior written notice of the date on which a
record will be taken for such dividend, distribution, or subscription rights
(and specifying the date on which the holders of common stock will be entitled
thereto) 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 10 days prior written notice of the date when the
same will take place (and specifying the date on which the holders of common
stock will be entitled to exchange their common stock for securities or other
property deliverable upon the occurrence of such event);
4
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 Registration Under Securities Act of 1933, as amended, The Company
hereby grants, with respect to the Shares or, if the Shares are convertible into
common stock of the Company, such common stock, the same registration rights
(which registration rights may be subject to "cutbacks" of underwriters) that
are afforded by the Company to the other holders of the same series or class of
securities of which the Shares are part, and on a pari passu basis therewith
(collectively, the "Series D Registration Rights"); provided, however, that such
Series D Registration Rights granted under this Section 3.3 in any event shall
not be less favorable than the registration rights (which registration rights
may be subject to "cutbacks" of underwriters as set forth in Section 9 of the
Rights Agreement) afforded by the Company to holders of the Company's other
series of preferred stock as set forth in the Company's Fourth Amended and
Restated Registration Rights Agreement, dated as of August______, 2002, among
the Company and the "Holders" signatory thereto (as amended, restated,
supplemented, or otherwise modified from time to time, the "Rights Agreement").
For the avoidance of doubt, Holder does not enjoy any demand registration right
that can be exercised without the requisite percentage of all holders of
"Registrable Common" necessary to trigger the demand registration rights set
forth in the Rights Agreement. The Series D Registration Rights granted by the
Company under this Section 3.3 shall not be affected in any manner adverse to
Holder by any amendment, modification, or waiver of the Series D Registration
Rights granted by the Company to the other holders of the same series or class
of securities of which the Shares are part (or, if applicable under the proviso
at the end of the first sentence of this Section, the registration rights
afforded by the Company to holders of the Company's other series of preferred
stock as set forth in the Rights Agreement), without the prior written consent
of Holder unless such amendment, modification or waiver affects Holder ratably
and in the same manner as they affect all other holders of the same series or
class of securities of which the Shares are part (or, if applicable under the
proviso at the end of the first sentence of this Section, all other holders of
the Company's other series of preferred stock, subject to the applicable
provisions of the Rights Agreement).
3.4 No Shareholder Rights. Except as provided in this Warrant, the
Holder will not have any rights as a shareholder of the Company until the
exercise or conversion of this Warrant.
ARTICLE 4. REPRESENTATIONS, WARRANTIES OF THE HOLDER. The Holder represents and
warrants to the Company as follows:
4.1 Purchase for Own Account. Except for transfers to Holder's
affiliates, this Warrant and the securities to be acquired upon exercise or
conversion of this Warrant by the Holder will be acquired for investment for the
Holder's account, not as a nominee or agent, and not with a view to the public
resale or distribution within the meaning of the 1933 Act, and the Holder has no
present intention of selling, granting any participation in, or otherwise
distributing the same. If not an individual, the Holder also represents that the
Holder has not been formed for the specific purpose of acquiring this Warrant or
the Shares.
4.2 Disclosure of Information. The Holder has received or has had full
access to all the information it considers necessary or appropriate to make an
informed investment decision with respect to the acquisition of this Warrant and
its underlying securities. The Holder further has had an opportunity to ask
questions and receive answers from the Company regarding the terms and
conditions of the offering of this Warrant and its underlying securities and to
obtain additional information (to the extent the Company possessed such
information or could acquire it without unreasonable effort or expense)
necessary to verify any information furnished to the Holder or to which the
Holder has access.
4.3 Investment Experience. The Holder understands that the purchase of
this Warrant and its underlying securities involves substantial risk. The
Holder: (i) has
5
experience as an investor in securities of companies in the development stage
and acknowledges that the Holder is able to fend for itself, can bear the
economic risk of such Holder's investment in this Warrant and its underlying
securities and has such knowledge and experience in financial or business
matters that the Holder is capable of evaluating the merits and risks of its
investment in this Warrant and its underlying securities and/or (ii) has a
preexisting personal or business relationship with the Company and certain of
its officers, directors or controlling persons of a nature and duration that
enables the Holder to be aware of the character, business acumen and financial
circumstances of such persons.
4.4 Accredited Investor Status. The Holder is an "accredited investor"
within the meaning of Regulation D promulgated under the 1933 Act.
4.5 The 1933 Act. The Holder understands that this Warrant and the
Shares issuable upon exercise or conversion hereof have not been registered
under the Act in reliance upon a specific exemption therefrom, which exemption
depends upon, among other things, the bona fide nature of the Holder's
investment intent as expressed herein. The Holder understands that this Warrant
and the Shares issued upon any exercise or conversion hereof must be held
indefinitely unless subsequently registered under the 1933 Act and qualified
under applicable state securities laws, or unless exemption from such
registration and qualification are otherwise available.
ARTICLE 5. MISCELLANEOUS.
5.1 Term: This Warrant is exercisable or convertible in whole or in
part at any time and from time to time on or before the Expiration Date.
5.2 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 WARRANT AND THE SHARES ISSUABLE HEREUNDER HAVE NOT BEEN
REGISTERED UNDER THE ACT, OR THE SECURITIES LAWS OF ANY STATE AND,
EXCEPT AND PURSUANT TO THE PROVISIONS OF ARTICLE 5 OF THIS WARRANT,
MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED, PLEDGED OR
HYPOTHECATED UNLESS AND UNTIL REGISTERED UNDER SAID ACT AND APPLICABLE
STATE SECURITIES LAW OR, IN THE OPINION OF LEGAL COUNSEL IN FORM AND
SUBSTANCE SATISFACTORY TO THE ISSUER OF THESE SECURITIES, SUCH OFFER,
SALE OR TRANSFER, PLEDGE OR HYPOTHECATION IS EXEMPT FROM REGISTRATION.
5.3 Compliance with Securities Laws on Transfer. This Warrant and the
Shares issuable upon exercise of this Warrant (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 Silicon Valley Bancshares (Holder's
parent company) or any other affiliate of Holder. Additionally, if there is no
material question as to the availability of current information as referenced in
Rule 144(c), Holder represents that it has complied with Rule 144(d) and (e) in
reasonable detail, the selling broker represents that it has complied with Rule
144(f), and the Company is provided with a copy of Holder's notice of proposed
sale, then Holder need not provide an opinion of counsel of Holder unless the
Chief Executive Officer or Chief Financial Officer of Borrower reasonably and in
6
good faith requests in writing to Holder that such opinion (which opinion may be
by Holder's internal counsel) be given.
5.4 Transfer Procedure. Upon receipt by Holder of the executed
Warrant, Holder will transfer all of this Warrant to Silicon Valley Bancshares,
Holder's parent company, by execution of an Assignment substantially in the form
of Appendix 2. Subject to the provisions of Section 5.3 and upon providing
Company with written notice, Silicon Valley Bancshares and any subsequent Holder
may transfer all or part of this Warrant or the Shares issuable upon exercise of
this Warrant (or the securities issuable directly or indirectly, upon conversion
of the Shares, if any) to any transferee, provided, however, in connection with
any such transfer, Silicon Valley Bancshares or any subsequent Holder will give
the Company notice of the portion of the Warrant being transferred with the
name, address and taxpayer identification number of the transferee and Holder
will surrender this Warrant to the Company for reissuance to the transferee(s)
(and Holder if applicable). The Company may refuse to transfer this Warrant or
the Shares (or the securities issuable directly or indirectly, upon conversion
of the Shares, if any) to any person who directly competes with the Company,
unless, in either case, the capital stock of the Company is publicly traded.
5.5 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 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 (or on the first business day after transmission by
facsimile) be, in writing by the Company or such holder from time to time.
Effective upon receipt of the fully executed Warrant and the initial transfer
described in Article 5.4 above, all notices to the Holder shall be addressed as
follows until the Company receives notice of a change of address in connection
with a transfer or otherwise:
Silicon Valley Bancshares
Attn: Treasury Department
0000 Xxxxxx Xxxxx, XX 000
Xxxxx Xxxxx, XX 00000
Telephone: 000-000-0000
Facsimile: 000-000-0000
Notice to the Company shall be addressed as follows until the Holder
receives notice of a change in address:
Integrity Pharmaceutical Corporation
Attn: ________________________
0000 Xxxxxxxxxx Xxxxx, Xxxxx 000
Xxxxxxx, XX 00000
Telephone:____________________
Facsimile:____________________
5.6 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.
5.7 Attorney's 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 attorney's fees and expenses.
5.8 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
7
or conversion hereof) as determined in accordance with Section 1.3 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.
5.9 Governing Law. This Warrant shall be governed by and construed in
accordance with the laws of the State of California, without giving effect to
its principles regarding conflicts of law.
5.10 Market Stand-Off Provision. Holder agrees to be bound by the
"Lockup Agreement" provisions of Section 11 of the Rights Agreement (as in
effect on the Issuance Date) (the "Market Stand-Off Provision"); provided,
however, that the Market Stand-Off Provision with respect to Holder shall not
apply to (a) Rule 144 sales, and (b) transactions relating to shares of common
stock or other securities of the Company acquired in open market transactions
after the completion of the Company's IPO. The Market Stand-Off Provision (as it
applies to Holder) shall not be amended, modified, or waived without the prior
written consent of Holder unless such amendment, modification, or waiver affects
all other persons and shares bound by the Market Stand-Off Provision ratably and
in the same manner.
[remainder of page intentionally left blank; signature page follows]
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5.11 Counterparts. This Warrant may be executed in counterparts, all
of which together shall constitute one and the same agreement.
"COMPANY"
Integrity Pharmaceutical Corporation
By: /s/ Xxxxxx X. Xxxxxxxxxx
------------------------------------
Name: Xxxxxx X. Xxxxxxxxxx
(Print)
Title: Chairman of the Board,
President or Vice President
By: /s/ Xxxxxxx X. Xxx
------------------------------------
Name: Xxxxxxx X. Xxx
Title: Chief Financial Officer,
Secretary, Assistant Treasurer or
Assistant Secretary
"HOLDER"
Silicon Valley Bank
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
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