Common Stock Warrant - Cardima Inc., Catalyst Ventures LP, Kleiner Perkins Caufield & Byers VI, KPCB VI Founders Fund, New Enterprise Associates V LP, Onset Enterprise Associates LP and Gabriel B. Vegh
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.
COMMON STOCK WARRANT
OF
CARDIMA, INC.
INCORPORATED UNDER THE LAWS OF THE STATE OF DELAWARE
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Issued: [NoteDate]
THIS CERTIFIES THAT, for value received, [Name] (the "Investor") is
entitled to subscribe for and purchase shares (the "Shares") of the fully paid
and nonassessable Common Stock of Cardima, Inc., a Delaware corporation (the
"Company"), at a price per share of $0.15 (such price and such other price as
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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 "Common
Stock" shall mean the Company's duly authorized Common Stock, and any stock into
or for which such Common Stock may hereafter be 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 extension of a loan to the
Company by the Investor as evidenced by that certain convertible promissory note
of even date herewith executed by the Company and delivered to the Investor in
the principal amount of $[NoteAmount] (the "Note").
1. TERM. Subject to the terms hereof, the purchase right represented by
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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
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acquisition of the Company by another entity by means of merger or other
transaction as a result of which stockholders of the Company 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. NUMBER OF SHARES. Subject to the terms and conditions hereinafter set
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forth, the Investor is entitled, upon surrender of this Warrant, to purchase
from the Company that number of shares of Common Stock, at a purchase price of
$0.15 per share, equal to the product of (i) the product of .05 multiplied by
the total original principal dollar amount represented by the Note (the
"Principal Note Amount"), multiplied by (ii) the number of thirty (30) day
periods all or any part of such Principal Note Amount remains outstanding.
3. METHOD OF EXERCISE, NET ISSUE EXERCISE.
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(a) Method of Exercise: Payment, Issuance of New Warrant. The
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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
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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
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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
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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.
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(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 Common Stock computed
using the following formula:
X = Y(A - B)
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A
Where X = The number of shares of Common Stock to be issued to Holder.
Y = the number of shares of Common Stock purchasable under this Warrant.
A = the fair market value of one share of the Company's Common 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 Common Stock shall mean (A) the average of the closing bid and asked
prices of the Company's Common 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 Common Stock is
listed, if applicable, as published in the Western Edition of The Wall Street
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Journal for the ten trading days prior to the date of determination of fair
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market value, or (C) if neither (A) or (B) is applicable, 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
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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.
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4. STOCK FULLY PAID: RESERVATION OF SHARES. All Shares that may be issued
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upon the exercise of the rights represented by this Warrant 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
Common Stock to provide for the exercise of the right represented by this
Warrant.
5. ADJUSTMENT OF WARRANT PRICE AND NUMBER OF SHARES. The number and kind
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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,
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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 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 Common
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 Common 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
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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
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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
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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 Common Stock outstanding immediately prior to such
dividend or distribution, and (ii) the denominator of which shall be the total
number of shares of Common Stock outstanding immediately after such dividend or
distribution and the number of Shares subject to this Warrant shall be
proportionately adjusted.
(d) No Impairment. The Company will not, by amendment of its
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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 5 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
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of a record of its shareholders for the purpose of determining stockholders 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 stockholders 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
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.
6. NOTICE OF ADJUSTMENTS. Whenever the Warrant Price shall be adjusted
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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.
7. FRACTIONAL SHARES. No fractional shares of Common Stock will be issued
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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.
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8. REGISTRATION RIGHTS. The Company agrees to use its best efforts and to
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do and take all actions necessary to amend that certain Second Amended and
Restated Stockholders' Rights Agreement dated December 31, 1994 (the
"Stockholder Rights Agreement") to include the Common Stock to be issued upon
exercise of this Warrant in the definition of Registrable Securities by no later
than 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.
9. TRANSFERS AND EXCHANGES.
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(a) This Warrant shall not be transferrable except to an affiliate of
the Investor.
(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.
10. RIGHTS AS STOCKHOLDERS.
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No holder of the Warrant, as such, shall be entitled to vote or
receive dividends or be deemed the holder of Common 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
stockholder of the Company or any right to vote for the election of directors or
upon any matter submitted to stockholders 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.
11. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. This Warrant is issued
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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 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
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Certificate of Incorporation, as amended, a true and complete copy of which has
been delivered to the original Warrant holder;
(d) 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.
12. REPRESENTATIONS AND WARRANTIES OF INVESTOR. Without limiting or
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modifying the representations and warranties of the Company in Section 11 of
this Warrant or the right of the Investor to rely thereon, the Investor hereby
represents and warrants that:
(a) Purchase Entirely for Own Account. This Warrant is issued to the
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Investor in reliance upon Investor's representation to the Company, which by its
acknowledgment of this Warrant Investor hereby confirms, that the Warrant and
the Common Stock issuable upon exercise of the Warrant (collectively, the
"Securities") will be acquired for investment for the Investor's own account,
not as a nominee or agent, and not with a view to the resale or distribution of
any part thereof, and that the Investor has no present intention of selling,
granting any participation in, or otherwise distributing the same (other than to
partners of the Investor). By acknowledging this Warrant, it does not have any
contract, undertaking, agreement, or arrangement with any person to sell,
transfer, or grant participations to such person or to any third person, with
respect to any of the Securities (other than to partners of the Investor). It
has full power and authority to acknowledge this Warrant.
(b) Disclosure of Information. It has had an opportunity to ask
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questions and receive answers from the Company regarding the terms and
conditions of the offering of the Warrant.
(c) Investment Experience. The Investor acknowledges that it is able
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to fend for itself, can bear the economic risk of its investment, and has such
knowledge and experience in financial or business matters that it is capable of
evaluating the merits and risks of the investment in the Warrant. It has not
been organized solely for the purpose of acquiring the Warrant.
(d) Accredited Investor. The Investor is an "accredited investor"
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within the meaning of SEC Rule 501 of Regulation D, as presently in effect.
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(e) Restricted Securities. It understands that the Securities it is
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purchasing are characterized as "restricted securities" under the federal
securities laws inasmuch as they are being acquired from the Company in a
transaction not involving a public offering and that under such laws and
applicable regulations such securities may be resold without registration under
the Act only in certain limited circumstances. In this connection, the Investor
represents that it is familiar with SEC Rule 144, as presently in effect, and
understands the resale limitations imposed thereby and by the Act.
(f) Legends. It is understood that the certificates evidencing the
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Securities may bear one or all of the following legends:
(i) "THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"). THEY MAY NOT BE SOLD, OFFERED
FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF A REGISTRATION STATEMENT IN
EFFECT WITH RESPECT TO THE SECURITIES UNDER SUCH ACT OR AN OPINION OF COUNSEL
REASONABLY SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED OR
UNLESS SOLD PURSUANT TO AN EXEMPTION TO SUCH ACT."
(ii) Any legend required by the laws of the State of California.
13. MODIFICATION AND WAIVER. This Warrant and any provision hereof may be
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changed, waived, discharged or terminated only by an instrument in writing
signed by the party against which enforcement of the same is sought.
14. NOTICES. Any notice, request or other document required or permitted
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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.
15. BINDING EFFECT ON SUCCESSORS. The terms and provisions of this
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Warrant shall be binding upon the Company and the Investor and their respective
successors and assigns. All of the obligations of the parties 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 each party relating thereto shall inure to the benefit of the successors and
assigns of the other. 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
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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.
16. LOST WARRANTS OR STOCK CERTIFICATES. The Company covenants to the
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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.
17. DESCRIPTIVE HEADINGS. The descriptive headings of the several
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paragraphs of this Warrant are inserted for convenience only and do not
constitute a part of this Warrant.
18. GOVERNING LAW. This Warrant shall be construed and enforced in
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accordance with, and the rights of the parties shall be governed by, the laws of
the State of California.
IN WITNESS WHEREOF, this Common Stock Warrant is executed effective as of
the date first above written.
CARDIMA, INC.
By:
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Title:
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AGREED TO AND ACCEPTED:
By:
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Title:
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EXHIBIT B
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NOTICE OF EXERCISE
To: Cardima, Inc.
47266 Benicia Street
Fremont, CA 94538
Attn: President
1. The undersigned hereby elects to purchase _________ shares of Common
Stock of Cardima, Inc. 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:
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Address:
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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.
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(Signature)
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(Date)
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EXHIBIT B-1
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NOTICE OF EXERCISE
To: Cardima, Inc.
47266 Benicia Street
Fremont, CA 94538
Attn: President
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 Common 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.
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(Signature)
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(Date)
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Schedule of Holders of
Form of Common Stock Warrant
Issued from April 1995 to December 1995
No. of
Common Stock
Name Warrant Shares
---- ---------------
Catalyst Ventures Limited Partnership 8,666
3,412
3,607
Kleiner Perkins Caufield & Byers VI 35,368
92,342
55,873
42,854
29,540
11,505
KPCB VI Founders Fund 5,425
14,165
8,571
6,574
4,531
1,764
New Enterprise Associates V, LP 43,333
17,746
18,261
Onset Enterprise Associates, LP 8,666
3,412
3,607
Gabriel B. Vegh 37,301