Exhibit 10.13
ARCA BIOPHARMA , I NC .
N OTE AND W ARRANT P URCHASE A GREEMENT
S EPTEMBER 24, 2008
E
XECUTION
V
ERSION
ARCA BIOPHARMA , I NC .
N OTE AND W ARRANT P URCHASE A GREEMENT
T HIS N OTE AND W ARRANT P URCHASE A GREEMENT (this “ Agreement ”) is made
as of September 24, 2008 (the “ Effective Date
”) by and between ARCA biopharma, Inc., a Delaware
corporation (the “ Company ”), and the persons
and entities named on the Schedule of Purchasers attached hereto
(individually, a “ Purchaser ” and collectively,
the “ Purchasers ”).
RECITALS
A. The Company has entered into
that certain Agreement and Plan of Merger and Reorganization dated
September 24, 2008, (the “ Merger Agreement
”) with Nuvelo, Inc., a Delaware corporation (“
Parent ”), and Nuvelo Acquisition Sub, Inc., a
Delaware corporation and a wholly-owned subsidiary of Parent (the
“ Merger Sub ”), pursuant to
which Merger Sub will merge with and into the Company and the
stockholders of the Company will receive shares of the capital
stock of Parent in exchange for their capital stock of the Company
(the “ Merger ”).
B. The Company has authorized the
sale of up to $8,750,000 in principal amount of its 6% convertible
promissory notes due March 31, 2009 and warrants to purchase
shares of the Company’s capital stock.
C. Each Purchaser wishes to purchase
a Note (as defined below) in the principal amount set forth
opposite such Purchaser’s name on the Schedule of Purchasers
attached hereto and a Warrant (as defined below) to purchase a
number of shares of the Company’s capital stock as determined
pursuant to the Warrant, on the terms and subject to the conditions
set forth herein.
D. The parties desire to make
Parent a third party beneficiary of certain rights and
obligations under this Agreement.
AGREEMENT
NOW, THEREFORE, in consideration of
the above recitals and the mutual covenants contained herein, the
parties hereby agree as follows:
|
1.
|
A
MOUNT AND T ERMS OF THE L OAN ; P URCHASE AND S ALE OF THE W ARRANTS .
|
1.1 The Loans.
Subject to the terms of this
Agreement, each Purchaser agrees to lend to the Company up to the
total amount (the “ Loan Amount ”) set forth
opposite such Purchaser’s name on the Schedule of Purchasers
attached hereto under the heading “ Loan Amount
” against the issuance and delivery by the Company of a
convertible promissory note for such Loan Amount in substantially
the form attached hereto as Exhibit A (each, a “
Note ” and collectively, the “ Notes
”). Each Note issued pursuant to this Section 1.1 shall
be convertible into capital stock of the Company as provided in
such Note.
1
1.2 Issuance of
Warrants. Subject to the terms of this
Agreement, and in consideration for the purchase by the Purchasers
of the Notes and for other good and valuable consideration, the
Company shall issue to each Purchaser a warrant to purchase shares
of Common Stock of the Company. Subject to certain adjustments
provided in the warrant, each warrant issuable pursuant to this
Section 1.2 shall entitle the Purchaser to acquire the number
of shares equal to the quotient of (a) one-fifth (
1 / 5 th
) of such
Purchaser’s Loan Amount divided by (b) the
exercise price of each warrant, rounded up to the nearest share.
The warrants shall be in substantially the form attached hereto as
Exhibit B (each, a “ Warrant ” and
collectively, the “ Warrants ”).
1.3 The Closing.
The closing of the purchase and sale
of the Notes and the Warrants (the “ Closing ”)
shall be held on or before October 14, 2008, or at such
earlier time as the Company and the Purchasers shall agree (the
“ Closing Date ”), provided, however if the
Merger Agreement is terminated prior to the Closing Date, then the
Company and the Purchaser shall have no further rights or
obligations under this Agreement following such termination and
this Agreement shall be terminated without any further action by
any of the parties. At the Closing, each Purchaser shall loan the
Company the Loan Amount set forth opposite such Purchaser’s
name on the Schedule of Purchasers under the heading “
Loan Amount .”
1.4 Delivery.
At the Closing: (a) each
Purchaser will deliver to the Company a check or wire transfer
funds in the amount of such Purchaser’s Loan Amount,
(b) the Company shall issue and deliver to each Purchaser a
Note in favor of such Purchaser payable in the principal amount of
such Purchaser’s Loan Amount and a Warrant as described in
Section 1.2 hereof, and (c) the Company shall execute and
deliver such other documents as the Purchasers shall reasonably
require in order to consummate the transactions contemplated
herein. In connection with the Closing, the Company shall have
filed with the Delaware Secretary of State the Certificate of
Amendment to the Restated Charter (as defined below) in
substantially the form attached hereto as Exhibit C (the
“ Charter Amendment ”).
|
2.
|
R
EPRESENTATIONS
AND W ARRANTIES OF THE C OMPANY .
|
Except as set forth on a Schedule of
Exceptions delivered by the Company to Purchasers on the Effective
Date, the Company represents and warrants to each Purchaser as of
the Effective Date as set forth below.
2.1 Organization, Good Standing
and Qualification. The
Company is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware. The Company
has all requisite corporate power and authority to own and operate
its properties and assets, to execute and deliver this Agreement,
the Notes and the Warrants (including the reservation of the shares
of capital stock issuable upon conversion of the Notes and the
exercise of the Warrants), to carry out the provisions of this
Agreement, the Notes and the Warrants, and to carry on its business
as presently conducted and as presently proposed to be conducted.
The Company is duly qualified to do business and is in good
standing as a foreign corporation in all jurisdictions in which the
nature of its activities and of its properties (both owned and
leased) makes such qualification necessary, except for those
jurisdictions in which failure to do so would not have a material
adverse effect on the Company or its business.
2
2.2 Subsidiaries.
The Company does not own or control
any equity security or other interest of any other corporation,
partnership, limited liability company or other business entity.
The Company is not a participant in any joint venture, partnership,
limited liability company or similar arrangement. Since its
inception, the Company has not consolidated or merged with,
acquired all or substantially all of the assets of, or acquired the
stock of or any interest in any corporation, partnership, limited
liability company or other business entity.
2.3 Capitalization; Voting
Rights.
(a) The authorized capital stock of the Company,
immediately prior to the Effective Date, consists of
(i) 26,000,000 shares of Common Stock, par value $0.001 per
share, 5,713,818 shares of which are issued and outstanding, and
(ii) 15,734,218 shares of Preferred Stock, par value $0.001
per share, (1) 9,222,257 shares of which are designated
Series A Preferred Stock, all of which are issued and
outstanding, (2) 3,720,692 shares of which are designated as
Series B-1 Preferred Stock, 3,688,902 of which are issued and
outstanding, and (3) 2,791,269 shares of which are designated
as Series B-2 Preferred Stock (together with the Series A Preferred
Stock, the “ Preferred Stock ”), 2,766,677 of
which are issued and outstanding.
(b) Under the Company’s 2004 Stock Incentive
Plan (as heretofore amended, the “ Plan ”),
immediately prior to the Effective Date, (i) 600,000 shares of
Common Stock have been issued pursuant to restricted stock purchase
agreements and 1,665,296 shares of Common Stock have been issued
pursuant to the exercise of outstanding options, (ii) options
to purchase 3,385,351 shares of Common Stock have been granted and
are currently outstanding as listed on Exhibit D , and
(iii) 705,903 shares of Common Stock remain available for
future issuance to officers, directors, employees and consultants
of the Company.
(c) Other than the shares reserved for issuance
under the Plan, and except as may be granted pursuant to this
Agreement, the Notes and the Warrants, and as set forth on the
Schedule of Exceptions, there are no outstanding options, warrants,
rights (including conversion or preemptive rights and rights of
first refusal), proxy or stockholder agreements, or agreements of
any kind for the purchase or acquisition from the Company of any of
its securities.
(d) All issued and outstanding shares of the
Company’s Common Stock and Preferred Stock (i) have been
duly authorized and validly issued to the persons listed on
Exhibit D hereto and are fully paid and nonassessable,
(ii) were issued in compliance with all applicable state and
federal laws concerning the issuance of securities, and
(iii) are subject to a right of first refusal in favor of the
Company upon transfer.
(e) The shares of capital stock issuable upon
conversion of the Notes and exercise of the Warrants have been duly
and validly reserved for issuance. When issued in compliance with
the provisions of the Notes or the Warrants and the Company’s
Second Amended and Restated Certificate of Incorporation, as
amended to date (the “ Restated Charter ”), the
shares of capital stock issuable upon conversion of the Notes or
exercise of the Warrants, as applicable, will be validly issued,
fully paid and nonassessable, and will be free of any liens
or
3
encumbrances other than (i) liens and
encumbrances created by or imposed upon the Purchasers or
(ii) as otherwise set forth in the Amended and Restated
Investor Rights Agreement dated May 31, 2007 among the Company
and certain stockholders of the Company (the “ Investor
Rights Agreement ”), the Amended and Restated Right of
First Refusal and Co-Sale Agreement dated May 31, 2007 among
the Company and certain stockholders of the Company (the “
ROFR and Co-Sale Agreement ”), and the Amended and
Restated Voting Agreement dated May 31, 2007 among the Company
and certain stockholders of the Company (the “ Voting
Agreement ”, and together with the Investor Rights
Agreement and the ROFR and Co-Sale Agreement, the “
Company Agreements ”); provided, however, that such
shares of capital stock may be subject to restrictions on transfer
under state and/or federal securities laws. The sale of the Notes
and the Warrants and the subsequent conversion of the Notes and
exercise of the Warrants into shares of capital stock of the
Company are not and will not be subject to any preemptive rights or
rights of first refusal that have not been properly waived or
complied with.
(f) Except as otherwise noted on the Schedule of
Exceptions, all options granted as of the Effective Date vest as
follows: 25% of the shares vest one year following the vesting
commencement date, with the remaining 75% vesting in equal
quarterly installments over the next three years. Except as set
forth on the Schedule of Exceptions, no stock plan, stock purchase,
stock option or other agreement or understanding between the
Company and any holder of any equity securities or rights to
purchase equity securities provides for acceleration or other
changes in the vesting provisions or other terms of such agreement
or understanding as the result of (i) termination of
employment or consulting services (whether actual or constructive);
(ii) any merger, consolidated sale of stock or assets, change
in control or any other transaction(s) by the Company; or
(iii) the occurrence of any other event or combination of
events.
(g) All outstanding shares of Common Stock and
Preferred Stock, and all shares of Common Stock and Preferred Stock
issuable upon the exercise or conversion of outstanding options,
warrants or other exercisable or convertible securities are subject
to a market standoff or “lockup” agreement of not less
than 180 days following the Company’s initial public
offering.
2.4 Authorization; Binding
Obligations. All
corporate action on the part of the Company, its officers,
directors and stockholders necessary for the authorization of this
Agreement and the Notes, the performance of all obligations of the
Company hereunder and thereunder at the Closing and the
authorization, sale, issuance and delivery of the Notes and the
Warrants pursuant hereto (and the reservation of the shares of
capital stock issuable upon conversion of the Notes and exercise of
the Warrants) pursuant to the Restated Charter has been taken. The
Agreement, the Notes and the Warrants, when executed and delivered,
will be valid and binding obligations of the Company enforceable in
accordance with their terms, except (a) as limited by
applicable bankruptcy, insolvency, reorganization, moratorium or
other laws of general application affecting enforcement of
creditors’ rights, and (b) general principles of equity
that restrict the availability of equitable remedies.
2.5 Financial
Statements. The Company
has made available to each Purchaser its audited balance sheet as
of December 31, 2007, an audited statement of income and cash
flows for the twelve months ending December 31, 2007, an
unaudited balance sheet as of June 30, 2008
4
and an unaudited statement of income and cash
flows for the year to date ending June 30, 2008 (collectively,
the “ Financial Statements ”). The Financial
Statements present fairly the financial condition and position of
the Company as of their respective dates.
2.6 Liabilities.
The Company has no material
liabilities and, to the best of its knowledge no material
contingent liabilities, not disclosed in the Financial Statements,
except current liabilities incurred in the ordinary course of
business which have not been, either in any individual case or in
the aggregate, materially adverse.
2.7 Agreements;
Action.
(a) Except for agreements explicitly contemplated
hereby and agreements between the Company and its employees with
respect to the sale of the Company’s outstanding Common
Stock, there are no agreements, understandings or proposed
transactions between the Company and any of its officers,
directors, employees, affiliates or any affiliate
thereof.
(b) There are no agreements, understandings,
instruments, contracts, proposed transactions, judgments, orders,
writs or decrees to which the Company is a party or to its
knowledge by which it is bound which may involve (i) future
obligations (contingent or otherwise) of, or payments to, the
Company in excess of $50,000, or (ii) the transfer or license
of any patent, copyright, trade secret or other proprietary right
to or from the Company (other than licenses by the Company of
“off the shelf” or other standard products), or
(iii) provisions restricting the development, manufacture or
distribution of the Company’s products or services, or
(iv) indemnification by the Company with respect to
infringements of proprietary rights.
(c) The Company has not (i) accrued, declared
or paid any dividends, or authorized or made any distribution upon
or with respect to any class or series of its capital stock,
(ii) incurred or guaranteed any indebtedness for money
borrowed or any other liabilities (other than trade payables
incurred in the ordinary course of business or as disclosed in the
Financial Statements) individually in excess of $10,000 or, in the
case of indebtedness and/or liabilities individually less than
$10,000, in excess of $25,000 in the aggregate, (iii) made any
loans or advances to any person, other than ordinary advances for
travel expenses, or (iv) sold, exchanged or otherwise disposed
of any of its assets or rights, other than the sale of its
inventory in the ordinary course of business.
(d) For the purposes of subsections (b) and
(c) above, all indebtedness, liabilities, agreements,
understandings, instruments, contracts and proposed transactions
involving the same person or entity (including persons or entities
the Company has reason to believe are affiliated therewith) shall
be aggregated for the purpose of meeting the individual minimum
dollar amounts of such subsections.
(e) The Company has not engaged in the past three
months in any discussion (i) with any representative of any
other business or businesses regarding the consolidation or merger
of the Company with or into any such other business or businesses,
(ii) with any corporation, partnership, limited liability
company, or other business entity or any individual regarding the
sale, conveyance or disposition of all or substantially all of the
assets of the
5
Company, or a transaction or series of related
transactions in which more than 50% of the voting power of the
Company is disposed of, or (iii) regarding any other form of
acquisition, liquidation, dissolution or winding up, of the
Company.
2.8 Obligations to Related
Parties. There are no
obligations of the Company to officers, directors, stockholders, or
employees of the Company other than (a) for payment of salary
for services rendered, (b) reimbursement for reasonable
expenses incurred on behalf of the Company and (c) for other
standard employee benefits made generally available to all
employees (including stock option agreements outstanding under any
stock option plan approved by the Board of Directors of the
Company). None of the officers, directors or, to the best of the
Company’s knowledge, key employees or stockholders of the
Company, or any members of their immediate families, is indebted to
the Company or has any direct or indirect ownership interest in any
firm or corporation with which the Company is affiliated or with
which the Company has a business relationship, or any firm or
corporation that competes with the Company, other than
(i) passive investments in publicly traded companies
(representing less than 1% of such company) which may compete with
the Company and (ii) investments by venture capital funds with
which directors of the Company may be affiliated and service as a
board member of a company in connection therewith due to a
person’s affiliation with a venture capital fund or similar
institutional investor in such company. No officer, director or
stockholder, or any member of their immediate families, is,
directly or indirectly, interested in any material contract with
the Company (other than such contracts as relate to any such
person’s ownership of capital stock or other securities of
the Company).
2.9 Changes.
Since June 30, 2008, there has
not been to the Company’s knowledge:
(a) Any change in the assets, liabilities, financial
condition, prospects or operations of the Company from that
reflected in the Financial Statements, other than changes in the
ordinary course of business, none of which individually or in the
aggregate has had or would reasonably be expected to have a
material adverse effect on such assets, liabilities, financial
condition, prospects or operations of the Company;
(b) Any resignation or termination of any officer,
key employee or group of employees of the Company;
(c) Any material change, except in the ordinary
course of business, in the contingent obligations of the Company by
way of guaranty, endorsement, indemnity, warranty or
otherwise;
(d) Any damage, destruction or loss, whether or not
covered by insurance, materially and adversely affecting the
properties, business or prospects or financial condition of the
Company;
(e) Any waiver by the Company of a valuable right or
of a material debt owed to it;
(f) Any material change in any compensation
arrangement or agreement with any employee, officer, director or
stockholder;
6
(g) Any labor organization activity related to the
Company;
(h) Any sale, assignment, or exclusive license or
transfer of any patents, trademarks, copyrights, trade secrets or
other intangible assets;
(i) Any change in any material agreement to which
the Company is a party or by which it is bound which materially and
adversely affects the business, assets, liabilities, financial
condition, operations or prospects of the Company;
(j) Any other event or condition of any character
that, either individually or cumulatively, has materially and
adversely affected the business, assets, liabilities, financial
condition, prospects or operations of the Company; or
(k) Any arrangement or commitment by the Company to
do any of the acts described in subsection (a) through
(j) above.
2.10 Title to Properties and
Assets; Liens, Etc. The
Company has good and marketable title to its properties and assets,
including the properties and assets reflected in the most recent
balance sheet included in the Financial Statements, and good title
to its leasehold estates, in each case subject to no mortgage,
pledge, lien, lease, encumbrance or charge, other than
(a) those resulting from taxes which have not yet become
delinquent, (b) minor liens and encumbrances which do not
materially detract from the value of the property subject thereto
or materially impair the operations of the Company, and
(c) those that have otherwise arisen in the ordinary course of
business. All facilities, machinery, equipment, fixtures, vehicles
and other properties owned, leased or used by the Company are in
good operating condition and repair and are reasonably fit and
usable for the purposes for which they are being used.
2.11 Intellectual
Property.
(a) The Company owns or possesses sufficient legal
rights to all trademarks, service marks, trade names, copyrights,
licenses, information and other proprietary rights and processes
necessary for its business as now conducted and as presently
proposed to be conducted, without any infringement of the rights of
others. To the Company’s knowledge, the Company owns or
possesses sufficient legal rights to all patents and trade secrets
necessary for its business as now conducted and as presently
proposed to be conducted, without any infringement of the rights of
others. There are no outstanding options, licenses or agreements of
any kind relating to the foregoing proprietary rights, nor is the
Company bound by or a party to any options, licenses or agreements
of any kind with respect to the patents, trademarks, service marks,
trade names, copyrights, trade secrets, licenses, information and
other proprietary rights and processes of any other person or
entity other than such licenses or agreements arising from the
purchase of “off the shelf” or standard products. To
the Company’s knowledge, no claims are currently being
asserted against the Company, nor are there any claims threatened
in writing, by any third party challenging or questioning the
Company’s right to use any of the patents, trademarks,
service marks, trade names, copyrights, trade secrets, information
or other proprietary rights and processes owned or used by the
Company or the validity or effectiveness of any license or similar
agreement with respect thereto.
7
(b) No product or service marketed or sold (or
proposed to be marketed or sold) by the Company violates or will
violate any license or infringe any trademarks, service marks,
trade names, copyrights or other proprietary rights of any other
person or entity. The Company has not received any communications
alleging that the Company has violated or, by conducting its
business as presently proposed to be conducted, would violate any
of the trademarks, service marks, trade names, copyrights or other
proprietary rights of any other person or entity. To the
Company’s knowledge, no product or service marketed or sold
(or proposed to be marketed or sold) by the Company violates or
will violate any patents or trade secrets of any other person or
entity. The Company has not received any communications alleging
that the Company has violated or, by conducting its business as
presently proposed to be conducted, would violate any of the
patents or trade secrets of any other person or entity.
(c) The Company is not aware that any of its
employees is obligated under any contract (including licenses,
covenants or commitments of any nature) or other agreement, or
subject to any judgment, decree or order of any court or
administrative agency, that would interfere with their duties to
the Company or that would conflict with the Company’s
business as proposed to be conducted. Each former and current
employee, officer and consultant of the Company has executed a
proprietary information and inventions agreement in the forms
delivered to the Purchasers’ counsel. No former and current
employee, officer or consultant of the Company has excluded works
or inventions made prior to his or her employment with the Company
from his or her assignment of inventions pursuant to such employee,
officer or consultant’s proprietary information and
inventions agreement. The Company does not believe it is or will be
necessary to utilize any inventions, trade secrets or proprietary
information of any of its employees made prior to their employment
by the Company, except for inventions, trade secrets or proprietary
information that have been assigned to the Company.
2.12 Compliance with Other
Instruments. The Company
is not in violation or default of any term of its Restated Charter
or its bylaws, each as amended. The Company is not in violation of
any provision of any mortgage, indenture, contract, lease,
agreement, instrument or contract to which it is party or by which
it is bound or of any judgment, decree, order or writ, other than
any such violation that would not have a material adverse effect on
the Company. The execution, delivery, and performance of and
compliance with this Agreement, the Notes and the Warrants, and the
issuance and sale of the Notes, the Warrants and the shares of
capital stock issuable upon conversion of the Notes and the
exercise of the Warrants pursuant hereto and the Restated Charter,
will not, with or without the passage of time or giving of notice,
result in any such violations, or be in conflict with or constitute
a default under any such term or provision, or result in the
creation of any mortgage, pledge, lien, encumbrance or charge upon
any of the properties or assets of the Company or the suspension,
revocation, impairment, forfeiture or nonrenewal of any permit,
license, authorization or approval applicable to the Company, its
business or operations or any of its assets or properties. To the
Company’s knowledge, the Company has avoided every condition,
and has not performed any act, the occurrence of which would result
in the Company’s loss of any right granted under any license,
distribution agreement or other agreement required to be disclosed
on the Schedule of Exceptions.
2.13 Litigation.
There is no action, suit, proceeding
or investigation pending or, to the Company’s knowledge,
currently threatened against the Company that would reasonably
be
8
expected to result, either individually or in
the aggregate, in any material adverse change in the assets,
condition, affairs or prospects of the Company, financially or
otherwise, or any change in the current equity ownership of the
Company or that questions the validity of this Agreement, the Notes
or the Warrants or the right of the Company to enter into this
Agreement, the Notes or the Warrants, or to consummate the
transactions contemplated hereby or thereby, nor is the Company
aware that there is any basis for any of the foregoing. The
foregoing includes, without limitation, actions pending or, to the
Company’s knowledge, threatened or any basis therefor known
by the Company involving the prior employment of any of the
Company’s employees, their use in connection with the
Company’s business of any information or techniques allegedly
proprietary to any of their former employers, or their obligations
under any agreements with prior employers. The Company is not a
party to, or to the Company’s knowledge subject to, the
provisions of any order, writ, injunction, judgment or decree of
any court or government agency or instrumentality. There is no
action, suit, proceeding or investigation by the Company currently
pending or which the Company intends to initiate.
2.14 Tax Returns and
Payments. The Company is
and always has been a subchapter C corp
