Stock Purchase Warrant [Series A Preferred] - Cardima Inc., Catalyst Ventures LP, Kleiner Perkins Caufield & Byers VI, KPCB VI Founders Fund, New Enterprise Associates V LP, Onset Enterprise Associates LP, Target Therapeutics Inc.
NEITHER THIS WARRANT NOR ANY OF THE SECURITIES ISSUABLE
HEREUNDER HAS BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "ACT"), AND MAY NOT BE OFFERED, SOLD
OR OTHERWISE TRANSFERRED, PLEDGED OR HYPOTHECATED IN THE
ABSENCE OF A REGISTRATION STATEMENT IN EFFECT WITH RESPECT
TO SUCH WARRANT OR SECURITIES, OR DELIVERY OF AN OPINION
OF COUNSEL IN FORM AND SUBSTANCE REASONABLY SATISFACTORY TO
THE COMPANY THAT SUCH OFFER, SALE OR TRANSFER, PLEDGE OR
HYPOTHECATION IS IN COMPLIANCE WITH THE ACT OR UNLESS SOLD
IN FULL COMPLIANCE WITH RULE 144 UNDER THE ACT.
SERIES A PREFERRED STOCK PURCHASE WARRANT
of
CARDIMA, INC.
INCORPORATED UNDER THE LAWS OF THE STATE OF DELAWARE
----------------------------------------------------
Issued: December 30, 1994
THIS CERTIFIES THAT, for value received, [1] (the "Investor") is
entitled to subscribe for and purchase [2] shares (the "Shares") of the fully
paid and nonassessable Series A Preferred Stock of Cardima, Inc., a Delaware
corporation (the "COMPANY"), at a price per share of $1.00 (such price and such
-----
other price as shall result, from time to time, from adjustments specified
herein is herein referred to as the "WARRANT PRICE"), subject to the provisions
and upon the terms and conditions hereinafter set forth. As used herein, the
term "Preferred Stock" shall mean the Company's duly authorized Series A
Preferred Stock, and any stock into or for which such Series A Preferred Stock
may hereafter be converted or exchanged pursuant to the Certificate of
Incorporation of the Company as from time to time amended as provided by law and
in such Articles, and the term "GRANT DATE" shall mean the date set forth above.
This Warrant is issued in connection with the cancellation of certain
promissory notes and the cancellation and reissuance of certain warrants
previously issued by the Company.
1. TERM. Subject to the terms hereof, the purchase right
----
represented by this Warrant is exercisable, in whole or in part, at any time and
from time to time from and after the Grant Date and prior to the earlier of (a)
the date ten (10) years after the Grant Date, or (b) the closing of the
Company's sale of all or substantially all of its assets or the acquisition of
the Company by another entity by means of merger or other transaction as a
result of which stockholders of the Company
<PAGE>
immediately prior to such acquisition possess a minority of the voting power of
the acquiring entity immediately following such acquisition (an "ACQUISITION")
to the extent that the acquiring entity in good faith requires, as a condition
of the Acquisition, the exercise or termination of this Warrant on or before the
closing of such Acquisition; provided that the Company shall provide written
notice of an Acquisition to the holder hereof not less than 30 days before the
proposed closing date of such Acquisition.
2. METHOD OF EXERCISE; NET ISSUE EXERCISE.
--------------------------------------
(a) Method of Exercise; Payment; Issuance of New Warrant. The
----------------------------------------------------
purchase right represented by this Warrant may be exercised by the holder
hereof, in whole or in part and from time to time, by either, at the election of
the holder hereof, (i) the surrender of this Warrant (with the notice of
exercise form attached hereto as Exhibit B duly executed) at the principal
---------
office of the Company and by the payment to the Company, by check, of an amount
equal to the then applicable Warrant Price per share multiplied by the number of
Shares then being purchased or (ii) 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 B-1 duly 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 check or 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. The person or persons
in whose name(s) any certificate(s) representing Shares 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 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 days of receipt of such notice 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.
(b) Net Issue Exercise.
------------------
(i) In lieu of exercising this Warrant, the holder hereof
may elect to receive shares equal to the value of this Warrant (or the portion
thereof being canceled) by surrender of this Warrant at the principal office of
the Company together with notice of such election in which event the Company
shall issue to Holder a number of shares of the Company's Preferred Stock
computed using the following formula:
X = Y(A - B)
--------
A
Where X = The number of shares of Preferred Stock to be issued to Holder.
-2-
<PAGE>
Y = the number of shares of Preferred Stock purchasable under this
Warrant.
A = the fair market value of one share of the Company's Preferred
Stock.
B = Warrant Price (as adjusted to the date of such calculations).
(ii) For purposes of this Section, fair market value of the
Company's Preferred Stock shall mean (A) the average of the closing bid and
asked prices of the Company's Preferred Stock quoted in the Over-The-Counter
Market Summary, if applicable, or (B) the average closing price quoted on any
exchange, including the Nasdaq National Market System, on which the Preferred
Stock is listed, if applicable, as published in the Western Edition of The Wall
--------
Street Journal for the ten trading days prior to the date of determination of
--------------
fair market value, or (C) the price determined by the Company's Board of
Directors, acting in good faith upon a review of all relevant factors.
(c) Company's Option Upon Registered Offering. In the event of the
-----------------------------------------
initial registered public offering by the Company of its Common Stock effected
pursuant to a Registered Statement on Form S-1 (or its successor) filed under
the Securities Act of 1933, the Company will have the option, but not the
obligation, to purchase for cash immediately prior to the issuance of such
shares in such offering this Warrant for a price per Share equal to the
difference between (x) the Net Per Share Price (as defined below) of the stock
being issued in such offering and (y) the Warrant Price. For the purpose of
this Paragraph the term ("NET PER SHARE PRICE") shall mean the proceeds to be
received by the Company (or selling shareholders, in the event of a secondary
offering) for each share in the registered public offering, net of underwriting
discounts and commissions.
3. STOCK FULLY PAID; RESERVATION OF SHARES. All Shares that may be
---------------------------------------
issued upon the exercise of the rights represented by this Warrant and Common
Stock issuable upon conversion of the Preferred Stock will, upon issuance, 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 the Warrant may be exercised, the Company will at all times have
authorized and reserved for the purpose of issuance upon exercise of the
purchase rights evidenced by this Warrant, a sufficient number of shares of its
Preferred Stock (and Common Stock issuable upon conversion thereof) to provide
for the exercise of the right represented by this Warrant.
4. ADJUSTMENT OF WARRANT PRICE AND NUMBER OF SHARES. The number and
------------------------------------------------
kind of securities purchasable upon the exercise of the 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, change or conversion 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 a continuing corporation and
-3-
<PAGE>
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 execute a new
Warrant (in form and substance satisfactory to the holder of this Warrant)
providing that the holder of this Warrant shall have the right to exercise such
new Warrant and upon such exercise to receive, in lieu of each share of
Preferred Stock theretofore issuable upon exercise of this Warrant, the kind and
amount of shares of stock, other securities, money and property receivable upon
such reclassification, change or merger by a holder of one share of Preferred
Stock. Such new Warrant shall provide for adjustments that shall be as nearly
equivalent as may be practicable to the adjustments provided for in this
Paragraph 4. The provisions of this subparagraph (a) shall similarly apply to
successive reclassification, changes, mergers and transfers.
(b) Subdivisions or Combination of Shares. If the Company at any
-------------------------------------
time while this Warrant remains outstanding and unexpired shall subdivide or
combine its Common Stock, the Warrant Price and the number of Shares issuable
upon exercise hereof shall be proportionately adjusted such that the aggregate
exercise price of this Warrant shall at all time remains equal.
(c) Stock Dividends. If the Company at any time while this
---------------
Warrant is outstanding and unexpired shall pay a dividend payable in shares of
Common Stock (except any distribution specifically provided for in the foregoing
subparagraphs (a) and (b)), 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
(i) the numerator of which shall be the total number of shares of Preferred
Stock outstanding immediately prior to such dividend or distribution, and (ii)
the denominator of which shall be the total number of shares of Preferred Stock
outstanding immediately after such dividend or distribution and the number of
Shares subject to this Warrant shall be proportionately adjusted.
(d) No Impairment. The Company will not, by amendment of its
-------------
Certificate of Incorporation or through 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 to be observed or performed hereunder by the
Company, but will at all times in good faith assist in the carrying out of all
the provisions of this Paragraph 4 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.
(e) Notices of Record Date. In the event of any taking by the
----------------------
Company of a record of its shareholders for the purpose of determining
shareholders who are entitled to receive payment of any dividend (other than a
cash dividend) or other distribution, any right to subscribe for, purchase or
otherwise acquire any share of any class or any other securities or property, or
to receive any other right, or for the purpose of determining shareholders who
are entitled to vote in connection with any proposed merger or consolidation of
the Company with or into any other corporation, or any proposed sale, lease or
conveyance of all or substantially all of the assets of the Company, or any
proposed liquidation, dissolution or winding up of the Company, the Company
shall mail to the holder
-4-
<PAGE>
of the Warrant, at least twenty (20) days prior to the date specified therein, a
notice specifying the date on which any such record is to be taken for the
purpose of such dividend, distribution or right, and the amount and character of
such dividend, distribution or right.
5. NOTICE OF ADJUSTMENTS. Whenever the Warrant Price shall be
---------------------
adjusted pursuant to the provisions hereof, the Company shall within thirty (30)
days of such adjustment deliver a certificate signed by its chief financial
officer to the registered holder(s) hereof 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 after giving effect
to such adjustment.
6. FRACTIONAL SHARES. No fractional shares of Preferred Stock will
-----------------
be issued in connection with any exercise hereunder, but in lieu of such
fractional shares the Company shall make a cash payment therefor upon the basis
of the Warrant Price then in effect.
7. REGISTRATION RIGHTS. The Company agrees to use its best efforts
-------------------
and to do and take all actions necessary to amend that certain Amended and
Restated Stockholders' Rights Agreement dated June 30, 1993 (the "Stockholder
Rights Agreement") to include the Series A Preferred Stock to be issued upon
exercise of this Warrant in the definition of Registrable Securities by no later
than the earlier of December 31, 1994 or the closing of the next round of equity
financing of the Company. The Investor agrees that it will become subject to
the market-stand-off provisions of the Stockholder Rights Agreement upon such
amendment.
8. TRANSFERS AND EXCHANGES.
-----------------------
(a) This Warrant shall not be transferrable except in accordance
with the terms of Section 3.7 of that certain Convertible Promissory Note and
Series A Preferred Stock Warrant Purchase Agreement dated as of September 9,
1994 by and among the Company, Investor and certain other investors.
(b) All new warrants issued in connection with transfers or
exchanges shall be identical in form and provision to this Warrant. It shall be
a further condition to each such transfer that the transferee shall receive and
accept a Warrant, of like tenor and date, executed by the Company.
9. RIGHTS AS SHAREHOLDERS.
----------------------
No holder of the Warrant, as such, shall be entitled to vote or
receive dividends or be deemed the holder of Preferred Stock, or any other
securities of the Company which may at any time be issuable on the exercise
thereof 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.
-5-
<PAGE>
10. REPRESENTATIONS AND WARRANTIES. This Warrant is issued and
------------------------------
delivered on the basis of the following:
(a) This Warrant has been duly authorized and executed by the
Company and when delivered will be the valid and binding obligation of the
Company enforceable in accordance with its terms;
(b) The Shares have been 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 nonassessable;
(c) The rights, preferences, privileges and restrictions granted
to or imposed upon the Shares and the holders thereof are as set forth in the
Company's Certificate of Incorporation, as amended, a true and complete copy of
which has been delivered to the original Warrant holder;
(d) The shares of Common Stock issuable upon conversion of the
Shares have been duly authorized and reserved and, when issued in accordance
with the terms of the Company's Certificate of Incorporation, as amended, will
be validly issued, fully paid and nonassessable; and
(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 Certificate of
Incorporation 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 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 with or the taking of any action in respect of or
by, any federal state or local government authority or agency or other person.
11. 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.
12. NOTICES. Any notice, request 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 on the signature page of this Warrant.
13. 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 Common Stock issuable upon the exercise of this
Warrant shall survive the exercise and termination of this Warrant and all of
the covenants and agreements of the Company shall inure to the benefit of the
successors and
-6-
<PAGE>
assigns of the holder hereof. The Company will, at the time of the exercise of
this Warrant, in whole or in part, upon request of the holder hereof but at the
Company's expense, acknowledge in writing its continuing obligation to the
holder hereof in respect of any rights (including, without limitation, any right
to registration of the shares of Registrable Securities) to which the holder
hereof shall continue to be entitled after such exercise in accordance with this
Warrant; provided, that the failure of the holder hereof to make any such
request shall not affect the continuing obligation of the Company to the holder
hereof in respect of such rights.
14. 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, or like tenor, in lieu of the lost, stolen, destroyed or mutilated
Warrant or stock certificate.
15. 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.
16. 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.
IN WITNESS WHEREOF, this Preferred Stock Purchase Warrant is executed
effective as of the date first above written.
CARDIMA, INC.
By:
---------------------------------------
Title:
------------------------------------
-7-
<PAGE>
EXHIBIT B
---------
NOTICE OF EXERCISE
To:
---------------------------------
---------------------------------
---------------------------------
Attn:
--------------------------
1. The undersigned hereby elects to purchase ______ shares of
__________ Stock of________________ pursuant to the terms of the attached
Warrant, and tenders herewith payment of the purchase price of such shares in
full.
2. Please issue a certificate or certificates representing said
shares in the name of the undersigned or in such other name or names as are
specified below
Name:
---------------------------------
Address:
------------------------------
------------------------------
------------------------------
3. The undersigned represents that the aforesaid shares being
acquired for the account of the undersigned for investment and not with a view
to, or for resale in connection with, the distribution thereof and that the
undersigned has no present intention of distributing or reselling such shares.
---------------------------------
(Signature)
----------------------
(Date)
-8-
<PAGE>
EXHIBIT B-1
-----------
NOTICE OF EXERCISE
To:
---------------------------------
---------------------------------
---------------------------------
Attn:
--------------------------
1. Contingent upon and effective immediately prior to the closing
(THE "CLOSING") of the Company's public offering contemplated by the
Registration Statement of Form S-______, filed _______________, _______________,
the undersigned hereby elects to purchase shares of
______________________________ Stock of the Company (or such lesser number of
shares as may be sold on behalf of the undersigned at the Closing) pursuant to
the terms of the attached Warrant.
2. Please deliver to the custodian for the selling shareholders a
stock certificate representing such _______________ shares.
3. The undersigned has instructed the custodian for the selling
shareholders to deliver to the Company $_______________ or, if less, the net
proceeds due the undersigned from the sale of shares in the aforesaid public
offering. If such net proceeds are less than the purchase price for such shares,
the undersigned agrees to deliver the difference to the Company prior to the
Closing.
---------------------------------
(Signature)
---------------------------
(Date)
-9-
<PAGE>
Schedule of Holders of
Form of Series A Preferred Stock Warrant
Issued in December 1994
No. of Series A
Preferred Stock
Name Warrant Shares
---- ----------------
Catalyst Ventures Limited Partnership 857
Kleiner Perkins Caufield & Byers VI 8,016
KPCB VI Founders Fund 1,229
New Enterprise Associates V, LP 4,362
Onset Enterprise Associates, LP 857
Target Therapeutics, Inc. 3,089