Exhibit 4.2
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
Corporation: EYEONICS, INC., a Delaware Corporation
Number of Shares: 27,692
Class of Stock: Series D Preferred
Initial Exercise Price: $3.25 per share
Issue Date: June 2, 2004
Expiration Date: June 2, 2011 (Subject to Section 4.1)
THIS WARRANT CERTIFIES THAT, for good and valuable consideration, the
receipt of which is hereby acknowledged, COMERICA BANK or its assignee
("Holder") is entitled to purchase such number of fully paid and nonassessable
shares of such class of securities (the "Shares") of EYEONICS, INC. (the
"Company") at the initial exercise price per Share (the "Warrant Price") all as
is 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 this
warrant and 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 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 1.4.
1.3 Intentionally Omitted.
1.4 Fair Market Value. If the Shares are traded regularly in a public
market, the fair market value of the Shares shall be the closing price of the
Shares (or the closing price of the Company's stock into which the Shares are
convertible) reported for the business day immediately before Holder delivers
its Notice of Exercise to the Company. If the Shares are not regularly traded in
a public market, the Board of Directors of the Company shall determine fair
market value in its reasonable good faith judgment.
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.
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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, license, or other disposition of all or substantially all of the
assets (including intellectual property) 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.
1.7.2 Assumption of Warrant. If upon the closing of any Acquisition
the successor entity assumes the obligations of this warrant, then 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 were outstanding on the record date for the
Acquisition and subsequent closing. The Warrant Price shall be adjusted
accordingly. The Company shall use reasonable efforts to cause the surviving
corporation to assume the obligations of this warrant.
1.7.3 Nonassumption. If upon the closing of any Acquisition the
successor entity does not assume the obligations of this warrant and Holder has
not otherwise exercised this warrant in full, then this warrant shall be deemed
to have been automatically converted pursuant to Section 1.2 and thereafter
Holder shall participate in the Acquisition on the same terms as other holders
of the same class of securities of the Company.
ARTICLE 2. ADJUSTMENTS TO THE SHARES.
2.1 Stock Dividends, Splits, Etc. If the Company declares or pays a
dividend on its common stock payable in common stock, or other securities,
subdivides the outstanding common stock into a greater amount of common stock,
then 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, 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 Certificate 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 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
Warrant 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, or other events.
2.3 Adjustments for Combinations, Etc. 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. If the
outstanding Shares are combined or consolidated, by reclassification or
otherwise, into a greater number of shares, the Warrant Price shall be
proportionately decreased.
2.4 Adjustments for Diluting Issuances. The number of shares of the
Company's common stock issuable upon conversion of the Shares shall be subject
to adjustment, from time to time, in the manner set forth on Exhibit A. if
attached, in the event of Diluting Issuances (as defined on Exhibit A).
2.5 No Impairment. The Company shall not, by amendment of its Certificate
of Incorporation 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 the
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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.
2.6 Certificate as to Adjustments. Upon each adjustment of the Warrant
Price, the Company at its expense shall promptly compute such adjustment, and
furnish Holder with a certificate of its an executive officer of the Company
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.
2.7 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 amount computed by multiplying the
fractional interest by the fair market value of a full Share.
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 exercise of the purchase
right represented by this warrant, and all securities, if any, issuable upon
conversion of the Shares, 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 or any liens and encumbrances created by
Holder.
(b) The Company's capitalization table attached to this warrant is
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; 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 15 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 (a) and (b) above; and (2) in the case of the matters referred to
in (c) and (d) above at least 15 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).
3.3 Information Rights. Subject to compliance with applicable federal and
state securities laws, so long as the Holder holds this warrant and/or any of
the Shares, the Company shall deliver to the Holder (a) promptly after mailing,
copies of all communiques to the shareholders of the Company, (b) within one
hundred fifty (150) 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 (c) within sixty (60) days after
the end of each of the first three quarters of each fiscal year, the Company's
quarterly, unaudited financial statements.
3.4 Investor Rights Agreement. The Company agrees to use its reasonable
best efforts to cause the Holder to become a party to the Company's Amended and
Restated Investor Rights Agreement dated April 10, 2003 (the "XXX") and this
warrant, the Shares and the common stock issuable upon conversion of the Shares
shall be included in the definition of "Registrable Securities" therein. Holder
agrees to be bound by the terms, conditions, and obligations set forth therein,
including the Market Stand-Off provisions contained therein.
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ARTICLE 4. MISCELLANEOUS.
4.1 Term; Notice of Expiration. This warrant is exercisable in whole or in
part, at any time and from time to time on or before the Expiration Date set
forth above; provided, however, that if the Company completes its initial public
offering within the one-year period immediately prior to the Expiration Date,
the Expiration Date shall automatically be extended until the first anniversary
of the effective date of the Company's initial public offering. If this warrant
has not been exercised prior to the Expiration Date, this warrant shall be
deemed to have been automatically exercised on the Expiration Date by "cashless"
conversion pursuant to Section 1.2.
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 issuable upon exercise of this warrant (and the securities issuable,
directly or indirectly, upon conversion of the Shares, if any) shall be subject
to such restrictions on transfer as are set forth in the XXX and applicable to
"Registrable Securities" (as defined therein).
4.4 Transfer Procedure. Subject to the provisions of Section 4.3, 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) 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);
provided, however, that Holder may transfer all or part of this warrant to its
affiliates, including, without limitation, Comerica Incorporated, at any time
without notice to the Company, and such affiliate shall then be entitled to all
the rights of Holder under this warrant and any related agreements, and the
Company shall cooperate fully in ensuring that any stock issued upon exercise of
this warrant is issued in the name of the affiliate that exercises the warrant.
The terms and conditions of this warrant shall inure to the benefit of, and be
binding upon, the Company and the holders hereof and their respective permitted
successors and assigns. Unless the Company is filing financial information with
the SEC pursuant to the Securities Exchange Act of 1934, the Company shall have
the right to refuse to transfer any portion of this warrant to any person who
directly competes with the Company.
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 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. All notices to the Holder shall be addressed as follows:
COMERICA BANK
Attn: Warrant Administrator
Technology and Life Sciences Division
X.X. Xxx 0000
Xxx Xxxxxxxxx, XX 00000-0000
with a copy to
COMERICA BANK
Attn: Warrant Administrator
Technology and Life Sciences Division
0 Xxxx Xxxx Xxxxxx, Xxxxx 000
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0000 Xx Xxxxxx Xxxx
Xxxx Xxxx, XX 00000
4.6 Amendments. 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 State of California, without giving effect to
its principles regarding conflicts of law.
EYEONICS, INC.
By: /s/ J. Xxxx Xxxxxx
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Name: J. Xxxx Xxxxxx
Title: CEO
By: /s/ Xxxxxx X. Xxxxx
------------------------------------
Name: Xxxxxx X. Xxxxx
Title: CFO
Authorized signatories under Corporate Resolutions to Borrow or an authorized
signer(s) under a resolution covering warrants must sign the warrant.
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APPENDIX 1
NOTICE OF EXERCISE
1. The undersigned hereby elects to purchase _______________ shares of the
________________ stock of EYEONICS, INC. pursuant to the terms of the attached
warrant, and tenders herewith payment of the purchase price of such shares in
full.
1. The undersigned hereby elects to convert the attached warrant into
shares in the manner specified in the warrant. This conversion is exercised with
respect to ___________ of the shares covered by the warrant.
(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:
COMERICA BANK
Attn: Warrant Administrator
Technology and Life Sciences Division
X.X. Xxx 0000
Xxx Xxxxxxxxx, XX 00000-0000
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.
COMERICA BANK or Registered Assignee
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(Signature)
-------------------------------------
(Date)
EXHIBIT A
Anti-Dilution Provisions
In the event of the issuance (a "Diluting Issuance") by the Company, after
the Issue Date of the warrant, of securities at a price per share less than the
Warrant Price, then the number of shares of common stock issuable upon
conversion of the Shares shall be adjusted in accordance with those provisions
of the Company's Amended and Restated Certificate of Incorporation which apply
to Diluting Issuances.
Under no circumstances shall the aggregate Warrant Price payable by the
Holder upon exercise of the warrant increase as a result of any adjustment
arising from a Diluting Issuance.
