Document:

fs1ex4xi_iaso.htm

    Exhibit
4.11

    
 

    NOTE
AND WARRANT PURCHASE
AGREEMENT

    
 

    This
NOTE AND WARRANT PURCHASE
AGREEMENT (this “Agreement”) is made
as of the last date set forth on the signature page hereof between PACIFIC BEACH BIOSCIENCES,
INC., a Delaware corporation (the “Company”), and
Paramount Credit Partners, LLC, a Delaware limited liability company (the “Subscriber”).

     

    W
I T N E S S E T H:

    
 

    WHEREAS, the Company desires
to offer and sell a senior promissory note in an aggregate principal amount of
$125,000 in substantially the form attached hereto as Exhibit A (the “Note”) in a private
offering (the “Offering”). In
addition to the Note, the Subscriber will receive a warrant (the “Warrant”) to purchase
shares of Common Stock, $0.001 par value per share (the “Common Stock”), of
the Company in the form attached hereto as Exhibit B;
and

     

    WHEREAS, the Company desires
to enter into this Agreement to issue and sell the Note and Warrant and the
Subscriber desires to purchase the Note and Warrant on the terms and conditions
set forth herein;

     

    NOW, THEREFORE, in
consideration of the promises and the mutual representations and covenants
hereinafter set forth, the parties hereto do hereby agree as
follows:

    
 

    I. SUBSCRIPTION FOR NOTES AND
REPRESENTATIONS BY SUBSCRIBER

     

    1.1 Subject to the terms and conditions
hereinafter set forth, the Subscriber agrees to purchase from the Company and
the Company agrees to sell and issue to the Subscriber the Note and the Warrant
for an aggregate purchase price of $125,000.

    
 

    1.2 The Subscriber recognizes that the
purchase of the Note involves a high degree of risk including, but not limited
to, the following: (a) the Company has a limited operating history and requires
substantial funds in addition to the proceeds of the Offering; (b) an investment
in the Company is highly speculative, and only investors who can afford the loss
of their entire investment should consider investing in the Company and the
Note; (c) the Subscriber may not be able to liquidate its investment; (d)
transferability of the Note and the Common Stock underlying the Warrant
(sometimes hereinafter collectively referred to as the “Securities”) is
extremely limited; (e) in the event of a disposition of the Securities, the
Subscriber could sustain the loss of its entire investment; and (f) the Company
has not paid any dividends on its capital stock since its inception and does not
anticipate paying any dividends in the foreseeable future.

    
 

    
      
        
        

      

      
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    1.3 The Subscriber represents that the
Subscriber is an “accredited investor” as such term is defined in Rule 501 of
Regula­tion D (“Regulation D”)
promulgated under the Securities Act of 1933, as amended (the “Securities Act”), and
that the Subscriber is able to bear the economic risk of an invest­ment in
the Securities.

     

    1.4 The Subscriber hereby acknowledges
receipt and careful review of this Agreement, the Note and the Warrant,
including all exhibits thereto (collectively referred to as the “Offering Materials”)
and hereby represents that the Subscriber has been furnished by the Company
during the course of the Offering with all information regarding the Company,
the terms and conditions of the Offering and any additional information that the
Subscriber, its purchaser representative, attorney and/or accountant has
requested or desired to know, and has been afforded the opportunity to ask
questions of and receive answers from duly authorized officers or other
representatives of the Company concerning the Company and the terms and
conditions of the Offering.

     

    1.5 The Subscriber hereby represents
that the Subscriber, either by reason of the Subscriber's business or financial
experience or the business or financial experience of the Subscriber's
professional advisors (who are unaffiliated with and not compensated by the
Company or any affiliate or selling agent of the Company directly or
indirectly), has the capacity to protect the Subscriber's own interests in
connection with the transaction contemplated hereby.

     

    1.6 The Subscriber hereby acknowledges
that the Offering has not been reviewed by the United States Securities and
Exchange Commission (the “SEC”) nor any state
regulatory authority since the Offering is intended to be exempt from the
registration requirements of Section 5 of the Securities Act pursuant to
Regulation D promulgated thereunder. The Subscriber understands that the
Securities have not been registered under the Securities Act or under any state
securities or “blue sky” laws and agrees not to sell, pledge, assign or
otherwise transfer or dispose of the Securities unless they are registered under
the Securities Act and under any applicable state securities or “blue sky” laws
or unless an exemption from such registration is available.

     

    1.7 The Subscriber understands that the
Securities have not been registered under the Securities Act or any state
securities laws by reason of a claimed exemption under the provisions of the
Securities Act and such state securities laws that depends, in part, upon the
Subscriber's investment intention. The Subscriber hereby represents that the
Subscrib­er is purchasing the Securities for the Subscriber's own account
for investment and not with a view toward the resale or distribution to others.
The Subscriber, if an entity, further represents that it was not formed for the
purpose of purchasing the Securities.

     

    1.8 The Subscriber understands that
there is no public market for the Securities and that no market may develop for
any of such Securities. The Subscrib­er under­stands that even if a
public market develops for such Securities, Rule 144 (“Rule 144”)
promul­gated under the Securities Act requires for non-affiliates, among
other conditions, certain holding periods prior to the resale (in limited
amounts) of secu­rities acquired in a non-public offering without having to
satisfy the regis­tration requirements under the Securities Act. The
Subscriber understands and hereby acknowl­edges that the Company is under no
obli­ga­tion to register any of the Securities under the Securities Act
or any state secu­ri­ties or “blue sky” laws other than as set forth in
Article V.

    
 

    
      
        
        

      

      
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    1.9 The Subscriber consents to the
placement of a legend on any certificate or other document evidencing the
Warrant and Common Stock that such securities have not been registered under the
Securities Act or any state securities or “blue sky” laws and setting forth or
referring to the restrictions on transferability and sale thereof contained in
this Agreement. The Subscriber is aware that the Company will make a notation in
its appropriate records with respect to the restrictions on the transferability
of such securities. The legend to be placed on each certificate shall be in form
substantially similar to the following:

    
 

    "THE
SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES
SECURITIES ACT OF 1933, AS AMENDED (THE "ACT") OR ANY STATE SECURITIES OR "BLUE
SKY LAWS", AND MAY NOT BE OFFERED, SOLD, TRANSFERRED, ASSIGNED, PLEDGED OR
HYPOTHECATED ABSENT AN EFFECTIVE REGISTRATION THEREOF UNDER SUCH ACT OR LAWS, OR
UNLESS THE COMPANY HAS RECEIVED AN OPINION OF COUNSEL, REASONABLY SATISFACTORY
TO THE COMPANY AND ITS COUNSEL, THAT SUCH REGISTRATION IS NOT
REQUIRED."

    
 

    1.10 The Subscriber represents that the
Subscriber has full power and authority (corporate, statutory and
other­wise) to execute and deliver this Agreement and to purchase the
Securities. This Agreement constitutes the legal, valid and binding obligation
of the Subscriber, enforce­able against the Subscriber in accordance with
its terms.

     

    1.11 The Subscriber (a) is authorized
and qualified to invest in the Company and the person signing this Agreement on
behalf of such entity has been duly authorized by such entity to do so and (b)
is duly organized, validly existing and in good standing under the laws of the
jurisdiction of its organization.

    1.12 Subject to the provision below,
the Subscriber hereby agrees that in the case of an initial offering of the
Common Stock to the public pursuant to an effective registration statement under
the Securities Act (the “IPO”), the Subscriber
will not, without the prior written consent of the Company, offer, pledge, sell,
contract to sell, grant any option for the sale of, or otherwise dispose of,
directly or indirectly, the Registrable Securities (as defined in Section 5.1)
purchased or acquired by the Subscriber for a period of up to 180 days from the
effective date of the registration statement relating to the IPO.

    
 

    
      
        
        

      

      
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    1.13 The Subscriber represents and
warrants that it has not engaged, consented to or authorized any broker, finder
or intermediary to act on its behalf, directly or indirectly, as a broker,
finder or intermediary in connection with the transactions contemplated by this
Agreement. The Subscriber hereby agrees to indemnify and hold harmless the
Company from and against all fees, commissions or other payments owing to any
such person or firm acting on behalf of the Subscriber
hereunder.

    1.14 The Subscriber agrees to hold the
Company and its directors, officers, employees, affiliates, controlling persons
and agents and their respective heirs, representatives, successors and assigns
harmless and to indemnify them against all liabilities, costs and expenses
incurred by them as a result of (a) any sale or distribution of the Securities
by the Subscriber in violation of the Securities Act or any applicable state
securities or “blue sky” laws; or (b) any false representation or warranty or
any breach or failure by the Subscriber to comply with any covenant made by the
Subscriber in this Agreement or any other document furnished by the Subscriber
to any of the foregoing in connection with this transaction.

     

    1.15 The Subscriber represents that no
authorization, approval, consent or license of any person is required to be
obtained for the purchase of the Securities by the Subscriber, other than as
have been obtained and are in full force and effect. The execution and delivery
of this Agreement does not, and the consummation of the transactions
contemplated hereby will not, result in any violation of or constitute a default
under any material agreement or other instrument to which the Subscriber is a
party or by which the Subscriber or any of its properties are bound, or to the
best of the Subscriber’s knowledge, any permit, franchise, judgment, order,
decree, statute, rule or regulation to which the Subscriber or any of its
businesses or properties is subject.

     

    1.16 The Subscriber understands,
acknowledges and agrees with the Company that the Offering is intended to be
exempt from the registration under the Securities Act by virtue of the
provisions of Regulation D thereunder, and/or the provisions of Regulation S,
which is in part dependent upon the truth, completeness and accuracy of the
statements made by the Subscriber.

    
 

    
      	
              II.
      

            	
              REPRESENTATIONS BY AND
      COVENANTS OF THE COMPANY

            

    

    
 

    The Company hereby represents and
warrants to the Subscriber that:

    
 

    2.1 Organization, Good Standing
and Qualification. The Company is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware and has
full corporate power and authority to conduct its business as currently
conducted. The Company is duly qualified as a foreign corporation to do business
and is in good standing in every jurisdiction in which the property owned or
leased by it or the nature of the business conducted by it makes such
qualification necessary, except to the extent that the failure to be so
qualified or in good standing would not reasonably be expected to have,
individually or in the aggregate, a material adverse effect on the business,
operations, conditions (financial or otherwise), properties, assets or results
of operations of that entity individually or of the Company and its Subsidiaries
(as defined below) as a whole (a “Material Adverse
Effect”). For purposes of this Section, “Subsidiary” means any
corporation, partnership, limited liability company, association, or other
business entity in which the Company owns or controls, directly or indirectly,
any interest, including, without limitation, any joint venture, partnership, or
similar arrangement.

    
 

    
      
        
        

      

      
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    2.2 Authorization;
Enforceability. The Company has all corporate right, power and authority
to enter into this Agreement and to consummate the transactions contemplated
hereby. All corporate action on the part of the Company, its directors and
stockholders necessary for the (i) authorization execution, delivery and
performance of this Agreement by the Company; and (ii) authorization, sale,
issuance and delivery of the Securities contemplated hereby and the performance
of the Company's obligations hereunder has been taken. This Agreement has been
duly executed and delivered by the Company and constitutes a legal, valid and
binding obligation of the Company, enforceable against the Company in accordance
with its terms, subject to laws of general application relating to bankruptcy,
insolvency and the relief of debtors and rules of law governing specific
performance, injunctive relief or other equitable remedies, and to limitations
of public policy. The Note, when issued and fully paid for in accordance with
the terms of this Agreement, will be validly issued. The Common Stock issuable
upon exercise of the Warrant, when issued in accordance with the terms of the
Warrant, will be validly issued, full paid and non-assessable. The issuance and
sale of the Securities contemplated hereby will not give rise to any preemptive
rights or rights of first refusal on behalf of any person which have not been
waived in connection with this Offering.

    
 

    2.3 No Conflict; Governmental
Consents.

    
 

    (a) Except as would not reasonably be
expected to have a Material Adverse Effect, the execution and delivery by the
Company of this Agreement and the consumma­tion of the transactions
contemplated hereby will not result in the violation of any law, statute, rule,
regulation, order, writ, injunction, judgment or decree of any court or
governmental authority to or by which the Company is bound, or of any provision
of the Certificate of Incorporation or By-Laws of the Company, and will not
conflict with, or result in a breach or violation of, any of the terms or
provisions of, or constitute (with due notice or lapse of time or both) a
default under, any lease, loan agreement, mortgage, security agreement, trust
indenture or other agreement or instrument to which the Company is a party or by
which it is bound or to which any of its properties or assets is subject, nor
result in the creation or imposition of any lien upon any of the properties or
assets of the Company.

    
 

    (b) No consent, approval, authorization
or other order of any governmental authority or other third party is required to
be obtained by the Company in connection with the authorization, execution and
delivery of this Agreement or with the authorization, issue and sale of the
Securities, except as has been obtained or such filings as may be required to be
made with the SEC and with any state or foreign blue sky or securities
regulatory authority relating to an exemption from registration
thereunder.

    
 

    
      
        
        

      

      
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    2.4 Licenses. Except as
would not reasonably be expected to have a Material Adverse Effect, the Company
has sufficient licenses, permits and other governmental authorizations currently
required for the conduct of its business or ownership of properties and is in
all material respects complying therewith.

    
 

    2.5 Litigation. The
Company knows of no pending or threatened legal or governmental proceedings
against the Company which (i) adversely questions the validity of this Agreement
or any agreements related to the transactions contemplated hereby or the right
of the Company to enter into any of such agreements, or to consummate the
transactions contemplated hereby or thereby or (ii) could, if there were an
unfavorable decision, have a Material Adverse Effect. There is no action, suit,
proceeding or investigation by the Company currently pending in any court or
before any arbitrator or that the Company intends to initiate.

    
 

    2.6 Investment Company
The Company is not an “investment company” within the meaning of such term under
the Investment Company Act of 1940, as amended, and the rules and regulations of
the SEC thereunder.

    
 

    2.7 Tax Status. To the
best of its knowledge, the Company (i) has made or filed all federal and state
income and all other tax returns, reports and declarations required by any
jurisdiction to which it is subject, (ii) has paid all taxes and other
governmental assessments and charges that are material in amount, shown or
determined to be due on such returns, reports and declarations, except those
being contested in good faith and (iii) has set aside on its books provision
reasonably adequate for the payment of all taxes for periods subsequent to the
periods to which such returns, reports or declarations apply. There are no
unpaid taxes in any material amount claimed to be due by the taxing authority of
any jurisdiction, and the officers of the Company know of no basis for any such
claim.

    
 

    2.8 Subordination.
Following the Closing Date, as long as the Note remains outstanding, the Company
will not, without the Subscriber’s prior written consent, incur indebtedness for
borrowed money (“New
Debt”) in favor of any person or entity (each a “New Lender”) which
indebtedness is secured or otherwise senior in priority to the Note, unless the
New Lenders execute and deliver to the Subscriber a subordination agreement
providing for the subordination of the New Debt to the Note.

     

    III.
CLOSING;
DELIVERY

    
 

    3.1 The
purchase and sale of the Securities shall take place at the offices of Wyrick
Robbins Yates & Ponton LLP, 4101 Lake Boone Trail, Suite 300, Raleigh, North
Carolina, 27607, at 10:00 a.m., on the date hereof, or at such other time and
place as the Company and the Subscriber may mutually agree, orally or in writing
(which time and place are designated as the “Closing”).

    
 

    
      
        
        

      

      
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    3.2 At the Closing, subject to the
terms and conditions hereof, the Company will deliver to the Subscriber duly
executed copies of the Note and the Warrant dated the date of the Closing (the
“Closing
Date”), against payment of the purchase price therefor by wire transfer,
a check or checks made payable to the order of the Company, a combination of the
above, or by such other means as shall be mutually agreeable to the Subscriber
and the Company.

    
 

    IV. CONDITIONS TO OBLIGATIONS OF
THE PARTIES

    
 

    4.1 The Subscriber’s obligation to
purchase the Securities at the Closing at which such purchase is to be
consummated is subject to the fulfillment on or prior to the Closing of the
following conditions, which conditions may be waived at the option of the
Subscriber to the extent permitted by law:

    
 

    (a) Legal Opinion. The
Subscriber shall have received an opinion of counsel to the Company addressed to
the Subscriber containing certain opinions to be substantially in the form
attached hereto as Exhibit
C.

    
 

    (b) Officer’s
Certificate. The Subscriber shall have received an Officer’s Certificate,
signed by the authorized officer of the Company and dated as of the Closing. The
certificate shall state, among other things, that the representations and
warranties contained herein and in the Offering Materials are true and accurate
in all material respects at the Closing Date with the same effect as though
expressly made at the Closing Date.

    
 

    V. REGISTRATION
RIGHTS

    
 

    5.1 Definitions. As used in this Agreement, the following terms
shall have the following meanings.

    
 

    (a) The term “Holder” shall mean
any holder of Registrable Securities.

    
 

    (b) The terms “register”, “registered” and
“registration”
refer to a registration effected by preparing and filing a registration
statement or similar document in compliance with the Securities Act, and the
declaration or order of effectiveness of such registration statement or
document.

    
 

    (c) The term “Registrable
Securities” shall mean (i) the shares of Common Stock issuable upon
exercise of the Warrant; and (ii) any shares of Common Stock issuable (or
issuable upon the conversion or exercise of any warrant, right or other security
that is issued) pursuant to a dividend or other distribution with respect to or
in replacement of any Securities; provided, however, that securities shall only
be treated as Registrable Securities if and only for so long as they (A) have
not been disposed of pursuant to a registration statement declared effective by
the SEC; (B) have not been sold in a transaction exempt from the registration
and prospectus delivery requirements of the Securities Act so that all transfer
restrictions and restrictive legends with respect thereto are removed upon the
consummation of such sale; (C) are held by a Holder or a permitted transferee of
a Holder pursuant to Section 5.9; and (D) may not be disposed of under Rule 144
under the Securities Act without restriction.

    
 

    
      
        
        

      

      
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    (d) The term “Trading Event” means
the first date on which the Company’s Common Stock trades on a national
securi­ties exchange or other automated quotation service, including the
Over the Counter Bulletin Board.

    
 

    5.2 Piggyback
Registration.

    
 

    (a) The Company agrees that if, at any
time, and from time to time, after the earlier to occur of (i) an IPO and (ii) a
Trading Event, the Board of Directors of the Company (the “Board”) shall
authorize the filing of a registration statement under the Securities Act (other
than the IPO or a registration statement on Form S-8, Form S-4 or any other form
that does not include substantially the same information as would be required in
a form for the general registration of securities) in connection with the
proposed offer of any of its securities by it or any of its stockholders, the
Company shall: (A) promptly notify each Holder that such registration statement
will be filed and that the Registrable Securities then held by such Holder will
be included in such registration statement at such Holder’s request; (B) cause
such registration statement to cover all of such Registrable Securities issued
to such Holder for which such Holder requests inclusion; (C) use best efforts to
cause such registration statement to become effective as soon as practicable;
and (D) take all other reasonable action necessary under any Federal or state
law or regulation of any governmental authority to permit all such Registrable
Securities that have been issued to such Holder to be sold or otherwise disposed
of, and will maintain such compliance with each such Federal and state law and
regulation of any governmental authority for the period necessary for such
Holder to promptly effect the proposed sale or other disposition.

    
 

    (b) Notwithstanding any other
provision of this Section 5.2, the Company may at any time, abandon or delay any
registration commenced by the Company. In the event of such an abandonment by
the Company, the Company shall not be required to continue registration of
shares requested by the Holder for inclusion, the Holder shall retain the right
to request inclusion of shares as set forth above and the withdrawn registration
shall not be deemed to be a registration request for the purposes of Section
5.2(c) below.

    
 

    (c) Each Holder shall have the right
to request inclusion of any of its Registrable Securities in a registration
statement as described in this Section 5.2, up to three times.

    
 

    5.3 Furnish Information.
It shall be a condition precedent to the obligation of the Company to take any
action pursu­ant to this Article V with respect to the Registrable
Securi­ties of any Holder that such Holder shall furnish to the Company such
informa­tion regarding the Holder, the Registra­ble Securities held by
the Holder, and the intended method of disposition of such securi­ties as
shall be reasonably required by the Company to effect the registration of such
Holder's Registrable Securities.

     

    5.4 Registration
Expenses. The Company shall bear and pay all expenses incurred in
connection with any registration, filing or qualification of Registrable
Securities with respect to registrations pursuant to Section 5.2 for each
Holder, including (without limitation) all registration, filing, and
qualification fees, printers and accounting fees relating or apportionable
thereto (“Registration
Expenses”), but excluding underwriting discounts and com­missions
relating to Registrable Securities and excluding any professional fees or costs
of accounting, financial or legal advisors to any of the Holders.

    
 

    5.5 Underwriting
Requirements. In connec­tion with any offering involving an
underwriting of shares of the Company's capital stock, the Company shall not be
required under Section 5.2 to include any of the Holders' Registrable Securities
in such underwriting unless they accept the terms of the underwriting as agreed
upon between the Company and the underwriters selected by it (or by other
persons entitled to select the underwrit­ers), and then only in such
quantity as the underwriters determine in their sole discretion will not
jeopardize the success of the offering by the Company. If the total amount of
securities, including Registrable Secu­rities, requested by stockholders to
be included in such offering exceeds the amount of securities sold other than by
the Company that the underwriters determine in their sole discretion is
compatible with the success of the offering, then the Company shall be required
to include in the offering only that number of such securi­ties, including
Registra­ble Securities, which the under­writers determine in their sole
discretion will not jeopardize the success of the offering (the securities so
included to be appor­tioned pro rata among the selling Holders according to
the total amount of securities entitled to be includ­ed there­in owned
by each selling Holder or in such other proportions as shall mutu­ally be
agreed to by such sell­ing Holders). For purposes of the preceding
paren­thetical concerning apportionment, for any selling Holder who is a
holder of Registrable Securities and is a partner­ship or corporation, the
partners, retired part­ners and stockholders of such Holder, or the estates
and family members of any such partners and retired partners and any trusts for
the benefit of any of the foregoing persons shall be deemed to be a single
“selling Holder”, and any pro-rata reduction with respect to such “selling
Holder” shall be based upon the aggregate amount of shares carrying
registra­tion rights owned by all entities and individuals in­cluded in
such “selling Holder”, as defined in this sentence.

    
 

    5.6 Delay of
Registration. No Holder shall have any right to obtain or seek an
injunction restrain­ing or otherwise delaying any such registration as the
result of any controversy that might arise with respect to the
inter­pretation or implemen­tation of this Article V.

    
 

    5.7 Indemnification. In
the event that any Regis­trable Securi­ties are included in a
registration state­ment under this Article V:

    
 

    
      
        
        

      

      
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    (a) To the extent permitted by law,
the Company will indemnify and hold harmless each Holder, any underwriter (as
defined in the Securities Act) for such Holder and each person, if any, who
controls such Holder or under­writer within the meaning of the Securities
Act or the Exchange Act, against any losses, claims, damages, or
liabili­ties (joint or sever­al) to which they may become subject under
the Securities Act, or the Exchange Act, insofar as such losses, claims,
damag­es, or liabilities (or actions in respect thereof) arise out of or are
based upon any of the following statements, omissions or violations
(collec­tively a “Violation”): (i) any
untrue state­ment or alleged untrue statement of a material fact contained
in such registra­tion state­ment, including any preliminary prospectus
or final prospectus contained therein or any amendments or sup­plements
thereto, (ii) the omission or alleged omis­sion to state therein a material
fact re­quired to be stated therein, or necessary to make the statements
therein not misleading, or (iii) any viola­tion or alleged violation by the
Company of the Securities Act, the Exchange Act, or any rule or regulation
promulgated under the Securities Act, or the Exchange Act, and the Company will
pay to each such Holder, under­writer or controlling person, as
in­curred, any legal or other expenses reasonably in­curred by them in
connection with investi­gating or defending any such loss, claim, damage,
liability, or action; provided, however, that the
indemnity agreement contained in this Section 5.7(a) shall not apply to amounts
paid in settlement of any such loss, claim, damage, liability, or action if such
set­tlement is effected without the consent of the Compa­ny (which
consent shall not be unreasonably with­held), nor shall the Company be
liable in any such case for any such loss, claim, damage, liability, or action
to the extent that it arises out of or is based upon a Violation which occurs in
reliance upon and in conformi­ty with written information furnished
expressly for use in con­nection with such registration by any such Holder,
under­writer or controlling person or a violation of any provision of this
Agreement by a Holder.

    
 

    (b) To the extent permitted by law,
each Holder will indemnify and hold harmless the Company, each of its directors,
each of its officers, each person, if any, who con­trols the Company within
the meaning of the Securities Act, any underwriter, any other Holder selling
securi­ties in such registration statement and any controlling person of any
such under­writer or other Holder, against any losses, claims, damages, or
liabilities (joint or sever­al) to which any of the foregoing persons may
become subject, under the Securities Act, or the Exchange Act, insofar as such
losses, claims, damages, or liabilities (or actions in respect thereto) arise
out of or are based upon any Violation, in each case to the extent (and only to
the extent) that such Violation occurs in reliance upon and in conformity with
written information fur­nished by such Holder ex­pressly for use in
connection with such regis­tration or a violation of any provision of this
Agreement by a Holder; and each such Holder will pay, as incurred, any legal or
other expenses reasonably incurred by any person intend­ed to be indemnified
pursu­ant to this Section 5.7(b), in connection with investi­gating or
defending any such loss, claim, damage, liability, or action; provided, however, that the
indem­nity agreement con­tained in this Section 5.7(b) shall not apply
to amounts paid in settlement of any such loss, claim, damage, liability or
action if such settlement is ef­fected with­out the consent of the
Hold­er, which consent shall not be unreasonably withheld; provid­ed, further, that, in no
event shall any indemnity under this Section 5.7(b) exceed the greater of the
cash value of the (i) gross proceeds from the offering received by such Holder
or (ii) such Holder’s investment pursuant to this Agreement as set forth on the
signature page attached hereto.

    
 

    
      
        
        

      

      
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    (c) Promptly after receipt by an
indem­ni­fied party under this Section 5.7 of notice of the commencement
of any action (including any governmental action), such indem­nified party
shall, if a claim in respect thereof is to be made against any indemnify­ing
party under this Section 5.7, deliver to the indemnify­ing party a written
notice of the commencement thereof and the indemni­fying party shall have
the right to par­ticipate in, and, to the extent the indemnifying party so
desires, jointly with any other indemnifying party simi­larly notified, to
assume the defense thereof with counsel selected by the indemnifying party and
approved by the indemnified party (whose approval shall not be unreasonably
withheld); provided, however, that an
indemnified party (together with all other indem­nified parties which may be
represented with­out conflict by one counsel) shall have the right to retain
one sepa­rate counsel, with the fees and expenses to be paid by the
indemnifying party, if representation of such indem­nified party by the
counsel retained by the indemnifying party would be inappropriate due to actual
or potential differing interests between such indemni­fied party and any
other party represented by such counsel in such proceeding. The failure to
deliver written notice to the indemnifying party within a rea­sonable time
of the com­mencement of any such action, if prejudicial to its ability to
defend such action, shall relieve such indem­nifying party of any liability
to the indemnified party under this Section 5.7, but the omission so to deliver
written notice to the indemnify­ing party will not re­lieve it of any
liabil­ity that it may have to any indem­nified party otherwise than
under this Section 5.7.

    
 

    (d) If the indemnification provided
for in this Section 5.7 is held by a court of competent juris­diction to be
unavailable to an indemnified party with respect to any loss, liability, claim,
damage, or ex­pense referred to therein, then the indemnifying party, in
lieu of indem­nifying such indemnified party hereun­der, shall
contrib­ute to the amount paid or pay­able by such indemnified party as
a result of such loss, liabil­ity, claim, dam­age, or expense in such
pro­por­tion as is appro­priate to reflect the relative fault of the
indem­nifying party on the one hand and of the indem­nified party on the
other in connection with the state­ments or omissions that resulted in such
loss, liabili­ty, claim, damage, or expense as well as any other relevant
equita­ble consid­er­ations. The relative fault of the
indemni­fying party and of the indemnified party shall be deter­mined by
refer­ence to, among other things, whether the untrue or alleged untrue
statement of a materi­al fact or the alleged omission to state a material
fact relates to infor­mation supplied by the indemnifying party or by the
indemnified party and the parties' rela­tive intent, knowl­edge, access
to infor­ma­tion, and opportunity to correct or prevent such
state­ment or omission.

    
 

    (e) Notwithstanding the foregoing, to
the extent that the provisions on indemnification and con­tri­bution
contained in the underwriting agreement en­tered into in connection with the
underwritten public offering are in conflict with the foregoing provisions, the
provi­sions in the underwriting agreement shall con­trol.

    
 

    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

      
      

    

    (f) The obligations of the Company and
Holders under this Section 5.7 shall survive the com­ple­tion of any
offer­ing of Registrable Securities in a registration state­ment under
this Article V, and other­wise.

    
 

    5.8 Reports Under Securities
Exchange Act of 1934. With a view to making available to the Holders the
benefits of Rule 144 and any other rule or regula­tion of the SEC that may
at any time permit a Holder to sell securities of the Company to the public
without registration or pursuant to a registration on Form S-3, the Company
agrees to:

    
 

    (a) make and keep public information
avail­able, as those terms are understood and defined in Rule 144, at all
times after 90 days after the effective date of the IPO or Trading Event by the
Company;

    
 

    (b) file with the SEC in a timely
manner all reports and other documents required of the Company under the
Securities Act and the Exchange Act; and

    
 

    (c) furnish to any Holder, so long as
the Holder owns any Registrable Securities, forthwith upon request (i) a copy of
the most recent annual or quar­ter­ly report of the Company and such
other reports and documents so filed by the Company, and (ii) such other
information as may be reasonably requested in availing any Holder of any rule or
regulation of the SEC which permits the selling of any such securities without
regis­tration or pursuant to such form.

    
 

    5.9 Permitted
Transferees. The rights to cause the Company to register Registrable
Securities granted to the Holders by the Company under this Article V may be
assigned in full by a Holder in connection with a transfer by such Holder of its
Registrable Securities if: (a) such Holder gives prior written notice to the
Company; (b) such transferee agrees to comply with the terms and provisions of
this Agreement; (c) such transfer is otherwise in compliance with this Agreement
and (d) such transfer is otherwise effected in accordance with applicable
securities laws. Except as specifically permitted by this Section 5.9, the
rights of a Holder with respect to Registrable Securities as set out herein
shall not be transferable to any other Person, and any attempted transfer shall
cause all rights of such Holder therein to be forfeited.

    
 

    5.10 Termination of Registration
Rights The right of any Holder to request inclu­sion in any
regis­tration pursuant to Section 5.2 shall terminate if all shares of
Registrable Secu­rities held by such Holder may immediately be sold under
Rule 144 without restriction.

    
 

    VI. MISCELLANEOUS

    
 

    6.1 Any notice or other communication
given hereunder shall be deemed sufficient if in writing and sent by registered
or certified mail, return receipt requested, or delivered by hand against
written receipt therefor, addressed as follows:

    
 

    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

    

     

    if to the
Company, to it at:

    
 

    c/o
Paramount Biosciences, LLC

    787
Seventh Avenue

    48th
Floor

    New York,
NY 10019

    Facsimile:
(212) 554-4366

    Attn: J.
Jay Lobell

     

    
 

    With a
copy to:

    
 

    Wyrick
Robbins Yates & Ponton LLP

    4101 Lake
Boone Trail

    Suite
300

    Raleigh,
NC 27607-7506

    Facsimile:
(919)781-4865

    Attn: W.
David Mannheim, Esq.

    Email:
dmannheim@wyrick.com

     

    
 

    if to the
Subscriber, to it at:

    
 

    Paramount
Credit Partners, LLC

    787
Seventh Avenue, 48th
Floor

    New York,
NY 10019

    Facsimile:
(212) 554-4355

    Attn:
Lindsay A. Rosenwald, M.D.

    
 

    Notices
shall be deemed to have been given or delivered on the date of mail­ing,
except notices of change of address, which shall be deemed to have been given or
delivered when received.

    
 

    6.2 Except as otherwise expressly
provided herein, any term of this Agreement may be amended and the observance of
any term of this Agreement may be waived (either generally or in a particular
instance, either retroactively or prospectively and either for a specified
period of time or indefinitely) with the written consent of the Company and the
Subscriber.

    
 

    6.3 Subject to the provisions of
Section 5.9, this Agreement shall be binding upon and inure to the benefit of
the parties hereto and to their respective heirs, legal representatives,
successors and assigns. This Agreement sets forth the entire agreement and
under­standing between the parties as to the subject matter hereof and
merges and supersedes all prior dis­cussions, agreements and understandings
of any and every nature among them.

    
 

    
      
        
        

      

      
        12

        
          

        

      

      
        
        

      

      
      

    

    6. 4 NOTWITHSTANDING THE PLACE WHERE
THIS AGREE­MENT MAY BE EXECUTED BY ANY OF THE PARTIES HERETO, THE PARTIES
EX­PRESSLY AGREE THAT ALL THE TERMS AND PROVI­SIONS HEREOF SHALL BE
CONSTRUED IN ACCORDANCE WITH AND GOV­ERNED BY THE SUBSTANTIVE AND PROCEDURAL
LAWS OF THE STATE OF NEW YORK WITH­OUT REGARD TO SUCH STATE’S PRINCIPLES OF
CONFLICTS OF LAW. IN THE EVENT THAT A JUDICIAL PROCEEDING IS NECESSARY, THE SOLE
FORUM FOR RESOLVING DISPUTES ARISING OUT OF OR RELATING TO THIS AGREEMENT IS THE
STATE AND FEDERAL COURTS LOCATED IN THE BOROUGH OF MANHATTAN, STATE OF NEW YORK.
THE PARTIES HEREBY IRREVOCABLY CONSENT TO THE JURISDICTION OF SUCH COURTS AND
AGREE TO SAID VENUE.

    
 

    6.5 In order to discourage frivolous
claims the parties agree that unless a claimant in any proceed­ing arising
out of this Agreement succeeds in establishing his claim and recovering a
judgment against another party (regardless of whether such claimant
suc­ceeds against one of the other parties to the action), then the other
party shall be entitled to recover from such claimant all of its reasonable
legal costs and expenses relating to such proceeding and/or incurred in
prepara­tion therefor.

    
 

    6.6 The holding of any provision of
this Agreement to be invalid or unenforce­able by a court of competent
juris­diction shall not affect any other provi­sion of this Agreement,
which shall remain in full force and effect. If any provision of this Agreement
shall be declared by a court of competent jurisdiction to be inval­id,
illegal or incapable of being enforced in whole or in part, such provision shall
be interpreted so as to remain enforceable to the maximum extent permissible
consistent with applicable law and the remaining condi­tions and provisions
or portions thereof shall neverthe­less remain in full force and effect and
enforceable to the extent they are valid, legal and en­forceable, and no
provisions shall be deemed dependent upon any other covenant or provision unless
so expressed herein.

    
 

    6.7 It is agreed that a waiver by
either party of a breach of any provision of this Agreement shall not operate,
or be construed, as a waiver of any subsequent breach by that same
party.

    
 

    6.8 The parties agree to execute and
deliver all such further documents, agreements and instruments and take such
other and further action as may be neces­sary or appropriate to carry out
the purposes and intent of this Agreement.

    
 

    6.9 This Agreement may be executed in
two or more counter­parts each of which shall be deemed an origi­nal,
but all of which shall together constitute one and the same
instrument.

    
 

    6.10 Nothing in this Agreement shall
create or be deemed to create any rights in any person or entity not a party to
this Agreement, except for the holders of Registrable Securities and (b) for the
indemnified parties pursuant to Section 5.7 hereof.

    
 

    [REMAINDER
OF PAGE INTENTIONALLY BLANK]

     

    
      
        
        

      

      
        13

        
          

        

      

      
        
        

      

    

    
 

    IN WITNESS WHEREOF, the
undersigned have entered into this Note and Warrant Purchase Agreement as of the
24th day
of June, 2009.

     

    
 

    
      	 	PACIFIC BEACH BIOSCIENCES,
      INC.
	 	 
	 	
              By:

            	
              
                /s/
      J. Jay Lobell

              

            
	 	 	
              Name:

            	
              J.
      Jay Lobell

            
	 	 	
              Title:

            	 

    

     

    
 

    
 

    
      	 	PARAMOUNT CREDIT PARTNERS,
      LLC
	 	 
	 	
              By:

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

              

            
	 	 	
              Name:

            	
              Lindsay
      A. Rosenwald, M.D.

            
	 	 	
              Title:

            	
              Managing
      Member

            

    

     

    
 

    
      
        
        

      

      
        14fs1ex4xii_iaso.htm

    Exhibit
4.12

    

    THIS NOTE
HAS 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 HAS 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.

     

    PACIFIC
BEACH BIOSCIENCES, INC.

    10%
SENIOR PROMISSORY NOTE

     

     

    
      	 	 San Diego,
      California
	 $125,000	  June 24,
      2009

    

     

     

    1.           Principal and
Interest.

    

    PACIFIC BEACH BIOSCIENCES,
INC. (the “Company”), a Delaware
corporation, for value received, hereby promises to pay to the order of PARAMOUNT CREDIT PARTNERS,
LLC, or his, her or its assigns (“Holder”), in lawful
money of the United States of America at the address for notices to Holder set
forth in the applicable Purchase Agreement (as defined below) (or such other
address as Holder shall provide to the Company in writing pursuant hereto), the
principal amount of One Hundred Twenty Five Thousand Dollars ($125,000),
together with interest as set forth below.

    

    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 ten percent (10%), or such lesser rate as shall be
the maximum rate allowable under applicable law; provided however, that upon an
Event of Default (as defined herein) during the Term (as defined herein) of this
Note, 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,
and shall accrue and be payable quarterly in arrears.  All unpaid
principal on this Note shall be due and payable on the earlier of (i) December
31, 2013; (ii) consummation by the Company of an equity financing (or series of
related equity financings), including without limitation a firm commitment
underwritten initial public offering pursuant to an effective registration
statement under the Securities Act of 1933, as amended, involving the sale of
equity securities in which the Company receives at least $10,000,000 in
aggregate gross cash proceeds (before brokers’ fees or other transaction related
expenses) (a “Qualified
Financing”); and (iii) consummation of a merger, share exchange or other
transaction (or series of related transactions), other than in connection with a
Qualified Financing, in which (A) 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 (B) the
aggregate consideration payable to the Company or its stockholders in such
transaction(s) is greater than or equal to $10,000,000 (such period of time from
the date of issuance hereof, the “Term”).  For
purposes of this Note, an “Event of Default”
shall occur if (i) the Company shall default in the payment on the 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 or the Purchase
Agreement (as defined below) (other than the failure to make payment when due),
and any such default shall continue for a period of sixty (60) days after the
date on which the Company receives written notice thereof from the
Holder.

    

    
      
         

      

      
         

        
          

        

      

      
         

      

       

    

    This Note is being issued pursuant to
that certain Note Purchase Agreement between the Company and the Holder, dated
as of the date hereof (the “Purchase Agreement”),
and is subject to its terms.  Capitalized terms used herein but not
defined shall have the meanings given to such terms in the Purchase
Agreement.  The Note shall rank pari passu with all other senior
existing indebtedness of the Company and, pursuant to Section 2.8 of the
Purchase Agreement, no new indebtedness which is secured or senior in right of
payment to the Notes may be issued by the Company without the consent of the
Holder.  No consent of the Holder will be required for issuances by
the Company of unsecured indebtedness that ranks pari passu with, or junior to,
the Notes.

    

    2.           Prepayment.  The
Notes may be prepaid at any time, in whole or in part, without penalty prior to
the end of the Term.

    

    3.           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.

    

    4.           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
provided pursuant to the Purchase Agreement.

    

    5.           Notice of Proposed
Transfers.  This Note shall not be transferable by the Holder
without the prior written consent of the Company, which shall not be
unreasonably withheld.  Notwithstanding the foregoing, the Holder may
transfer this Note to one or more of its members, 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 the Note transferred as above provided shall bear an appropriate
restrictive legend, except that the Note 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.

    

    6.           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 or the Purchase Agreement at any time
which is not cured within the time periods permitted therein, or if no cure
period is provided therein, within sixty (60) days after the date on which the
Company receives written notice thereof from the Holder.

    

    
      
         

      

      
        2

        
          

        

      

      
         

      

       

    

    7.           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.

    

    8.           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.

    

    9.           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.

    

    10.        
Amendment.  Any
term of this Note may be amended only with the written consent of the Company
and the Holder.

    

    *  *  *  *  *

     

    
      
         

      

      
        3

        
          

        

      

      
         

      

    

     

    ISSUED as of the date first
above written.

    

     

    

    
      	 
      	PACIFIC BEACH BIOSCIENCES,
      INC.
	 
      	 
      
	 
      	
              By:

            	
              
                /s/
      J. Jay
      Lobell

              

            
	 
      	 
      	
              Name:

            	
              J.
      Jay Lobell

            
	 
      	 
      	
              Title:

            	 
      

    

    
 

     

     

     

     

     

     

      
        

      

    

    4

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