Exhibit 4.5
THIS WARRANT AND THE SHARES ISSUABLE UPON EXERCISE HEREOF HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR ANY STATE SECURITIES LAWS, AND MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED, OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT RELATED THERETO OR, SUBJECT TO SECTION 11 HEREOF, AN OPINION OF COUNSEL (WHICH MAY BE COMPANY COUNSEL) REASONABLY SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED UNDER THE ACT, OR ANY APPLICABLE STATE SECURITIES LAWS.
WARRANT AGREEMENT
To Purchase Shares of the Common Stock of
KURA ONCOLOGY, INC.
Dated as of November 29, 2022
WHEREAS, Kura Oncology, Inc., a Delaware corporation (the “Company”), has entered into a Loan and Security Agreement, dated November 2, 2022 (as amended and in effect from time to time, the “Loan Agreement”), with Hercules Capital, Inc., a Maryland corporation, in its capacity as administrative and collateral agent, Hercules Capital IV, L.P., a Delaware limited partnership, as a lender (the “Warrantholder”), and the other lenders party thereto;
WHEREAS, pursuant to the Loan Agreement and as additional consideration to the Warrantholder for, among other things, its agreements in the Loan Agreement, the Company has agreed to issue to the Warrantholder this Warrant Agreement, evidencing the right to purchase shares of the Company’s Common Stock (this “Warrant”, “Warrant Agreement”, or this “Agreement”);
NOW, THEREFORE, in consideration of the Warrantholder having executed and delivered the Loan Agreement and provided the financial accommodations contemplated therein, and in consideration of the mutual covenants and agreements contained herein, the Company and Warrantholder agree as follows:
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“Act” means the Securities Act of 1933, as amended.
“Charter” means the Company’s Amended and Restated Certificate of Incorporation, as may be amended and in effect from time to time.
“Common Stock” means the Company’s common stock, $0.0001 par value per share, as presently constituted under the Charter, and any class and/or series of Company capital stock for or into which such common stock may be converted or exchanged in a reorganization, recapitalization or similar transaction.
“Effective Date” means November 2, 2022.
“Exercise Price” means $14.38, subject to adjustment from time to time in accordance with the provisions of this Warrant.
“Liquid Sale” means the closing of a Merger Event in which the consideration received by the Company and/or its stockholders, as applicable, consists solely of cash and/or Marketable Securities.
“Marketable Securities” in connection with a Merger Event means securities meeting all of the following requirements: (i) the issuer thereof is then subject to the reporting requirements of Section 13 or Section 15(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and is then current in its filing of all required reports and other information under the Act and the Exchange Act; (ii) the class and series of shares or other security of the issuer that would be received by the Warrantholder in connection with the Merger Event were the Warrantholder to exercise this Warrant on or prior to the closing thereof is then traded on a national securities exchange or over-the-counter market, and (iii) following the closing of such Merger Event, the Warrantholder would not be restricted from publicly re-selling all of the issuer’s shares and/or other securities that would be received by the Warrantholder in such Merger Event were the Warrantholder to exercise this Warrant in full on or prior to the closing of such Merger Event, except to the extent that any such restriction (x) arises solely under federal or state securities laws, rules or regulations, and (y) does not extend beyond six months from the closing of such Merger Event.
“Merger Event” means any of the following: (i) a sale, lease or other transfer of all or substantially all assets of the Company, (ii) any merger or consolidation involving the Company in which the Company is not the surviving entity or in which the outstanding shares of the Company’s capital stock are otherwise converted into or exchanged for shares of capital stock or other securities or property of another entity, or (iii) any sale by holders of the outstanding voting equity securities of the Company in a single transaction or series of related transactions of shares constituting a majority of the outstanding combined voting power of the Company.
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“Purchase Price” means, with respect to any exercise of this Warrant, an amount equal to the then-effective Exercise Price multiplied by the number of shares of Common Stock as to which this Warrant is then exercised.
The term of this Agreement and the right to purchase Common Stock as granted herein shall commence on the Effective Date and, subject to Section 8(a) below, shall be exercisable until 5:00 p.m. (Eastern Time) on the seventh anniversary of the Effective Date.
The Purchase Price may be paid at the Warrantholder’s election either (i) by cash or check, or (ii) by surrender of all or a portion of the Warrant for shares of Common Stock to be exercised under this Agreement and, if applicable, an amended Agreement setting forth the remaining number of shares purchasable hereunder, as determined below (“Net Issuance”). If the Warrantholder elects the Net Issuance method, the Company will issue shares of Common Stock in accordance with the following formula:
X = Y(A-B)
A
Where: X = the number of shares of Common Stock to be issued to the Warrantholder.
Y = the number of shares of Common Stock requested to be exercised under this Agreement.
A = the then-current fair market value of one share of Common Stock at the time of exercise of this Warrant.
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B = the then-effective Exercise Price.
For purposes of the above calculation, the current fair market value of shares of Common Stock shall mean with respect to each share of Common Stock:
Upon partial exercise by either cash, check or Net Issuance, prior to the expiration or earlier termination hereof, the Company shall promptly issue an amended Agreement representing the remaining number of shares purchasable hereunder. All other terms and conditions of such amended Agreement shall be identical to those contained herein, including, but not limited to the Effective Date hereof.
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During the term of this Agreement, the Company will at all times have authorized and reserved a sufficient number of shares of its Common Stock to provide for the exercise of the rights to purchase Common Stock as provided for herein. If at any time during the term hereof the number of authorized but unissued shares of Common Stock shall not be sufficient to permit exercise of this Warrant in full, the Company will take such corporate action as may, in the opinion of its counsel, be necessary to increase its authorized but unissued shares of Common Stock to such number of shares as shall be sufficient for such purposes.
No fractional shares or scrip representing fractional shares shall be issued upon the exercise of this Agreement, but in lieu of such fractional shares the Company shall make a cash payment therefor in an amount equal to the product of (a) the then fair market value of one share of Common Stock multiplied by (b) the fraction of a share.
Without limitation of any provision hereof, the Warrantholder agrees that this Agreement does not entitle the Warrantholder to any voting rights or other rights as a stockholder of the Company prior to the exercise of any of the purchase rights set forth in this Agreement.
The Company shall maintain a registry showing the name and address of the registered holder of this Agreement. The Warrantholder’s initial address, for purposes of such registry, is set forth in Section 12(g) below. The Warrantholder may change such address by giving written notice of such changed address to the Company.
The Exercise Price and the number of shares of Common Stock purchasable hereunder are subject to adjustment from time to time, as follows:
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This Agreement has been entered into by the Company in reliance upon the following representations and covenants of the Warrantholder:
Subject to compliance with applicable federal and state securities laws, this Agreement and all rights hereunder are transferable, in whole or in part, without charge to the holder hereof (except for transfer taxes) upon surrender of this Agreement properly endorsed; provided, that as long as no Event of Default (as defined in the Loan Agreement) has occurred and is continuing, the holder hereof may not, without the Company’s prior written consent, transfer
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this Agreement or any portion hereof, or any shares issued upon any exercise hereof, to any person or entity who directly competes with the Company (as reasonably determined by Agent upon consultation with Company), it being acknowledged that in all cases, any transfer to an affiliate of the holder hereof shall be allowed. Each taker and holder of this Agreement, by taking or holding the same, consents and agrees that this Agreement, when endorsed in blank, shall be deemed negotiable, and that the holder hereof, when this Agreement shall have been so endorsed and its transfer recorded on the Company’s books, shall be treated by the Company and all other persons dealing with this Agreement as the absolute owner hereof for any purpose and as the person entitled to exercise the rights represented by this Agreement. Subject to the first sentence of this Section 11, the transfer of this Agreement shall be recorded on the books of the Company upon receipt by the Company of a notice of transfer in the form attached hereto as Exhibit III (the “Transfer Notice”), at its principal offices and the payment to the Company of all transfer taxes and other governmental charges imposed on such transfer. Until the Company receives such Transfer Notice, the Company may treat the registered owner hereof as the owner for all purposes. Notwithstanding anything herein or in any legend to the contrary, the Company shall not require an opinion of counsel in connection with any sale, assignment or other transfer by the Warrantholder of this Warrant (or any portion hereof or any interest herein) or of any shares of Common Stock issued upon any exercise hereof to an affiliate (as defined in Regulation D) of the Warrantholder, provided that such affiliate is an “accredited investor” as defined in Regulation D.
Capitalized terms used in this Section 12 but not defined in this Warrant shall have the meanings ascribed to such terms in the Loan Agreement. The Warrantholder and the Company acknowledge and agree that (a) this Warrant (and other warrants issued contemporaneously by the Company (collectively, the “Warrants”)) and the Loans (and any notes executed and delivered in connection therewith) are intended to be treated as an “investment unit” within the meaning of Section 1273(c)(2) of the Internal Revenue Code of 1986, as amended, and (b) the “issue price” for the interest in any Term Loan Advance held by each Lender and any note issued in connection therewith, shall take into account the fair market value of the Warrants acquired by such Lender on the date of such Term Loan Advance (including for such purpose, any increase in the number of shares of Common Stock purchasable pursuant to any Warrant as a result of such additional Term Loan Advance) as reasonably determined by the Borrower. Each of the Warrantholder and the Company shall prepare and file all federal income tax returns on a basis consistent with the foregoing.
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If to the Warrantholder:
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HERCULES CAPITAL, INC.
Legal Department
Attention: Chief Legal Officer
400 Hamilton Avenue, Suite 310
Palo Alto, CA 94301
Email: legal@htgc.com
Telephone: 650-289-3060
With a copy to:
LATHAM & WATKINS LLP
Attention: Haim Zaltzman
505 Montgomery Street, Suite 2000
San Francisco, CA 94111
Email: haim.zaltzman@lw.com
Telephone: 415-395-8870
If to the Company:
KURA ONCOLOGY, INC.
Attention: Teresa Bair
12730 High Bluff Drive, Suite 400
San Diego, CA 92130
Email: tbair@kuraoncology.com
Telephone: 858-500-8800
With a copy to:
COOLEY LLP
Attention: Charles Bair
10265 Science Center Dr.
San Diego, CA 92121
Email: cbair@cooley.com
Telephone: (858) 550 6142
or to such other address as each party may designate for itself by like notice.
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Agreement or in any document delivered pursuant hereto shall be for the benefit of the Warrantholder and shall survive the execution and delivery of this Agreement and the expiration or other termination of this Agreement.
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THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR ANY APPLICABLE STATE SECURITIES LAWS, AND MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION RELATED THERETO OR, SUBJECT TO SECTION 11 OF THE WARRANT AGREEMENT DATED NOVEMBER 29, 2022, BETWEEN THE COMPANY AND KURA ONCOLOGY, INC., AN OPINION OF COUNSEL (WHICH MAY BE COMPANY COUNSEL) REASONABLY SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED UNDER THE ACT OR ANY STATE SECURITIES LAWS.
[Remainder of Page Intentionally Left Blank]
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IN WITNESS WHEREOF, the parties hereto have caused this Warrant Agreement to be executed by its officers thereunto duly authorized as of the date set forth above.
COMPANY: KURA ONCOLOGY, INC.
By: /s/ Troy E. Wilson
Name: Troy Wilson
Title: President and Chief Executive Officer
WARRANTHOLDER: HERCULES CAPITAL, INC.
By: Hercules Technology SBIC Management, LLC,
its General Partner
By: Hercules Capital, Inc.,
its Manager
By:
Name: Seth Meyer
Title: Chief Financial Officer
Signature Page to Warrant Agreement
IN WITNESS WHEREOF, the parties hereto have caused this Warrant Agreement to be executed by its officers thereunto duly authorized as of the date set forth above.
COMPANY: KURA ONCOLOGY, INC.
By:
Name: Troy Wilson
Title: President and Chief Executive Officer
WARRANTHOLDER: HERCULES CAPITAL, INC.
By: Hercules Technology SBIC Management, LLC, its General Partner
By: Hercules Capital, Inc.,
its Manager
By: /s/ Seth Meyer
Name: Seth Meyer
Title: Chief Financial Officer
Signature Page to Warrant Agreement
EXHIBIT I
NOTICE OF EXERCISE
To: [____________________________]
(1) The undersigned Warrantholder hereby elects to purchase [ ] shares of the Common Stock of Kura Oncology, Inc., pursuant to the terms of the Warrant Agreement dated November 29, 2022 (the “Warrant Agreement”) between Kura Oncology, Inc. and the Warrantholder, and tenders herewith payment of the Purchase Price in full, together with all applicable transfer taxes, if any. [NET ISSUANCE: elects pursuant to Section 3(a) of the Warrant Agreement to effect a Net Issuance.]
(2) Please issue a certificate or certificates or book-entry credit(s) representing said shares of Common Stock in the name of the undersigned or in such other name as is specified below.
(Name)
(Address)
WARRANTHOLDER: HERCULES CAPITAL IV
By Hercules Technology SBIC Management, LLC,
its General Partner
By: Hercules Capital, Inc.
it Manager
By:
Name:
Title:
Date:
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EXHIBIT II
ACKNOWLEDGMENT OF EXERCISE
The undersigned, Kura Oncology, Inc., hereby acknowledges receipt of the “Notice of Exercise” from Hercules Capital IV, L.P. to purchase [ ] shares of the Common Stock of Kura Oncology, Inc., pursuant to the terms of the Warrant Agreement by and between Kura Oncology, Inc. and the Warrantholder, dated November 29, 2022 (the “Agreement”), and further acknowledges that [ ] shares remain subject to purchase under the terms of the Agreement.
COMPANY: KURA ONCOLOGY, INC.
By:
Name:
Title:
Date:
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EXHIBIT III
TRANSFER NOTICE
(To transfer or assign the foregoing Agreement execute this form and supply required information. Do not use this form to purchase shares.)
FOR VALUE RECEIVED, the foregoing Agreement and all rights evidenced thereby are hereby transferred and assigned to
(Please Print)
whose address is
Dated:
Holder’s Signature:
Holder’s Address:
Signature Guaranteed:
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