Contract
Exhibit 4.6
EXECUTION COPY
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 UNDER ANY
STATE SECURITIES LAWS AND MAY NOT BE SOLD EXCEPT PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT, OR AN EXEMPTION FROM REGISTRATION, UNDER SAID ACT AND
LAWS.
SUCH SECURITIES ARE ALSO SUBJECT TO THE TERMS AND CONDITIONS OF A SECOND AMENDED
AND RESTATED RIGHT OF FIRST REFUSAL AND CO-SALE AGREEMENT, A THIRD AMENDED AND
RESTATED VOTING AGREEMENT AND A THIRD AMENDED AND RESTATED INVESTOR RIGHTS
AGREEMENT, EACH DATED AS OF DECEMBER 9, 2003, AND EACH AMONG THE ISSUER AND
VARIOUS OF ITS STOCKHOLDERS ARE ON FILE AT THE PRINCIPAL OFFICE OF THE ISSUER. THE
SALE, TRANSFER, ASSIGNMENT OR OTHER DISPOSITION OF SUCH SECURITIES IS SUBJECT TO
THE TERMS OF EACH SUCH AGREEMENT.
WARRANT TO PURCHASE
SHARES OF COMMON STOCK
OF
VOLCANO THERAPEUTICS, INC.
Expires December 9, 2013
No. W-2
December 9, 2003
FOR VALUE RECEIVED, subject to the provisions hereinafter set forth, the
undersigned, Volcano Therapeutics, Inc., a Delaware corporation (together with its
successors and assigns, the “Issuer”), hereby certifies that
FFC EXECUTIVE PARTNERS II, L.P.
or its registered assigns is entitled to subscribe for and purchase at an initial
exercise price of $.01 per share, during the period specified in this Warrant, 48,269
shares (subject to adjustment as hereinafter provided) of the duly authorized, validly
issued, fully paid and non-assessable Common Stock all subject to adjustment and upon the
terms and conditions as hereinafter provided. Capitalized terms used in this Warrant and
not otherwise defined herein shall have the respective meanings specified in Section 7
hereof.
1. Term. The right to subscribe for and purchase shares of Warrant Stock
represented hereby shall commence on the date of issuance of this Warrant and shall expire at
5:00 P.M., Eastern Time, on December 9, 2013 (such period being
the “Term”).
2.
Method of Exercise; Payment; Issuance of New
Warrant; Transfer and Exchange.
(a) Time
of Exercise. The purchase rights represented by this Warrant
may be exercised in whole or in part at any time and from time to time during the Term.
(b) Method
of Exercise. The Holder hereof may exercise this Warrant,
in whole or in part, by the surrender of this Warrant (with the exercise form attached hereto
duly
executed) at the principal office of the Issuer, and by the payment to the Issuer of an amount
of
consideration therefor equal to the Warrant Price in effect on the date of such exercise
multiplied
by the number of shares of Warrant Stock with respect to which this Warrant is then being
exercised, payable at such Holder’s election (i) by certified or official bank check or wire
transfer
of immediately available funds or (ii) by surrender to the Issuer for cancellation of a
portion of
this Warrant representing that number of unissued shares of Warrant Stock which is equal to
the
quotient obtained by dividing (A) the product obtained by multiplying the Warrant Price by the
number of shares of Warrant Stock being purchased upon such exercise by (B) the difference
obtained by subtracting the Warrant Price from the Current Market Price per share of Warrant
Stock as of the date of such exercise, or (iii) by a combination of the foregoing methods of
payment selected by the Holder of this Warrant. In any case where the consideration payable
upon such exercise is being paid in whole or in part pursuant to the provisions of clause (ii)
of
this Section 2(b), such exercise shall be accompanied by written notice from the Holder of
this
Warrant specifying the manner of payment thereof, and in the case of application of clause
(ii),
containing a calculation showing the number of shares of Warrant Stock with respect to which
rights are being surrendered thereunder and the net number of shares to be issued after giving
effect to such surrender.
(c) Issuance
of Stock Certificates. In the event of any exercise of the
rights represented by this Warrant in accordance with and subject to the terms and conditions
hereof, (i) certificates for the shares of Warrant Stock so purchased shall be dated the date
of
such exercise and delivered to the Holder hereof within a reasonable time, not exceeding five
Business Days after such exercise, and the Holder hereof shall be deemed for all purposes to
be
the Holder of the shares of Warrant Stock so purchased as of the date of such exercise, and
(ii)
unless this Warrant has expired, a new Warrant representing the number of shares of Warrant
Stock, if any, with respect to which this Warrant shall not then have been exercised (less any
amount thereof which shall have been cancelled in payment or partial payment of the Warrant
Price as hereinabove provided) shall also be issued to the Holder hereof within such time.
(d) Transferability
of Warrant. Subject to the provisions of Section
2(e) hereof, this Warrant may be transferred on the books of the Issuer by the Holder hereof
in
person or by duly authorized attorney, upon surrender of this Warrant at the principal office
of
the Issuer, properly endorsed (by the Holder executing an assignment in the form attached
hereto) and upon payment of any necessary transfer tax or other governmental charge imposed
upon such transfer. This Warrant is exchangeable at the principal office of the Issuer for
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Warrants for the purchase of the same aggregate number of shares of Warrant Stock, each new Warrant
to represent the right to purchase such number of shares of Warrant Stock as the Holder hereof
shall designate at the time of such exchange. All Warrants issued on transfers or exchanges shall
be dated the Closing Date and shall be identical to this Warrant except as to the number of shares
of Warrant Stock issuable pursuant hereto.
(e) Compliance with Securities Laws.
(i) The Holder of this Warrant, by acceptance hereof,
acknowledges that this Warrant and the shares of Warrant Stock to be issued upon exercise hereof
are being acquired solely for the Holder’s own account and not as a nominee for any other party,
and for investment, and that the Holder will not offer, sell or otherwise dispose of this Warrant
or any shares of Warrant Stock to be issued upon exercise hereof except pursuant to an effective
registration statement, or an exemption from registration, under the Securities Act and any
applicable state securities laws.
(ii) Except as provided in paragraph (iii) below, this
Warrant
and all certificates representing shares of Warrant Stock issued upon exercise hereof shall
be stamped or imprinted with a legend in substantially the following form:
“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 UNDER ANY
STATE SECURITIES LAWS AND MAY NOT BE SOLD EXCEPT PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT, OR AN EXEMPTION FROM REGISTRATION, UNDER SAID ACT AND LAWS.
SUCH SECURITIES ARE ALSO SUBJECT TO THE TERMS AND CONDITIONS OF A RIGHT OF FIRST
REFUSAL AND CO-SALE AGREEMENT, A THIRD AMENDED AND RESTATED VOTING AGREEMENT AND A
THIRD AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT, EACH DATED AS OF DECEMBER 9,
2003, AND EACH AMONG THE ISSUER AND VARIOUS OF ITS STOCKHOLDERS ARE ON FILE AT THE
PRINCIPAL OFFICE OF THE ISSUER. THE SALE, TRANSFER, ASSIGNMENT OR OTHER DISPOSITION
OF SUCH SECURITIES IS SUBJECT TO THE TERMS OF SUCH AGREEMENT.”
(iii) The restrictions imposed by this Section 2(e) upon
the
transfer of this Warrant and the shares of Warrant Stock to be purchased upon exercise hereof shall
terminate (A) when such securities shall have been effectively registered under the Securities Act,
or (B) upon the Issuer’s receipt of an opinion of counsel, in form and substance reasonably
satisfactory to the Issuer (it being understood that in-house counsel to the Holder shall be deemed
to be acceptable counsel), addressed to the Issuer to the effect that such restrictions are no
longer required to ensure compliance with the Securities Act. Whenever such restrictions shall
cease and terminate as to any such securities, the Holder thereof shall be entitled to receive from
the Issuer (or its transfer agent and registrar), without expense (other than applicable transfer
taxes, if any), new Warrants (or, in the case of shares of Warrant Stock,
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new stock certificates) of like tenor not bearing the applicable legends required by paragraph
(ii) above relating to the Securities Act and state securities laws.
(f) Continuing Rights of Holder. The Issuer will, at the time of or at
any time after each exercise of this Warrant, upon the request of the
Holder hereof or of any shares of Warrant Stock issued upon such exercise, acknowledge in writing the extent, if any,
of
its continuing obligation to afford to such Holder all rights to which such Holder shall
continue
to be entitled after such exercise in accordance with the terms of this Warrant,
provided that if
any such Holder shall fail to make any such request, the failure shall not affect the
continuing
obligation of the Issuer to afford such rights to such Holder.
(g) Qualified Public Offering. The Issuer will give the Holder notice
of an anticipated Qualified Public Offering no less than 10 Business Days prior to the
Qualified
Public Offering. At any time after receiving such a notice and prior to the Qualified Public
Offering the Holder may exercise this Warrant pursuant to Section 2(b) and state in the
election
notice that such exercise shall be subject to and conditioned upon the occurrence of the
Qualified
Public Offering. Any such exercise by the Holder shall be deemed to occur at the same time as
the Qualified Public Offering. If the Holder does not exercise this Warrant pursuant to this
Section 2(g), any unexercised portion of this Warrant shall be deemed to have been exercised
in
full pursuant to clause (ii) of Section 2(b) of this Warrant at the same time as the Qualified
Public Offering without any action on the part of the Holder.
(h) Recapitalization,
Reorganization, Reclassification, Consolidation, Merger or
Sale.
(i) Without limiting any other provision hereof, in case the Issuer after the Closing
Date shall do any of the following (each a “Triggering Event”) (a) consolidate with or merge into
any other Person and the Issuer shall not be the continuing or surviving corporation of such
consolidation or merger, or (b) permit any other Person to consolidate with or merge into the
Issuer and the Issuer shall be the continuing or surviving Person but, in connection with such
consolidation or merger, any Capital Stock of the Issuer shall be changed into or exchanged for
securities of any other Person or cash or any other property, or (c) transfer all or substantially
all of its properties or assets to any other Person, or (d) effect a capital reorganization or
reclassification of its Capital Stock, or (e) enter into any other transaction similar to any of
the foregoing, then, and in the case of each such Triggering Event, the Issuer shall give the
Holder at least twenty (20) days prior notice of such Triggering Event. At any time after receiving
such a notice and prior to the Triggering Event the Holder may exercise this Warrant pursuant to
Section 2(b) and state in the election notice that such exercise shall be subject to and
conditioned upon the occurrence of the Triggering Event. Any such exercise by the Holder shall be
deemed to occur at the same time as the Triggering Event. If the Holder does not exercise this
Warrant pursuant to this Section 2(h), any unexercised portion of this Warrant shall be deemed to
have been exercised in full pursuant to clause (ii) of Section 2(b) of this Warrant at the same
time as the Triggering Event without any action on the part of the Holder.
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3.
Stock Fully Paid; Reservation and Listing of Shares;
Covenants.
(a) The Issuer represents, warrants, covenants and agrees that all
shares of Warrant Stock which may be issued upon the exercise of this Warrant, will, upon
issuance, be duly authorized, validly issued, fully paid and non-assessable and free from all
taxes, liens and charges created by or through the Issuer with respect to issuance (other than
restrictions under federal and state securities laws). The Issuer further covenants and agrees
that
during the period within which this Warrant may be exercised, the Issuer will at all times
have
authorized and reserved a sufficient number of shares of Common Stock
to provide for the exercise of this Warrant.
(b) If any shares of the Common Stock required to be reserved for
issuance upon exercise of this Warrant or as otherwise provided hereunder require registration or
qualification with any governmental authority under any federal or state law before such shares may
be so issued, the Issuer will in good faith use its best efforts as expeditiously as possible at
its expense to cause such shares to be duly registered or qualified.
(c) The Issuer shall not by any action including, without limitation,
amending the Certificate of Incorporation or through any reorganization, transfer of assets,
consolidation, merger, dissolution, issue or sale of securities or any other action, avoid or
seek to
avoid the observance or performance of any of the terms of this Warrant, 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 to protect the rights of the Holder hereof against impairment.
Without limiting the generality of the foregoing, without the consent of the Requisite
Holders,
the Issuer will (i) not permit the par value, if any, of its Common Stock to exceed the then
effective Warrant Price, (ii) take all such action as may be reasonably necessary in order
that the
Issuer may validly and legally issue fully paid and nonassessable shares of Common Stock, free
and clear of any liens, claims, encumbrances and restrictions (other than as provided herein
and
restrictions under federal and state securities laws) created by or through Issuer with
respect to
such issuance upon the exercise of this Warrant, and (iii) use its reasonable best efforts to
obtain
all such authorizations, exemptions or consents from any public regulatory body having
jurisdiction thereof as may be necessary to enable the Issuer to perform its obligations under
this
Warrant.
(d) The Issuer agrees that neither it nor its Affiliates will in the future
issue any press releases or other public disclosure, including any prospectus, proxy statement
or
other materials filed with any governmental authority relating to a public offering of the
stock of
the Issuer or any of its Subsidiaries, using the name of the Holder or its Affiliates or
referring to
this Warrant without at least two (2) Business Days prior notice to the Holder and without the
prior written consent of the Holder unless (and only to the extent that) the Issuer or its
Affiliate is
required to do so under law and then, in any event, the Issuer or such Affiliate will consult
with
the Holder before issuing such press release or other public disclosure.
4. Adjustment of Warrant Price and Warrant Share Number. The Warrant Share Number
and the Warrant Price shall be subject to adjustment from time to time upon the happening of
certain events, and the Holder hereof shall have additional rights, as follows:
(a) Reserved.
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(b) Subdivision or Combination of Shares. If the Issuer, at any time
while this Warrant is outstanding, shall subdivide or combine any shares of Common Stock, (i)
in case of subdivision of shares, the Warrant Share Number shall be proportionately increased
(as at the effective date of such subdivision or, if the Issuer shall take a record of holders
of its
Common Stock for the purpose of so subdividing, as at the applicable record date, whichever is
earlier) to reflect the increase in the total number of shares of Common Stock outstanding as
a
result of such subdivision, or (ii) in the case of a combination of shares, the Warrant Share
Number shall be proportionately reduced (as at the effective date of such combination or, if
the
Issuer shall take a record of holders of its Common Stock for the purpose of so combining, as
at
the applicable record date, whichever is earlier) to reflect the reduction in the total number
of shares of Common Stock outstanding as a result of such combination.
(c) Certain Dividends and Distributions. If the Issuer, at any time
while this Warrant is outstanding, shall:
(i) Stock Dividends. Pay a dividend in, or make any
other
distribution to its stockholders (without consideration therefor) of, shares of Common Stock or any
Common Stock Equivalent, the Warrant Share Number shall be adjusted, as at the date the Issuer
shall take a record of the holders of the Issuer’s Capital Stock for the purpose of receiving such
dividend or other distribution (or if no such record is taken, as at the date of such payment or
other distribution), to that number determined by multiplying the Warrant Share Number in effect
immediately prior to such record date (or if no such record is taken, then immediately prior to
such payment or other distribution), by a fraction (1) the numerator of which shall be the total
number of shares of Common Stock outstanding immediately after such dividend or distribution (plus
in the event that the Issuer paid cash for fractional shares, the number of additional shares which
would have been outstanding had the Issuer issued fractional shares in connection with said
dividends), and (2) the denominator of which shall be the total number of shares of Common Stock
outstanding immediately prior to such dividend or distribution; or
(ii) Liquidating Dividends, etc. Make a distribution of its
property to the holders of its Common Stock as a dividend in liquidation or partial liquidation or
by way of return of capital other than as a dividend payable out of funds legally available for
dividends under the laws of the State of Delaware, the Holder of this Warrant shall, upon exercise
(including without limitation payment of the Warrant Price), be entitled to receive, in addition to
the number of shares of Warrant Stock receivable thereupon, and without payment of any additional
consideration therefor, an amount payable in cash equal to the fair market value of such property
as would have been payable to such Holder had such Holder been the Holder of record of such Warrant
Stock on the record date for such distribution or if no such record is taken, on the date of such
distribution; and appropriate provision therefor shall be made a part of any such distribution; or
(iii) Cash and Other Dividends. Declare, make or pay any
dividend or other distribution, whether in cash, securities or other property (other than dividends
and distributions subject to subparagraphs (i) and (ii) of this Section 4(c)), with respect to its
Common Stock or any Common Stock Equivalent, the Holder of this Warrant shall, upon exercise
(including, without limitation, payment of the Warrant Price), be entitled to receive, in addition
to the number of shares of Warrant Stock receivable thereupon, and without payment of
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any additional consideration therefor, the amount and type of such cash, securities or property as
would have been payable to such Holder had such Holder been the Holder of record of such Warrant
Stock on the record date for such dividend or distribution or if no such record is taken, on the
date of such dividend or distribution; and appropriate provision therefor shall be made a part of
any such dividend or distribution.
(d) Issuance of Additional Shares of Common Stock. Unless the
holders of Series B Preferred Stock elect to waive the application of Article IV, Section 4(e) of
the Certificate of Incorporation, if the Issuer, at any time while this Warrant is outstanding,
shall issue any Additional Shares of Common Stock (otherwise than as provided in the foregoing
subsections (a) through (c) of this Section 4), at a price per share less than $3.00 or without
consideration, then the Warrant Share Number upon each such issuance shall be adjusted to that
number (rounded to the nearest one-tenth of a share) determined by multiplying the Warrant Share
Number then in effect by a fraction:
(i) the numerator of which shall be equal to the number of
shares of Common Stock outstanding immediately after the issuance of such Additional Shares of
Common Stock; and
(ii) the denominator of which shall be equal to the sum
of (A)
the number of shares of Common Stock outstanding immediately prior to the issuance of such
Additional Shares of Common Stock plus (B) the number of shares of Common Stock (rounded to
the nearest whole share) which the aggregate consideration for the total number of such Additional
Shares of Common Stock so issued would purchase at $3.00 per share.
The provisions of this Section 4(d) shall not apply under any of the circumstances for which an
adjustment is provided in Sections 4(a), 4(b) or 4(c). No adjustment of the Warrant Share Number
shall be made under this Section 4(d) upon the issuance of any Additional Shares of Common Stock
which are issued pursuant to any Common Stock Equivalent if any required adjustments shall have
been made pursuant to Section 4(e) or Section 4(f).
(e) Issuance of Common Stock Equivalents. The following provisions
shall be applicable to the issuance of Common Stock Equivalents:
(i) Except as provided in clause (ii) of this Section 4(e), if
the
Issuer, at any time while this Warrant is outstanding, shall issue any Common Stock Equivalent and
the price per share for which Additional Shares of Common Stock may be issuable thereafter pursuant
to such Common Stock Equivalent (determined by dividing (x) the price received upon issuance of
such Common Stock Equivalent plus the aggregate exercise price payable pursuant to the terms of
such Common Stock Equivalent by (y) the maximum number of Additional Shares of Common Stock
issuable pursuant to such Common Stock Equivalent, whether or not such Common Stock Equivalent is
actually then exercisable, convertible or exchangeable in whole or in part, as of the date of such
issuance) shall be less than $3.00, then the Warrant Share Number upon each such issuance shall be
adjusted as provided in the first sentence of Section 4(d) on the basis that (1) the maximum number
of Additional Shares of Common Stock issuable pursuant to all such Common Stock Equivalents shall
be deemed to have been issued (whether or not such Common Stock Equivalents are actually then
exercisable, convertible or exchangeable
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in whole or in part) as of the date of such issuance, and (2) the aggregate consideration for such
maximum number of Additional Shares of Common Stock shall be deemed to be the consideration
received upon issuance of such Common Stock Equivalent plus the aggregate exercise price payable
pursuant to the terms of such Common Stock Equivalent.
(ii) If the Issuer, no later than 30 days after the Closing Date, shall issue shares of
its Series B Preferred Stock, the Warrant Share Number upon each such issuance shall be increased
by 12% of the number of shares of Series B Preferred Stock so issued.
(iii) No adjustment of the Warrant Share Number shall be made
under this Section 4(e) upon the issuance of any Convertible Security which is issued pursuant to
the exercise of any warrants or other subscription or purchase rights therefor, if any adjustment
shall previously have been made in the Warrant Share Number then in effect upon the issuance of
such warrants or other rights pursuant to this Section 4(e).
(f) Adjustments of Exercise Price and Conversion Rights of Common Stock
Equivalents. If the Issuer, at any time while this Warrant is outstanding, shall, after any
issuance of any Common Stock Equivalent, amend or adjust the price per share for which Additional
Shares of Common Stock may be issuable thereafter pursuant to such Common Stock Equivalent, and the
price per share, after giving effect to such amendment or adjustment, for which Additional Shares
of Common Stock may be issuable thereafter pursuant to such Common Stock Equivalent (determined by
dividing (x) the price received upon original issuance of such Common Stock Equivalent plus the
aggregate price, as so amended or adjusted, payable pursuant to the terms of such Common Stock
Equivalent by (y) the maximum number of Additional Shares of Common Stock issuable pursuant to such
Common Stock Equivalent, as so amended or adjusted, whether or not such Common Stock Equivalent is
actually then exercisable, convertible or exchangeable in whole or in part, as of the date of such
amendment or adjustment) shall be less than $3.00, then the Warrant Share Number upon each such
amendment or adjustment shall be adjusted as provided in the first sentence of Section 4(d) on the
basis that (1) the maximum number of Additional Shares of Common Stock issuable pursuant to such
Common Stock Equivalent shall be deemed to have been issued (whether or not such Common Stock
Equivalent is actually then exercisable, convertible or exchangeable in whole or in part) as of the
date of such amendment or adjustment and after giving effect thereto, and (2) the aggregate
consideration for such maximum number of Additional Shares of Common Stock shall be deemed to be
the minimum consideration receivable by the Issuer for the original issuance of such Additional
Shares of Common Stock pursuant to such Common Stock Equivalent, as so amended or adjusted, plus
the aggregate exercise price payable pursuant to the terms of such Common Stock Equivalent, as so
amended or adjusted. If at any time while this Warrant is outstanding, after issuance of any Common
Stock Equivalent, the number of Additional Shares of Common Stock into which such Common Stock
Equivalent is convertible or exchangeable increases, by adjustment of the conversion or exchange
ratio or price or otherwise (each, an “Adjustment Event”), then the Warrant Share Number upon each
such Adjustment Event shall be adjusted as provided in the first sentence of Section 4(d) on the
basis that (1) the maximum number of Additional Shares of Common Stock issuable pursuant to such
Common Stock Equivalent as a result of such Adjustment Event shall be deemed to have been issued
(whether or not such Common Stock Equivalent is actually then exercisable, convertible or
exchangeable in
8
whole or in part) as of the date of such Adjustment Event and after giving effect thereto, and (2)
the aggregate consideration for such maximum number of Additional Shares of Common Stock shall be
deemed to be the consideration, if any, paid to the Issuer to effect such Adjustment Event.
(g) Reserved.
(h) Other
Provisions Applicable to Adjustments Under this Section 4. The
following provisions shall be applicable to the determination of the price per share and the making
of adjustments in the Warrant Share Number provided in, and to the other provisions of, this
Section 4:
(i) Computation of Consideration. The consideration received by the Issuer
shall be deemed to be the following: to the extent that any Additional Shares of Common Stock or
any Common Stock Equivalent shall be issued for a cash consideration, the consideration received by
the Issuer therefor, or if such Additional Shares of Common Stock or Common Stock Equivalents are
offered by the Issuer for subscription, the subscription price, or, if such Additional Shares of
Common Stock or Common Stock Equivalents are sold to underwriters or dealers for public offering
without a subscription offering, the public offering price, in any such case excluding any amounts
paid or receivable for accrued interest or accrued dividends and without deduction of any
compensation, discounts, commissions, or expenses paid or incurred by the Issuer for or in
connection with the underwriting thereof or otherwise in connection with the issue thereof; to the
extent that such issuance shall be for a consideration other than cash, then, except as herein
otherwise expressly provided, the fair market value of such consideration at the time of such
issuance as determined in good faith by the Board. The consideration for any Additional Shares of
Common Stock issuable pursuant to any Common Stock Equivalent shall be the consideration received
by the Issuer for issuing such Common Stock Equivalent, plus the additional consideration payable
to the Issuer upon the exercise, conversion or exchange of such Common Stock Equivalent. In case of
the issuance at any time of any Additional Shares of Common Stock or Common Stock Equivalents in
payment or satisfaction of any dividend upon any class of Capital Stock of the Issuer other than
Common Stock, the Issuer shall be deemed to have received for such Additional Shares of Common
Stock or Common Stock Equivalents a consideration equal to the amount of such dividend so paid or
satisfied. In case of the issuance at any time of any Additional Shares of Common Stock or Common
Stock Equivalents as a unit with any note or other security, the Issuer shall be deemed to have
received no consideration for such Additional Shares of Common Stock or Common Stick Equivalents;
provided that, with respect to any Common Stock Equivalent which provides for payment of an
exercise price as a condition to the issuance of Additional Shares of Common Stock pursuant
thereto, the Issuer shall be deemed to have received consideration for such Common Stock Equivalent
equal to such exercise price. In any case in which the property, securities or other consideration
to be received or paid shall be other than cash, the Board shall promptly notify the Holder of this
Warrant of its good faith determination of the fair market value of such consideration.
(ii) Readjustment of Warrant Share Number. Upon the
expiration or termination of the right to convert, exchange or exercise any Common Stock Equivalent
the issuance of which effected an adjustment in the Warrant Share Number, if such
9
Common Stock Equivalent shall not have been converted, exercised or exchanged in its entirety, the
number of shares of Common Stock deemed to be issued and outstanding by reason of the fact that
they were issuable upon conversion, exchange or exercise of any such Common Stock Equivalent shall
no longer be computed as set forth above, and the Warrant Share Number shall forthwith be
readjusted and thereafter be the number which it would have been (but reflecting any other
adjustments in the Warrant Share Number made pursuant to the provisions of this Section 4 after the
issuance of such Common Stock Equivalent) had the adjustment of the Warrant Share Number been made
in accordance with the issuance or sale of the number of Additional Shares of Common Stock actually
issued upon conversion, exchange or issuance of such Common Stock Equivalent and thereupon only the
number of Additional Shares of Common Stock actually so issued shall be deemed to have been issued
and only the consideration actually received by the Issuer (computed as in clause (i) of this
Section 4(h)) shall be deemed to have been received by the Issuer.
(iii) Outstanding
Common Stock. The number of shares of
Common Stock at any time outstanding shall (a) not include any Warrant Stock or any shares of
Common Stock then directly or indirectly owned or held by or for the account of the Issuer or any
of its Subsidiaries, and (b) shall be deemed to include the maximum number of shares of Common
Stock issuable upon conversion, exercise or exchange of any then outstanding Common Stock
Equivalents (whether or not such Common Stock Equivalents are actually then exercisable,
convertible or exchangeable in whole or in part), other than the Warrants.
(iv) When
Adjustment Not Required. If the Issuer shall
take a
record of the holders of its Common Stock for the purpose of a subdivision or combination of its
Common Stock or for the purpose of entitling them to receive a dividend or distribution and shall,
thereafter and before the distribution to stockholders thereof, legally abandon its plan to effect
such subdivision or combination or pay or deliver such dividend or distribution, then thereafter no
adjustment shall be required by reason of the taking of such record and any such adjustment
previously made in respect thereof shall be rescinded and annulled.
(i) Other
Action Affecting Common Stock. In case after the Closing Date hereof,
the Issuer shall take any action affecting its Common Stock, other than an action described in any
of the foregoing Sections 4(a) through 4(h), inclusive, and the failure to make any adjustment
would not fairly protect the purchase rights represented by this Warrant in accordance with the
essential intent and principle of this Section 4, then the Warrant Share Number shall be adjusted
in such manner and at such time as the Board may in good faith determine to be equitable in the
circumstances.
(j) Adjustment
of Warrant Price. Upon each adjustment in the
Warrant Share Number pursuant to any of the foregoing provisions of this Section 4, the Warrant
Price shall be adjusted, to the nearest ten thousandth of one cent, to the product obtained by
multiplying the Warrant Price immediately prior to such adjustment in the Warrant Share Number by a
fraction, the numerator of which shall be the Warrant Share Number immediately before giving effect
to such adjustment and the denominator of which shall be the Warrant Share Number immediately after
giving effect to such adjustment; provided, however, that if at any time, as a result of
any adjustments hereunder, the Warrant Price shall be less than the par value per share of Warrant
Stock, then the price payable per share of Warrant Stock by the Holder
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hereunder in the event of an exercise of this Warrant at such time in whole or in part shall be an
amount equal to the par value per share of such Warrant Stock.
5.
Notice of Adjustments. Whenever the Warrant Price or Warrant Share
Number shall be adjusted pursuant to Section 4 hereof (for purposes of this Section 5, an
“adjustment”), the Issuer shall cause its Chief Financial Officer to prepare and execute a
certificate setting forth, in reasonable detail, the event requiring the adjustment, the
amount of
the adjustment, the method by which such adjustment was calculated (including a description of
the basis on which the Board made any determination hereunder), and the Warrant Price and
Warrant Share Number after giving effect to such adjustment, and shall cause copies of such
certificate to be delivered to the Holder of this Warrant promptly after each adjustment. Any
dispute between the Issuer and the Holder of this Warrant with respect to the matters set
forth in
such certificate may at the option of the Requisite Holders of this Warrant be submitted to an
independent accounting firm not then regularly engaged by the Issuer chosen by the Issuer and
reasonably acceptable to the Requisite Holders, which firm shall deliver a written opinion as
to
such matters to the Issuer and the Holders within thirty days after submission to it of such
dispute. Such opinion shall be final and binding on the parties hereto. The fees and expenses
of
such accounting firm shall be paid by the Issuer.
6.
Fractional Shares. No fractional shares of Warrant Stock will be issued in
connection with any exercise hereof, but in lieu of such fractional shares, the Issuer shall
make a
cash payment therefor equal in amount to the fair market value of such fractional shares.
7.
Definitions. For the purposes of this Warrant, the following terms have
the following meanings:
“Additional Shares of Common Stock” means all shares of Common Stock issued by the
Issuer after the Closing Date, and all shares of Other Common, if any, issued by the Issuer after
the Closing Date, except (i) the Warrant Stock, (ii) shares of Common Stock issued or issuable upon
conversion of shares of Series A Preferred Stock or Series B Preferred Stock outstanding on the
Closing Date, (iii) shares of Common Stock issued or issuable upon exercise of employee stock
options outstanding on the Closing Date, (iv) shares of Common Stock issued or issuable upon
exercise of options and warrants to purchase Common Stock which are outstanding on the Closing
Date, (v) shares of Common Stock issued or deemed issued after the Closing Date to officers,
directors, consultants, advisors or employees of the Issuer, pursuant to a stock grant, option or
purchase plan or other employee stock incentive program or arrangement approved by a two-thirds
majority of the Board, plus any shares repurchased by the Issuer from such persons, (vi) all shares
of Common Stock issued or deemed issued after the Closing Date in connection with research and
development partnerships, licensing or collaborative arrangements, borrowings from financial
institutions, equipment financing and similar transactions approved by a two-thirds majority of the
Board, and (vii) all shares of Common Stock issuable upon exercise of other options or warrants
issued and outstanding on the Closing Date.
“Affiliate” means, with respect to any Person, (a) each Person that, directly or indirectly,
owns or controls, whether beneficially, or as a trustee, guardian or other fiduciary, 5% or more of
the Voting Stock of such Person, (b) each Person that controls, is controlled by or is under common
control with such Person, (c) each of such Person’s officers, directors, joint
11
venturers and partners and (d) in the case of the Issuer, the immediate family members, spouses
and lineal descendants of individuals who are Affiliates of the Issuer. For the purposes of this
definition, “control” of a Person shall mean the possession, directly or indirectly, of the power
to direct or cause the direction of its management or policies, whether through the ownership of
voting securities, by contract or otherwise.
“Board” shall mean the Board of Directors of the Issuer.
“Business Day” means any day except a Saturday, a Sunday or a legal holiday in New York City.
“Capital Stock” means and includes (i) any and all shares, interests, participations or other
equivalents of or interests in (however designated) corporate stock, including, without limitation,
shares of preferred or preference stock, (ii) all partnership interests (whether general or
limited) in any Person which is a partnership, (iii) all membership interests or limited liability
company interests in any limited liability company, and (iv) all equity or ownership interests in
any Person of any other type.
“Certificate of Incorporation” means the Certificate of Incorporation of the Issuer as
in effect on the Closing Date, and as hereafter from time to time amended, modified, supplemented
or restated in accordance with its terms and pursuant to applicable law.
“Closing Date” means December 9, 2003.
“Common Stock” means the Common Stock and any other Capital Stock into which such stock may
hereafter be changed.
“Common Stock Equivalent” means any Convertible Security or warrant, option or other
right to subscribe for or purchase any Additional Shares of Common Stock or any Convertible
Security or any stock appreciation right or other right to receive any payment based upon the value
of the Common Stock or Other Common Stock.
“Convertible Securities” means evidences of indebtedness, shares of Capital Stock or
other Securities (including the Series A Preferred Stock and Series B Preferred Stock) which are or
may be at any time convertible into or exchangeable for Additional Shares of Common Stock. The term
“Convertible Security” means one of the Convertible Securities.
“Current Market Price” as in effect on any day means the average of the daily market
prices of the Common Stock for the period of 30 consecutive trading days ending three trading days
preceding such date. The market price for each such day shall be the last sale price on such day as
reported on the New York Stock Exchange Consolidated Tape, or, if the Common Stock is not listed on
the New York Stock Exchange, Inc. or reported on such Consolidated Tape, then the last sale price
on such day on the principal domestic stock exchange on which such Common Stock is then listed or
admitted to trading, or, if no sale takes place on such day on such exchange, the average of the
closing bid and asked prices on such day as officially quoted on such exchange, or, if the Common
Stock is not then listed or admitted to trading on any domestic stock exchange but is quoted in the
Nasdaq Stock Markets National Market System (“NMS/NASDAQ”) of the National Association of
Securities Dealers, Inc. Automated Quotation
12
System (“NASDAQ”), then the Current Market Price for each such trading day shall be the last sale
price on such day as quoted by NMS/NASDAQ, or, if no sale takes place on such day or if the Common
Stock is neither listed or admitted to trading on any domestic stock exchange nor quoted on such
NMS/NASDAQ, then the Current Market Price for each such trading day shall be the average of the
reported closing bid and asked price quotations on such day in the over-the-counter market, as
reported by NASDAQ, or, if not so reported, as furnished by the National Quotation Bureau, Inc., or
if such firm at the time is not engaged in the business of reporting such prices, as furnished by
any similar firm then engaged in such business as selected by the Issuer, or if there is no such
firm, as furnished by any member of the National Association of Securities Dealers, Inc. selected
by the Issuer with the written approval of the Requisite Holders (which approval shall not be
unreasonably withheld). If at any time such Common Stock is not listed on any domestic exchange or
quoted in the domestic over-the-counter market, the Current Market Price shall be deemed to be the
fair market value per share of such Common Stock as determined in good faith by the Board by notice
to the Requisite Holders, provided that if the determination of “Current Market Price” is being
made immediately prior to the effectiveness of the Company’s initial public offering of Common
Stock, the “Current Market Price” shall mean the “price to public” per share specified in the final
prospectus relating to that offering. In determining the fair market value of any shares of Common
Stock, no consideration shall be given to any restrictions on transfer of the Common Stock imposed
by agreement or by federal or state securities laws, or to the existence or absence of, or any
limitations on, voting rights, or to minority or non-control ownership positions. In the event that
the Requisite Holders challenge the determination of Current Market Price by the Board with another
proposed market price for each share of Common Stock, and independent appraiser selected by the
board of directors of the Issuer shall determine the Current Market Price, and the Issuer shall
bear the cost of such appraisal only if the difference between its challenged Current Market Price
and the one determined by the independent appraiser is greater than that between the market price
proposed by the Requisite Holders and the one determined by the independent appraiser; otherwise,
the Requisite Holders shall bear the cost of such appraisal.
“Exchange
Act” means the Securities Exchange Act of 1934, as amended, or any similar federal
statute at the time in effect.
“Holders” mean the Persons who shall from time to time own any Warrant. The term “Holder”
means one of the Holders.
“Independent Appraiser” means a nationally recognized investment banking firm or other
nationally recognized firm, in each case, that is regularly engaged in the business of appraising
the Capital Stock or assets of corporations or other entities as going concerns, and which is not
affiliated with either the Issuer or the Holder of any Warrant.
“Issuer” has the meaning specified in the first paragraph hereof.
“Other Common” means any Capital Stock of the Issuer of any class which shall be authorized at
any time after the date of this Warrant (other than Common Stock) and which shall have the right to
participate in the distribution of earnings and assets of the Issuer without limitation as to
amount.
13
“Person” means an individual, a corporation, a partnership, a trust, a limited liability
company, an unincorporated organization or a government organization or an agency or political
subdivision thereof.
“Qualified Public Offering” means the closing of a firm commitment underwritten public
offering pursuant to an effective registration statement under the Securities Act, covering the
offer and sale of Common Stock in which (1) the public offering price equals or exceeds $10.00 per
share (adjusted to reflect subsequent stock dividends, stock splits or recapitalization) and (2)
the aggregate gross offering proceeds (before underwriters discounts and commissions and before
expenses) equals or exceeds $50 million.
“Requisite Holders” means at any time the Holders of Warrants (other than the Issuer
or any Subsidiary thereof) exercisable for a majority of the shares of Warrant Stock issuable under
the Warrants at the time outstanding.
“Securities” means any debt or equity securities of the Issuer, whether now or hereafter
authorized, any instrument convertible into or exchangeable for Securities or a Security, and any
option, warrant or other right to purchase or acquire any Security. “Security” means one of the
Securities.
“Series B Preferred Stock” means the Issuer’s Series B Preferred Stock having the
terms provided in the Certificate of Incorporation as of the Closing Date.
“Securities Act” means the Securities Act of 1933, as amended, or any similar federal statute
then in effect.
“Subsidiary” means any corporation at least 50% of whose outstanding Voting Stock shall at the
time be owned directly or indirectly by the Issuer or by one or more of its Subsidiaries, or by the
Issuer and one or more of its Subsidiaries.
“Voting Stock”, any class or classes (however designated) of capital stock having ordinary
voting power for the election of a majority of the members of the Board (or other governing body)
of the corporation, other than Capital Stock having such power only by reason of the happening of a
contingency.
“Warrants” means this Warrant and any other warrants of like tenor issued in substitution or
exchange for any thereof pursuant to the provisions of Section 2(c) or 2(d) hereof or of any of
such other Warrants.
“Warrant Price” means the exercise price per share of Common Stock specified in the first
paragraph of this Warrant and such other exercise prices as shall result from the adjustments
specified in Section 4 hereof.
“Warrant Share Number” means at any time the aggregate number of shares of Warrant
Stock which may at such time be purchased upon exercise of this Warrant, after giving effect to all
prior adjustments to such number made or required to be made under the terms hereof.
14
“Warrant Stock” means Common Stock issuable upon exercise of any Warrant or Warrants or
otherwise issuable pursuant to any Warrant or Warrants.
8.
Information. The Issuer shall deliver to the Holder hereof and to each
holder of shares of Warrant Stock the documents and other information required under Article 6
of the Note and Warrant Purchase Agreement, dated as of the Closing Date, among the Issuer,
the guarantors signatory thereto, FFC Partners II, L.P. and FFC Executive Partners II, L.P.
within
the applicable time period specified therein and regardless of whether or not that Agreement
is
then in effect.
9.
Amendment and Waiver. Any term, covenant, agreement or condition in
this Warrant may be amended, or compliance therewith may be waived (either generally or in a
particular instance and either retroactively or prospectively), by a written instrument or
written
instruments executed by the Issuer and the Requisite Holders;
provided, however, that
no such
amendment or waiver shall reduce the Warrant Share Number, increase the Warrant Price,
shorten the period during which this Warrant may be exercised, change the manner of payment
of the Warrant Price or modify any provision of this Section 9 without the consent of the
Holder
of this Warrant.
10.
Governing Law. THIS WARRANT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK
WITHOUT GIVING EFFECT TO CONFLICTS OF LAW PRINCIPLES THEREOF.
11. Notices. All notices and other communications provided for hereunder
shall be in writing and delivered by hand or sent by first class registered mail, return
receipt
requested, or sent by telecopy (with such telecopy to be confirmed promptly in writing sent by
first class registered mail, return receipt requested), and if to the Holder of this Warrant
or of
Warrant Stock issued pursuant hereto, addressed to such Holder at its last known address or
telecopy number appearing on the books of the Issuer maintained for such purposes, and if to
the
Issuer, addressed to:
Volcano Therapeutics, Inc.
0000 Xxxxxxx Xxxx
Xxxxxx Xxxxxxx, XX 00000
Attention: Xxxxx Xxxxxxxxxx
Facsimile: 000-000-0000
0000 Xxxxxxx Xxxx
Xxxxxx Xxxxxxx, XX 00000
Attention: Xxxxx Xxxxxxxxxx
Facsimile: 000-000-0000
or to such other address or addresses or telecopy number or numbers as any such party may most
recently have designated in writing to the other parties hereto by such notice. All such
communications shall be deemed to have been given or made when so delivered by hand, upon actual
receipt if sent by telecopy, or three business days after being so mailed.
12. Remedies. The Issuer stipulates that the remedies at law of the Holder of
this Warrant in the event of any default or threatened default by the Issuer in the
performance of
or compliance with any of the terms of this Warrant are not and will not be adequate and that,
to
the fullest extent permitted by law, such terms may be specifically enforced by a decree for
the
15
specific performance of any agreement contained herein or by an injunction against a violation of
any of the terms hereof or otherwise. Time is of the essence in this Warrant.
13.
Successors and Assigns. This Warrant and the rights evidenced hereby
shall inure to the benefit of and be binding upon the successors and assigns of the Issuer,
the
Holder hereof and (to the extent provided herein) the Holders of Warrant Stock issued pursuant
hereto, and shall be enforceable by any such Holder or Holder of Warrant Stock.
14.
Modification and Severability. If, in any action before any court or
agency legally empowered to enforce any provision contained herein, any provision hereof is
found to be unenforceable, then such provision shall be deemed modified to the extent
necessary
to make it enforceable by such court or agency. If any such provision is not enforceable as
set
forth in the preceding sentence, the unenforceability of such provision shall not affect the
other
provisions of this Warrant, but this Warrant shall be construed as if such unenforceable
provision
had never been contained herein.
15.
Integration. This Warrant replaces all prior agreements, supersedes all
prior negotiations and constitutes the entire agreement of the parties with respect to the
transactions contemplated herein.
16.
Headings. The headings of the Sections of this Warrant are for
convenience of reference only and shall not, for any purpose, be deemed a part of this
Warrant.
16
| VOLCANO THERAPEUTICS, INC. | ||||||
| By: | /s/ Xxxxx Xxxxxxxxxx | |||||
| Name: Xxxxx Xxxxxxxxxx | ||||||
| Title: President & CEO | ||||||
EXERCISE FORM
[ ]
The undersigned hereby irrevocably elects to exercise the right to purchase
represented by the attached Warrant for, and to purchase thereunder,
shares of
Common Stock, par value $.01 per share (the “Common Stock”), of Volcano Therapeutics, Inc. (the
“Issuer”), as provided for therein, and tenders herewith payment of the Warrant Price in full in
accordance with the terms of the attached Warrant.
Please issue a certificate or certificates for such shares of Common Stock in the following
name or names and denominations:
If said number of shares of Common Stock shall not be all the shares of Common Stock issuable
upon exercise of the attached Warrant, a new Warrant is to be issued in the name of the undersigned
for the balance remaining of such shares of Common Stock less any fraction of a share of Common
Stock paid in cash.
Dated:
|
Signature | |||||||
| Address | ||||||||
17
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned registered owner of this Warrant hereby sells,
assigns and transfers unto the within Warrant and all rights evidenced
thereby and does irrevocably constitute and appoint , attorney, to transfer the
said Warrant on the books of the within named corporation.
Dated:
|
Signature | |||||||
| Address | ||||||||
PARTIAL ASSIGNMENT
FOR VALUE RECEIVED, the undersigned registered owner of this Warrant hereby sells, assigns and transfers unto the right to purchase ___shares of the
Common Stock issuable upon exercise of the attached Warrant, and does irrevocably constitute and
appoint , attorney, to transfer that part of the said Warrant on the
books of the within named corporation.
Dated:
|
Signature | |||||||
| Address | ||||||||
FOR USE BY THE ISSUER ONLY:
This Warrant No. W- cancelled (or transferred or exchanged) this day of
, 20 ,
shares of Common Stock issued therefor in the name of , Warrant No.
W-
issued for
shares of Common
Stock in the name of
18
