Document:

exv4w2

Exhibit 4.2

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 FOR 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 LAWS 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: Somaxon Pharmaceuticals, Inc., a Delaware corporation

Number of Shares: As set forth below

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

Warrant Price: As set forth below

Issue Date: May 21, 2008

Expiration Date: May 20, 2018

			
	Credit Facility:	 	This Warrant is issued in connection with that certain
Loan and Security Agreement of even date herewith among
Silicon Valley Bank, Oxford Finance Corporation and the
Company (the “Loan Agreement”).

     THIS WARRANT CERTIFIES THAT, for good and valuable consideration, OXFORD FINANCE CORPORATION
(together with any successor or permitted assignee or transferee of this Warrant or of any shares
issued upon exercise hereof, “Holder”) is entitled to purchase the number of fully paid and
non-assessable shares (the “Shares”) of the above-stated Class of Stock (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.

     A. Warrant Price; Number of Shares

          (1) Warrant Price. The purchase price per Share hereunder (the “Warrant Price”) shall
be equal to the average of the closing prices of a share of the Class as reported on the NASDAQ
Global Market for the ten (10) consecutive trading days immediately preceding the date on which the
first Credit Extension (as defined in the Loan Agreement) is made to the Company, as may be
adjusted from time to time thereafter in accordance with the provisions of this Warrant.

          (2) Number of Shares. The number of Shares for which this Warrant shall be exercisable
shall equal (i) $700,000, divided by (ii) the Warrant Price as determined on the date the first
Credit Extension is made to the Company, subject to adjustment from time to time in accordance with
the provisions of this Warrant.

 

 

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 or other securities
otherwise issuable upon exercise of this Warrant minus the aggregate Warrant Price of such Shares
by (b) the fair market value of one Share. The fair market value of the Shares shall be determined
pursuant to Article 1.3.

          1.3 Fair Market Value. If the Class 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. If the Class 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,
exclusive license, or other disposition of all or substantially all of the assets of the Company,
or any reorganization, consolidation, merger or sale of outstanding capital stock of the Company
where the holders of the Company’s outstanding voting securities before the transaction
beneficially own less than a majority of the outstanding voting securities of the surviving entity
or, if applicable, its parent entity, after 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 that
is not a True Asset Sale (as defined below) in which the sole

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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 an “arms length” 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
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.

D) Notwithstanding the foregoing provisions of this Section 1.6.2., in the event that the acquiror
in an Acquisition does not agree to assume this Warrant at and as of the closing thereof, this
Warrant, to the extent not exercised or converted on or prior to such closing, shall terminate and
be of no further force or effect as of immediately following such closing if all of the following
conditions are met: (i) the acquiror is subject to the reporting requirements of Section 13 or
Section 15(d) of the Securities Exchange Act of 1934, as amended, (ii) the class of stock or other
security of the acquiror that would be received by Holder in connection with such Acquisition were
Holder to exercise or convert this Warrant on or prior to the closing thereof is listed for trading
on a national securities exchange or approved for quotation on an automated inter-dealer quotation
system, and (iii) the value (determined as of the closing of such Acquisition in accordance with
the definitive agreements therefor) of the acquiror stock and/or other securities that would be
received by Holder in respect of each Share were Holder to exercise or convert this Warrant on or
prior to the closing of such Acquisition is equal to or greater than three (3) times the
then-effective Warrant Price.

As used in this Section 1.6, “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

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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, 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 occurred. If the Company subdivides the outstanding shares
of the Class by reclassification or otherwise into a greater number of shares, the number of Shares
purchasable hereunder shall be proportionately increased and the Warrant Price shall be
proportionately decreased. If the outstanding shares of the Class 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, and the
Warrant Price shall be adjusted proportionately. 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.

          2.3 [Intentionally Omitted].

          2.4 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; provided, however, that notwithstanding the foregoing, nothing in
this Section 2.4 shall restrict or impair the Company’s right to effect changes to the rights,
preferences, and privileges associated with the Shares with the requisite consent of the
stockholders as may be required to amend the Certificate of Incorporation from time to time so long
as such amendment affects the rights, preferences, and privileges granted

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to Holder associated with the Shares in the same manner as the other holders of outstanding shares
of the Class.

          2.5 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.

          2.6 Certificate as to Adjustments. Upon each adjustment of the Warrant Price, Class
and/or number of Shares, 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, Class and number of Shares in effect upon the date thereof and the series of adjustments
leading to such Warrant Price, Class and number of Shares.

ARTICLE 3. REPRESENTATIONS AND COVENANTS OF THE COMPANY.

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

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

          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 the outstanding shares of
the Class; (d) to effect an Acquisition or to liquidate, dissolve or wind up; or (e) offer holders
of registration rights the opportunity to participate in an underwritten public offering of the
Company’s securities for cash, then, in connection with each such event, the Company shall give
Holder notice thereof at the same time and in the same manner as the Company notifies the holders
of the outstanding shares of the Class thereof.

          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.

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

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          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 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 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 FOR AND
PURSUANT TO THE PROVISIONS OF ARTICLE 5 OF THAT

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CERTAIN WARRANT TO PURCHASE STOCK ISSUED BY THE COMPANY TO OXFORD FINANCE
CORPORATION DATED AS OF MAY 21, 2008 MAY NOT BE OFFERED, SOLD OR OTHERWISE
TRANSFERRED, PLEDGED OR HYPOTHECATED UNLESS AND UNTIL REGISTERED UNDER
SAID ACT AND APPLICABLE STATE SECURITIES LAWS 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 Shares 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 any
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. Subject to the provisions of Article 5.3 and upon providing
the Company with written notice, Holder may transfer all or part of this Warrant or the Shares
issuable upon exercise of this Warrant to any transferee, provided, however, in connection with any
such transfer, 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).

          5.5 Notices. All notices and other communications from the Company to the Holder, or
vice versa, shall be deemed delivered and effective (a) upon the earlier of actual receipt and
three (3) Business Days after deposit in the U.S. mail, first class, registered or certified mail
return receipt requested, with proper postage prepaid; (b) upon transmission, when sent by
electronic mail (if an email address is specified herein) or facsimile transmission; (c) one (1)
Business Day after deposit with a reputable overnight courier with all charges prepaid; or (d) when
delivered, if hand-delivered by messenger, all of which shall be addressed to the party to be
notified and sent to the address, facsimile number, or email address indicated below. Either
Holder or the Company may change its mailing or email address or facsimile number by giving the
other party written notice thereof in accordance with the terms of this Section 5.5.

     To the Holder:

Oxford Finance Corporation

Attn: Mr. John Henderson

133 North Fairfax Street

Alexandria, VA 22314

Facsimile: 703-519-5225

     To the Company:

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Somaxon Pharmaceuticals,Inc.

Attn: Meg M. McGilley, Chief Financial Officer

3721 Valley Centre Drive, Suite 500

San Diego, CA 92130

Telephone: (858) 480-0402

Facsimile: (858) 509-1761

Email: mmcgilley@somaxon.com

     with copies to:

Somaxon Pharmaceuticals, Inc.

Attn: Matthew W. Onaitis, General Counsel

3721 Valley Centre Drive, Suite 500

San Diego, California 92130

Fax: (858) 509-1761

Email: monaitis@somaxon.com, and

Latham & Watkins LLP

Attn: Cheston J. Larson, Esq.

12636 High Bluff Drive, Suite 400

San Diego, California 92130

Fax: (858) 523-5450

Email: cheston.larson@lw.com

          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.

[Remainder of page left blank intentionally]

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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”	 	 
	 
	 	 	 	 
	SOMAXON PHARMACEUTICALS, INC.	 	 
	 
	 	 	 	 
	By:

	 	/s/ Meg M. McGilley
	 	 
	 

	 	 	 	 
	Name:

	 	Meg M. McGilley	 	 
	 

	 	 	 	 
	 

	 	(Print)	 	 
	Title:

	 	Vice President and Chief Financial Officer	 	 
	 
	 	 	 	 
	“HOLDER”	 	 
	 
	 	 	 	 
	OXFORD FINANCE CORPORATION	 	 
	 
	 	 	 	 
	By:

	 	/s/ T. A. Lex	 	 
	 

	 	 	 	 
	Name:

	 	T. A. Lex	 	 
	 

	 	 	 	 
	 

	 	(Print)	 	 
	Title:

	 	Chief Operating Officer	 	 

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APPENDIX 1

NOTICE OF EXERCISE

     1. Holder
elects to purchase
                     shares of the Common/Series            Preferred [strike
one] Stock of                                       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 of the date hereof.

	 	 	 	 	 	 	 
	 

	 	HOLDER:
	 	 
	 
	 	 	 	 	 	 
	 	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	 
 

	 	 
	 
	 

	 	Name:
	 	 
 

	 	 
	 
	 

	 	Title:
	 	 
 

	 	 
	 
	 

	 	(Date):
	 	 
 

	 	 

10exv4w3

Exhibit 4.3

Execution Copy

WARRANT

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

MAY 21, 2008                    

     Warrant to Purchase up to 165,000 shares of Common Stock of Somaxon Pharmaceuticals, Inc. (the
“Company”).

     In consideration for Kingsbridge Capital Limited (the “Investor”) agreeing to enter
into that certain Common Stock Purchase Agreement, dated as of the date hereof, between the
Investor and the Company (the “Agreement”), the Company hereby agrees that the Investor or
any other Warrant Holder (as defined below) is entitled, on the terms and conditions set forth
below, to purchase from the Company at any time during the Exercise Period (as defined below) up to
165,000 fully paid and non-assessable shares of common stock, par value $0.0001 per share, of the
Company (the “Common Stock”) at the Exercise Price (as defined below), as the same may be
adjusted from time to time pursuant to Section 6 hereof. The resale of the shares of Common Stock
or other securities issuable upon exercise or exchange of this Warrant is subject to the provisions
of the Registration Rights Agreement. Capitalized terms used herein and not otherwise defined
shall have the meanings given them in the Agreement.

     Section 1. Definitions.

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

          “Closing Price” as of any particular day shall mean the closing price per share of the
Company’s Common Stock as reported by Bloomberg L.P. on such day.

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

 

 

“Exercise
Price” as of the date hereof shall mean $5.4175.

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

          “Per Share Warrant Value” shall mean the difference resulting from subtracting the
Exercise Price from the Closing Price on the Trading Day immediately preceding the Exercise Date.

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

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

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

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

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

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

     Section 2. Exercise.

          (a) Method of Exercise. This Warrant may be exercised in whole or in part (but not as
to a fractional share of Common Stock), at any time and from time to time during the Exercise
Period, by the Warrant Holder by surrender of this Warrant, with the form of exercise attached
hereto as Exhibit A completed and duly executed by the Warrant Holder (the “Exercise
Notice”), to the Company at the address set forth in Section 10.4 of the Agreement, accompanied
by payment of the Exercise Price multiplied by the number of shares of Common Stock for which this
Warrant is being exercised (the “Aggregate Exercise Price”). The later of the date on
which an Exercise Notice or payment of the Exercise Price (unless this Warrant is exercised in
accordance with Section 2(c) below) is received by the Company in accordance with this clause
(a) shall be deemed an “Exercise Date.”

 

 

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

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

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

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

 

 

     Section 4. Delivery of Warrant Shares.

          (a) Subject to the terms and conditions of this Warrant, as soon as practicable after the
exercise of this Warrant in full or in part, and in any event within ten (10) Trading Days
thereafter, the Company at its expense (including, without limitation, the payment by it of any
applicable issue taxes) will cause to be issued in the name of and delivered to the Warrant Holder,
or as the Warrant Holder may lawfully direct, a certificate or certificates for, or make deposit
with the Depositary Trust Company via book-entry of, the number of validly issued, fully paid and
non-assessable Warrant Shares to which the Warrant Holder shall be entitled on such exercise,
together with any other stock or other securities or property (including cash, where applicable) to
which the Warrant Holder is entitled upon such exercise in accordance with the provisions hereof.

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

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

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

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

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

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

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

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

               (i) Upon occurrence of any of the events specified in subsection (a)(ii) below (the
“Adjustment Events”) while this Warrant is unexpired and not exercised in full, the Warrant
Holder may in its sole discretion require the Company, or any successor or purchasing

 

 

corporation, as the case may be, without payment of any additional consideration therefor,
upon surrender by the Warrant Holder of the Warrant to be replaced, to execute and deliver to the
Warrant Holder a new Warrant providing that the Warrant Holder shall have the right to exercise
such new Warrant (upon terms not less favorable to the Warrant Holder than those then applicable to
this Warrant) and to receive upon such exercise, in lieu of each share of Common Stock theretofore
issuable upon exercise of this Warrant, the kind and amount of shares of stock, other securities,
money or property receivable upon such Adjustment Event by the holder of one share of Common Stock
issuable upon exercise of this Warrant had this Warrant been exercised immediately prior to such
Adjustment Event, and the Exercise Price shall be proportionately adjusted, as applicable, such
that the aggregate amount to be paid by the Warrant Holder to acquire all of the Warrant Shares
upon exercise (the “Aggregate Exercise Price”) after such Adjustment Event shall be equal to the
Aggregate Exercise Price prior to such Adjustment Event. Such new Warrant shall provide for
adjustments that shall be as nearly equivalent as may be practicable to the adjustments provided
for in this Section 6.

               (ii) The Adjustment Events shall be (1) any reclassification or change of Common Stock (other
than a change in par value, as a result of a subdivision or combination of Common Stock or in
connection with an Excluded Merger or Sale), (2) any consolidation, merger or mandatory share
exchange of the Company with or into another corporation (other than a merger or mandatory share
exchange with another corporation in which the Company is a continuing corporation and which does
not result in any reclassification or change other than a change in par value or as a result of a
subdivision or combination of Common Stock), other than (each of the following referred to as an
“Excluded Merger or Sale”) a transaction involving (A) sale of all or substantially all of
the assets of the Company, (B) any merger, consolidation or similar transaction where the
consideration payable to the shareholders of the Company by the acquiring Person consists
substantially of cash or publicly traded securities, or a combination thereof, or where the
acquiring Person does not agree to assume the obligations of the Company under outstanding warrants
(including this Warrant). In the event of an Excluded Merger or Sale, the Company shall deliver a
notice to the Warrant Holder at least 10 days before the consummation of such Excluded Merger or
Sale, the Warrant Holder may exercise this Warrant at any time before the consummation of such
Excluded Merger or Sale (and such exercise may be made contingent upon the consummation of such
Excluded Merger or Sale), and any portion of this Warrant that has not been exercised before
consummation of such Excluded Merger or Sale shall terminate and expire, and shall no longer be
outstanding.

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

          (c) Stock Dividends. If the Company, at any time while this Warrant is unexpired and
not exercised in full, shall pay a dividend or other distribution in shares of

 

 

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

          (d) Liquidating Dividends, Etc. If the Company, at any time while this Warrant is
unexpired and not exercised in full, makes a distribution of its assets or evidences of
indebtedness to the holders of its Common Stock as a dividend in liquidation or by way of return of
capital or other than as a dividend payable out of earnings or surplus legally available for
dividends under applicable law or any distribution to such holders made in respect of the sale of
all or substantially all of the Company’s assets (other than under the circumstances provided for
in the foregoing subsections (a) through (c)), then the Warrant Holder shall be entitled to receive
upon exercise of this Warrant in addition to the Warrant Shares receivable in connection therewith,
and without payment of any consideration other than the Exercise Price, the kind and amount of such
distribution per share of Common Stock multiplied by the number of Warrant Shares that, on the
record date for such distribution, are issuable upon such exercise of the Warrant (with no further
adjustment being made following any event which causes a subsequent adjustment in the number of
Warrant Shares issuable), and an appropriate provision therefor shall be made a part of any such
distribution. The value of a distribution that is paid in other than cash shall be determined in
good faith by the Board of Directors of the Company. Notwithstanding the foregoing, in the event
of a proposed dividend in liquidation or distribution to the shareholders made in respect of the
sale of all or substantially all of the Company’s assets, the Company shall deliver a notice to the
Warrant Holder at least 10 days before the consummation of such event, the Warrant Holder may
exercise this Warrant at any time before the consummation of such event (and such exercise may be
made contingent upon the consummation of such event), and any portion of this Warrant that has not
been exercised before consummation of such event shall terminate and expire, and shall no longer be
outstanding.

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

 

 

(y) a fraction, of which (I) the numerator is the unexercised portion of this Warrant then
being exercised, and (II) the denominator is the aggregate amount of the unexercised portion of
this Warrant.

     Section 7. Notice of Adjustments. Whenever the Exercise Price or number of Warrant
Shares shall be adjusted pursuant to Section 6 hereof, the Company shall promptly prepare a
certificate signed by its Chief Executive Officer or Chief Financial Officer setting forth in
reasonable detail the event requiring the adjustment, the amount of the adjustment, the method by
which such adjustment was calculated (including a description of the basis on which the Company’s
Board of Directors made any determination hereunder), and the Exercise Price and number of Warrant
Shares purchasable at that Exercise Price after giving effect to such adjustment, and shall
promptly cause copies of such certificate to be sent by overnight courier to the Warrant Holder.

     Section 8. No Impairment. The Company will not, by amendment of its Certificate of
Incorporation or By-Laws or through any reorganization, transfer of assets, consolidation, merger,
dissolution or issue or sale of securities, avoid or seek to avoid the observance or performance of
any of the terms of this Warrant, but will at all times in good faith assist in the carrying out of
all such terms and in the taking of all such action as may be necessary or appropriate in order to
protect the rights of the Warrant Holder against impairment. Without limiting the generality of
the foregoing, the Company (a) will not increase the par value of any Warrant Shares above the
amount payable therefor on such exercise, and (b) will take all such action as may be reasonably
necessary or appropriate in order that the Company may validly and legally issue fully paid and
non-assessable Warrant Shares on the exercise of this Warrant.

     Section 9. Rights as Stockholder. Except as set forth in Section 6 above, prior to
exercise of this Warrant, the Warrant Holder shall not be entitled to any rights as a stockholder
of the Company with respect to the Warrant Shares, including (without limitation) the right to vote
such shares, receive dividends or other distributions thereon or be notified of stockholder
meetings.

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

     Section 11. Choice of Law. This Warrant shall be construed under the laws of the
State of New York without regard to principles of conflicts of law that would result in the
application of any law other than the laws of the State of New York.

     Section 12. Entire Agreement; Amendments. Except for any written instrument
concurrent or subsequent to the date hereof executed by the Company and the Investor, this Warrant,
the Agreement and the Registration Rights Agreement contain the entire understanding of the parties
with respect to the matters covered hereby and thereby. No provision of this

 

 

Warrant may be waived or amended other than by a written instrument signed by the party
against whom enforcement of any such amendment or waiver is sought.

     Section 13. Restricted Securities.

          (a) Registration or Exemption Required. This Warrant has been issued in a transaction
exempt from the registration requirements of the Securities Act, in reliance upon the provisions of
Section 4(2) thereof and Regulation D promulgated thereunder, and/or upon such other exemption from
the registration requirements of the Securities Act as may be available with respect to this
Warrant. This Warrant and the Warrant Shares issuable upon exercise of this Warrant may not be
resold except pursuant to an effective registration statement or an exemption to the registration
requirements of the Securities Act and applicable state laws.

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

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

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

          (d) Assignment. Assuming the conditions of Section 13(a) above regarding registration
or exemption have been satisfied, the Warrant Holder may sell, transfer, assign, pledge or
otherwise dispose of this Warrant (each of the foregoing, a “Transfer”), in whole or in
part, but only to an Affiliate of the Warrant Holder. The Warrant Holder shall deliver a written
notice to Company, substantially in the form of the Assignment attached hereto as
Exhibit B, indicating the person or persons to whom the Warrant shall be Transferred and
the respective number of warrants to be Transferred to each assignee. The Company shall effect the
Transfer within ten (10) days, and shall deliver to the Transferee(s) designated by the Warrant
Holder a Warrant or Warrants of like tenor and terms for the appropriate number of shares. In
connection with and as a condition of any such proposed Transfer, the Company may request the
Warrant

 

 

Holder to provide an opinion of counsel to the Warrant Holder in form and substance reasonably
satisfactory to the Company to the effect that the proposed Transfer complies with all applicable
federal and state securities laws.

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

     Section 14. Notices. All notices, demands, requests, consents, approvals, and other
communications required or permitted hereunder shall be given in accordance with Section 10.4 of
the Agreement.

     Section 15. Miscellaneous. This Warrant and any term hereof may be changed, waived,
discharged or terminated only by an instrument in writing signed by the party against which
enforcement of such change, waiver, discharge or termination is sought. The headings in this
Warrant are for purposes of reference only, and shall not limit or otherwise affect any of the
terms hereof. The invalidity or unenforceability of any provision hereof shall in no way affect
the validity or enforceability of any other provision.

     Section 16. Company Call Right.

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

               (i) If the Investor has not previously exercised this Warrant in full, then the Company shall
have a right to demand the surrender of this Warrant, or remaining portion thereof, from the
Investor without compensation, and the Investor shall promptly surrender this Warrant, or remaining
portion thereof. Following such demand for surrender, this Warrant shall automatically be deemed
to have been canceled and shall have no further force or effect.

               (ii) If, prior to receiving a Call Right Notice (as defined below), the Investor has
previously exercised this Warrant with respect to some or all of the Warrant Shares, and the
Investor has not previously sold such Warrant Shares, then Company shall have a right to purchase
from the Investor that number of shares of Common Stock equal to the number of shares of Common
Stock issued in connection with the exercise(s) of the Warrant, at a repurchase price per share
equal to the price per share paid by the Investor in connection with such exercise(s). For greater
certainty, (a) if Warrant Shares were exercised for cash, the purchase price per share under the
Call Right shall be equal to the Exercise Price, (b) if Warrant Shares were exercised on a cashless
exercise basis, the purchase price per share for such Warrant Shares under the Call Right shall be
zero, and (c) if such Warrant Shares were exercised on both a cash and cashless exercise basis, the
purchase price per share under the Call Right shall be equal to the total amount of cash paid in
connection with such cash exercise(s) divided by the total number of shares of Common Stock issued
in connection with all exercises of the Warrant (whether on a cash or cashless basis).

 

 

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

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

[Remainder of Page Intentionally Left Blank. Signature Page Follows.]

 

 

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

	 	 	 	 	 
	 	SOMAXON PHARMACEUTICALS, INC.

 	 
	 	By:  	/s/ Meg M. McGilley
 	 
	 	 	Name:  	Meg M. McGilley 	 
	 	 	Title:  	Vice President and Chief Financial Officer 	 
	 
	Investor acknowledges and agrees to the terms and conditions of this Warrant.
	 	 	 	 	 
	 	KINGSBRIDGE CAPITAL LIMITED

 	 
	 	By:  	                              /s/ Tony Gardner-Hillman
 	 
	 	 	Tony Gardner-Hillman 	 
	 	 	Director 	 

 

 

	 	 	 	 	 

EXHIBIT A TO THE WARRANT

EXERCISE FORM

SOMAXON PHARMACEUTICALS, INC.

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

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

	 	 	 	 	 
	Dated:
	 	 	 	 
	 

	 	 

	 	 
	 
	 	 	 	 
	 	 	 
	Signature of Registered Holder	 	 
	 
	 	 	 	 
	 	 	 
	Name of Registered Holder (Print)	 	 
	 
	 	 	 	 
	 	 	 
	Address	 	 

 

 

EXHIBIT B TO THE WARRANT

ASSIGNMENT

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

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

	 	 	 	 	 
	Dated:
	 	 	 	 
	 

	 	 

	 	 
	 
	 	 	 	 
	 	 	 
	Signature	 	 
	 
	 	 	 	 
	Fill in for new Registration of Warrant:	 	 
	 
	 	 	 	 
	 	 	 
	Name	 	 
	 
	 	 	 	 
	 	 	 
	Address	 	 
	 
	 	 	 	 
	 	 	 
	Please print name and address of assignee (including zip code number)

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