VIA PHARMACEUTICALS,
INC.
NOTE AND WARRANT PURCHASE
AGREEMENT
THIS NOTE AND
WARRANT PURCHASE AGREEMENT (this “ Agreement
”) is made as of March 12, 2009 by and among VIA
Pharmaceuticals, Inc., a Delaware corporation (the “
Company ”), and the investors listed on
Schedule A hereto (each of which is herein referred to
as an “ Investor ”).
THE PARTIES HEREBY
AGREE AS FOLLOWS:
ISSUANCE OF NOTES AND
WARRANTS
1.1 Issuance of
Notes . Subject to the terms and conditions of this Agreement,
at the Initial Closing (as defined below), the Company shall issue
and sell to each Investor a promissory note (each such note, a
“ Note ” and collectively, the “
Notes ”) in the form of Exhibit A
attached hereto, in a principal amount (the “ Principal
Amount ”) of up to the amount set forth opposite such
Investor’s name beneath the caption “Total Aggregate
Principal Amount” on Schedule A attached hereto.
Each such Note shall be issued to such Investor against payment by
such Investor at the Initial Closing of the amount set forth
opposite such Investor’s name beneath the caption
“Principal Amount of Initial Advance” on
Schedule A attached hereto. At each Subsequent Closing
(as defined below), each Investor, to the extent such Investor is
participating in such Subsequent Closing, shall fund an additional
advance to the Company under such Investor’s Note and the
grid attached as Schedule 1 to such Note shall be updated to
reflect such additional advance. Capitalized but otherwise
undefined terms used herein shall have the meanings provided
therefor in the Notes.
1.2 Issuance of
Warrants . Subject to the terms and conditions of this
Agreement, at the Initial Closing, the Company shall issue to each
Investor a warrant (each such warrant, the " Warrant
” and collectively, the “ Warrants
”), in the form attached hereto as Exhibit B ,
representing the right, subject to the terms of the Warrant, to
purchase in the aggregate up to the number of shares Common Stock
of the Company (as adjusted for stock splits, recapitalizations or
other similar events) set forth opposite such Investor’s name
beneath the caption “No. of Warrant Shares” on
Schedule A attached hereto. Each Warrant shall, unless
sooner terminated as provided therein, have a term of five years
from the date of the Initial Closing and shall be exercisable
(subject to the terms of the Warrant) at an exercise price (subject
to adjustment as set forth in the Warrant) equal to the Exercise
Price.
1.3 Exercise
Price . For purposes of this Agreement, “ Exercise
Price ” shall mean $0.12 per share.
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2.1 Initial
Closing . The initial closing of the purchase and sale of the
Notes and the Warrants hereunder (the “ Initial
Closing ”) shall be held at Morrison & Foerster
LLP located at 425 Market Street, San Francisco, California 94105
on the date of this Agreement or at such other place and date as is
mutually agreeable to the Company and the Investors.
2.2 Subsequent
Closings . Subsequent to the Initial Closing, the Company may
receive additional advances from each Investor in accordance with
the terms of each Note, up to a maximum of the amount set forth
opposite such Investor’s name beneath the caption
“Total Aggregate Principal Amount” (including the
initial advance made at the Initial Closing). The closing of such
additional advances shall be held at Morrison & Foerster LLP
located at 425 Market Street, San Francisco, California 94105, on
such date or at such other place as is mutually agreeable to the
Company and the Investors providing such additional advances (which
each such date and place a " Subsequent Closing
” and, together with the Initial Closing, a “
Closing ”).
2.3 Conditions
to Initial Closing . The several obligations of the Investors
to purchase the Notes on the date of the Initial Closing shall be
subject to the prior or concurrent satisfaction of each of the
conditions precedent set forth in this Section 2.3
.
(a)
Security Agreements; Registration Rights Agreement . The
Investors shall have received, each executed and delivered by the
Company and the Investors or any Collateral Agent on their behalf
(each, in form and substance satisfactory to the Investors):
(i) a security agreement (the “ Security
Agreement ”) under which the Company grants to the
Investors (or any Collateral Agent on their behalf) a blanket
security interest in its personal property; and (ii) a
Collateral Assignment of Patents (the “ Patent Security
Agreement ”) under which the Company grants to the
Investors a security interest in all of the Company’s United
States patents and applications for United States patents. The
Investors shall have received, executed and delivered by the
Company and all other required parties thereto, a registration
rights agreement (in form and substance satisfactory to the
Investors) (the “ Registration Rights Agreement
”) under which the Company grants to the Investors
registration rights in respect of the Common Stock issuable upon
exercise of the Warrants.
(b)
Resolutions, etc . The Investors shall have received
(i) a certificate, dated the date of the Initial Closing, of
an authorized signatory of the Company as of the date of the
Initial Closing certifying (A) copies of the resolutions and
other actions taken or adopted by the Company authorizing the
execution, delivery and performance of the Transaction Documents
(as defined below) to which the Company is a party (and confirming
that no resolutions or actions contrary to such resolutions or
actions have been taken), and (B) the Certificate of
Incorporation of the Company (which shall also be certified by the
Secretary of State of the state in which the Company is organized
or formed) and Bylaws of the Company, (ii) a good standing
certificate with respect to the Company as of a date recently prior
to the date of the Initial Closing from the Secretary of the State
of the state in which the Company is organized or formed, and
(iii) evidence of qualification of the Company to do business
in each jurisdiction where the nature of
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its properties
of the conduct of its business requires it to be so qualified to do
business as of a recent date and where the failure so to qualify
could result in a Material Adverse Effect. As used herein, the
“ Transaction Documents ” means this
Agreement, the Collateral Documents (as defined below), the Notes,
the Warrants, the Registration Rights Agreement and any other and
all other certificates, documents, agreements and instruments
delivered to the Investors under or in connection with this
Agreement. “
Collateral Documents ” means, collectively, the
Security Agreement, the Patent Security Agreement, and any other
agreement pursuant to which the Company or any other Person
provides a Lien on its assets in favor of the Investors in
connection herewith, and all filings, documents and agreements made
or delivered pursuant thereto.
(c)
Collateral Matters . The Company shall have delivered to the
Investors (or any Collateral Agent on their behalf) each of the
following: (i) confirmation that all UCC-1 financing
statements and other filings necessary or appropriate in the
reasonable opinion of the Investors to perfect the security
interests of the Investors (or any Collateral Agent on their
behalf) in the Collateral have been accepted for filing;
(ii) such lien and judgment searches as the Investors have
reasonably requested, and such termination statements or other
documents, as may be necessary to confirm that the Collateral is
subject to no other security interests in favor of any Persons
other than Permitted Liens; (iii) the certificates or
instruments representing any pledged Collateral, together with
undated stock powers or endorsements, as the case may be, executed
in blank, with respect thereto; (iv) if as of the date of the
Initial Closing any Collateral is located on any premises in which
any third party has an interest, such bailee agreement,
subordination agreement, landlord waiver agreement or collateral
access agreement, as applicable, duly executed by such third party,
as the Investors shall reasonably request; (v) evidence that
all other actions necessary or appropriate in the reasonable
opinion of the Investors to perfect and protect the security
interests in the Collateral have been taken, including such account
control agreements in favor of the Investors (or any Collateral
Agent on their behalf) with respect to the Company’s deposit
and securities accounts, executed by each applicable bank, broker
or other securities intermediary as the Investors shall reasonably
request; and (vi) evidence of satisfactory insurance coverage,
together with evidence that the Investors have been named (or any
Collateral Agent on their behalf has been named) as loss payee
under all policies of property insurance and as additional insured
under all policies of liability insurance.
(d)
No Contest, etc . No claim, litigation, arbitration,
governmental investigation, injunction, order, proceeding or
inquiry shall be pending or threatened which: (i) seeks to
enjoin or would be reasonably be expected to materially delay,
impose material limitations on, or otherwise prevent the
consummation of, or to recover any damages or obtain relief as a
result of, the transactions contemplated by or in connection with
the Transaction Documents; or (ii) would otherwise be adverse
to any of the parties hereto in any material respect with respect
to the transactions contemplated hereby.
(e)
Certificate as to Completed Conditions, Warranties, No Default,
etc . The Investors shall have received a certificate, dated as
of the date of the Initial Closing, of an authorized signatory of
the Company to the effect that: (i) all conditions precedent
set forth in this Section 2 have been satisfied;
(ii) all representations and warranties set forth in
Section 4 are true and correct in all material respects
(except for representations or warranties already qualified by
materiality, which shall be true and correct in all respects); and
(iii) all representations and warranties set forth in any
other documents entered into in connection herewith are true and
correct in all material respects (except for representations or
warranties already qualified by materiality, which shall be true
and correct in all respects).
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(f)
Certificate as to Compliance with Requirements of Law . The
Investors shall have received a certificate, dated as of the date
of the Initial Closing, of an authorized signatory of the Company
to the effect that the Company has obtained and maintains in full
force and effect each and every consent, approval, filing and
registration by or with any Person, including, without limitation,
any Governmental Authority, necessary to authorize or permit the
execution, delivery or performance of the Transaction Documents,
the issuance of the Notes and the Warrants (including any approval,
consent, filing and registration required under Federal or State
securities laws), the validity or enforceability thereof, or the
consummation of the transactions contemplated by the Transaction
Documents.
(g)
NASDAQ Qualification . The shares of the Company’s
Common Stock issuable upon exercise of the Warrants shall be duly
authorized for listing by NASDAQ, subject to official notice of
issuance, to the extent required by the rules of NASDAQ.
(h)
Due Diligence . The Investors shall have completed their
business, legal, and collateral due diligence with respect to the
Company and shall be satisfied therewith.
2.4 Conditions
to Subsequent Closings . Each Investor shall not have any
obligation to participate in any Subsequent Closing or otherwise to
fund any amounts to the Company, other than the obligation of such
Investor in respect of the Initial Closing, subject to
Section 2.3. Each Investor may participate in any Subsequent
Closing in its sole discretion. Prior and as a condition to each
Subsequent Closing, the Company shall deliver to the Investor
participating in such Subsequent Closing a certificate, dated as of
the date of such Subsequent Closing, of an authorized signatory of
the Company confirming the matters set forth in
Sections 2.3(e) and (f) (with all representations and
warranties so confirmed to be deemed made as of the date of such
Subsequent Closing). The Investor participating in any Subsequent
Closing also may request, as a condition to the closing of such
Subsequent Closing, that the Company execute a Collateral
Assignment of Copyrights or a Collateral Assignment of Trademarks,
each in the form attached as an exhibit to the Security
Agreement.
(a)
Initial Closing . At the Initial Closing (i) each
Investor shall deliver to the Company a check or wire transfer of
immediately available funds (pursuant to wire instructions
previously provided by the Company to the Investors) in the amount
set forth opposite such Investor’s name beneath the caption
“Principal Amount of Initial Advance” on
Schedule A attached hereto, and (ii) the Company
shall execute and deliver to each Investor a Note reflecting the
name of the Investor, the amount of the initial advance (which
shall be set forth in the grid attached as Schedule 1 to such
Note), and the date of the Initial Closing, together with the
Investor’s Warrant as contemplated by
Section 1.2.
(b)
Subsequent Closings . At any Subsequent Closing, each
Investor participating in such Subsequent Closing shall deliver to
the Company a check or wire transfer of immediately available funds
(pursuant to wire instructions previously provided by the
Company
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to the
Investors) in the amount of such additional drawdown by the Company
on such Note previously purchased by such Investor, and such
Investor shall provide the Company with a copy of the updated grid
in Schedule 1 of the Note reflecting the additional drawdown
made at such Subsequent Closing.
REPRESENTATIONS AND WARRANTIES OF
INVESTORS
Each Investor
hereby represents and warrants to the Company that, as of the date
of the Initial Closing, and each Subsequent Closing at which such
Investor participates:
3.1 Purchase
for Own Account . Such Investor represents that it is acquiring
the Notes, the Warrants and the Common Stock issuable upon exercise
of the Warrants (collectively, the " Securities
”) solely for investment for such Investor’s own
account not as a nominee or agent, and not with a view to the
resale or distribution of any part thereof, and that such Investor
has no present intention of selling, granting any participation in,
or otherwise distributing the same. The acquisition by such
Investor of any of the Securities shall constitute confirmation of
the representation by such Investor that such Investor does not
have any contract, undertaking, agreement or arrangement with any
person to sell, transfer or grant participations to such person or
to any third person, with respect to any of the
Securities.
3.2 Investment
Experience . Either (i) such Investor or its officers,
directors, managers or controlling persons has a preexisting
personal or business relationship with the Company or its officers,
directors or controlling persons, or (ii) such Investor, by
reason of its own business and financial experience, has the
capacity to protect its own interests in connection with the
investment contemplated hereby. Such Investor represents that it is
an investor in securities of companies in the development stage and
acknowledges that it is able to fend for itself, can bear the
economic risk of its investment, and has such knowledge and
experience in financial or business matters that it is capable of
evaluating the merits and risks of the investment in the
Securities. Such Investor acknowledges that any investment in the
Securities involves a high degree of risk, and represents that it
is able, without materially impairing its financial condition, to
hold the Securities for an indefinite period of time and to suffer
a complete loss of its investment.
3.3 Accredited
Investor . Such Investor represents that it is an
“accredited investor” within the meaning of Securities
and Exchange Commission (“SEC”) Rule 501 of
Regulation D, as presently in effect and, for the purpose of
Section 25102(f) of the California Corporations Code, it is
excluded from the count of “purchasers” pursuant to
Rule 260.102.13 thereunder.
3.4
Restrictions on Transfer . Such Investor understands that
the Securities are characterized as “restricted
securities” under the federal securities laws inasmuch as
they are being acquired from the Company in a transaction not
involving a public offering and that under such laws and applicable
regulations such securities may be resold without registration
under the Securities Act of 1933, as amended (the “
Act ”), only in certain limited circumstances.
In this connection, such Investor represents that it is familiar
with SEC Rule 144, as presently in effect, and understands the
resale limitations imposed thereby and by the Act. SUCH
INVESTOR
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UNDERSTANDS AND
ACKNOWLEDGES HEREIN THAT AN INVESTMENT IN THE COMPANY’S
SECURITIES INVOLVES AN EXTREMELY HIGH DEGREE OF RISK AND MAY RESULT
IN A COMPLETE LOSS OF HIS, HER OR ITS INVESTMENT. Such Investor
understands that
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