COMMON STOCK AND WARRANT PURCHASE AGREEMENT CORAUTUS GENETICS INC. AND PURCHASERS JANUARY 8, 2004

EXHIBIT 10.2

COMMON STOCK AND WARRANT PURCHASE AGREEMENT

AND

PURCHASERS

JANUARY 8, 2004

COMMON STOCK AND WARRANT PURCHASE AGREEMENT

THIS COMMON STOCK AND WARRANT PURCHASE AGREEMENT (this “Agreement”) is made and entered into as of the 8^th day of January, 2004 by and among Corautus Genetics Inc., a Delaware corporation (the “Company”), and the persons or entities listed on Exhibit A attached hereto (each a “Purchaser” and collectively the “Purchasers”).

IN CONSIDERATION OF the premises and the mutual representations and warranties, agreements and covenants hereinafter set forth and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Company and the Purchasers agree as follows:

ARTICLE 1

Definitions

1.1 Certain Defined Terms. For purposes of this Agreement, the following capitalized terms shall have the following respective meanings:

(a) “Claims and Losses” means, with respect to any Person, any and all claims, actions, suits, judgments, settlements, liabilities, losses, damages, awards, interest, penalties, costs and expenses (including, without limitation, reasonable attorneys’ fees) actually suffered or incurred by such Person.

(b) “Common Stock” means the common stock, par value $0.001 per share, of the Company.

(d) “Exchange Act” means the Securities Exchange Act of 1934, as amended.

(e) “Material Adverse Effect” means, with respect to any Person, any circumstance, change or effect that: (i) is or is reasonably likely to be materially adverse to the business, assets, operations, results of operations, prospects, liabilities (including, without limitation, contingent liabilities) or the financial condition of such Person and its Subsidiaries, taken as a whole, or (ii) is reasonably likely to materially adversely effect the ability of such Person to consummate the transactions contemplated by this Agreement.

(f) “Person” means any individual, partnership, firm, corporation, limited liability company, association, trust, unincorporated organization or other entity, as well as any syndicate or group that would be deemed a person under Section 13(d)(3) of the Exchange Act.

(g) “Preferred Stock” means the preferred stock, par value $0.001 per share, of the Company.

(h) “Prospectus” means a prospectus, including any amendment or supplement thereto, included in the Registration Statement at the time of its effectiveness.

(i) “Purchaser Disclosure Schedule” means the applicable disclosure schedule of a particular Purchaser attached hereto as Exhibit E.

(j) “Registration Statement” means a registration statement on Form S-3 or another appropriate form filed by the Company with the SEC covering the resale, from time to time, of the Shares and Warrant Shares by the Purchasers.

(k) “SEC” means the Securities and Exchange Commission.

(l) “SEC Reports” means (i) the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2002, (ii) the Company’s Quarterly Reports on Form 10-Q for the quarterly periods ended March 31, 2003, June 30, 2003 and September 30, 2003, (iii) all proxy statements relating to the Company’s meetings of stockholders (whether annual or special) held since January 1, 2003, and (iv) all other forms, reports and other registration statements (other than Quarterly Reports on Form 10-Q not referred to in clause (ii) above) filed by the Company with the SEC since January 1, 2003.

(m) “Securities Act” means the Securities Act of 1933, as amended.

(n) “Strategic Event” means any merger, consolidation or other business combination, sale of shares of capital stock, sale of assets, tender offer, exchange offer or similar transactions or series of transactions involving the Company or material development in the Company’s product approval that has not been publicly announced.

(o) “Subsidiary” means, with respect to any Person, any corporation, partnership, joint venture, limited liability company or other entity, whether incorporated or unincorporated, of which such Person or any other Subsidiary of such Person (i) owns, directly or indirectly, fifty percent (50%) or more of the outstanding voting securities or equity interests, (ii) is entitled to elect at least a majority of the board of directors or similar governing body, or (iii) is a general partner, excluding such partnerships where such Person or any Subsidiary of such Person do not have a majority of the voting interests in such partnership.

1.2 Additional Definitions. The following capitalized terms have the meanings set forth in the Sections of this Agreement set forth below:

Definition		Location
“Agreement”		Preamble
“Closing”		3.1
“Closing Date”		3.1
“Company”		Preamble
“Company Indemnified Party”		7.3
“Notice”		8.1
“Purchase Price”		2.3
“Purchaser” or “Purchasers”		Preamble
“Purchaser Indemnified Party”		7.2
“Shares”		2.1
“Unit”		2.1
“VGI”		4.1
“Warrant” or “Warrants”		2.1
“Warrant Shares”		2.1

ARTICLE 2

Purchase and Sale of Common Stock and Warrants

2.1 Units. For purposes of this Agreement, each “Unit” means and shall be comprised of five (5) shares (the “Shares”) of the Company’s Common Stock and the right to purchase one (1) share of the Company’s Common Stock at an exercise price per share equal to one hundred twenty percent (120%) of the closing price of one share of the Company’s Common Stock on the American Stock Exchange on the trading day immediately preceding the Closing Date therefor. The foregoing right shall be aggregated for each Purchaser and represented by a warrant (each a “Warrant” and collectively the “Warrants”) to purchase such shares of the Company’s Common Stock (the “Warrant Shares”) in substantially the form set forth in Exhibit B attached hereto.

2.2 Purchase and Sale of Units. Subject to the terms and conditions of this Agreement, the Company will issue and sell to each Purchaser, and each Purchaser will purchase from the Company, the number of Units set forth opposite such Purchaser’s name on the schedule of Purchasers set forth in Exhibit A attached hereto. The maximum number of Units issuable hereunder is 240,000 (comprising 1,200,000 Shares and Warrants for 240,000 Warrant Shares). The obligations of the Purchasers hereunder are several and not joint.

2.3 Allocation of Purchase Price. The purchase price payable by each Purchaser for the Units to be purchased hereunder (the “Purchase Price”) shall be equal to the number of Units to be purchased by such Purchaser multiplied by $21.9195, as set forth opposite such Purchaser’s Name on the schedule of Purchasers set forth in Exhibit A attached hereto. The Purchase Price for each Unit shall be allocated as follows: (a) $4.3819 of each Unit shall be allocated to each Share contained in such Unit; and (b) $0.01 of each Unit shall be allocated to the right to purchase one share of Common Stock represented by the Warrant.

ARTICLE 3

Closing and Deliverables

3.1 The Closing. Subject to the terms and conditions of this Agreement, the closing of the purchase and sale of the Units will take place at a closing to be held at the offices of ▇▇▇▇▇▇▇ Long & ▇▇▇▇▇▇▇▇ LLP, ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇, on January 22, 2004 at 10:00 a.m. local time or such other time as may be agreed upon by the Company and the Purchasers; provided, however, the Company shall schedule an alternative closing with respect to a particular Purchaser on such other date as the Company and such

Purchaser may mutually agree but in any event not later than January 30, 2004. The first closing and each additional closing are referred to herein individually as a “Closing,” and the date of the first closing and the date of each additional closing are referred to herein individually as a “Closing Date.”

3.2 Deliverables and Conditions to Closing.

(a) Conditions to the Company’s Obligations. The Company’s obligations to complete the purchase and sale of the Units and to deliver the stock certificate(s) and Warrant(s) therefor to each Purchaser is subject to (i) receipt by the Company of immediately available funds in the full amount of the Purchase Price for the Units being purchased hereunder as set forth opposite such Purchaser’s name on Exhibit A attached hereto, and (ii) a certificate, dated as of the Closing Date, executed by an authorized officer of such Purchaser, to the effect that the representations and warranties made by such Purchaser in this Agreement are accurate in all material respects as of the Closing Date and to the effect that such Purchaser has fulfilled in all material respects those undertakings of such Purchaser in this Agreement to be fulfilled on or prior to the Closing.

(b) Conditions to the Purchaser’s Obligations. Each Purchaser’s obligation to complete the purchase and sale of the Units is subject to delivery by the Company to such Purchaser of (i) a certificate, dated as of the Closing Date, executed by a duly authorized officer of the Company, to the effect that the representations and warranties of the Company set forth in Article 4 below are accurate in all material respects as of the Closing Date and to the effect that the Company has fulfilled in all material respects those undertakings of the Company to be fulfilled on or prior to the Closing, (ii) instructions in the form of Exhibit C attached hereto to the Company’s transfer agent to deliver to such Purchaser one or more stock certificates issued in the name of such Purchaser, or in such nominee name(s) as designated by such Purchaser in writing, representing the number of Shares set forth opposite such Purchaser’s name on the schedule of Purchasers set forth in Exhibit A attached hereto, and (iii) a Warrant to purchase the number of Warrant Shares set forth opposite such Purchaser’s name on the schedule of Purchasers set forth in Exhibit A attached hereto.

ARTICLE 4

Representations, Warranties and Covenants of the Company

Except as set forth in the Company’s SEC Reports or on the corresponding sections of the Company Disclosure Schedule, or as specifically contemplated by this Agreement, the Company hereby represents and warrants to, and covenants with, each Purchaser as of the Closing Date as follows:

4.1 Organization and Qualification; Subsidiaries. The Company is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware and has all necessary corporate power and authority to own, operate or lease the properties and assets now owned, operated or leased by it and to carry on its business as it is currently conducted. The Company is duly licensed or qualified to do business and is in good standing in each jurisdiction in which the properties owned or leased by it or the operation of its business makes such

licensing or qualification necessary, except where the failure to be so licensed or qualified would not have a Material Adverse Effect. Other than Urogen Acquisition Corporation and Vascular Genetics Inc. (“VGI”), the Company does not own, of record or beneficially, any direct or indirect equity or other interest in any Subsidiary.

4.2 Authority, Enforcement and Validity. The Company has all necessary corporate power and authority to enter into this Agreement, to carry out its obligations hereunder and to consummate the transactions contemplated hereby. The execution and delivery by the Company of this Agreement, the performance by the Company of its obligations hereunder and the consummation by the Company of the transactions contemplated hereby have been duly authorized by all requisite action on the part of the Company. This Agreement has been duly executed and delivered by the Company, and (assuming due execution and delivery hereof by each other party hereto) this Agreement constitutes, or upon its execution shall constitute, the legal, valid and binding obligation of the Company enforceable against the Company in accordance with its terms, subject to (i) the effect of any applicable bankruptcy, insolvency, reorganization, moratorium and other similar laws relating to or affecting creditors’ rights and remedies generally, and (ii) the effect of general equitable principles, regardless of whether asserted in a proceeding in equity or at law.

4.3 Capitalization. The authorized capital stock of the Company consists of 100,000,000 shares of Common Stock and 5,000,000 shares of Preferred Stock (of which Preferred Stock there are designated 40,000 shares of Series A Preferred Stock, 13,000 shares of Series B Preferred Stock, 17,000 shares of Series C Preferred Stock and 1,400,000 shares of Series D Preferred Stock). As of December 31, 2003, (a) 10,564,877 shares of Common Stock are issued and outstanding, (b) 2,163,225 shares of Common Stock are reserved for issuance pursuant to options granted pursuant to the Company’s 1995 Stock Plan, 1995 Directors Option Plan, 1999 Stock Plan, and 2002 Stock Plan, (c) 710,611 shares of Common Stock are reserved for issuance upon the exercise of outstanding warrants, (d) 2,000 shares of Series C Preferred Stock are issued and outstanding, (e) 1,385,377 shares of Series D Preferred Stock are issued and outstanding, and (f) 556,903 shares of Common Stock are reserved for issuance to the former stockholders of VGI to indemnify such stockholders against certain losses as set forth in an Agreement and Plan of Reorganization dated September 12, 2002, as amended, between the Company and VGI. Except as set forth in this Section, in the Company’s SEC Reports or in the Company Disclosure Schedule, there are no outstanding options, warrants, subscriptions, calls, convertible securities or other rights, agreements, arrangements or commitments relating to the capital stock of the Company or obligating the Company to issue or sell any shares of capital stock of, or any other equity interest in, the Company, excluding occasional grants of options to members of the Company’s Board of Directors for attendance at meetings pursuant to established policies.

4.4 Issuance of Shares. The Shares and Warrants to be issued and sold pursuant to this Agreement have been duly and validly authorized by the Company, and, at the Closing, the Shares and Warrants will have been duly and validly issued, fully paid and non-assessable, and the issuance of the Shares and Warrants shall not be subject to preemptive or other similar rights, except for such rights that have been waived. The Warrant Shares, if and when issued, sold and delivered in accordance with the terms of the Warrants, will be duly and validly issued, fully

paid and non-assessable, and the issuance of such Warrant Shares shall not subject to any preemptive or similar rights, except for such rights that have been waived.

4.5 No Conflict. The execution, delivery and performance by the Company of this Agreement and the consummation by the Company of the transactions contemplated hereby does not (a) violate, conflict with or result in the breach of any provision of its certificate of incorporation or by-laws, (b) conflict with or violate any law, rule, regulation, order, judgment or decree applicable to the Company or any of its Subsidiaries, or (c) conflict with, result in any breach of, constitute a default under, require any consent under, or give to others any rights of termination, amendment, acceleration, suspension, revocation or cancellation of any material agreement, indenture or instrument to which the Company or any of its Subsidiaries is a party, except for any such conflicts, violations, breaches, defaults or other occurrences that have not had, and would not be reasonably expected to have, individually or in the aggregate, a Material Adverse Effect.

4.6 Governmental Consents and Approvals. The execution, delivery and performance of this Agreement by the Company does not require any consent, approval, authorization or other order of, action by, filing with or notification to, any governmental authority other than (a) any approval of, filing with or notification to the American Stock Exchange, including the approval of the listing of the Shares and Warrant Shares on such exchange, and (b) such registrations, filings and authorizations as may be required under applicable federal and state securities laws, including, without limitation, the Registration Statement and a declaration as to the effectiveness of such Registration Statement.

4.7 SEC Reports. The Company has filed all forms, reports and documents required to be filed by it with the SEC pursuant to the reporting requirements of the Exchange Act during the twelve (12) months preceding the date of this Agreement. As of their respective filings dates, the Company’s SEC Reports (a) were prepared in accordance with either the requirements of the Securities Act or the Exchange Act, as the case may be, and the rules and regulations of the SEC promulgated thereunder, and (b) did not, at the time they were filed, or, if amended, as of the date of such amendment, contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements made therein, in the light of the circumstances under which they were made, not misleading.

4.8 Financial Statements. Each of the consolidated financial statements (including, in each case, any notes thereto) contained in the Company’s SEC Reports was prepared in accordance with United States generally accepted accounting principles applied on a consistent basis throughout the periods indicated (except as may be indicated in the notes thereto or, in the case of unaudited statements, as permitted by Form 10-Q of the SEC), and each fairly presents, in all material respects, the consolidated financial position, results of operations and cash flows of the Company and its consolidated Subsidiaries as at the respective dates thereof and for the respective periods indicated therein (subject, in the case of unaudited statements, to normal and recurring year-end adjustments which would not have had, and would not have, a Material Adverse Effect).

4.9 Absence of Certain Changes. Except as set forth in the Company’s SEC Reports or in Section 4.9 of the Company Disclosure Schedule, since the date of the balance sheet in the

Company’s most recently filed SEC Report, the business of the Company has been conducted in the ordinary course, in a manner consistent with past practices and there has been no Material Adverse Effect.

4.10 Litigation. Except as set forth in the Company’s SEC Reports or in Section 4.10 of the Company Disclosure Schedule, there is no action, suit, proceeding, inquiry or investigation before any court, public board, government agency, self-regulatory agency or other body pending or, to the knowledge of the Company, threatened by or against the Company or either of its two Subsidiaries which has resulted or would reasonably be expected to have a Material Adverse Effect.

4.11 Disclosure. Except as set forth on Section 4.11 of the Company Disclosure Schedule, the Company confirms that neither it nor any other Person acting on its behalf has provided any Purchaser or its agents or counsel with any information that constitutes or might constitute material, non-public information.

4.12 Use of Proceeds. The Company intends to use the net proceeds from the sale of the Units hereunder for general corporate and working capital purposes.

ARTICLE 5

Representations, Warranties and Covenants of Each Purchaser

Except as set forth on the corresponding sections of the applicable Purchaser Disclosure Schedule or as specifically contemplated by this Agreement, each Purchaser, severally and not jointly, hereby represents and warrants to, and covenants with, the Company as of the Closing Date as follows:

5.1 Organization. Such Purchaser is an entity duly organized, validly existing and in good standing under the laws of its state of organization and has all necessary power and authority to own, operate or lease the properties and assets now owned, operated or leased by it and to carry on its business as it is currently conducted.

5.2 Authority, Enforcement and Validity. Such Purchaser has all necessary power and authority to enter into this Agreement, to carry out its obligations hereunder and to consummate the transactions contemplated hereby. The execution and delivery by such Purchaser of this Agreement, the performance by such Purchaser of its obligations hereunder and the consummation by such Purchaser of the transactions contemplated hereby have been duly authorized by all requisite action on the part of such Purchaser. This Agreement has been duly executed and delivered by such Purchaser, and (assuming due execution and delivery hereof by the Company) this Agreement constitutes, or upon its execution shall constitute, the legal, valid and binding obligation of such Purchaser enforceable against such Purchaser in accordance with its terms, subject to (i) the effect of any applicable bankruptcy, insolvency, reorganization, moratorium and other similar laws relating to or affecting creditors’ rights and remedies generally, and (ii) the effect of general equitable principles, regardless of whether asserted in a proceeding in equity or at law.

5.3 No Conflict. The execution, delivery and performance by such Purchaser of this Agreement and the consummation by such Purchaser of the transactions contemplated hereby does not (a) violate, conflict with or result in the breach of any provision of its certificate of incorporation, by-laws or other organizational or governing documents, (b) conflict with or violate any law, rule, regulation, order, judgment or decree applicable to such Purchaser or any of its Subsidiaries, or (c) conflict with, result in any breach of, constitute a default under, require any consent under, or give to others any rights of termination, amendment, acceleration, suspension, revocation or cancellation of any material agreement, indenture or instrument to which such Purchaser or any of its Subsidiaries is a party, except for any such conflicts, violations, breaches, defaults or other occurrences that have not had, and would not be reasonably expected to have, individually or in the aggregate, a Material Adverse Effect.

5.4 Governmental Consents and Approvals. The execution, delivery and performance of this Agreement by such Purchaser does not require any consent, approval, authorization or other order of, action by, filing with or notification to, any governmental authority.

5.5 Accredited Investor and Investment Experience. Such Purchaser is an “accredited investor” within the meaning of Rule 501 of Regulation D promulgated under the Securities Act. In addition, such Purchaser is knowledgeable, sophisticated and experienced in making, and is qualified to make, decisions with respect to investments in securities representing an investment decision like that involved in the purchase of the Shares and Warrants.

5.6 Availability of Funds. Such Purchaser currently has sufficient immediately available funds in cash and will at the Closing have sufficient immediately available funds in cash to pay the Purchase Price and to pay any other amounts payable pursuant to this Agreement and to effect the transactions contemplated thereby.

5.7 Investment Intent. Such Purchaser is acquiring the Units for its own account solely for the purpose of investment and not as a nominee or agent and not with a view to, or for offer or sale in connection with, any distribution thereof. Such Purchaser shall not, directly or indirectly, offer, sell, pledge, transfer or otherwise dispose of (or solicit any offers to buy, purchase or otherwise acquire or take a pledge of) any of the Shares, Warrants or Warrant Shares except in accordance with the provisions of Article 6 of this Agreement.

5.8 Information and Risk.

(a) Such Purchaser has requested, received, reviewed and considered all information such Purchaser deems relevant in making an informed decision to purchase the Shares and Warrants. Such Purchaser has had an opportunity to discuss the Company’s business, management and financial affairs with its management and also had an opportunity to ask questions of officers of the Company that were answered to such Purchaser’s satisfaction, provided that such inquiries do not impair the rights of such Purchaser to rely on the representations and warranties of the Company as set forth in Article 4.

(b) Such Purchaser recognizes that an investment in the Shares and Warrants involves a high degree of risk, including a risk of total loss of such Purchaser’s investment. Such Purchaser is able to bear the economic risk of holding the Shares and Warrants for an indefinite

period or complete loss of the investment, and has knowledge and experience in the financial and business matters such that it is capable of evaluating the risks of the investment in the Shares and Warrants.

(c) Such Purchaser has, in connection with such Purchaser’s decision to purchase the Shares and Warrants, not relied upon any representations or other information (whether oral or written) other than as set forth in the representations and warranties of the Company contained herein and the SEC Reports, and such Purchaser has, with respect to all matters relating to this Agreement and the offer and sale of the Shares and Warrants, relied solely upon the advice of such Purchaser’s own counsel and has not relied upon or consulted any counsel to the Company.

5.9 Disclosures to the Company. Such Purchaser understands that the Company is relying on the statements contained herein to establish an exemption from registration under applicable federal and state securities laws. Such Purchaser will promptly notify the Company of any changes in the information set forth in the Registration Statement or Prospectus regarding such Purchaser. For purposes of the requirements of state securities laws, such Purchaser represents that it is solely a resident of the state set forth opposite such Purchaser’s name on Exhibit A attached hereto and that the offer and purchase of the Shares and the Warrants pursuant hereto has and will occur solely in such state.

5.10 Legends.

(a) Such Purchaser understands that, until such time as the Shares and the Warrant Shares into which the Warrant is convertible may be sold under an effective registration statement under the Securities Act, or an exemption under the Securities Act and applicable state securities laws, the Shares and the Warrant Shares into which the Warrant is convertible will bear a restrictive legend in substantially the following form (and a stop-transfer order may be placed against transfer of the certificates for such securities):

“The securities represented by this certificate have not been registered under the Securities Act of 1933, as amended (the “Securities Act”), or under the securities laws of any other jurisdiction. These securities have been acquired for investment and not with a view to, or in connection with, the distribution thereof. The securities may not be offered, sold, pledged, transferred or assigned in the absence of an effective registration statement for the securities under the Securities Act and applicable state securities laws, unless sold pursuant to an exemption under the Securities Act and applicable state securities laws.”

(b) Such certificates shall not be required to contain such legend (i) while a Registration Statement covering the resale of such Shares and Warrant Shares is effective under the Securities Act, (ii) following any sale of such Shares and Warrant Shares pursuant to Rule 144, or (iii) if such Shares and Warrant Shares are eligible for sale under Rule 144(k). Following the effective date of the Registration Statement or at such earlier time as a legend is no longer required for certain Shares or Warrant Shares, the Company will use commercially reasonable

efforts to, no later than five (5) trading days following the delivery by a Purchaser to the Company or its transfer agent of a legended certificate representing such securities, deliver or cause to be delivered to such Purchaser a certificate representing such securities that is free from all restrictive and other legends.

5.11 Nature of Purchaser. Except as set forth in Exhibit A attached hereto, such Purchaser: (a) is not an affiliate (as such term is defined pursuant to Rule 12b-2 promulgated under the Exchange Act) of any other Purchaser; (b) is not constituted as a partnership, association, joint venture or any other type of joint entity with any other Purchaser; and (c) is in no way acting as a group (as such term is defined under Section 13(d) of the Exchange Act) with any other Purchaser. If at any time after the Closing Date such Purchaser becomes an affiliate (as defined herein) of any other Purchaser, such Purchaser will provide prompt written notice to the Company.

5.12 Brokers or Finders. No broker, investment banker, financial advisor or other Person is entitled to any broker’s, finder’s, financial advisor’s or other similar fee or commission in connection with the transactions contemplated by this Agreement based upon arrangements made by or on behalf of such Purchaser, except as may be paid to Vertical Ventures, LLC by the Company.

5.13 Disclosure. Such Purchaser confirms that neither it nor any other Person acting on its behalf has received any information that constitutes or might constitute material, non-public information.

ARTICLE 6

Registration of the Shares; Compliance with the Securities Act

6.1 Registration Procedures and Expenses.

(a) Except for such times as the Company may be required to suspend the use of a prospectus forming a part of the Registration Statement, the Company will:

(1) as soon as practicable, but in no event later than thirty (30) days following the Closing Date, use commercially reasonable efforts to prepare and file with the SEC a Registration Statement;

(2) use commercially reasonable efforts to cause the Registration Statement to become effective under the Securities Act no later than one hundred twenty (120) days after the Closing Date;

(3) prepare and file with the SEC such amendments and supplements to the Registration Statement and the prospectus used in connection therewith as may be necessary to keep the Registration Statement continuously effective until the earliest of (i) the second anniversary of the Closing Date, or (ii) such time as all Shares purchased by the Purchasers have been sold;

(4) so long as the Registration Statement is effective covering the resale of Shares owned by the Purchasers, furnish to the Purchasers with respect to the Shares registered under the Registration Statement (and to each underwriter, if any, of such Shares) such reasonable number of copies of prospectuses and such other documents as the Purchaser may reasonably request, in order to facilitate the public sale or other disposition of all or any of the Shares by the Purchasers; provided, however, that the obligation of the Company to deliver copies of prospectuses to the Purchasers shall be subject to the receipt by the Company of reasonable assurances from the Purchasers that the Purchasers will comply with the applicable provisions of the Securities Act and of such other securities laws as may be applicable in connection with any use of such prospectuses;

(5) use commercially reasonable efforts to file documents required of the Company for normal Blue Sky clearance in states specified in writing by the Purchasers; provided, however, that the Company shall not be required to qualify to do business or consent to service of process in any jurisdiction in which the Company is not now so qualified or has not so consented; and

(6) bear all expenses in connection with the procedures in paragraphs (a) through (c) of this Section 6.1 and the registration of the Shares pursuant to the Registration Statement, other than fees and expenses, if any, of counsel or other advisers to the Purchasers or underwriting discounts, brokerage fees and commissions incurred by the Purchasers, if any.

(b) In the event that the Registration Statement is not declared effective by the SEC on or before the one hundred twentieth (120^th) day after the Closing Date for a Purchaser, the Company shall pay to such Purchaser liquidated damages in a cash amount equal to one-thirtieth of one percent (1/30 of 1%) of the Purchase Price paid by such Purchaser for each day after such one hundred twentieth (120^th) day that the Registration Statement is not declared effective; provided, however, that such fees in the aggregate shall in no event to exceed eight percent (8%) of the Purchase Price

(c) Notwithstanding Section 6.1(a) and (b): (i) the Company shall be permitted to suspend the actions required under Sections 6.1(a)(1) through (3) to the extent necessary in connection with any Strategic Event or any negotiations or discussions in connection therewith; and (ii) the Company shall not be required to pay any fee pursuant to Section 6.1(b) to the extent the payment of such fee is related to such suspension.

(d) Each Purchaser will promptly notify the Company of any changes in the information set forth in the Registration Statement or Prospectus regarding the Purchaser or its plan of distribution.

6.2 Restrictions on Transferability.

(a) Each Purchaser agrees that it will not effect any disposition of the Shares that would constitute a sale within the meaning of the Securities Act or pursuant to any applicable state securities or Blue Sky laws, except as contemplated in the Registration Statement referred to in Section 6.1 or pursuant to a written opinion of legal counsel reasonably satisfactory to the Company and addressed to the Company to the effect that registration is not

required in connection with the proposed transfer; whereupon the holder of such securities shall be entitled to transfer such securities in accordance with the terms of the notice delivered by the holder to the Company. Each certificate evidencing the securities transferred as above provided shall bear the appropriate restrictive legends set forth in Section 5.10.

(b) Each Purchaser acknowledges that there may occasionally be times when the Company must suspend the use of the prospectus forming a part of the Registration Statement until such time as an amendment or supplement to the Registration Statement has been filed by the Company and declared effective, or until such time as the Company has filed an appropriate report with the SEC pursuant to the Exchange Act. Each Purchaser hereby covenants that such Purchaser will not sell any Shares pursuant to said prospectus during the period commencing at the time at which the Company gives the Purchasers written notice of the suspension of the use of said prospectus and ending at the time the Company gives the Purchasers written notice that the Purchasers may thereafter effect sales pursuant to said prospectus.

(c) None of the Shares shall be transferable except upon the conditions specified in this Article 6, which are intended to ensure compliance with the provisions of the Securities Act. Each Purchaser will cause any proposed transferee of the Shares held by such Purchaser to agree to take and hold such Shares subject to the provisions and upon the conditions specified in this Article 6 if and to the extent that such Shares continue to be restricted securities in the hands of the transferee.

6.3 Termination of Conditions and Obligations. The conditions precedent imposed by Section 6.2 above regarding the transferability of the Shares shall cease and terminate as to any particular number of the Shares upon the date on which the Purchaser may sell without volume limitations all such Shares then held by the Purchaser without registration by reason of Rule 144 or any other rule of similar effect.

ARTICLE 7

Indemnification

7.1 Survival of Representations and Warranties. The representations, warranties, covenants, agreements and indemnities of the Company and each Purchaser contained in this Agreement shall survive the Closing Date and remain in full force and effect until the first anniversary of the Closing Date.

7.2 Indemnification by the Company. The Company shall indemnify, defend and hold harmless each Purchaser and each Person, if any, who controls any Purchaser within the meaning of Section 15 of the Securities Act (each, a “Purchaser Indemnified Party”) from and against any and all Claims and Losses actually suffered or incurred by such Purchaser Indemnified Parties arising out of or resulting from (a) any untrue statement or alleged untrue statement of a material fact contained in the Registration Statement or Prospectus, or in any amendments or supplements thereto, or any omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances in which they were made, not misleading, or (b) the breach by the Company of

any of its representations or warranties in this Agreement; provided, however, the foregoing indemnities shall not apply to any Claims and Losses arising out of or resulting from (x) any such untrue statement or omission or alleged untrue statement or omission based upon information furnished to the Company by any Purchaser Indemnified Party, or (y) the breach by any Purchaser of any if its representations or warranties or the failure of any Purchaser to comply with any of the covenants and agreements in this Agreement, or (z) any statement or omission in any Prospectus that is corrected in any subsequent Prospectus that was delivered to a Purchaser prior to the pertinent sale or sales by the Purchaser.

7.3 Indemnification by each Purchaser. Each Purchaser shall severally indemnify, defend and hold harmless the Company, its directors and officers, and each Person, if any, who controls the Company within the meaning of Section 15 of the Securities Act (each, a “Company Indemnified Party”) from and against any and all Claims and Losses actually suffered or incurred by such Company Indemnified Parties arising out of or resulting from (a) any untrue statement or alleged untrue statement of a material fact contained in the Registration Statement or Prospectus, or in any amendments or supplements thereto, or any omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances in which they were made, not misleading based upon information furnished to the Company by such Purchaser, (b) the breach by such Purchaser of any if its representations or warranties in this Agreement, or (c) the failure of such Purchaser to comply with any of the covenants and agreements in Section 6.1(d) or 6.2 of this Agreement; provided, however, the foregoing indemnities shall not apply to any Claims and Losses arising out of or resulting from the breach by the Company of any if its representations or warranties or the failure of the Company to comply with any of the covenants and agreements in this Agreement.

7.4 Limitations for Indemnification. In no event shall the Company be required to indemnify any Purchaser, and its Purchaser Indemnified Parties, hereunder in excess of an amount equal to the aggregate Purchase Price paid by such Purchaser to the Company on the Closing Date. In no event shall any Purchaser be required to indemnify the Company, and its Company Indemnified Parties, hereunder in excess of an amount equal to the aggregate Purchase Price paid by such Purchaser to the Company on the Closing Date.

7.5 Procedures for Indemnification. An indemnified party hereunder shall notify the indemnifying party, in writing, of any claim for indemnification, specifying in reasonable detail the nature of the Claims and Losses and, if known, the amount or an estimate of the amount of the Claims and Losses. In the event of a claim by any third party, or if there is any claim against a third party available by virtue of the circumstances of the Claims and Losses, the indemnifying party may assume the defense or the prosecution thereof by prompt written notice to indemnified party including the employment of counsel or accountants, at its cost and expense; provided, however, if the defendants in any such action include both the indemnifying party and the indemnified party and such parties shall have reasonable concluded that there may be a conflict between the positions of such parties in conducting the defense of any such action, the indemnified party shall have the right to select separate legal counsel to assume such defense and otherwise participate in such action at the indemnifying party’s expense. The indemnified party shall have the right to employ counsel separate from counsel employed by the indemnifying party in any such action and to participate therein, but the fees and expenses of such counsel employed by the indemnified party shall be at its expense. The indemnifying party shall not be

liable for any settlement of any such Claims and Losses effected without its prior written consent, which shall not be unreasonably withheld; provided that if the indemnifying party does not assume the defense or prosecution of a third-party claim as provided above within thirty (30) Days after notice thereof from the indemnified party, the indemnified party may settle such claim without the indemnifying party’s consent. The indemnifying party shall not agree to a settlement of any Claims and Losses which provides for any relief other than the payment of monetary damages or which could have a material precedential impact or effect on the business or financial condition of the indemnified party without the indemnified party’s prior written consent. Whether or not the indemnifying party chooses to so defend or prosecute such claim, both parties shall cooperate in the defense or prosecution thereof and shall furnish such records, information and testimony, and attend such conferences, discovery proceedings, hearings, trials and appeals, as may be reasonably requested in connection therewith.

ARTICLE 8

Notices

8.1 Notices Generally. Any notice, request, demand, instruction or other document to be given hereunder (a “Notice”) by any party hereto to another party hereto shall be in writing and sent by facsimile or delivered personally or sent by registered or certified mail (including by overnight courier or express mail service), postage or fees prepaid, and addressed as set forth in this Article 8 below. Any Notice sent by facsimile shall be deemed to have been duly given to the party to whom it is sent upon written confirmation of receipt, provided that a copy of such fax is delivered personally or mailed to the recipient within one business day of the date of the fax, in the manner herein provided. Any Notice which is delivered personally in the manner provided herein shall be deemed to have been duly given to the party to whom it is directed upon actual receipt by such party or the office of such party. Any Notice which is delivered by overnight courier in the manner provided herein shall be deemed to have been duly given to the party to whom it is directed on the second business day after deposit with such overnight courier. Any Notice which is addressed and mailed in the manner herein provided shall be conclusively presumed to have been duly given to the party to which it is addressed at the close of business, local time of the recipient, on the fourth business day after the day it is so placed in the mail or, if earlier, the time of actual receipt.

8.2 Notices to the Company. All Notices to the Company shall be addressed to the following addresses or at such other address or addresses as may have been previously furnished to each Purchaser by Notice in accordance with this Article 8:

Corautus Genetics Inc.

▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇, ▇▇▇▇▇ ▇▇▇

▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇

Attention: Chief Executive Officer

With a copy to:

▇▇▇▇▇▇▇ Long & ▇▇▇▇▇▇▇▇ LLP

▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇

▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇

Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.

8.3 Notices to each Purchaser. All Notices to any Purchaser shall be addressed to the address for such Purchaser set forth in Exhibit A attached hereto, or at such other address or addresses as may have been previously furnished to the Company by Notice in accordance with this Article 8.

ARTICLE 9

General Provisions

9.1 Governing Law and Venue. This Agreement shall be governed by, and construed in accordance with, the laws of the State of Georgia. The Parties unconditionally and irrevocably agree and consent to the exclusive jurisdiction of the federal and state courts located in the State of Georgia and waive any objection with respect thereto, for the purpose of any action, suit or proceeding arising out of or relating to this Agreement or the transactions contemplated hereby, and further agree not to commence any such action, suit or proceeding except in any such court or in the event any such court has determined that it is without jurisdiction.

9.2 Entire Agreement. This Agreement (including the Exhibits, which are incorporated herein, and the Warrants issued hereunder) constitutes the entire agreement between the Company and the Purchasers and supersedes any prior understanding or agreement among them respecting the subject matter hereof. Except as specifically set forth herein, neither the Company nor the Purchasers make any representation, warrant, covenant or undertaking with respect to such matters.

9.3 Amendment. This Agreement may not be amended or modified except by an instrument in writing signed by authorized representatives of the Company and each Purchaser.

9.4 No Waiver. No waiver of any provision hereof will be valid or binding on a party hereto unless such waiver is in writing and signed by or on behalf such party. The delay or failure of any party to enforce at any time for any period the provisions of or any rights deriving from this Agreement shall not be construed to be a waiver of such provisions or rights or the right of such party thereafter to enforce such provisions.

9.5 Severability. In case any one or more of the provisions contained in this Agreement should be found by a court of competent jurisdiction to be invalid, illegal or unenforceable in any respect against any party, such invalidity, illegality, or unenforceability shall only apply to such party in the specific jurisdiction where such judgment shall be made, and the validity, legality, and enforceability of the remaining provisions contained herein shall not in any way be affected or impaired thereby, except that this Agreement shall not be reformed in any

way that will deny to any party the essential benefits of this Agreement, unless such party waives in writing its rights to such benefits.

9.6 Successors and Assigns. The terms, conditions and obligations of this Agreement shall inure to the benefit of and be binding upon the parties hereto and their respective successors and permitted assigns.

9.7 Headings. Article, Section and other headings contained in this Agreement are inserted for convenience only and shall not be construed to define, interpret, describe or limit the scope, extent or intent of this Agreement or any provision hereof

9.8 Counterparts and Facsimile. This Agreement may be executed and delivered (including by facsimile transmission) in one or more counterparts, and by the different parties in separate counterparts, each of which when executed shall be deemed to be an original, but all of which taken together shall constitute one and the same agreement. Delivery of an executed counterpart of a signature page to this Agreement by facsimile shall be effective as delivery of a manually executed counterpart of this Agreement.

<Signatures on Following Pages>

IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first above written.

COMPANY:

Corautus Genetics Inc., a Delaware corporation

By:		/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇

		▇▇▇▇▇▇▇ ▇. ▇▇▇▇
		Chief Executive Officer