Attached files
Exhibit
4.16
THIS NOTE
AND THE SECURITIES ISSUABLE UPON CONVERSION HEREOF HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”),
APPLICABLE STATE SECURITIES LAWS, OR APPLICABLE LAWS OF ANY FOREIGN
JURISDICTION. THIS NOTE AND SUCH SECURITIES HAVE BEEN ACQUIRED FOR
INVESTMENT AND NOT WITH A VIEW TO DISTRIBUTION OR RESALE, AND MAY NOT BE
OFFERED, SOLD, PLEDGED, HYPOTHECATED OR OTHERWISE TRANSFERRED IN THE ABSENCE OF
AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND ANY APPLICABLE
STATE SECURITIES LAWS AND IN THE ABSENCE OF COMPLIANCE WITH APPLICABLE LAWS OF
ANY FOREIGN JURISDICTION, OR AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY
THAT SUCH REGISTRATION IS NOT REQUIRED OR SUCH FOREIGN JURISDICTION LAWS HAVE
BEEN SATISFIED.
AMENDED
AND RESTATED
FUTURE
ADVANCE PROMISSORY NOTE
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For
Amounts advanced pursuant to the
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La
Jolla, CA
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Schedule
Set Forth as Exhibit A
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September
30, 2009
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Recitals
A. In
consideration of certain loans provided by Capretti Grandi, LLC (“Capretti”) to Pacific
Beach Biosciences, Inc., a Delaware corporation (the “Company”), the
Company made that certain FUTURE ADVANCE PROMISSORY NOTE, dated December 18,
2008 (as amended, the “Existing Promissory
Note”) in favor of Capretti.
B. Each
party desires to amend and restate the Existing Promissory Note on the terms and
subject to the conditions contained herein.
Agreements
1. Principal and
Interest
The
Company, for value received, hereby promises to pay to the order of Capretti or
its assigns (the “Holder”), in lawful
money of the United States of America at such address as Holder shall provide to
the Company in writing, an amount equal to the sum of all loans made by the
Holder to the Company pursuant to the terms and provisions of this promissory
note (the “Note”)in immediately
available funds.
From and
after the date hereof, but prior to the Due Date (as defined herein), or such
later date as the Holder and the Company may agree in writing, the Company may
request the Holder to provide loans under this Note. For purposes of
this Note, any amounts which the Holder pays to third parties on behalf of the
Company for obligations arising out of the operations of the business of the
Company shall be considered a “loan.” Promptly after such request, if
no Event of Default (as defined herein) shall have occurred and be continuing,
the Holder or one or more if its affiliates may provide such loan to the Company
in the amount requested. The Company hereby authorizes the Holder to
record on the attached Schedule A the
principal amount of each loan made by the Holder or one or more of its
affiliates to the Company; provided, however, that any
failure by the Holder to record any such loan shall not affect the Company’s
obligation to repay such loan, together with interest thereon, in accordance
with this Note.
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The
Company promises to pay interest on the unpaid principal amount from the date
hereof until such principal amount is paid in full at the rate of eight percent
(8%) per annum, or such lesser rate as shall be the maximum rate allowable under
applicable law; provided, however, that upon an Event of Default, the interest
rate on this Note shall be increased to twelve percent (12%) per annum during
the term of the default. Interest from the date hereof shall be
computed on the basis of a 360-day year of twelve 30-day months, shall compound
annually and shall be accrued and added to principal on an annual
basis. Unless converted, all unpaid principal and accrued but unpaid
interest on this Note shall be due and payable on September 30, 2010 (the “Due
Date”). For purposes of this Note, an “Event of Default”
shall occur if (i) the Company shall default in the payment on this Note, when
and as the same shall become due and payable and any such failure to make
payment continues for five (5) business days; or (ii) the Company shall default
in the due observance or performance of any material covenant, condition or
agreement on the part of the Company contained in this Note (other than the
failure to make payment when due) and any such default shall continue for a
period of thirty (30) days after the date on which the Company receives written
notice thereof from the Holder.
This Note
shall rank pari passu in right of payment with all other existing indebtedness
of the Company, including (a) that certain Future Advance Promissory Note
between the Company and The Lindsay A. Rosenwald 2000 Family Trusts Dated
December 15, 2000, dated December 1, 2006, as amended on September 28, 2007 and
amended and restated on the date hereof, (b) that certain Future Advance
Promissory Note between the Company and Paramount Biosciences, LLC, dated
December 1, 2006 (as amended on September 28, 2007), as amended and restated on
the date hereof, (c) those certain Senior Promissory Notes between the Company
and Paramount Credit Partners, LLC, dated January 15, 2009 and June 24, 2009 and
(d) the series of convertible promissory notes issued by the Company in
connection with an offering described in the Company’s Confidential Offering
Memorandum (together with all amendments, supplements, exhibits, and appendices
thereto), dated September 28, 2007 (such notes, as amended to date, shall be
collectively referred to as the “Bridge
Notes”). No consent of the Holder will be required for
issuances by the Company of unsecured indebtedness that ranks pari passu with,
or junior to, this Note.
2. Conversion.
2.1 (a) All
unpaid principal and accrued but unpaid interest on this Note shall be
automatically converted into the Company’s equity securities (the “Securities”) issued
in the Company’s next equity financing (or series of related equity financings)
involving the sale of Securities in which the Company receives at least
$10,000,000 in aggregate gross cash proceeds (before brokers’ fees or other
transaction related expenses, and excluding any such proceeds resulting from any
conversion of the Bridge Notes minus the amount of aggregate gross cash proceeds
to the Company from the sale of equity or debt securities of the Company after
December 14, 2009 (a “Qualified
Financing”), at a conversion price equal to 70% of the lowest per unit
price paid for such Securities in cash by investors in such Qualified Financing,
and upon such other terms, conditions and agreements as may be applicable in
such Qualified Financing.
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(b) In the
event that the Company consummates a merger, share exchange, or other
transaction (or series of related transactions), other than in connection with a
Qualified Financing, in which (i) the Company merges into or otherwise becomes a
wholly-owned subsidiary of a company that (A) is subject to the public company
reporting requirements of the Securities Exchange Act of 1934, as amended, or
the equivalent reporting requirements of the Ontario Securities Commission, or
that is listed on the London Stock Exchange main market, the Euronext markets,
or AIM, and (B) does not engage in any active operations, and (ii) the aggregate
consideration payable to the Company or its stockholders in such transaction(s)
(the “Reverse Merger
Consideration”) is greater than or equal to $10,000,000 (a “Reverse Merger”),
then immediately prior to such Reverse Merger, all unpaid principal and accrued
but unpaid interest on this Note shall be automatically converted into Common
Stock at a conversion price per share equal to 70% of the quotient obtained by
dividing (i) the Reverse Merger Consideration less the amount of unpaid
principal and accrued but unpaid interest on all Bridge Notes and the Existing
Notes (as defined below) immediately prior to the Reverse Merger by (ii) the
number of shares of Common Stock of the Company then outstanding, on a fully
diluted basis (the “Outstanding Shares”).
For this purpose, Outstanding Shares shall (i) exclude any shares of Common
Stock issuable upon conversion of the Bridge Notes or the Existing Notes or upon
exercise of the warrants issued to the Placement Agent in connection with the
sale of the Bridge Notes but (ii) include all shares of Common Stock issuable
upon the exercise of (A) options and other warrants outstanding (to the extent
that such options or warrants are exercised or assumed in connection with the
Reverse Merger) and (B) options that the Company is required by agreement to
issue to one or more employees, consultants, or licensors of the Company in
connection with such Reverse Merger to maintain a specified percentage interest
in the Company (but which have not yet been issued)). For purposes hereof,
“Existing
Notes” shall mean collectively, (1) this Note, (2) that certain Future
Advance Promissory Note between the Company and Paramount Biosciences, LLC,
dated December 1, 2006 (as amended on September 28, 2007), as amended and
restated on the date hereof and (3) that certain Future Advance Promissory Note
between the Company and The Lindsay A. Rosenwald 2000 Family Trusts Dated
December 15, 2000, dated December 1, 2006, as amended on September 28, 2007 and
amended and restated on the date hereof.
The
shares of Common Stock issuable pursuant to clause 2.1(b) above shall be issued
effective prior to the consummation of the Reverse Merger and conditioned upon
the consummation of such Reverse Merger. As a holder of such shares
of Common Stock, the Holder will receive the consideration payable in connection
with such Reverse Merger on a share-for-share basis with all other stockholders
of the Company and in like kind, at the same time and upon the same conditions
as all other stockholders of the Company.
If any
Reverse Merger Consideration is other than cash, its value will be deemed to be
its fair market value as determined, in good faith, by the Board of Directors of
the Company. The value of any securities shall be determined by the
Board of Directors of the Company as set forth for a Sale of the Company in
Section 2.1(c) below.
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(c) This Note
plus any unpaid accrued interest thereon shall automatically convert into shares
of Common Stock of the Company effective immediately prior to the consummation
of a Sale of the Company. For purposes hereof, “Sale of the Company”
shall mean a transaction (or series of related transactions) with one or more
non-affiliates of the Company, pursuant to which such party or parties acquire
(i) capital stock of the Company or the surviving entity possessing the voting
power to elect a majority of the board of directors of the Company or the
surviving entity (whether by merger, consolidation, sale or transfer of the
Company’s capital stock or otherwise) (a “Stock Acquisition”);
or (ii) all or substantially all of the Company’s assets determined on a
consolidated basis (an “Asset Sale”);
provided, however, that notwithstanding anything to the contrary contained
herein, to the extent any transaction (or series of related transactions)
qualifies as a Qualified Financing or a Reverse Merger, such transaction(s)
shall not be deemed to constitute a Sale of the Company. For purposes hereof,
“Sale Proceeds”
shall mean (i) in the event of a Stock Acquisition, the cash or securities paid
by the acquirer to the Company or the selling stockholders to acquire such
shares; and (ii) in the event of an Asset Sale, the cash or securities legally
available for distribution to the Company’s stockholders, after creation of
adequate reserves for liabilities of the Company.
The price
per share at which this Note will convert into Common Stock of the Company upon
a Sale of the Company will be equal to the lesser of (i) 70% of the quotient
obtained by dividing (x) the value of the Sale Proceeds received in such
transaction less the unpaid principal and accrued but unpaid interest on this
Note and the Existing Notes immediately prior to the Sale of the Company by (y)
the number of Outstanding Shares, and (ii) the quotient obtained by dividing (x)
$50,000,000 less the unpaid principal and accrued but unpaid interest on this
Note and the Existing Notes by (y) the number of Outstanding Shares. For
purposes of this Section 2.1(c), Outstanding Shares shall be determined as set
forth in Section 2.1(b) of this Note, except that it shall not include any
shares of Common Stock issuable upon the exercise of any options and warrants
outstanding immediately prior to such Sale of the Company if such options or
warrants have an exercise price in excess of the Note conversion price
determined under this Section 2.1(c)).
(d) In the
event the Company completes (in one or a series of related transactions) a
merger, consolidation, sale or transfer of more than fifty percent (50%) of the
Company’s capital stock, in each case, which does not constitute a Sale of the
Company, a Reverse Merger or a Qualified Financing (an “Other Transaction”),
then the term “Securities” as used herein shall thereafter refer to the equity
securities or securities convertible into or exchangeable for equity securities
of the surviving, resulting, combined or acquiring entity in such merger,
consolidation, sale or transfer.
2.2 Upon
consummation of a Qualified Financing, Reverse Merger, Sale or Other Transaction
in accordance with the terms of Section 2.1, the outstanding unpaid principal
and accrued but unpaid interest of this Note shall be converted without any
further action by the Holder and whether or not this Note is surrendered to the
Company or its transfer agent, and the indebtedness evidenced by this Note shall
be satisfied in full and no interest shall continue to accrue on this Note and
all rights of the Holder hereunder shall terminate. The Company shall
not be obligated to issue certificates evidencing the shares of the securities
issuable upon such conversion unless this Note is either delivered to the
Company or its transfer agent, or the Holder notifies the Company or its
transfer agent that such Note has been lost, stolen or destroyed and executes an
agreement satisfactory to the Company to indemnify the Company from any loss
incurred by it in connection with such Note. The Company shall, as
soon as practicable after such delivery, or such agreement and indemnification,
issue and deliver to such Holder of such Note, a certificate or certificates for
the securities to which the Holder shall be entitled. Such conversion
shall be deemed to have been made concurrently with the closing of the Qualified
Financing, the Reverse Merger, the Sale of the Company or the Other Transaction,
as applicable. The person or persons entitled to receive securities
issuable upon such conversion shall be treated for all purposes as the record
holder or holders of such securities on such date. The Company shall
not issue fractional shares but shall round down the number of shares issued to
the nearest whole number. Any conversion effected in accordance with
this Section 2 shall be binding upon the Holder hereof.
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3. Prepayment.
(a) This Note
may not be prepaid at any time, in whole or in part, prior to its
maturity.
(b) In the
event that this Note becomes due and payable (whether on the Due Date or earlier
pursuant to Section 7 hereof) prior to the consummation by the Company of a
Qualified Financing, Reverse Merger, Sale of the Company or Other Transaction,
then in connection with the repayment of this Note, in addition to the payment
of the unpaid principal amount and all accrued but unpaid interest on this Note,
the Company shall pay to Holder, as a repayment premium, an amount in cash equal
to 42.8571% of the aggregate principal amount of this Note.
4. Attorneys’
Fees. If the indebtedness represented by this Note or any part
thereof is collected in bankruptcy, receivership or other judicial proceedings
or if this Note is placed in the hands of attorneys for collection after
default, the Company agrees to pay, in addition to the principal and interest
payable hereunder, reasonable attorneys’ fees and costs incurred by
Holder.
5. Notices. Any
notice, other communication or payment required or permitted hereunder shall be
in writing and shall be deemed to have been given upon delivery to the address
above.
6. Notice of Proposed
Transfers. Prior to any proposed transfer of this Note or the
Securities, unless there is in effect a registration statement under the
Securities Act covering the proposed transfer, the Holder shall give written
notice to the Company of such Holder’s intention to effect such
transfer. Each such notice shall describe the manner and
circumstances of the proposed transfer in sufficient detail, and shall, if the
Company so requests, be accompanied (except in transactions in compliance with
Rule 144) by an unqualified written opinion of legal counsel, who shall be
reasonably satisfactory to the Company, addressed to the Company and reasonably
satisfactory in form and substance to the Company’s counsel, to the effect that
the proposed transfer of this Note or Securities may be effected without
registration under the Securities Act; provided, however, no such
opinion of counsel shall be necessary for a transfer without consideration by a
Holder to any affiliate of such Holder, or a transfer by a Holder which is a
partnership to a partner of such partnership or a retired partner of such
partnership who retires after the date hereof, or to the estate of any such
partner or retired partner or the transfer by gift, will or intestate succession
of any partner to his spouse or lineal descendants or ancestors, if the
transferee agrees in writing to be subject to the terms hereof to the same
extent as if such transferee were the original Holder hereunder. Each
certificate evidencing Securities or this Note transferred as above provided
shall bear an appropriate restrictive legend, except that this Note or
certificate shall not bear such restrictive legend if, in the opinion of counsel
for the Company, such legend is not required in order to establish compliance
with any provisions of the Securities Act.
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7. Acceleration. This
Note shall become immediately due and payable if (i) the Company commences any
proceeding in bankruptcy or for dissolution, liquidation, winding-up,
composition or other relief under state or federal bankruptcy laws; or (ii)
there is any material breach of any material covenant, warranty, representation
or other term or condition of this Note at any time which is not cured within
the time periods permitted therein, or if no cure period is provided therein,
within thirty (30) days after the date on which the Company receives written
notice thereof from the Holder.
8. No Dilution or
Impairment. The Company will not, by amendment of its Certificate of
Incorporation or Bylaws or through any reorganization, transfer of assets,
consolidation, merger, dissolution, issue or sale of securities or any other
voluntary action, avoid or seek to avoid the observance or performance of any of
the terms of this Note, but will at all times in good faith assist in the
carrying out of all such terms and in the taking of all such action as may be
necessary or appropriate in order to protect the rights of the Holder of this
Note against dilution or other impairment.
9. Waivers. The Company
hereby waives presentment, demand for performance, notice of non-performance,
protest, notice of protest and notice of dishonor. No delay on the part of the
Holder in exercising any right hereunder shall operate as a waiver of such right
or any other right. This Note is being delivered in and shall be construed in
accordance with the laws of the State of New York, without regard to the
conflicts of laws provisions thereof.
10. No Stockholder
Rights. Nothing contained in this Note shall be construed as
conferring upon the Holder or any other person the right to vote or to consent
or to receive notice as a stockholder of the Company.
11. Amendment. Any
term of this Note may be amended with the written consent of the Company and the
Holder hereof.
* * * *
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IN
WITNESS WHEREOF, this Amended and Restated Future Advanced Promissory Note is
executed by the parties hereto as of the date and year first written
above.
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PACIFIC
BEACH BIOSCIENCES, INC.
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By:
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/s/
James Rock
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Name:
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James
Rock
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Title:
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CAPRETTI
GRANDI, LLC
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By:
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/s/
Lindsay A. Rosenwald, M.D.
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Name:
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Lindsay
A. Rosenwald, M.D.
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Title:
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Managing
Member
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