Exhibit 10.1
 
SECURITIES PURCHASE AGREEMENT
 
This Securities Purchase Agreement (this “Agreement”) is dated as of May 14,
2012 among AtheroNova Inc., a Delaware corporation (the “Company”), and each
purchaser identified on the signature pages hereto (each, including its
successors and assigns, a “Purchaser” and collectively, the “Purchasers”).
 
WHEREAS, subject to the terms and conditions set forth in this Agreement and
pursuant to Section 4(2) of the Securities Act of 1933, as amended (the
“Securities Act”), and Rule 506 promulgated thereunder, the Company desires to
issue and sell to each Purchaser, and each Purchaser, severally and not jointly,
desires to purchase from the Company, securities of the Company as more fully
described in this Agreement.
 
NOW, THEREFORE, in consideration of the mutual covenants contained in this
Agreement, and for other good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, the Company and each Purchaser agree
as follows:
 
ARTICLE I.
DEFINITIONS
 
1.1           Definitions.  In addition to the terms defined elsewhere in this
Agreement: (a) capitalized terms that are not otherwise defined herein have the
meanings given to such terms in the Notes (as defined herein), and (b) the
following terms have the meanings set forth in this Section 1.1:
 
“Affiliate” means any Person that, directly or indirectly through one or more
intermediaries, controls, is controlled by or is under common control with a
Person, as such terms are used in and construed under Rule 405 under the
Securities Act.
 
“Board of Directors” means the board of directors of the Company.
 
“Business Day” means any day except any Saturday, any Sunday, any day which is a
federal legal holiday in the United States or any day on which banking
institutions in the State of California are authorized or required by law or
other governmental action to close.
 
“Closing” shall have the meaning ascribed to such term in Section 2.1.
 
“Closing Date” shall have the meaning ascribed to such term in Section 2.1.
 
“Commission” means the Securities and Exchange Commission.
 
“Common Stock” means the common stock of the Company, par value $0.0001 per
share, and any other class of securities into which such securities may
hereafter be reclassified or changed.
 
“Common Stock Equivalents” means any securities of the Company or the
Subsidiaries which would entitle the holder thereof to acquire at any time
Common Stock, including, without limitation, any debt, preferred stock, rights,
options, warrants or other instrument that is at any time convertible into or
exercisable or exchangeable for, or otherwise entitles the holder thereof to
receive, Common Stock.
 
 
 

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“Company Counsel” means Stubbs Alderton & Markiles, LLP, with offices located at
15260 Ventura Boulevard, 20th Floor, Sherman Oaks, California 91403, Attention:
Louis Wharton, fax: (818) 444-6309.
 
“Conversion Price” shall have the meaning ascribed to such term in the Notes.
 
“Exchange Act” means the Securities Exchange Act of 1934, as amended, and the
rules and regulations promulgated thereunder.

“GAAP” shall have the meaning ascribed to such term in Section 3.1(f).
 
“Liens” means a lien, charge, security interest, encumbrance, right of first
refusal, preemptive right or other restriction.
 
“Material Adverse Effect” shall have the meaning assigned to such term in
Section 3.1(a).
 
“Maximum Rate” shall have the meaning ascribed to such term in Section 5.15.
 
“Notes” means the 12% Convertible Notes due, subject to the terms therein,
September 30, 2012, issued by the Company to the Purchasers hereunder, in the
form of Exhibit A attached hereto.
 
“Person” means an individual or corporation, partnership, trust, incorporated or
unincorporated association, joint venture, limited liability company, joint
stock company, government (or an agency or subdivision thereof) or other entity
of any kind.
 
“Required Approvals” shall have the meaning ascribed to such term in Section
3.1(d).
 
“Rule 144” means Rule 144 promulgated by the Commission pursuant to the
Securities Act, as such Rule may be amended from time to time, or any similar
rule or regulation hereafter adopted by the Commission having substantially the
same effect as such Rule.
 
“SEC Reports” shall have the meaning ascribed to such term in Section 3.1(f).
 
“Securities” means the Notes, the Warrants and the Underlying Shares.
 
“Securities Act” means the Securities Act of 1933, as amended, and the rules and
regulations promulgated thereunder.
 
 
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“Short Sales” means all “short sales” as defined in Rule 200 of Regulation SHO
under the Exchange Act (but shall not be deemed to include the location and/or
reservation of borrowable shares of Common Stock).
 
“Subscription Amount” means, as to each Purchaser, the aggregate amount to be
paid for the Notes and the Warrants purchased hereunder as specified below such
Purchaser’s name on the signature page of this Agreement and next to the heading
“Subscription Amount,” in United States dollars and in immediately available
funds.  The initial principal amount of each Purchaser’s Note shall be equal to
such Purchaser’s Subscription Amount.
 
“Subsidiary” means any subsidiary of the Company, including any direct or
indirect subsidiary of the Company formed or acquired after the date
hereof.  The Company’s Subsidiaries as of the Closing Date are listed in Exhibit
D hereof.
 
“Subsidiary Guarantee” means the Subsidiary Guarantee, in the form attached
hereto as Exhibit C, executed by each Subsidiary in favor of the Purchasers,
guaranteeing the Company’s obligations under the Notes.
 
“Trading Day” means a day on which the principal Trading Market is open for
business.
 
“Trading Market” means the following markets or exchanges on which the Common
Stock is listed or quoted for trading on the date in question: NYSE Amex, the
NASDAQ Stock Market, the New York Stock Exchange, the OTC Bulletin Board, the
OTCQX U.S. or the OTCQB.
 
“Transaction Documents” means this Agreement, the Notes, the Warrants, the
Subsidiary Guarantee and all exhibits and schedules thereto and hereto and any
other documents or agreements executed in connection with the transactions
contemplated hereunder.
 
“Transfer Agent” means Securities Transfer Corporation, the current transfer
agent of the Company with a mailing address of 2591 Dallas Parkway, Suite 102,
Frisco, TX 75034, and a facsimile number of (469) 633-0088, and any successor
transfer agent of the Company.
 
“Underlying Shares” means the shares of Common Stock issued and issuable upon
conversion or redemption of the Notes and upon exercise of the Warrants and
issued and issuable in lieu of the cash payment of interest on the Notes in
accordance with the terms of the Notes.
 
“Warrants” means the Common Stock Purchase Warrants delivered to the Purchasers
at the Closing in accordance with Section 2.2(a) hereof in the form of Exhibit B
attached hereto.
 
“Warrant Shares” means the shares of Common Stock issuable upon exercise of the
Warrants.
 
 
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ARTICLE II.
PURCHASE AND SALE
 
2.1           Closing.  The purchase and sale of the Notes shall take place in
one or more closings (each, a “Closing” and the date of each Closing, a “Closing
Date”).  The first Closing (the “Initial Closing”) shall take place on May __,
2012, at 10:00 a.m., Pacific Time (the date of the Initial Closing, the “Initial
Closing Date”), at the offices of Company Counsel or at such other location or
time or on such other date mutually agreed upon by the Company and all of the
Purchasers participating therein, subject to the conditions precedent for a
Closing as set forth in Section 2.3, and to each party’s obligations hereunder
having been satisfied or waived.  The Company may consummate additional Closings
within 60 days of the Initial Closing Date.  At the Closings, upon the terms and
subject to the conditions set forth herein, the Company agrees to sell, and the
Purchasers, severally and not jointly, agree to purchase, in the aggregate,
$1,000,000 in principal amount of the Notes.  On each Closing Date, each
Purchaser participating in the applicable Closing shall deliver to the Company,
via wire transfer or a certified check, immediately available funds equal to
such Purchaser’s Subscription Amount and the Company shall deliver to such
Purchaser its respective Note and Warrant, and the Company and the Purchasers
shall deliver the other items set forth in Section 2.2.
 
2.2           Deliveries.
 
(a)           On a Closing Date, the Company shall deliver or cause to be
delivered to each Purchaser participating in the Closing the following:
 
 
(i)
this Agreement duly executed by the Company;

 
 
(ii)  a Note with a principal amount equal to such Purchaser’s Subscription
Amount, registered in the name of such Purchaser;

 
 
  (iii)        a Warrant, registered in the name of such Purchaser, to purchase
up to a number of shares of Common Stock equal to 20% of such Purchaser’s
Subscription Amount; and

 
 
(iv)  the Subsidiary Guarantee, duly executed by each Subsidiary of the Company.

          
(b)           On a Closing Date, each Purchaser participating in such Closing
shall deliver or cause to be delivered to the Company the following:
 
 
(i)
this Agreement duly executed by such Purchaser; and

 
 
(ii)
such Purchaser’s Subscription Amount by wire transfer to the account as
specified in writing by the Company.

 
2.3           Closing Conditions.
 
(a)           The obligations of the Company hereunder in connection with a
Closing are subject to the following conditions being met:
 
 
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  (i)           the accuracy in all material respects on the Closing Date of the
representations and warranties of the Purchasers contained herein;

 
 
  (ii)          all obligations, covenants and agreements of each Purchaser
required to be performed at or prior to the Closing Date shall have been
performed; and

 
 
(iii)
at the Closing, the delivery by each Purchaser of the items set forth in Section
2.2(b) of this Agreement.

 
(b)          The respective obligations of the Purchasers participating in a
Closing hereunder are subject to the following conditions being met:
 
 
(i)
the accuracy in all material respects on the Closing Date of the representations
and warranties of the Company contained herein;

 
 
  (ii)           all obligations, covenants and agreements of the Company
required to be performed at or prior to the Closing Date shall have been
performed; and

 
 
(iii)
at the Closing, the delivery by the Company of the items set forth in Section
2.2(a) of this Agreement.

 
ARTICLE III.
REPRESENTATIONS AND WARRANTIES
 
3.1           Representations and Warranties of the Company.  The Company hereby
represents and warrants as of the Closing Date to the Purchasers as follows:
 
(a)           Organization and Qualification.  The Company and each Subsidiary
is an entity duly formed, validly existing and in good standing under the laws
of the jurisdiction of its incorporation or organization (as applicable), with
the requisite power and authority to own and use its properties and assets and
to carry on its business as currently conducted.  Each of the Company and the
Subsidiaries is duly qualified to conduct business and is in good standing as a
foreign corporation or other entity in each jurisdiction in which the nature of
the business conducted or property owned by it makes such qualification
necessary, except where the failure to be so qualified or in good standing, as
the case may be, could not have or reasonably be expected to result in (i) a
material adverse effect on the legality, validity or enforceability of any
Transaction Document, (ii) a material adverse effect on the results of
operations, assets, business, prospects or condition (financial or otherwise) of
the Company and the Subsidiaries, taken as a whole, or (iii) a material adverse
effect on the Company’s ability to perform in any material respect on a timely
basis its obligations under any Transaction Document (any of (i), (ii) or (iii),
a “Material Adverse Effect”) and no action or proceeding has been instituted in
any such jurisdiction revoking, limiting or curtailing or seeking to revoke,
limit or curtail such power and authority or qualification.
 
 
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(b)           Authorization; Enforcement.  The Company and the Subsidiaries have
the requisite corporate power and authority to enter into and to consummate the
transactions contemplated by each of the Transaction Documents and otherwise to
carry out their obligations hereunder and thereunder.  The execution and
delivery of each of the Transaction Documents by the Company and the
Subsidiaries and the consummation by them of the transactions contemplated
hereby and thereby have been duly authorized by all necessary action on the part
of the Company and the Subsidiaries and no further action is required by the
Company, the Subsidiaries, the Board of Directors, the board of directors of
each Subsidiary or their stockholders in connection therewith other than in
connection with the Required Approvals.  Each Transaction Document has been (or
upon delivery will have been) duly executed by the Company and the Subsidiaries,
as applicable, and, when delivered in accordance with the terms hereof and
thereof, will constitute the valid and binding obligation of the Company and the
Subsidiaries enforceable against the Company and the Subsidiaries in accordance
with its terms, except (i) as limited by general equitable principles and
applicable bankruptcy, insolvency, reorganization, moratorium and other laws of
general application affecting enforcement of creditors’ rights generally, (ii)
as limited by laws relating to the availability of specific performance,
injunctive relief or other equitable remedies and (iii) insofar as
indemnification and contribution provisions may be limited by applicable law.
 
(c)           No Conflicts.  The execution, delivery and performance of the
Transaction Documents by the Company and the Subsidiaries and the consummation
by the Company and the Subsidiaries of the other transactions contemplated
hereby and thereby do not and will not: (i) conflict with or violate any
provision of the Company’s or any Subsidiary’s certificate of incorporation,
bylaws or other organizational or charter documents, or (ii) conflict with, or
constitute a default (or an event that with notice or lapse of time or both
would become a default) under, result in the creation of any Lien upon any of
the properties or assets of the Company or any Subsidiary, or give to others any
rights of termination, amendment, acceleration or cancellation (with or without
notice, lapse of time or both) of, any agreement, loan or credit facility, debt
or other instrument (evidencing a Company or Subsidiary debt or otherwise) or
other understanding to which the Company or any Subsidiary is a party or by
which any property or asset of the Company or any Subsidiary is bound or
affected, or (iii) subject to the Required Approvals, conflict with or result in
a violation of any law, rule, regulation, order, judgment, injunction, decree or
other restriction of any court or governmental authority to which the Company or
a Subsidiary is subject (including federal and state securities laws and
regulations), or by which any property or asset of the Company or a Subsidiary
is bound or affected; except in the case of each of clauses (ii) and (iii), such
as could not have or reasonably be expected to result in a Material Adverse
Effect.
 
(d)           Filings, Consents and Approvals.  Neither the Company nor any
Subsidiary is required to obtain any consent, waiver, authorization or order of,
give any notice to, or make any filing or registration with, any court or other
federal, state, local or other governmental authority or other Person in
connection with the execution, delivery and performance by the Company and the
Subsidiaries of the Transaction Documents, other than those obtained and/or made
prior to or as of the Closing Date, and the filing of Form D with the Commission
and such filings as are required to be made under applicable state securities
laws (collectively, the “Required Approvals”).
 
 
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(e)           Issuance of the Securities.  The Securities are duly authorized
and, when issued and paid for in accordance with the applicable Transaction
Documents, will be duly and validly issued, fully paid and nonassessable, free
and clear of all Liens imposed by the Company other than restrictions on
transfer provided for in the Transaction Documents.  The Underlying Shares, when
issued in accordance with the terms of the Transaction Documents, will be
validly issued, fully paid and nonassessable, free and clear of all Liens
imposed by the Company other than restrictions on transfer provided for in the
Transaction Documents.  The Company has reserved from its duly authorized
capital stock a number of shares of Common Stock for issuance of the Underlying
Shares.
 
(f)           SEC Reports; Financial Statements.  To the Company’s knowledge,
the Company has filed all reports, schedules, forms, statements and other
documents required to be filed by the Company under the Securities Act and the
Exchange Act, including pursuant to Section 13(a) or 15(d) thereof, for the 12
months preceding the date hereof (the foregoing materials, including the
exhibits thereto and documents incorporated by reference therein, being
collectively referred to herein as the “SEC Reports”).  To the Company’s
knowledge, as of their respective dates, the SEC Reports complied as to form in
all material respects with the disclosure requirements of the Securities Act and
the Exchange Act, as applicable, and, to the Company’s knowledge none of the SEC
Reports, when filed, contained any untrue statement of a material fact or
omitted to state a material fact required to be stated therein or necessary in
order to make the statements therein, in the light of the circumstances under
which they were made, not misleading.  To the Company’s knowledge the financial
statements of the Company included in the SEC Reports comply in all material
respects with applicable accounting requirements and the rules and regulations
of the Commission with respect thereto as in effect at the time of filing.  Such
financial statements have been prepared in accordance with United States
generally accepted accounting principles applied on a consistent basis during
the periods involved (“GAAP”), except as may be otherwise specified in such
financial statements or the notes thereto and except that unaudited financial
statements may not contain all footnotes required by GAAP, and fairly present in
all material respects the financial position of the Company and its consolidated
Subsidiaries as of and for the dates thereof and the results of operations and
cash flows for the periods then ended, subject, in the case of unaudited
statements, to normal, immaterial, year-end audit adjustments
 
(g)           Certain Fees.  No brokerage or finder’s fees or commissions are or
will be payable by the Company to any broker, financial advisor or consultant,
finder, placement agent, investment banker, bank or other Person with respect to
the transactions contemplated by the Transaction Documents.  The Purchasers
shall have no obligation with respect to any fees or with respect to any claims
made by or on behalf of other Persons for fees of a type contemplated in this
section that may be due in connection with the transactions contemplated by the
Transaction Documents.
 
3.2           Representations and Warranties of the Purchasers.  Each Purchaser,
severally and not jointly, hereby represents and warrants as of the Closing Date
to the Company as follows:
 
 
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(a)           Organization; Authority.  Such Purchaser is an entity duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its organization with full right, corporate or partnership power
and authority to enter into and to consummate the transactions contemplated by
the Transaction Documents and otherwise to carry out its obligations hereunder
and thereunder.  The execution and delivery of the Transaction Documents and
performance by such Purchaser of the transactions contemplated by the
Transaction Documents have been duly authorized by all necessary corporate or
similar action on the part of such Purchaser.  Each Transaction Document to
which it is a party has been duly executed by such Purchaser, and when delivered
by such Purchaser in accordance with the terms hereof, will constitute the valid
and legally binding obligation of such Purchaser, enforceable against it in
accordance with its terms, except (i) as limited by general equitable principles
and applicable bankruptcy, insolvency, reorganization, moratorium and other laws
of general application affecting enforcement of creditors’ rights generally,
(ii) as limited by laws relating to the availability of specific performance,
injunctive relief or other equitable remedies and (iii) insofar as
indemnification and contribution provisions may be limited by applicable law.
 
(b)           Own Account.  Such Purchaser understands that the Securities are
“restricted securities” and have not been registered under the Securities Act or
any applicable state securities law and is acquiring the Securities as principal
for its own account and not with a view to or for distributing or reselling such
Securities or any part thereof in violation of the Securities Act or any
applicable state securities law, has no present intention of distributing any of
such Securities in violation of the Securities Act or any applicable state
securities law and has no direct or indirect arrangement or understandings with
any other persons to distribute or regarding the distribution of such Securities
in violation of the Securities Act or any applicable state securities law.
 
(c)           Purchaser Status.  At the time such Purchaser was offered the
Securities, it was, and at the date hereof it is, and on each date on which it
or its permitted assignee exercises any Warrant or converts any Note it or such
permitted assignee, as the case may be, will be an “accredited investor” as
defined in Rule 501(a) under the Securities Act.  Such Purchaser is not required
to be registered as a broker dealer under Section 15 of the Exchange Act.
 
(d)           Experience of Such Purchaser.  Such Purchaser, either alone or
together with its representatives, has such knowledge, sophistication and
experience in business and financial matters so as to be capable of evaluating
the merits and risks of the prospective investment in the Securities, and has so
evaluated the merits and risks of such investment.  Such Purchaser is able to
bear the economic risk of an investment in the Securities and, at the present
time, is able to afford a complete loss of such investment.
 
(e)           General Solicitation.  Such Purchaser is not purchasing the
Securities as a result of any advertisement, article, notice or other
communication regarding the Securities published in any newspaper, magazine or
similar media or broadcast over television or radio or presented at any seminar
or any other general solicitation or general advertisement.
 
 
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(f)           Short Sales and Confidentiality Prior To The Date Hereof.  Other
than consummating the transactions contemplated hereunder, such Purchaser has
not directly or indirectly, nor has any Person acting on behalf of or pursuant
to any understanding with such Purchaser, executed any purchases or sales,
including Short Sales, of the securities of the Company during the period
commencing from the time that such Purchaser first received a term sheet
(written or oral) from the Company or any other Person representing the Company
setting forth the material terms of the transactions contemplated hereunder
until the date hereof (“Discussion Time”).  Notwithstanding the foregoing, in
the case of a Purchaser that is a multi-managed investment vehicle whereby
separate portfolio managers manage separate portions of such Purchaser’s assets
and the portfolio managers have no direct knowledge of the investment decisions
made by the portfolio managers managing other portions of such Purchaser’s
assets, the representation set forth above shall only apply with respect to the
portion of assets managed by the portfolio manager that made the investment
decision to purchase the Securities covered by this Agreement.  Other than to
other Persons party to this Agreement, such Purchaser has maintained the
confidentiality of all disclosures made to it in connection with this
transaction (including the existence and terms of this transaction).
 
ARTICLE IV.
OTHER AGREEMENTS OF THE PARTIES
 
4.1           Transfer Restrictions.
 
(a)           The Securities may only be disposed of in compliance with state
and federal securities laws.  In connection with any transfer of Securities
other than pursuant to an effective registration statement or Rule 144, to the
Company or to an Affiliate of a Purchaser or in connection with a pledge as
contemplated in Section 4.1(b), the Company may require the transferor thereof
to provide to the Company an opinion of counsel selected by the transferor and
reasonably acceptable to the Company, the form and substance of which opinion
shall be reasonably satisfactory to the Company, to the effect that such
transfer does not require registration of such transferred Securities under the
Securities Act.  As a condition of transfer, any such transferee shall agree in
writing to be bound by the terms of this Agreement and shall have the rights of
a Purchaser under this Agreement.
 
(b)           Each Purchaser agrees to the imprinting, so long as is required by
this Section 4.1, of a legend on any of the Securities in the following form:
 
[NEITHER] THIS SECURITY [NOR THE SECURITIES INTO WHICH THIS SECURITY IS
[EXERCISABLE] [CONVERTIBLE]] HAS [NOT] BEEN REGISTERED WITH THE SECURITIES AND
EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON
AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
“SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT
TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO
AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH
APPLICABLE STATE SECURITIES LAWS.  THIS SECURITY [AND THE SECURITIES ISSUABLE
UPON [EXERCISE] [CONVERSION] OF THIS SECURITY] MAY BE PLEDGED IN CONNECTION WITH
A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN SECURED BY SUCH SECURITIES.
 
 
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The Company acknowledges and agrees that a Purchaser may from time to time
pledge pursuant to a bona fide margin agreement with a registered broker-dealer
or grant a security interest in some or all of the Securities to a financial
institution that is an “accredited investor” as defined in Rule 501(a) under the
Securities Act and who agrees to be bound by the provisions of this Agreement
and, if required under the terms of such arrangement, such Purchaser may
transfer pledged or secured Securities to the pledgees or secured parties.  Such
a pledge or transfer would not be subject to approval of the Company and no
legal opinion of legal counsel of the pledgee, secured party or pledgor shall be
required in connection therewith.  Further, no notice shall be required of such
pledge.  At the appropriate Purchaser’s expense, the Company will execute and
deliver such reasonable documentation as a pledgee or secured party of
Securities may reasonably request in connection with a pledge or transfer of the
Securities, including, if the Securities are subject to a registration statement
filed under the Securities Act, the preparation and filing of any required
prospectus supplement under Rule 424(b)(3) under the Securities Act or other
applicable provision of the Securities Act to appropriately amend the list of
Selling Stockholders thereunder.
 
(c)      Certificates evidencing the Underlying Shares shall not contain any
legend (including the legend set forth in Section 4.1(b) hereof), except for any
legend reasonably referring to any applicable transfer restrictions under state
securities laws: (i) while a registration statement covering the resale of such
security is effective under the Securities Act, or (ii) if such Underlying
Shares are eligible for resale under Rule 144 and the holder thereof is not an
Affiliate of the Company, or (iii) if such legend is not required under
applicable requirements of the Securities Act (including judicial
interpretations and pronouncements issued by the staff of the Commission).  If
required by the Transfer Agent to effect the removal of the legend hereunder,
the Company shall cause its counsel to issue a legal opinion to the Transfer
Agent promptly after the date which is six months following the applicable
Closing Date (if the Company has been subject to the reporting requirements of
Section 13 or 15(d) of the Exchange Act for the then preceding 90 days and has
filed all reports required to be filed thereunder during the then preceding 12
months (or such shorter period that the Company was required to file such
reports) and the holder thereof is not an Affiliate of the Company).  If all or
any portion of any Note or any Warrant is converted or exercised (as applicable)
at a time when there is an effective registration statement to cover the resale
of the Underlying Shares, or if such Underlying Shares may be sold under Rule
144 or if such legend is not otherwise required under applicable requirements of
the Securities Act (including judicial interpretations and pronouncements issued
by the staff of the Commission) then such Underlying Shares shall be issued free
of all legends, except for any legend reasonably referring to any applicable
transfer restrictions under state securities laws.  The Company may not make any
notation on its records or give instructions to the Transfer Agent that enlarge
the restrictions on transfer set forth in this section.
 
 
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(d)           Each Purchaser, severally and not jointly, agrees that such
Purchaser will sell any Securities pursuant to either Rule 144 or the
registration requirements of the Securities Act, including any applicable
prospectus delivery requirements, or an exemption therefrom, and that if
Securities are sold pursuant to a registration statement filed under the
Securities Act, they will be sold in compliance with the plan of distribution
set forth therein, and acknowledges that the removal of the restrictive legend
from certificates representing Securities as set forth in this Section 4.1 is
predicated upon the Company’s reliance upon this understanding.
 
4.2           Acknowledgment of Dilution.  The Company acknowledges that the
issuance of the Securities may result in dilution of the outstanding shares of
Common Stock.  The Company further acknowledges that its obligations under the
Transaction Documents, including without limitation its obligation to issue the
Underlying Shares pursuant to the Transaction Documents, are unconditional and
absolute and not subject to any right of set off, counterclaim, delay or
reduction, regardless of the effect of any such dilution or any claim the
Company may have against any Purchaser and regardless of the dilutive effect
that such issuance may have on the ownership of the other stockholders of the
Company.
 
4.3           Conversion and Exercise Procedures.  The form of Notice of
Exercise included in the Warrants and the form of Notice of Conversion included
in the Notes set forth the totality of the procedures required of the Purchasers
in order to exercise the Warrants or convert the Notes.  No additional legal
opinion or other information or instructions shall be required of the Purchasers
to exercise the Warrants or convert the Notes.  The Company shall honor
exercises of the Warrants and conversions of the Notes and shall deliver
Underlying Shares in accordance with the terms and conditions set forth in the
Transaction Documents.
 
4.4           Use of Proceeds.  The Company shall use the net proceeds from the
sale of the Securities hereunder for working capital purposes and shall not use
such proceeds for (a) the satisfaction of any portion of the Company’s debt
(other than payment of trade payables in the ordinary course of the Company’s
business and prior practices), (b) the redemption of any Common Stock or Common
Stock Equivalents or (c) the settlement of any outstanding litigation.
 
4.5           Form D; Blue Sky Filings.  The Company agrees to timely file a
Form D with respect to the Securities as required under Regulation D and to
provide a copy thereof, promptly upon the request of the Purchaser.  The Company
shall take such action as the Company shall reasonably determine is necessary in
order to obtain an exemption for, or to qualify the Securities for, sale to the
Purchasers at the Closing under applicable securities or “Blue Sky” laws of the
states of the United States, and shall provide evidence of such actions promptly
upon the request of any Purchaser.
 
4.6           Additional Guarantors.   The Company shall cause each of its
Subsidiaries, including those formed or acquired on or after the date hereof, to
execute and deliver to the Purchasers the Subsidiary Guarantee.
 
 
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ARTICLE V.
MISCELLANEOUS
 
5.1           Fees and Expenses.  Each party shall pay the fees and expenses of
its advisers, counsel, accountants and other experts, if any, and all other
expenses incurred by such party incident to the negotiation, preparation,
execution, delivery and performance of this Agreement.  The Company shall pay
all transfer agent fees, stamp taxes and other taxes and duties levied in
connection with the delivery of any Securities to the Purchasers.
 
5.2           Entire Agreement.  The Transaction Documents, together with the
exhibits and schedules thereto, contain the entire understanding of the parties
with respect to the subject matter hereof and supersede all prior agreements and
understandings, oral or written, with respect to such matters, which the parties
acknowledge have been merged into such documents, exhibits and schedules.
 
5.3           Notices.  Any and all notices or other communications or
deliveries required or permitted to be provided hereunder shall be in writing
and shall be deemed given and effective on the earliest of (a) the date of
transmission or delivery, if such notice or communication is delivered via
facsimile at the facsimile number, or delivered by a U.S. nationally recognized
overnight courier service to the address, set forth on the signature pages
attached hereto prior to 5:30 p.m. (Pacific time) on a Trading Day, (b) the next
Trading Day after the date of transmission, if such notice or communication is
delivered via facsimile at the facsimile number, or delivered by such courier
service to the address, set forth on the signature pages attached hereto on a
day that is not a Trading Day or later than 5:30 p.m. (Pacific time) on any
Trading Day, or (c) upon actual receipt by the party to whom such notice is
required to be given.  The address for such notices and communications shall be
as set forth on the signature pages attached hereto.
 
5.4           Amendments; Waivers.  No provision of this Agreement may be
waived, modified, supplemented or amended except in a written instrument signed,
in the case of an amendment, by the Company and the Purchasers of at least a
majority in interest of the Securities still held by the Purchasers or, in the
case of a waiver, by the party against whom enforcement of any such waived
provision is sought.  No waiver of any default with respect to any provision,
condition or requirement of this Agreement shall be deemed to be a continuing
waiver in the future or a waiver of any subsequent default or a waiver of any
other provision, condition or requirement hereof, nor shall any delay or
omission of any party to exercise any right hereunder in any manner impair the
exercise of any such right.
 
5.5           Headings.  The headings herein are for convenience only, do not
constitute a part of this Agreement and shall not be deemed to limit or affect
any of the provisions hereof.
 
5.6           Successors and Assigns.  This Agreement shall be binding upon and
inure to the benefit of the parties and their successors and permitted
assigns.  The Company may not assign this Agreement or any rights or obligations
hereunder without the prior written consent of the Purchaser (other than by
merger).  Any Purchaser may assign any or all of its rights under this Agreement
to any Person to whom such Purchaser assigns or transfers any Securities,
provided that such transferee agrees in writing to be bound, with respect to the
transferred Securities, by the provisions of the Transaction Documents that
apply to the “Purchasers.”
 
 
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5.7           No Third-Party Beneficiaries.  This Agreement is intended for the
benefit of the parties hereto and their respective successors and permitted
assigns and is not for the benefit of, nor may any provision hereof be enforced
by, any other Person.
 
5.8           Governing Law.  All questions concerning the construction,
validity, enforcement and interpretation of the Transaction Documents shall be
governed by and construed and enforced in accordance with the internal laws of
the State of California, without regard to the principles of conflicts of law
thereof.  Each party agrees that all legal proceedings concerning the
interpretations, enforcement and defense of the transactions contemplated by
this Agreement and any other Transaction Documents (whether brought against a
party hereto or its respective affiliates, directors, officers, shareholders,
employees or agents) shall be commenced exclusively in the state and federal
courts sitting in the County of Los Angeles.  Each party hereby irrevocably
submits to the exclusive jurisdiction of the state and federal courts sitting in
the County of Los Angeles for the adjudication of any dispute hereunder or in
connection herewith or with any transaction contemplated hereby or discussed
herein (including with respect to the enforcement of any of the Transaction
Documents), and hereby irrevocably waives, and agrees not to assert in any suit,
action or proceeding, any claim that it is not personally subject to the
jurisdiction of any such court, that such suit, action or proceeding is improper
or is an inconvenient venue for such proceeding.  Each party hereby irrevocably
waives personal service of process and consents to process being served in any
such suit, action or proceeding by mailing a copy thereof via registered or
certified mail or overnight delivery (with evidence of delivery) to such party
at the address in effect for notices to it under this Agreement and agrees that
such service shall constitute good and sufficient service of process and notice
thereof.  Nothing contained herein shall be deemed to limit in any way any right
to serve process in any other manner permitted by law.  If either party shall
commence an action or proceeding to enforce any provisions of the Transaction
Documents, then the prevailing party in such action or proceeding shall be
reimbursed by the other party for its reasonable attorneys’ fees and other costs
and expenses incurred with the investigation, preparation and prosecution of
such action or proceeding.
 
5.9            Survival.  The representations and warranties shall survive the
Closings and the delivery of the Securities for the applicable statute of
limitations.
 
5.10          Execution.  This Agreement may be executed in two or more
counterparts, all of which when taken together shall be considered one and the
same agreement and shall become effective when counterparts have been signed by
each party and delivered to the other party, it being understood that both
parties need not sign the same counterpart.  In the event that any signature is
delivered by facsimile transmission or by e-mail delivery of a “.pdf” or other
document image format data file, such signature shall create a valid and binding
obligation of the party executing (or on whose behalf such signature is
executed) with the same force and effect as if such facsimile or “.pdf” or other
document image format data file signature page were an original thereof.
 
 
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5.11          Severability.  If any term, provision, covenant or restriction of
this Agreement is held by a court of competent jurisdiction to be invalid,
illegal, void or unenforceable, the remainder of the terms, provisions,
covenants and restrictions set forth herein shall remain in full force and
effect and shall in no way be affected, impaired or invalidated, and the parties
hereto shall use their commercially reasonable efforts to find and employ an
alternative means to achieve the same or substantially the same result as that
contemplated by such term, provision, covenant or restriction.  It is hereby
stipulated and declared to be the intention of the parties that they would have
executed the remaining terms, provisions, covenants and restrictions without
including any of such that may be hereafter declared invalid, illegal, void or
unenforceable.
 
5.12          Replacement of Securities.  If any certificate or instrument
evidencing any Securities is mutilated, lost, stolen or destroyed, the Company
shall issue or cause to be issued in exchange and substitution for and upon
cancellation thereof (in the case of mutilation), or in lieu of and substitution
therefor, a new certificate or instrument, but only upon receipt of evidence
reasonably satisfactory to the Company of such loss, theft or destruction.  The
applicant for a new certificate or instrument under such circumstances shall
also pay any reasonable third-party costs (including customary indemnity)
associated with the issuance of such replacement Securities.
 
5.13          Remedies.  In addition to being entitled to exercise all rights
provided herein or granted by law, including recovery of damages, each of the
Purchasers and the Company will be entitled to specific performance under the
Transaction Documents.  The parties agree that monetary damages may not be
adequate compensation for any loss incurred by reason of any breach of
obligations contained in the Transaction Documents and hereby agrees to waive
and not to assert in any action for specific performance of any such obligation
the defense that a remedy at law would be adequate.
 
5.14          Payment Set Aside.  To the extent that the Company makes a payment
to any Purchaser pursuant to any Transaction Document or a Purchaser enforces or
exercises its rights thereunder, and such payment or payments or the proceeds of
such enforcement or exercise or any part thereof are subsequently invalidated,
declared to be fraudulent or preferential, set aside, recovered from, disgorged
by or are required to be refunded, repaid or otherwise restored to the Company,
a trustee, receiver or any other person under any law (including, without
limitation, any bankruptcy law, state or federal law, common law or equitable
cause of action), then to the extent of any such restoration the obligation or
part thereof originally intended to be satisfied shall be revived and continued
in full force and effect as if such payment had not been made or such
enforcement or setoff had not occurred.
 
 
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5.15          Usury.  To the extent it may lawfully do so, the Company hereby
agrees not to insist upon or plead or in any manner whatsoever claim, and will
resist any and all efforts to be compelled to take the benefit or advantage of,
usury laws wherever enacted, now or at any time hereafter in force, in
connection with any claim, action or proceeding that may be brought by any
Purchaser in order to enforce any right or remedy under any Transaction
Document.  Notwithstanding any provision to the contrary contained in any
Transaction Document, it is expressly agreed and provided that the total
liability of the Company under the Transaction Documents for payments in the
nature of interest shall not exceed the maximum lawful rate authorized under
applicable law (the “Maximum Rate”), and, without limiting the foregoing, in no
event shall any rate of interest or default interest, or both of them, when
aggregated with any other sums in the nature of interest that the Company may be
obligated to pay under the Transaction Documents exceed such Maximum Rate.  It
is agreed that if the maximum contract rate of interest allowed by law and
applicable to the Transaction Documents is increased or decreased by statute or
any official governmental action subsequent to the date hereof, the new maximum
contract rate of interest allowed by law will be the Maximum Rate applicable to
the Transaction Documents from the effective date forward, unless such
application is precluded by applicable law.  If under any circumstances
whatsoever, interest in excess of the Maximum Rate is paid by the Company to any
Purchaser with respect to indebtedness evidenced by the Transaction Documents,
such excess shall be applied by such Purchaser to the unpaid principal balance
of any such indebtedness or be refunded to the Company, the manner of handling
such excess to be at such Purchaser’s election.
 
5.16          Saturdays, Sundays, Holidays, etc.  If the last or appointed day
for the taking of any action or the expiration of any right required or granted
herein shall not be a Business Day, then such action may be taken or such right
may be exercised on the next succeeding Business Day.
 
5.17           Construction. The parties agree that each of them and/or their
respective counsel has reviewed and had an opportunity to revise the Transaction
Documents and, therefore, the normal rule of construction to the effect that any
ambiguities are to be resolved against the drafting party shall not be employed
in the interpretation of the Transaction Documents or any amendments hereto.
 

 
(Signature Pages Follow)
 
 
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IN WITNESS WHEREOF, the parties hereto have caused this Securities Purchase
Agreement to be duly executed by their respective authorized signatories as of
the date first indicated above.
 
ATHERONOVA INC.
 
Address for Notice:
 
 
 
By:  /s/ Mark Selawski                                                         
     Name:  Mark Selawski
     Title:  Chief Financial Officer
Fax: (949) 476-1122
E-mail: mselawski@atheronova.com

 
 
 

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IN WITNESS WHEREOF, the undersigned has caused this Securities Purchase
Agreement to be duly executed by its respective authorized signatories as of the
date first indicated above.
 
 

Name of Purchaser: Amir L. Ecker

 

Signature of Authorized Signatory of Purchaser: /s/ Amir L. Ecker   

 

Name of Authorized Signatory:                 Title of Authorized Signatory:    
          Email Address of Purchaser:                 Facsimile Number of
Purchaser: (610) 975-9973                     Address for Notice of Purchaser:
800 Newtown Road               Villanova, Pennsylvania 19085                    
        Address for Delivery of Securities for Purchaser (if not same as address
for notice):                                                          
Subscription Amount: $350,000.00               Warrant Shares: 70,000 (20% of
Subscription Amount)    

 
 

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IN WITNESS WHEREOF, the undersigned has caused this Securities Purchase
Agreement to be duly executed by its respective authorized signatories as of the
date first indicated above.
 
 

Name of Purchaser: ACT Capital Partners, L.P.  

 

Signature of Authorized Signatory of Purchaser: /s/ Amir L. Ecker   

 

Name of Authorized Signatory:  Amir L. Ecker             Title of Authorized
Signatory:  General Partner             Email Address of Purchaser:             
  Facsimile Number of Purchaser: (610) 975-9973                     Address for
Notice of Purchaser: 2 Radnor Corporate Center               Suite 111          
    Radnor, Pennsylvania 19087                             Address for Delivery
of Securities for Purchaser (if not same as address for notice):                
                                          Subscription Amount: $350,000.00      
        Warrant Shares: 70,000 (20% of Subscription Amount)  

 
 
 

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EXHIBIT A

NOTE
 
 
 

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EXHIBIT B

WARRANT
 
 
 

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EXHIBIT C

SUBSIDIARY GUARANTEE

 
 

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EXHIBIT D

SUBSIDIARIES

AtheroNova Operations, Inc., a Delaware corporation