Document:

Exhibit 4.1

 

AMENDED AND RESTATED WARRANT

 

THE SECURITIES EVIDENCED BY THIS WARRANT HAVE NOT BEEN
REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES
ACT”), OR ANY OTHER APPLICABLE SECURITIES LAWS AND HAVE BEEN ISSUED IN
RELIANCE UPON AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES
ACT AND SUCH OTHER SECURITIES LAWS. 
NEITHER THIS SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE
REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED, HYPOTHECATED OR OTHERWISE
DISPOSED OF, EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OR PURSUANT TO A TRANSACTION WHICH IS EXEMPT FROM, OR NOT
SUBJECT TO, SUCH REGISTRATION.

 

Original Issuance
Date: November 2, 2006

Amendment and
Restatement Date: February 15, 2008

 

Warrant to Purchase up to Two Hundred Sixty Thousand
(260,000) shares of Common Stock of Metabasis Therapeutics, Inc. (the “Company”).

 

In consideration for Kingsbridge Capital Limited (the “Investor”),
agreeing to enter into that certain Common Stock Purchase Agreement, dated as
of November 2, 2006, as amended, between the Investor and the Company (the
“Agreement”), the Company hereby agrees that the Investor or any other
Warrant Holder (as defined below) is entitled, on the terms and conditions set
forth below, to purchase from the Company at any time during the Exercise
Period (as defined below) up to two hundred sixty thousand (260,000) fully paid
and nonassessable shares of common stock, par value $0.001 per share, of the Company
(the “Common Stock”) at the Exercise Price (hereinafter defined), as the
same may be adjusted from time to time pursuant to Section 6 hereof.  The resale of the shares of Common Stock or
other securities issuable upon exercise or exchange of this Warrant is subject
to the provisions of the Registration Rights Agreement.  Capitalized terms used herein and not
otherwise defined shall have the meanings given them in the Agreement.

 

This Warrant amends and
restates in its entirety that certain Warrant to Purchase up to Two
Hundred Sixty Thousand (260,000) shares of Common Stock of the Company dated November 2, 2006, which is hereby
terminated, cancelled and superseded by this Warrant and shall have no further
force or effect whatsoever.

 

Section 1.               Definitions.

 

“Affiliate” shall mean any Person that,
directly or indirectly through one or more intermediaries, controls or is
controlled by, or is under direct or indirect common control with any other
Person.  For the purposes of this definition,
“control,” when used with respect to any Person, means the power to direct the
management and policies of such Person, directly or indirectly, whether through
the ownership of voting securities, by contract or otherwise, and the term “controls”
and “controlled” have meanings correlative to the foregoing.

 

“Closing Price” as of any particular day shall
mean the volume weighted average price (the aggregate sales price of all trades
of Common Stock during such Trading Day divided by the total number of shares
of Common Stock traded during such Trading Day) per share of the Company’s
Common Stock as reported by Bloomberg L.P. on such day using the AQR function.

 

 

“Exercise Period” shall mean that period
beginning six months after the original issuance date of this Warrant (as set
forth above) and continuing until (i) the expiration of the five-year
period thereafter, or (ii) a Funding Default, subject in each case to
earlier termination in accordance with Section 6 hereof.

 

“Exercise Price” as of the date hereof shall
mean four dollars and sixty-three cents ($4.63).

 

“Funding Default” shall mean a failure by the
Investor to accept a Draw Down Notice made by the Company and to acquire and
pay for the Shares in accordance therewith within three (3) Business Days
following the delivery of such Shares to the Investor, provided such Draw Down
Notice was made in accordance with the terms and conditions of the Agreement
(including the satisfaction or waiver of the conditions to the obligation of
the Investor to accept a Draw Down set forth in Article VII of the
Agreement), provided further, that such failure was reasonably within the
control of the Investor.

 

“Per Share Warrant Value” shall mean the
difference resulting from subtracting the Exercise Price from the average of
the Closing Prices on the ten Trading Days immediately preceding the Exercise
Date.

 

“Person” shall mean an individual, a
corporation, a partnership, a limited liability company, an association, a
trust or other entity or organization, including a government or political
subdivision or an agency or instrumentality thereof.

 

“Principal Market” shall mean the NASDAQ Global
Select Market, the NASDAQ Global Market, the NASDAQ Capital Market, the
American Stock Exchange or the New York Stock Exchange, whichever is at the
time the principal trading exchange or market for the Common Stock.

 

“SEC” shall mean the United States Securities
and Exchange Commission.

 

“Trading Day” shall mean any day other than a
Saturday or a Sunday on which the Principal Market is open for trading in
equity securities.

 

“Warrant Holder” shall mean the Investor or any
permitted assignee or permitted transferee of all or any portion of this
Warrant.

 

“Warrant Shares” shall mean those shares of
Common Stock received or to be received upon exercise of this Warrant.

 

Section 2.               Exercise.

 

(a)   Method of Exercise.  This Warrant may be exercised in whole or in
part (but not as to a fractional share of Common Stock), at any time and from
time to time during the Exercise Period, by the Warrant Holder by (i) surrender
of this Warrant, with the form of exercise attached hereto as Exhibit A
completed and duly executed by the Warrant Holder (the “Exercise Notice”),
to the Company at the address set forth in Section 10.04 of the Agreement,
accompanied by payment of the Exercise Price multiplied by the number of shares
of Common Stock for which this Warrant is being exercised (the “Aggregate
Exercise Price”) or (ii) telecopying an executed and completed
Exercise Notice to the Company and delivering to the Company within five (5) Business
Days thereafter the original Exercise Notice, this Warrant and the Aggregate
Exercise Price.  The later of the date on
which an Exercise Notice is received by the Company in accordance with clauses (i) or
(ii) above or the Company receives payment of the Exercise Price (unless
the Warrant is exercised as provided in Section 2(c) below) shall be
deemed an “Exercise Date.”

 

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(b)   Payment of Aggregate
Exercise Price.  Subject to paragraph (c) below,
payment of the Aggregate Exercise Price shall be made by wire transfer of
immediately available funds to an account designated by the Company.  If the amount of the payment received by the
Company is less than the Aggregate Exercise Price, the Warrant Holder will be
notified of the deficiency and shall make payment in that amount within three (3) Business
Days.  In the event the payment exceeds
the Aggregate Exercise Price, the Company will refund the excess to the Warrant
Holder within five (5) Business Days of receipt.

 

(c)   Cashless Exercise.  In the event that the Warrant Shares to be
received by the Warrant Holder upon exercise of the Warrant may not be resold
pursuant to an effective registration statement or an exemption to the
registration requirements of the Securities Act of 1933, as amended (the “Securities
Act”), and applicable state laws, the Warrant Holder may, as an alternative
to payment of the Aggregate Exercise Price upon exercise in accordance with
paragraph (b) above, elect to effect a cashless exercise by so
indicating on the Exercise Notice and including a calculation of the number of
shares of Common Stock to be issued upon such exercise in accordance with the
terms hereof (a “Cashless Exercise”). 
If a registration statement on Form S-1 or Form S-3 under the
Securities Act, or such other form as deemed appropriate by counsel to the
Company for the registration for the resale by the Warrant Holder of (x) the
shares of Common Stock of the Company that may be purchased under the
Agreement, (y) the Warrant Shares, or (z) any securities issued or
issuable with respect to any of the foregoing by way of exchange, stock
dividend or stock split or in connection with a combination of shares,
recapitalization, merger, consolidation or other reorganization or otherwise,
has been declared effective by the SEC and remains effective, the Company may,
in its sole discretion, permit the Warrant Holder to elect to effect a Cashless
Exercise or require the Warrant Holder to pay the Exercise Price of the Warrant
Shares being purchased by the Warrant Holder under this Warrant.  In the event of a Cashless Exercise, the
Warrant Holder shall receive that number of shares of Common Stock determined
by (i) multiplying the number of Warrant Shares for which this Warrant is
being exercised by the Per Share Warrant Value and (ii) dividing the
product by the average of the Closing Prices on the ten Trading Days
immediately preceding the Exercise Date, rounded to the nearest whole
share.  The Company shall cancel the
total number of Warrant Shares equal to the excess of the number of the Warrant
Shares for which this Warrant is being exercised over the number of Warrant
Shares to be received by the Warrant Holder pursuant to such Cashless Exercise.

 

(d)   Replacement Warrant.  In the event that the Warrant is not
exercised in full, the number of Warrant Shares shall be reduced by the number
of such Warrant Shares for which this Warrant is exercised, and the Company, at
its expense, shall forthwith issue and deliver to or upon the order of the
Warrant Holder a new Warrant of like tenor in the name of the Warrant Holder,
reflecting such adjusted number of Warrant Shares.

 

Section 3.               Exercise
Limitation.  The Warrant Holder may
not exercise this Warrant such that the number of Warrant Shares to be received
pursuant to such exercise aggregated with all other shares of Common Stock then
owned by the Warrant Holder beneficially or deemed beneficially owned by the
Warrant Holder would result in the Warrant Holder owning more than 9.9% of all
of such Common Stock as would be outstanding on such Exercise Date, as
determined in accordance with Section 13(d) of the Exchange Act of
1934 and the rules and regulations promulgated thereunder.

 

Section 4.               Delivery of
Warrant Shares.

 

(a)   Subject to the terms and
conditions of this Warrant, as soon as practicable after the exercise of this
Warrant in full or in part, and in any event within ten (10) Business Days
thereafter, the Company at its expense (including, without limitation, the
payment by it of any applicable issue taxes) will cause to be issued in the
name of and delivered to the Warrant Holder, or as the Warrant Holder may
lawfully direct, a certificate or certificates for, or make deposit with the
Depositary Trust Company via book-entry of, the number of validly issued, fully
paid and non-assessable Warrant Shares to which the Warrant 

 

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Holder shall be entitled
on such exercise, together with any other stock or other securities or property
(including cash, where applicable) to which the Warrant Holder is entitled upon
such exercise in accordance with the provisions hereof.

 

(b)   This Warrant may not be
exercised as to fractional shares of Common Stock.  In the event that the exercise of this
Warrant, in full or in part, would result in the issuance of any fractional
share of Common Stock, then in such event the Warrant Holder shall receive the
number of shares rounded to the nearest whole share.

 

Section 5.               Representations,
Warranties and Covenants of the Company.

 

(a)   The Warrant Shares, when issued
in accordance with the terms hereof, will be duly authorized and, when paid for
or issued in accordance with the terms hereof, shall be validly issued, fully
paid and non-assessable.

 

(b)   The Company shall take all
commercially reasonable actions and proceedings as may be required and
permitted by applicable law, rule and regulation for the legal and valid
issuance of this Warrant and the Warrant Shares to the Warrant Holder.

 

(c)   The Company has authorized and
reserved for issuance to the Warrant Holder the requisite number of shares of
Common Stock to be issued pursuant to this Warrant.  The Company shall at all times reserve and
keep available, solely for issuance and delivery as Warrant Shares hereunder,
such shares of Common Stock as shall from time to time be issuable as Warrant
Shares.

 

(d)   From the date hereof through
the last date on which this Warrant is exercisable, the Company shall take all
commercially reasonable actions to ensure that the Common Stock remains listed
or quoted on the Principal Market.

 

Section 6.               Adjustment of
the Exercise Price.  The Exercise
Price and, accordingly, the number of Warrant Shares issuable upon exercise of
the Warrant, shall be subject to adjustment from time to time upon the
happening of certain events as follows:

 

(a)   Reclassification,
Consolidation, Merger, Mandatory Share Exchange, Sale or Transfer.

 

(i)            Upon occurrence of any
of the events specified in subsection (a)(ii) below (the “Adjustment
Events”) while this Warrant is unexpired and not exercised in full, the
Warrant Holder may in its sole discretion require the Company, or any successor
or purchasing corporation, as the case may be, without payment of any
additional consideration therefor, to execute and deliver to the Warrant Holder
a new Warrant providing that the Warrant Holder shall have the right to
exercise such new Warrant (upon terms not less favorable to the Warrant Holder
than those then applicable to this Warrant) and to receive upon such exercise,
in lieu of each share of Common Stock theretofore issuable upon exercise of
this Warrant, the kind and amount of shares of stock, other securities, money
or property receivable upon such Adjustment Event by the holder of one share of
Common Stock issuable upon exercise of this Warrant had this Warrant been
exercised immediately prior to such Adjustment Event.  Such new Warrant shall provide for
adjustments that shall be as nearly equivalent as may be practicable to the adjustments
provided for in this Section 6.

 

(ii)           The Adjustment Events
shall be (1) any reclassification or change of Common Stock (other than a
change in par value, as a result of a subdivision or combination of Common
Stock or in connection with an Excluded Merger or Sale), (2) any
consolidation, merger or mandatory share exchange of the Company with or into
another corporation (other than a merger or mandatory share 

 

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exchange with another
corporation in which the Company is a continuing corporation and which does not
result in any reclassification or change other than a change in par value or as
a result of a subdivision or combination of Common Stock), other than (each of
the following referred to as an “Excluded Merger or Sale”) a transaction
involving (A) sale of all or substantially all of the assets of the
Company, (B) any merger, consolidation or similar transaction where the
consideration payable to the shareholders of the Company by the acquiring
Person consists substantially of cash or publicly traded securities, or a
combination thereof, or where the acquiring Person does not agree to assume the
obligations of the Company under outstanding warrants (including this Warrant).  In the event of an Excluded Merger or Sale,
the Company shall deliver a notice to the Warrant Holder at least 10 days
before the consummation of such Excluded Merger or Sale, the Warrant Holder may
exercise this Warrant at any time before the consummation of such Excluded
Merger or Sale (and such exercise may be made contingent upon the consummation
of such Excluded Merger or Sale), and any portion of this Warrant that has not
been exercised before consummation of such Excluded Merger or Sale shall
terminate and expire, and shall no longer be outstanding.

 

(b)   Subdivision or Combination
of Shares.  If the Company, at any
time while this Warrant is unexpired and not exercised in full, shall subdivide
its Common Stock, the Exercise Price shall be proportionately reduced as of the
effective date of such subdivision, or, if the Company shall take a record of
holders of its Common Stock for the purpose of so subdividing, as of such
record date, whichever is earlier.  If
the Company, at any time while this Warrant is unexpired and not exercised in
full, shall combine its Common Stock, the Exercise Price shall be
proportionately increased as of the effective date of such combination, or, if
the Company shall take a record of holders of its Common Stock for the purpose
of so combining, as of such record date, whichever is earlier.

 

(c)   Stock Dividends.  If the Company, at any time while this
Warrant is unexpired and not exercised in full, shall pay a dividend or other
distribution in shares of Common Stock to all holders of Common Stock, then the
Exercise Price shall be adjusted, as of the date the Company shall take a
record of the holders of its Common Stock for the purpose of receiving such
dividend or other distribution (or if no such record is taken, as at the date
of such payment or other distribution), to that price determined by multiplying
the Exercise Price in effect immediately prior to such payment or other
distribution by a fraction:  (i) 
the numerator of which shall be the total number of shares of Common Stock
outstanding immediately prior to such dividend or distribution, and (ii) the
denominator of which shall be the total number of shares of Common Stock
outstanding immediately after such dividend or distribution.  The provisions of this subsection (c) shall
not apply under any of the circumstances for which an adjustment is provided in
subsections (a) or (b).

 

(d)   Liquidating Dividends, Etc.  If the Company, at any time while this
Warrant is unexpired and not exercised in full, makes a distribution of its
assets or evidences of indebtedness to the holders of its Common Stock as a
dividend in liquidation or by way of return of capital or other than as a
dividend payable out of earnings or surplus legally available for dividends
under applicable law or any distribution to such holders made in respect of the
sale of all or substantially all of the Company’s assets (other than under the
circumstances provided for in the foregoing subsections (a) through (c)),
then the Warrant Holder shall be entitled to receive upon exercise of this Warrant
in addition to the Warrant Shares receivable in connection therewith, and
without payment of any consideration other than the Exercise Price, the kind
and amount of such distribution per share of Common Stock multiplied by the
number of Warrant Shares that, on the record date for such distribution, are
issuable upon such exercise of the Warrant (with no further adjustment being
made following any such event which causes an adjustment in the number of
Warrant Shares issuable), and an appropriate provision therefor shall be made a
part of any such distribution.  The value
of a distribution that is paid in other than cash shall be determined in good
faith by the Board of Directors of the Company. 
Notwithstanding the foregoing, in the event of a proposed dividend in
liquidation or distribution to the shareholders made in respect of the sale of
all or 

 

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substantially all of the
Company’s assets, the Company shall deliver a notice to the Warrant Holder at
least 10 days before the consummation of such event, the Warrant Holder may
exercise this Warrant at any time before the consummation of such event (and
such exercise may be made contingent upon the consummation of such event), and
any portion of this Warrant that has not been exercised before consummation of
such event shall terminate and expire, and shall no longer be outstanding.

 

(e)   Adjustment for Spin Off.  If, for any reason,  prior to the exercise of this Warrant in
full,  the Company  spins off or 
otherwise  divests itself of a
part of its business or  operations or
disposes all or a part of its assets in a 
transaction  (a “Spin Off”)
in which the Company does not receive compensation for such business,
operations or assets, but causes securities of another entity to which such
business, operations or assets are transferred (“Spin Off  Securities”) to be issued to holders of
Common Stock, then the Company shall cause (i) to be reserved Spin Off
Securities equal to the number thereof which 
would have been issued to the Warrant Holder in the event that the
entire unexercised portion of this Warrant outstanding on the record date (the “Record  Date”) for  determining 
the number of Spin Off Securities to be issued to holders of Common
Stock had been exercised by the Warrant Holder as of the close of business on
the Trading Day immediately  prior to the
Record Date (the “Reserved  Spin Off
Shares”), and (ii) to be issued to the Warrant Holder on the exercise
of all or any unexercised portion of this Warrant, such amount of the
Reserved  Spin Off  Shares 
equal  to (A) the  Reserved 
Spin  Off  Shares multiplied by (B) a
fraction,  of which (I) the  numerator is the unexercised portion of this
Warrant then being  exercised,  and (II) the denominator  is the aggregate amount of the unexercised
portion of this Warrant..

 

Section 7.               Notices.  Whenever the Exercise Price or number of
Warrant Shares shall be adjusted pursuant to Section 6 hereof, the Company
shall promptly prepare a certificate signed by its Chief Executive Officer or
Chief Financial Officer setting forth in reasonable detail the event requiring
the adjustment, the amount of the adjustment, the method by which such
adjustment was calculated (including a description of the basis on which the
Company’s Board of Directors made any determination hereunder), and the
Exercise Price and number of Warrant Shares purchasable at that Exercise Price
after giving effect to such adjustment, and shall promptly cause copies of such
certificate to be sent by overnight courier to the Warrant Holder.  In the event of any taking by the Company of
a record of the holders of any class of securities for the purpose of
determining the holders thereof who are entitled to receive any dividend (other
than a cash dividend) or other distribution, any right to subscribe for,
purchase or otherwise acquire any shares of stock of any class or any other
securities or property, or to receive any other similar right accruing to a
stockholder by virtue of ownership of shares of the Company’s capital stock,
the Company shall mail to the Warrant Holder, at least five (5) Business
Days prior to the date specified therein, a notice specifying the date on which
any such record is to be taken for the purpose of such dividend, distribution
or right, and the amount and character of such dividend, distribution or right.

 

Section 8.               No Impairment.  The Company will not, by amendment of its
Certificate or Bylaws or through any reorganization, transfer of assets,
consolidation, merger, dissolution or issue or sale of securities, 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 Warrant Holder against
impairment.  Without limiting the
generality of the foregoing, the Company (a) will not increase the par
value of any Warrant Shares above the amount payable therefor on such exercise,
and (b) will take all such action as may be reasonably necessary or
appropriate in order that the Company may validly and legally issue fully paid
and nonassessable Warrant Shares on the exercise of this Warrant.

 

Section 9.               Rights As
Stockholder.  Except as set forth in Section 6
above, prior to exercise of this Warrant, the Warrant Holder shall not be
entitled to any rights as a stockholder of the Company 

 

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with respect to the
Warrant Shares, including (without limitation) the right to vote such shares,
receive dividends or other distributions thereon or be notified of stockholder
meetings.

 

Section 10.             Replacement of
Warrant.  Upon receipt of evidence
reasonably satisfactory to the Company of the loss, theft, destruction or
mutilation of the Warrant and, in the case of any such loss, theft or
destruction of the Warrant, upon delivery of an indemnity agreement or security
reasonably satisfactory in form and amount to the Company or, in the case of any
such mutilation, on surrender and cancellation of such Warrant, the Company at
its expense will execute and deliver, in lieu thereof, a new Warrant of like
tenor.

 

Section 11.             Choice of Law.  This Warrant shall be construed under the
laws of the State of New York.

 

Section 12.             Entire Agreement;
Amendments.  Except for any written
instrument concurrent or subsequent to the date hereof executed by the Company
and the Investor, this Warrant and the Agreement contain the entire
understanding of the parties with respect to the matters covered hereby and
thereby.  No provision of this Warrant
may be waived or amended other than by a written instrument signed by the party
against whom enforcement of any such amendment or waiver is sought.

 

Section 13.             Restricted Securities.

 

(a)   Registration or Exemption
Required.  This Warrant has been
issued in a transaction exempt from the registration requirements of the
Securities Act in reliance upon the provisions of Section 4(2) thereof
and Regulation D thereof, and/or upon such other exemption from the
registration requirements of the Securities Act as may be available with
respect to this Warrant.  This Warrant
and the Warrant Shares issuable upon exercise of this Warrant may not be resold
except pursuant to an effective registration statement or an exemption to the
registration requirements of the Securities Act and applicable state laws.  The Company shall have no obligation to
register the Warrant or the Warrant Shares except as explicitly set forth in
that certain Registration Rights Agreement entered into by and between the
Investor and the Company on even date hereof.

 

(b)   Legend. Any replacement
Warrants issued pursuant to Section 2 and Section 10 hereof and,
unless a registration statement has been declared effective by the SEC and
remains effective in accordance with the Securities Act, with respect thereto,
any Warrant Shares issued upon exercise hereof, shall bear the following
legend:

 

“THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT
BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES
ACT”), OR ANY OTHER APPLICABLE SECURITIES LAWS AND HAVE BEEN ISSUED IN
RELIANCE UPON AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES
ACT AND SUCH OTHER SECURITIES LAWS. 
NEITHER THIS SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE
REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED, HYPOTHECATED OR
OTHERWISE DISPOSED OF, EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OR PURSUANT TO A TRANSACTION WHICH IS EXEMPT FROM, OR
NOT SUBJECT TO, SUCH REGISTRATION.”

 

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(c)   No Other Legend or Stock
Transfer Restrictions.  No legend
other than the one specified in Section 13(b) has been or shall be
placed on the share certificates representing the Warrant Shares and no
instructions or “stop transfer orders” (so called “stock transfer restrictions”)
or other restrictions have been or shall be given to the Company’s transfer
agent with respect thereto other than as expressly set forth in this Section 13.

 

(d)   Assignment.  Assuming the conditions of Section 13(a) above
regarding registration or exemption have been satisfied, the Warrant Holder may
sell, transfer, assign, pledge or otherwise dispose of this Warrant (each of
the foregoing, a “Transfer”), in whole or in part, but only to an
Affiliate of the Warrant Holder.  The
Warrant Holder shall deliver a written notice to the Company, substantially in
the form of the Assignment attached hereto as Exhibit B, indicating the
person or persons to whom the Warrant shall be Transferred and the respective
number of Warrant Shares to be covered by the warrants to be Transferred to
each assignee.  The Company shall effect
the Transfer within ten (10) days, and shall deliver to the Transferee(s) designated
by the Warrant Holder a Warrant or Warrants of like tenor and terms for the
appropriate number of shares.  In
connection with and as a condition of any such proposed Transfer, the Company
may require (i) the Warrant Holder to provide an opinion of counsel to the
Warrant Holder in form and substance reasonably satisfactory to the Company to
the effect that the proposed Transfer complies with all applicable federal and
state securities laws and (ii) the proposed Transferee to make customary
and reasonable representations to the Company in connection with such Transfer
attendant to the acquisition of unregistered securities, including without
limitation the Transferee’s investment intent and status as an “accredited investor”
as defined in Regulation D.

 

(e)   Investor’s Compliance.  Nothing in this Section 13 shall affect
in any way the Investor’s obligations under any agreement to comply with all
applicable securities laws upon resale of the Common Stock.

 

Section 14.             Notices.  All notices, demands, requests, consents,
approvals, and other communications required or permitted hereunder shall be
given in accordance with Section 10.04 of the Agreement.

 

Section 15.             Miscellaneous.  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.  The headings in
this Warrant are for purposes of reference only, and shall not limit or
otherwise affect any of the terms hereof. 
The invalidity or unenforceability of any provision hereof shall in no
way affect the validity or enforceability of any other provision.

 

Section 16.             Company Call Right.

 

(a)   If a Funding Default occurs,
the Company shall have the right to demand the surrender of this Warrant or any
remaining portion thereof, Shares and/or cash from the Investor as follows (the
“Call Right”):

 

(i)            If the Investor has
not previously exercised this Warrant in full, then this Warrant shall
automatically be deemed to have been canceled and shall have no further force
or effect.

 

(ii)           If, prior to receiving
a Call Right Notice, the Investor has previously exercised this Warrant with
respect to some or all of the Warrant Shares, and the Investor has not
previously sold such Warrant Shares, then Company shall have a right to
purchase from the Investor that number of shares of Common Stock equal to the
number of shares of Common Stock issued in connection with the exercise(s) of
the Warrant, at a repurchase price per share equal to the cash price per share
paid by the 

 

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Investor in connection
with such exercise(s).  For greater
certainty, (a) if Warrant Shares were exercised for cash, the purchase
price per share under the Call Right shall be equal to the Exercise Price, (b) if
Warrant Shares were exercised on a cashless exercise basis, the purchase price
per share for such Warrant Shares under the Call Right shall be zero, and (c) if
such Warrant Shares were exercised on both a cash and cashless exercise basis,
the purchase price per share under the Call Right shall be equal to the total
amount of cash paid in connection with such cash exercise(s) divided by
the total number of shares of Common Stock issued in connection with all
exercises of the Warrant (whether on a cash or cashless basis).

 

(iii)          If, prior to receiving a
Call Right Notice, the Investor has previously exercised this Warrant with
respect to some or all of the Warrant Shares, and the Investor subsequently
sold such Warrant Shares, then the Investor shall remit to the Company the
excess, if any, of (x) the proceeds received by Investor through the sale
of such Warrant Shares, over (y) the aggregate Exercise Price for such
Warrant Shares.  In the event that the
Investor obtained such Warrant Shares through a Cashless Exercise, then the
Investor shall instead remit to the Company all proceeds received by the
Investor through the sale of such Warrant Shares.  For the avoidance of doubt, in the event that
the Investor has sold some or all of the Warrant Shares prior to receiving a
Call Right Notice, then the right set forth in this paragraph (iii) shall
constitute the sole Call Right of the Company with respect to such Warrant
Shares which have been sold.

 

(b)   The Company may exercise the
Call Right by delivering a notice (the “Call Right Notice”) to the
Investor within thirty (30) days after the occurrence of a Funding
Default.  On the tenth (10th)
Business Day following delivery of the Call Right Notice to the Investor, the
Company shall tender the purchase price, if any, and the Investor shall tender
shares of Common Stock, if any, to be sold to the Company pursuant to the Call
Right Notice, immediately following which the Company and the Investor shall
consummate such purchase and sale.  The
Call Right shall survive both the assignment of the Warrant by the Investor and
the disposition of the Warrant Shares by the Investor following exercise of the
Warrant.

 

Section 17.             Absence of
Presumption.  This Warrant shall be
construed without regard to any presumption or rule requiring construction
or interpretation against the party drafting or causing any instrument to be
drafted.

 

[Remainder of this
page intentionally left blank]

 

9

 

IN WITNESS WHEREOF, this Amended and Restated Warrant
was duly executed by the undersigned, thereunto duly authorized, as of the date
first set forth above.

 

	
   

  	
  METABASIS
  THERAPEUTICS, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Paul K.
  Laikind, Ph.D.

  
	
   

  	
   

  	
  Paul K. Laikind,
  Ph.D.

  
	
   

  	
   

  	
  Chief Executive
  Officer

  

 

 

Investor acknowledges and agrees to the terms and
conditions of this Amended and Restated Warrant.

 

	
   

  	
  KINGSBRIDGE
  CAPITAL LIMITED

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Maria
  O’Donoghue

  
	
   

  	
   

  	
  Maria O’Donoghue

  
	
   

  	
   

  	
  Director

  

 

 

SIGNATURE PAGE - WARRANT

 

 

EXHIBIT A TO THE WARRANT

 

EXERCISE FORM

 

METABASIS THERAPEUTICS, INC.

 

The undersigned hereby irrevocably exercises the right
to purchase                                
shares of Common Stock of Metabasis Therapeutics, Inc., a Delaware
corporation (the “Company”), evidenced by the attached Warrant, and (CIRCLE
EITHER (i) or (ii)) (i) tenders herewith payment of the Aggregate
Exercise Price with respect to such shares in full, in the amount of $             ,
in cash, by certified or official bank check or by wire transfer for the
account of the Company or (ii) elects, pursuant to Section 2(c) of
the Warrant, to convert such Warrant into shares of Common Stock of the Company
on a cashless exercise basis, all in accordance with the conditions and
provisions of said Warrant and in accordance with the calculations attached
hereto.

 

The undersigned requests that stock certificates for
such Warrant Shares be issued, and a Warrant representing any unexercised portion
hereof be issued, pursuant to this Warrant, in the name of the registered
Warrant Holder and delivered to the undersigned at the address set forth below.

 

	
  Dated:

  	
   

  	
   

  
	
   

  
	
   

  	
   

  
	
  Signature of
  Registered Holder

  
	
   

  
	
   

  	
   

  
	
  Name of
  Registered Holder (Print)

  
	
   

  
	
   

  	
   

  
	
  Address

  

 

 

EXHIBIT B TO THE WARRANT

 

ASSIGNMENT

 

(To be executed by the registered Warrant Holder
desiring to transfer the Warrant)

 

FOR VALUED RECEIVED, the undersigned Warrant Holder of
the attached Warrant hereby sells, assigns and transfers unto the persons below
named the right to purchase                            
shares of Common Stock of Metabasis Therapeutics, Inc. (the “Company”)
evidenced by the attached Warrant and does hereby irrevocably constitute and
appoint                                            
attorney to transfer the said Warrant on the books of the Company, with full
power of substitution in the premises.

 

	
  Dated:

  
	
   

  
	
   

  
	
   

  	
   

  
	
  Signature

  
	
   

  
	
  Fill in for new
  Registration of Warrant:

  
	
   

  
	
   

  	
   

  
	
  Name

  
	
   

  
	
   

  	
   

  
	
  Address

  
	
   

  
	
   

  	
   

  
	
  Please print
  name and address of assignee

  
	
  (including zip
  code number)Exhibit 10.1

 

AMENDMENT TO COMMON STOCK PURCHASE AGREEMENT

 

THIS
AMENDMENT TO COMMON STOCK PURCHASE AGREEMENT (this “Amendment”) is made and entered into as of February 15, 2008, by and between METABASIS THERAPEUTICS, INC., a Delaware
corporation (the “Company”),
and Kingsbridge Capital Limited, an entity organized and existing under the
laws of the British Virgin Islands (“Kingsbridge”), with respect to the Common
Stock Purchase Agreement dated as of November 2, 2006, by and between the
Company and Kingsbridge (the “Purchase Agreement”). 
Capitalized terms used but not otherwise defined herein shall have the
meanings given them in the Purchase Agreement.

 

RECITAL

 

WHEREAS, the Company and Kingsbridge desire to amend
the Purchase Agreement as set forth herein, and in connection therewith, to
amend and restate the Warrant to decrease its exercise price to $4.63 per share
(subject to further adjustment from time to time as provided in the Warrant).

 

AMENDMENT

 

NOW,
THEREFORE, in
consideration of the foregoing premises and the mutual covenants and conditions
set forth below, and for other good and valuable consideration, the receipt of
which is hereby acknowledged, the parties to this Amendment hereby agree as
follows:

 

1.                                      Amendment of Purchase
Agreement.

 

(a)                                  Section 1.19 of the Purchase Agreement
is hereby amended and restated to read in its entirety as follows:

 

Section 1.19.                         “Draw Down Discount
Price” means (i) 90% of the VWAP on any Trading Day during a Draw Down
Pricing Period when the VWAP equals or exceeds $1.75 but is less than or equal
to $5.75, (ii) 92% of the VWAP on any Trading Day during a Draw Down
Pricing Period when the VWAP exceeds $5.75 but is less than or equal to $9.50,
or (iii) 94% of the VWAP on any Trading Day during a Draw Down Pricing
Period when the VWAP exceeds $9.50.

 

(b)                                  Section 1.32(b) of the Purchase
Agreement is hereby amended and restated to read in its entirety as follows:

 

(b)                               (i) if the Company’s
Market Capitalization is equal to or exceeds $175 million at the time of the
delivery of the applicable Draw Down Notice, 1.5% of the Company’s Market
Capitalization at the time of the delivery of the applicable Draw Down Notice; (ii) if
the Company’s Market Capitalization is equal to or exceeds $100 million but is
less than $175 million at the time of the delivery of the applicable Draw Down
Notice, 1.25% of the Company’s Market Capitalization at the time of the
delivery of the applicable Draw Down Notice; or (iii) if the Company’s
Market Capitalization is equal to or exceeds $53 million but is less than $100
million at the time of the delivery of the applicable Draw Down Notice, 1% of
the Company’s Market Capitalization at the time of the delivery of the
applicable Draw Down Notice.

 

1

 

(c)                                  Section 3.06(b) of the Purchase
Agreement is hereby amended and restated to read in its entirety as follows:

 

(b)                               For each Trading Day during
a Draw Down Pricing Period that the VWAP is less than the greater of (i) 90%
of the Closing Price of the Company’s Common Stock on the Trading Day
immediately preceding the commencement of such Draw Down Pricing Period, or (ii) $1.75,
such Trading Day shall not be used in calculating the number of Shares to be
issued in connection with such Draw Down, and the Draw Down Amount in respect
of such Draw Down Pricing Period shall be reduced by one eighth (1/8th)
of the initial Draw Down Amount specified in the Draw Down Notice.  If trading in the Company’s Common Stock is
suspended for any reason for more than three (3) consecutive or
non-consecutive hours during any Trading Day during a Draw Down Pricing Period,
such Trading Day shall not be used in calculating the number of Shares to be
issued in connection with such Draw Down, and the Draw Down Amount in respect
of such Draw Down Pricing Period shall be reduced by one eighth (1/8th) of the
initial Draw Down Amount specified in the Draw Down Notice.

 

(d)                                  Section 8.02(c) of the Purchase
Agreement is hereby amended and restated to read in its entirety as follows:

 

(c)                                [Reserved.]

 

(e)                                  Section 10.04 of the Purchase Agreement
is hereby amended and restated to read in its entirety as follows:

 

Section 10.04.                  Notices.  All notices, demands, requests, consents,
approvals, and other communications required or permitted hereunder shall be in
writing and, unless otherwise specified herein, shall be (i) personally
served, (ii) deposited in the mail, registered or certified, return
receipt requested, postage prepaid, (iii) delivered by reputable air
courier service with charges prepaid, or (iv) transmitted by hand
delivery, telegram, or facsimile, addressed as set forth below or to such other
address as such party shall have specified most recently by written notice
given in accordance herewith, in each case with a copy to the e-mail address
set forth beside the facsimile number for the addressee below.  Any notice or other communication required or
permitted to be given hereunder shall be deemed effective (a) upon hand
delivery or delivery by facsimile, with accurate confirmation generated by the
transmitting facsimile machine, at the address or number designated below (if
delivered on a Business Day during normal business hours where such notice is
to be received), or the first Business Day following such delivery (if
delivered other than on a Business Day during normal business hours where such
notice is to be received) or (b) on the second Business Day following the
date of mailing by express courier service, fully prepaid, addressed to such
address, or upon actual receipt of such mailing, whichever shall first
occur.  The addresses for such
communications shall be:

 

If to the
Company:

 

Metabasis Therapeutics, Inc.

11119
North Torrey Pines Road

La Jolla, CA 92037

Facsimile:  (858) 622-5556

E-mail:  beck@mbasis.com

Attention:  John W. Beck, C.P.A.

 

2

 

With a
copy (which shall not constitute notice) to:

 

Cooley Godward Kronish LLP

4401 Eastgate Mall

San Diego, CA 92121-1909

Facsimile: (858) 550-6420

Attention:
Jason Kent, Esq.

E-mail:  jkent@cooley.com

 

If to the
Investor:

 

Kingsbridge
Capital Limited

Attention:
Mr. Tony Hillman

P.O. Box
1075

Elizabeth
House

9 Castle
Street

St Helier

Jersey

JE42QP

Channel
Islands

Telephone:  011-44-1534-636-041

Facsimile:  011-44-1534-636-042

Email:  admin@kingsbridgecap.com; and
adamgurney@kingsbridgecap.com

 

With a
copy (which shall not constitute notice) to:

 

Kingsbridge
Corporate Services

Kingsbridge
House

New Abbey

Kilcullen,
County Kildare

Republic
of Ireland

Telephone:  011-353-45-481-811

Facsimile:
011-353-45-482-003

Email:  adamgurney@kingsbridge.ie;
emmagalway@kingsbridge.ie;, and pwhelan@kingsbridge.ie

 

And
another a copy (which shall not constitute notice) to:

 

Stroock & Stroock &
Lavan LLP

180 Maiden Lane

New York, NY 10038

Facsimile: (212) 806-5400

Attention: Keith M. Andruschak, Esq.
- kandruschak@stroock.com

 

Either
party hereto may from time to time change its address or facsimile number for
notices under this Section by giving at least ten (10) days’ prior
written notice of such changed address or facsimile number to the other party
hereto.

 

3

 

2.                                      Amendment and Restatement of
Warrant.  The Warrant is hereby amended and restated as
set forth on Exhibit A
hereto.  The Company and Kingsbridge
agree that upon such amendment and restatement, the prior Warrant shall be
terminated, cancelled and superseded in its entirety and shall have no further
force or effect whatsoever.  Promptly
following the date hereof, Kingsbridge will return to the Company any originally
executed copy of the prior Warrant in its possession.

 

3.                                      Representations and
Warranties.  The Company and Kingsbridge hereby confirm
that each of their respective representations and warrants set forth in the
Purchase Agreement are true and correct in all material respects as of the date
hereof (except for such representations and warranties that are made as of a
particular date).

 

4.                                      Effect of Amendment on
Purchase Agreement.  Except as and to the extent expressly
modified by this Amendment, the Purchase Agreement shall remain in full force
and effect in all respects.

 

5.                                      Counterparts;
Facsimile.  This Amendment may be executed in several
counterparts, each of which shall constitute an original and all of which, when
taken together, shall constitute one agreement. 
Facsimile signatures shall be as effective as original signatures.

 

6.                                      Construction.  This Amendment shall be governed, construed and enforced in accordance
with the internal laws of the State of New York, without giving effect to its
conflicts of laws principles.

 

[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]

 

4

 

The parties hereto have
caused this AMENDMENT TO COMMON STOCK
PURCHASE AGREEMENT to be executed and delivered as of the date first
written above.

 

 

	
  COMPANY:

  	
   

  	
  KINGSBRIDGE:

  
	
   

  	
   

  	
   

  
	
  METABASIS
  THERAPEUTICS, INC.

  	
   

  	
  KINGSBRIDGE
  CAPITAL LIMITED

  
	
   

  	
   

  	
   

  
	
  Signature:

  	
  /s/ Paul K.
  Laikind

  	
   

  	
  Signature:

  	
  /s/ Maria
  O’Donoghue

  
	
  Print Name:

  	
  Paul K.
  Laikind

  	
   

  	
  Print Name:

  	
  Maria
  O’Donoghue

  
	
  Title:

  	
  Chief
  Executive Officer

  	
   

  	
  Title:

  	
  Director

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