EXHIBIT 10.3
NOTE AND WARRANT PURCHASE
AGREEMENT
This NOTE AND WARRANT PURCHASE
AGREEMENT (this “ Agreement ” ) is made
as of August 5, 2005 by and among Large Scale Biology Corporation,
a Delaware corporation (the “ Company ”
), Large Scale Bioprocessing, Inc., a Delaware corporation and a
wholly-owned subsidiary of the Company ( “
Bioprocessing ” ), and each purchaser identified
on the signature page hereto (each an “ Investor
” and collectively the “ Investors
” ).
RECITALS
A. The
Company is currently in need of funds to help finance its
operations until the closing of its next round of significant
financing.
B. The
Company and Bioprocessing own and operate a manufacturing facility
and land in Owensboro, Kentucky, for pilot and large-scale protein
extraction and downstream biomanufacturing of products ( “
Owensboro Facility ” ).
C. The
Investors are willing to advance funds to the Company, some of
which will fund Bioprocessing’s operations, in exchange for
the issuance to each such Investor of (i) a Secured Promissory
Note evidencing the Company’s obligation to repay such
Investor’s loan of the advanced funds with such loan to be
secured by a security interest and second mortgage on the Owensboro
Facility real property; and (ii) a Warrant to purchase certain
shares of capital stock of the Company, all as provided in this
Agreement.
NOW THEREFORE, the parties hereby
agree as follows:
1. PURCHASE AND SALE OF NOTE
AND WARRANT .
1.1 Note Purchase .
Subject to the terms and conditions of this Agreement, the
Company agrees to sell to Investors, and each Investor agrees to
purchase from the Company, a Secured Promissory Note in the form
attached to this Agreement as Exhibit A (the “
Note ” ) in the amount equal to the amount
specified for such Investor on the signature page hereof, in the
aggregate principal amount for all Investors of
$1,000,000.00. The performance of the Company of its
obligations under the Note is secured by a Security Agreement in
the form attached hereto as Exhibit B (the “
Security Agreement ” ) and a Mortgage in the form
attached thereto as Exhibit C (the “
Mortgage ” and together with the Security
Agreement, the “ Security Agreements ” )
each entered into by the Company and the Investors as of even date
herewith.
1.2 Warrant Issuance
. Subject to the terms and conditions of this Agreement,
the Company further agrees to sell and issue to each Investor a
warrant to purchase shares of the Company’s capital stock (
“ LSBC Stock ” or “ Warrant
Stock ” ) equal to 50% of such Investor’s
subscription amount as specified on the signature page hereof
divided by the closing bid price on the day prior to the Closing (
“ Exercise Price ” ) in the form attached
hereto as Exhibit C (the “ Warrant
” ).
2. CLOSING . The
purchase and sale of the Note and the Warrant will take place at
the offices of the Company, 3333 Vaca Valley Parkway, Vacaville,
California, on August 5, 2005 at 11:30 a.m. Pacific time, or at
such other time and place as the Company and the Investor mutually
agree upon (which time and place are referred to as the “
Closing ” ). At the Closing, each Investor
will deliver to the Company payment in full for the Note and the
Warrant in the amount specified on the signature page hereof, which
Investor agrees to purchase at the Closing by wire transfer of
funds to the Company. At the Closing, the Company will
deliver to each Investor a duly executed Note and a duly executed
Warrant.
3. REPRESENTATIONS AND
WARRANTIES OF THE COMPANY . The Company hereby
represents and warrants to each Investor that the statements in the
following paragraphs of this Section 3 are all true and
complete as of immediately prior to the Closing:
3.1 Organization, Good Standing
and Qualification . The Company has been duly
incorporated and organized, and is validly existing in good
standing, under the laws of the State of Delaware. The
Company has the corporate power and authority to own and operate
its properties and assets and to carry on its business as currently
conducted and as presently proposed to be conducted.
3.2 Due Authorization .
All corporate action on the part of the Company’s
directors and shareholders necessary for the authorization,
execution, delivery of, and the performance of all obligations of
the Company under, this Agreement, the Note, the Warrant and the
Security Agreements has been taken or will be taken prior to the
Closing, and this Agreement constitutes, and the Note, the Warrant
and the Security Agreements, when executed and delivered, will
constitute, valid and legally binding obligations of the Company,
enforceable in accordance with their respective terms, except as
may be limited by (i) applicable bankruptcy, insolvency,
reorganization or other laws of general application relating to or
affecting the enforcement of creditor’s rights generally and
(ii) the effect of rules of law governing the availability of
equitable remedies.
3.3 Corporate Power .
The Company has the corporate power and authority to execute
and deliver this Agreement, the Note, the Warrant and the Security
Agreements to be purchased by the Investor hereunder, to issue the
Note and the Warrant and to carry out and perform all its
obligations under this Agreement, the Note, the Warrant and the
Security Agreements.
3.4 Valid Issuance
.
(a) The
Warrant and the Warrant Stock (the “ Securities
” ), when issued, sold and delivered in accordance with
the terms of this Agreement and the Warrant for the consideration
provided for herein and therein, will be duly and validly issued,
fully paid and nonassessable.
(b) Based
in part on the representations made by each Investor in
Section 4 hereof, the offer and sale of the Securities solely
to the Investors in accordance with this Agreement are exempt from
the registration and prospectus delivery requirements of the U.S.
Securities Act of 1933, as amended (the “ 1933 Act
” ) and the securities registration and qualification
requirements of the currently effective provisions of the
securities laws of the state in which the Investor is
resident.
4. REPRESENTATIONS, WARRANTIES
AND CERTAIN AGREEMENTS OF INVESTOR . Each Investor
hereby, for himself or itself and for no other Investor,
represents and warrants to, and agrees with, the Company,
that:
4.1 Authorization .
This Agreement constitutes Investor’s valid and
legally binding obligation, enforceable in accordance with its
terms except as may be limited by (i) applicable
bankruptcy, insolvency, reorganization or other laws of general
application relating to or affecting the enforcement of
creditors’ rights generally and (ii) the effect of rules
of law governing the availability of equitable remedies.
Investor represents that Investor has full power and authority to
enter into this Agreement.
4.2 Purchase for Own
Account . The Securities will be acquired for
investment for Investor’s own account, not as a nominee or
agent, and not with a view to the public resale or distribution
thereof within the meaning of the 1933 Act, and Investor has no
present intention of selling, granting any participation in, or
otherwise distributing the same.
4.3 Disclosure of
Information . Investor has received or has had full
access to all the information it considers necessary or appropriate
to make an informed investment decision with respect to the
Securities. Investor further has had an opportunity to ask
questions and receive answers from the Company regarding the terms
and conditions of the offering of the Securities and to obtain
additional information (to the extent the Company possessed such
information or could acquire it without unreasonable effort or
expense) necessary to verify any information furnished to Investor
or to which Investor had access. The foregoing, however, does
not in any way limit or modify the representations and warranties
made by the Company in Section 3.0.
4.4 Investment Experience
. Investor understands that the purchase of the
Securities involves substantial risk. Investor (i) has
experience as an investor in securities of companies in the
development stage and acknowledges that Investor is able to fend
for himself, can bear the economic risk of Investor’s
investment in the Securities and has such knowledge and experience
in financial or business matters that Investor is capable of
evaluating the merits and risks of this investment in the
Securities and protecting his own interests in connection with this
investment and/or (ii) has a preexisting personal or business
relationship with the Company and certain of its officers,
directors or controlling persons of a nature and duration that
enables Investor to be aware of the character, business acumen and
financial circumstances of such persons.
4.5 Accredited Investor
Status . Investor is an “accredited
investor” within the meaning of Regulation D promulgated
under the 1933 Act.
4.6 Restricted Securities
. Investor understands that the Securities are
characterized as “restricted securities” under the 1933
Act and Rule 144 promulgated thereunder inasmuch as they are
being acquired from the Company in a transaction not involving a
public offering, and that under the 1933 Act and applicable
regulations thereunder such securities may be resold without
registration under the 1933 Act only in certain lim
