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Exhibit 4.6  

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

 
 

PROMETHEUS LABORATORIES, INC.    
    
    WARRANT TO PURCHASE 208,971 SHARES
  OF SERIES D PREFERRED STOCK    

        THIS
CERTIFIES THAT, for value received, MEIER MITCHELL & COMPANY and its assignees are entitled to subscribe for and purchase 208,971 fully paid and nonassessable shares of
Series D Preferred Stock (as adjusted pursuant to Section 4 hereof, the "Shares") of PROMETHEUS LABORATORIES, INC., a California corporation (the "Company"), at $1.75 per share
(such price and such other price as shall result, from time to time, from the adjustments specified in Section 4 hereof is herein referred to as the "Warrant Price"), subject to the provisions
and upon the terms and conditions hereinafter set forth. As used herein, (a) the term "Series Preferred" shall mean the Company's presently authorized Series D Preferred Stock, and any
stock into or for which such Series D Preferred Stock may hereafter be converted or exchanged, and after the automatic conversion of the Series D Preferred Stock to Common Stock shall
mean the Company's Common Stock, (b) the term "Date of Grant" shall mean June 6, 2000, and (c) the term "Other Warrants" shall mean any other warrants issued by the Company in
connection with the transaction with respect to which this Warrant was issued, and any warrant issued upon transfer or partial exercise of or in lieu of this Warrant. The term "Warrant" as used herein
shall be deemed to include Other Warrants unless the context clearly requires otherwise. Notwithstanding the foregoing, to the extent the Company has not authorized for issuance sufficient
Series D Preferred Stock upon exercise of this Warrant, then the shares issuable under this Warrant shall be for (i) Series D Preferred Stock in number of shares to the extent
authorized, and (ii) Common Stock of the Company for the remaining number of shares. The Company covenants with the holder of this Warrant that: (i) as soon as practicable and in no
event later than August 1, 2000, the Company will cause to be authorized sufficient shares of Series D Preferred Stock to permit the full exercise of this Warrant and the Other Warrants
into Series D Preferred Stock, and (ii) no liquidation, dissolution, merger, consolidation, acquisition or other liquidation event as set forth in the Company's
Charter shall occur until the Company has authorized sufficient shares of Series D Preferred Stock for the full exercise of this Warrant and the Other Warrants. 

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

        2.    Method of Exercise; Payment; Issuance of New Warrant.    Subject to Section 1 hereof, the purchase right
represented by this Warrant may be exercised by the holder hereof, in whole or in part and from time to time, at the election of the holder hereof, by (a) the surrender of this Warrant (with
the notice of exercise substantially in the form attached hereto as Exhibit A-l duly completed and executed) at the principal office of the Company and by the payment to the
Company, by certified or bank check, or by wire transfer to an account designated by the Company (a "Wire Transfer") of an amount equal to the then applicable Warrant Price multiplied by the number of
Shares then being purchased; (b) if in connection with a registered public offering of the Company's securities, the surrender of this Warrant (with the notice of exercise form attached hereto
as Exhibit A-2 duly completed and executed) at the principal office of the Company together with notice of arrangements reasonably satisfactory to the Company for payment to the
Company either by certified or bank check 

 

or
by Wire Transfer from the proceeds of the sale of shares to be sold by the holder in such public offering of an amount equal to the then applicable Warrant Price per share multiplied by the number
of Shares then being purchased; or (c) exercise of the "net issuance" right provided for in Section 10.2 hereof. The person or persons in whose name(s) any certificate(s) representing
shares of Series Preferred shall be issuable upon exercise of this Warrant shall be deemed to have become the holder(s) of record of, and shall be treated for all purposes as the record holder(s) of,
the shares represented thereby (and such shares shall be deemed to have been issued) immediately prior to the close of business on the date or dates upon which of this Warrant is exercised. In the
event of any exercise of the rights represented by this Warrant, certificates for the shares of stock so purchased shall be delivered to the holder hereof as soon as possible and in any event within
thirty (30) days after such exercise and, unless this Warrant has been fully exercised or expired, a new Warrant representing the portion of the Shares, if any, with respect to which this
Warrant shall not then have been exercised shall also be issued to the holder hereof as soon as possible and in any event within such thirty-day period; provided, however, at such time as
the Company is subject to the reporting requirements of the Securities Exchange Act of 1934, as amended, if requested by the holder of this Warrant, the Company shall cause its transfer agent to
deliver the certificate representing Shares issued upon exercise of this Warrant to a broker or other person (as directed by the holder exercising this Warrant) within the time period required to
settle any trade made by the holder after exercise of this Warrant. 

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

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

        (a)    Reclassification or Merger.    In case of any reclassification or change of securities of the class issuable
upon exercise of this Warrant (other than a change in par value, or from par value to no par value, or from no par value to par value, or as a result of a subdivision or combination), or in case of
any merger of the Company with or into another corporation (other than a merger with another corporation in which the Company is the acquiring and the surviving corporation and which does not result
in any reclassification or change of outstanding securities issuable upon exercise of this Warrant), or in case of any sale of all or substantially all of the assets of the Company, the Company, or
such successor or purchasing corporation, as the case may be, shall duly execute and deliver to the holder of this Warrant a new Warrant (in form and substance satisfactory to the holder of this
Warrant), or the Company shall make appropriate provision without the issuance of a new Warrant, so that the holder of this Warrant shall have the right to receive, at a total purchase price not to
exceed that payable upon the exercise of the unexercised portion of this Warrant, and in lieu of the shares of Series Preferred theretofore issuable upon exercise of this Warrant, (i) the kind
and amount of shares of stock, other securities, money and property receivable upon such reclassification, change, merger or sale by a holder of the number of shares of Series Preferred then
purchasable under this Warrant, or (ii) in the case of such a merger or sale in which the consideration paid consists all or in part of assets other than securities of the successor or
purchasing corporation, at the option of the Holder of this Warrant, the securities of the successor or purchasing corporation having a value at the time of the transaction equivalent to the valuation
of the Series Preferred at the time of the transaction. Any new Warrant 

2

 

shall
provide for adjustments that shall be as nearly equivalent as may be practicable to the adjustments provided for in this Section 4. The provisions of this subparagraph (a) shall
similarly apply to successive reclassifications, changes, mergers and transfers. 

        (b)    Subdivision or Combination of Shares.    If the Company at any time while this Warrant remains outstanding and
unexpired shall subdivide or combine its outstanding shares of Series Preferred, the Warrant Price shall be proportionately decreased and the number of Shares issuable hereunder shall be
proportionately increased in the case of a subdivision and the Warrant Price shall be proportionately
increased and the number of Shares issuable hereunder shall be proportionately decreased in the case of a combination. 

        (c)    Stock Dividends and Other Distributions.    If the Company at any time while this Warrant is outstanding and
unexpired shall (i) pay a dividend with respect to Series Preferred payable in Series Preferred, then the Warrant Price shall be adjusted, from and after the date of determination of
shareholders entitled to receive such dividend or distribution, to that price determined by multiplying the Warrant Price in effect immediately prior to such date of determination by a fraction
(A) the numerator of which shall be the total number of shares of Series Preferred outstanding immediately prior to such dividend or distribution, and (B) the denominator of which shall
be the total number of shares of Series Preferred outstanding immediately after such dividend or distribution; or (ii) make any other distribution with respect to Series Preferred (except any
distribution specifically provided for in Sections 4(a) and 4(b)), then, in each such case, provision shall be made by the Company such that the holder of this Warrant shall receive upon exercise of
this Warrant a proportionate share of any such dividend or distribution as though it were the holder of the Series Preferred (or Common Stock issuable upon conversion thereof) as of the record date
fixed for the determination of the shareholders of the Company entitled to receive such dividend or distribution. 

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

        (e)    Antidilution Rights.    The other antidilution rights applicable to the Shares of Series Preferred purchasable
hereunder are set forth in the Company's Articles of Incorporation, as amended through the Date of Grant, a true and complete copy of which is attached hereto as Exhibit B (the "Charter"). Such
antidilution rights shall not be restated, amended, modified or waived in any manner without holder's prior written consent if the effect of such restatement, amendment, modification or waiver on the
holder hereof would be more adverse to the holder hereof than, and substantially dissimilar to, its effect on the other holders of the Company's Series Preferred. The Company shall promptly provide
the holder hereof with any restatement, amendment, modification or waiver of the Charter promptly after the same has been made. 

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

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the
adjustment, the method by which such adjustment was calculated, and the conversion price or ratio of the Series Preferred after giving effect to such adjustment, and shall cause copies of such
certificate to be mailed (without regard to Section 13 hereof, by first class mail, postage prepaid) to the holder of this Warrant. 

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

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

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

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

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

        (1)   The
holder is aware of the Company's business affairs and financial condition, and has acquired information about the Company sufficient to reach an informed and
knowledgeable decision to acquire this Warrant. The holder is acquiring this Warrant for its own account for investment purposes only and not with a view to, or for the resale in connection with, any
"distribution" thereof in violation of the Act. 

        (2)   The
holder understands that this Warrant has 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. 

        (3)   The
holder further understands that this Warrant must be held indefinitely unless subsequently registered under the Act and qualified under any applicable state
securities laws, 

4

 

or
unless exemptions from registration and qualification are otherwise available. The holder is aware of the provisions of Rule 144, promulgated under the Act. 

        (4)   The
holder is an "accredited investor" as such term is defined in Rule 501 of Regulation D under the Act, as presently in effect. 

        (5)   The
right to acquire Shares of Series Preferred issuable upon exercise of holder's rights contained herein will be acquired for investment and not with a view to the
sale or distribution of any part thereof, and the holder has no present intention of selling or engaging in any public distribution of the same except pursuant to a registration or exemption. 

        (6)   The
holder understands (i) that the Shares of Series Preferred issuable upon exercise of the holder's rights contained herein is not registered under the 1933 Act
or qualified under applicable state securities laws on the ground that the issuance contemplated by this Warrant will be exempt from the registration and qualifications requirements thereof, and
(ii) that the Company's reliance on such exemption is predicated on the representations set forth in this Section 7(a). 

        (7)   The
holder has such knowledge and experience in financial and business matters as to be capable of evaluating the merits and risks of its investment and has the ability
to bear the economic risks of its investment. 

        (8)   Holder
understands that if the Company does not register with the Securities and Exchange Commission pursuant to Section 12 of the 1933 Act, or file reports
pursuant to Section 15(d) of the Securities Exchange Act of 1934 (the "1934 Act"), or if a registration statement covering the securities under the 1933 Act is not in effect when it desires to
sell (i) the rights to purchase Shares of Series Preferred pursuant to this Warrant, or (ii) the Shares of Series Preferred issuable upon exercise of the right to purchase, it may be
required to hold such securities for an indefinite period. The holder also understands that any sale of the rights of the holder to purchase Shares of Series Preferred which might be made by it in
reliance upon Rule 144 under the 1933 Act may be made only in accordance with the terms and conditions of that Rule. 

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

5

 

reasonably
request to provide a reasonable assurance that the provisions of Rule 144 or 144A have been satisfied. Each certificate representing this Warrant or the shares of Series Preferred
thus transferred (except a transfer pursuant to Rule 144 or 144A) shall bear a legend as to the applicable restrictions on transferability in order to ensure compliance with such laws, unless
in the aforesaid opinion of counsel for the holder, such legend is not required in order to ensure compliance with such laws. The Company may issue stop transfer instructions to its transfer agent in
connection with such restrictions. 

        (c)    Applicability of Restrictions.    Neither any restrictions of any legend described in this Warrant nor the
requirements of Section 7(b) above shall apply to any transfer of, or grant of a security interest in, this Warrant (or the Series Preferred or Common Stock obtainable upon exercise thereof) or
any part hereof (i) to a partner of the holder if the holder is a partnership or to a member of the holder if the holder is a limited liability company, (ii) to a partnership of which
the holder is a partner or to a limited liability company of which the holder is a member, or (iii) to any affiliate of the holder if the holder is a corporation;  provided, however, in any such
transfer, if applicable, the transferee shall on the Company's request agree in writing to be bound by the terms of this
Warrant as if an original holder hereof. 

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

        9.    [Reserved]    

        10.    Additional Rights.    

        10.1    Acquisition Transactions.    The Company shall provide the holder of this Warrant with at least twenty
(20) days' written notice prior to closing thereof of the terms and conditions of any of the following transactions (to the extent the Company has notice thereof): (i) the sale, lease,
exchange, conveyance or other disposition of all or substantially all of the Company's property or business, or (ii) its merger into or consolidation with any other corporation (other than a
wholly-owned subsidiary of the Company), or any transaction (including a merger or other reorganization) or series of related transactions, in which more than 50% of the voting power of the Company is
disposed of. 

        10.2    Right to Convert Warrant into Stock; Net Issuance.    

        (a)    Right to Convert.    In addition to and without limiting the rights of the holder under the terms of this
Warrant, the holder shall have the right to convert this Warrant or any portion thereof (the "Conversion Right") into shares of Series Preferred (or Common Stock if the Series Preferred has been
automatically converted into Common Stock) as provided in this Section 10.2 at any time or from time to time during the term of this Warrant. Upon exercise of the Conversion Right with respect
to a particular number of shares subject to this Warrant (the "Converted Warrant Shares"), the Company shall deliver to the holder (without payment by the holder of any exercise price or any cash or
other consideration) that number of shares of fully paid and 

6

 

nonassessable
Series Preferred (or Common Stock if the Series Preferred has been automatically converted into Common Stock) as is determined according to the following formula: 

	X =	B - A
 Y	 

	Where:	X =	the number of shares of Series Preferred (or Common Stock if the Series Preferred has been automatically converted to Common Stock) that shall be issued to holder
	

 	

Y =	

the fair market value of one share of Series Preferred (or Common Stock if the Series Preferred has been automatically converted to Common Stock)
	

 	

A =	

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

 	

B =	

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

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

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

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

          (i)  If
the Conversion Right is exercised in connection with and contingent upon a Public Offering, and if the Company's Registration Statement relating to such Public
Offering ("Registration Statement") has been declared effective by the Securities and Exchange 

7

 

Commission,
then the initial "Price to Public" specified in the final prospectus with respect to such offering. 

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

        (A)  If
traded on a securities exchange, the fair market value of the Common Stock shall be deemed to be the average of the closing prices of the Common Stock on such
exchange over the 30-day period ending five business days prior to the Determination Date, and the fair market value of the Series Preferred shall be deemed to be such fair market value of
the Common Stock multiplied by the number of shares of Common Stock into which each share of Series Preferred is then convertible; 

        (B)  If
traded on the Nasdaq Stock Market or other over-the-counter system, the fair market value of the Common Stock shall be deemed to be the
average of the closing bid prices of the Common Stock over the 30-day period ending five business days prior to the Determination Date, and the fair market value of the Series Preferred
shall be deemed to be such fair market value of the Common Stock multiplied by the number of shares of Common Stock into which each share of Series Preferred is then convertible; and 

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

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

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

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

        (b)   Subject
to the requirement that the Company take such actions as are necessary to authorize additional shares of Series D Preferred Stock, the Shares will, no
later than August 1, 2000, be duly authorized and reserved for issuance by the Company and, when issued in accordance with the terms hereof, will be validly issued, fully paid and
non-assessable. Notwithstanding the foregoing, there is sufficient number of shares of Common Stock which have been duly authorized and reserved for issuance by the Company to provide to
the holder upon exercise of this Warrant, and when issued in accordance with the terms hereof, will be validly issued, fully paid and non-assessable; 

        (c)   The
rights, preferences, privileges and restrictions granted to or imposed upon the Series Preferred and the holders thereof are as set forth in the Charter, and on the
Date of Grant, each share of the Series Preferred represented by this Warrant is convertible into one share of Common Stock; 

8

 

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

        (e)   The
execution and delivery of this Warrant are not, and the issuance of the Shares upon exercise of this Warrant in accordance with the terms hereof will not be,
inconsistent with the Company's Charter or by-laws, do not and will not contravene any law, governmental rule or regulation, judgment or order applicable to the Company, and do not and
will not conflict with or contravene any provision of, or constitute a default under, any indenture, mortgage, contract or other instrument of which the Company is a party or by which it is bound or
require the consent or approval of, the giving of notice to, the registration or filing with or the taking of any action in respect of or by, any Federal, state or local government authority or agency
or other person, except for the filing of notices pursuant to federal and state securities laws, which filings will be effected by the time required thereby; and 

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

        (g)   The
number of shares of Common Stock of the Company outstanding on the date hereof, on a fully diluted basis (assuming the conversion of all outstanding convertible
securities and the exercise of all outstanding options and warrants), does not exceed 30,000,000 shares. 

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

        13.    Notices.    Any notice, request, communication or other document required or permitted to be given or delivered
to the holder hereof or the Company shall be delivered, or shall be sent by certified or registered mail, postage prepaid, to each such holder at its address as shown on the books of the Company or to
the Company at the address indicated therefor on the signature page of this Warrant. 

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

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

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

        17.    Governing Law.    This Warrant shall be construed and enforced in accordance with, and the rights of the
parties shall be governed by, the laws of the State of California. 

9

 

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

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

        20.    No Impairment of Rights.    The Company will not, by amendment of its Charter or through any other means, avoid
or seek to avoid the observance or performance of any of the terms of this Warrant, but will at all times in good faith assist in the carrying out of all such terms and in the taking of all such
action as may be necessary or appropriate in order to protect the rights of the holder of this Warrant against impairment. 

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

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

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

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

	 	 	PROMETHEUS LABORATORIES, INC.
	

 	
 	

By	

/s/ James Schoeneck

	 	 	Title	President & CEO 6-5-00

	 	 	Address:	5739 Pacific Center Boulevard

San Diego, CA 92121

10

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Exhibit 4.7  

 

 
 

WARRANT
  
    To Purchase Shares of Common Stock,
  $.001 par value, of
  
    PROMETHEUS LABORATORIES INC.
  
    April 30, 2001    

 

TABLE OF CONTENTS  

	 
	 	 
	 	 
	 	Page

	1.	 	Definitions	 	1
	 	 	1.1.	 	Definitions of Terms	 	1
	 	 	1.2.	 	Other Definitions	 	3
	2.	 	Exercise of Warrant	 	3
	 	 	2.1.	 	Right to Exercise; Notice	 	3
	 	 	2.2.	 	Manner of Exercise; Issuance of Common Stock	 	3
	 	 	2.3.	 	Effectiveness of Exercise	 	4
	 	 	2.4.	 	Continued Validity	 	4
	 	 	2.5.	 	Automatic Exercise on Last Day of Exercise Period	 	5
	3.	 	Registration, Transfer, Exchange and Replacement of Securities; Legends	 	5
	 	 	3.1.	 	Registration, Transfer, Exchange and Replacement of Securities	 	5
	 	 	3.2.	 	Legends	 	5
	4.	 	Anti-Dilution Provisions	 	5
	 	 	4.1.	 	Adjustment of Number of Shares Purchasable	 	5
	 	 	4.2.	 	Adjustment of Exercise Price	 	5
	 	 	4.3.	 	Dividends	 	11
	 	 	4.4.	 	Certificates and Notices	 	12
	 	 	4.5.	 	Adjustments for Changes in Certain Data	 	13
	5.	 	Repurchase; Registration, etc	 	13
	6.	 	Reservation of Common Stock	 	13
	7.	 	Various Covenants of the Company	 	13
	 	 	7.1.	 	No Impairment or Amendment	 	13
	 	 	7.2.	 	Indemnification	 	14
	 	 	7.3.	 	Certain Expenses	 	14
	8.	 	Miscellaneous	 	14
	 	 	8.1.	 	Nonwaiver	 	14
	 	 	8.2.	 	Amendment	 	14
	 	 	8.3.	 	Communications	 	14
	 	 	8.4.	 	Like Tenor	 	14
	 	 	8.5.	 	Remedies	 	14
	 	 	8.6.	 	Successors and Assigns	 	14
	 	 	8.7.	 	Governing Law	 	14
	 	 	8.8.	 	Headings; Entire Agreement; Partial Invalidity, etc	 	15
	

Form of Notice of Exercise	
 	

 
	Form of Assignment	 	 

   
THIS WARRANT HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED AND

MAY NOT BE TRANSFERRED IN THE ABSENCE OF REGISTRATION THEREUNDER OR AN EXEMPTION THEREFROM 

WARRANT 

To
Purchase Shares of Common Stock, $.001 par value, of 

PROMETHEUS
LABORATORIES INC. 

	No. RW-    	 	April 30, 2001

        THIS
IS TO CERTIFY that, for value received,                        , or registered assigns, is entitled upon the due exercise hereof
at any time during the Exercise Period to purchase
                        shares of Common Stock of Prometheus Laboratories Inc., a California corporation (the "Company"), at
an Exercise Price of $.01 per share (such Exercise Price and the number of
shares of Common Stock purchasable hereunder being subject to adjustment as provided herein), and to exercise the other rights, powers and privileges hereinafter provided, all on the terms and subject
to the conditions hereinafter set forth. 

        This
Warrant is one of the Company's Warrants to Purchase Shares of Common Stock (herein, together with any warrants issued in exchange therefor or replacement thereof, all as amended,
modified or supplemented from time to time, called the "Warrants") initially exercisable in the aggregate for 4,466,224 (subject to adjustment) shares of Common Stock of the Company and issued
pursuant to those certain Securities Purchase Agreements, dated the Closing Date, by and among the Company and the institutional investors named therein (as amended, modified and supplemented from
time to time, the "Securities Purchase Agreements"). Reference is hereby made to the Securities Purchase Agreements and the other Transaction Documents for a description of, among other things,
certain terms relating to the Warrants and the Warrant Shares and certain rights of the holders thereof, including the right to require the repurchase of the Warrants and the Warrant Shares under
certain circumstances. Holders of Warrants and/or Warrant Shares are entitled to the applicable benefits of the Securities Purchase Agreements and the other Transaction Documents and may enforce the
applicable agreements contained therein, all in accordance with and subject to the terms thereof, notwithstanding any payment or prepayment or redemption or acquisition of any of the other Securities
issued pursuant to the Securities Purchase Agreements. 

1.    Definitions.    

        1.1.    Definitions of Terms.    Terms used herein without definition which are defined in the Securities Purchase
Agreements have the meanings ascribed to them therein, unless the context clearly requires otherwise, including, without limitation the following terms:
"Notes", "Officer's Certificate", "Person",
"Preferred Stock", "Qualified IPO", "Required Holders",
"Securities", "Securities Act", "Subsidiary" and
"Transaction Documents". In addition, the terms defined in this section 1, whenever used and capitalized in this Warrant, shall, unless the
context otherwise requires, have the following respective meanings: 

        "Assignment" shall mean the form of Assignment appearing at the end of this Warrant. 

        "Closing Date" shall mean April 30, 2001. 

        "Common Stock" shall mean the Common Stock, $.001 par value, of the Company as constituted on the Closing Date and any stock into which
such Common Stock shall have been changed or any stock resulting from any reclassification of such Common Stock. 

1

 

        "Company" shall mean Prometheus Laboratories Inc., a California corporation, and any successor corporation. 

        "Convertible Securities" shall mean evidences of indebtedness, shares (including, without limitation, Preferred Stock) of stock or other
securities which are convertible into or exchangeable or exercisable for, with or without payment of additional consideration, shares of Common Stock, either immediately or upon the arrival of a
specified date or the happening of a specified event. 

        "Current Market Price" of any security as of any date herein specified shall mean the average of the daily closing prices for the 30
consecutive trading days commencing 45 trading days before the day in question (or in the event that a security has been traded for less than 45 days, each of the trading days on which such
security has been traded). The closing price for each day shall be (a) if such security is listed or admitted for trading on any national
securities exchange, the last sale price of such security, regular way, or the average of the closing bid and asked prices thereof if no such sale occurred, in each case as officially reported on the
principal securities exchange on which such security is listed, or (b) if not reported as described in clause (a), the average of the
closing bid and asked prices of such security in the over-the-counter market as shown by the National Association of Securities Dealers, Inc. Automated Quotation System,
if so quoted, as reported by any member firm of the New York Stock Exchange selected by the Company. If such security is quoted on a national securities or central market system in lieu of a market or
quotation system described above, the closing price shall be determined in the manner set forth in clause (a) of the preceding sentence if actual transactions are reported and in the manner set
forth in clause (b) of the preceding sentence if bid and asked prices are reported but actual transactions are not. 

        "Exercise Price" shall mean the price per share of Common Stock set forth in the preamble to this Warrant, as such price may be adjusted
pursuant to section 4. 

        "Exercise Period" shall mean the period commencing on the Closing Date and terminating at 5:00 p.m. Boston time on April 30,
2008. 

        "Fair Value" shall mean the fair value of the appropriate security, property, assets, business or entity as determined by the board of
directors of the Company, provided that if, within 15 days following the receipt of the writing setting forth any such determination of Fair
Value, the Required Holders of the Warrants shall notify the Company of their disagreement with such determination, then Fair Value shall be determined by an independent appraiser of recognized
national standing (selected by the Company and reasonably satisfactory to the Required Holders of the Warrants). Each determination of Fair Value shall be made in accordance with generally accepted
financial practice (but without any adjustment on account of any lack of liquidity, lack of control and/or restriction on transferability) and shall be set forth in writing and the Company shall,
immediately following such determination, deliver a copy thereof to each holder or holders of the Warrants then outstanding. The determination of any such independent appraiser so made shall be
conclusive and binding on the Company and on each such holder for purposes of the transaction giving rise to the need for such determination. The Company shall pay all of the expenses incurred in
connection with any such determination, including, without limitation, the expenses of the independent appraiser engaged to make such determination,  provided that if the determination of Fair Value by
such independent appraiser is less than 105% of the Fair Value as initially determined by the board
of directors of the Company, then the expenses of such independent appraiser shall be borne by the holders of the Warrants and/or Warrant Shares who shall have requested that such independent
appraiser make such determination. If the Company shall not have selected such appraiser within 20 days after the occurrence of the event giving rise to the need therefor, then the Required
Holders of the Warrants at the time outstanding may select such appraiser. Notwithstanding the foregoing, in the case of any security, if clauses (a) or (b) of the definition of Current Market
Price are applicable to such security, then the Fair Value of such security shall be the Current Market Price of such security. 

2

 

        "Notice of Exercise" shall mean the form of Notice of Exercise appearing at the end of this Warrant. 

        "Other Securities" shall mean with reference to the exercise privilege of the holders of the Warrants, any shares (other than shares of
Common Stock) and any other securities of the Company (including, without limitation, Preferred Stock) or of any other Person which the holders of the Warrants at any time shall be entitled to
receive, or shall have received, upon the exercise or partial exercise of the Warrants, in lieu of or in addition to Common Stock, or which at any time shall be issuable or shall have been issued in
exchange for or in replacement of Common Stock (or Other Securities) pursuant to the terms of the Warrants or otherwise. 

        "Securities Purchase Agreements" shall have the meaning specified in the preamble to this Warrant. 

        "Series E Preferred Stock Conversion Price" shall mean the per share conversion price of the Company's Series E Preferred
Stock as in effect from time to time. On the Closing Date, the Series E Preferred Stock Conversion Price is $3.37. For avoidance of doubt, following the consummation of a Qualified IPO, there
shall be no adjustment pursuant to section 4 solely on account of any issue or sale of any
shares of Common Stock, Stock Purchase Rights or Convertible Securities for consideration per share (determined as provided in section 4) of less than the Series E Preferred Stock
Conversion Price. 

        "Stock Purchase Rights" shall mean any warrants, options or other rights to subscribe for, purchase or otherwise acquire any shares of
Common Stock or any Convertible Securities, either immediately or upon the arrival of a specified date or the happening of a specified event. 

        "Warrant Shares" shall mean the shares of Common Stock (and/or Other Securities) issued or issuable, as the case may be, from time to time
upon exercise of the Warrants, including, without limitation, any shares of Common Stock (and/or Other Securities) issued or issuable with respect thereto by way of stock dividend or stock split or in
connection with a combination of shares, recapitalization, merger, consolidation, other reorganization or otherwise. 

        "Warrants" shall have the meaning specified in the preamble to this Warrant. 

        1.2.    Other Definitions.    The terms defined in this section 1.2, whenever used in this Warrant, shall,
unless the context otherwise requires, have the following respective meanings: 

        "this Warrant" (and similar references to any of the other Transaction Documents) shall mean, and the words
"herein" (and "therein"), "hereof" (and
"thereof"), "hereunder" (and "thereunder") and words of
similar import shall, unless the context clearly requires otherwise, refer to, such instruments as they may from time to time be amended, modified or supplemented. 

2.    Exercise of Warrant.    

        2.1.    Right to Exercise; Notice.    On the terms and subject to the conditions of this section 2, the holder
hereof shall have the right, at its option, to exercise this Warrant in whole or in part at any time or from time to time during the Exercise Period, all as more fully specified below. 

        2.2.    Manner of Exercise; Issuance of Common Stock.    To exercise this Warrant, the holder hereof shall deliver to
the Company (a) a Notice of Exercise duly executed by the holder hereof (or its attorney) specifying the number of Warrant Shares to be
purchased, (b) an amount equal to the aggregate Exercise Price for all Warrant Shares as to which this Warrant is then being exercised and
(c) this Warrant. At the option of the holder hereof, payment of the aggregate Exercise Price shall be made
(w) by wire transfer of funds to an account in a bank located in the United States designated by the Company for such purpose,
(x) by check payable to the order of the Company, (y) by application of any Warrants, any
Warrant Shares or any Notes, as provided below, or (z) by any combination of such methods. 

3

 

        Upon
the exercise of this Warrant in whole or in part, the holder hereof may, at its option, submit to the Company written instructions from such holder to apply any specified portion of
the Warrants or the Warrant Shares issuable upon such exercise in payment of the Exercise Price required upon such exercise, in which case the Company will accept such specified portion of the
Warrants or the Warrant Shares (at a value equal to the then Fair Value thereof), in lieu of a like amount of such cash payment. 

        Upon
the exercise of this Warrant in whole or in part by the holder of any Notes, such holder may, at its option, surrender such Notes to the Company together with written instructions
from such holder to apply all or any specified principal amount of such Notes against the payment of some or all of the Exercise Price required upon such exercise, in which case the Company will
accept such specified principal amount in lieu of a like amount of such cash payment. Upon any such partial application of the principal of any such Note, the Company at its expense will promptly
issue and deliver to or upon the order of the holder thereof a new Note or Notes equal in aggregate principal amount to the unpaid principal amount of such surrendered Note not so applied and dated so
as to result in no loss of interest. At the time of surrender of any such Note pursuant to this section 2.2, the Company will pay to the holder surrendering such Note all interest on the
principal amount thereof so applied accrued to and including the date of such surrender. 

        Upon
receipt of the items referred to in section 2.3, the Company shall, as promptly as practicable, and in any event within five days thereafter, cause to be issued and delivered
to the holder hereof (or its nominee) or the transferee designated in the Notice of Exercise, a certificate or certificates representing the number of Warrant Shares specified in the Notice of
Exercise (but not exceeding the maximum number of shares issuable upon exercise of this Warrant) minus the number of Warrant Shares, if any, applied in
payment of the Exercise Price. Such certificates shall be registered in the name of the holder hereof (or its nominee) or in the name of such transferee, as the case may be. 

        If
this Warrant is exercised in part, the Company shall, at the time of delivery of such certificate or certificates, issue and deliver to the holder hereof or the transferee so
designated in the Notice of Exercise, a new Warrant evidencing the right of the holder hereof or such transferee to purchase at the Exercise Price then in effect the aggregate number of Warrant Shares
for which this Warrant shall not have been exercised and this Warrant shall be cancelled. 

        2.3.    Effectiveness of Exercise.    Unless otherwise requested by the holder hereof, this Warrant shall be deemed to
have been exercised and such certificate or certificates representing Warrant Shares shall be deemed to have been issued, and the holder or transferee so designated in the Notice of Exercise shall be
deemed to have become the holder of record of such Warrant Shares for all purposes, as of the close of business on the latest date on which the Notice of Exercise, the Exercise Price and this Warrant
shall have all been received by the Company in the manner set forth in section 2.2. 

        2.4.    Continued Validity.    A holder of Warrant Shares issued upon the exercise of this Warrant, in whole or in
part, shall continue to be entitled to all rights to which a holder of this Warrant is entitled pursuant to the provisions of this Warrant except such rights as by their terms apply solely to the
holder of a Warrant, notwithstanding that this Warrant is cancelled following such exercise. For avoidance of doubt, following the exercise of this Warrant, the holder of Warrant Shares issued upon
exercise shall not be entitled to any adjustment to the number of such Warrant Shares on account of the application of the anti-dilution provisions contained in section 4 of this
Warrant to any event or transaction occurring after such exercise, provided that prior to such exercise all adjustments required by the terms of such
section 4 shall have been made. The Company will, at the time of any exercise of this Warrant, upon the request of the holder of the Warrant Shares issued upon the exercise hereof, acknowledge
in writing, in form reasonably satisfactory to such holder, its continuing obligation to afford to such holder all rights to which such holder shall continue to be entitled after such exercise in
accordance with the provisions of this Warrant, including, without limitation, those set forth in sections 7.1, 7.2 and 7.3 of this Warrant;  provided that if such holder shall fail to make any such

4

 

request,
such failure shall not affect the continuing obligation of the Company to afford to such holder all such rights. 

        2.5.    Automatic Exercise on Last Day of Exercise Period.    If this Warrant shall not have been exercised in full on
or before the last day of the Exercise Period, then this Warrant shall be automatically exercised, without further action on the part of the holder hereof, in full (and the holder hereof shall be
deemed to be a holder of the Warrant Shares issued upon such automatic exercise) on and as of the last day of the Exercise Period, unless at any time on or before such last day of the Exercise Period
the holder of this Warrant shall notify the Company in writing that no such automatic exercise is to occur. Payment of the Exercise Price due in connection with any such automatic exercise pursuant to
this section 2.5 shall be made by application of Warrants (at a value equal to the then Fair Value thereof) equal to the aggregate Exercise Price which is due upon such exercise, unless at any
time on or before such last day of the Exercise Period the holder of this Warrant shall notify the Company that such holder elects one of the other payment options set forth in section 2.2. As
promptly as practicable following any such automatic exercise, and in any event within ten Business Days after the day that the holder of this Warrant surrenders this Warrant to the Company for
cancellation, the Company shall cause to be issued and delivered to the holder hereof a certificate registered in the name of the holder hereof (unless the holder shall specifically instruct the
Company otherwise) representing the Warrant Shares issued in connection with such automatic exercise of this Warrant. 

3.    Registration, Transfer, Exchange and Replacement of Securities; Legends.    

        3.1.    Registration, Transfer, Exchange and Replacement of Securities.    Reference is hereby made to the Securities
Purchase Agreements for certain provisions relating to the registration, transfer, exchange and replacement of the Warrants and Warrant Shares. 

        3.2.    Legends.    Neither this Warrant nor any Warrant Shares may be transferred or assigned unless registered under
the Securities Act or unless an exemption from such registration is available. Each Warrant shall bear a legend in substantially the following form: 

"THIS
WARRANT HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED AND MAY NOT BE TRANSFERRED IN THE ABSENCE OF REGISTRATION OR AN EXEMPTION THEREFROM." 

Until
the date on which a registration statement covering the Warrant Shares becomes effective under the Securities Act, each certificate evidencing Warrant Shares shall bear a legend in substantially
the following form: 

"THE
SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED AND MAY NOT BE TRANSFERRED IN THE ABSENCE OF REGISTRATION THEREUNDER OR AN EXEMPTION
THEREFROM." 

4.    Anti-Dilution Provisions.    

        4.1.    Adjustment of Number of Shares Purchasable.    Upon any adjustment of the Exercise Price as provided in
section 4.2, the holder hereof shall thereafter be entitled to purchase, at the Exercise Price resulting from such adjustment, the number of shares of Common Stock (calculated to the nearest
1/100th of a share) obtained by multiplying the Exercise Price in effect immediately prior to such adjustment by the number of shares of Common Stock purchasable hereunder immediately prior to such
adjustment and dividing the product thereof by the Exercise Price resulting from such adjustment. 

        4.2.    Adjustment of Exercise Price.    In addition to any adjustment required under the provisions of
section 4.5 below, and except as otherwise provided in section 4.2(n) below, the Exercise Price shall be subject to adjustment from time to time as set forth in this section 4.2. 

5

 

        (a)    Stock Dividends, Subdivisions and Combinations.    If and whenever the Company subsequent to the date hereof: 

        (i)    declares
a dividend upon, or makes any distribution in respect of, any of its capital stock payable in shares of Common Stock, or 

        (ii)   subdivides
its outstanding shares of Common Stock into a larger number of shares of Common Stock, or 

        (iii)  combines
its outstanding shares of Common Stock into a smaller number of shares of Common Stock, 

then
the Exercise Price shall be adjusted to that price determined by multiplying the Exercise Price in effect immediately prior to such event by a fraction
(A) the numerator of which shall be the total number of outstanding shares of Common Stock immediately prior to such event, and
(B) the denominator of which shall be the total number of outstanding shares of Common Stock immediately after such event, in each case (A) and
(B), treating as outstanding all shares of Common Stock issuable upon conversion or exchange of any such Convertible Securities and exercise of any such Stock Purchase Rights. 

        (b)    Issuance of Additional Shares of Common Stock.    If and whenever the Company subsequent to the date hereof but
prior to the consummation of a Qualified IPO shall issue or sell any shares of Common Stock (except as otherwise provided in the last paragraph of this section 4.2(b)), for a consideration per
share less than the greater of (x) the Series E Preferred Stock Conversion Price then in effect and
(y) the Fair Value per share (determined, in each case, as of the date specified in the next succeeding paragraph), the Exercise Price upon each
such issuance or sale shall be adjusted as of the date specified in the next succeeding paragraph to the lower of the prices calculated pursuant to the following clauses (i) and (ii) of this
section 4.2(b): 

        (i)    reducing the Exercise Price in the same proportion as the Series E Preferred Stock Conversion Price is (or is to
be) reduced on account of such issue or sale; and 

        (ii)   multiplying the Exercise Price in effect as of the date specified in the next succeeding paragraph by a fraction the
numerator of which is (A) the sum of (1) the number of shares of Common Stock outstanding
immediately prior to such issue or sale multiplied by the Fair Value per share of Common Stock immediately prior to such issue or sale plus
(2) the aggregate consideration, if any, received by the Company upon such issue or sale, divided by
(B) the total number of shares of Common Stock outstanding immediately after such issue or sale, and the denominator of which is the Fair Value
per share of Common Stock immediately prior to such issue or sale, it being agreed that in determining the number of shares of Common Stock outstanding it shall be assumed that all shares of Preferred
Stock, all Warrants and all other options and warrants outstanding on the Closing Date shall have been converted and exercised for shares of Common Stock. 

        For
purposes of this section 4.2(b), the date as of which the Exercise Price shall be adjusted and the date as of which the Series E Preferred Stock Conversion Price and
the Fair Value shall be determined shall be the earlier of (i) the date on which the Company shall enter into a firm contract for the issuance of
such shares of Common Stock and (ii) immediately prior to the date of actual issuance of such shares of Common Stock. 

        No
adjustment of the Exercise Price shall be made under this section 4.2(b) upon the issuance of any shares of Common Stock which are
(i) distributed to holders of Common Stock pursuant to a stock dividend or subdivision for which an adjustment shall previously have been made
under section 4.2(a) or (ii) issued pursuant to the exercise of any Stock Purchase Rights or pursuant to the conversion or exchange of any
Convertible Securities in each case to the extent that 

6

 

sections 4.2(c)
or (d) applied to the issuance of such Stock Purchase Rights or Convertible Securities. 

        (c)    Issuance of Stock Purchase Rights.    If and whenever the Company subsequent to the date hereof but prior to
the consummation of a Qualified IPO shall issue or sell any Stock Purchase Rights and the consideration per share for which shares of Common Stock may at any time thereafter be issuable upon exercise
thereof (or, in the case of Stock Purchase Rights exercisable for the purchase of Convertible Securities, upon the subsequent conversion or exchange of such Convertible Securities) shall be less than
the greater of (x) the Series E Preferred Stock Conversion Price or (y) the Fair
Value per share (determined, in each case, as of the date specified in the next succeeding paragraph), the Exercise Price upon each such issuance or sale shall be adjusted as provided in
section 4.2(b) as of the date specified in the next succeeding paragraph on the basis that the maximum number of shares of Common Stock ever issuable upon exercise of such Stock Purchase Rights
(or upon conversion or exchange of such Convertible Securities following such exercise) shall be deemed to have been issued as of the date of the determination of the Series E Preferred Stock
Conversion Price and the Fair Value specified in the next succeeding paragraph. 

        For
the purposes of this section 4.2(c), the date as of which the Exercise Price shall be adjusted and the date as of which the Fair Value shall be determined shall be the earlier
of (i) the date on which the Company shall enter into a firm contract for the issuance of such Stock Purchase Rights and
(ii) immediately prior to the date of actual issuance of such Stock Purchase Rights. 

        No
adjustment of the Exercise Price shall be made under this section 4.2(c) upon the issuance of any Stock Purchase Rights to the extent that an adjustment shall previously have
been made upon issuance of such Stock Purchase Rights pursuant to section 4.2(a). 

        (d)    Issuance of Convertible Securities.    If and whenever the Company subsequent to the date hereof but prior to
the consummation of a Qualified IPO shall issue or sell any Convertible Securities (except as otherwise provided in the last paragraph of this section 4.2(d)) and the consideration per share
for which shares of Common Stock may at any time thereafter be issuable pursuant to the terms of such Convertible Securities shall be less than the greater of
(x) the Series E Preferred Stock Conversion Price or (y) the Fair Value per share
(determined, in each case, as of the date specified in the next succeeding paragraph), the Exercise Price upon each such issuance or sale shall be adjusted as provided in section 4.2(b) as of
the date specified in the next succeeding paragraph on the basis that the maximum number of shares of Common Stock ever necessary to effect the conversion or exchange of all such Convertible
Securities shall be deemed to have been issued as of the date of the determination of the Fair Value specified in the next succeeding paragraph. 

        For
the purposes of this section 4.2(d), the date as of which the Exercise Price shall be adjusted and the date as of which the Series E Preferred Stock Conversion Price
and the Fair Value shall be determined shall be the earlier of (i) the date on which the Company shall enter into a firm contract for the
issuance of such Convertible Securities and (ii) immediately prior to the date of actual issuance of such Convertible Securities. 

        No
adjustment of the Exercise Price shall be made under this section 4.2(d) upon the issuance of any Convertible Securities which are issued pursuant to the exercise of any Stock
Purchase Rights to the extent that an adjustment shall previously have been made upon the issuance of such Stock Purchase Rights pursuant to section 4.2(a) or (c). 

        (e)    Minimum Adjustment.    If any adjustment of the Exercise Price pursuant to this section 4.2 shall result
in an adjustment of less than $.0001, no such adjustment shall be made, but 

7

 

any
such lesser adjustment shall be carried forward and shall be made at the time and together with the next subsequent adjustment which, together with any adjustments so carried forward, shall amount
to $.0001; provided that upon any adjustment of the Exercise Price resulting from (i) the
declaration of a dividend upon, or the making of any distribution in respect of, any stock of the Company payable in Common Stock, or (ii) the
reclassification by subdivision, combination or otherwise, of the Common Stock into a greater or smaller number of shares, the foregoing figure of $.0001 per share (or such figure as last adjusted)
shall be proportionately adjusted, and provided, further, that upon the exercise of this Warrant, the
Company shall make all necessary adjustments (to the nearest .0001 of a cent) not theretofore made to the Exercise Price up to and including the date upon which this Warrant is exercised. 

        (f)    Readjustment of Exercise Price.    Upon each change in
(i) the consideration, if any, payable for any Stock Purchase Rights or Convertible Securities referred to in section 4.2(c) or (d),
(ii) the consideration, if any, payable upon exercise of such Stock Purchase Rights or upon the conversion or exchange of such Convertible
Securities or (iii) the number of shares of Common Stock issuable upon the exercise of such Stock Purchase Rights or the rate at which such
Convertible Securities are convertible into or exchangeable for shares of Common Stock, the Exercise Price in effect at the time of such event shall forthwith be readjusted to the Exercise Price which
would have been in effect at such time had such Stock Purchase Rights or Convertible Securities provided for such changed consideration, number of shares of Common Stock so issuable or conversion
rate, as the case may be, at the time initially granted, issued or sold. On the expiration of any Stock Purchase Rights not exercised or of any right to convert or exchange under any Convertible
Securities not exercised, the Exercise Price then in effect shall forthwith be increased to the Exercise Price which would have been in effect at the time of such expiration had such Stock Purchase
Rights or Convertible Securities never been issued. No readjustment of the Exercise Price pursuant to this section 4.2(f) shall
(i) increase the Exercise Price by an amount in excess of the adjustment originally made to the Exercise Price in respect of the issue, sale or
grant of the applicable Stock Purchase Rights or Convertible Securities or (ii) require any adjustment to the amount paid or number of Warrant
Shares received by any Person upon any exercise of this Warrant prior to the date upon which such readjustment to the Exercise Price shall occur. 

        (g)    Reorganization, Reclassification or Recapitalization of the Company.    If and whenever subsequent to the date
hereof the Company shall effect (i) any reorganization or reclassification or recapitalization of the capital stock of the Company (other than in
the cases referred to in section 4.2(a)), (ii) any consolidation or merger of the Company with or into another Person,
(iii) the sale, transfer or other disposition of the property, assets or business of the Company as an entirety or substantially as an entirety
or (iv) any other transaction (or any other event shall occur) as a result of which holders of Common Stock become entitled to receive any shares
of stock or other securities and/or property (including, without limitation, cash) with respect to or in exchange for the Common Stock, there shall thereafter be deliverable upon the exercise of this
Warrant or any portion thereof (in lieu of or in addition to the Warrant Shares theretofore deliverable, as appropriate) the same number of shares of stock or other securities and/or the same amount
of property (including, without limitation, cash) to which the holder of the number of Warrant Shares which would otherwise have been deliverable upon the exercise of this Warrant or any portion
thereof at the time would have been entitled upon such reorganization or
reclassification or recapitalization of capital stock, consolidation, merger, sale, transfer, disposition or other transaction or upon the occurrence of such other event, and at the same aggregate
Exercise Price. 

8

  

        Prior
to and as a condition of the consummation of any transaction or event described in the preceding sentence, the Company shall make equitable, written adjustments in the application
of the provisions set forth herein and in the other Transaction Documents (to the extent the same are for the benefit of the holders of the Warrants and/or Warrant Shares) satisfactory to the Required
Holders of the Warrants and, if applicable, Warrant Shares, so that all such provisions shall thereafter be applicable, as nearly as possible, in relation to any shares of stock or other securities or
other property thereafter deliverable upon exercise of the Warrants. Any such adjustment shall be made by and set forth in a supplemental agreement of the Company and/or the successor entity, as
applicable, for the benefit of the holders of Warrants and/or Warrant Shares and in form and substance acceptable to the Required Holders of the Warrants and Warrant Shares, which agreement shall bind
the Company and/or the successor entity, as applicable, and all holders of Warrants and Warrant Shares and shall be accompanied by a favorable opinion of the regular outside counsel to the Company or
the successor entity, as applicable (or such other firm as is reasonably acceptable to the Required Holders of the Warrants), as to the enforceability of such agreement and as to such other matters as
the Required Holders of the Warrants may reasonably request. 

        (h)    Other Dilutive Events.    If any other transaction or event (other than those explicitly referred to in this
section 4.2), including, without limitation, any issuance, repurchase, redemption, or other distribution in respect of any shares of stock or securities of the Company or of any other Person,
including any Person referred to in section 4.2(g), shall occur as to which the other provisions of this section 4 are not strictly applicable but the failure to make any adjustment to
the Exercise Price or to any of the other terms of this Warrant would not fairly protect the purchase rights and other rights represented by this Warrant in accordance with the essential intent and
principles hereof, then, and as a condition to the consummation of any such transaction or event, and in each such case, the Company shall appoint a firm of independent public accountants of
recognized national standing (which may be the regular auditors of the Company), which shall give its opinion as to the adjustment, if any, on a basis consistent with the essential intent and
principles established in this section 4, necessary to preserve, without dilution, the rights represented by this Warrant. The certificate of any such firm of accountants shall be conclusive
evidence of the correctness of any computation made under this section 4. The Company shall pay the fees and expenses of such firm of accountants in connection with any such opinion. Upon
receipt of such opinion, the Company will promptly deliver a copy thereof to the holder of this Warrant and shall make the adjustments described therein. 

        (i)    Determination of Consideration.    For purposes of this section 4, the consideration received or
receivable by the Company for the issuance, sale or grant of shares of Common Stock, Stock Purchase Rights or Convertible Securities, irrespective of the accounting treatment of such consideration,
shall be valued and determined as follows: 

        (i)    Cash Payment.    In the case of cash, the gross amount paid by the purchasers without deduction of any accrued
interest or dividends, any reasonable expenses paid or incurred and any reasonable
underwriting commissions or concessions paid or allowed by the Company in connection with such issue or sale. 

        (ii)    Non-Cash Payment.    In the case of consideration other than cash, the Fair Value thereof (in any
case as of the date immediately preceding the issuance, sale or grant in question). 

        (iii)    Certain Allocations.    If shares of Common Stock, Stock Purchase Rights and/or Convertible Securities are
issued or sold together with other securities or other assets of the Company for a consideration which covers more than one of the foregoing categories of securities and assets, the consideration
received or receivable (computed as provided in 

9

 

clauses (i)
and (ii) of this section 4.2 (i)) shall be allocable to such shares of Common Stock, Stock Purchase Rights and/or Convertible Securities as reasonably determined in
good faith by the board of directors of the Company (provided such allocation is set forth in a written resolution and a certified copy thereof is
furnished to the holder of this Warrant promptly (but in any event within 10 days) following its adoption). 

        (iv)    Dividends in Securities.    If the Company shall declare a dividend or make any other distribution upon any
stock of the Company payable in shares of Common Stock, Convertible Securities or Stock Purchase Rights, such shares of Common Stock, Convertible Securities or Stock Purchase Rights, as the case may
be, issuable in payment of such dividend or distribution shall be deemed to have been issued or sold without consideration. 

        (v)    Stock Purchase Rights and Convertible Securities.    The consideration for which each share of Common Stock
shall be deemed to be issued upon the issuance or sale of any Stock Purchase Rights or Convertible Securities shall be determined by dividing
(A) the total consideration, if any, received by the Company as consideration for the Stock Purchase Rights or the Convertible Securities, as the
case may be, plus the minimum aggregate amount of additional consideration, if any, ever payable to the Company upon the exercise of such Stock Purchase Rights and/or upon the conversion or exchange
of such Convertible Securities, as the case may be, but without deduction of any accrued interest or dividends, any reasonable expenses paid or incurred and any reasonable underwriting commissions or
concessions paid or allowed by the Company in connection with such issue or sale; by (B) the maximum number of shares of Common Stock ever
issuable upon the exercise of such Stock Purchase Rights or upon the conversion or exchange of such Convertible Securities. 

        (vi)    Merger, Consolidation or Sale of Assets.    If any shares of Common Stock, Convertible Securities or Stock
Purchase Rights are issued in connection with any merger or consolidation of which the Company is the surviving corporation, the amount of consideration therefor shall be deemed to be the Fair Value
of such portion of the assets and business of the non-surviving corporation as shall be attributable to such Common Stock, Convertible Securities or Stock Purchase Rights, as the
case may be. In the event of (A) any merger or consolidation of which the Company is not the surviving corporation or
(B) the sale, transfer or other disposition of the property, assets or business of the Company as an entirety or substantially as an entirety for
stock or other securities of any other Person, the Company shall be deemed to have issued the number of shares of Common Stock for stock or securities of the surviving corporation or such other Person
computed on the basis of the actual exchange ratio on which the transaction was predicated and for a consideration equal to the Fair Value on the date of such transaction of such stock or securities
of the surviving corporation or such other Person, and if any such calculation results in adjustment of the Exercise Price, the determination of the number of Warrant Shares issuable upon exercise of
this Warrant immediately prior to such merger, consolidation or sale, for the purposes of section 4.2(g), shall be made after giving effect to such adjustment of the Exercise Price. 

        (j)    Record Date.    If the Company shall take a record of the holders of the Common Stock for the purpose of
entitling them (i) to receive a dividend or other distribution payable in Common Stock, Convertible Securities or Stock Purchase Rights or
(ii) to subscribe for or purchase Common Stock, Convertible Securities or Stock Purchase Rights, then all references in this section 4 to
the date of the issue or sale of the shares of Common Stock deemed to have been issued or sold upon the declaration of such dividend or the making of such other distribution or the date of the
granting of such right of subscription or purchase, as the case may be, shall be deemed to be references to such record date. 

10

 

        (k)    Shares Outstanding.    The number of shares of Common Stock deemed to be outstanding at any given time shall
not include shares of Common Stock held by the Company or any Subsidiary of the Company. 

        (l)    Maximum Exercise Price.    At no time shall the Exercise Price exceed the amount set forth in the first
paragraph of the Preamble of this Warrant except as a result of an adjustment thereto pursuant to section 4.2(a)(iii) or 4.2(g). 

        (m)    Application.    All subdivisions of this section 4.2 are intended to operate independently of one
another. If a transaction or an event occurs that requires the application of more than one subdivision, all applicable subdivisions shall be given independent effect (but without duplication). 

        (n)    No Adjustments under Certain Circumstances.    Anything herein to the contrary notwithstanding, no adjustment
to the Exercise Price shall be made in the case of: 

        (i)    any
issuance of shares of Common Stock (or Other Securities) upon the exercise in whole or part of any Warrant; 

        (ii)   any
issuance of shares of Common Stock upon the conversion of any shares of the Company's Preferred Stock outstanding on the Closing Date, as specified on  Schedule 5.19 to the Securities Purchase
Agreements; 

        (iii)  any
issuance of shares of Common Stock upon conversion of options or warrants outstanding on the Closing Date as specified on  Schedule 5.19 to the Securities Purchase Agreements; 

        (iv)  any
issuance or grant by the Company to any employees of or consultants to the Company of shares of Common Stock and/or options to purchase shares of Common Stock
pursuant to the Company's stock option plans existing on the Closing Date, and the issuance of shares of Common Stock upon the exercise of such options,  provided that the aggregate number of shares of
Common Stock so issued and issuable shall not exceed 2,654,665 (appropriately adjusted for stock splits,
stock dividends and the like) at any time (such figure constituting the sum of (x) the "New Option Pool for Dilution Calculations" of 2,100,000
shares appearing on that portion of Schedule 5.19 to the Securities Purchase Agreements entitled "Warrant Calculation Summary"  plus (y) 554,665 shares), it being agreed that for purposes of this clause (iv) to the
extent any such option expires or is terminated without exercise, it shall not, at any time following such expiration or termination, be deemed to have been issued; 

        (v)   in
addition to any issuance permitted under the foregoing clauses (i), (ii), (iii) or (iv), any issuance or grant by the Company to any employees of or
consultants to the Company of shares of Common Stock and/or options to purchase shares of Common Stock pursuant to any stock option plan or similar arrangement, and the issuance of shares of Common
Stock upon the exercise of such options, provided that (i) the aggregate number of shares of
Common Stock so issued and issuable shall not exceed 4,846,345 (appropriately adjusted for stock splits, stock dividends and the like) at any time (such 4,846,345 shares being intended to constitute
10% of the outstanding shares of Common Stock on the Closing Date (calculated on a fully-diluted basis)) and (ii) the per share consideration
paid in respect of such shares is not less than the Fair Value thereof at the time of issuance or grant, it being agreed that for purposes of this clause (v) to the extent any such option
expires or is terminated without exercise, it shall not, at any time following such expiration or termination, be deemed to have been issued. 

        4.3.    Dividends.    If the Company shall declare or pay any dividend or make any other distribution to the holders
of its Common Stock in respect thereof (other than a dividend or distribution payable in 

11

 

shares
of Common Stock, Convertible Securities or Stock Purchase Rights for which an adjustment is made under section 4.2), such dividend or distribution shall also be paid to the holder hereof
as if this Warrant had been exercised and such holder were, at the time of any such declaration or payment, then a holder of that number of Warrant Shares to which such holder is then entitled on the
exercise hereof. 

        4.4.    Certificates and Notices.    

        (a)    Adjustments to Exercise Price.    As promptly as practicable (but in any event not later than five days) after
the occurrence of any event requiring any adjustment under this section 4 to the Exercise Price (or to the number or kind of securities or other property deliverable upon the exercise of this
Warrant), the Company shall, at its expense, deliver to the holder of this Warrant either (i) an Officer's Certificate or
(ii) a certificate signed by a firm of independent public accountants of recognized national standing (which may be the regular auditors of the
Company), setting forth in reasonable detail the events requiring the adjustment and the method by which such adjustment was calculated and specifying the adjusted Exercise Price and the number of
shares of Common Stock purchasable upon exercise of this Warrant after giving effect to such adjustment. The certificate of any such firm of accountants shall be conclusive evidence of the correctness
of any computation made under this section 4. 

        (b)    Extraordinary Corporate Events.    If and whenever the Company subsequent to the date hereof shall propose to
(i) pay any dividend to the holders of shares of Common Stock or to make any other distribution to the holders of shares of Common Stock
(including, without limitation, any cash dividend), (ii) offer to the holders of shares of Common Stock rights to subscribe for or purchase any
additional shares of any class of stock or any other rights or options or (iii) effect any reclassification of the Common Stock (other than a
reclassification involving merely the subdivision or combination of outstanding shares of Common Stock), (iv) engage in any reorganization or
recapitalization or any consolidation or merger (other than a merger in which no distribution of securities or other property is to be made to holders of shares of Common Stock),
(v) consummate any sale, transfer or other disposition of its property, assets and business as an entirety or substantially as an entirety,
(vi) effect any other transaction which might require an adjustment to the Exercise Price (or to the number or kind of securities or other
property deliverable upon the exercise of this Warrant), including, without limitation, any transaction of the kind described in section 4.2(g) or
(vii) commence or effect the liquidation, dissolution or winding up of the Company, then, in each such case, the Company shall deliver to the
holder of this Warrant an Officer's Certificate giving notice of such proposed action, specifying (A) the date on which the stock transfer books
of the Company shall close, or a record shall be taken, for determining the holders of Common Stock entitled to receive such dividend or other distribution or such rights or options, or the date on
which such reclassification, reorganization, recapitalization, consolidation, merger, sale, transfer, other disposition, transaction, liquidation, dissolution or winding up shall take place or
commence, as the case may be, and (B) the date as of which it is expected that holders of Common Stock of record shall be entitled to receive
securities or other property deliverable upon such action, if any such date is to be fixed. Such Officer's Certificate shall be delivered in the case of any action covered by clause (i) or (ii)
above, at least 30 days prior to the record date for determining holders of Common Stock for purposes of receiving such payment or offer, and, in any other case, at least 30 days prior
to the date upon which such action takes place and 20 days prior to any record date to determine holders of Common Stock entitled to receive such securities or other property. 

        (c)    Effect of Failure.    Failure to give any certificate or notice, or any defect in any certificate or notice
required under this section 4.4 shall not affect the legality or validity of the adjustment of the Exercise Price or the number of Warrant Shares purchasable upon exercise of this Warrant. 

12

 

        4.5.    Adjustments for Changes in Certain Data.    The Company hereby agrees that the initial aggregate number of
shares of Common Stock issuable upon exercise in full of the Warrants issued on the Closing Date to the initial holders thereof was 4,466,224 shares of Common Stock, which was intended to constitute
at least 9.2% of the shares of Common Stock outstanding immediately following the Closing (calculated on a fully-diluted basis as of the Closing Date assuming the conversion, exercise and exchange of
all securities convertible into or exercisable or exchangeable for Common Stock, including, without limitation, the Warrants and the Company's outstanding Preferred Stock, and assuming the issue of
all of the shares of Common Stock reserved for issue pursuant to (or upon exercise of options issued pursuant to) all stock bonus plans and stock option plans (or similar arrangements)). If for any
reason the shares purchasable upon the exercise of the Warrants issued on the Closing Date did not constitute at least 9.2% of the shares of Common Stock outstanding as of such time (and as so
calculated), the Company shall forthwith reissue each Warrant then outstanding with appropriate adjustments in the Exercise Price and in the number of shares issuable upon exercise thereof (together
with an Officer's Certificate setting forth in reasonable detail the computation of such adjustments), and all such adjustments shall be reasonably satisfactory to the holders thereof. 

5.    Repurchase; Registration, etc.    Reference is hereby made to the Securities Purchase Agreements and the other Transaction
Documents for certain provisions relating to (a) the rights of the holders thereof to require repurchase of the Warrants and Warrant Shares under
certain circumstances and (b) the rights of the holders of the Registrable Shares (as defined in the Registration Rights Agreement) to require
the registration thereof under the Securities Act. 

6.    Reservation of Common Stock.    The Company has reserved and will at all times reserve and keep available, solely for
issuance, sale and delivery upon the exercise of this Warrant, such number of shares of Common Stock (and/or Other Securities) equal to the number of shares of Common Stock (and/or Other Securities)
issuable upon the exercise of this Warrant. All such shares of Common Stock (and/or Other Securities) shall be duly authorized and, when issued upon exercise of this Warrant in accordance with the
terms hereof, will be validly issued and fully paid and nonassessable with no liability on the part of the holders thereof. 

7.    Various Covenants of the Company.    

        7.1.    No Impairment or Amendment.    The Company shall not by any action including, without limitation, amending its
charter, by-laws or other organizational documents, any reorganization, recapitalization, 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 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 to protect the rights of the holder hereof against impairment. Without limiting the generality of the foregoing, the Company
(a) will take all such action as may be necessary or appropriate in order that the Company may validly issue fully paid and nonassessable Warrant
Shares, (b) will obtain and maintain all such authorizations, exemptions or consents from any public regulatory body having jurisdiction as may
be necessary to enable the Company to perform its obligations under this Warrant, (c) will not issue any capital stock or enter into any
agreement the terms of which would have the effect, directly or indirectly, of preventing the Company from honoring its obligations hereunder and
(d) except in compliance with the Securities Purchase Agreements, will not amend or modify any term, condition or provision of its charter or
by-laws in a manner which is, or could reasonably be expected to be, materially adverse to the interests of any holder of Warrants and/or Warrant Shares. 

        So
long as any Warrants or Warrant Shares are outstanding, the Company will acknowledge in writing, in form satisfactory to any holder of any such security, the continued validity of the
Company's obligations hereunder. 

13

 

        7.2.    Indemnification.    Without limiting the generality of any provision of the Securities Purchase Agreements or
any of the other Transaction Documents, the Company shall indemnify, save and hold harmless the holder of this Warrant and the holder of any Warrant Shares from and against any and all liability,
loss, cost, damage, reasonable attorneys' and accountants' fees and expenses, court costs and all other out-of-pocket expenses reasonably incurred by such holder in connection
with preserving, exercising and/or enforcing any of the terms hereof. 

        7.3.    Certain Expenses.    The Company shall pay all expenses in connection with, and all taxes (other than stock
transfer taxes and taxes on gains and income) and other governmental charges that may be imposed in respect of, the Company's issue, sale and delivery of this Warrant and any Warrant Shares. 

8.    Miscellaneous.    

        8.1.    Nonwaiver.    No course of dealing or any delay or failure to exercise any right, power or remedy hereunder on
the part of the holder of this Warrant or of any Warrant Shares shall operate as a waiver of or otherwise prejudice such holder's rights, powers or remedies. 

        8.2.    Amendment.    Any term, covenant, agreement or condition of the Warrants may, with the consent of the Company,
be amended, or compliance therewith may be waived (either generally or in a particular
instance and either retroactively or prospectively), by one or more substantially concurrent written instruments signed by the Required Holders of the Warrants,  provided that (a) no such amendment or waiver shall change the number of Warrant Shares issuable
upon the exercise of any Warrant or the manner of exercise or the amount of any payment due upon exercise without the prior written consent of the holder of such Warrant and
(b) no such amendment or waiver shall extend to or affect any obligation not expressly amended or waived or impair any right consequent thereon. 

        8.3.    Communications.    All communications provided for herein shall be delivered, mailed or sent by facsimile
transmission addressed in the manner and shall be effective as of the time specified in the Securities Purchase Agreements 

        8.4.    Like Tenor.    All Warrants shall at all times be identical, except as to the preamble to each Warrant. 

        8.5.    Remedies.    The Company stipulates that the remedies at law of the holder or holders of this Warrant and/or
of any Warrant Shares in the event of any default or threatened default by the Company in the performance of or compliance with any of the terms of this Warrant are not and will not be adequate and
that, to the fullest extent permitted by law, such terms may be specifically enforced by a decree for the specific performance of any agreement contained herein or by an injunction against a violation
of any of the terms hereof or otherwise. No remedy conferred in this Warrant on the holder of any Warrant or Warrant Shares is intended to be exclusive of any other remedy, and each and every such
remedy shall be cumulative and shall be in addition to every other remedy given hereunder or under any other agreement, document or instrument or now or hereafter existing at law or in equity or by
statute or otherwise. 

        8.6.    Successors and Assigns.    This Warrant and the rights evidenced hereby shall inure to the benefit of and be
binding upon the successors and assigns of the Company, the holder or holders of this Warrant and, as applicable, of any Warrant Shares, to the extent provided herein, and shall be enforceable by such
holder or holders. 

        8.7.    Governing Law.    This Warrant, including the validity hereof and the rights and obligations of the Company
and of the holder hereof and all amendments and supplements hereof and all waivers and consents hereunder, shall be construed in accordance with and governed by the domestic substantive laws of the
State of New York without giving effect to any choice of law or conflicts of law 

14

 

provision
or rule that would cause the application of the domestic substantive laws of any other jurisdiction. 

        8.8.    Headings; Entire Agreement; Partial Invalidity, etc.    The table of contents to and headings in this Warrant
are for purposes of reference only and shall not limit or otherwise affect the meaning hereof. This Warrant, together with the other Transaction Documents, embodies the entire agreement and
understanding between the holder hereof and the Company and supersedes all prior agreements and understandings relating to the subject matter hereof. In case any provision in this Warrant or any of
the other Transaction Documents shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby. 

[The
remainder of this page is left blank intentionally.] 

15

 

        IN
WITNESS WHEREOF, the Company has caused this Warrant to be executed as an instrument under seal by its duly authorized officer as of the date first above written. 

	 	 	PROMETHEUS LABORATORIES INC.
	

 	
 	

By:	
 	

    

	 	 	 	 	(Title)

16

QuickLinks

WARRANT To Purchase Shares of Common Stock, $.001 par value, of PROMETHEUS LABORATORIES INC. April 30, 2001

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