exv4w5



 






EXHIBIT 4.5



THE SECURITIES EVIDENCED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED OR ANY STATE SECURITIES LAWS. NO SALE OR DISPOSITION MAY BE EFFECTED WITHOUT (i) EFFECTIVE
REGISTRATION STATEMENTS RELATED THERETO, (ii) AN OPINION OF COUNSEL OR OTHER EVIDENCE, REASONABLY
SATISFACTORY TO THE COMPANY, THAT SUCH REGISTRATIONS ARE NOT REQUIRED, (iii) RECEIPT OF NO-ACTION
LETTERS FROM THE APPROPRIATE GOVERNMENTAL AUTHORITIES, OR (iv) OTHERWISE COMPLYING WITH THE
PROVISIONS OF SECTION 7 OF THE WARRANT UNDER WHICH THESE SECURITIES WERE ISSUED, DIRECTLY OR
INDIRECTLY.




STRUCTURAL GENOMIX, INC.



WARRANT TO PURCHASE SHARES

OF PREFERRED STOCK



     THIS CERTIFIES THAT, for value received, SILICON VALLEY BANK and its assignees are entitled to
subscribe for and purchase that number of the fully paid and nonassessable shares of Series
Preferred (as defined below and as adjusted pursuant to Section 4 hereof, the
“Shares”) of STRUCTURAL GENOMIX, INC., a Delaware corporation (the “Company”), as
is determined pursuant to the next paragraph hereof at the price per share as is determined
pursuant to the next paragraph hereof (such price and such other price as shall result, from time
to time, from the adjustments specified in Section 4 hereof is herein referred to as the
“Warrant Price”), subject to the provisions and upon the terms and conditions hereinafter
set forth. As used herein, (a) the term “Series Preferred” shall mean: (x) the Company’s
presently authorized Series C Preferred Stock, or (y) in the event that immediately following a
Qualified Financing (as defined below) the initial Warrant Price is less than $8.45 (as equitably
adjusted for any stock split, recapitalization or the like affecting the Company’s presently
authorized Series C Preferred Stock), the same series of convertible preferred stock as sold by the
Company in its next Qualified Financing, and, in either case, any stock into or for which such
stock may hereafter be converted or exchanged, and (z) after the automatic conversion of the series
preferred stock issuable hereunder to common stock, the Company’s Common Stock; (b) the term
“Date of Grant” shall mean July 15, 2002; and (c) the term “Other Warrants” shall
mean any other warrants issued by the Company in connection with the transaction with respect to
which this Warrant was issued, and any warrant issued upon transfer or partial exercise of or in
lieu of this Warrant. The term “Warrant” as used herein shall be deemed to include Other
Warrants unless the context clearly requires otherwise.



     The Warrant Price shall be the lower of (a) $8.45 (as equitably adjusted for any stock split,
recapitalization or the like affecting the Company’s presently authorized Series C Preferred Stock)
and (b) the lowest effective price per share (on a common stock equivalent basis and taking into
account any securities issued together with the preferred stock) at which shares of the Company’s
convertible preferred stock are sold in a Qualified Financing; provided that if a
Qualified Financing has not closed prior to the exercise of this Warrant, then the Warrant Price
shall be the price determined pursuant to the preceding clause (a). A “Qualified
Financing” shall mean the sale of the convertible preferred stock (anticipated to be Series E
Preferred Stock) of the Company to purchasers which include venture capital investors in an
aggregate cash amount not less than $15,000,000. The number of shares for which this Warrant is
exercisable shall be
the nearest whole number determined by dividing $150,000 by the Warrant Price determined
pursuant to this paragraph.



 









 





     1. Term. The purchase right represented by this Warrant is exercisable, in whole or
in part, at any time and from time to time from the Date of Grant through the later of (i) ten (10)
years after the Date of Grant or (ii) five (5) years after the closing of the Company’s initial
public offering of its Common Stock (“IPO”) effected pursuant to a Registration Statement
on Form S-1 (or its successor) filed under the Securities Act of 1933, as amended (the
“Act”).



     2. Method of Exercise; Payment; Issuance of New Warrant. Subject to Section 1
hereof, the purchase right represented by this Warrant may be exercised by the holder hereof, in
whole or in part and from time to time, at the election of the holder hereof, by (a) the surrender
of this Warrant (with the notice of exercise substantially in the form attached hereto as
Exhibit A-1 duly completed and executed) at the principal office of the Company and by the
payment to the Company, by certified or bank check, or by wire transfer to an account designated by
the Company (a “Wire Transfer”) of an amount equal to the then applicable Warrant Price
multiplied by the number of Shares then being purchased; (b) if in connection with a registered
public offering (other than the IPO) of the Company’s securities in which securities of selling
stockholders (other than the Company) are registered, the surrender of this Warrant (with the
notice of exercise form attached hereto as Exhibit A-2 duly completed and executed) at the
principal office of the Company together with notice of arrangements reasonably satisfactory to the
Company for payment to the Company either by certified or bank check or by Wire Transfer from the
proceeds of the sale of shares to be sold by the holder in such public offering of an amount equal
to the then applicable Warrant Price per share multiplied by the number of Shares then being
purchased; or (c) exercise of the “net issuance” right provided for in Section 10.2 hereof.
The person or persons in whose name(s) any certificate(s) representing shares of Series Preferred
shall be issuable upon exercise of this Warrant shall be deemed to have become the holder(s) of
record of, and shall be treated for all purposes as the record holder(s) of, the Shares represented
thereby (and such Shares shall be deemed to have been issued) immediately prior to the close of
business on the date or dates upon which this Warrant is exercised. In the event of any exercise
of the rights represented by this Warrant, certificates for the Shares of stock so purchased shall
be delivered to the holder hereof as soon as possible and in any event within thirty (30) days
after such exercise and, unless this Warrant has been fully exercised or expired, a new Warrant
representing the portion of the Shares, if any, with respect to which this Warrant shall not then
have been exercised shall also be issued to the holder hereof as soon as possible and in any event
within such thirty-day period; provided that at such time as the Company is subject
to the reporting requirements of the Securities Exchange Act of 1934, as amended, if requested by
the holder of this Warrant, the Company shall cause its transfer agent to deliver the certificate
representing Shares issued upon exercise of this Warrant to a broker or other person (as directed
by the holder exercising this Warrant) within the time period required to settle any trade made by
the holder after exercise of this Warrant.



     3. Stock Fully Paid; Reservation of Shares. All Shares that may be issued upon the
exercise of the rights represented by this Warrant will, upon issuance pursuant to the terms and
conditions herein, be fully paid and nonassessable, and free from all preemptive rights and taxes,
liens and charges with respect to the issue thereof. During the period within which the rights
represented by this Warrant may be exercised, the Company will at all times have authorized,
and reserved for the purpose of the issue upon exercise of the purchase rights evidenced by
this Warrant, a sufficient number of shares of its Series Preferred to provide for the exercise of
the rights represented by this Warrant and a sufficient number of shares of its Common Stock to
provide for the conversion of the Series Preferred into Common Stock.



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     4. Adjustment of Warrant Price and Number of Shares. The number and kind of
securities purchasable upon the exercise of this Warrant and the Warrant Price shall be subject to
adjustment from time to time upon the occurrence of certain events, as follows:



          (a) Reclassification or Merger. In case of any reclassification or change of
securities of the class issuable upon exercise of this Warrant (other than a change in par value,
or from par value to no par value, or from no par value to par value, or as a result of a
subdivision or combination), or in case of any merger of the Company with or into another
corporation (other than a merger with another corporation in which the Company is the acquiring and
the surviving corporation and which does not result in any reclassification or change of
outstanding securities issuable upon exercise of this Warrant), or in case of any sale of all or
substantially all of the assets of the Company, the Company, or such successor or purchasing
corporation, as the case may be, shall duly execute and deliver to the holder of this Warrant a new
Warrant (in form and substance satisfactory to the holder of this Warrant), or the Company shall
make appropriate provision without the issuance of a new Warrant, so that the holder of this
Warrant shall have the right to receive upon exercise of this Warrant, at a total purchase price
not to exceed that payable upon the exercise of the unexercised portion of this Warrant, and in
lieu of the shares of Series Preferred theretofore issuable upon exercise of this Warrant, the kind
and amount of shares of stock, other securities, assets and property receivable upon such
reclassification, change, merger or sale by a holder of the number of shares of Series Preferred
then purchasable under this Warrant. Any new Warrant shall provide for adjustments that shall be
as nearly equivalent as may be practicable to the adjustments provided for in this Section
4. The provisions of this Section 4(a) shall similarly apply to successive
reclassifications, changes, mergers and sales.



          (b) Subdivision or Combination of Shares. If the Company at any time while this
Warrant remains outstanding and unexpired shall subdivide or combine its outstanding shares of
Series Preferred, the Warrant Price shall be proportionately decreased and the number of Shares
issuable hereunder shall be proportionately increased in the case of a subdivision and the Warrant
Price shall be proportionately increased and the number of Shares issuable hereunder shall be
proportionately decreased in the case of a combination; provided that the holder of
this Warrant shall not be entitled to any adjustment pursuant to this Section 4(b) that
would duplicate the effect of any adjustments effecting the Series Preferred made pursuant to the
Charter (as defined below).



          (c) Stock Dividends and Other Distributions. If the Company at any time while this
Warrant is outstanding and unexpired shall (x) pay a dividend with respect to Series Preferred
payable in Series Preferred, then the Warrant Price shall be adjusted, from and after the date of
determination of stockholders entitled to receive such dividend or distribution, to that price
determined by multiplying the Warrant Price in effect immediately prior to such date of
determination by a fraction (A) the numerator of which shall be the total number of shares of
Series Preferred outstanding immediately prior to such dividend or distribution, and (B) the
denominator of which shall be the total number of shares of Series Preferred outstanding



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immediately after such dividend or distribution; or (y) make any other distribution not
covered under the immediately preceding clause (x) with respect to Series Preferred (except any
distribution specifically provided for in Sections 4(a) and 4(b)), then, in each such case,
provision shall be made by the Company such that the holder of this Warrant shall receive upon
exercise of this Warrant a proportionate share of any such dividend or distribution as though it
were the holder of the Series Preferred (or Common Stock issuable upon conversion thereof) as of
the record date fixed for the determination of the stockholders of the Company entitled to receive
such dividend or distribution; provided that the holder of this Warrant shall not
be entitled to any adjustment pursuant to this Section 4(c) that would duplicate the effect
of any adjustments effecting the Series Preferred made pursuant to the Charter.



          (d) Adjustment of Number of Shares. Upon each adjustment in the Warrant Price
pursuant to this Section 4, the number of Shares of Series Preferred purchasable hereunder
shall be adjusted, to the nearest whole share, to the product obtained by multiplying the number of
Shares purchasable immediately prior to such adjustment in the Warrant Price by a fraction, the
numerator of which shall be the Warrant Price immediately prior to such adjustment and the
denominator of which shall be the Warrant Price immediately thereafter.



          (e) Antidilution Rights. The other antidilution rights applicable to the Shares of
Series Preferred purchasable hereunder are set forth in the Company’s Certificate of Incorporation,
as amended through the Date of Grant, a true and complete copy of which is attached hereto as
Exhibit B (the “Charter”). The Company shall promptly provide the holder hereof
with any restatement, amendment, modification or waiver of the Charter promptly after the same has
been made.



     5. Notice of Adjustments. Whenever the Warrant Price or the number of Shares
purchasable hereunder shall be adjusted pursuant to Section 4 hereof, the Company shall
make a certificate signed by its Chief Financial Officer or Vice President of Finance setting
forth, in reasonable detail, the event requiring the adjustment, the amount of the adjustment, the
method by which such adjustment was calculated, and the Warrant Price and the number of Shares
purchasable hereunder after giving effect to such adjustment, and shall cause copies of such
certificate to be mailed (without regard to Section 13 hereof, by first class mail, postage
prepaid) to the holder of this Warrant. In addition, whenever the conversion price or conversion
ratio of the Series Preferred shall be adjusted, the Company shall make a certificate signed by its
Chief Financial Officer or Vice President of Finance setting forth, in reasonable detail, the event
requiring the adjustment, the amount of the adjustment, the method by which such adjustment was
calculated, and the conversion price or ratio of the Series Preferred after giving effect to such
adjustment, and shall cause copies of such certificate to be mailed (without regard to Section
13 hereof, by first class mail, postage prepaid) to the holder of this Warrant. Whenever the
Warrant Price or the number of Shares purchasable hereunder shall be adjusted pursuant to the
occurrence of a Qualified Financing, the Company shall make a certificate signed by its Chief
Financial Officer or Vice President of Finance setting forth, in reasonable detail, the event
requiring the adjustment, the amount of the adjustment, the method by which such adjustment was
calculated, and the Warrant Price and the number of Shares purchasable hereunder after giving
effect to such adjustment, and shall cause copies of such certificate to be mailed (without regard
to Section 13 hereof, by first class mail, postage prepaid) to the holder of this Warrant.



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     6. Fractional Shares. No fractional shares of Series Preferred will be issued in
connection with any exercise hereunder, but in lieu of such fractional shares the Company shall
make a cash payment therefor based on the fair market value of the Series Preferred on the date of
exercise as reasonably determined in good faith by the Company’s Board of Directors.



     7. Compliance with Act; Disposition of Warrant or Shares of Series Preferred.



          (a) Compliance with Act. The holder of this Warrant, by acceptance hereof, agrees
that this Warrant, and the shares of Series Preferred to be issued upon exercise hereof and any
Common Stock issued upon conversion thereof are being acquired for investment and that such holder
will not offer, sell or otherwise dispose of this Warrant, or any shares of Series Preferred to be
issued upon exercise hereof or any Common Stock issued upon conversion thereof except under
circumstances which will not result in a violation of the Act or any applicable state securities
laws. Upon exercise of this Warrant, unless the Shares being acquired are registered under the Act
and any applicable state securities laws or an exemption from such registration is available, the
holder hereof shall confirm in writing that the shares of Series Preferred so purchased (and any
shares of Common Stock issued upon conversion thereof) are being acquired for investment and not
with a view toward distribution or resale in violation of the Act and shall confirm such other
matters related thereto as may be reasonably requested by the Company. This Warrant and all shares
of Series Preferred issued upon exercise of this Warrant and all shares of Common Stock issued upon
conversion thereof (unless registered under the Act and any applicable state securities laws) shall
be stamped or imprinted with a legend in substantially the following form:


“THE SECURITIES EVIDENCED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR ANY STATE SECURITIES LAWS. NO SALE OR DISPOSITION MAY BE EFFECTED WITHOUT (i)
EFFECTIVE REGISTRATION STATEMENTS RELATED THERETO, (ii) AN OPINION OF COUNSEL OR OTHER EVIDENCE,
REASONABLY SATISFACTORY TO THE COMPANY, THAT SUCH REGISTRATIONS ARE NOT REQUIRED, (iii) RECEIPT OF
NO-ACTION LETTERS FROM THE APPROPRIATE GOVERNMENTAL AUTHORITIES, OR (iv) OTHERWISE COMPLYING WITH
THE PROVISIONS OF SECTION 7 OF THE WARRANT UNDER WHICH THESE SECURITIES WERE ISSUED, DIRECTLY OR
INDIRECTLY.”




     Said legend shall be removed by the Company, upon the request of a holder, at such time as the
restrictions on the transfer of the applicable security shall have terminated. In addition, in
connection with the issuance of this Warrant, the holder specifically represents to the Company by
acceptance of this Warrant as follows:



               (1) The holder is aware of the Company’s business affairs and financial condition, and has
acquired information about the Company sufficient to reach an informed and knowledgeable decision
to acquire this Warrant and the shares of Series Preferred issuable upon exercise hereof and any
Common Stock issuable upon conversion thereof. The holder is acquiring this Warrant and the shares
of Series Preferred issuable upon exercise hereof and any Common Stock issuable upon conversion
thereof for its own account for investment purposes only and not with a view to, or for the resale
in connection with, any “distribution” thereof in violation of the Act.



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               (2) The holder understands that this Warrant and the shares of Series Preferred issuable upon
exercise hereof and any Common Stock issuable upon conversion thereof have not been registered
under the Act in reliance upon a specific exemption therefrom, which exemption depends upon, among
other things, the bona fide nature of the holder’s investment intent as expressed herein. The
holder realizes that the basis for the exemption may not be present if, notwithstanding its
representations, the holder has a present intention of acquiring the securities for a fixed or
determinable period in the future, selling (in connection with a distribution or otherwise),
granting any participation in, or otherwise distributing the securities. The holder has no such
present intention, other than potential transfers between affiliates



               (3) The holder further understands that this Warrant and the shares of Series Preferred
issuable upon exercise hereof and any Common Stock issuable upon conversion thereof must be held
indefinitely unless subsequently registered under the Act and qualified under any applicable state
securities laws, or unless exemptions from registration and qualification are otherwise available.
The holder is aware of the provisions of Rule 144, promulgated under the Act. The holder is
further aware that certain conditions for resale set forth in Rule 144 have not been satisfied and
that the Company presently has no plans to satisfy these conditions in the foreseeable future.



               (4) The holder is an “accredited investor” as such term is defined in Rule 501 of Regulation D
promulgated under the Act.



          (b) Disposition of Warrant or Shares. With respect to any offer, sale or other
disposition of this Warrant or any shares of Series Preferred acquired pursuant to the exercise of
this Warrant or Common Stock issued upon conversion thereof prior to registration of such Warrant
or shares, the holder hereof agrees to give written notice to the Company prior thereto, describing
briefly the manner thereof, together with a written opinion of such holder’s counsel, or other
evidence, if reasonably satisfactory to the Company, to the effect that such offer, sale or other
disposition may be effected without registration or qualification (under the Act as then in effect
or any federal or state securities law then in effect) of this Warrant or such shares of Series
Preferred or Common Stock and indicating whether or not under the Act certificates for this Warrant
or such shares of Series Preferred or Common Stock to be sold or otherwise disposed of require any
restrictive legend as to applicable restrictions on transferability in order to ensure compliance
with such law. Upon receiving such written notice and reasonably satisfactory opinion or other
evidence, the Company, as promptly as practicable but no later than fifteen (15) days after receipt
of the written notice, shall notify such holder that such holder may sell or otherwise dispose of
this Warrant or such shares of Series Preferred or Common Stock, all in accordance with the terms
of the notice delivered to the Company. If a determination has been made pursuant to this
Section 7(b) that the opinion of counsel for the holder or other evidence is not reasonably
satisfactory to the Company, the Company shall so notify the holder promptly with details thereof
after such determination has been made. Notwithstanding the foregoing, this Warrant or such shares
of Series Preferred or Common Stock may, as to such federal laws, be offered, sold or otherwise
disposed of in accordance with Rule 144 or 144A under the Act; provided that the
Company shall have been furnished with such information as the Company may reasonably request to
provide a reasonable assurance that the provisions of Rule 144 or 144A have been satisfied. Each
certificate representing this Warrant or the shares of Series



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Preferred or Common Stock thus transferred (except a transfer pursuant to Rule 144 or 144A)
shall bear a legend as to the applicable restrictions on transferability in order to ensure
compliance with such laws, unless in the aforesaid opinion of counsel for the holder, such legend
is not required in order to ensure compliance with such laws. The Company may issue stop transfer
instructions to its transfer agent in connection with such restrictions. Notwithstanding the
foregoing, the holder (including any transferee of the original holder) shall not transfer this
Warrant or shares of Series Preferred or Common Stock to any competitor of the Company, as
determined in good faith by the Company’s Board of Directors.



          (c) Applicability of Restrictions. Neither any restrictions of any legend described
in this Warrant nor the requirements of Section 7(b) above shall apply to any transfer of,
or grant of a security interest in, this Warrant (or the Series Preferred or Common Stock
obtainable upon exercise thereof) or any part hereof (i) to a partner of the holder if the holder
is a partnership or to a member of the holder if the holder is a limited liability company, or (ii)
to Silicon Valley Bancshares (holder’s parent company) or any affiliate of the holder if the holder
is a corporation or bank; provided that in any such transfer, (x) the transferee
shall agree in writing to be bound by the terms of this Warrant as if an original holder hereof,
and (z) other than the transfer to Silicon Valley Bancshares the transferor shall give the Company
prior written notice thereof in reasonable detail, including the name of the transferee and the
extent of the rights and/or number of shares to be transferred. Subject to the provisions of this
Section 7(c), upon receipt by holder of the executed Warrant, holder will transfer all or
part of this Warrant or the Shares issuable upon exercise of this Warrant (or the securities
issuable, directly or indirectly, upon conversion of the Shares, if any) to Silicon Valley
Bancshares, holder’s parent company. Subject to the provisions of this Section 7(c) and
upon providing Company with written notice and the transferee providing the Company with
transferee’s agreement to be bound by the terms of this Warrant, holder or Silicon Valley
Bancshares may transfer all or part of this Warrant or the Shares issuable upon exercise of this
Warrant (or the securities issuable, directly or indirectly, upon conversion of the Shares, if any)
to The Silicon Valley Bank Foundation.



     8. Rights as Stockholders; Information. No holder of this Warrant, as such, shall be
entitled to vote or receive dividends or be deemed the holder of Series Preferred or any other
securities of the Company which may at any time be issuable upon the exercise hereof for any
purpose, nor shall anything contained herein be construed to confer upon the holder of this
Warrant, as such, any of the rights of a stockholder of the Company or any right to vote for the
election of directors or upon any matter submitted to stockholders at any meeting thereof, or to
receive notice of meetings, or to receive dividends or subscription rights or otherwise until this
Warrant shall have been exercised and the Shares purchasable upon the exercise hereof shall have
become deliverable, as provided herein. Notwithstanding the foregoing, the Company will transmit
to the holder of this Warrant such information, documents and reports as are generally distributed
to the holders of any class or series of the securities of the Company concurrently with the
distribution thereof to the stockholders.



     9. Registration Rights; Market Stand-Off Agreement.



          (a) Registration Rights. The Company shall promptly, and in any event within one (1)
year from the Date of Grant and prior to the closing of the IPO, use its best efforts to amend that
certain Restated Investor Rights Agreement dated as of September 12, 2000 by and



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among the Company and the investors party thereto (the “Rights Agreement”) so as to
include the holder of this Warrant as an “Investor” thereunder and to treat the Series Preferred as
“Shares” thereunder, in each case solely for purposes of Section 2 of the Rights Agreement, with
the following exceptions and clarifications:



               (1) The holder will have not have the right to demand registration, but can otherwise
participate in any registration demanded by others.



               (2) The Company will use its best efforts to amend the Rights Agreement so that the
registration rights granted hereunder are freely assignable by the holder of this Warrant in
connection with a permitted transfer of this Warrant or the Shares.



               (3) If and when the holder of this Warrant becomes a party to the Rights Agreement as herein
provided, the terms of the Rights Agreement shall supercede and replace all corresponding terms of
this Warrant relating to the registration of the Shares and any market stand-off or lock-up
agreements.



               (4) From and after the Date of Grant, the holder of this Warrant shall be entitled to receive
copies of all notices required pursuant to the terms of the Rights Agreement to be given by the
Company to all holders of “Registrable Securities” and, for purposes of such notices, the holder
hereof shall be treated as if the holder were a holder of “Registrable Securities” as of the Date
of Grant.



          (b) Market Stand-Off Agreement. In connection with the IPO and upon request of the
Company or the underwriters managing such offering of the Company’s securities, the holder of this
Warrant agrees not sell, dispose of, transfer, make any short sale of, grant any option for the
purchase of, or enter into any hedging or similar transaction with the same economic effect as a
sale, any Common Stock (or other securities) of the Company held by such holder, for a period of
time specified by the managing underwriter(s) (not to exceed one hundred eighty (180) days)
following the effective date of a registration statement relating to the IPO; provided
that all other persons selling shares of Common Stock in such offering and all executive
officers, directors and one percent (1%) shareholders of the Company shall also have agreed not to
sell publicly their Common Stock under the circumstances and pursuant to the terms set forth in
this Section 9(b). Holder agrees to execute and deliver such other agreements as may be
reasonably requested by the Company and/or the managing underwriter(s) which are consistent with
the foregoing or which are necessary to give further effect thereto. In order to enforce the
foregoing covenant, the Company may impose stop-transfer instructions with respect to such Common
Stock (or other securities) until the end of such period.



          (c) Holder’s Acceptance. The holder of this Warrant agrees, by its acceptance hereof
and effective upon the amendment of the Rights Agreement as contemplated pursuant to Section
9(a) above, to become a party to the Rights Agreement and be bound by the provisions thereof
with respect to those matters addressed in Section 2 and Section 5 (exclusive of Section 5.4)
thereof.



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     10. Additional Rights.



     10.1 Acquisition Transactions. The Company shall provide the holder of this Warrant
with at least twenty (20) days’ written notice prior to closing thereof of the terms and conditions
of any of the following transactions (to the extent the Company has notice thereof): (i) the sale,
lease, exchange, conveyance or other disposition of all or substantially all of the Company’s
property or business, or (ii) its merger into or consolidation with any other corporation (other
than a whollyowned subsidiary of the Company), or any transaction (including a merger or other
reorganization) or series of related transactions, in which more than fifty percent (50%) of the
voting power of the Company is disposed of; provided that following the IPO, the
Company’s obligations under this Section 10.1 shall be deemed replaced with a requirement
to give the holder of this Warrant such advanced notice as the Company is required by law to give
to its stockholders prior to any transaction of the nature described in the preceding clauses (i)
or (ii) of this Section 10.1.



     10.2 Right to Convert Warrant into Stock: Net Issuance.



          (a) Right to Convert. In addition to and without limiting the rights of the holder
under the terms of this Warrant, the holder shall have the right to convert this Warrant or any
portion thereof (the “Conversion Right”) into shares of Series Preferred as provided in
this Section 10.2 at any time or from time to time during the term of this Warrant. Upon
exercise of the Conversion Right with respect to a specified number of shares subject to this
Warrant (the “Converted Warrant Shares”), the Company shall deliver to the holder (without
payment by the holder of any exercise price or any cash or other consideration) that number of
shares of fully paid and nonassessable Series Preferred as is determined according to the following
formula:



	 	 	 	 	 	 	 
	X

	 	=
	 	B – A
	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	Y	 	 






	 	 	 
	Where: X =

	 	the number of shares of Series Preferred that shall be issued to holder
 
	Y =

	 	the fair market value of one share of Series Preferred
 
	A =

	 	the aggregate Warrant Price of the specified number of
Converted Warrant Shares immediately prior to the exercise of the Conversion
Right (i.e., the number of Converted Warrant Shares multiplied by the Warrant
Price)
 
	B =

	 	the aggregate fair market value of the specified number of
Converted Warrant Shares (i.e., the number of Converted Warrant Shares
multiplied by the fair market value of one Converted Warrant Share)






     No fractional shares shall be issuable upon exercise of the Conversion Right, and, if the
number of shares to be issued determined in accordance with the foregoing formula is other than a
whole number, the Company shall pay to the holder an amount in cash equal to the fair market value
of the resulting fractional share on the Conversion Date (as hereinafter defined). For
purposes of Section 10 of this Warrant, shares issued pursuant to the Conversion Right
shall be treated as if they were issued upon the exercise of this Warrant.



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          (b) Method of Exercise. The Conversion Right may be exercised by the holder by the
surrender of this Warrant at the principal office of the Company together with a written statement
(which may be in the form of Exhibit A-1 or Exhibit A-2 hereto) specifying that the
holder thereby intends to exercise the Conversion Right and indicating the number of shares subject
to this Warrant which are being surrendered (referred to in Section 10.2(a) hereof as the
Converted Warrant Shares) in exercise of the Conversion Right. Such conversion shall be effective
upon receipt by the Company of this Warrant together with the aforesaid written statement, or on
such later date as is specified therein (the “Conversion Date”), and, at the election of
the holder hereof, may be made contingent upon the closing of the sale of the Company’s Common
Stock to the public in a public offering pursuant to a Registration Statement under the Act (a
“Public Offering”). Certificates for the shares issuable upon exercise of the Conversion
Right and, if applicable, a new warrant evidencing the balance of the shares remaining subject to
this Warrant, shall be issued as of the Conversion Date and shall be delivered to the holder within
thirty (30) days following the Conversion Date.



          (c) Determination of Fair Market Value. For purposes of this Section 10.2,
“fair market value” of a share of Series Preferred (or Common Stock if the Series Preferred has
been automatically converted into Common Stock) as of a particular date (the “Determination
Date”) shall mean:



               (i) If the Conversion Right is exercised in connection with and contingent upon a Public
Offering, and if the Company’s Registration Statement relating to such Public Offering
(“Registration Statement”) has been declared effective by the Securities and Exchange
Commission, then the initial “Price to Public” specified in the final prospectus with respect to
such offering.



               (ii) If the Conversion Right is not exercised in connection with and contingent upon a Public
Offering, then as follows:



          (A) If traded on a securities exchange, the fair market value of the Common Stock shall be
deemed to be the average of the closing prices of the Common Stock on such exchange over the five
trading days immediately prior to the Determination Date, and the fair market value of the Series
Preferred shall be deemed to be such fair market value of the Common Stock multiplied by the number
of shares of Common Stock into which each share of Series Preferred is then convertible;



          (B) If traded on the Nasdaq Stock Market or other over-the-counter system, the fair market
value of the Common Stock shall be deemed to be the average of the closing prices of the Common
Stock as reported in the Wall Street Journal over the five trading days immediately prior to the
Determination Date, and the fair market value of the Series Preferred shall be deemed to be such
fair market value of the Common Stock multiplied by the number of shares of Common Stock into which
each share of Series Preferred is then convertible; and



-10-









 





          (C) If there is no public market for the Common Stock, then fair market value of the Common
Stock shall be determined in good faith by the Board of Directors of the Company. If there is no
public market for the Series Preferred, then fair market value of the Series Preferred shall be
determined in good faith by the Board of Directors of the Company.


In making a determination under clauses (A) or (B) above, if on the Determination Date, five
trading days had not passed since the IPO, then the fair market value of the Common Stock shall be
the average closing prices for the shorter period beginning on and including the date of the IPO
and ending on the trading day prior to the Determination Date (or if such period includes only one
trading day the closing price for such trading day). If closing prices are no longer reported by a
securities exchange or other trading system, the closing price shall be that which is reported by
such securities exchange or other trading system at 4:00 p.m. New York City time on the applicable
trading day.




     10.3 Exercise Prior to Expiration. To the extent this Warrant is not previously
exercised as to all of the Shares subject hereto, and if the fair market value of one share of the
Series Preferred is greater than the Warrant Price then in effect, this Warrant shall be deemed
automatically exercised pursuant to Section 10.2 (even if not surrendered) immediately
before its expiration. For purposes of such automatic exercise, the fair market value of one share
of the Series Preferred upon such expiration shall be determined pursuant to Section
10.2(c). To the extent this Warrant or any portion thereof is deemed automatically exercised
pursuant to this Section 10.3, the Company agrees to promptly notify the holder hereof of
the number of Shares, if any, the holder hereof is to receive by reason of such automatic exercise.
The holder hereof will promptly surrender this Warrant following receipt from the Company of
certificates representing such Shares.



     11. Representations, Warranties and Covenants. The Company represents, warrants and
covenants to the holder of this Warrant as follows:



          (a) This Warrant has been duly authorized and executed by the Company and is a valid and
binding obligation of the Company enforceable in accordance with its terms, subject to laws of
general application relating to bankruptcy, insolvency and the relief of debtors and the rules of
law or principles at equity governing specific performance, injunctive relief and other equitable
remedies.



          (b) The shares of Series C Preferred stock issuable upon exercise of this Warrant have been
duly authorized and reserved for issuance by the Company and, if issued in accordance with the
terms hereof, will be validly issued, fully paid and nonassessable and free from preemptive rights.



          (c) The rights, preferences, privileges and restrictions granted to or imposed upon the Series
Preferred Stock and the holders thereof are as set forth in the Charter. Assuming this Warrant is
exercisable for shares of Series C Preferred Stock, on the Date of Grant each share of the Series
Preferred represented by this Warrant is convertible into one share of Common Stock. If shares of
Series Preferred are sold by the Company in a Qualified Financing following the Date of Grant and
prior to the expiration or exercise of this Warrant for a purchase price of less than $8.45 per
share, the Company will authorize and reserve for issuance by the



-11-









 







Company all shares of Series Preferred issuable upon exercise of this Warrant and, if issued
in accordance with the terms hereof, such shares of Series Preferred will be validly issued, fully
paid and nonassessable and free from preemptive rights



          (d) The shares of Common Stock issuable upon conversion of the Shares have been duly
authorized and reserved for issuance by the Company and, when issued in accordance with the terms
of the Charter will be validly issued, fully paid and nonassessable.



          (e) The execution and delivery of this Warrant are not, and the issuance of the Shares upon
exercise of this Warrant in accordance with the terms hereof will not be, inconsistent with the
Company’s Charter or by-laws, do not and will not contravene any law, governmental rule or
regulation, judgment or order applicable to the Company (in each case as such laws, governmental
rules and regulations, judgments or orders are currently in effect), and do not and will not
conflict with or contravene any provision of, or constitute a default under, any indenture,
mortgage, contract or other instrument of which the Company is a party or by which it is bound or,
as of the Date of Grant, require the consent or approval of, the giving of notice to, the
registration or filing with or the taking of any action in respect of or by, any Federal, state or
local government authority or agency or other person, except for the filing of notices pursuant to
federal and state securities laws, which filings will be effected by the time required thereby.
The Company covenants to take all necessary steps to ensure that from and after the Date of Grant
the issuance of the Shares upon exercise of this Warrant in accordance with the terms hereof will
not contravene any law, governmental rule or regulation, judgment or order applicable to the
Company at any time.



          (f) As of the Date of Grant, there are no actions, suits, audits, investigations or
proceedings pending or, to the knowledge of the Company, threatened against the Company in any
court or before any governmental commission, board or authority which, if adversely determined,
could have a material adverse effect on the ability of the Company to perform its obligations under
this Warrant.



          (g) The number of shares of Common Stock of the Company outstanding on the date hereof, on a
fully diluted basis (assuming the conversion of all outstanding convertible securities and the
exercise of all outstanding options and warrants other than this Warrant and the Other Warrants,
and excluding any shares of Common Stock issuable pursuant to that certain Convertible Promissory
Note dated as of December 21, 2001, issued to mHoldings Trust), does not exceed 26,184,348 shares.



     12. Modification and Waiver. This Warrant and any provision hereof may be changed,
waived, discharged or terminated only by an instrument in writing signed by the party against which
enforcement of the same is sought.



     13. Notices. Any notice, request, communication or other document required or
permitted to be given or delivered to the holder hereof or the Company shall be delivered, or shall
be sent by certified or registered mail, or by internationally recognized overnight courier,
postage prepaid, to each such holder at its address as shown on the books of the Company or to the
Company at the address indicated therefor on the signature page of this Warrant or such other
address as the Company may specify pursuant to this Section 13. A copy of any notices sent
to



-12-









 







the Company shall be simultaneously sent to the Company’s counsel, Annette North, at the
Company’s address indicated therefor on the signature page of this Warrant or such other address as
the Company may specify pursuant to this Section 13.



     14. Binding Effect on Successors. This Warrant shall be binding upon any corporation
succeeding the Company by merger, consolidation or acquisition of all or substantially all of the
Company’s assets, and all of the obligations of the Company relating to the Series Preferred
issuable upon the exercise or conversion of this Warrant shall survive the exercise, conversion and
termination of this Warrant and all of the covenants and agreements of the Company shall inure to
the benefit of the successors and assigns of the holder hereof.



     15. Lost Warrants or Stock Certificates. The Company covenants to the holder hereof
that, upon receipt of evidence reasonably satisfactory to the Company of the loss, theft,
destruction or mutilation of this Warrant or any stock certificate and, in the case of any such
loss, theft or destruction, upon receipt of an indemnity reasonably satisfactory to the Company, or
in the case of any such mutilation upon surrender and cancellation of such Warrant or stock
certificate, the Company will make and deliver a new Warrant or stock certificate, of like tenor,
in lieu of the lost, stolen, destroyed or mutilated Warrant or stock certificate.



     16. Descriptive Headings. The descriptive headings of the various Sections of this
Warrant are inserted for convenience only and do not constitute a part of this Warrant. The
language in this Warrant shall be construed as to its fair meaning without regard to which party
drafted this Warrant.



     17. Governing Law. This Warrant shall be construed and enforced in accordance with,
and the rights of the parties shall be governed by, the laws of the State of California, without
regard to principles of conflicts of law.



     18. Survival of Representations, Warranties and Agreements. All representations and
warranties of the Company and the holder hereof contained herein shall survive the Date of Grant,
the exercise or conversion of this Warrant (or any part hereof) or the termination or expiration of
rights hereunder. All agreements of the Company and the holder hereof contained herein shall
survive indefinitely until, by their respective terms, they are no longer operative.



     19. Remedies. In case any one or more of the covenants and agreements contained in
this Warrant shall have been breached, the holders hereof (in the case of a breach by the Company),
or the Company (in the case of a breach by a holder), may proceed to protect and enforce their or
its rights either by suit in equity and/or by action at law, including, but not limited to, an
action for damages as a result of any such breach and/or an action for specific performance of any
such covenant or agreement contained in this Warrant.



     20. No Impairment of Rights. The Company will not, by amendment of its Charter or
through any other means, 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 action as may be necessary or appropriate in order to protect the
rights of the holder of this Warrant against impairment.



-13-









 





     21. Severability. The invalidity or unenforceability of any provision of this Warrant
in any jurisdiction shall not affect the validity or enforceability of such provision in any other
jurisdiction, or affect any other provision of this Warrant, which shall remain in full force and
effect.



     22. Recovery of Litigation Costs. If any legal action or other proceeding is brought
for the enforcement of this Warrant, or because of an alleged dispute, breach, default, or
misrepresentation in connection with any of the provisions of this Warrant, the successful or
prevailing party or parties shall be entitled to recover reasonable attorneys’ fees and other costs
incurred in that action or proceeding, in addition to any other relief to which it or they may be
entitled.



     23. Entire Agreement; Modification. This Warrant constitutes the entire agreement
between the parties pertaining to the subject matter contained in it and supersedes all prior and
contemporaneous agreements, representations, and undertakings of the parties, whether oral or
written, with respect to such subject matter.



     24. Acceptance. Acceptance of this Warrant by the holder shall constitute acceptance
of and agreement to all of the terms and conditions contained herein



-14-









 





     The Company has caused this Warrant to be duly executed and delivered as of the Date of Grant
specified above.



	 	 	 	 	 
	 	 	STRUCTURAL GENOMIX, INC.
	 
	 	 	 	 
	 

	 	By:	 	/s/ Herbert G. Mutter
	 

	 	 	 	 
	 
	 	 	 	 
	 

	 	Name:	 	Herbert G. Mutter
	 

	 	 	 	 
	 
	 	 	 	 
	 

	 	Title:	 	Vice President, Finance
	 

	 	 	 	 
	 
	 	 	 	 
	 

	 	Address:
	 	10505 Roselle Street

San Diego, California 92121






-15-









 






EXHIBIT A-1




NOTICE OF EXERCISE





			
	To:	 	STRUCTURAL GENOMIX, INC. (the “Company”)





     1. The undersigned hereby:



	 	 	 
	 ̈

	 	elects to purchase ______ shares of [Series Preferred Stock] [Common Stock]
of the Company pursuant to the terms of the attached Warrant, and tenders
herewith payment of the purchase price of such shares in full, or
	 
	 	 
	 ̈

	 	elects to exercise its net issuance rights pursuant to Section 10.2
of the attached Warrant with respect to ______ shares of [Series Preferred
Stock] [Common Stock].






     2. Please
issue a certificate or certificates representing ______ shares in the name of the
undersigned or in such other name or names as are specified below:


 



 



(Name)



 



 



 



 



(Address)




     3. The undersigned represents that the aforesaid shares are being acquired for the account of
the undersigned for investment and not with a view to, or for resale in connection with, the
distribution thereof and that the undersigned has no present intention of distributing or reselling
such shares, all except as in compliance with applicable securities laws.



 

 

 

(Signature)



 



 




(Date)




 









 








EXHIBIT A-2




NOTICE OF EXERCISE





			
	To:	 	STRUCTURAL GENOMIX, INC. (the “Company”)





          1. Contingent upon and effective immediately prior to the closing (the “Closing”) of the
Company’s public offering contemplated by the Registration Statement on Form S___, filed___,
200_, the undersigned hereby:



           ̈
elects to purchase ______ shares of [Series Preferred Stock] [Common Stock] of the
Company (or such lesser number of shares as may be sold on behalf of the undersigned at the
Closing) pursuant to the terms of the attached Warrant, or



           ̈ elects to exercise its net issuance rights pursuant to Section 10.2 of the attached
Warrant with respect to______ shares of [Series Preferred Stock] [Common Stock].



          2. Please deliver to the custodian for the selling shareholders a stock certificate
representing such ______ shares.



          3. The undersigned has instructed the custodian for the selling shareholders to deliver to the
Company $______ or, if less, the net proceeds due the undersigned from the sale of shares in the
aforesaid public offering. If such net proceeds are less than the purchase price for such shares,
the undersigned agrees to deliver the difference to the Company prior to the Closing.



  

 





 

(Signature)




 



 




(Date)




 









 








EXHIBIT B




CHARTER