Document:

Form of Convertible Promissory Note

 Exhibit 4.1 
 THIS CONVERTIBLE PROMISSORY NOTE AND THE UNDERLYING SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”). NO SALE OR DISPOSITION THEREOF MAY BE EFFECTED EXCEPT IN COMPLIANCE WITH RULE 144
UNDER SUCH ACT OR AN EFFECTIVE REGISTRATION STATEMENT RELATED THERETO OR AN OPINION OF COUNSEL FOR THE HOLDER SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED UNDER THE ACT OR RECEIPT OF A NO-ACTION LETTER FROM THE U.S. SECURITIES
AND EXCHANGE COMMISSION. 
 AKESIS PHARMACEUTICALS, INC. 
 CONVERTIBLE PROMISSORY NOTE 
  

			
	$[—]	 	[—], 200[—]
		 	San Diego, California

 FOR VALUE RECEIVED,
AKESIS PHARMACEUTICALS, INC., a Nevada corporation (the “Company”), hereby unconditionally promises to pay to the order of Avalon Ventures VII, L.P. (the
“Lender”), in lawful money of the United States and in immediately available funds, the principal amount of $[—] (the “Principal Amount”), together
with accrued and unpaid interest thereon calculated as set forth in Section 4 hereof (collectively, the “Loan Balance”), which shall be due and payable on the dates and in the manner set forth in this Convertible
Promissory Note (this “Note”). 
 This Note has been issued pursuant to the terms of that certain Note and Warrant
Purchase Agreement, dated as of September 29, 2008 (the “Agreement”), by and between the Company and Lender. 
 1. DEFINITIONS. Capitalized terms used and not otherwise defined herein are intended to have the meanings given to them in the Agreement. In addition, the following capitalized terms used herein shall have the
following respective meanings: 
 1.1 “Qualifying Financing” shall mean the Company’s
first preferred stock financing for capital-raising purposes occurring prior to the Maturity Date (as defined below) that involves the receipt by the Company of at least $2,000,000.00 (including any amounts received in connection with the conversion
of any and all Notes issued pursuant to the Agreement). 
 1.2 “Qualifying Financing Shares”
shall mean the shares of the Company’s preferred stock sold and issued to investors in connection with a Qualifying Financing. 
 1.3 “Senior Indebtedness” shall mean the principal of (and premium, if any) and unpaid interest on, or other payment obligation with respect to, all indebtedness of the Company pursuant to that certain Loan
and Security Agreement, dated as of December 15, 2006, by and between the Company and Square 1 Bank, whether or not secured and whether incurred previously or incurred after the date hereof. 

 2. MATURITY DATE. Unless converted in full pursuant to
Section 5 prior thereto, the Loan Balance shall be due and payable on February 1, 2009 (the “Maturity Date”). 
 3. PAYMENTS. Payments under this Note shall be made in lawful money of the United States by wire transfer or other form of immediately available funds acceptable to Lender at the address of Lender set forth on the
signature page hereto or at such other place as Lender shall have designated in writing. The Company may without penalty repay all or any portion of the Loan Balance at any time prior to the Maturity Date. 
 4. INTEREST RATE. The Company shall pay interest on the Principal Amount from the date hereof until payment in full,
which interest shall be payable at the rate of eight percent (8%) per annum or the maximum rate permissible by law (which under the laws of the State of California shall be deemed to be the laws relating to permissible rates of interest on
commercial loans), whichever is less. The aggregate amount of interest due under this Note pursuant to this Section 4 shall be calculated with respect to any given period by multiplying the then-outstanding Principal Amount by the product of:
(i) the number of days in such period; multiplied by (ii) the applicable daily interest rate, calculated on the basis of a 365-day year. 
 5. AUTOMATIC CONVERSION. In the event of the closing of a Qualifying Financing prior to the Maturity Date, the entire amount of the then-outstanding Loan Balance shall automatically convert into that
number of Qualifying Financing Shares as is determined by dividing the then-outstanding Loan Balance by the price per Qualifying Financing Share paid by investors in connection with the Qualifying Financing. In the event of the conversion of this
Note pursuant to this Section 5: (i) Lender agrees to surrender this Note for conversion and cancellation at the closing of the Qualifying Financing and to execute all such documents in connection with the conversion of this Note as may be
reasonably requested by the Company; and (ii) the Company shall pay to Lender, upon Lender’s request, cash in an amount equal to that portion of the then-outstanding Loan Balance, if any, that would otherwise convert into a fractional
Qualifying Financing Share pursuant to this Section 5. 
 6. EVENTS OF DEFAULT.
Notwithstanding anything to the contrary set forth herein, the entire then-outstanding Loan Balance shall be immediately due and payable (and collectible by Lender pursuant to any applicable law) if the Company: (i) fails to pay timely any
of the Loan Balance due under this Note on the date the same becomes due and payable; (ii) makes any assignment for the benefit of its creditors under applicable state law; (iii) is the subject of an involuntary petition for bankruptcy
under any federal or state insolvency laws and such petition is not dismissed within one hundred fifty (150) days after the filing thereof; or (iv) voluntarily files a petition for bankruptcy under any federal or state insolvency law (each
of the events or circumstances described in the foregoing clauses (i) through (iv) being referred to herein as a “Default”). Upon the occurrence of any such Default, the Lender may, at its option:
(i) accelerate repayment of the then-outstanding Loan Balance due under this Note, in which case the then-outstanding Loan Balance shall be immediately due and payable; and/or (ii) pursue any other legal or equitable remedies available to
Lender. 
 7. NATURE OF OBLIGATIONS. This Note represents an unsecured obligation of the
Company. The indebtedness evidenced by this Note is hereby expressly subordinated, to the extent and in the manner hereinafter set forth, in right of payment to the prior payment in full of all of the Senior Indebtedness. Any and all claims arising
under this Note are and shall be at all times subject and subordinate to the Senior Indebtedness. If requested by the Company, Lender shall execute and deliver any necessary documents to assure any lender of Senior Indebtedness of the subordination
agreed to by Lender herein. 
  

 2. 

 8. WAIVER. The Company waives presentment and demand for payment, notice of
dishonor, protest and notice of protest of this Note. 
 9. GOVERNING LAW. This Note shall be governed
in all respects by the internal laws of the state of California as applied to agreements entered into among California residents to be performed entirely within California, without regard to conflict of laws rules. 
 10. LOST NOTE. In the event of any loss of this Note by Lender, the Company shall execute a replacement promissory
note in favor of Lender on the same terms and conditions of this Note upon the receipt by the Company of an affidavit of lost note, in form and substance reasonably satisfactory to the Company, duly executed and delivered by Lender. 
 11. ASSIGNMENT. The rights and obligations of the Company and Lender will be binding upon and inure to the benefit of the
successors, assigns, heirs, administrators and transferees of the parties and any assignment hereunder shall remain subject to the restrictions set forth in the Agreement. 
 12. AMENDMENTS. This Note may be amended or modified, and any term or provision hereof (including, without limitation, provisions
relating to the threshold for determining a Qualifying Financing) may be waived or departure therefrom consented or approved (either generally or in a particular instance and either retroactively or prospectively), only upon the written consent of
the Lender and the Company. 
 13. COUNTERPARTS. This Note may be executed in two or more counterparts, each of which
shall be deemed an original, but all of which together shall constitute one and the same instrument. 
 [REMAINDER OF PAGE INTENTIONALLY LEFT
BLANK] 
  

 3. 

 IN WITNESS WHEREOF, the Company has
caused this CONVERTIBLE PROMISSORY NOTE to be issued on the date first written above. 
  

			
	AKESIS PHARMACEUTICALS, INC.
		
	 	 	 
	 Jay Lichter, Ph.D.
 Chairman and CEO

		
	Address:	 	 888 Prospect Street, Suite 320
 La Jolla, CA 92037

		
	Telephone:	 	(858) 454-4311
	Facsimile:	 	(858) 348-2183
	E-mail:	 	jlichter@avalon-ventures.com

  

			
	AVALON VENTURES VII, L.P.
	
	 By: Avalon Ventures VII GP, LLC
 Its: General
Partner

		
	 	 	 
	 Douglas Downs
 Chief Financial Officer

		
	Address:	 	 888 Prospect Street, Suite 320
 La Jolla, CA 92037

		
	Telephone:	 	(858) 454-4311
	Facsimile:	 	(858) 348-2183
	E-mail:	 	doug@avalon-ventures.com

 [SIGNATURE PAGE TO AKESIS PHARMACEUTICALS, INC. CONVERTIBLE PROMISSORY NOTE]Form of Warrant to Purchase Capital Stock

 Exhibit 4.2 
 THIS WARRANT AND THE UNDERLYING SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”). NO SALE OR DISPOSITION THEREOF MAY BE EFFECTED EXCEPT IN COMPLIANCE WITH RULE 144 UNDER SUCH ACT OR
AN EFFECTIVE REGISTRATION STATEMENT RELATED THERETO OR AN OPINION OF COUNSEL FOR THE HOLDER SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED UNDER THE ACT OR RECEIPT OF A NO-ACTION LETTER FROM THE U.S. SECURITIES AND EXCHANGE
COMMISSION. 
 AKESIS PHARMACEUTICALS, INC. 
 WARRANT TO PURCHASE CAPITAL STOCK 
  

					
	No. [—]	 		 	[—], 200[—]

 Void After [—], 2013 
 THIS CERTIFIES THAT, for value received, Avalon Ventures VII, L.P. (the
“Holder”) is entitled to subscribe for and purchase during the Exercise Period (as defined below) for the Applicable Price Per Share (as defined below) from AKESIS PHARMACEUTICALS,
INC., a Nevada corporation (the “Company”), up to that number of fully paid and nonassessable shares of Warrant Stock (as defined below) as is determined in accordance with Section 2.1 below.

 This Warrant to Purchase Capital Stock (this “Warrant”) has been issued pursuant to that certain Note and Warrant
Purchase Agreement, dated as of September 29, 2008 (the “Agreement”), by and between the Company and Holder. Pursuant to the Agreement, the Company also issued to Holder a Convertible Promissory Note, dated as of even
date herewith (the “Note”), for the aggregate principal amount of $[•] (the “Original Holder Principal Amount”). 
 1. DEFINITIONS. Capitalized terms used and not otherwise defined herein are intended to have the meanings given to them in the
Note. In addition, the following capitalized terms used herein shall have the following respective meanings: 
 1.1
“Applicable Per Share Price” shall mean the price per Qualifying Financing Share paid by investors in a Qualifying Financing; provided, however, that the Applicable Price Per Share shall be subject to
adjustment from time to time in accordance with Section 4. 
 1.2 “Coverage Amount” shall
mean and be equal to fifteen percent (15%) of the Original Holder Principal Amount. 
 1.3 “Exercise
Period” shall mean the period commencing on the date of the closing of a Qualifying Financing (if any) and ending on [•], 2013, unless earlier terminated as provided below. 

 1.4 “Fair Market Value” shall mean, as applicable:
(i) in the case of any Warrant Stock traded on a national securities exchange, the value equal to the average of the closing prices of such Warrant Stock on such exchange over the ten (10) trading day period ending one (1) trading day
prior to the date this Warrant is being exercised; (ii) in the case of Warrant Stock actively traded over-the-counter, the value equal to the average of the closing bid or sale prices (whichever is applicable) over the ten (10) trading day
period ending one (1) trading day prior to the date this Warrant is being exercised; and (iii) in the event that there is no active public market for the Warrant Stock, the value equal to the fair market value thereof, as determined in
good faith by the Board of Directors of the Company on the date this Warrant is being exercised. 
 1.5
“Warrant Price” shall mean, in connection with any exercise of this Warrant, the aggregate exercise price for the shares of Warrant Stock being acquired in connection with such exercise, as determined by multiplying the
number of shares of Warrant Stock being acquired in connection with such exercise by the Applicable Price Per Share. 
 1.6
“Warrant Stock” shall mean Qualifying Financing Shares. 
 2. EXERCISE OF
WARRANT.  
 2.1 General. At any time during the Exercise Period, this Warrant may be exercised, in
whole or in part and in accordance with the provisions set forth in this Section 2, for that number of shares of Warrant Stock as is equal to: (i) the Coverage Amount; divided by (ii) the Applicable Per Share Price. 
 2.2 Mechanics of Exercise. In order to effect the exercise of this Warrant, Holder shall deliver to the Company: (i) this
Warrant; (ii) an executed Notice of Exercise in the form attached hereto as Exhibit A; and (ii) except as set forth in Section 2.3, payment of the Warrant Price in cash by wire transfer of immediately available funds or such
other form of cash payment as may be accepted by the Company in its discretion. Upon receipt of all of the foregoing, the Company shall promptly: (x) issue to Holder a certificate representing the shares of Warrant Stock being acquired
hereunder; and (y) if applicable, issue to Holder a new warrant, substantially identical in form and substance to this Warrant, representing the right to purchase the remaining shares of Warrant Stock underlying this Warrant. 
 2.3 Net Exercise. Notwithstanding any provisions herein to the contrary, if the Fair Market Value of one share of Warrant Stock is
greater than the Applicable Per Share Price on the date on which this Warrant is exercised, in lieu of exercising this Warrant by payment of cash, Holder may elect to receive that number of shares of Warrant Stock as determined in accordance with
the following formula: 
 X = Y(A-B) 
             A 
 Where:       X =   the number of shares of Warrant Stock to be issued to Holder; 
  

	 	Y =	the number of shares of Warrant Stock purchasable under this Warrant or, if only a portion of the Warrant is being exercised, the portion of the Warrant being exercised;

  

 2. 

	 	A =	the Fair Market Value of one (1) share of Warrant Stock; and 

  

	 	B =	the Applicable Price Per Share as of the date of such exercise. 

 3. COVENANTS OF THE COMPANY. 
 3.1 Covenants
as to Exercise Shares. The Company covenants and agrees that all shares of Warrant Stock that may be issued upon the exercise of the rights represented by this Warrant will, upon issuance, be validly issued and outstanding, fully paid and
nonassessable, and free from all taxes, liens and charges with respect to the issuance thereof, other than taxes, liens or charges created by or imposed upon Holder through no action of the Company. 
 3.2 Notices of Record Date. In the event of any taking by the Company of a record of the holders of any class of securities for the
purpose of determining the holders thereof who are entitled to receive any dividend or other distribution, the Company shall deliver to Holder, at least ten (10) days prior to the date specified herein, a notice specifying the date on which any
such record is to be taken for the purpose of such dividend or distribution. 
 4. ADJUSTMENT OF
THE APPLICABLE PRICE PER SHARE. In the event of any changes, from time to time, in the outstanding capital stock of the Company by reason of stock dividends,
subdivisions, split-ups or combinations of shares, the number and class of shares available under this Warrant and the Applicable Price Per Share shall be correspondingly adjusted so as to give Holder, upon the exercise of this Warrant for the same
aggregate Warrant Price, the total number, class and kind of shares of Warrant Stock as Holder would have owned had the Warrant been exercised prior to any such event and had Holder continued to hold such shares of Warrant Stock until after the
event requiring adjustment. 
 5. FRACTIONAL SHARES. No fractional shares shall be issued upon the
exercise of this Warrant as a consequence of any adjustment pursuant hereto. All shares of Warrant Stock (including fractions) issuable upon exercise of this Warrant may be aggregated for purposes of determining whether the exercise would result in
the issuance of any fractional share. If, after aggregation, the exercise would result in the issuance of a fractional share, the Company shall, in lieu of issuance of any fractional share, pay Holder a sum in cash equal to the Fair Market Value of
such fractional share. 
 6. EARLY TERMINATION. If, at any time during the Exercise Period, there is
effected any capital reorganization or reclassification of the capital stock of the Company (other than a change in par value or as a result of a stock dividend or subdivision, split-up or combination of shares), any consolidation or merger of the
Company with or into another corporation (other than a merger solely to effect a reincorporation of the Company into another state), or any sale or other disposition of all or substantially all the properties and assets of the Company in its
entirety to any other person, the Company shall provide to Holder at least twenty (20) days advance written notice of such event, and this Warrant shall terminate unless exercised in accordance with the terms hereof prior to the effective date
of such event. 
  

 3. 

 7. NO STOCKHOLDER RIGHTS. This Warrant in and of
itself shall not entitle Holder to any voting rights or other rights as a stockholder of the Company. 
 8. TRANSFER
OF WARRANT. Neither this Warrant nor any rights hereunder shall be transferable, except in accordance with Section 4 of the Agreement. Any such permitted transfer must be made by Holder in person or by duly
authorized attorney, upon delivery of this Warrant and the form of assignment attached hereto as Exhibit B to any such permitted transferee. As a condition precedent to such transfer, the transferee shall sign an investment letter in form and
substance satisfactory to the Company. Subject to the foregoing, the provisions of this Warrant shall inure to the benefit of and be binding upon any successor to the Company and shall extend to any holder hereof. 
 9. LOST, STOLEN, MUTILATED OR DESTROYED WARRANT. If this
Warrant is lost, stolen, mutilated or destroyed, the Company may, on such terms as to indemnity or otherwise as it may reasonably impose (which shall, in the case of a mutilated Warrant, include the surrender thereof), issue a new Warrant of like
denomination and tenor as the Warrant so lost, stolen, mutilated or destroyed. 
 10. GOVERNING LAW.
This Warrant shall be governed in all respects by the internal laws of the state of California as applied to agreements entered into among California residents to be performed entirely within California, without regard to conflict of laws rules.

 11. AMENDMENT; WAIVER. This Warrant may be amended or modified, and any term or provision hereof or
thereof may be waived or departure therefrom consented or approved (either generally or in a particular instance and either retroactively or prospectively), only upon the written consent of the Company and the Holder. Any amendment or modification
of this Warrant, or waiver of any term or provision of this Warrant, shall be binding upon each holder hereof. 
 12.
NOTICES. All notices and other communications hereunder shall be made and delivered as prescribed in the Agreement. 
 13. COUNTERPARTS. This Warrant may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. 
 [REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK] 
  

 4. 

 IN WITNESS WHEREOF, the parties have
executed this WARRANT TO PURCHASE CAPITAL STOCK as of the date first written above. 
  

			
	AKESIS PHARMACEUTICALS, INC.
		
	 	 	 
	 Jay Lichter, Ph.D.
 Chairman and Chief
Executive Officer

		
	Address:	 	 888 Prospect Street, Suite 320
 La Jolla, CA 92037

		
	Telephone:	 	(858) 454-4311
	Facsimile:	 	(858) 348-2183
	E-mail:	 	jlichter@avalon-ventures.com

  

			
	AVALON VENTURES VII, L.P.
	
	 By: Avalon Ventures VII GP, LLC
 Its: General
Partner

		
	 	 	 
	 Douglas Downs
 Chief Financial Officer

		
	Address:	 	 888 Prospect Street, Suite 320
 La Jolla, CA 92037

		
	Telephone:	 	(858) 454-4311
	Facsimile:	 	(858) 348-2183
	E-mail:	 	doug@avalon-ventures.com

 [SIGNATURE PAGE TO AKESIS PHARMACEUTICALS, INC. WARRANT TO PURCHASE CAPITAL STOCK]

 EXHIBIT A 
 NOTICE OF EXERCISE 
  

	TO:	AKESIS PHARMACEUTICALS, INC. 

 (1)  ̈ The undersigned hereby elects to purchase
                         shares of the
                     Preferred Stock of AKESIS PHARMACEUTICALS, INC. (the
“Company”) pursuant to the terms of the attached Warrant, and tenders herewith payment of the exercise price in full, together with all applicable transfer taxes, if any. 
        ̈ The undersigned hereby elects to purchase
                         shares of the
                     Preferred Stock of the Company pursuant to the terms of the net exercise provisions set forth in Section 2.3 of the
attached Warrant, and shall tender payment of all applicable transfer taxes, if any. 
 (2) Please issue a certificate or certificates
representing said shares of                          Preferred Stock of the Company (the “Shares”)
in the name of the undersigned or in such other name as is specified below: 
  
  
 (Name) 
  
  
  
  
 (Address) 
 (3) The undersigned represents that (i) the aforesaid Shares are being
acquired for the account of the undersigned for investment and not with a view to, or for resale in connection with, the distribution thereof and that the undersigned has no present intention of distributing or reselling such shares; (ii) the
undersigned is aware of the Company’s business affairs and financial condition and has acquired sufficient information about the Company to reach an informed and knowledgeable decision regarding its investment in the Company; (iii) the
undersigned is experienced in making investments of this type and has such knowledge and background in financial and business matters that the undersigned is capable of evaluating the merits and risks of this investment and protecting the
undersigned’s own interests; (iv) the undersigned understands that the Shares issuable upon exercise of this Warrant have not been registered under the Securities Act of 1933, as amended (the “Securities Act”), by
reason of a specific exemption from the registration provisions of the Act, which exemption depends upon, among other things, the bona fide nature of the investment intent as expressed herein, and, because such securities have not been registered
under the Securities Act, they must be held indefinitely unless subsequently registered under the Securities Act or an exemption from such registration is available; (v) the undersigned is aware that the aforesaid Shares may not be sold
pursuant to Rule 144 adopted under the Securities Act unless certain conditions are met and until the undersigned has held the shares for the number of years prescribed by Rule 144, that among the conditions for use of Rule 144 is the availability
of current information to the public about the Company and the Company has not made such information available and has no present plans to do so; and (vi) the undersigned agrees not to make any disposition of all or any part of the aforesaid
Shares unless and until there is then in effect a registration statement under the Securities Act covering such proposed disposition and such disposition is made in accordance with said registration statement, or the undersigned has provided the
Company with an opinion of counsel satisfactory to the Company, stating that such registration is not required. 
  

					
	  	 		 	  
	(Date)	 		 	(Signature)
			
	 	 		 	  
		 		 	(Print name)

 EXHIBIT B 
 FORM OF ASSIGNMENT 
 FOR VALUE
RECEIVED, the Warrant to which this Form of Assignment is attached as Exhibit B, and all rights evidenced thereby, are hereby assigned to: 
 Name: _______________________________________________________________________________________________ 
 (Please Print) 
 Address: _____________________________________________________________________________________________ 
 (Please Print) 
 Dated:
                        , 200     
 Holder’s Signature: ___________________________________________ 
 Holder’s Address: ____________________________________________ 
 By signing above, the transferee agrees to be bound by the terms,
restrictions and conditions set forth in (1) the Warrant and (2) the Agreement (as defined in the Warrant). 
 NOTE: The signature to
this Form of Assignment must correspond with the name as it appears on the face of the Warrant, without alteration or enlargement or any change whatever. Officers of corporations and those acting in a fiduciary or other representative capacity
should file proper evidence of authority to assign the foregoing Warrant.

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00148-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00148-of-00352.parquet"}]]