Document:

Exhibit 4.2

 

THIS WARRANT AND THE SECURITIES ISSUABLE UPON EXERCISE OF THIS WARRANT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR UNDER THE SECURITIES LAWS OF APPLICABLE STATES. THIS WARRANT IS SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER THE ACT AND THE APPLICABLE STATE SECURITIES LAWS PURSUANT TO REGISTRATION OR EXEMPTION THEREFROM. INVESTORS SHOULD BE AWARE THAT THEY MAY BE REQUIRED TO BEAR THE FINANCIAL RISKS OF THIS INVESTMENT FOR AN INDEFINITE PERIOD OF TIME.

 

WARRANT TO PURCHASE COMMON STOCK

 

	
No. W-[   ]
    	
April [   ],   2015
    

 

Void After April [  ], 2022

 

This certifies that, for value received, [                 ] or its assigns (the “Holder”), is entitled to subscribe for and purchase from Ra Pharmaceuticals, Inc., a Delaware corporation (the “Company”), with its principal office at One Kendall Square, Suite B14301, Cambridge, MA  02139, the Exercise Shares at the Exercise Price (each as defined below).

 

This Warrant is being issued as one of a series of warrants pursuant to the terms of the Convertible Promissory Note Purchase Agreement, dated April 1, 2015, by and among the Company and the purchasers set forth therein (as amended and/or restated from time to time, the “Purchase Agreement”). Capitalized terms not otherwise defined herein shall have the meaning given to such terms in the Purchase Agreement.

 

Subject to the terms and conditions set forth herein, the Holder, commencing on the date hereof, shall be entitled to purchase from the Company [insert 25% of the principal amount of the related note divided by $0.80176] shares (the “Exercise Shares”) of Common Stock, $0.001 par value per share, of the Company (“Common Stock”), at a price per share of $0.01 (the “Exercise Price”). Until such time as this Warrant is exercised in full or expires, the Exercise Price and the Exercise Shares are subject to adjustment as hereinafter provided.

 

1.                                      EXERCISE OF WARRANT.  This Warrant may be exercised at any time pursuant to the terms hereunder on or after the date of issuance and ending at 5:00 p.m. EST on [          ] (the “Exercise Period”).  The rights represented by this Warrant may be exercised in whole or in part at any time during the Exercise Period, by delivery of the following to the Company at its address set forth above (or at such other address as it may designate by notice in writing to the Holder):

 

(a)                                 An executed Notice of Exercise in the form attached hereto;

 

(b)                                 Payment of the Exercise Price (i) in cash or by check, (ii) by cancellation of indebtedness, or (iii) pursuant to the terms of the net exercise provisions set forth in Section 1.1; and

 

(c)                                  This Warrant.

 

 

Upon the exercise of the rights represented by this Warrant, a certificate or certificates for the Exercise Shares so purchased, registered in the name of the Holder or persons affiliated with the Holder, if the Holder so designates, shall be issued and delivered to the Holder within a reasonable time after the rights represented by this Warrant shall have been so exercised.

 

The person in whose name any certificate or certificates for Exercise Shares are to be issued upon exercise of this Warrant shall be deemed to have become the holder of record of such shares on the date on which this Warrant was surrendered and payment of the Exercise Price was made, irrespective of the date of delivery of such certificate or certificates, except that, if the date of such surrender and payment is a date when the stock transfer books of the Company are closed, such person shall be deemed to have become the holder of such shares at the close of business on the next succeeding date on which the stock transfer books are open.

 

1.1                               Net Exercise.  Notwithstanding any provisions herein to the contrary, if the fair market value of one share of the Company’s Common Stock issuable hereunder is greater than the Exercise Price (at the date of calculation as set forth below), in lieu of exercising this Warrant by payment of cash, the Holder may elect to receive shares equal to the value (as determined below) of this Warrant (or the portion thereof being canceled) by surrender of this Warrant at the principal office of the Company together with the properly endorsed Notice of Exercise in which event the Company shall issue to the Holder a number of shares of Common Stock computed using the following formula:

 

X = Y (A-B)

A

 

Where             X =                             the number of Exercise Shares to be issued to the Holder

 

Y =                             the number of shares of Common Stock purchasable under the Warrant or, if only a portion of the Warrant is being exercised, the portion of the Warrant being canceled (at the date of such calculation)

 

A =                             the fair market value of one share of the Company’s Common Stock purchasable under the Warrant (at the date of such calculation)

 

B =                             Exercise Price (as adjusted to the date of such calculation)

 

For purposes of the above calculation, the fair market value of one share of Common Stock shall be determined by the Company’s Board of Directors in good faith; provided, however, that in the event that this Warrant is exercised pursuant to this Section 1.1 in connection with the Company’s initial public offering of its Common Stock, the fair market value per share shall be the product of (i) the per share offering price to the public of the Company’s initial public offering, and (ii) the number of shares of Common Stock into which each share of Common Stock issuable hereunder is convertible at the time of such exercise.

 

2.                                      COVENANTS OF THE COMPANY.

 

2.1                               Covenants as to Exercise Shares.  The Company covenants and agrees that all Exercise Shares that may be issued upon the exercise of the rights represented by this

 

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Warrant will, upon issuance, be validly issued and outstanding, fully paid and nonassessable, and free from all taxes, liens and charges with respect to the issuance thereof.  The Company further covenants and agrees that the Company will at all times during the Exercise Period, have authorized and reserved, free from preemptive rights, a sufficient number of shares of its Common Stock to provide for the exercise of the rights represented by this Warrant.  If at any time during the Exercise Period the number of authorized but unissued shares of Common Stock shall not be sufficient to permit exercise of this Warrant, the Company will take such corporate action as may, in the opinion of its counsel, be necessary to increase its authorized but unissued shares of Common Stock to such number of shares as shall be sufficient for such purposes.

 

2.2                               No Impairment.  Except and to the extent as waived or consented to by the Holder, the Company will not, by amendment of its certificate of incorporation or through any 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 hereunder by the Company, but will at all times in good faith assist in the carrying out of all the provisions of this Warrant and in the taking of all such action as may be necessary or appropriate in order to protect the exercise rights of the Holder against impairment.

 

2.3                               Notices of Record Date.  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 which is the same as cash dividends paid in previous quarters) or other distribution, the Company shall mail to the Holder, at least ten (10) days prior to the date specified herein, a notice specifying the date on which any such record is to be taken for the purpose of such dividend or distribution.

 

3.                                      REPRESENTATIONS OF HOLDER.

 

3.1                               Acquisition of Warrant for Personal Account.  The Holder represents and warrants that it is acquiring the Warrant and the Exercise Shares solely for its account for investment and not with a view to or for sale or distribution of said Warrant or Exercise Shares or any part thereof.  The Holder also represents that the entire legal and beneficial interests of the Warrant and Exercise Shares the Holder is acquiring is being acquired for, and will be held for, its account only.

 

3.2                               Securities Are Not Registered.

 

(a)                                 The Holder understands that the Warrant and the Exercise Shares have not been registered under the Securities Act of 1933, as amended (the “Act”) on the basis that no distribution or public offering of the stock of the Company is to be effected.  The Holder realizes that the basis for the exemption may not be present if, notwithstanding its representations, the Holder has a present intention of acquiring the securities for a fixed or determinable period in the future, selling (in connection with a distribution or otherwise), granting any participation in, or otherwise distributing the securities.  The Holder has no such present intention.

 

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(b)                                 The Holder recognizes that the Warrant and the Exercise Shares must be held indefinitely unless they are subsequently registered under the Act or an exemption from such registration is available.  The Holder recognizes that the Company has no obligation to register the Warrant or the Exercise Shares of the Company, or to comply with any exemption from such registration.

 

(c)                                  The Holder is aware that neither the Warrant nor the Exercise Shares may be sold pursuant to Rule 144 adopted under the Act unless certain conditions are met, including, among other things, the existence of a public market for the shares, the availability of certain current public information about the Company, the resale following the required holding period under Rule 144 and the number of shares being sold during any three month period not exceeding specified limitations.  Holder is aware that the conditions for resale set forth in Rule 144 have not been satisfied and that the Company presently has no plans to satisfy these conditions in the foreseeable future.

 

3.3                               Disposition of Warrant and Exercise Shares.

 

(a)                                 The Holder further agrees not to make any disposition of all or any part of the Warrant or Exercise Shares in any event unless and until:

 

(i)                                    The Company shall have received a letter secured by the Holder from the Securities and Exchange Commission stating that no action will be recommended to the Commission with respect to the proposed disposition;

 

(ii)                                There is then in effect a registration statement under the Act covering such proposed disposition and such disposition is made in accordance with said registration statement; or

 

(iii)                            The Holder shall have notified the Company of the proposed disposition and shall have furnished the Company with a detailed statement of the circumstances surrounding the proposed disposition, and if reasonably requested by the Company, the Holder shall have furnished the Company with an opinion of counsel, reasonably satisfactory to the Company, for the Holder to the effect that such disposition will not require registration of such Warrant or Exercise Shares under the Act or any applicable state securities laws.

 

(iv)                             Notwithstanding the provisions of paragraphs (i), (ii) and (iii) above, no such registration statement or opinion of counsel shall be necessary for a transfer by a Holder that is (A) a partnership transferring to its partners or former partners in accordance with partnership interests or to an affiliate of such partnership, (B) a corporation transferring to a wholly-owned subsidiary or a parent corporation that owns all of the capital stock of the Holder, (C) a limited liability company transferring to its members or former members in accordance with their interest in the limited liability company or to an affiliate of such limited liability company, or (D) an individual transferring to the Holder’s family member or trust for the benefit of an individual Holder; provided that in each case the transferee will be subject to the terms of this Warrant to the same extent as if it were an original Holder hereunder.

 

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(b)                                 The Holder understands and agrees that all certificates evidencing the shares to be issued to the Holder may bear the following legend:

 

“THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR UNDER THE SECURITIES LAWS OF APPLICABLE STATES.  THESE SECURITIES ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER THE ACT AND APPLICABLE STATE SECURITIES LAWS, PURSUANT TO REGISTRATION UNDER SUCH LAWS OR AN EXEMPTION FROM SUCH REGISTRATION REQUIREMENT.  INVESTORS SHOULD BE AWARE THAT THEY MAY BE REQUIRED TO BEAR THE FINANCIAL RISKS OF THIS INVESTMENT FOR AN INDEFINITE PERIOD OF TIME.  THE ISSUER OF THESE SECURITIES MAY REQUIRE AN OPINION OF COUNSEL IN FORM AND SUBSTANCE SATISFACTORY TO THE ISSUER TO THE EFFECT THAT ANY PROPOSED TRANSFER OR RESALE IS IN COMPLIANCE WITH THE ACT AND ALL APPLICABLE STATE SECURITIES LAWS.”

 

4.                                      ADJUSTMENT OF EXERCISE PRICE.  In the event of changes in the outstanding Common Stock of the Company by reason of stock dividends, split-ups, recapitalizations, reclassifications, combinations or exchanges of shares, separations, reorganizations, liquidations, or the like, the number and class of shares available under the Warrant in the aggregate and the Exercise Price shall be correspondingly adjusted to give the Holder of the Warrant, on exercise for the same aggregate Exercise Price, the total number, class, and kind of shares as the Holder would have owned had the Warrant been exercised prior to the event and had the Holder continued to hold such shares until after the event requiring adjustment; provided, however, that such adjustment shall not be made with respect to, and this Warrant shall terminate if not exercised prior to, the events set forth in Section 6 below.  The form of this Warrant need not be changed because of any adjustment in the number of Exercise Shares subject to this Warrant.

 

5.                                      FRACTIONAL SHARES.  No fractional shares shall be issued upon the exercise of this Warrant as a consequence of any adjustment pursuant hereto.  All Exercise Shares (including fractions) issuable upon exercise of this Warrant may be aggregated for purposes of determining whether the exercise would result in the issuance of any fractional share.  If, after aggregation, the exercise would result in the issuance of a fractional share, the Company shall, in lieu of issuance of any fractional share, pay the Holder otherwise entitled to such fraction a sum in cash equal to the product resulting from multiplying the then current fair market value of an Exercise Share by such fraction.

 

6.                                      EARLY TERMINATION.  In the event of, at any time during the Exercise Period, any capital reorganization, or any reclassification of the capital stock of the Company (other than a change in par value or from par value to no par value or no par value to par value or as a result of a stock dividend or subdivision, split-up or combination of shares), or the consolidation or merger of the Company with or into another corporation (other than a merger solely to effect a reincorporation of the Company into another state), or the sale or other disposition of all or substantially all the properties and assets of the Company in its entirety to any other person or an

 

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underwritten initial public offering of the Common Stock (an “IPO”), the Company shall provide to the Holder twenty (20) days advance written notice of such  reorganization, reclassification, consolidation, merger or sale or other disposition of the Company’s assets or IPO (each a “Sale Event”), and this Warrant shall terminate unless exercised prior to the occurrence of such Sale Event; provided, however, that in the event of such Sale Event, the Holder shall have the right to “put” this Warrant to the Company and in exchange therefore, the Holder shall be entitled to receive, subject to the consummation of the Sale Event, the cash, securities and other property that the Holder would have received in respect of the Exercise Shares had the Holder exercised this Warrant immediately prior to the effective time of such Sale Event less an amount equal to (x) the number of Exercise Shares then subject to this Warrant multiplied by (y) the Exercise Price then in effect hereunder.  The Holder shall only effect such put by (i) providing the Company with written notice of exercise of this put right prior to the consummation of the Sale Event, and (ii) tendering this Warrant to the Company for cancellation.  Any such put shall be subject to the consummation of the Sale Event.

 

7.                                      NO STOCKHOLDER RIGHTS.  This Warrant in and of itself shall not entitle the Holder to any voting rights or other rights as a stockholder of the Company.

 

8.                                      TRANSFER OF WARRANT.  Subject to applicable laws and the restriction on transfer set forth on the first page of this Warrant, this Warrant and all rights hereunder are transferable, by the Holder in person or by duly authorized attorney, upon delivery of this Warrant and the form of assignment attached hereto to any transferee designated by Holder.  The transferee shall sign an investment letter in form and substance satisfactory to the Company.

 

9.                                      LOST, STOLEN, MUTILATED OR DESTROYED WARRANT.  If this Warrant is lost, stolen, mutilated or destroyed, the Company may, on such terms as to indemnity or otherwise as it may reasonably impose (which shall, in the case of a mutilated Warrant, include the surrender thereof), issue a new Warrant of like denomination and tenor as the Warrant so lost, stolen, mutilated or destroyed.  Any such new Warrant shall constitute an original contractual obligation of the Company, whether or not the allegedly lost, stolen, mutilated or destroyed Warrant shall be at any time enforceable by anyone.

 

10.                               NOTICES, ETC.  All notices required or permitted hereunder shall be in writing and shall be deemed effectively given: (a) upon personal delivery to the party to be notified, (b) when sent by confirmed telex, facsimile or electronic mail if sent during normal business hours of the recipient, if not, then on the next business day, (c) five (5) days after having been sent by registered or certified mail, return receipt requested, postage prepaid, or (d) one (1) day after deposit with a nationally recognized overnight courier, specifying next day delivery, with written verification of receipt.  All communications shall be sent to the Company at the address listed on the signature page and to Holder at its address listed on the first page of this Warrant or at such other address as the Company or Holder may designate by ten (10) days advance written notice to the other parties hereto.

 

11.                               ACCEPTANCE.  Receipt of this Warrant by the Holder shall constitute acceptance of and agreement to all of the terms and conditions contained herein.

 

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12.                               AMENDMENT AND WAIVER.  Any term of this Warrant may be amended or waived with the written consent of the Company and the Requisite Investors as provided in Section 9 of the Purchase Agreement; provided, however, that any amendment or waivers must apply to all Holders in the same manner.  Holder acknowledges that because this Warrant may be amended with the consent of the Requisite Investors, Holder’s rights hereunder  may be amended or waived without Holder’s consent.  Upon the effectuation of such waiver or amendment in conformance with this Section 12, the Company shall promptly give written notice thereof to the record Holders of the Warrants who have not previously consented thereto in writing.

 

13.                               GOVERNING LAW.  This Warrant and any controversy arising out of or relating to this Warrant shall be governed by and construed in accordance with the General Corporation Law of the State of Delaware as to matters within the scope thereof, and as to all other matters shall be governed by and construed in accordance with the internal laws of the Commonwealth of Massachusetts without regard to conflict of law principles that would result in the application of any law other than the law of the Commonwealth of Massachusetts.

 

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IN WITNESS WHEREOF, the Company has caused this Warrant to be executed by its duly authorized officer as of this       day of                 , 2015.

 

 

	
 
    	
THE COMPANY:
    
	
 
    	
 
    
	
 
    	
RA   PHARMACEUTICALS, INC.
    
	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
Name:
    
	
 
    	
Title
    

 

 

SIGNATURE PAGE TO

WARRANT TO PURCHASE COMMON STOCK

 

 

NOTICE OF EXERCISE

 

(1)                                 o                                    The undersigned hereby elects to purchase                shares of the Common Stock of Ra Pharmaceuticals, Inc, a Delaware corporation (the “Company”) pursuant to the terms of the attached Warrant, and tenders herewith payment of the exercise price in full, together with all applicable transfer taxes, if any.

 

o                                    The undersigned hereby elects to purchase                shares of the Common Stock of the Company pursuant to the terms of the net exercise provisions set forth in Section 1.1 of the attached Warrant, and shall tender payment of all applicable transfer taxes, if any.

 

(2)                                 Please issue a certificate or certificates representing said shares of Common Stock in the name of the undersigned or in such other name as is specified below:

 

	
 
    	
 
    	
 
    
	
 
    	
(Name)
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
(Address)
    	
 
    

 

(3)                                 The undersigned represents that (i) the aforesaid shares of Common Stock are being acquired for the account of the undersigned for investment and not with a view to, or for resale in connection with, the distribution thereof and that the undersigned has no present intention of distributing or reselling such shares; (ii) the undersigned is aware of the Company’s business affairs and financial condition and has acquired sufficient information about the Company to reach an informed and knowledgeable decision regarding its investment in the Company; (iii) the undersigned is experienced in making investments of this type and has such knowledge and background in financial and business matters that the undersigned is capable of evaluating the merits and risks of this investment and protecting the undersigned’s own interests; (iv) the undersigned understands that the shares of Common Stock issuable upon exercise of this Warrant have not been registered under the Securities Act of 1933, as amended (the “Securities Act”), by reason of a specific exemption from the registration provisions of the Securities Act, which exemption depends upon, among other things, the bona fide nature of the investment intent as expressed herein, and, because such securities have not been registered under the Securities Act, they must be held indefinitely unless subsequently registered under the Securities Act or an exemption from such registration is available; (v) the undersigned is aware that the aforesaid shares of Common Stock may not be sold pursuant to Rule 144 adopted under the Securities Act unless certain conditions are met and until the undersigned has held the shares for the number of years prescribed by Rule 144, that among the conditions for use of the Rule is the availability of current information to the public about the Company and the Company has not made such information available and has no present plans to do so; and (vi) the undersigned agrees not to make any disposition of all or any part of the aforesaid shares of Common Stock unless and until there is then in effect a registration statement under the Securities Act covering such proposed disposition and such disposition is made in accordance with said registration statement, or the undersigned has provided the Company with an opinion of counsel satisfactory to the Company, stating that such registration is not required.

 

 

	
 
    	
 
    	
 
    
	
(Date)
    	
 
    	
(Signature)
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
(Print name)
    

 

 

ASSIGNMENT FORM

 

(To assign the foregoing Warrant, execute this form and supply required information.  Do not use this form to purchase shares.)

 

FOR VALUE RECEIVED, the foregoing Warrant and all rights evidenced thereby are hereby assigned to

 

	
Name:
    	
 
    
	
(Please Print)
    
	
 
    	
 
    
	
 
    	
 
    
	
Address:
    	
 
    
	
(Please Print)
    
	
 
    
	
 
    
	
Dated:                ,   20
    
	
 
    	
 
    
	
Holder’s Signature:
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
Holder’s Address:
    	
 
    	
 
    
					

 

NOTE:  The signature to this Assignment Form must correspond with the name as it appears on the face of the Warrant, without alteration or enlargement or any change whatever.  Officers of corporations and those acting in a fiduciary or other representative capacity should file proper evidence of authority to assign the foregoing Warrant.Exhibit 4.3

 

THE WARRANT EVIDENCED HEREBY, AND THE SECURITIES ISSUABLE HEREUNDER, HAVE BEEN AND SHALL BE ISSUED WITHOUT REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR THE APPLICABLE STATE SECURITIES LAWS.  THE WARRANT AND SUCH SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO DISTRIBUTION OR RESALE, AND SHALL NOT BE SOLD, TRANSFERRED, PLEDGED OR HYPOTHECATED UNLESS THE PROPOSED DISPOSITION IS THE SUBJECT OF A CURRENTLY EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT AND UNDER APPLICABLE STATE SECURITIES LAWS OR UNLESS THE COMPANY HAS RECEIVED AN OPINION OF COUNSEL, IN FORM AND SUBSTANCE REASONABLY SATISFACTORY TO THE COMPANY, TO THE EFFECT THAT SUCH REGISTRATION IS NOT REQUIRED UNDER THE ACT AND SUCH STATE SECURITIES LAWS IN CONNECTION WITH SUCH DISPOSITION.

 

THIS WARRANT, AND THE SECURITIES ISSUABLE UPON EXERCISE OF THIS WARRANT, ARE SUBJECT TO RESTRICTIONS ON TRANSFER AND OTHER PROVISIONS SET FORTH IN THIS WARRANT.

 

RA PHARMACEUTICALS, INC.

 

COMMON STOCK WARRANT

 

Original Issue Date:  December 1, 2010

 

Void After:  5 PM Boston Time on December 1, 2020

 

This Warrant Is Issued to

 

Stephen C. Blacklow

 

(hereinafter called the “Holder,” which term shall include the Holder’s legal representatives, heirs, successors and permitted assigns) by Ra Pharmaceuticals, Inc., a Delaware corporation (hereinafter referred to as the “Company”).  This Warrant may be transferred by the Holder only in accordance with the provisions of Section 13.

 

The Company hereby certifies as of the date first written above (the “Effective Date”) that, for value received, the Holder is entitled, subject to the terms and conditions set forth in this Warrant, to purchase from the Company, at any time on or after the Original Issue Date and in any event not after the Expiration Date (as defined below), up to four hundred ninety eight (498) duly authorized, validly issued, fully paid, nonassessable shares of the Company’s Common Stock, par value $0.001 per share (the “Common Stock”), at an initial purchase price per share equal to $0.01 per share.  The number of shares of Common Stock and the purchase price thereof shall be adjusted or readjusted from time to time as provided in this Warrant (as so adjusted, the “Warrant Shares” and the “Exercise Price”, respectively).

 

“Expiration Date” means the earlier to occur of (i) the Company’s first underwritten public offering of its Common Stock under the Securities Act of 1933, as amended (the “Securities Act”), or (ii) the tenth anniversary of the Effective Date.

 

 

1.                                      Vesting; Exercise of Warrant.

 

1.1                               Vesting.  No portion of this Warrant may be exercised until such portion shall have vested and become exercisable.  Except as set forth below, and subject to the determination of the Company’s Board of Directors in its sole discretion to accelerate the vesting schedule hereunder, this Warrant shall be vested and exercisable with respect to the Warrant Shares on the respective dates indicated below:

 

(a)                                 25% of the Warrant Shares are vested and exercisable as of the Effective Date.

 

(b)                                 Thereafter, the remaining 75% of the Warrant Shares shall vest and become exercisable in 12 equal quarterly installments at the end of each quarter following the three (3)-month anniversary of the Effective Date.

 

(c)                                  Notwithstanding the foregoing, in the event the Exclusive License Agreement, effective as of November 29, 2010, by and between the Company and Anthony C. Forster (the “Forster License”) is terminated for any reason other than by Dr. Forster in connection with a breach of the Forster License by the Company or a bankruptcy or similar event involving the Company, (i) this Warrant shall remain exercisable with respect to any Warrant Shares that have become vested as of the date of such termination of the Forster License for a period of 90 days from the date of termination or until the Expiration Date, if earlier, and (ii) any portion of this Warrant that is not vested and exercisable as of the date of such termination shall terminate immediately upon the date of such termination of the Forster License and be null and void.

 

1.2                               Exercise.  The Holder may exercise this Warrant with respect to vested Warrant Shares, in whole or in part (except as to a fractional share), during the period beginning on the Original Issue Date and ending on the Expiration Date, by (i) delivering a subscription agreement, in the form attached hereto as Exhibit A (the “Subscription Form”), duly executed by the Holder, specifying the number of Warrant Shares to be issued to the Holder as a result of such exercise, (ii) surrendering this Warrant to the Company, properly endorsed by the Holder (or if this Warrant has been destroyed, stolen or has otherwise been misplaced, by delivering to the Company an affidavit of loss duly executed by the Holder), and (iii) tendering payment for the shares of Common Stock designated by the Exercise Notice in lawful money of the United States in the form of cash, bank or certified check made payable to the order of the Company, or by wire transfer of immediately available funds, or by the cancellation of indebtedness of the Company owed to the Holder, or in any combination thereof, of the applicable Exercise Price as to which this Warrant is being exercised.

 

2.                                      Net Exchange.  The Holder may, in lieu of exercising this Warrant with respect to vested Warrant Shares pursuant to the terms of Section 1, elect to exchange this Warrant at any time prior to the Expiration Date by delivering to the Company a written notice, in the form attached hereto as Exhibit B (the “Exchange Notice”), duly executed by the Holder, specifying the number of Warrant Shares to be issued to the Holder as a result of such exchange.  The Holder shall thereupon be entitled to receive the number of Warrant Shares equal to the product of (i) the number of Warrant Shares issuable upon exercise of this Warrant (or, if only a portion

 

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of this Warrant is being exercised, issuable upon the exercise of such portion) for cash, and (ii) a fraction, the numerator of which is the Fair Market Value (as defined below) per share of Common Stock at the time of such exercise minus the Exercise Price in effect at the time of such exercise, and the denominator of which is the Fair Market Value per share of Common Stock at the time of such exercise, such number of shares so issuable upon such exchange to be rounded down to the nearest whole number of shares of Common Stock with any excess at the option of the Holder to be forfeited or to be paid in cash by the Company to the Holder.  For all purposes of this Warrant (other than Section 1 and this Section 2), any reference herein to the “exercise” of this Warrant shall be deemed to include a reference to the exchange of this Warrant for Common Stock in accordance with the terms of this Section 2.  For purposes of this Section 2, “Fair Market Value” shall mean the value most recently determined by either (a) a consummated sale of the Common Stock for cash, (b) a valuation exercise performed by an independent third party at the request of the Company, or (c) in the event that neither (a) nor (b) has occurred within the three-month period prior to the exercise date, then the Board of Directors, in good faith, shall determine the fair market value per share of the Common Stock (including without limitation a determination for purposes of granting Common Stock options or issuing Common Stock under an employee benefit plan of the Company); and, in any event, the Board of Directors (or a representative thereof) shall promptly notify the Holder of the Fair Market Value per share of Common Stock.  Notwithstanding the foregoing, the price paid in any private sale or transfer of shares by a stockholder of the Company shall not constitute “Fair Market Value” for purposes of this Warrant.

 

3.                                      Issuance of Stock Certificates.  As promptly as practicable after exercise or exchange and surrender of this Warrant and receipt of payment of the aggregate Exercise Price (if applicable), the Company shall issue and deliver to the Holder a certificate or certificates for the shares purchased hereunder in the name of the Holder.

 

4.                                      Adjustment for Dividends, Distributions, Subdivisions, Combinations, Mergers, Consolidations or Sale of Assets.

 

4.1                               Manner of Adjustment.

 

(a)                                 Stock Dividends, Distributions or Subdivisions.  In the event the Company shall issue shares of Common Stock in a stock dividend, stock distribution or subdivision, the Exercise Price in effect immediately before such stock dividend, stock  distribution or subdivision shall, concurrently with the effectiveness of such stock dividend, stock distribution or subdivision, be proportionately decreased and the number of Warrant Shares shall be proportionately increased.

 

(b)                                 Combinations or Consolidations.  In the event the outstanding shares of Common Stock shall be combined or consolidated, by reclassification or otherwise, into a lesser number of shares of Common Stock, the Exercise Price in effect immediately prior to such combination or consolidation shall, concurrently with the effectiveness of such combination or consolidation, be proportionately increased and the number of Warrant Shares shall be proportionately decreased.

 

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(c)                                  Adjustment for Reclassification, Exchange or Substitution.  In the event that the class of securities issuable upon the exercise of this Warrant shall be changed into the same or a different number of shares of any class or classes of stock, whether by capital reorganization, reclassification or otherwise (other than any event addressed by Sections 4.1(a), 4.1(b) or 4.1(d)), then and in each such event the Holder shall have the right thereafter to exercise this Warrant for the kind and amount of shares of stock and other securities and property receivable upon such reorganization, reclassification, or other change, by holders of the number of shares of the class of securities into which such Warrant might have been exercisable for immediately prior to such reorganization, reclassification, or change, all subject to further adjustment as provided herein.

 

(d)                                 Adjustment for Merger, Consolidation or Sale of Assets.  In the event that the Company shall merge or consolidate with or into another entity or sell all or substantially all of its assets, this Warrant shall thereafter be exercisable for the kind and amount of shares of stock or other securities or property to which a holder of the Warrant Shares would have been entitled upon such consolidation, merger or sale; and, in such case, appropriate adjustment (as determined in good faith by the Board of Directors) shall be made in the application of the provisions set forth in this Section 4 with respect to the rights and interest thereafter of the Holder of this Warrant, to the end that the provisions set forth in this Section 4 shall thereafter be applicable, as nearly as reasonably may be, in relation to any shares of stock or other property thereafter deliverable upon the exercise of this Warrant.

 

4.2                               Certificate as to Adjustments.  Upon the occurrence of each adjustment or readjustment of the Exercise Price pursuant to this Section 4, the Company at its expense shall promptly compute such adjustment or readjustment in accordance with the terms hereof and furnish to the Holder a certificate setting forth such adjustment or readjustment and showing in detail the facts upon which such adjustment or readjustment is based.

 

4.3                               Closing of Books.  The Company shall at no time close its transfer books against the transfer of any of Warrant Shares in any manner which interferes with the timely and proper issuance of such shares.

 

5.                                      Effect of Certain Transactions.  If: (i) the Company effects a Deemed Liquidation Event (as defined in the Company’s Amended and Restated Certificate of Incorporation filed with the Secretary of State of the State of Delaware on February 12, 2010, as the same may be further amended and/or restated from time to time), (ii) the Company is liquidated, dissolved or wound-up voluntarily or involuntarily, (iii) the stockholders of the Company sell all of the Company’s capital stock, or (iv) the Company is involved its first underwritten public offering of its Common Stock under the Act (each event identified in the immediately preceding clauses (i) - (iv) referred herein to as a “Transaction”), in any case while this Warrant remains outstanding, this Warrant shall terminate upon the effective time of such Transaction unless provision is made in connection with such Transaction for the assumption or continuation of this Warrant by the Company or its successor entity; provided, that the Holder shall be permitted within a specified period of time prior to the consummation of the Transaction as determined by the Company’s Board of Directors, to exercise such portion of the Warrant that is then exercisable or will become exercisable as of the effective time of the Transaction; provided, further, that the

 

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exercise of any portion of the Warrant not exercisable prior to the consummation of the Transaction shall be subject to the consummation of the Transaction.

 

6.                                      Covenants of the Company.  During the period within which the rights represented by this Warrant may be exercised, the Company shall at all times have authorized and reserved for the purpose of issue upon exercise of the rights evidenced hereby, a sufficient number of shares of the class of securities issuable upon exercise of this Warrant to provide for the exercise of such rights.  All securities which may be issued upon the exercise of the rights represented by this Warrant shall, upon issuance, be duly authorized, validly issued, fully paid and non-assessable and free from all taxes, liens and charges with respect to the issue thereof.  Upon surrender for exercise, this Warrant shall be canceled and shall not be reissued; provided, however, that upon the partial exercise hereof a substitute Warrant of like tenor and date representing the rights to subscribe for and purchase any such unexercised portion hereof shall be issued.

 

7.                                      Certain Restrictions on Warrant Shares.  In addition to any other agreements that the Holder is subject to, the Holder, if requested by the Company and an underwriter of Common Stock (or other securities) of the Company, not to sell or otherwise transfer or dispose of any Common Stock (or other securities) of the Company held by such Holder during a period of up to one hundred and eighty (180) days following the effective date of a registration statement of the Company filed under the filed under the Act; provided, however, that (a) such agreement only applies to the first such registration statement of the Company including securities to be sold on its behalf to the public in an underwritten offering; and (b) all holders of registration rights with respect to securities of the Company, all officers and directors of the Company and all persons including shares in such offering enter into similar agreements.  The Company may impose stop-transfer instructions with respect to the shares (or securities) subject to the foregoing restriction until the end of such period.

 

8.                                      Voting Rights.  This Warrant shall not entitle the Holder to any voting rights or any other rights as a stockholder of the Company but upon presentation of this Warrant with the Subscription Form or Exchange Notice duly executed and the tender of payment of the aggregate Exercise Price (if applicable) at the office of the Company pursuant to the provisions of this Warrant, the Holder shall forthwith be deemed a stockholder of the Company in respect of the securities for which the Holder has so subscribed and paid or exchanged.

 

9.                                      No Change Necessary.  The form of this Warrant need not be changed because of any adjustment in the Exercise Price or in the number of Warrant Shares.  A Warrant issued after any adjustment or any partial exercise or upon replacement may continue to express the same Exercise Price and the same number of Warrant Shares (appropriately reduced in the case of partial exercise) as are stated on this Warrant as initially issued, and that Exercise Price and that number of Warrant Shares shall be considered to have been so changed as of the close of business on the date of adjustment.

 

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10.                               Notices to Holder.  If at any time prior to the expiration of this Warrant and prior to its exercise, any of the following events shall occur:

 

(a)                                 The Company shall take a record of the holders of its Common Stock for the purpose of entitling them to receive a dividend or distribution payable otherwise than out of current or retained earnings, as indicated by the accounting treatment of such dividend or distribution on the books of the Company; or

 

(b)                                 The consummation of a Transaction;

 

then, in any one or more of said events, the Company shall give to the Holder written notice of such event.  Such notice shall set forth the date on which such event shall take place, shall if applicable specify the deadline date as of which the holders of Common Stock of record shall be entitled or required to take any action, or the record date with respect to any dividend, and shall be given at least twenty (20) days prior to the deadline or record date.  Failure to give such notice or any defect therein shall not affect the validity of any action taken in connection with the declaration or payment of any such dividend or the making of any such distribution or any action in connection with any such proposed Transaction.

 

11.                               Addresses for Notices.  All notices, requests, consents and other communications hereunder shall be in writing, either delivered in hand or mailed by registered or certified mail, return receipt requested, or sent by facsimile, and shall be deemed to have been duly made when delivered:

 

(a)                                 If to the Holder, to the Holder’s address as shown on the books of the Company; or

 

(b)                                 If to the Company, to Ra Pharmaceuticals, Inc., Attn: President, at the Company’s present address.

 

12.                               Substitution.  In the case this Warrant shall be mutilated, lost, stolen or destroyed, the Company shall issue a new Warrant of like tenor and denomination and deliver the same (a) in exchange and substitution for and upon surrender and cancellation of any mutilated Warrant, or (b) in lieu of any Warrant lost, stolen or destroyed, upon receipt of evidence satisfactory to the Company of the loss, theft, or destruction of such Warrant (including, without limitation, a reasonably detailed affidavit with respect to the circumstances of any loss, theft or destruction), and of indemnity (or, in the case of the initial Holder or any other institutional holder, an indemnity agreement) satisfactory to the Company.

 

13.                               Transfer Restrictions.

 

13.1                        No Transfer of Warrant.  This Warrant shall be exercisable only by the Holder.  Without the prior written consent of the Company, this Warrant shall not be transferred, assigned, pledged or hypothecated in any way (whether by operation of law or otherwise) and shall not be subject to execution, attachment or similar process.  Any attempted transfer, assignment, pledge, hypothecation or other disposition of this Warrant or of any rights granted hereunder contrary to the provisions of this Section 13, or the levy of any attachment or similar process upon this Warrant or such rights, shall be null and void.

 

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13.2                        Company Right of First Refusal.  At any time following any exercise of this Warrant in whole or in part, in the event that the Holder desires at any time to sell or otherwise transfer all or any part of such Holder’s issued Warrant Shares, the Holder first shall give written notice to the Company of the Holder’s intention to make such transfer.  Such notice shall state the number of Warrant Shares which the Holder proposes to sell (the “Offered Shares”), the price and the terms at which the proposed sale is to be made and the name and address of the proposed transferee.  At any time within 30 days after the receipt of such notice by the Company, the Company or its assigns may elect to purchase all or any portion of the Offered Shares at the price and on the terms offered by the proposed transferee and specified in the notice.  The Company or its assigns shall exercise this right by mailing or delivering written notice to the Holder within the foregoing 30-day period.  If the Company or its assigns elect to exercise its purchase rights under this Section 13.2, the closing for such purchase shall, in any event, take place within 45 days after the receipt by the Company of the initial notice from the Holder.  In the event that the Company or its assigns do not elect to exercise such purchase right, or in the event that the Company or its assigns do not pay the full purchase price within such 45-day period, the Holder may, within 60 days thereafter, sell the Offered Shares to the proposed transferee and at the same price and on the same terms as specified in the Holder’s notice.

 

14.                               Taxes.  The Company makes no representation about tax treatment to the Holder with respect to receipt or exercise of this Warrant or acquiring, holding or disposing of the Warrant Shares, and the Holder represents that the Holder has had the opportunity to discuss such treatment with the Holder’s tax advisers.

 

15.                               Remedies.  Each party stipulates that the remedies at law in the event of any default or threatened default by the other party in the performance or compliance with any of the terms of this Warrant are and shall not be adequate, and that such terms may be specifically enforced by a decree for that specific performance of any agreement contained herein or by an injunction against a violation of any of the terms hereof or otherwise.

 

16.                               Governing Law.  This Warrant shall be governed by and construed in accordance with the General Corporation Law of the State of Delaware as to matters within the scope thereof, and as to all other matters shall be governed by and construed in accordance with the internal laws of the Commonwealth of Massachusetts without regard to conflict of law principles that would result in the application of any law other than the law of the Commonwealth of Massachusetts.

 

17.                               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; provided that a majority-in-interest of the Holders (as determined by reference to the number of Warrant Shares that are issuable upon exercise of all the then outstanding Warrants) may change, waive, discharge or terminate their applicable Warrants and any term thereunder on behalf of all of the Holders.  The invalidity or unenforceability of any provision hereof shall in no way affect the validity or enforceability of any other provision.

 

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* * *

 

IN WITNESS WHEREOF, the Company has caused this Warrant to be executed effective as of the date first written above.

 

	
 
    	
RA   PHARMACEUTICALS, INC.
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/   Douglas A. Treco
    
	
 
    	
 
    	
 
    
	
 
    	
Name:   Douglas A. Treco, Ph.D.
    
	
 
    	
 
    	
 
    
	
 
    	
Title:   President
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
Acknowledged   and agreed:
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
/s/   Stephen C. Blacklow
    	
 
    	
 
    	
 
    
	
Stephen   C. Blacklow
    	
 
    	
 
    	
 
    
					

 

 

[SIGNATURE PAGE TO COMMON STOCK WARRANT]

 

 

Exhibit A

 

SUBSCRIPTION FORM

 

(To be Executed by the Holder

in Order to Exercise the Warrant)

 

Date:    12/21/2010

 

To:                             D. Treco

 

The undersigned, pursuant to the provisions set forth in the attached Warrant hereby irrevocably elects to purchase  124 shares of the Common Stock covered by such Warrant and herewith makes payment of $1.24, representing the [full/partial] purchase price for such shares at the price per share provided for in such Warrant.  Capitalized terms defined, but not used, herein shall have the meanings ascribed to them in such Warrant.

 

The undersigned hereby agrees to take such other action and execute and deliver such other documents as the Company may require, in connection with the issue of shares of Common Stock to the undersigned as aforesaid, in order to comply with the provisions of such Warrant.

 

The undersigned is aware that the Common Stock has not been registered under the Act or any state securities laws.  The undersigned understands that the reliance by the Company on exemptions under the Act is predicated in part upon the truth and accuracy of the statements of the undersigned in this Subscription Form and such Warrant.

 

The undersigned represents and warrants that (1) the undersigned has been furnished with all information which the undersigned deems necessary to evaluate the merits and risks of the purchase of the Common Stock, (2) the undersigned has had the opportunity to ask questions concerning the Common Stock and the Company and all questions posed have been answered by the Company to the satisfaction of the undersigned, (3) the undersigned has been given the opportunity to obtain any additional information the undersigned deems necessary to verify the accuracy of any information obtained concerning the Common Stock and the Company, (4) the undersigned has such knowledge and experience in financial and business matters that the undersigned is able to evaluate the merits and risks of purchasing the Common Stock and to make an informed investment decision relating thereto, and (5) the undersigned is an “Accredited Investor” as defined in Rule 501(a) of Regulation D under the Act.

 

The undersigned hereby represents and warrants that the undersigned is purchasing the Common Stock for the account of the undersigned and not with a view to the sale or distribution of all or any part of the Common Stock.

 

The undersigned understands that because the Common Stock has not been registered under the Act, the undersigned must continue to bear the economic risk of the investment for an indefinite time and the Common Stock cannot be sold unless the Common Stock is subsequently registered under applicable federal and state securities laws or an exemption from such registration is available.

 

 

The undersigned agrees that the undersigned shall in no event sell or distribute or otherwise dispose of all or any part of the Common Stock unless (1) there is an effective registration statement under the Act and applicable state securities laws covering any such transaction involving the Common Stock or (2) the Company receives an opinion of legal counsel to the undersigned (concurred in by legal counsel for the Company) stating that such transaction is exempt from registration or the Company otherwise satisfies itself that such transaction is exempt from registration.

 

The undersigned consents to the placing of a legend on the undersigned’s certificate for the Common Stock stating that the Common Stock 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 Common Stock until the Common Stock may be legally resold or distributed without restriction.

 

The undersigned has considered the Federal and state income and other tax implications of the exercise of the Warrant and the purchase and subsequent sale of the Common Stock.

 

 

	
 
    	
Stephen   C. Blacklow
    
	
 
    	
Printed Name of Holder (Must conform in all respects to name   of Holder as specified on the face of such Warrant)
    
	
 
    	
 
    
	
 
    	
/s/   Stephen C. Blacklow
    
	
 
    	
Signature
    
	
 
    	
 
    
	
 
    	
Name of Signatory (for an entity only)
    
	
 
    	
 
    
	
 
    	
Title of Signatory (for an entity only)
    

 

 

 

Exhibit B

 

EXCHANGE NOTICE

 

(To be Executed by the Holder

in Order to Exchange the Warrant)

 

Date:                    

 

To:                             [        ]

 

The undersigned, pursuant to the provisions set forth in the attached Warrant hereby irrevocably elects to exchange such Warrant with respect to                 shares of the Common Stock of the Company (the “Common Stock”) covered by such Warrant which such Holder would be entitled to receive upon the exercise thereof.  Capitalized terms defined, but not used, herein shall have the meanings ascribed to them in such Warrant.

 

The undersigned hereby agrees to take such other action and execute and deliver such other documents as the Company may require, in connection with the issue of shares of Common Stock to the undersigned as aforesaid, in order to comply with the provisions of such Warrant.

 

The undersigned is aware that the Common Stock has not been registered under the Act or any state securities laws.  The undersigned understands that the reliance by the Company on exemptions under the Act is predicated in part upon the truth and accuracy of the statements of the undersigned in this Exchange Notice and such Warrant.

 

The undersigned represents and warrants that (1) the undersigned has been furnished with all information which the undersigned deems necessary to evaluate the merits and risks of the receipt of the Common Stock, (2) the undersigned has had the opportunity to ask questions concerning the Common Stock and the Company and all questions posed have been answered by the Company to the satisfaction of the undersigned, (3) the undersigned has been given the opportunity to obtain any additional information the undersigned deems necessary to verify the accuracy of any information obtained concerning the Common Stock and the Company, (4) the undersigned has such knowledge and experience in financial and business matters that the undersigned is able to evaluate the merits and risks of receiving the Common Stock and to make an informed investment decision relating thereto, and (5) the undersigned is an “Accredited Investor” as defined in Rule 501(a) of Regulation D under the Act.

 

The undersigned hereby represents and warrants that the undersigned is receiving the Common Stock for the account of the undersigned and not with a view to the sale or distribution of all or any part of the Common Stock.

 

The undersigned understands that because the Common Stock has not been registered under the Act, the undersigned must continue to bear the economic risk of the investment for an indefinite time and the Common Stock cannot be sold unless the Common Stock is subsequently registered under applicable federal and state securities laws or an exemption from such registration is available.

 

 

The undersigned agrees that the undersigned shall in no event sell or distribute or otherwise dispose of all or any part of the Common Stock unless (1) there is an effective registration statement under the Act and applicable state securities laws covering any such transaction involving the Common Stock or (2) the Company receives an opinion of legal counsel to the undersigned (concurred in by legal counsel for the Company) stating that such transaction is exempt from registration or the Company otherwise satisfies itself that such transaction is exempt from registration.

 

The undersigned consents to the placing of a legend on the undersigned’s certificate for the Common Stock stating that the Common Stock 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 Common Stock until the Common Stock may be legally resold or distributed without restriction.

 

The undersigned has considered the Federal and state income and other tax implications of the exchange of the Warrant and the receipt and subsequent sale of the Common Stock.

 

 

	
 
    	
 
    
	
 
    	
Printed Name of Holder (Must conform in all respects to name   of Holder as specified on the face of such Warrant)
    
	
 
    	
 
    
	
 
    	
Signature
    
	
 
    	
 
    
	
 
    	
Name of Signatory (for an entity only)
    
	
 
    	
 
    
	
 
    	
Title of Signatory (for an entity only)

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