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WARRANT TO PURCHASE SHARES OF PREFERRED STOCK of SKINMEDICA, INC.

Bridge Loan Agreement

WARRANT TO PURCHASE SHARES 

OF PREFERRED STOCK 

 

of 

 

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SKINMEDICA INC

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Title: WARRANT TO PURCHASE SHARES OF PREFERRED STOCK of SKINMEDICA, INC.
Governing Law: California     Date: 4/27/2005

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Form of Series B Bridge Loan Warrant

Exhibit 4.3

 

THIS WARRANT AND THE SECURITIES ISSUABLE UPON THE EXERCISE HEREOF HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR ANY STATE SECURITIES LAWS. THEY MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED, HYPOTHECATED OR OTHERWISE TRANSFERRED 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.

 

THE SALE OF THE SECURITIES WHICH ARE THE SUBJECT OF THIS WARRANT HAS NOT BEEN QUALIFIED WITH THE COMMISSIONER OF CORPORATIONS OF THE STATE OF CALIFORNIA OR ANY OTHER STATE AND THE ISSUANCE OF SUCH SECURITIES OR THE PAYMENT OR RECEIPT OF ANY PART OF THE CONSIDERATION FOR SUCH SECURITIES PRIOR TO SUCH QUALIFICATION IS UNLAWFUL, UNLESS THE SALE OF SUCH SECURITIES IS EXEMPT FROM QUALIFICATION BY SECTION 2511, 25102 OR 25105 OF THE CALIFORNIA CORPORATIONS CODE OR SUCH PROVISIONS OF THE CORPORATIONS CODE OF ANY SUCH OTHER STATE. THE RIGHTS OF THE HOLDER OF THIS WARRANT ARE EXPRESSLY CONDITIONED UPON SUCH QUALIFICATION BEING OBTAINED, UNLESS THE SALE IS SO EXEMPT.

 

Void after

 

_________

 

WARRANT TO PURCHASE SHARES

OF PREFERRED STOCK

 

of

 

SKINMEDICA, INC.

 

INCORPORATED UNDER THE LAWS OF THE STATE OF CALIFORNIA

 

THIS CERTIFIES THAT, for value received,                     , together with its permitted successors and assigns (“Holder”) is entitled, subject to the terms set forth below, to subscribe for and purchase shares of a series of Preferred Stock (the “Preferred Stock”) of SKINMEDICA, INC., a California corporation (the “Company”), subject to adjustment as provided herein. This warrant and any warrant subsequently issued upon exchange or transfer hereof are hereinafter referred to collectively as the “Warrant.”

 

This Warrant is subject to the following terms and conditions:

 

1. Convertible Promissory Note and Warrant Purchase Agreement. This Warrant is issued in connection with and subject to the terms and conditions of that certain Convertible Promissory Note and Warrant Purchase Agreement dated June 21, 2002 (the “Purchase Agreement”) by and among the Company, Holder and the other parties thereto. Pursuant to the Purchase Agreement, the Company has also issued to Holder a convertible promissory note and

 

1


may from time to time issue additional promissory notes (each a “Note” and collectively, the “Notes”). All capitalized terms used but not defined in this Warrant shall have the meanings ascribed thereto in the Purchase Agreement.

 

2. Exercise of Warrant. The terms and conditions upon which this Warrant may be exercised, and the shares covered hereby may be purchased, are as follows:

 

2.1 Term. Subject to the terms hereof, this Warrant may be exercised at any time after the date hereof, or from time to time, in whole or in part; provided, however, that in no event may this Warrant be exercised (the “Exercise Date”) later than 5:00 p.m. (Pacific Time) on the earlier of (a) the close of business on June 21, 2009, or (b) (i) the closing of the acquisition of the Company by another entity by means of a transaction or series of related transactions or (ii) the closing of the sale of all or substantially all of the assets of the Company, unless the Company’s shareholders of record prior to such acquisition or sale shall hold at least fifty percent (50%) of the voting power of the acquiring or surviving entity immediately after such acquisition or sale (the “Exercise Period”). At least ten (10) days prior to the occurrence of an event specified in (b) of this Section 2.1, the Company shall send to Holder notice of such event and that Holder’s rights under this Warrant shall terminate upon the occurrence of such event; provided, that if the Company sends such notice less than ten (10) days prior to the occurrence of such event, Holder’s right to exercise this Warrant shall be extended for a period of five (5) days after the date of the notice, after which time Holder’s rights under this Warrant shall terminate.

 

2.2 Number of New Equity Shares. This Warrant may be exercised for a number of New Equity Shares as set forth below:

 

2.2.1 Qualified Equity Financing. In the event the Company completes a Qualified Equity Financing, as defined below, the number of New Equity Shares, as defined below, subject to this Warrant will be equal to the following:

 

A =

   .2(B)
    

    C

 

Where:

 

A

   =    The number of New Equity Shares that may be purchased by Holder pursuant to this Warrant.

B

   =    The original principal amount of all Notes held by Holder and issued pursuant the Purchase Agreement.

C

   =    The Exercise Price (as defined below) for the New Equity Shares.

 

The “Qualified Equity Financing” shall mean the next equity financing after the date hereof, in which the Company raises at least $5 million in gross proceeds, including conversion of the Notes issued pursuant to the Purchase Agreement, and in which investors purchase shares of a series of the Company’s Preferred Stock.

 

2


The “New Equity Shares” shall mean the shares of the series of the Company’s Preferred Stock sold by the Company in the Qualified Equity Financing; provided, that in the event a Qualified Equity Financing has not occurred by December 21, 2003, the “New Equity Shares” shall mean the Company’s Series A Preferred Stock.

 

2.3 Exercise Price. The “Exercise Price” shall be equal to the per share purchase price for the New Equity Shares sold by the Company, subject to adjustment as provided herein.

 

2.4 Method of Exercise. Subject to the terms and conditions contained herein and while this Warrant remains outstanding and exercisable, this Warrant is exercisable with respect to any or all of the New Equity Shares, at the option of Holder, upon surrender of this Warrant to the Company together with (a) a duly completed (i) Notice of Exercise, in the form attached hereto as Exhibit A, or (ii) Net Issue Election Notice, in the form attached hereto as Exhibit B and (b) payment of an amount equal to the Exercise Price multiplied by the number of New Equity Shares with respect to which this Warrant is being exercised as provided in Section 2.5 below. If Holder exercises this Warrant with respect to less than all of the New Equity Shares represented by this Warrant, the Company shall cancel this Warrant upon the surrender thereof and shall execute and deliver to Holder a new Warrant for the balance of such New Equity Shares.

 

2.5 Payment. Payment of the Exercise Price for the New Equity Shares with respect to which this Warrant is being exercised by Holder shall be made, at the option of Holder, (a) by delivery of cash payable by wire transfer of immediately available funds, (b) by the delivery of a cashier’s check or certified check, (c) by net issue election as set forth in Section 2.6 below, or (d) by any combination of (a) – (c).

 

2.6 Net Issue Election The Holder may elect to receive, without payment by the Holder of any additional consideration, New Equity Shares equal to the value of the “spread” on the New Equity Shares or any portion thereof by the surrender of the Warrant to the Company, together with a duly completed Net Issue Election Notice, in the form attached hereto as Exhibit B, at the principal office of the Company, in which event the Company shall issue to the Holder such number of New Equity Shares as is computed using the following formula:

 

X

   = Y (A – B)
                 A

 

Where:

   X =    The number of New Equity Shares to be issued to Holder pursuant to the net issue election;
     Y =    The number of New Equity Shares in respect of which the net issue election is made;
     A =    The fair market value (as determined below) of one New Equity Share at the time the net issue election is made;
     B =    The Exercise Price in effect under this Warrant as of the date of the net issue election.

 

3


For purposes of this Section 2.6, the fair market value of one New Equity Share as of a particular date shall be as determined in good faith by the Board of Directors of the Company.

 

3. Limit on Rights of the Holder upon Exercise. Holder acknowledges and agrees that upon the exercise of this Warrant in full or in part, the following provisions shall apply to the rights of Holder as a holder of New Equity Shares and of Common Stock of the Company (“Common Stock”) that such New Equity Shares are convertible into.

 

3.1 Market Stand-Off Agreement. During the period of duration (not to exceed 180 days) specified by the Company and an underwriter of Common Stock or other securities of the Company, following the effective date of a registration statement of the Company filed under the Act, Holder shall not, to the extent requested by the Company and such underwriter, directly or indirectly sell, offer to sell, contract to sell (including, without limitation, any short sale), grant any option to purchase or otherwise transfer or dispose of (other than to transferees or donees who agree to be similarly bound) any securities of the Company held by it at any time during such period except Common Stock included in such registration. In order to enforce the foregoing covenant, the Company may impose stop-transfer instructions with respect to the Common Stock of Holder (and the shares or securities of every other person subject to the foregoing restriction) until the end of such period. This Section 3.1 shall survive any termination or the expiration of this Warrant.

 

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

 

4.1 Conversion of New Equity Shares into Common Stock. Upon conversion of all of the issued and outstanding shares of the Company’s Preferred Stock into Common Stock, this Warrant shall be automatically exercisable only for such number of shares of Common Stock as Holder would have received had this Warrant been exercised in full for the New Equity Shares and then converted into Common Stock on the date all issued and outstanding shares of the Company’s Preferred Stock converted into Common Stock. The Exercise Price in effect immediately prior to such conversion shall, concurrently with the effectiveness of such conversion, be proportionally adjusted. Upon such conversion of the Preferred Stock into Common Stock, all references under this Warrant to New Equity Shares shall be deemed references to Common Stock.

 

4.2 Split, Subdivision or Combination. If the Company should at any time or from time to time fix a record date for (a) the effectuation of a split or subdivision of the outstanding New Equity Shares or (b) the determination of the holders of New Equity Shares entitled to receive a dividend or other distribution payable in additional New Equity Shares or other securities or rights convertible into, or entitling the holder thereof to receive directly or indirectly, additional New Equity Shares (hereinafter referred to as the “New Equity Equivalents”), without payment of any considera

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