exv4w7






Exhibit 4.7



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:

	 	ZONARE MEDICAL SYSTEMS, INC., a Delaware corporation
	 
	 	 
	Number of Shares:

	 	81,024
	 
	 	 
	Class of Stock:

	 	Series E Preferred (subject to Section 1.7)
	 
	 	 
	Initial Exercise Price:

	 	$0.92565 per share (subject to Section 1.7)
	 
	 	 
	Issue Date:

	 	September 20, 2004
	 
	 	 
	Expiration Date:

	 	The earlier of (i) seven (7) years after the Issue Date
or (ii) three (3)
years after the closing of the Company’s initial public
offering (“IPO”)
of its Common Stock effected pursuant to a Registration
Statement on
Form S-1 (or its successor) filed under the Securities
Act of 1933, as
amended (the “Act”).






     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 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.



     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.



     1.4 Delivery of Certificate and New Warrant. Promptly after Holder properly
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 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.




          1.6.2 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. The
Company
shall use reasonable efforts to cause the surviving corporation to assume the obligations of
this warrant.




          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 Holder shall have the option either to (a) deem this warrant 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; or (b) require the Company to
purchase this
warrant for cash upon the closing of the Acquisition for an amount per Share equal to three
(3) times the
Warrant Price.




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 Amended and Restated Certificate of Incorporation
upon
the closing of an IPO. 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,



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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 Warrant Price and the number of Shares
issuable upon exercise of this warrant 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 Amended and Restated
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 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. Notwithstanding the foregoing, the Company may amend or modify its Amended and
Restated Certificate of Incorporation or take any other action (including any of the
transactions described
in this Article 2) at any time and for any reason so long as such amendment, modification or
action affects
Holder in the same manner as such amendment, modification or action affects all of the
Company’s
stockholders holding the same series or class of shares that would be issued to the Holder
upon proper
exercise of this Warrant as of the date of such amendment, modification or action.



     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 an officer
certificate
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 imposed by Holder.




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




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     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
20 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 20 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. 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 stockholder
consents
sent to stockholders of the Company.



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. 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) may not be transferred or assigned in whole or in part without compliance with
applicable federal
and state securities laws by the transferor and the transferee (including, without limitation,
the delivery of
investment representation letters and legal opinions reasonably satisfactory to the Company).
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
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



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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 or entity 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

500 Woodward Ave., 32nd Floor

MC 3379

Detroit, MI 48226




     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 Lock-up. Each Holder and transferee hereby agrees that, in connection with the
Company’s IPO, if so requested by any representative of the underwriters (the “Managing
Underwriter”),
such Holder or transferee shall not sell or otherwise transfer any securities of the Company
during the
period specified by the Company’s Board of Directors at the request of the Managing
Underwriter (the
“Market Standoff Period”), with such period not to exceed 180 days following the effective
date of the
IPO; provided, that all of the Company’s officers and directors, and all holders of 1% or more
of the
equity or voting power of the Company, enter into similar agreements. The Company may impose
stop-transfer instructions with respect to securities subject to the foregoing restrictions until
the end of such
Market Standoff Period.



     4.9 Accredited Investor Status. The Holder represents to the Company that it
is an
“accredited investor” within the meaning of Regulation D promulgated under the Act.



     4.10 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.



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	 	 	ZONARE MEDICAL SYSTEMS, INC.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:

Name:
	 	/s/ Kevin Davidge
 

KEVIN DAVIDGE
	 	 
	 

	 	Title:
	 	V.P. & CFO	 	 






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APPENDIX 1




NOTICE OF EXERCISE




     1. The
undersigned hereby elects to purchase                     shares of the
                     stock of ZONARE MEDICAL SYSTEMS, 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

500 Woodward Ave., 32nd Floor

MC 3379

Detroit, MI 48226




     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




	 	 	 
	 

(Signature)

	 	 
	 
	 	 
	 
	 	 	 	 	 	 
	 

(Date)

	 	 






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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, if at all, in
accordance with those provisions (the “Provisions”) of the Company’s Amended and Restated
Certificate of Incorporation, as amended, 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.




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