Document:

ex10-30.htm

Exhibit 10.30

PROMISSORY NOTE

$352,273                      South San Francisco, California

April 29, 2011

FOR VALUE RECEIVED, VistaGen Therapeutics, Inc., a California corporation ("Company"), in connection with the satisfaction of certain amounts owed by Company to Cato Holding Company ("Payee"), and as consideration for:

 

1.           cancellation in full of all amounts due and payable, as of the date hereof, by Company to Payee under that certain Loan Agreement, dated February 3 , 2004 (the "Loan Agreement"), as amended August 10,2006, and further amended pursuant to Amendment No. 2, dated February 14, 2007, Amendment No. 3, dated December 31, 2009, and Amendment No. 4, dated December 31,2010, each attached hereto as Exhibit A, and,

2.           cancellation of $ 105,000 in principal amount owed by Company to Payee under that Unsecured Promissory Note, dated August 19,2010 (the "August 2010 Note"), as amended December 31,2010, each attached hereto as Exhibit B,

3.           the release by Payee of certain security interests in Company's marketable personal property as given in Exhibit B to the Loan Agreement as attached hereto as Exhibit C.  Company hereby promises to pay to Payee or any permitted holder of this Promissory Note (the "2011 Note") designated by Payee (a "Holder"), at its offices located at 4364 South Alston Ave., Durham, NC, 27713, or at such other place as Payee or a Holder may from time to time designate in writing, in lawful money of the United States of America, the principal sum of Three Hundred Fifty-One Thousand Seven Hundred Sixty Dollars ($352,273) in full satisfaction of those amounts due under the Loan Agreement and the August 2010 Note, as of April 29, 2011, as listed above, and in accordance with the following:

1. Payments.

 

    (a) Company shall pay to Payee the principal sum of Three Hundred Fifty-Two Thousand Two Hundred Seventy Three Dollars ($352,273) in accordance with the following payment schedule:

 

       1.           Ten Thousand Dollars ($ 10,000) each month, beginning May 1,2011 and ending on October 1,2011;

 

    2.           Twelve Thousand Dollars ($12,500) each month, beginning November 1, 2011, and each month thereafter until the balance under the 2011 Note, is paid in full, with the final monthly payment to be made in the amount equal to the then current outstanding balance of principal and interest due under the 2011 Note, subject to certain conditions described in Section 3 below.

 

2. Interest. The 2011 Note shall bear interest at the rate of 7.0% per annum, compounded monthly.

 

3.           Events of Default and Remedies.

 

Any one of the following occurrences shall constitute an "Event of Default" under this Note:

 

    (a)           The failure by Company to make any payment upon this 2011 Note within ten (10) days of the date the same becomes due and payable in accordance with the terms hereof; or

    (b)           The occurrence of any default under this 2011 Note other than as described in the preceding clause and the continuation of such default for twenty (20) days after notice thereof is given to Company by the Payee; or

    (c)           Company becoming the subject of any proceedings or action of any regulatory agency or any court relating to its insolvency or for the appointment of a trustee, receiver or similar officer for Company, making an assignment for the benefit of its creditors, or entering into any agreement for the extension or readjustment of all or substantially all of its obligations.

  

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Upon the occurrence of any Event of Default hereunder, (i) the entire unpaid principal balance at the option of Payee and without notice or demand of any kind to Company or any other person, immediately becomes due and payable; and (ii) the Payee shall have and may exercise any and all rights and remedies available at law or in equity.

 

4.           Time of Cancellation.

    (a) The cancellation of the $105,000 due under the August 2010 Note described above shall occur immediately before the conversion of the remaining sums due under such note pursuant to the certain Conversion Agreement between the Company and certain holders of the Company's promissory notes dated on or about April 29, 2011.

 

5.           Miscellaneous.

    (a)           The provisions of this 2011 Note shall inure to the benefit of and be binding on any successor to Company, or any assignees hereof, and shall extend to any Holder hereof.

    (b)           The obligation to pay the Holder of this 2011 Note shall be absolute and unconditional and the rights of such Holder shall not be subject to any defense, setoff, counterclaim or recoupment or by reason of any indebtedness or liability at any time owing by Holder to Company.

    (c)           This 2011 Note shall not be amended unless such amendment is in writing and executed by both Holder and Company.

    (d)           This 2011 Note shall be governed by and construed in accordance with the laws of the State of California.

    (e) Company reserves the right to prepay the outstanding balance under this 2011 Note in full or in part at any time during the term of this 2011 Note without notice and without premium or penalty.

IN WITNESS WHEREOF, the undersigned has executed and delivered this 2011 Note as of the date and year first above written.

VISTAGEN THERAPEUTICS, INC.

 

By: /s/ Shawn K. Singh

Shawn K. Singh

Chief Executive Officer

 

 

Cato Holding Company hereby agrees that, upon execution of this note by Company, (1) all amounts due under the Loan Agreement are cancelled, (2) $105,000 due under the August 2010 Note is cancelled, and (3) all security interests under Exhibit B of the Loan Agreement are cancelled.

 

 

By: /s/ Cato Holding Company

 

  

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Exhibit A

 

 

LOAN AGREEMENT

 

 

Dated as of February 3, 2004 by and between CATO HOLDING COMPANY

CATO VENTURE GROUP

as lender

and

VISTAGEN THERAPEUTICS, INC.

 as borrower

 

 

TOTAL CREDIT AMOUNT: $200,000

Maturity; 36 months

Formula: None.

Loan Fee: None

Interest: Prime plus 1%

Warrants: 25,000 shares of Common Stock

Warrant Price: $0.08 per share

 

1.     The terms and information set forth on this cover page are a part of the attached Loan Agreement, dated as of the date first written above (this "Agreement"), entered into by and between Cato Holding Company; a North Carolina corporation dba Cato Venture Group  ("Lender"), and VistaGen Therapeutics, Inc., a California Corporation ("Borrower"), The terms and conditions of the Agreement agreed to between Lender and Borrower are as follows:

Advances.

 

    (a)     Borrower may request and promptly receive one or more advances (each, an "Advance" and collectively, the "Advances") from time to time in an aggregate outstanding amount up to the total Credit Amount specified on the cover page thereafter, provided all matters relating to the requested Advances have been completed to Lender's satisfaction

    (b)           To obtain an Advance, Borrower shall give Lender irrevocable written notice in the form acceptable to Lender (attached as Exhibit A) by 10:00 a.m. New York Time on the business day prior to the date of such Advance. The Advances made pursuant to this Agreement and all payments made hereunder shall be recorded by Lender on its books and records. The failure to record any Advance, prepayment or payment shall hot limit or otherwise affect the obligation of Borrower to pay any amounts due hereunder. Each request for an Advance shall- be deemed to affirmthat the representations and warranties set forth in Section 3 are true, complete and correct.

    (c)           Borrower shall pay interest on the outstanding Advances at a floating rate, equal to the Prime Rate announced from time to time by Lender plus themargin specified on the cover page hereof. Interest shall be payable in arrears on the first day of each month. The Prime Rate shall mean the published 'Prime Rate" that appears in the "Money Rates" section of The Wall Street Journal. The entire outstanding principal balance of the Advances, all accrued arid unpaid interest thereon, and all fees, expenses and other amounts outstanding, if any, hereunder shall.be immediately due and payable on the Maturity Date specified on the cover page.

  

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    (d)           All payments on this Agreement shall be applied first to fees and expenses, if any, then to interest and then to principal. Any principal or interest payments on this Agreement outstanding after the occurrence and during the continuance of a default under this Agreement shall bear interest at a rate equal to the lesser of 5% above the rate otherwise applicable under this Agreement or the maximum rate permitted under law. The provision in this paragraph for late fees and default interest shall not be construed as Lender's consent to Borrower's failure to pay any amounts in strict accordance with this Agreement, and Lender's acceptance of iany such payments shall not restrict Lender's exercise of any remedies arising out of any such fai lure.

 

2.         Security Interest. As security for all present and future indebtedness, guarantees,liabilities, and other obligations of Borrower to Lender under this Agreement or otherwise (collectively, the "Obligations"). Borrower hereby assigns and grants Lender a continuing security interest in Borrower's personal property, whether now owned (as specified in Exhibit B) or hereafter acquired, and wherever located, including without limitation all of the following: all accounts, cash, general intangibles, chattel paper, documents, letters of credit, instruments, deposit accounts, investment property, inventory, fixtures and equipment, as such terms are defined in Division 9 of the California Uniform Commercial Code in effect on the date hereof, excluding all of Borrower's intellectual property, including patents, patent applications, cell lines, licensed property and copyrights and trademarks and all products and proceeds thereof, but including any insurance proceeds of the foregoing (collectively, the "Collateral"). Borrower will provide Lender timely access to such documents from time to time to ensure perfectionor continuity of the security interest granted hereunder.

 

3.      Representations and Warranties. Borrower represents to Lender on the date hereof and ori each date on which an Advance is requested, as follows: (a) Borrower is not knowingly in default under any agreement under which Borrower owes any money, or any agreement, the violation or termination of which could have a material adverse effect on Borrower; (b) Borrower has taken all action necessary to authorize the execution, delivery and performance of this Agreement; (c) there are no liens, security interests or other encumbrances on the Collateral other than the first priority security interest granted to Lender hereunder; (d) the execution and performance of this Agreement do not conflict with, or constitute a default under, any agreement to which Borrower is party or by which Borrower is bound; (e) the information provided to Lender on or prior to the date of this Agreement is true and correct in all material respects; (f) All financial statements and other information provided to Lender fairly present Borrower's financial condition, and there has not been a material adverse change in the financial condition of Borrower since the date of the most recent of the financial statements submitted to Lender; (g) the execution and performance of this Agreement do not conflict with, or constitute a default under, any agreement to which Borrower is party or by which Borrower is bound; (h) Borrower is in compliance with all laws and orders applicable to it; (i) Borrower is not party to any litigation and is not the subject of any government investigation, and Borrower has no knowledge of'any pending litigation or investigation or the existence of circumstances that reasonably cotild be expected to give rise to such litigation or investigation; and (j) no representation or other statement made by Borrower to Lender contains any untrue statement of a material adverse fact or omits to state a material adverse fact necessary to make any statements made to Lender not misleading

  

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4. Covenants.

 

    (a)           Borrower will provide Lender (i) within 45 days after the last day of each quarter, company-prepared quarterly financial statements in same form and substance as provided to all investors, (ii) as soon as available, but in any event with ninety (90) days after the end of each fiscal year, compiled financial statements of Borrower prepared in accordance with GAAP, consistently applied, together with a unqualified opinion on such financial statements of the Borrower's independent certified public accounting firm; and (iii) promptly upon Lender's request, such other information relating to Borrower's operations and condition as Lender may reasonably request from time to time. Lender, at its cost, shall have a right to examine and copy Borrower's bojoks andrecords from time to time within the Company's facilities.and upon reasonable notice to Borrower. Borrower will maintain insurance in the form and amount found acceptable to Lender prior to closing relating to the Collateral and Borrower's business If permitted by Borrower's insurance carrier, any insurance on the Collateral shall include a lender's loss payable endorsement in favor of Lender as an additional loss payee, and any liability insurance shall show Lender as an additional insured.

    (b)           Borrower will maintain its corporate existence and good standing and will maintain in force all licenses and agreements necessary or appropriate in Borrower's judgement to the conduct of its business. Borrower will pay all taxes on or before the date such taxes are due, and will comply with all laws and orders applicable to it.

    (c)           Borrower will not without advance approval of Lender whoose approval shall not be unreasonably with held, (i) make any material investments in, or loans or advances to,any person other than in the ordinary course of business as currently conducted or currently planned to be conducted , (ii) acquire any material assets other than in the ordinary course of business as currently conducted, (iii) make any material distributions or pay any dividends to any person on account of Borrower's shares, (iv) excepting sales of convertible debt approved for sale by the Company's Director's, borrow any money, or otherwise become substantially more liable in connection with any indebtedness outside the ordinary course of business as currently conducted, (v) move, dispose of or encumber any, portion of its Collateral, except for dispositions of inventory in the ordinary course of business as currently conducted, or (vi) merge or consolidate with or into any person or entity.

 

5.           Fees and Expenses. Lender shall pay all of its legal and underwriting expenses in connection with this Agreement, with the exception of the insurance endorsements as set forth in Section 4(a). Borrower shall, pay all of its legal expenses in connection with this Agreement and all reasonable out of pocket costs that Lender incurs in enforcing this Agreement or exercising any rights withjrespeet to the Collateral including all costs incurred after the occurrence of an Insolvency Event), including without limitation reasonable attorneys fees and expenses.

 

6.           Events of Default: Remedies. Any one or more of the following shall constitute an Event of Default under this Agreement: 

   

    (a) Borrower's failure (i) to comply with written notice from Lender of Borrowers providing 48-hour notice to pay all or any part of the overdue principal or interest payments required hereunder as of the date due and payable, or (ii) to comply with any agreement or covenant set forth in this Agreement, or (iii) to comply with any law to which Borrower is subject; or (b) Borrower becomes the subject of any case or proceeding under the United States Bankruptcy Code or any other law relating to the reorganization or restructuring of debt (an "Insolvency Event"); or (c) any representation made to Lender in this Agreement, or any information given to Lender by or on behalf of Borrower shall be incorrect in any adverse material respect; or (d) any part of the Collateral becomes subject to an attachment, lien, security interest or levy in favor of any person or entity other than Lender; or (e) a judgment or judgments for the payment of money shall be rendered against Borrower and shall remainunsatisfied and unstayed for a period of twenty (20) business days.

  

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7.           Upon the occurrence of an Event of Default hereunder, all unpaid principal, accrued interest; and other amounts owing hereunder shall, at the option of Lender, be immediately due and payable and collectible by or on behalf of Lender, and Lender may exercise all of the rights of a secured party under the California Uniform Commercial Code and any other applicable law. Lender may immediately set off and apply to any obligation outstanding hereunder any balances or deposits held by Lender or any indebtedness at any time: owing to or for the credit or the account of Borrower held by Lender. Borrower shall assemble the Collateral in accordance with Lender's directions within 14 days, and Lender shall have a right at Borrower's sole expense to dispose of all or any portion of the Collateral in the order and manner that Lender elects, in its sole discretion, in any commercially reasonable manner. Lender shall have a royalty-free license to use any name, trademark, or any property of Borrower to complete production of, advertisement for, and disposition of any Collateral and Lender shall have a license to enter into, occupy and use Borrower's premises during normal business hours and in the presence of one or more officers of the Company and the Collateral without charge to exercise any of Lender's rights or remedies under this Agreement. Borrower irrevocably appoints Lender (and any of Lender's designated employees or agents) as Borrower's true and lawful attorney in fact to: endorse Borrower's name on any checks or other forms of payment; make, settle and adjust all claims under and decisions with respect to Borrower's policies of insurance; settle and adjust disputes and claims respecting accounts receivable with account debtors; execute and deliver all notices, instruments and agreements in connection with the perfection of the security interest granted in this Agreement; and sell, lease or otherwise dispose of all or any part of the Collateral. The appointment of Lender as Borrower's attorney in fact, and each of Lender's rights and powers, being coupled with an interest, is irrevocable until all amount owing to Lender have been repaid in full. Waivers: Indemnity. Borrower shall pay all reasonable costs of collection and enforcement of this Agreement when incurred, including reasonable attorneys' fees, costs and expenses incurred before, after or in connection with of an Insolvency Event. Lender shall be liable for any loss of, or damage to, the Collateral, the risk of which shall beborne by Lender. Borrower shall hold Lender harmless from any claim, obligation or liability (including without limitation reasonable attorneys fees and expenses) arising out of this Agreement or the transactions contemplated hereby, including any claim, obligation or liability arising before, after or in connection with an Insolvency Event. The indemnity obligation hereunder shall survive repayment of all Obligations and termination of this Agreement until all applicable statute of limitation periods as to actions that may be brought against Lender have run.

 

8.      Miscellaneous. Lender may assign all or any part of its interest in this Agreement and the Advances to any person or entity, or grant a participation of any interest in this Agreement, without notice to, or the consent of, Borrower. This Agreement can be amended only by an instrument signed by Lender and Borrower, AD prior agreements, understandings and. negotiations with the Lender are superseded by this Agreement. Borrowermay not assign any obligation hereunder without Lender's consent, which consent will not be unreasonably with held.. This Agreement maybe executed in two or more counterparts, each of which shall be deemed an original, but all of which, shall constitute one instrument. Each provision of this Agreement shall be severable from every other provision of this Agreement fir the purpose of deteirnining the legal enforceability of any specific provision. All covenants, representations and warrants made in this Agreement shall continue in full force and effect so long as any obligations hereunder remain outstanding. This Agreement shall be governed by the internal laws of the State of California, without regard to conflicts of laws rules. Borrower and Lender consent to the jurisdiction of the United States District Court of the Northern District of California and the state courts for Santa Clara County, California.

  

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JURY WAIVER. LENDER AND BORROWER WAIVE ANY RIGHT TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION ARISING OUT OF THIS AGREEMENT OR ANY OF THE TRANSACTIONS CONTEMPLATED HEREIN, INCLUDING WITHOUT LIMITATION CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW OR STATUTORY CLAIMS. EACH PARTY RECOGNIZES AND AGREES THAT THE FOREGOING WAIVER CONSTITUTES A MATERIAL INDUCEMENT FOR IT TO ENTER INTO THIS AGREEMENT. EACH PARTY REPRESENTS AND WARRANTS THAT IT HAS REVIEWED THIS WAIVER WITH ITS LEGAL COUNSEL AND THAT IT KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL

 

 

IN WITNESS WHEREOF, -the undersigned have executed this Agreement as of the first day above written.

 

 

VISTAGEN THERAPEUTICS, INC.       

 

 

CATO HOLDING COMPANY

DBA CATO VENTURE GROUP

  

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AMENDMENT NO. 2 TO LOAN AGREEMENT

THIS AMENDMENT NO. 2 TO LOAN AGREEMENT (the"Amendment") is made and entered Into as of February 14 2007, by and between Cato Holding Company, a North Carolina corporation dba Cato BioVentures ("LENDER"), and VistaGen Therapeutics, Inc., a California corporation ("BORROWER").

 

WHEREAS, the parties entered into that certain Loan Agreement dated as of February 3, 2007, as amended by an Agreement dated August 16,2006 (collectively; the "Agreement"), pursuant to which LENDER extended to BORROWER a $200,000 line of credit at an interest rate of Prime plus 1% and with a maturity of thirty-six (36) months from the date of the Agreement; and

WHEREAS, the parties desire to amend the Agreement to increase the line of credit extended to BORROWER to: $400,000 and to amend the maturity date and repayment terms;

 

NOW, THEREFORE, in consideration of the foregoing premises and other good and valuable consideration the receipt and sufficiency of which Is hereby acknowledged, the parties agree as follows:

 

1.     Total Crsdit Amount on the Cover Page of the Agreement. The Total Credit Amount is hereby amended by deleting "$200,000" and replacing it with "$400,000".

 

2.     Maturity on the Cover Page of the Agreement The Maturity Is hereby amended by deleting it in its entirety and replacing it with the following; "Maturity: The earlier of one hundred eighty (180) days after the closing of Borrower's offering of common stock in connection with its simultaneous reverse merger Into a public shell company whose common stock currently trades on the OTC Bulletin Board (the "Offering") or December 31, 2009."

 

3.     Confirmation of Agreement. Except as otherwise amended or modified hereby, all terms and conditions of the Agreement shall remain in full force and effect,

 

4.     Capitalized Terms. Capitalized terms used but not defined in this Amendment shall have the meanings ascribed to them in the Agreement.

 

5.     Counterparts. This Amendment may be executed in one or more counterparts, each of which shall be deemed an original but all of which taken together shall constitute one and the same instrument.

 

Cato Holding Company

 

By: /s/ Cato Holding Company

 

Name:    

Title:  

 

 

VistaGen Therapeutics, Inc 

 

By:  /s/ Shawn K. Singth

Name: Shawn K. Singh

Title: CEO

 

 

  

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AMENDMENT NO. 3

TO

 

LOAN AGREEMENT

THIS AMENDMENT NO. 3 TO LOAN AGREEMENT (the "Amendment") is made and entered into as of December 31, 2009, by and between Cato Holding Company, a North Carolina corporation dba Cato BioVentures ("LENDER"), and VistaGen Therapeutics, inc., a California corporation ("BORROWER").

WHEREAS, the parties entered into that certain Loan Agreement dated as of February 3, 2004, as amended by an Agreement dated August 18, 2006 and Amendment No. 2 dated February 14, 2007 (collectively, the "Agreement"), pursuant to which LENDER extended to BORROWER a $400,000 line of. credit at an interest rate of Prime plus 1 %; and

WHEREAS, the parties desire to amend the Agreement to amend the maturity date and repayment terms;

NOW, THEREFORE, in consideration of the foregoing premises and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties agree as follows:

1.     Maturity on the Cover Page of the Agreement. The Maturity is hereby amended by deleting it in its entirety and replacing it with the following:

"Maturity: The earlier of ninety (90) days after the closing of Borrower's initial public offering of common stock in the United States or Canada (the "Offering") or December 31, 2010."

 

2.           Confirmation of Agreement. Except as otherwise amended or modified hereby, all terms and conditions of the Agreement shall remain in full force and effect.

 

3.           Capitalized Terms. Capitalized terms used but not defined in this Amendment shall have the meanings ascribed to them in the Agreement.

 

4.           Counterparts. This Amendment may be executed in one or more counterparts, each of which shall be deemed an original but all of which taken together shall constitute one and the same instrument.

 

Cato Holding Company

 

By: /s/ Cato Holding Company

 

Name:    

Title:  

 

 

VistaGen Therapeutics, Inc 

 

By:  /s/ Shawn K. Singth

Name: Shawn K. Singh

Title: CEO

  

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AMENDMENT NO. 4 TO

LOAN AGREEMENT

THIS AMENDMENT NO. 4 TO LOAN AGREEMENT (the "Amendment") is made and entered into as of December 30 2010, by and between Cato Holding Company, a North Carolina corporation dba Cato BioVentures ("LENDER"), and VistaGen Therapeutics, Inc., a California corporation ("BORROWER").

 

WHEREAS, the parties entered into that certain Loan Agreement dated as of February 3, 2004, as amended by an Agreement dated. August 18, 2006, Amendment #2 dated February 14, 2007, and Amendment #3 dated December 31, 2009, (collectively, the "Agreement"), pursuant to which LENDER extended to BORROWER a $400,000 line of credit at an interest rate of Prime plus 1 % and with a maturity of December 31, 2010; and

WHEREAS, the parties desire to amend the Agreement to amend the maturity date and repayment terms;

 

NOW, THEREFORE, in consideration of the foregoing premises and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties agree as follows:

 

1.           Maturity on the Cover Page of the Agreement. The Maturity is hereby amended by deleting it in its entirety and replacing it with the following:

 

"Maturity: Ninety (90) days following the first to occur of a.) the closing of Borrower's offering of $5,000,000 or more in common stock, or b.) the closing of a reverse merger into a public shell company whose common stock currently trades on the OTC Bulletin Board (the "Offering"), or c.) December 31,2012."

 

2.           Confirmation of Agreement. Except as otherwise amended or modified hereby, all terms and conditions of the Agreement shall remain in full force and effect.

 

3.           Capitalized Terms. Capitalized terms used but not defined in this Amendment shall have the meanings ascribed to them In the Agreement.

 

4.           Counterparts. This Amendment may be executed in one or more counterparts, each of which shall be deemed an original but all of which taken together shall constitute one and the same instrument.

 

Cato Holding Companyex10-31.htm

Exhibit 10.31

UNSECURED PROMISSORY NOTE

 

Issuance Date: April 2011

 

FOR VALUE RECEIVED, the undersigned VISTAGEN THERAPEUTICS, INC. a California corporation ("Maker"), hereby promises to pay to DES JARDINS SECURITIES INC. "Payee") at 25 York Street, 10th Floor, Toronto, Ontario M5J 2V5 Canada, or at such other place or to such other party as Payee may from time to time designate, the principal sum of TWO HUNDRED THIRTY SIX THOUSAND FIFTY-EIGHT DOLLARS ($236,058), plus interest from the date hereof, in immediately available funds on the terns and subject to the conditions set forth below. This Note is issued by Maker to Payee in full satisfaction of all amounts owed by Maker to Payee, whether or not subject to outstanding invoices, pursuant to that certain engagement letter, dated March 12,2010, as amended, between Maker and Payee through the Issuance Date of this Unsecured Promissory Note ("Note"), Including the outstanding invoices listed on Schedule A attached hereto,

 

1 Maturity Date. Unless sooner paid in accordance with the terms hereof, the entire unpaid principal amount and all accrued interest shall become fully due and payable on the earliest of (i) June 30,2014, (ii) the consummation of a Change of Control (as defined below); and (in) the acceleration of the maturity of this Note by the Payee upon the occurrence and during the continuance of an Event of Default (such earliest date, the "Maturity Date"), The entire amount of unpaid principal and accrued but unpaid interest, if any, shall be due and payable on the Maturity Date. For purposes of this Note, "Change of Control"  shall mean (A) the acquisition of the shares of the Maker by another entity by means of any reorganization, merger or consolidation (but excluding any reorganization, merger, reverse merger or consolidation effected exclusively for the purpose of changing the domicile of Maker or effecting a going public transaction involving Maker), (B) any transaction or series of related transactions in which Maker's shareholders of record as constituted on the date hereof immediately after such transaction or series of related transactions (by virtue of securities issued in such transaction or series of related transactions) fail to hold at least 50% of the voting power of the resulting or surviving corporation following such transaction or series of related transactions, or (C) a sale of all or substantially all of the assets of Maker by means of a transaction or series of related transactions.

 

2   Interest. Interest on the outstanding balance of this Note shall be computed from the Issuance Date at the per annum rate of seven and one-half percent (7.5%) (computed on the basis of actual calendar days elapsed and a year of 365 days) or, if less, at the highest rate of intejsst then permitted under applicable law and shall continue to accrue until paid in full; provided, however, upon the occurrence of an Event of Default (as defined in Section 5 below), the outstanding balance of this Note shall accrue interest at the per annum rate of ten percent (10%) (computed on the basis of actual calendar days elapsed and a year of 365 days) or, if less at the highest rate permitted under applicable law, and shall continue to accrue until paid in full

 

 

  

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3 Payment.

 

    (a)     Form of Payment. All payments of interest and principal shall be in lawful money of Canada to Payee by wire transfer. All payments shall be applied first to accrued interest, and thereafter to principal

 

    (b)    Principal and Interest Payments. Beginning on May 31,2011, and on or before the last business day of each calendar month thereafter until December 31,2011, Maker shall pay Payee Four Thousand Dollars per month ($4,000% by wire transfer ("Monthly Payment") until the earlier of; (a) the Ml payment of this Note or (b) June 30,2014; provided, however, that (1) beginning on January 31,2012, the Monthly Payment shall increase to Six Thousand Dollars ($6,000), (2) upon the closing by Maker of a Qualified Financing (as defined below), Maker shall pay Payee a lump sum equal to Thirty-Nine Thousand Six Hundred Dollars ($39,600) within ten (10) business days of the closing of such Qualified Financing; (3) beginning on January 1,2012, Maker shall be required to make certain interim cash payments to Payee under this Note equal to one-half of one percent (0.5%) of the proceeds of all of Maker's pubic or private equity financings during the term of the Note forthwith upon closing of such public or private equity financings; and (4) if, during the term of the Note, (i) Maker receives a loan from the federal government of Canada under the "Prosperity Initiative" (or a comparable low interest long term federal loan program) with net loan proceeds to Maker of at least CDN $5,000,000 in cash, and (ii) the terms of such loan permit the use of loan proceeds by Maker to pay prior indebtedness to Payee then Maker shall make an interim cash payment to Payee equal to one percent (1%) of such loan proceeds within ten (10) days of Maker's receipt thereof fi*om the Canadian federal government. All amounts paid under this Note shall be folly credited against the outstanding Note balance at the time each payment is made. If any amount remains unpaid as of June 30,2014, such remaining amount shall be paid in by the Maturity Date, For purposes of this Section 3, "Qualified Financing" means an equity or equity based financing or series of equity financings between the Issuance Date and June 30,2012, resulting in gross proceeds to Maker totaling at least CDN Five Million Five Hundred Thousand Dollars (CDN $5,500,000).

 

4.       Prepayment Maker reserves the right to prepay the outstanding balance under this Note in full or in part at any time prior to the Maturity Date without notice and without premium or penalty.

 

5-      Conversion into Maker Equity Securities, Until the Maturity Date, Payee shall have the right to convert all or a portion of the outstanding balance of this Note into the equity securities offered by Maker, and on the same terms offered by Maker to new investors, in connection with any private placement of equity securities by Maker,

 

6.      Events of Default: Remedies, Any one of the following occurrences shall constitute an "Event of Default" under this Note

 

    (a) Maker fails to make a payment of any installment of principal or interest on this Note when and as the same becomes due and payable in accordance with the terms hereof, whether upon the Maturity Date or upon any date upon which a Monthly Payment is due or by acceleration or otherwise;

 

    (b) Maker fails to perform any obligation under this Note;

  

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    (c) Maker shall (i) liquidate, wind up or dissolve (or suffer any liquidation, wind-up or dissolution), (ii) suspend its operations other than in the ordinary course of business or (iii) take any action to authorize any of the actions or events set forth above in this Section 6(c);

 

    (d) Any judgments or arbitration awards shall be entered against Maker, or Maker shall enter into any settlement agreements with respect to any litigation or arbitration, in the amount of One Hundred Thousand Dollars ($100,000) or more, and such judgment, award or agreement has not been satisfied, vacated, discharged or stayed or bonded pending appeal within thirty (30) days after the entry thereof; or Maker or any of its Subsidiaries shall be enjoined, restrained or in any way prevented by court order from continuing to conduct all or any material part of its business affairs;

 

    (e) Maker becomes bankrupt, commits any act of bankruptcy, becomes the subject of any proceedings or action of any regulatory agency or any court relating to insolvency9 or makes an assignment for the benefit of its creditors, or enters into any agreement for the composition, extension, or readjustment of all or substantially all of his obligations;

 

    (f) The holder of any indebtedness of Maker accelerates any payment of any amount or amounts of principal or interest on any such indebtedness (the "Indebtedness") (other than with respect to this Note) prior to its stated maturity or payment date, the aggregate principal amount of which Indebtedness is in excess of One Hundred Thousand Dollars ($100,000), whether such Indebtedness now exists or shall hereinafter be created, and such accelerated payment entitles the holder thereof to immediate payment of such Indebtedness which is due and owing and such indebtedness has not been discharged in full or such acceleration 1ms not been stayed, rescinded or annulled within fifteen (15) business days of such acceleration.

 

7. Consequences of Events of Default. Upon the occurrence of any Event of Default hereunder, Payee shall send a written notice of such default to Maker declaring the nature of the Event of Default Maker shall have thirty (30) business days to cure any Event of Default, if such Event of Default may be cured within such time. If the Event of Default is not so cured, then Maker shall immediately (and in no event later than two (2) days thereafter) pay the entire outstanding balance under this Note (including, for greater certainty, principal, interest and out-of-pocket expenses) to Payee  Failure to pay in full when this Note is due or upon the occurrence of an Event of Default shall result in a reinstatement of any of Payee's prior invoices that were forgiven upon execution of this Note and not otherwise paid under this Note. Maker agrees to pay Payee all out-of-pocket costs and expenses incurred by Payee in an effort to collect indebtedness under this Note, including attorneys' fees and to pay interest at the post-default interest rate as provided in Section 2 of this Note.

 

8. Independent Counsel: Terms of Transaction. Maker acknowledps and agrees (i) that the terms of this Note are fair and reasonable to Maker, (ii) that Payee has advised Maker of all terms of the transaction in writing and Maker has been urged to, and given the opportunity to, seek the advice of an independent counsel of Maker's choice, (iii) that Maker has had a reasonable opportunity to seek such advice from such independent counsel and (iv) that Maker consents to the terms of this Note and the actions contemplated hereby. 

 

9. Miscellaneous.

 

    (a) Team of Note. The Maker represents, warrants and covenants that the terms and conditions of this Note are substantially the same as, and in any event, not worse than the terms and conditions of any indebtedness (including the Other Notes (as defined herein) entered into by the Matker with any other service provider or advisor to the Maker,

  

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    (b) Lost. Stolen Destroyed or Mutilated Notes. In case any Note shall be mutilated, lost, stolen or destroyed, Maker shall have received an executed lost note affidavit attesting to the same, Maker shall issue a new Note of like date, tenor and denomination and deliver the same in exchange and substitution for and upon surrender and cancellation of any mutilated Note, or in lieu of any Note lost, stolen or destroyed, upon receipt of evidence satisfactory to Maker of the loss, theft or destruction of such Note.

 

    (c) Amendment and Waiver, Any term of this Note may be amended and the observance of any term of this Note may be waived (either generally or in a particular instance and either retroactively or prospectively), only with the written consent of Maker and Payee. Any amendment or waiver effected in accordance with this Section shall be binding upon Maker and Payee.

 

    This Note shall rank equally with the Other Notes regardless of their actual date of issue. No modification, variation or amendment of any provision of the Other Notes more favourable than those expressed in this Note shall be made unless the Maker notifies the Payee at least 10 Business Days before doing so  the Maker enters into amending documentation in favour of the Payee contemporaneously with the grant of the more favourable terms to such other holders. For purposes hereof, "Other Notes" collectively  the unsecured promissoiy notes issued by the Maker on or about the date hereof to each of Monison & Foerster LLP and McCarthy Tetrault LLP, in the form presented to the Payee prior to the delivery by the Maker of this Note.

 

    (d)    Notices. Any notice, demand, request, waiver or other communication required or permitted to be given hereunder shall be in writing and shall be effective (a) upon hand delivery by telecopy or facsimile at the address or number designated below (if delivered on a business day during normal business hours where such notice is to be received), or the first business day following such delivery (if delivered other than on a business day during normal business hours where such notice is to be received) or (b) on the first business day following the date of mailing by express courier service, fully prepaid, addressed to such address, or upon actual receipt of such mailing, whichever shall first occur,

 

Address of Payee:                                                 Desjardins Securities

25 York Street, 10th Floor Toronto, ON M5 J 2VS Attn; Dennis Logan Tell No.: (416) 607-3039 Fax No.:

 

Address of Maker:                                                 VistaGen Therapeutics, Ine,

384 Oyster Point Blvd., Suite #8 South San Fjsuiciseo, CA 94080 Attention: Chief Executive Officer Tel No.: (650) 244-9997 ext 224 Fax No.: (650) 244-9979

 

    (e) Severability, If one or more provisions of this Note are held to be unenforceable under applicable law, such provision shall be excluded from this Note and the balance of the Note shall be interpreted as if such provision were so excluded and shall be enforceable in accordance with its terms.

  

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    (f) Remedies Cumulative: Failure or Indulgence Not a Waiver. The remedies provided in this Note shall be cumulative and in addition to all other remedies available under this Note. No failure or delay on the part of Payee in the exercise of any power, right or privilege hereunder shall operate as a waiver thereof  nor shall any single or partial exercise of any such power, right or privilege preclude other or further exercise thereof or of any other rights power or privilege.

 

    (g) Payments. Whenever any payment of cash is to be made by Maker to any Person pursuant to this Note such payment shall be made in lawful money of the United States of America via wire transfer of immediately available funds to the account designated by Payee.

 

    (h) Waiver. Maker waives diligence, presentment protest and demand and also notice of protest, demand, dishonor and nonpayment of this Note. No extension of time for the payment of this Note shall affect the original liability under this Note of Maker, The pleading of any statute of limitations as a defense to any demand against Maker is expressly waived by Maker to the full extent permitted by law.

 

    (i)          Setoff. The obligation to pay Payee shall be absolute and unconditionaland the rights of Payee shall not be subject to any defense, setoff, counterclaim or recoupment orby reason of any indebtedness or liability at any time owing by Payee to Maker.

 

    (j)     Governing Law. This Note shall be governed by and construed in accordance with the laws of the Province of Ontario and the federal laws of Canada applicable therein. Without prejudice to the ability of the Payee to enforce this Note in any other proper jurisdiction, the Maker hereby irrevocably submits and attorns to the non-exclusive jurisdiction of the courts of the City ofToronto in the Province of Ontario in connection with this Note,

 

    (k)     Successors and Assigns. This Note shall inure to the benefit of Payee and its successors and assigns, The obligations of Maker hereunder shall not be assignable.

 

    (1)     Excessive Interest. Notwithstanding any other provision herein to the contrary, this Note is hereby expressly limited so that the interest rate charged hereunder shall at no time exceed the maximum rate permitted by applicable law. If, for any circumstance whatsoever, the interest rate charged exceeds the maximum rate peiraitted by applicable law, the interest rate shall be reduced to the maximum rate peimitted, and if Payee shall have received anamount that would cause the interest rate charged to be in excess of the maximum rate permitted, such amount that would be excessive interest shall be applied to the reduction of the principal amount owing hereunder (without charge for prepayment) and not to the payment of interest, or if such excessive interest exceeds the unpaid balance of principal, such excess shall be refunded to Maker.

 

    (m)    Currency, Any inference in this Note to $ or to dollars shall refer to the lawful currency of Canada, unless otherwise specified..

{Signature page to follow}

  

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IN WITNESS WHEREOF, the undersigned has executed and delivered this Note as of the date first above written.

 

'MAKER'

 

VISTAGEN THERAPEUTICS, INC.

 a California corporation

 

"PAYEE*

 

DESJARDINS SECURITIES INC

 

 

Denrffs Logan* Managing Directs Investment Banking

 

Acceptance:

 

Payee hereby agrees that, upon execution of this Note by Payee all amounts owed by

Maker to Payee, whether or not subject to outstanding invoices, pursuant to that certain

engagement letter, dated Match 12, 2010, as amended, between Maker and Payee through the

Issuance Date of this Note, including the outstanding invoices listed on Schedule A attached

hereto, shall be satisfied in full

 

Printed Name: Dennis Logan

Title: Managing Director, Investment Banking, Desjardins Securities Inc.

 

SCHEDULE A SCHEDULE OF INVOICES

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