Document:

Exhibit 4.3

 

THIS WARRANT AND THE SHARES ISSUABLE HEREUNDER HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR THE SECURITIES LAWS OF ANY STATE AND, EXCEPT AND PURSUANT TO THE PROVISIONS OF ARTICLE 5 BELOW, MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED, PLEDGED OR HYPOTHECATED UNLESS AND UNTIL REGISTERED UNDER SAID ACT AND APPLICABLE STATE SECURITIES LAW OR, IN THE OPINION OF LEGAL COUNSEL IN FORM AND SUBSTANCE SATISFACTORY TO THE ISSUER OF THESE SECURITIES, SUCH OFFER, SALE OR TRANSFER, PLEDGE OR HYPOTHECATION IS EXEMPT FROM REGISTRATION.

 

WARRANT TO PURCHASE STOCK

 

Company: Tetralogic Pharmaceuticals Corporation, a Delaware corporation 

Number of Share: 33,333, subject to adjustment

Class of Stock: Common Stock, $0.0001 par value per share

Warrant Price: $0.45, subject to adjustment

Issue Date: May 2, 2007

Expiration Date: May 2, 2017

Credit Facility: This Warrant is issued in connection with that certain First Loan Modification Agreement, of even date herewith, to that certain Loan and Security Agreement dated as of December 13, 2004, between Silicon Valley Bank and the Company.

 

THIS WARRANT CERTIFIES THAT, for good and valuable consideration, SILICON VALLEY BANK (Silicon Valley Bank, together with any successor or permitted assignee or transferee of this Warrant or of any shares issued upon exercise hereof, is referred to hereinafter as “Holder”) is entitled to purchase the number of fully paid and nonassessable shares (the “Shares”) of the class of securities (the “Class”) of the above-named company (the “Company”) at the above-stated Warrant Price, all as set forth above and as adjusted pursuant to Article 2 of this Warrant, subject to the provisions and upon the terms and conditions set forth in this Warrant. This Warrant may be exercised in whole or in part at any time and from time to time until 5:00 PM, Eastern Time, on the Expiration Date, and shall be void thereafter. Until such time as this Warrant is exercised in full or expires, the Exercise Price and the Shares are subject to adjustment from time to time as hereinafter provided.

 

ARTICLE 1. EXERCISE.

 

1.1                               Method of Exercise. Holder may exercise this Warrant by delivering the original of this Warrant together with a duly executed Notice of Exercise in substantially the form attached as Appendix 1 to the principal office of the Company. Unless Holder is exercising the conversion right set forth in Article 1.2, Holder shall also deliver to the Company a check, wire transfer (to an account designated by the Company), or other form of payment acceptable to the Company for the aggregate Warrant Price for the Shares being purchased.

 

1.2                               Conversion Right. In lieu of exercising this Warrant as specified in Article 1.1, Holder may from time to time convert this Warrant, in whole or in part, into a number of Shares determined by dividing (a) the aggregate fair market value of the Shares issuable upon exercise of this Warrant minus the aggregate Warrant Price of such Shares by (b) the fair

 

 

market value of one Share. The fair market value of the Shares shall be determined pursuant to Article 1.3.

 

1.3                               Fair Market Value. If the Company’s common stock is traded in a public market, the fair market value of a Share shall be the closing price of a share of common stock reported for the business day immediately before Holder delivers this Warrant together with its Notice of Exercise to the Company (or in the instance where the Warrant is exercised immediately prior to the effectiveness of the Company’s initial public offering (“IPO”), the “price to public” per share price specified in the final prospectus relating to such offering). If the Company’s common stock is not traded in a public market, the Board of Directors of the Company shall determine fair market value in its reasonable good faith judgment.

 

1.4                               Delivery of Certificate and New Warrant. Promptly after Holder exercises or converts this Warrant and, if applicable, the Company receives payment of the aggregate Warrant Price, the Company shall deliver to Holder certificates for the Shares acquired and, if this Warrant has not been fully exercised or converted and has not expired, a new Warrant representing the Shares not so acquired.

 

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

 

1.6                               Treatment of Warrant Upon Acquisition of Company.

 

1.6.1           “Acquisition”. For the purpose of this Warrant, “Acquisition” means any sale, transfer, exclusive license, or other disposition of all or substantially all of the assets of the Company, or any acquisition, reorganization, consolidation, merger or sale of outstanding capital stock of the Company where the holders of the Company’s outstanding voting equity securities immediately prior to the transaction beneficially own less than a majority of the outstanding voting equity securities of the surviving or successor entity immediately following the transaction.

 

1.6.2           Treatment of Warrant at Acquisition.

 

A)                                        Upon the written request of the Company, Holder agrees that, in the event of an Acquisition in which the sole consideration is cash, either (a) Holder shall exercise its conversion or purchase right under this Warrant and such exercise will be deemed effective immediately prior to the consummation of such Acquisition or (b) if Holder elects not to exercise the Warrant, this Warrant will expire upon the consummation of such Acquisition. The Company shall provide the Holder with written notice of its request relating to the foregoing (together with such reasonable information as the Holder may request in connection with such contemplated Acquisition giving rise to such notice), which is to be delivered to Holder not less than ten (10) days prior to the closing of the proposed Acquisition.

 

B)                                        Upon the written request of the Company, Holder agrees that, in the event of an Acquisition that is a sale of all or substantially all of the Company’s assets (and only its assets) to a third party that is not an Affiliate (as defined below) of the Company (a “True Asset Sale”), either (a) Holder shall exercise its conversion or purchase right under this Warrant and such

 

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exercise will be deemed effective immediately prior to the consummation of such Acquisition or (b) if Holder elects not to exercise the Warrant, this Warrant will continue until the Expiration Date if the Company continues as a going concern following the closing of any such True Asset Sale. The Company shall provide the Holder with written notice of its request relating to the foregoing (together with such reasonable information as the Holder may request in connection with such contemplated Acquisition giving rise to such notice), which is to be delivered to Holder not less than ten (10) days prior to the closing of the proposed Acquisition.

 

C)                                   Upon the closing of any Acquisition other than those particularly described in subsections (A) and (B) above, the successor entity shall assume the obligations of this Warrant, and this Warrant shall be exercisable for the same securities, cash and property as would be payable for the Shares issuable upon exercise of the unexercised portion of this Warrant as if such Shares were outstanding on the record date for the Acquisition and subsequent closing. The Warrant Price and/or number of Shares shall be adjusted accordingly.

 

As used herein “Affiliate” shall mean any person or entity that owns or controls directly or indirectly ten percent (10%) or more of the stock of Company, any person or entity that controls or is controlled by or is under common control with such persons or entities, and each of such person’s or entity’s officers, directors, joint venturers or partners, as applicable.

 

ARTICLE 2. ADJUSTMENTS TO THE SHARES.

 

2.1                               Stock Dividends, Splits, Etc. If the Company declares or pays a dividend on the outstanding shares of the Class payable in common stock or other securities, or subdivides the outstanding Common Stock into a greater amount of Common Stock, then upon exercise of this Warrant, for each Share acquired, Holder shall receive, without cost to Holder, the total number and kind of securities to which Holder would have been entitled had Holder owned the Shares of record as of the date the dividend or subdivision occurred. If the outstanding shares of Common Stock are combined or consolidated, by reclassification or otherwise, into a lesser number of shares, the Warrant Price shall be proportionately increased and the number of Shares shall be proportionately decreased.

 

2.2                               Reclassification, Exchange, Combinations or Substitution. Upon any reclassification, exchange, substitution, or other event that results in a change of the number and/or class of the securities issuable upon exercise or conversion of this Warrant, Holder shall be entitled to receive, upon exercise or conversion of this Warrant, the number and kind of securities and property that Holder would have received for the Shares if this Warrant had been exercised immediately before such reclassification, exchange, substitution, or other event. Such an event shall include, without limitation, any automatic conversion of the outstanding or issuable securities of the Company of the same class or series as the Shares to common stock pursuant to the terms of the Company’s Certificate of Incorporation upon the closing of the IPO. The Company or its successor shall promptly issue to Holder an amendment to this Warrant setting forth the number and kind of such new securities or other property issuable upon exercise or conversion of this Warrant as a result of such reclassification, exchange, substitution or other event that results in a change of the number and/or class of securities issuable upon exercise or conversion of this Warrant. The amendment to this Warrant shall provide for adjustments which shall be as nearly equivalent as may be practicable to the adjustments provided for in this Article 2 including, without limitation, adjustments to the Warrant Price and to the number of securities or property issuable upon exercise of the new Warrant. The provisions of this Article 2.2 shall similarly apply to successive reclassifications, exchanges, substitutions, or other events.

 

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2.3                               No Impairment. The Company shall not, by amendment of its Certificate of Incorporation, or through a reorganization, transfer of assets, consolidation, merger, dissolution, issue, or sale of securities or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms to be observed or performed under this Warrant by the Company, but shall at all times in good faith assist in carrying out of all the provisions of this Article 2 and in taking all such action as may be necessary or appropriate to protect Holder’s rights under this Article against impairment.

 

2.4                               Fractional Shares. No fractional Shares shall be issuable upon exercise or conversion of the Warrant and the number of Shares to be issued shall be rounded down to the nearest whole Share. If a fractional share interest arises upon any exercise or conversion of the Warrant, the Company shall eliminate such fractional share interest by paying Holder the amount computed by multiplying the fractional interest by the fair market value of a full Share (determined in accordance with Section 1.3 above).

 

2.5                               Certificate as to Adjustments. Upon each adjustment of the Warrant Price, number of Shares or class of security for which this Warrant is exercisable, the Company shall promptly notify Holder in writing, and, at the Company’s expense, promptly compute such adjustment, and furnish Holder with a certificate of its Chief Financial Officer setting forth such adjustment and the facts upon which such adjustment is based. The Company shall, upon written request, furnish Holder a certificate setting forth the Warrant Price, number of Shares or class of security for which this Warrant is exercisable in effect upon the date thereof and the series of adjustments leading to such Warrant Price, number of Shares and class of security.

 

ARTICLE 3. REPRESENTATIONS AND COVENANTS OF THE COMPANY.

 

3.1                               Representations and Warranties. The Company represents and warrants to the Holder as follows:

 

(a)                                      The initial Warrant Price referenced on the first page of this Warrant is not greater than the purchase price per share paid for the Company’s Series B Preferred Stock.

 

(b)                                      All Shares which may be issued upon the exercise of the purchase right represented by this Warrant, and all securities, if any, issuable upon conversion of the Shares, shall, upon issuance, be duly authorized, validly issued, fully paid and nonassessable, and free of any liens and encumbrances except for restrictions on transfer provided for herein or under applicable federal and state securities laws.

 

(c)                                       The Company’s capitalization table attached hereto as Schedule 1 is true and complete as of the Issue Date.

 

3.2                               Notice of Certain Events. If the Company proposes at any time (a) to declare any dividend or distribution upon the outstanding shares of the same class and series as the Shares, whether in cash, property, stock, or other securities and whether or not a regular cash dividend; (b) to offer for subscription or sale pro rata to the holders of the outstanding shares of the same class and series as the Shares any additional shares of any class or series of the Company’s stock; (c) to effect any reclassification, reorganization or recapitalization of any of its stock or (d) to effect an Acquisition or to liquidate, dissolve or wind up; then, in connection with each such event, the Company shall give Holder: (1) at least 10 days prior written notice of the date on which a record will be taken for such dividend, distribution, or

 

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subscription rights (and specifying the date on which the holders of shares of the same class and series as the Shares will be entitled thereto) or for determining rights to vote, if any, in respect of the matters referred to in (c) and (d) above and (2) in the case of the matters referred to in (c) and (d) above at least 10 days prior written notice of the date when the same will take place (and specifying the date on which the holders of shares of the same class and series as the Shares will be entitled to exchange their shares for the securities or other property deliverable upon the occurrence of such event). The Company’s failure to give any notice to Holder as and when required by this Section 3.2, and/or any defect in any such notice given, shall not affect the validity of the transaction or event requiring such notice.

 

3.3                               No Shareholder Rights. Except as provided in this Warrant, Holder will not have any rights as a shareholder of the Company until the exercise of this Warrant.

 

3.4                               Certain Information. The Company agrees to provide Holder at any time and from time to time with such information as Holder may reasonably request for purposes of Holder’s compliance with regulatory, accounting and reporting requirements applicable to Holder.

 

ARTICLE 4. REPRESENTATIONS, WARRANTIES OF THE HOLDER. The Holder represents and warrants to the Company as follows:

 

4.1                               Purchase for Own Account. This Warrant and the securities to be acquired upon exercise of this Warrant by Holder will be acquired for investment for Holder’s account, not as a nominee or agent, and not with a view to the public resale or distribution within the meaning of the Act. Holder also represents that it has not been formed for the specific purpose of acquiring this Warrant or the Shares.

 

4.2                               Disclosure of Information. Holder has received or has had full access to all the information it considers necessary or appropriate to make an informed investment decision with respect to the acquisition of this Warrant and its underlying securities Holder further has had an opportunity to ask questions and receive answers from the Company regarding the terms and conditions of the offering of this Warrant and its underlying securities and to obtain additional information (to the extent the Company possessed such information or could acquire it without unreasonable effort or expense) necessary to verify any information furnished to Holder or to which Holder has access.

 

4.3                               Investment Experience. Holder understands that the purchase of this Warrant and its underlying securities involves substantial risk. Holder has experience as an investor in securities of companies in the development stage and acknowledges that Holder can bear the economic risk of such Holder’s investment in this Warrant and its underlying securities and has such knowledge and experience in financial or business matters that Holder is capable of evaluating the merits and risks of its investment in this Warrant and its underlying securities and/or has a preexisting personal or business relationship with the Company and certain of its officers, directors or controlling persons of a nature and duration that enables Holder to be aware of the character, business acumen and financial circumstances of such persons.

 

4.4                               Accredited Investor Status. Holder is an “accredited investor” within the meaning of Regulation D promulgated under the Act.

 

4.5                               The Act. Holder understands that this Warrant and the Shares issuable upon exercise or conversion hereof have not been registered under the Act in reliance upon a

 

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specific exemption therefrom, which exemption depends upon, among other things, the bona fide nature of the Holder’s investment intent as expressed herein. Holder understands that this Warrant and the Shares issued upon any exercise or conversion hereof must be held indefinitely unless subsequently registered under the Act and qualified under applicable state securities laws, or unless exemption from such registration and qualification are otherwise available.

 

ARTICLE 5. MISCELLANEOUS.

 

5.1                               Term: This Warrant is exercisable in whole or in part at any time and from time to time on or before the Expiration Date.

 

5.2                               Legends. This Warrant and the Shares (and the securities issuable, directly or indirectly, upon conversion of the Shares, if any) shall be imprinted with a legend in substantially the following form:

 

THIS WARRANT AND THE SHARES ISSUABLE HEREUNDER HAVE NOT BEEN REGISTERED UNDER THE ACT, OR THE SECURITIES LAWS OF ANY STATE AND, EXCEPT AND PURSUANT TO THE PROVISIONS OF ARTICLE 5 OF THAT CERTAIN WARRANT TO PURCHASE STOCK ISSUED BY THE COMPANY TO SILICON VALLEY BANK DATED AS OF MAY     , 2007, MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED, PLEDGED OR HYPOTHECATED UNLESS AND UNTIL REGISTERED UNDER SAID ACT AND APPLICABLE STATE SECURITIES LAW OR, IN THE OPINION OF LEGAL COUNSEL IN FORM AND SUBSTANCE SATISFACTORY TO THE ISSUER OF THESE SECURITIES, SUCH OFFER, SALE OR TRANSFER, PLEDGE OR HYPOTHECATION IS EXEMPT FROM REGISTRATION.

 

5.3                               Compliance with Securities Laws on Transfer. This Warrant and the securities issuable upon exercise of this Warrant may not be transferred or assigned in whole or in part without compliance with applicable federal and state securities laws by the transferor and the transferee (including, without limitation, the delivery of investment representation letters and legal opinions reasonably satisfactory to the Company, as reasonably requested by the Company). The Company shall not require Holder to provide an opinion of counsel if the transfer is to SVB Financial Group (Silicon Valley Bank’s parent company) or any other affiliate of Holder, provided that any such transferee is an “accredited investor” as defined in Regulation D promulgated under the Act.

 

5.4                               Transfer Procedure. After receipt by Silicon Valley Bank (“Bank”) of the executed Warrant, Bank will transfer all of this Warrant to SVB Financial Group, Holder’s parent company, by execution of an Assignment substantially in the form of Appendix 2. Subject to the provisions of Article 5.3 and upon providing the Company with written notice, SVB Financial Group and any subsequent Holder may transfer all or part of this Warrant or the securities issuable upon exercise of this Warrant to any transferee, provided, however, in connection with any such transfer, SVB Financial Group or any subsequent Holder will give the Company notice of the portion of the Warrant being transferred with the name, address and taxpayer identification number of the transferee and Holder will surrender this Warrant to the Company for reissuance to the transferee(s) (and Holder if applicable). The Company may refuse to transfer this Warrant (or any part hereof) or any Shares to any person who directly competes

 

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with the Company, unless in either case, the stock of the Company is publicly traded or such transfer is in connection with an Acquisition.

 

5.5                               Notices. All notices and other communications from the Company to the Holder, or vice versa, shall be deemed delivered and effective when given personally or mailed by first-class registered or certified mail, postage prepaid, at such address as may have been furnished to the Company or Holder, as the case may (or on the first business day after transmission by facsimile) be, in writing by the Company or such holder from time to time. All notices to Holder shall be addressed as follows until the Company receives notice of a change of address in connection with a transfer or otherwise:

 

SVB Financial Group

Attn: Treasury Department

3003 Tasman Drive, HA 200

Santa Clara, CA 95054

Telephone: 408-654-7400

Facsimile: 408-496-2405

 

Notice to the Company shall be addressed as follows until Holder receives notice of a change in address:

 

Tetralogic Pharmaceuticals Corporation

Attn: John Gill

365 Phoenixville Pike

Malvern, PA 19355

Telephone: 610.889.9900

Facsimile: 610.889.9994

 

5.6                               Waiver. 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.

 

5.7                               Attorney’s Fees. In the event of any dispute between the parties concerning the terms and provisions of this Warrant, the party prevailing in such dispute shall be entitled to collect from the other party all costs incurred in such dispute, including reasonable attorneys’ fees.

 

5.8                               Automatic Conversion upon Expiration. In the event that, upon the Expiration Date, the fair market value of one Share (or other security issuable upon the exercise hereof) as determined in accordance with Section 1.3 above is greater than the Warrant Price in effect on such date, then this Warrant shall automatically be deemed on and as of such date to be converted pursuant to Section 1.2 above as to all Shares (or such other securities) for which it shall not previously have been exercised or converted, and the Company shall promptly deliver a certificate representing the Shares (or such other securities) issued upon such conversion to Holder.

 

5.9                               Counterparts. This Warrant may be executed in counterparts, all of which together shall constitute one and the same agreement.

 

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5.10                        Governing Law. This Warrant shall be governed by and construed in accordance with the laws of the State of California, without giving effect to its principles regarding conflicts of law.

 

	
“COMPANY”
    	
 
    
	
 
    	
 
    
	
TETRALOGIC PHARMACEUTICALS   CORPORATION
    	
 
    
	
 
    	
 
    	
 
    
	
By:
    	
/s/ John M. Gill
    	
 
    
	
 
    	
 
    	
 
    
	
Name:
    	
John Gill
    	
 
    
	
Title:
    	
President
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
“HOLDER”
    	
 
    
	
 
    	
 
    	
 
    
	
SILICON VALLEY BANK
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
By:
    	
/s/ Thomas F. Gordon
    	
 
    
	
Name:
    	
Thomas F. Gordon
    	
 
    
	
 
    	
(Print)
    	
 
    
	
Title:
    	
Deal Team Leader
    	
 
    

 

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APPENDIX 1

 

NOTICE OF EXERCISE

 

1.                                      Holder elects to purchase                     shares of the Common Stock of Tetralogic Pharmaceuticals Corporation pursuant to the terms of the attached Warrant, and tenders payment of the purchase price of the shares in full.

 

[or]

 

1.                                      Holder elects to convert the attached Warrant into Shares/cash [strike one] in the manner specified in the Warrant. This conversion is exercised for                     of the Shares covered by the Warrant.

 

[Strike paragraph that does not apply.]

 

2.                                      Please issue a certificate or certificates representing the Shares in the name specified below:

 

	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
Holders Name
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
(Address)
    	
 
    

 

3.                                      By its execution below and for the benefit of the Company, Holder hereby restates each of the representations and warranties in Article 4 of the Warrant as the date hereof.

 

	
 
    	
HOLDER:
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
Name:
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
Title:
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
(Date):
    	
 
    

 

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SCHEDULE 1

 

Company Capitalization Table

 

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APPENDIX 2

 

ASSIGNMENT

 

For value received, Silicon Valley Bank hereby sells, assigns and transfers unto

 

	
 
    	
Name:
    	
SVB Financial Group
    
	
 
    	
Address:
    	
3003 Tasman Drive (HA-200)
    
	
 
    	
 
    	
Santa Clara, CA 95054
    
	
 
    	
 
    	
 
    
	
 
    	
Tax ID:
    	
91-1962278
    

 

that certain Warrant to Purchase Stock issued by Tetralogic Pharmaceuticals Corporation, a Delaware corporation (the “Company”), on May    , 2007 (the “Warrant”) together with all rights, title and interest therein.

 

	
 
    	
SILICON VALLEY BANK
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
Name:
    	
 
    
	
 
    	
Title:
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
Assignment Date:
    	
 
    	
 
    
				

 

By its execution below, and for the benefit of the Company, SVB Financial Group makes each of the representations and warranties set forth in Article 4 of the Warrant as of the date hereof and agrees to be bound by all of the terms and conditions set forth in the Warrant as the “Holder” thereof.

 

	
 
    	
SVB FINANCIAL GROUP
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
Name: 
    	
 
    
	
 
    	
Title:
    	
 
    

 

11Exhibit 4.4

 

THIS WARRANT AND THE SHARES OF CAPITAL STOCK ISSUED UPON ANY EXERCISE HEREOF HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR ANY APPLICABLE STATE SECURITIES LAWS AND MAY NOT BE SOLD OR OTHERWISE TRANSFERRED TO ANY PERSON, INCLUDING A PLEDGEE, UNLESS (I) EITHER (A) A REGISTRATION STATEMENT WITH RESPECT THERETO SHALL BE EFFECTIVE UNDER THE SECURITIES ACT, OR (B) THAT AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT IS AVAILABLE, AND (2) THERE SHALL HAVE BEEN COMPLIANCE WITH ALL APPLICABLE STATE SECURITIES OR “BLUE SKY” LAWS.

 

Void after 5:00 p.m. New York Time on the Expiration Date (as defined below)

Warrant to Purchase Shares of Convertible Preferred Stock

 

Warrant No       

 

WARRANT TO PURCHASE CONVERTIBLE PREFERRED STOCK 

 

OF

 

TETRALOGIC PHARMACEUTICALS CORPORATION

 

 

This is to Certify that, FOR VALUE RECEIVED,                                               , or its permitted assigns (“Holder’’), is entitled to Purchase, subject to the provisions of this Warrant, from TetraLogic Pharmaceuticals Corporation, a Delaware corporation (the “Company”), either (i) until the completion of a Qualified financing,                 fully paid, validly issued and nonassessable shares of Series A Convertible Preferred Stock, par value $0.0001 of the Company, (“Preferred Stock”) at an exercise price of $1.00 per share, or (ii) commencing on the completion of a Qualified Financing, such number of shares of Qualified Securities that is equal to the quotient of (I) $         divided by (II) the Qualified Purchase Price, at an exercise price pre [SIC] share equal to the Qualified Purchase Price, exercisable at any time or from time to time during the period from March 30, 2006 or to such date that is the later of (a) five years from the date of a [SIC] the consummation of the Company’s first firm-commitment underwritten offering of shares of its common stock in which (1) the aggregate price paid for such shares by the public shall be at least $25,000,000, and (2) the price paid by the public shall be at least $5.00  per share (appropriately and proportionately adjusted for stock dividends, stock splits and other subdivisions and combinations of, and recapitalizations and like occurrences with respect to, the Common Stock) (a “Qualified Public Offering”), or (b) March 30, 2016 (the later of (a) and (b) is referred to herein as the “Expiration Date”), but not later than 5:00 p.m. New York City Time on the Expiration Date. The number of shares of Preferred Stock or Qualified Securities, as applicable, to be received upon the exercise of this Warrant and the exercise price to be paid for each share of Preferred Stock or Qualified Securities, as applicable, may be adjusted from time to time as hereinafter set forth. The shares of Preferred Stock or Qualified Securities deliverable upon such exercise, and as adjusted from time to time, are hereinafter referred to as “Warrant Shares” and the exercise price for each Warrant Share, as in effect at any time and as adjusted from time to time is hereinafter referred to as the “Exercise Price.” Unless otherwise defined in this Warrant, capitalized terms used in this Warrant shall have the respective meanings ascribed

 

 

to such terms in that certain Convertible Note and Warrant Purchase Agreement, dated as of March 30, 2006, among the Company, the Holder and the other signatories thereto. 

 

(a)           EXERCISE OF WARRANT

 

(1)           This Warrant may be exercised in whole or in part at any time or from time to time on or after March 30, 2006 until the Expiration Date (the “Exercise Period”), provided, however, that (i) if either such day is a day on which banking institutions in the State of Delaware are authorized by law to close, then on the next succeeding day which shall not be such a day, (ii) in the event of any merger, consolidation or sale of substantially all the assets of the Company as an entirety, resulting in any distribution to the Company’s stockholders, prior to the Expiration Date, the Holder shall have the right to exercise this Warrant commencing at such time through the Expiration Date into the kind and amount of shares of stock and other securities and property (including cash) receivable by a holder of the number of shares of Warrant Shares into which this Warrant might have been exercisable immediately prior thereto at the applicable Exercise Price in effect immediately prior to any such merger, consolidation or sale and (iii) fo1lowing the closing of a Qualified Public Offering, the Holder shall have the right to exercise this Warrant commencing at such time through the Expiration Date into the number of shares of common stock of the Company receivable by a holder of the number of shares of Warrant Shares into which this Warrant might have been exercisable immediately prior thereto at the applicable Exercise Price in effect immediately prior to the closing of a Qualified Public Offering. This Warrant may be exercised by presentation and surrender hereof to the Company at its principal office, or at the office of its stock transfer agent, if any, with the Purchase Form annexed hereto as Exhibit A, duly executed and accompanied by payment of the Exercise Price for the number of Warrant Shares specified in such form. As soon as practicable after each such exercise of the warrants, but not later than ten (l0) business days from the date of such exercise, the Company shall issue and deliver to the Holder a certificate or certificate for the Warrant Shares issuable upon such exercise, registered in the name of the Holder or its designee. If this Warrants should be exercised in part only, the Company shall, upon surrender of this Warrant for cancellation, execute and deliver a new Warrant evidencing the rights of the Holder thereof to purchase the balance of the Warrant Shares purchasable there under. Upon receipt by the Company of this Warrant at its office, or by the stock transfer agent of the Company at its office, in proper form for exercise, the Holder shall be deemed to be the holder of record of the shares of Warrant Shares issuable upon such exercise, notwithstanding that the stock transfer books of the Company shall then be closed or that certificates representing such shares of Warrant Shares shall not then be physically delivered to the Holder.

 

(2)           At any time during the Exercise Period, the Holder may, at its option, exchange this Warrant, in whole or in part (a “Warrant Exchange”), into the number of Warrant Shares determined in accordance with this Section (a)(2), by surrendering this Warrant at the principal office of the Company or at the office of its stock transfer agent, accompanied by a notice stating such Holder’s intent to effect such exchange, the number of Warrant Shares to be exchanged and the date on which the Holder requests that such Warrant Exchange occur (the “Notice of Exchange”). The Warrant Exchange shall take place on the date specified in the Notice of Exchange or, if later, the date the Notice of Exchange is received by the Company (the “Exchange Date”). Certificates for the shares issuable upon such Warrant Exchange and, if

 

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applicable, a new warrant of like tenor evidencing the balance of the shares remaining subject to this Warrant, shall be issued as of the Exchange Date and delivered to the Holder within ten (10) business days following the Exchange Date. In connection with any Warrant Exchange, this Warrant shall represent the right to subscribe for and acquire the number of Warrant Shares (rounded to the next smallest whole number of Warrant Shares, together with any cash payment required pursuant to Section (c) below) equal to (i) the number of Warrant Shares specified by the Holder in its Notice of Exchange (the “Total Number”) less (ii) the number of Warrant Shares equal to the quotient obtained by dividing (A) the product of the Total Number and the existing Exercise Price by (B) the current market value of a share of Common Stock. Current market value shall have the meaning set forth in Section (c) below, except that for purposes hereof, the date of exercise, as used in such Section (c), shall mean the Exchange Date. In the event of any Warrant Exchange, the Holder shall be deemed to have exercised this Warrant for a number of Warrant Shares equal to the Total Number.

 

(b)           RESERVATION OF SHARES. The Issuer shall, to provide for the exercise of Warrants, authorize, and reserve and keep available, sufficient shares, of (i) Series A Preferred Stock or Qualified Securities for issuance upon exercise of the Warrants, and (ii) Common Stock for issuance upon conversion of such Series A Preferred Stock or Qualified Securities. Such Series A Preferred Stock, Qualified Securities and Common Stock shall, when issued or delivered in accordance with the terms of the Warrants, be duly and validly issued and fully paid and non-assessable. The Issuer shall prepare and file with the Secretary of the State of the State of Delaware all amendments to the Restated Certificate of Incorporation that are necessary to effectuate any of the Issuer’s covenants set forth in Section 5.1 of the Purchase Agreement, which amendments shall in each case be in form and substance satisfactory to the Required Holders.

 

(c)           FRACTIONAL SHARES. No fractional shares or script representing fractional shares shall be issued upon the exercise of this Warrant. With respect to any fraction of a share called for upon any exercise hereof, the Company shall pay to the Holder an amount in cash equal to such fraction multiplied by the current market value of a share, determined as follows:

 

(1)           If the date for such determination is the date on which the Company’s common stock is first sold to the public by the Company in a firm commitment public offering under the Securities Act of 1933, as amended, then the initial public offering price (before deducting commissions, discounts or expenses) at which the common stock is sold in such offering; or

 

(2)           If the Common Stock is listed on a national securities exchange or admitted to unlisted trading privileges on such exchange or listed for trading on the Nasdaq National Market, the current market value shall be the last reported sale price of the Common Stock on such exchange or market on the last business day prior to the date of exercise of this Warrant or if no such sale is made on such day, the average closing bid and asked prices for such day on such exchange or market; or 

 

3

 

(3)           If the Common Stock is not so listed or admitted to unlisted trading privileges, but is traded on the Nasdaq SmallCap Market or the OTC Bulletin Board, the current Market Value shall be the last reported sale price for such day on such market and if the Common Stock is not so traded, the current market value shall be the mean of the last reported bid and asked prices reported on the last business day prior to the date of the exercise of this Warrant; or

 

(4)           If the Common Stock is not so listed or admitted to unlisted trading privileges or if the bid and asked prices are not so reported, the current market value shall be an amount (not less than book value thereof, as of the end of the most recent fiscal year of the Company ending prior to the date of the exercise of the Warrant) as is determined in such reasonable manner as may be prescribed by the Board of Directors of the Company.

 

(d)           EXCHANGE, TRANSFER, ASSIGNMENT OR LOSS OF WARRANT. This Warrant is exchangeable, without expense, at the option of the Holder, upon presentation and surrender hereof to the Company or at the office of its stock transfer agent, if any, for other warrants of different denominations entitling the holder thereof to purchase in the aggregate the same number of shares of Preferred Stock or Qualified Securities purchasable hereunder. Upon surrender of this Warrant to the Company at its principal office or at the office of its stock transfer agent, if any, with the Assignment Form annexed hereto as Exhibit B, duly executed and funds sufficient to pay any transfer tax, and, if requested by the Company, an opinion of counsel reasonably acceptable to the Company that any such assignment may be made without registration under the Securities Act of 1933, as amended, the Company shall, without charge, execute and deliver a new Warrant in the name of the assignee or assignees named in such instrument of assignment and this Warrant shall promptly be canceled. This Warrant may be divided or combined with other warrants which carry the same rights upon presentation hereof at the principal office of the Company or at the office of it stock transfer agent, if any, together with a written notice specifying the names and denominations in which new Warrants are to be issued and signed by the Holder hereof. The term “Warrant” as used herein includes any Warrants into which this Warrant may be divided or exchanged. Upon receipt by the Company of evidence satisfactory to it of the loss, theft, destruction or mutilation of this Warrant, and (in the case of loss, theft or destruction) of reasonably satisfactory indemnification, and upon surrender and cancellation of this Warrant, if mutilated, the Company will execute and deliver a new Warrant of like tenor and date.

 

(e)           RIGHTS OF THE HOLDER. The Holder shall not, by virtue hereof, be entitled to any rights of a shareholder in the Company, either at law or equity, and the rights of the Holder are limited to those expressed in the Warrant and are not enforceable against the Company except to the extent set forth herein.

 

(f)            ANTI-DILUTION PROVISIONS. The Exercise Price in effect at any time and the number and kind of securities purchasable upon the exercise of the Warrants shall be subject to adjustment from time to time upon the happening of certain events as follows:

 

4

 

(1)           In case the Company shall (i) declare a dividend or make a distribution on its outstanding shares of Warrant Shares in such Warrant Shares, (ii) subdivide or reclassify its outstanding shares of Warrant Shares into a greater number of such Warrant Shares, or (iii) combine or reclassify its outstanding shares of Warrant Shares into a smaller number of such Warrant Shares, and there is not a simultaneous adjustment to the conversion price thereof, then there shall be an equitable adjustment of the Exercise Price in effect at the time of the record date for such dividend or distribution or of the effective date of such subdivision, combination or reclassification so that it shall equal the price determined by multiplying the Exercise Price at that time by a fraction, the denominator of which shall be the number of shares of Warrant Shares outstanding after giving effect to such action, and the numerator of which shall be the number of shares of Warrant Shares outstanding immediately prior to such action. Such adjustment shall be made successively whenever any event listed above shall occur and shall be in addition to any subsequent adjustments to the conversion price of the Warrant Shares.

 

(2)           Whenever the Exercise Price payable upon exercise of each Warrant is adjusted pursuant to Section (f)(1) above, the number of Warrant Shares purchasable upon exercise of this Warrant at that time shall simultaneously be adjusted by multiplying the number of Warrant Shares initially issuable upon exercise of this Warrant by the Exercise Price in effect on the date hereof and dividing the product so obtained by the Exercise Price, as adjusted.

 

(3)           Whenever the Exercise Price is adjusted, as herein provided, the Company shall promptly but no later than 10 days after any request for such an adjustment by the Holder, cause a notice setting forth the adjusted Exercise Price and adjusted number of Warrant Shares issuable upon exercise of each Warrant, and, if requested, information describing the transactions giving rise to such adjustments, to be mailed to the Holders at their last addresses appearing in the Company’s books and records, and shall notify its transfer agent, if any, of such adjustment. The Company may retain a firm of independent certified public accountants selected by the Board of Directors (who may be the regular accountants employed by the Company) to make any computation required by this Section (f)(3), and a certificate signed by such firm shall be conclusive evidence of the correctness of such adjustment.

 

(4)           In the event that at any time, as a result of an adjustment made pursuant to Section (f)(1) above, the Holder of this Warrant thereafter shall become entitled to receive any shares of the Company, other than Common Stock, thereafter the number of such shares so receivable upon exercise of this Warrant shall be subject to adjustment from time to time in a manner and on terms as

 

5

 

nearly equivalent as practicable to the provisions with respect to the Common Stock contained in Sections (f)(1) to (f)(3), inclusive above.

 

(5)           Irrespective of any adjustments in the Exercise Price or the number or kind of shares purchasable upon exercise of this Warrant, Warrants theretofore or thereafter issued may continue to express the same price and number and kind of shares as are stated in the similar Warrants initially issuable pursuant to the Purchase Agreement.

 

(6)           Any adjustment made to the Exercise Price pursuant to this Section shall be disregarded to the extent that such adjustment is made as a result of an event described in Section (f)(1) for a class or series of securities that is not the class or series of securities with respect to which this Warrant is exercised.

 

(g)           OFFICER’S CERTIFICATE.  Whenever the Exercise Price shall be adjusted as required by the provisions of the foregoing Section, the Company shall forthwith file in the custody of its Secretary or an Assistant Secretary at its principal office and with its stock transfer agent, if any, an officer’s certificate showing the adjusted Exercise Price determined as herein provided, setting forth in reasonable detail the facts requiring such adjustment, including a statement of the number of additional shares of Common Stock, if any, and such other facts as shall be necessary to show the reason for and the manner of computing such adjustment.  Each such officer’s certificate shall be made available at all reasonable times for inspection by the holder or any holder of a Warrant executed and delivered pursuant to Section (a) and the Company shall, forthwith after each such adjustment, mail a copy by certified mail of such certificate to the Holder or any such holder.

 

(h)           NOTICES TO WARRANT HOLDERS.  So long as this Warrant shall be outstanding, (i) if the Company shall pay any dividend or make any distribution upon the Warrant Shares or Common Stock, or (ii) if the Company shall offer to the holders of Warrant Shares or Common Stock for subscription or purchase by them any share of any class or any other rights, or (iii) if any capital reorganization of the Company, reclassification of the capital  stock of the Company, consolidation or merger of the Company with or into another corporation, sale, lease or transfer of all or substantially all of the property and assets of the Company to another corporation, or voluntary or involuntary dissolution, liquidation or winding up of the Company shall be effected, then in any such case, the Company shall cause to be mailed by certified mail to the Holder, at least fifteen business days prior the date specified in (x) or (y) below, as the case may be, a notice containing a brief description of the proposed action and stating the date on which (x) a record is to be taken for the purpose of such dividend, distribution or rights, or (y) such reclassification, reorganization, consolidation, merger, conveyance, lease, dissolution, liquidation or winding up is to take place and the date, if any is to be fixed, as of which the holders of Warrant Shares or Common Stock or other securities shall receive cash or other property deliverable upon such reclassification, reorganization, consolidation, merger, conveyance, dissolution, liquidation or winding up.

 

(i)            RECLASSIFICATION, REORGANIZATlON OR MERGER.  In case of any reclassification, capital reorganization or other change of outstanding shares of the Warrant

 

6

 

Shares of the Company, or in the case of any consolidation or merger of the Company with or into another corporation (other than a merger with a subsidiary in which merger the Company is the continuing corporation and which does not result in any reclassification, capital reorganization or other change of outstanding shares of the Warrant Shares) or in the case of any sale, lease or conveyance to another corporation of all or substantially all of the assets of the Company, the Company shall, as a condition precedent to such transaction, cause effective  provisions to be made so that the Holder shall have the right thereafter by exercising this Warrant at any time prior to the expiration of the Warrant, to purchase the kind and amount of shares of stock and other securities and property receivable upon such reclassification, capital reorganization and other change, consolidation, merger, sale or conveyance by a holder of the number of shares of the Warrant Shares which might have been purchased upon exercise of this Warrant immediately prior to such reclassification, change, consolidation, merger, sale or conveyance.  Any such provision shall include provision for adjustments which shall be as nearly equivalent as may be practicable to the adjustments provided for in this Warrant.  The foregoing provisions of this Section (i) shall similarly apply to successive reclassifications, capital reorganizations and changes of shares of the Warrant Shares and to successive consolidations, mergers, sales or conveyances.

 

(j)            COMPLIANCE WITH SECURITIES ACT.

 

(1)           Unregistered Securities.  The Holder acknowledges that neither this Warrant, nor the Warrant Shares, have been registered under the Securities Act and agrees not to sell, pledge, distribute, offer for sale, transfer or otherwise dispose of this Warrant or any Warrant Shares in the absence of (i) an effective registration statement under the Securities Act covering this Warrant or such Warrant Shares and registration or qualification of this Warrant or such Warrant Shares under any applicable “blue sky” or state securities law then in effect, or (ii) the availability of an exemption from any such registration and qualification.

 

(2)           Legend.  Any certificates delivered to the Holder representing Warrant  Shares shall bear the following legend or a legend in substantially similar form:

 

“THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN TAKEN FOR INVESTMENT AND THEY MAY NOT BE SOLD OR OTHERWISE TRANSFERRED BY ANY PERSON, INCLUDING A PLEDGEE, IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR THE SHARES UNDER THE SECURITIES ACT OF I 933, AS AMENDED, OR IF AN EXEMPTION FROM REGISTRATION IS THEN AVAILABLE.”

 

(k)           GOVERNING LAW.  This Warrant will be governed by and construed in accordance with and governed by the laws of Delaware, without giving effect to the conflict of law principles thereof.

 

(l)            NOTICES.  All notices, requests and other communications hereunder shall be in writing, shall be either (i) delivered by hand, (ii) made by facsimile transmission, (iii) sent by overnight courier, or (iv) sent by registered mail, postage prepaid, return receipt requested.  In  the case of notices from the Company to the Holder, they shall be sent to the address furnished to the Company in writing by the last Holder who shall have furnished an address to the Company

 

7

 

in writing.  All notices from the Holder to the Company shall be delivered to the Company at its offices at 365 Phoenixville Pike, Malvern, Pennsylvania 19333, facsimile number (610) 889-9994, or such other address and facsimile number as the Company shall so notify the Holder. All notices, requests and other communications hereunder shall be deemed to have been given (i) by hand, at the time of the delivery thereof to the receiving party at the address of such party described above, (ii) if made by facsimile transmission, at the time that receipt thereof has been acknowledged by electronic confirmation or otherwise, (iii) if sent by overnight courier, on the next business day following the day such notices is delivered to the courier service, or (iv) if sent by registered mail, on the fifth (5th) business day following the day such mailing is made.

 

8

 

	
 
    	
TETRALOGlC   PHARMACEUTICALS CORPORATION
    
	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By: 
    	
 
    
	
 
    	
 
    	
Name:  John M. Gill
    
	
 
    	
 
    	
Title:  President and Chief Executive officer
    

 

9

 

Exhibit A 

 

PURCHASE FORM

 

To:          TetraLogic Pharmaceuticals Corporation

 

The undersigned pursuant to the provisions set forth in the attached Warrant (No.                 ), (the “Warrant”) hereby irrevocably elects to (check one):

 

o                                                                                    (A)          purchase          shares of the Series        Preferred Stock, par value $                   per share, of TetraLogic Pharmaceuticals Corporation (the “Preferred Stock”), covered by such Warrant and herewith makes payment of $                  , representing the full purchase price for such shares at the price per share provided for in such Warrant; or

 

o                                                                                    (B)          convert         Warrant Shares (as defined below) into that number of shares of fully paid and nonassessable shares of Series        Preferred Stock, determined pursuant to the provisions of Section 2 of the Warrant.

 

The Series      Preferred Stock for which the Warrant may be exercised or convened shall be known herein as the “Warrant Shares.” All capitalized terms used but not defined herein shall have the meanings ascribed to such terms in the Warrant.

 

The undersigned is aware that the Warrant Shares have not been and, subject to certain registration rights which the undersigned may otherwise posses [SIC], will not be registered under the Securities Act of 1933, as amended (the “Securities Act”) or any state securities laws.  The undersigned understands that reliance by the Company on exemptions under the Securities Act is predicated in part upon the truth and accuracy of the statements of the undersigned in this Purchase Form.

 

The undersigned agrees that it will in no event sell or distribute or otherwise dispose of all or any part of the Warrant Shares unless (1) there is an effective registration statement under the Securities Act and applicable state securities laws covering any such transaction involving the Warrant Shares, or (2) such transaction is exempt from registration.  The undersigned consents to the placing of a legend on its certificate for the Warrant Shares stating that the sale of the Warrant Shares has not been registered and setting forth the restriction on transfer contemplated hereby and to the placing of a stop transfer order on the books of the Company and with any transfer agents against the Warrant Shares until the Warrant Shares may be legally resold or distributed without restriction.

 

 

The undersigned has considered the federal and state income tax implications of the  exercise of the Warrant and the purchase and subsequent sale of the Warrant Shares.

 

	
 
    	
 
    
	
 
    	
 
    
	
 
    	
Dated:
    	
 
    

 

2

 

Exhibit B  

 

ASSIGNMENT FORM

 

ASSIGNMENT SEPARATE FROM CERTIFICATE

 

FOR VALUE RECEIVED,                                                                             hereby sells, assigns and transfers unto                                                 (i)                                                                        (                                ) the right to purchase                            shares of Series      Preferred Stock, par value $                    per share, of TetraLogic Pharmaceuticals (the “Company”) pursuant to the warrant No.               (the “Warrant”) delivered herewith and standing in the name of the undersigned on the books of the Company, and does hereby irrevocably constitute and appoint the Company its attorney to transfer the said Warrant on the books of the Company with full power of substitution in the premises.

 

Dated:                               , 20       

 

	
IN   PRESENCE OF
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
By:
    	
 
    
	
Witness   Name:
    	
Print   Name:
    
	
 
    	
Title:
    
				

 

 

SCHEDULE OF MATERIAL DIFFERENCES 

TO EXHIBIT 4.4

 

	
Warrant Number
    	
 
    	
Name
    	
 
    	
Number of Shares
    	
 
    	
Amount
    	
 
    
	
A-1
    	
 
    	
HealthCare Ventures VII, L.P.
    	
 
    	
52,083
    	
 
    	
$
    	
52,083
    	
 
    
	
A-2
    	
 
    	
Novitas Capital III, L.P. (f/k/a PA Early Stage   Partners III, L.P.)
    	
 
    	
20,833
    	
 
    	
$
    	
20,833
    	
 
    
	
A-3
    	
 
    	
Kammerer & Associates, L.P.
    	
 
    	
10,500
    	
 
    	
$
    	
10,500

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