Exhibit 10.12

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 EXCEPT IN ACCORDANCE WITH APPLICABLE LAW.

WARRANT TO PURCHASE STOCK

 

 

 

Corporation:

  

Tobira Therapeutics, Inc.

 

 

Number of Shares:

  

218,539

 

 

Class of Stock:

  

Series B Preferred Stock (the “Series B Preferred”)

 

 

Initial Exercise Price:

  

$0.5491 per share

 

 

Issue Date:

  

November 9, 2011

 

 

Expiration Date:

  

November 9, 2018

THIS WARRANT CERTIFIES THAT , for good and valuable consideration, the receipt
of which is hereby acknowledged, SQUARE 1 BANK or its assignee (“Holde”) 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 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 1.3. Upon the conversion of this warrant in whole
at such time when the aggregate fair market value of the Shares or other
securities otherwise issuable upon exercise of this warrant is less than the
aggregate Warrant Price of such Shares, this Warrant shall be deemed canceled in
full.

1.3 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.

 

 

 

 

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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. On receipt of evidence reasonably satisfactory to
the Company of the loss, theft, destruction or mutilation of this warrant and,
in the case of loss, theft or destruction, on delivery of an indemnity agreement
reasonably satisfactory in form and amount to the Company or, in the case of
mutilation, on surrender and cancellation of this warrant, the Company at its
expense shall execute and deliver, in lieu of this warrant, a new warrant of
like tenor.

1.6 Repurchase on Sale, Merger, or Consolidation of the Company.

1.6.1 “Acquisition.” For the purpose of this warrant, “Acquisition” means
(a) any sale, exclusive license, or other disposition of all or substantially
all of the assets (including intellectual property) of the Company, or (b) any
reorganization, consolidation, merger or sale of the voting securities of the
Company or any other transaction 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; provided that one or
more sales of the Company’s securities in connection with a bona fide equity
financing for capital raising purposes in which the Company is the surviving
corporation shall not be deemed an Acquisition.

1.6.2 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.

1.6.3 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, or 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.

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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. 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. In the event of an anti-dilution
adjustment to the Conversion Price (as defined in the Company’s Certificate of
Incorporation, as amended (the “Certificate of Incorporation”)) of the Series B
Preferred pursuant to the applicable provisions of the Certificate of
Incorporation, the Shares held by the Holder shall be entitled to a similar
adjustment in accordance with such applicable provisions.

2.5 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 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.

2.6 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) The initial Warrant Price referenced on the first page of this warrant is
equal to the price paid per share in the Company’s most recent equity financing.

(b) 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.

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(c) The Company’s capitalization table attached to this warrant is true and
complete as of the Issue Date.

3.2 Notice of Certain Events. The Company shall provide Holder with not less
than 10 days prior written notice, including a description of the material facts
surrounding, any of the following events: (a) declaration of 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) offering 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) effecting
any reclassification or recapitalization of common stock; or (d) the merger or
consolidation with or into any other corporation, or sale, lease, license, or
conveyance of all or substantially all of its assets, or liquidation,
dissolution or winding up.

3.3 Information Rights. So long as the Holder holds this warrant and/or any of
the Shares, the Company shall deliver to the Holder (a) promptly after mailing,
copies of all communiques to the shareholders of the Company, (b) within one
hundred eighty (180) 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 forty-five (45) days
after the end of each of the first three quarters of each fiscal year, the
Company’s quarterly, unaudited financial statements, in the form delivered by
the Company to its investors.

3.4 Confidentiality. In handling any confidential information, Holder and all
employees and agents of Holder shall use such information only for purposes
related to Holder’s status as a holder of equity in the Company, not disclose
such information to any third party except as permitted hereby and exercise the
same degree of care that Holder exercises with respect to its own proprietary
information of the same types (but no less than reasonable care) to maintain the
confidentiality of any non-public information thereby received or received
pursuant to Section 3.3 above except that disclosure of such information may be
made (i) to the subsidiaries or affiliates of Holder in connection Holder’s
status as a holder of equity in the Company, (ii) as required by law,
regulations, rule or order, subpoena, judicial order or similar order, (iii) as
may be required in connection with the examination, audit or similar
investigation of Holder and (v) as Holder may determine in connection with the
enforcement of any remedies hereunder. Confidential information hereunder shall
not include information that either: (a) is in the public domain or in the
knowledge or possession of Holder when disclosed to Holder, or becomes part of
the public domain after disclosure to Holder through no fault of Holder; or
(b) is disclosed to Holder on a non-confidential basis by a third party,
provided Holder does not have actual knowledge that such third party is
prohibited from disclosing such information.

3.5 Registration Under Securities Act of 1933, as amended. The Company agrees
that the Shares or, if the Shares are convertible into common stock of the
Company, such common stock, shall be “Registrable Securities”, and Holder shall
be a “Holder” under the Amended and Restated Investors’ Rights Agreement among
the Company and other persons dated as of August 24, 2010, as amended.

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ARTICLE 4

MISCELLANEOUS

4.1 Term: Exercise Upon 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 (the “IPO”) within the three-year period immediately prior to the
Expiration Date, the Expiration Date shall automatically be extended until the
third anniversary of the effective date of the Company’s IPO. 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, if any, 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 EXCEPT IN
ACCORDANCE WITH APPLICABLE LAW.

4.3 Compliance with Securities Laws on Transfer. This warrant and the Shares
issuable upon exercise of this warrant (and the securities, if any, 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. The
Company shall not require Holder to provide an opinion of counsel if the
transfer is to an affiliate of Holder or 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.

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, if any, 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). No
surrender or reissuance shall be required if the transfer is to an affiliate of
Holder.

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:

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Square 1 Bank

Attn: Warrant Administrator

406 Blackwell Street, Suite 240

Crowe Building

Durham, NC 27701

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 Market Stand-Off Agreement. Holder hereby agrees that in connection with the
IPO of the Company’s securities (other than a registration of securities in a
Rule 145 transaction or with respect to an employee benefit plan) that, upon
request of the Company or the underwriters managing any underwritten offering of
the Company’s securities, not to sell, make any short sale of, loan, grant any
option for the purchase of, pledge, hypothecate, limit such Holder’s market risk
regarding or otherwise directly or indirectly dispose of any shares of the
Company’s capital stock acquired through the exercise or conversion of this
Warrant (other than those included in the registration) or other capital stock
of the Company or securities exchangeable or convertible into capital stock of
the Company without the prior written consent of the Company or such
underwriters, as the case may be, for such period of time (not to exceed one
hundred eighty (180) days from the date of the final prospectus used in such
registration) as may be requested by the Company or such managing underwriters,
and to enter into a lock-up agreement in customary form with such underwriters
providing for restrictions approved by the Board of Directors of the Company,
provided that all officers and directors of the Company and holders of at least
one percent (1%) of the Company’s outstanding voting securities are bound by and
have entered into similar agreements. The underwriters in connection with the
IPO are intended third party beneficiaries of this Section and shall have the
right, power and authority to enforce the provisions hereof as though they were
a party hereto. Holder further agrees to execute such agreements as may be
reasonably requested by the underwriters in the Company’s IPO that are
consistent with this Section 4.8 or that are necessary to give further effect
thereto. The certificates for any such securities of the Company held by Holder
shall contain, for so long as such market stand-off provision remains in place,
a legend in substantially the following form:

“THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO CERTAIN RESTRICTIONS
ON TRANSFER INCLUDING A MARKET STAND-OFF AGREEMENT BETWEEN THE COMPANY AND THE
ORIGINAL STOCKHOLDER THAT PROHIBITS SALE OR TRANSFER OF SUCH SHARES FOR A PERIOD
OF UP TO 180 DAYS FOLLOWING THE DATE OF THE FINAL PROSPECTUS FOR THE INITIAL
PUBLIC OFFERING OF THE ISSUER’S COMMON STOCK. THIS AGREEMENT IS BINDING UPON
TRANSFEREES. A COPY OF THE AGREEMENT IS ON FILE WITH THE SECRETARY OF THE
ISSUER.”

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In order to enforce the foregoing covenant, the Company may impose stop transfer
instructions with respect to the securities held by Holder (and the shares or
securities of every other person subject to the foregoing restriction) until the
end of such period. Notwithstanding the foregoing, if (i) during the last
seventeen (17) days of the one hundred eighty (180)-day restricted period, the
Company issues an earnings release or material news or a material event relating
to the Company occurs; or (ii) prior to the expiration of the one hundred eighty
(180)-day restricted period, the Company announces that it will release earnings
results during the sixteen (16)-day period beginning on the last day of the one
hundred eighty (180)-day period, the restrictions imposed by this Section 4.8
shall continue to apply until the expiration of the eighteen (18)-day period
beginning on the issuance of the earnings release or the occurrence of the
material news or material event.

4.9 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.

[Signature Page Follows]

 

 

 

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IN WITNESS WHEREOF, the undersigned has executed this Warrant to Purchase Stock
as of the date set forth above.

 

TOBIRA THERAPEUTICS, INC.

 

 

By:

 

/s/ Andrew Hindman

Name:

 

Andrew Hindman

Title:

 

President & CEO

[Signature Page to Warrant to Purchase Stock]

 

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APPENDIX 1

NOTICE OF EXERCISE

1. The undersigned hereby elects to purchase             shares of the
            stock of TOBIRA THERAPEUTICS , I NC . 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:

Square 1 Bank

Attn: Warrant Administrator

406 Blackwell Street, Suite 240

Fowler Building

Durham, NC 27701

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.

 

SQUARE 1 BANK or Registered Assignee

 

 

 

 

 

 

 

(Signature)

 

 

 

 

 

 

 

(Date)