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WARRANT TO PURCHASE STOCK

Warrant Agreement

WARRANT TO PURCHASE STOCK | Document Parties: EPOCRATES INC You are currently viewing:
This Warrant Agreement involves

EPOCRATES INC

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Title: WARRANT TO PURCHASE STOCK
Governing Law: California     Date: 4/17/2008

WARRANT TO PURCHASE STOCK, Parties: epocrates inc
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Exhibit 4.2

THIS WARRANT AND THE SHARES ISSUABLE HEREUNDER HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD, PLEDGED, OR OTHERWISE TRANSFERRED WITHOUT AN EFFECTIVE REGISTRATION THEREOF UNDER SUCH ACT OR PURSUANT TO RULE 144 OR AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE CORPORATION AND ITS COUNSEL, THAT SUCH REGISTRATION IS NOT REQUIRED.


WARRANT TO PURCHASE STOCK

Corporation: ePocrates, Inc. , a California corporation.
Number of Shares: Warrant Coverage is 13% (subject to the provisions below).
Class of Stock: Series A Preferred, provided, however, if the Series B Preferred round closes on or before the Bridge Loan Maturity Date, (as defined in that certain Loan and Security Agreement of even date herewith, the "Loan Agreement") the Class of Stock shall be that of Series B Preferred.
Initial Exercise Price: If the Class of Stock is Series A Preferred the Initial Exercise Price shall be
$1.00 per share, provided, however, if the Class of Stock is Series B Preferred, the Share Price shall be that given at the close of the Series B Preferred round.
Issue Date:
June 2, 2000 .
Expiration Date:
Is the later occurrence of any of the following events: (i) June 2, 2010; or (ii) seven (7) years from closing of Company's initial public offering .
Warrant Coverage shall be defined as $                        divided by the Initial Exercise Price multiplied by the applicable Warrant Coverage percentage.

Defined terms used but not otherwise defined herein shall have the same meanings as in the Loan Agreement.

        THIS WARRANT CERTIFIES THAT, for the agreed upon value of $1.00 and for other good and valuable consideration,                                     ("Holder") is entitled to purchase the number of fully paid and nonassessable shares of the class of securities (the "Shares") of the corporation (the "Company") at the initial exercise price per Share (the "Warrant Price") all as set forth above and as adjusted pursuant to Article 2 of this Warrant, subject to the provisions and upon the terms and conditions set forth in this Warrant.

        In the event Company does not request Bridge Loan Advances in excess of the Cap Amount, as defined in the Loan Agreement, Holder shall not be entitled to 3% of the 13% of the Warrant Coverage, as described in the Number of Shares above.

        In the event the Company does not repay in full all amounts outstanding under that certain Bridge Loan on or before Bridge Loan Maturity Date (described therein), the Company shall grant Holder additional shares equal to 2% Warrant Coverage, plus an additional 4% Warrant Coverage (pro rated) if the Bridge Loan is not paid off 30 days after the Bridge Loan Maturity Date, plus an additional 6% Warrant Coverage (pro rated) if the Bridge Loan is not paid off 60 days after the Bridge Loan Maturity Date (collectively, the "Additional Shares"). Notwithstanding the foregoing, such grant of the Additional Shares shall not be construed in any way as Holder's agreement to (i) waive an Event of Default under the Loan Agreement; (ii) forbear from exercising its rights and remedies if an Event of Default occurs, exists or continues under the Loan Agreement; or (iii) extend the Bridge Loan Maturity Date.

        In addition to above Number of Shares, in the event Company request Equipment Advances, as defined in Loan Agreement, Holder shall be entitled to an additional 3% Warrant Coverage, provided, however, if any Equipment Advances are used to finance Other Equipment then Holder shall be entitled to an additional 5.5% Warrant Coverage.


 

ARTICLE 1.   EXERCISE.

         1.1     Method of Exercise.     Holder may exercise this Warrant by delivering a duly executed Notice of Exercise in substantially the form attached as Appendix 1 to the principal office of the Company. Unless Holder is exercising the conversion right set forth in Section 1.2, Holder shall also deliver to the Company a check for the aggregate Warrant Price for the Shares being purchased.

         1.2     Conversion Right.     In lieu of exercising this Warrant as specified in Section 1,1, Holder may from time to time convert this Warrant, in whole or in part, into a number of Shares determined by dividing (a) the aggregate fair market value of the Shares or other securities otherwise issuable upon exercise of this Warrant minus the aggregate Warrant Price of such Shares by (b) the fair market value of one Share. The fair market value of the Shares shall be determined pursuant to Section 1.3.

         1.3     Fair Market Value.     If the Shares are traded in a public market, the fair market value of the Shares shall be the closing price of the Shares (or the closing price of the Company's stock into which the Shares are convertible) reported for the business day immediately before Holder delivers its Notice of Exercise to the Company. If the Shares are not traded in a public market, the Board of Directors of the Company shall determine fair market value in its reasonable good faith judgment. The foregoing notwithstanding, if Holder advises the Board of Directors in writing that Holder disagrees with such determination, then the Company and Holder shall promptly agree upon a reputable investment banking firm to undertake such valuation. If the valuation of such investment banking firm is greater than that determined by the Board of Directors, then all fees and expenses of such investment banking firm shall be paid by the Company. In all other circumstances, such fees and expenses shall be paid by Holder.

         1.4     Delivery of Certificate and New Warrant.     Promptly after Holder exercises or converts this Warrant, the Company shall deliver to Holder certificates for the Shares acquired and, if this Warrant has not been fully exercised or converted and has not expired, a new Warrant representing the Shares not so acquired.

         1.5     Replacement of Warrants.     On receipt of evidence reasonably satisfactory to the Company of the loss, theft, destruction or mutilation of this Warrant and, in the case of loss, theft or destruction, on delivery of an indemnity agreement reasonably satisfactory in form and amount to the Company or, in the case of mutilation, on surrender and cancellation of this Warrant, the Company shall execute and deliver, in lieu of this Warrant, a new warrant of like tenor.

         1.6     Assumption Upon Sale, Merger, or Consolidation of the Company.     

  •          1.6.1      "Acquisition".     For the purpose of this Warrant, "Acquisition" means any sale, license, or other disposition of all or substantially all of the assets of the Company, or any reorganization, consolidation, or merger of the Company where the holders of the Company's securities before the transaction beneficially own less than 50% of the outstanding voting securities of the surviving entity after the transaction.

             1.6.2      Assumption of Warrant.     Upon the closing of any Acquisition the successor entity shall assume the obligations of this Warrant, and this Warrant shall be exercisable for the same securities, cash, and property as would be payable for the Shares issuable upon exercise of the unexercised portion of this Warrant as if such Shares were outstanding on the record date for the Acquisition and subsequent closing. The Warrant Price shall be adjusted accordingly.

ARTICLE 2.   ADJUSTMENTS TO THE SHARES.

         2.1     Stock Dividends, Splits, Etc.     lf the Company (i) declares or pays a dividend on its common stock (or the Shares if the Shares are securities other than common stock) payable in common stock, or other securities, or (ii) subdivides the outstanding common stock into a greater amount of common stock, or, if the Shares are securities other than common stock, subdivides the Shares in a transaction

2


 

that increases the amount of common stock into which the Shares are convertible, then upon exercise of this Warrant, for each Share acquired, Holder shall receive, without cost to Holder, the total number and kind of securities to which Holder would have been entitled had Holder owned the Shares of record as of the date the dividend or subdivision occurred.

         2.2     Reclassification, Exchange or Substitution.     Upon any reclassification, exchange, substitution, or other event that results in a change of the number and/or class of the securities issuable upon exercise or conversion of this Warrant, Holder shall be entitled to receive, upon exercise or conversion of this Warrant, the number and kind of securities and property that Holder would have received for the Shares if this Warrant had been exercised immediately before such reclassification, exchange, substitution, or other event


 
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