Document:

fs1ex4xiii_iaso.htm

    Exhibit
4.13

     

    Warrant
No.

     

    PACIFIC
BEACH BIOSCIENCES, INC.

    COMMON
STOCK WARRANT

     

    THIS
WARRANT HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE “ACT”), OR
UNDER THE SECURITIES LAWS OF ANY STATE.  THIS WARRANT IS SUBJECT TO
RESTRICTIONS ON TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED OR RESOLD
EXCEPT AS PERMITTED UNDER THE ACT AND THE APPLICABLE STATE SECURITIES LAWS,
PURSUANT TO REGISTRATION OR EXEMPTION THEREFROM.  THE ISSUER OF THIS
WARRANT MAY REQUIRE AN OPINION OF COUNSEL IN FORM AND SUBSTANCE SATISFACTORY TO
THE ISSUER TO THE EFFECT THAT ANY PROPOSED TRANSFER OR RESALE IS IN COMPLIANCE
WITH THE ACT AND ANY APPLICABLE STATE SECURITIES LAWS.

     

    This
certifies that PARAMOUNT CREDIT
PARTNERS, LLC (the “Holder”), its
designees or permitted assigns, subject to the terms and conditions set forth
herein, at any time after the Commencement Date and prior to the Expiration Date
(as such terms are defined below), is entitled to purchase from PACIFIC BEACH BIOSCIENCES,
INC., a Delaware corporation (the “Company”), that
number of fully-paid and non-assessable shares (subject to adjustment as
provided herein) (the “Warrant Shares”) of
the Company’s Common Stock, $0.001 par value per share (the “Common Stock”), equal
to (i) forty percent (40%) of the principal amount of that certain Senior 10%
Promissory Note dated the date hereof in the principal amount of $125,000,
issued by the Company to the Holder (the “Note”) pursuant to
that certain Note and Warrant Purchase Agreement dated the date hereof between
the Company and the Holder (the “Purchase Agreement”),
divided by (ii) the lowest price at which equity securities of the Company are
sold in the first Qualified Financing (as defined in the Note) following the
date hereof (the “Lowest Price Paid”),
upon surrender to the Company at its principal office (or at such other location
as the Company may advise the Holder in writing) of this Warrant properly
endorsed with the Form of Subscription attached hereto duly completed and signed
and upon payment of the aggregate Exercise Price (as defined below) for the
number of Warrant Shares for which this Warrant is being exercised determined in
accordance with the provisions hereof.  The exercise price (the “Exercise Price”) per
Warrant Share issuable pursuant to this Common Stock Warrant shall be equal to
110% of the Lowest Price Paid, payable in accordance with Section 1(b)
hereof.

     

    
      
         

      

      
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    Notwithstanding
the foregoing, in the event that the Company consummates a merger, share
exchange, or other transaction (or series of related transactions), other than
in connection with a Qualified Financing, in which (i) the Company merges into
or otherwise becomes a wholly-owned subsidiary of a company subject to the
public company reporting requirements of the Securities Exchange Act of 1934, as
amended, and (ii) the aggregate consideration accorded to the Company in such
transaction(s) (the “Reverse Merger
Consideration”) is greater than or equal to $10,000,000 (a “Reverse Merger”),
then this Warrant shall be exercisable immediately prior to the Reverse Merger
(and subject to Section 3 hereof following the Reverse Merger) for that number
of Warrant Shares, with an Exercise Price, in each case determined in accordance
with, and on the same terms and conditions, as provided for in the event of a
Qualified Financing above, provided that for purposes thereof, the Lowest Price
Paid shall be deemed equal to the quotient obtained by dividing the (i) Reverse
Merger Consideration less the amount of unpaid principal and accrued interest
under the Note by (ii) the number of shares of Common Stock outstanding
immediately prior to such Reverse Merger, on a fully diluted basis, but without
giving effect to the conversion of the Notes or any other senior promissory
notes of the Company or any placement warrants that have been issued by the
Company issued to the Placement Agent (as defined in the Purchase
Agreement).  If any Reverse Merger Consideration is other than cash,
its value will be deemed to be its fair market value as determined, in good
faith, by the Board of Directors of the Company.

     

    Notwithstanding
the foregoing, if neither a Qualified Financing nor a Reverse Merger occur on or
before June 24, 2011, then this Warrant will be exercisable for that number of
Warrant Shares equal to forty percent (40%) of the principal amount of the Note
purchased by the original holder divided by $1.00, at a per share exercise price
of $1.00.

     

    This
Warrant is issued subject to the following terms and conditions:

     

    1. Exercise, Issuance of
Certificates.  Subject to Sections 3(d) and 4 hereof, the
Holder may exercise this Warrant, at any time or from time to time, during the
period (a) commencing on the consummation of a Qualified Financing or a Reverse
Merger (the “Commencement Date”),
and (b) expiring at 5:00 p.m. (Eastern Time) on June 24, 2014 (the “Expiration
Date”).  The Holder may exercise this Warrant on or prior to
the Expiration Date for all or any part of the Warrant Shares (but not for a
fraction of a share) that may be purchased hereunder, as that number may be
adjusted pursuant to Section 3 of this Warrant.  The Company agrees
that the Warrant Shares purchased under this Warrant shall be and are deemed to
be issued to the Holder hereof as the record owner of such Warrant Shares as of
the close of business on the date on which this Warrant shall have been
surrendered, properly endorsed, the completed and executed Form of Subscription
delivered, and payment made for such Warrant Shares (such date, a “Date of
Exercise”).  Certificates for the Warrant Shares so purchased,
together with any other securities or property to which the Holder hereof is
entitled upon such exercise, shall be delivered to the Holder hereof by the
Company at the Company’s expense as soon as practicable after the rights
represented by this Warrant have been so exercised, but in any event not later
than ten (10) business days following the Date of Exercise.  In case
of a purchase of less than all the Warrant Shares which may be purchased under
this Warrant, the Company shall cancel this Warrant and execute and deliver to
the Holder hereof within a reasonable time a new Warrant or Warrants of like
tenor for the balance of the Warrant Shares purchasable under the Warrant
surrendered upon such purchase.  Each stock certificate so delivered
shall be registered in the name of such Holder and issued with a legend in
substantially the form of the legend placed on the front of this
Warrant.

     

    (a) The
Company’s obligations to issue and deliver Warrant Shares in accordance with the
terms hereof are absolute and unconditional, irrespective of any action or
inaction by the Holder to enforce the same.  Nothing herein shall
limit a Holder’s right to pursue any other remedies available to it hereunder,
at law or in equity including, without limitation, a decree of specific
performance and/or injunctive relief with respect to the Company’s failure to
timely deliver certificates representing shares of Common Stock upon exercise of
the Warrant  as required pursuant to the terms hereof.

     

    (b) Payment of Exercise
Price. The Holder shall pay the Exercise Price by delivering immediately
available funds to the Company.

     

    
      
         

      

      
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    2. Shares to be Fully Paid;
Reservation of Shares.  The Company covenants and agrees that
all Warrant Shares, will, upon issuance and payment of the applicable Exercise
Price, be duly authorized, validly issued, fully paid and nonassessable, and
free of all preemptive rights, liens and encumbrances, except for restrictions
on transfer provided for herein.  The Company shall at all times
reserve and keep available out of its authorized and unissued Common Stock,
solely for the purpose of providing for the exercise of the rights to purchase
all Warrant Shares granted pursuant to this Warrant, such number of shares of
Common Stock as shall, from time to time, be sufficient therefor.

     

    3. Adjustment of Exercise Price
and Number of Shares.  The Exercise Price and the total number
of Warrant Shares shall be subject to adjustment from time to time upon the
occurrence of certain events described in this Section 3.

     

    (a) Subdivision or Combination
of Stock.  In the event the outstanding shares of the Company’s
Common Stock shall be increased by a stock dividend payable in Common Stock,
stock split, subdivision, or other similar transaction occurring after the date
hereof into a greater number of shares of Common Stock, the Exercise Price in
effect immediately prior to such subdivision shall be proportionately reduced
and the number of Warrant Shares issuable hereunder proportionately
increased.  Conversely, in the event the outstanding shares of the
Company’s Common Stock shall be decreased by reverse stock split, combination,
consolidation, or other similar transaction occurring after the date hereof into
a lesser number of shares of Common Stock, the Exercise Price in effect
immediately prior to such combination shall be proportionately increased and the
number of Warrant Shares issuable hereunder proportionately
decreased.

     

    (b) Reclassification.  If
any reclassification of the capital stock of the Company or any reorganization,
consolidation, merger (other than a Reverse Merger), or any sale, lease,
license, exchange or other transfer (in one transaction or a series of related
transactions) of all or substantially all, of the business and/or assets of the
Company (the “Reclassification
Events”) shall be effected in such a way that holders of Common Stock
shall be entitled to receive stock, securities, or other assets or property,
then, as a condition of such Reclassification Event, lawful and adequate
provisions shall be made whereby the Holder hereof shall thereafter have the
right to purchase and receive (in lieu of the shares of Common Stock of the
Company immediately theretofore purchasable and receivable upon the exercise of
the rights represented hereby) such shares of stock, securities, or other assets
or property as may be issued or payable with respect to or in exchange for a
number of outstanding shares of such Common Stock equal to the number of shares
of such stock immediately theretofore purchasable and receivable upon the
exercise of the rights represented hereby.  In any Reclassification
Event, appropriate provision shall be made with respect to the rights and
interests of the Holder of this Warrant to the end that the provisions hereof
(including, without limitation, provisions for adjustments of the Exercise Price
and of the number of Warrant Shares), shall thereafter be applicable, as nearly
as may be, in relation to any shares of stock, securities, or other assets or
property thereafter deliverable upon the exercise hereof.

     

    (c) Notice of
Adjustment.  Upon any adjustment of the Exercise Price, any
increase or decrease in the number of Warrant Shares or any change in the type
of stock, securities or other assets or property issuable upon exercise hereof,
the Company shall give written notice thereof, by first class mail postage
prepaid, addressed to the registered Holder of this Warrant at the address of
such Holder as shown on the books of the Company.  The notice shall be
prepared and signed by the Company’s Chief Financial Officer and shall state the
Exercise Price resulting from such adjustment, the increase or decrease, if any,
in the number of shares purchasable at such price upon the exercise of this
Warrant and, if applicable, the type of stock, securities or other assets or
property then issuable upon exercise hereof, setting forth in reasonable detail
the method of calculation and the facts upon which such calculation is
based.

    

    
      
         

      

      
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    (d) Termination Upon a Sale of
the Company.  Notwithstanding any other provision of this
Section 3, upon the consummation of a Sale of the Company (as defined in the
Note) prior to, but not in connection with, a Qualified Financing or Reverse
Merger, this Warrant shall terminate immediately upon such consummation without
the opportunity for exercise.  “Sale of the Company” shall mean a
transaction (or series of related transactions) with one or more non-affiliates,
pursuant to which such party or parties acquire (x) capital stock of the Company
or the surviving entity possessing the voting power to elect a majority of the
Board of Directors of the Company or the surviving entity (whether by merger,
consolidation, sale or transfer of the Company’s capital stock or otherwise); or
(y) all or substantially all of the Company’s assets determined on a
consolidated basis.

    

    4. Redemption of
Warrants.

     

    (a) Redemption.  This
Warrant may be redeemed at the option of the Company, at any time after the date
that the Common Stock is traded on the Over-the-Counter Bulletin Board (the
“OTCBB”) or on
a national securities exchange, following a period of thirty (30) consecutive
calendar days in which the per share average closing sale price of the Common
Stock equals or exceeds an amount that is twice the Exercise Price, on notice as
set forth in Section 4(b) hereof, and at a redemption price equal to $0.001 (the
“Redemption
Price”) for each Warrant Share purchasable under this Warrant; provided, however, that this
Warrant may not be redeemed by the Company unless the resale of the Warrant
Shares purchasable hereunder has been registered under the Securities Act of
1933, as amended (the “Act”) or are
otherwise freely tradable.  For purposes of this Section 4(a), the
closing sale price of the Common Stock shall be determined by the closing price
as reported by the OTCBB so long as the Common Stock is quoted on the OTCBB, and
if the Common Stock is hereafter listed or quoted on the Nasdaq Capital Market
or a national securities exchange, shall be determined by the last reported sale
price on the primary exchange or market on which the Common Stock is
traded.

     

    (b) Notice of
Redemption.  In the case of any redemption of this Warrant, the
Company shall give notice of such redemption to the Holder hereof as provided in
this Section 4(b).  Notice of redemption to the Holder of this Warrant
shall be given in person, by recognized overnight courier, mailed by certified
or registered mail, return receipt requested, or by confirmed facsimile
transmission, to the Holder’s last address and/or facsimile of record with the
Company not less than twenty (20) days prior to the date fixed for
redemption.  Any notice which is given in the manner herein provided
shall be conclusively presumed to have been duly given, whether or not the
Holder receives the notice.  Each such notice shall specify the date
fixed for redemption, the place of redemption and the aggregate Redemption
Price, and shall state that payment of the Redemption Price will be made upon
surrender of this Warrant at such place of redemption, and that if not exercised
by the close of business on the date fixed for redemption, the exercise rights
of the Warrant shall expire unless extended by the Company.  Such
notice shall also state the current Exercise Price and the date on which the
right to exercise the Warrant will expire unless extended by the
Company.

     

    (c) Payment of Redemption
Price.  If notice of redemption shall have been given as
provided in Section 4(b), the Redemption Price shall, unless the Warrant is
theretofore exercised pursuant to the terms hereof, become due and payable on
the date and at the place stated in such notice.  On and after such
date of redemption, the exercise rights of this Warrant shall expire and this
Warrant shall be null and void on presentation and surrender of this Warrant at
such place of payment in such notice specified, this Warrant shall be paid and
redeemed at the Redemption Price per Warrant Share within ten (10) days
thereafter.

     

    
      
         

      

      
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    5. No Voting or Dividend
Rights.  Nothing contained in this Warrant shall be construed
as conferring upon the holder hereof the right to vote or to consent to receive
notice as a stockholder of the Company on any other matters or any rights
whatsoever as a shareholder of the Company.  No dividends or interest
shall be payable or accrued in respect of this Warrant or the interest
represented hereby or the shares purchasable hereunder until, and only to the
extent that, this Warrant shall have been exercised.

     

    6. Compliance with the
Act. The Holder of this Warrant, by acceptance hereof, agrees that this
Warrant is being acquired for its own account and not for any other person or
persons, for investment purposes and that it will not offer, sell, or otherwise
dispose of this Warrant except under circumstances which will not result in a
violation of the Act or any applicable state securities laws.

     

    7. Limited
Transferability.  The Holder represents that by accepting this
Warrant it understands that this Warrant and any securities obtainable upon
exercise of this Warrant have not been registered for sale under Federal or
state securities laws and are being offered and sold to the Holder pursuant to
one or more exemptions from the registration requirements of such securities
laws.  In the absence of an effective registration of such securities
or an exemption therefrom, any certificates for such securities shall bear the
legend set forth on the first page hereof.  The Holder understands
that it must bear the economic risk of its investment in this Warrant and any
securities obtainable upon exercise of this Warrant for an indefinite period of
time, as this Warrant and such securities have not been registered under Federal
or state securities laws and therefore cannot be sold unless subsequently
registered under such laws, unless an exemption from such registration is
available.

     

    8. Amendment, Waiver,
etc.  Except as expressly provided herein, neither this Warrant
nor any term hereof may be amended, waived, discharged or terminated other than
by a written instrument signed by the party against whom enforcement of any such
amendment, waiver, discharge or termination is sought.

     

    9. Notices.  Any
notice, request, or other document required or permitted to be given or
delivered to the Holder hereof or the Company shall be delivered as set forth in
the Purchase Agreement.

     

    10. Governing
Law.  This Warrant shall be construed and enforced in
accordance with, and the rights of the parties shall be governed by, the laws of
the State of New York without regard to the conflicts of laws provisions
thereof.

     

    
      
         

      

      
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    11. Lost or Stolen
Warrant.  Upon receipt of evidence reasonably satisfactory to
the Company of the loss, theft, destruction, or mutilation of this Warrant and,
in the case of any such loss, theft or destruction, upon receipt of an indemnity
reasonably satisfactory to the Company, or in the case of any such mutilation,
upon surrender and cancellation of such Warrant, the Company, at its expense,
will make and deliver a new Warrant, of like tenor, in lieu of the lost, stolen,
destroyed or mutilated Warrant.

     

    12. Fractional
Shares.  No fractional shares shall be issued upon exercise of
this Warrant.  The Company shall, in lieu of issuing any fractional
share, pay the Holder entitled to such fraction a sum in cash equal to such
fraction (calculated to the nearest 1/100th of a share) multiplied by the then
effective Exercise Price on the date the Form of Subscription is received by the
Company.

     

    13. Successors and
Assigns.  This Warrant and the rights evidenced hereby shall
inure to the benefit of and be binding upon the successors of the Company and
the successors and assigns of the Holder.

     

    14. Severability of
Provisions. In case any one or more of the provisions of this Warrant
shall be invalid or unenforceable in any respect, the validity and
enforceability of the remaining terms and provisions of this Warrant shall not
in any way be affected or impaired thereby and the parties will attempt in good
faith to agree upon a valid and enforceable provision which shall be a
commercially reasonable substitute therefor, and upon so agreeing, shall
incorporate such substitute provision in this Warrant.

     

    Remainder
of Page Intentionally Left Blank; Signature Page Follows

    

    
      
         

      

      
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    IN WITNESS WHEREOF, the
Company has caused this Warrant to be duly executed by its officer, thereunto
duly authorized as of this 24th day
of June, 2009.

     

     

    
      
        	 	PACIFIC BEACH BIOSCIENCES,
      INC.	 
	 	
                 

                 

              	 
	
                 

              	
                By:
      

              	
                /s/
      J. Jay Lobell

              	 
	Date:	 	
                Name:    J. Jay
      Lobell

              	 
	 	 	Title:	 
	 	 	 	 

      

    

     

    
      
         

      

      
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    FORM
OF SUBSCRIPTION

     

    (To be
signed only upon exercise of Warrant)

     

    To:           [COMPANY
NAME]

     

    The
undersigned, the holder of the attached Common Stock Warrant, hereby elects to
exercise the purchase right represented by such Warrant for, and to purchase
thereunder,                                    
shares of Common Stock of [COMPANY  NAME] and such holder herewith
makes payment of $_________ therefor.

     

     

    The
undersigned requests that certificates for such shares be issued in the name of,
and delivered to: _____________________________

     

    whose
address
is: ._______________________________________________________

     

    DATED:  ______________________________                                                  

     

     

    
      	 	 	
              (Signature
      must conform in all respects to name of 

              Holder
      as specified on the face of the Warrant)

            
	 	 	 
	 	 	Name: _________________________________________________      
	 	 	Title:  __________________________________________________

    

     

     

    
      
         

      

      
        8fs1ex4xiv_iaso.htm

    Exhibit
4.14

     

    THIS NOTE
AND THE SECURITIES ISSUABLE UPON CONVERSION HEREOF HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”),
APPLICABLE STATE SECURITIES LAWS, OR APPLICABLE LAWS OF ANY FOREIGN
JURISDICTION.  THIS NOTE AND SUCH SECURITIES HAVE BEEN ACQUIRED FOR
INVESTMENT AND NOT WITH A VIEW TO DISTRIBUTION OR RESALE, AND MAY NOT BE
OFFERED, SOLD, PLEDGED, HYPOTHECATED OR OTHERWISE TRANSFERRED IN THE ABSENCE OF
AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND ANY APPLICABLE
STATE SECURITIES LAWS AND IN THE ABSENCE OF COMPLIANCE WITH APPLICABLE LAWS OF
ANY FOREIGN JURISDICTION, OR AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY
THAT SUCH REGISTRATION IS NOT REQUIRED OR SUCH FOREIGN JURISDICTION LAWS HAVE
BEEN SATISFIED.

     

    AMENDED
AND RESTATED

    FUTURE
ADVANCE PROMISSORY NOTE

    

     

    
      	
              For
      Amounts advanced pursuant to the

            	
              La
      Jolla, CA

            
	
              Schedule
      Set Forth as Exhibit A

            	
              September
      30, 2009

            

    

    

    

    Recitals

    

    A.           In
consideration of certain loans provided by Paramount Biosciences, LLC (“PBS”) to Pacific
Beach Biosciences, Inc., a Delaware corporation (the “Company”), the
Company made that certain FUTURE ADVANCE PROMISSORY NOTE, dated December 1, 2006
and amended on September 28, 2007 (as amended, the “Existing Promissory
Note”) in favor of PBS.

    

    B.           Each
party desires to amend and restate the Existing Promissory Note on the terms and
subject to the conditions contained herein.

    

    Agreements

     

    1. Principal and
Interest

     

    The
Company, for value received, hereby promises to pay to the order of PBS or its
assigns (the “Holder”), in lawful
money of the United States of America at 787 Seventh Avenue, New York, NY 10019
(or such other address as Holder shall provide to the Company in writing), an
amount equal to the sum of all loans made by the Holder to the Company pursuant
to the terms and provisions of this promissory note (the “Note”) in immediately
available funds.

     

    From and
after the date hereof, but prior to the Due Date (as defined herein), or such
later date as the Holder and the Company may agree in writing, the Company may
request the Holder to provide loans under this Note.  For purposes of
this Note, any amounts which the Holder pays to third parties on behalf of the
Company for obligations arising out of the operations of the business of the
Company shall be considered a “loan.”  Promptly after such request, if
no Event of Default (as defined herein) shall have occurred and be continuing,
the Holder or one or more if its affiliates may provide such loan to the Company
in the amount requested.  The Company hereby authorizes the Holder to
record on the attached Schedule A the
principal amount of each loan made by the Holder or one or more of its
affiliates to the Company; provided, however, that any
failure by the Holder to record any such loan shall not affect the Company’s
obligation to repay such loan, together with interest thereon, in accordance
with this Note.

     

    
      
         

      

      
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    The
Company promises to pay interest on the unpaid principal amount from the date
hereof until such principal amount is paid in full at the rate of eight percent
(8%) per annum, or such lesser rate as shall be the maximum rate allowable under
applicable law; provided, however, that upon an Event of Default, the interest
rate on this Note shall be increased to twelve percent (12%) per annum during
the term of the default.   Interest from the date hereof shall be
computed on the basis of a 360-day year of twelve 30-day months, shall compound
annually and shall be accrued and added to principal on an annual
basis.  Unless converted, all unpaid principal and accrued but unpaid
interest on this Note shall be due and payable on September 30, 2010 (the “Due
Date”).  For purposes of this Note, an “Event of Default”
shall occur if (i) the Company shall default in the payment on this Note, when
and as the same shall become due and payable and any such failure to make
payment continues for five (5) business days; or (ii) the Company shall default
in the due observance or performance of any material covenant, condition or
agreement on the part of the Company contained in this Note (other than the
failure to make payment when due) and any such default shall continue for a
period of thirty (30) days after the date on which the Company receives written
notice thereof from the Holder.

     

    This Note
shall rank pari passu in right of payment with all other existing indebtedness
of the Company, including (a) that certain Future Advance Promissory Note
between the Company and The Lindsay A. Rosenwald 2000 Family Trusts Dated
December 15, 2000, dated December 1, 2006, as amended on September 28, 2007 and
amended and restated on the date hereof, (b) that certain Future Advance
Promissory Note between the Company and Capretti Grandi, LLC, dated December 18,
2008, as amended and restated on the date hereof, (c) those certain Senior
Promissory Notes between the Company and Paramount Credit Partners, LLC, dated
January 15, 2009 and June 24, 2009 and (d) the series of convertible promissory
notes issued by the Company in connection with an offering described in the
Company’s Confidential Offering Memorandum (together with all amendments,
supplements, exhibits, and appendices thereto), dated September 28, 2007 (such
notes, as amended to date, shall be collectively referred to as the “Bridge
Notes”).  No consent of the Holder will be required for
issuances by the Company of unsecured indebtedness that ranks pari passu with,
or junior to, this Note.

     

    2. Conversion.

     

    2.1 (a) All
unpaid principal and accrued but unpaid interest on this Note shall be
automatically converted into the Company’s equity securities (the “Securities”) issued
in the Company’s next equity financing (or series of related equity financings)
involving the sale of Securities in which the Company receives at least
$10,000,000 in aggregate gross cash proceeds (before brokers’ fees or other
transaction related expenses, and excluding any such proceeds resulting from any
conversion of the Bridge Notes minus the amount of aggregate gross cash proceeds
to the Company from the sale of equity or debt securities of the Company after
December 14, 2009 (a “Qualified
Financing”), at a conversion price equal to 70% of the lowest per unit
price paid for such Securities in cash by investors in such Qualified Financing,
and upon such other terms, conditions and agreements as may be applicable in
such Qualified Financing.

     

    
      
         

      

      
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    (b) In the
event that the Company consummates a merger, share exchange, or other
transaction (or series of related transactions), other than in connection with a
Qualified Financing, in which (i) the Company merges into or otherwise becomes a
wholly-owned subsidiary of a company that (A) is subject to the public company
reporting requirements of the Securities Exchange Act of 1934, as amended, or
the equivalent reporting requirements of the Ontario Securities Commission, or
that is listed on the London Stock Exchange main market, the Euronext markets,
or AIM, and (B) does not engage in any active operations, and (ii) the aggregate
consideration payable to the Company or its stockholders in such transaction(s)
(the “Reverse Merger
Consideration”) is greater than or equal to $10,000,000 (a “Reverse Merger”),
then immediately prior to such Reverse Merger, all unpaid principal and accrued
but unpaid interest on this Note shall be automatically converted into Common
Stock at a conversion price per share equal to 70% of the quotient obtained by
dividing (i) the Reverse Merger Consideration less the amount of unpaid
principal and accrued but unpaid interest on all Bridge Notes and the Existing
Notes (as defined below) immediately prior to the Reverse Merger by (ii) the
number of shares of Common Stock of the Company then outstanding, on a fully
diluted basis (the “Outstanding Shares”).
For this purpose, Outstanding Shares shall (i) exclude any shares of Common
Stock issuable upon conversion of the Bridge Notes or the Existing Notes or upon
exercise of the warrants issued to the Placement Agent in connection with the
sale of the Bridge Notes but (ii) include all shares of Common Stock issuable
upon the exercise of (A) options and other warrants outstanding (to the extent
that such options or warrants are exercised or assumed in connection with the
Reverse Merger) and (B) options that the Company is required by agreement to
issue to one or more employees, consultants, or licensors of the Company in
connection with such Reverse Merger to maintain a specified percentage interest
in the Company (but which have not yet been issued)). For purposes hereof,
“Existing
Notes” shall mean collectively, (1) this Note, (2) that certain Future
Advance Promissory Note between the Company and Capretti Grandi, LLC, dated
December 18, 2008, as amended and restated on the date hereof and (3) that
certain Future Advance Promissory Note between the Company and The Lindsay A.
Rosenwald 2000 Family Trusts Dated December 15, 2000, dated December 1, 2006, as
amended on September 28, 2007 and amended and restated on the date
hereof.

     

    The
shares of Common Stock issuable pursuant to clause 2.1(b) above shall be issued
effective prior to the consummation of the Reverse Merger and conditioned upon
the consummation of such Reverse Merger.  As a holder of such shares
of Common Stock, the Holder will receive the consideration payable in connection
with such Reverse Merger on a share-for-share basis with all other stockholders
of the Company and in like kind, at the same time and upon the same conditions
as all other stockholders of the Company.

     

    If any
Reverse Merger Consideration is other than cash, its value will be deemed to be
its fair market value as determined, in good faith, by the Board of Directors of
the Company.  The value of any securities shall be determined by the
Board of Directors of the Company as set forth for a Sale of the Company in
Section 2.1(c) below.

     

    
      
         

      

      
        3

        
          

        

      

      
         

      

    

     

    (c) This Note
plus any unpaid accrued interest thereon shall automatically convert into shares
of Common Stock of the Company effective immediately prior to the consummation
of a Sale of the Company.  For purposes hereof, “Sale of the Company”
shall mean a transaction (or series of related transactions) with one or more
non-affiliates of the Company, pursuant to which such party or parties acquire
(i) capital stock of the Company or the surviving entity possessing the voting
power to elect a majority of the board of directors of the Company or the
surviving entity (whether by merger, consolidation, sale or transfer of the
Company’s capital stock or otherwise) (a “Stock Acquisition”);
or (ii) all or substantially all of the Company’s assets determined on a
consolidated basis (an “Asset Sale”);
provided, however, that notwithstanding anything to the contrary contained
herein, to the extent any transaction (or series of related transactions)
qualifies as a Qualified Financing or a Reverse Merger, such transaction(s)
shall not be deemed to constitute a Sale of the Company. For purposes hereof,
“Sale Proceeds”
shall mean (i) in the event of a Stock Acquisition, the cash or securities paid
by the acquirer to the Company or the selling stockholders to acquire such
shares; and (ii) in the event of an Asset Sale, the cash or securities legally
available for distribution to the Company’s stockholders, after creation of
adequate reserves for liabilities of the Company.

     

    The price
per share at which this Note will convert into Common Stock of the Company upon
a Sale of the Company will be equal to the lesser of (i) 70% of the quotient
obtained by dividing (x) the value of the Sale Proceeds received in such
transaction less the unpaid principal and accrued but unpaid interest on this
Note and the Existing Notes immediately prior to the Sale of the Company by (y)
the number of Outstanding Shares, and (ii) the quotient obtained by dividing (x)
$50,000,000 less the unpaid principal and accrued but unpaid interest on this
Note and the Existing Notes by (y) the number of Outstanding Shares. For
purposes of this Section 2.1(c), Outstanding Shares shall be determined as set
forth in Section 2.1(b) of this Note, except that it shall not include any
shares of Common Stock issuable upon the exercise of any options and warrants
outstanding immediately prior to such Sale of the Company if such options or
warrants have an exercise price in excess of the Note conversion price
determined under this Section 2.1(c)).

     

    (d) In the
event the Company completes (in one or a series of related transactions) a
merger, consolidation, sale or transfer of more than fifty percent (50%) of the
Company’s capital stock, in each case, which does not constitute a Sale of the
Company, a Reverse Merger or a Qualified Financing (an “Other Transaction”),
then the term “Securities” as used herein shall thereafter refer to the equity
securities or securities convertible into or exchangeable for equity securities
of the surviving, resulting, combined or acquiring entity in such merger,
consolidation, sale or transfer.

     

    (e) Notwithstanding
any provision herein to the contrary, the principal amount of all loans made by
the Holder to the Company under this Note on or after September 30, 2009, up to
$1,000,000 in the aggregate, shall immediately and automatically be converted
into the same equity or derivative securities as are issued in any equity or
derivative equity financing consummated by the Company on or after September 30,
2009 that does not otherwise constitute a Qualified Financing (the “Financing”), on the
same terms and conditions that such equity securities are offered in the
Financing.  Upon the issuance of such securities to the Holder, the
portion of the principal amount of the Note related to such loans made on or
after September 30, 2009 shall be deemed repaid in full and cancelled; however,
all interest accrued on such principal amount through the date such securities
are issued shall remain payable in accordance with the terms
hereof.

     

    2.2 Upon
consummation of a Qualified Financing, Reverse Merger, Sale or Other Transaction
in accordance with the terms of Section 2.1, the outstanding unpaid principal
and accrued but unpaid interest of this Note shall be converted without any
further action by the Holder and whether or not this Note is surrendered to the
Company or its transfer agent, and the indebtedness evidenced by this Note shall
be satisfied in full and no interest shall continue to accrue on this Note and
all rights of the Holder hereunder shall terminate.  The Company shall
not be obligated to issue certificates evidencing the shares of the securities
issuable upon such conversion unless this Note is either delivered to the
Company or its transfer agent, or the Holder notifies the Company or its
transfer agent that such Note has been lost, stolen or destroyed and executes an
agreement satisfactory to the Company to indemnify the Company from any loss
incurred by it in connection with such Note.  The Company shall, as
soon as practicable after such delivery, or such agreement and indemnification,
issue and deliver to such Holder of such Note, a certificate or certificates for
the securities to which the Holder shall be entitled.  Such conversion
shall be deemed to have been made concurrently with the closing of the Qualified
Financing, the Reverse Merger, the Sale of the Company or the Other Transaction,
as applicable.  The person or persons entitled to receive securities
issuable upon such conversion shall be treated for all purposes as the record
holder or holders of such securities on such date.  The Company shall
not issue fractional shares but shall round down the number of shares issued to
the nearest whole number.  Any conversion effected in accordance with
this Section 2 shall be binding upon the Holder hereof.

     

    
      
         

      

      
        4

        
          

        

      

      
         

      

    

     

    3. Prepayment.

     

    (a) This Note
may not be prepaid at any time, in whole or in part, prior to its
maturity.

     

    (b) In the
event that this Note becomes due and payable (whether on the Due Date or earlier
pursuant to Section 7 hereof) prior to the consummation by the Company of a
Qualified Financing, Reverse Merger, Sale of the Company or Other Transaction,
then in connection with the repayment of this Note, in addition to the payment
of the unpaid principal amount and all accrued but unpaid interest on this Note,
the Company shall pay to Holder, as a repayment premium, an amount in cash equal
to 42.8571% of the aggregate principal amount of this Note.

     

    4. Attorneys’
Fees.  If the indebtedness represented by this Note or any part
thereof is collected in bankruptcy, receivership or other judicial proceedings
or if this Note is placed in the hands of attorneys for collection after
default, the Company agrees to pay, in addition to the principal and interest
payable hereunder, reasonable attorneys’ fees and costs incurred by
Holder.

     

    5. Notices.  Any
notice, other communication or payment required or permitted hereunder shall be
in writing and shall be deemed to have been given upon delivery to the address
above.

     

    6. Notice of Proposed
Transfers.  Prior to any proposed transfer of this Note or the
Securities, unless there is in effect a registration statement under the
Securities Act covering the proposed transfer, the Holder shall give written
notice to the Company of such Holder’s intention to effect such
transfer.  Each such notice shall describe the manner and
circumstances of the proposed transfer in sufficient detail, and shall, if the
Company so requests, be accompanied (except in transactions in compliance with
Rule 144) by an unqualified written opinion of legal counsel, who shall be
reasonably satisfactory to the Company, addressed to the Company and reasonably
satisfactory in form and substance to the Company’s counsel, to the effect that
the proposed transfer of this Note or Securities may be effected without
registration under the Securities Act; provided, however, no such
opinion of counsel shall be necessary for a transfer without consideration by a
Holder to any affiliate of such Holder, or a transfer by a Holder which is a
partnership to a partner of such partnership or a retired partner of such
partnership who retires after the date hereof, or to the estate of any such
partner or retired partner or the transfer by gift, will or intestate succession
of any partner to his spouse or lineal descendants or ancestors, if the
transferee agrees in writing to be subject to the terms hereof to the same
extent as if such transferee were the original Holder hereunder. Each
certificate evidencing Securities or this Note transferred as above provided
shall bear an appropriate restrictive legend, except that this Note or
certificate shall not bear such restrictive legend if, in the opinion of counsel
for the Company, such legend is not required in order to establish compliance
with any provisions of the Securities Act.

     

    
      
         

      

      
        5

        
          

        

      

      
         

      

    

     

    7. Acceleration.  This
Note shall become immediately due and payable if (i) the Company commences any
proceeding in bankruptcy or for dissolution, liquidation, winding-up,
composition or other relief under state or federal bankruptcy laws; or (ii)
there is any material breach of any material covenant, warranty, representation
or other term or condition of this Note at any time which is not cured within
the time periods permitted therein, or if no cure period is provided therein,
within thirty (30) days after the date on which the Company receives written
notice thereof from the Holder.

     

    8. No Dilution or
Impairment. The Company will not, by amendment of its Certificate of
Incorporation or Bylaws or through any reorganization, transfer of assets,
consolidation, merger, dissolution, issue or sale of securities or any other
voluntary action, avoid or seek to avoid the observance or performance of any of
the terms of this Note, but will at all times in good faith assist in the
carrying out of all such terms and in the taking of all such action as may be
necessary or appropriate in order to protect the rights of the Holder of this
Note against dilution or other impairment.

     

    9. Waivers. The Company
hereby waives presentment, demand for performance, notice of non-performance,
protest, notice of protest and notice of dishonor. No delay on the part of the
Holder in exercising any right hereunder shall operate as a waiver of such right
or any other right. This Note is being delivered in and shall be construed in
accordance with the laws of the State of New York, without regard to the
conflicts of laws provisions thereof.

     

    10. No Stockholder
Rights.  Nothing contained in this Note shall be construed as
conferring upon the Holder or any other person the right to vote or to consent
or to receive notice as a stockholder of the Company.

     

    11. Amendment.  Any
term of this Note may be amended with the written consent of the Company and the
Holder hereof.

     

    * * * *
*

     

    
      
         

      

      
        6

        
          

        

      

      
         

      

    

     

    IN
WITNESS WHEREOF, this Amended and Restated Future Advanced Promissory Note is
executed by the parties hereto as of the date and year first written
above.

     

     

    
      	 
      	
              PACIFIC
      BEACH BIOSCIENCES, INC.

            
	 
      	 
      
	 
      	
              By:

            	
              
                /s/
      James Rock

              

            
	 
      	
              Name:

            	
              James
      Rock

            
	 
      	
              Title:

            	 
      

    

    

     

    
      	 
      	
              PARAMOUNT
      BIOSCIENCES, LLC

            
	 
      	 
      
	 
      	
              By:

            	
              
                /s/
      Lindsay A. Rosenwald, M.D.

              

            
	 
      	
              Name:

            	
              Lindsay
      A. Rosenwald, M.D.

            
	 
      	
              Title:

            	
              Sole
      Member

            

    

    

    

    
      
         

      

      
        7

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