EXHIBIT 10.1
THIRD AMENDED AND RESTATED CONVERTIBLE PROMISSORY NOTE
$5.0 MILLION MARCH 22 2007
WHEREAS, Boston Life Sciences, Inc., a Delaware corporation (the "MAKER"),
and Robert Gipson (the "LENDER"), were parties to that certain Promissory Note,
dated August 8, 2006 and made by the Maker in favor of the Lender for the
principal sum $3,000,000.00 (the "ORIGINAL NOTE");
WHEREAS, on October 26, 2006, the Maker and the Lender amended and restated
the Original Note to increase the principal sum from $3,000,000.00 to
$4,000,000.00 (the "AMENDED NOTE");
WHEREAS, on February 8, 2007, the Maker and the Lender amended and restated
the Amended Note to increase the principal sum from $4,000,000.00 to
$5,000,000.00 (the "SECOND AMENDED NOTE"); and
WHEREAS, the Lender and the Maker desire to amend and restate the Second
Amended Note as set forth herein.
NOW THEREFORE, in consideration of the premises and mutual promises and
covenants contained herein, and on the terms herein set forth, the parties
hereto, intending to be legally bound, hereby agree to amend and restate the
Second Amended Note in its entirety to read as follows:
FOR VALUE RECEIVED, Maker, hereby unconditionally promises to pay to the
order of Lender, in lawful money of the United States of America and in
immediately available funds, the principal sum of Five Million Dollars
($5,000,000), without any interest or additional payments thereon (the "LOAN"),
due and payable on the dates and in the manner set forth below.
1. REPAYMENT. Subject to Section 3 hereof, the Loan shall be due and
payable on the earliest to occur of (i) June 30, 2007 and (ii) the date on which
the Lender declares an Event of Default (as defined in Section 8 below) to have
occurred (the first of the events set forth in Section 2(i) and 2(ii)) to occur
being referred to herein as the "MATURITY DATE"). This Third Amended and
Restated Note may not be prepaid in whole or in part at any time without the
prior written consent of the Lender.
2. PAYMENTS. No interest shall accrue on the Loan.
3. CONVERSION. On or after June 15, 2007 (the "CONVERSION DATE"), Lender
shall effect the conversion of the Loan into the Common Stock of the Company
pursuant to the terms of this Section 3. On or before the Conversion Date, by
written notice to the Company, the Lender shall submit this Third Amended and
Restated Convertible Promissory Note to the Company and in full satisfaction of
any and all obligations the Maker has hereunder, Maker shall issue to Lender,
2,000,000 shares of the Common Stock of the Company (subject to adjustment for
stock splits, dividends, combinations or the like after the date hereof).
Notwithstanding anything to the
contrary contained herein, Lender shall be prohibited from effecting a
conversion pursuant to this Section 3 if at the time of such conversion (i) the
Common Stock issuable to such Purchaser pursuant to such conversion or as a
result of such conversion, when taken together with all shares of Common Stock
then held or otherwise beneficially owned by such Purchaser exceeds 19.9% of the
total number of issued and outstanding shares of Common Stock of the Company
immediately prior to such conversion or (ii) the Common Stock issuable to such
Purchaser pursuant to such conversion or as a result of such conversion, exceeds
19.9% of the total number of issued and outstanding shares of Common Stock of
the Company immediately prior to such conversion, in each case unless and until
the stockholders of the Company approve the conversion of all of the shares of
Common Stock issuable hereunder and the transactions contemplated hereby
pursuant to Nasdaq Marketplace Rule 4350(i)(1)(D)(ii) and any other applicable
rules and regulations ("STOCKHOLDER APPROVAL"). In the event that Stockholder
Approval is required to effect the conversion set forth herein, the Conversion
shall be automatically extended to the date occurring three days after
Stockholder Approval is obtained. The Maker hereby covenants and agrees that it
shall use its best efforts to seek Stockholder Approval for the conversion
contemplated by this Section 3.
4. PLACE OF PAYMENT. All amounts payable hereunder shall be payable in
immediately available funds at the office of the Lender, c/o Ingalls & Snyder,
61 Broadway, New York, NY, unless another place of payment shall be specified in
writing by the Lender.
5. APPLICATION OF PAYMENTS. Payment on this Third Amended and Restated Note
shall be applied first to costs and expenses due hereunder and thereafter to the
outstanding principal balance hereof.
6. REPRESENTATIONS AND WARRANTIES. The Maker represents and warrants to the
Lender that:
(a) the Maker is duly organized, validly existing, and in good
standing under the laws of its jurisdiction of incorporation and is duly
qualified and in good standing in every other jurisdiction where the nature of
its business or the location or ownership of its properties requires such
qualification and where the failure to be so qualified would reasonably be
expected to have a material adverse effect on the Maker's business, operations,
properties, assets or condition (financial or otherwise);
(b) the Maker has the full corporate power and authority to execute
and deliver this Third Amended and Restated Note and to perform all of the
obligations hereunder, and all necessary corporate action has been taken to
execute and deliver this Third Amended and Restated Note and to make the
borrowings hereunder;
(c) this Third Amended and Restated Note constitutes the legal, valid,
and binding obligations of the Maker, enforceable against the Maker in
accordance with its terms, subject to applicable bankruptcy, insolvency,
reorganization or similar laws generally affecting the enforcement of the rights
of creditors; and
(d) the execution, delivery and performance by the Maker of this Third
Amended and Restated Note does not (i) violate any provisions of the Maker's
Certificate of
Incorporation, as amended, bylaws, as amended, or any contract, agreement, law,
regulation, order, decree or writ to which the Maker or any of its properties
are subject or (ii) require the consent or approval of any person, entity or
authority, including, without limitation, any regulatory authority or
governmental body of the United States of America or any state thereof or any
political subdivision of any of the foregoing.
7. NEGATIVE COVENANTS. So long as any principal and interest remains
outstanding under this Third Amended and Restated Note, the Maker shall not:
(a) create, incur, assume, guaranty, become liable with respect to
(contingently or otherwise), or permit to be outstanding any indebtedness for
money borrowed (including, without limitation, any indebtedness evidenced by any
notes, instruments or agreements or in connection with any capitalized lease),
except for (i) the obligations under this Third Amended and Restated Note, (ii)
a promissory note of even date herewith pursuant to which the Maker shall be
permitted to borrow up to an additional principal sum of $5,000,000 and (iii) up
to an additional $15,000,000 of borrowed money indebtedness;
(b) (i) declare or pay any cash dividend, or make a distribution on,
repurchase, or redeem, any class of stock of the Maker, other than pursuant to
repurchase obligations under existing employee stock purchase or option plans or
(ii) sell, lease, transfer or otherwise dispose of any material assets or
property of the Maker; or
(c) dissolve or liquidate.
8. DEFAULT. Each of the following events shall be an "EVENT OF DEFAULT"
hereunder:
(a) the Maker fails to pay any of the principal or any other amounts
payable under this Third Amended and Restated Note when and as the same becomes
due and payable;
(b) the Maker files any petition or action for relief under any bankruptcy,
reorganization, insolvency or moratorium law or any other law for the relief of,
or relating to, Maker, now or hereafter in effect, or seeks the appointment of a
custodian, receiver, trustee (or other similar official) of the Maker or all or
any substantial portion of the Maker's assets, or makes any assignment for the
benefit of creditors or takes any action in furtherance of any of the foregoing,
or fails to generally pay its debts as they become due;
(c) an involuntary petition is filed, or any proceeding or case is
commenced, against the Maker (unless such proceeding or case is dismissed or
discharged within ninety (90) days of the filing or commencement thereof) under
any bankruptcy, reorganization, arrangement, insolvency, adjustment of debt,
liquidation or moratorium statute now or hereafter in effect, or a custodian,
receiver, trustee, assignee for the benefit of creditors (or other similar
official) is applied for, appointed for the Maker or to take possession, custody
or control of any property of the Maker, or an order for relief is entered
against the Maker in any of the foregoing; or
(d) any representation or warranty made or deemed made by the Maker under
this Third Amended and Restated Note shall have been false or misleading in any
material respect when made or deemed made.
9. REMEDIES. Upon the occurrence and during the continuance of an Event of
Default hereunder:
(a) all unpaid principal and other amounts owing hereunder shall, at
the option of the Lender, and, in the case of an Event of Default pursuant to
Section 8(b) or (c) above, automatically, be immediately due, payable and
collectible by the Lender pursuant to applicable law; and
(b) the Lender may exercise any and all rights and remedies it may
have under this Third Amended and Restated Note or under applicable law.
All rights and remedies shall be cumulative and not exclusive. The failure
of the holder hereof to exercise all or any of its rights, remedies, powers or
privileges hereunder or applicable law, in any instance shall not constitute a
waiver thereof in that or any other instance.
10. EXPENSES. The Maker agrees to and shall pay to the Lender on demand,
any and all expenses, including, without limitation, reasonable attorney's fees
and disbursements, incurred or paid by the Lender in connection herewith,
including, without limitation, such fees, costs and expenses incurred for
collection or enforcement of amounts outstanding hereunder, for protecting,
preserving or enforcing the Lender's rights or remedies (including fees, costs
and expenses relating to any proceedings with respect to the bankruptcy,
reorganization, insolvency, readjustment of debt, dissolution or liquidation of
the Maker).
11. WAIVER. The Maker, for itself and its legal representatives, successors
and assigns, hereby expressly waives demand, protest, presentment, notice of
dishonor, notice of acceptance, and notice of protest, and all other demands and
notices in connection with the delivery, acceptance, performance, default or
enforcement of this Third Amended and Restated Note and agrees that any
extension, renewal or postponement of the time of payment or any other
indulgence to, or release of any person now or hereafter obligated for the
payment of this Third Amended and Restated Note shall not affect the Maker's
liability hereunder.
12. NO RELIANCE. Lender hereby acknowledges (i) that Wilmer Cutler
Pickering Hale and Dorr LLP has served as counsel solely to the Maker in
connection with entering into this Third Amended and Restated Note, the Loan and
the transactions contemplated hereby, and (ii) that Lender (a) has sought the
advice of his own legal counsel and has not relied upon Wilmer Cutler Pickering
Hale and Dorr LLP, (b) has had an opportunity to fully discuss and review the
terms of this Third Amended and Restated Note with Lender's counsel and (c)
understands the contents herein and freely and voluntarily assents to all of the
terms and conditions hereof and the transactions contemplated hereby.
13. GOVERNING LAW; CONSENT TO JURISDICTION. THIS THIRD AMENDED AND RESTATED
NOTE IS INTENDED TO TAKE EFFECT AS A SEALED INSTRUMENT AND SHALL BE GOVERNED BY,
AND CONSTRUED IN ACCORDANCE WITH, THE LAWS (AND NOT THE LAWS OF CONFLICT) OF THE
COMMONWEALTH OF MASSACHUSETTS. THE MAKER HEREBY IRREVOCABLY SUBMITS TO THE
JURISDICTION OF THE COURTS OF THE COMMONWEALTH OF MASSACHUSETTS AND THE UNITED
STATES DISTRICT COURT FOR THE COMMONWEALTH OF
MASSACHUSETTS FOR THE PURPOSE OF ANY SUIT, ACTION OR OTHER PROCEEDING ARISING
OUT OF OR RELATING TO THIS THIRD AMENDED AND RESTATED NOTE AND THE MAKER HEREBY
IRREVOCABLY AGREES THAT ALL CLAIMS IN RESPECT OF SUCH ACTION OR PROCEEDING MAY
BE HEARD AND DETERMINED IN ANY SUCH COURT AND IRREVOCABLY WAIVES ANY OBJECTION
IT MAY NOW OR HEREAFTER HAVE AS TO THE VENUE OF ANY SUCH SUIT, ACTION OR
PROCEEDING BROUGHT IN ANY SUCH COURT OR THAT SUCH COURT IS AN INCONVENIENT
FORUM. NOTHING HEREIN SHALL LIMIT THE RIGHT OF THE LENDER TO BRING PROCEEDINGS
AGAINST THE MAKER IN THE COURTS OF ANY OTHER JURISDICTION. ANY JUDICIAL
PROCEEDING BY THE MAKER AGAINST THE LENDER OR ANY AFFILIATE OF THE LENDER
INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER IN ANY WAY ARISING OUT OF, RELATED
TO, OR CONNECTED WITH THIS THIRD AMENDED AND RESTATED NOTE SHALL BE BROUGHT ONLY
IN A COURT IN THE COMMONWEALTH OF MASSACHUSETTS.
14. SUCCESSORS AND ASSIGNS. This Third Amended and Restated Note and all
obligations of the Maker hereunder shall be binding upon the successors and
assigns of the Maker, and shall, together with the rights and remedies of the
Lender hereunder, inure to the benefit of the Lender, any future holder of this
Third Amended and Restated Note and their respective successors and assigns,
provided, however, the Maker may not transfer or assign its rights or
obligations hereunder without the express written consent of the Lender, and any
purported transfer or assignment by the Maker without the Lender's written
consent shall be null and void. The Lender may assign, transfer, participate or
endorse its rights under this Third Amended and Restated Note without the
consent or approval of the Maker, and all such rights shall inure to the
Lender's successors and assigns. No sales of participations, other sales,
assignments, transfers, endorsements or other dispositions of any rights
hereunder or any portion thereof or interest therein shall in any manner affect
the obligations of the Maker under this Third Amended and Restated Note. Upon
request, the Maker shall, at its own expense, execute and deliver to the
assignee of this Third Amended and Restated Note, a replacement Note of equal
and like tenor in an amount assigned to and assumed by such assignee.
15. WAIVER OF JURY TRIAL AND CERTAIN DAMAGES. THE MAKER AND THE LENDER EACH
WAIVES ITS RIGHT TO A JURY TRIAL WITH RESPECT TO ANY ACTION OR CLAIM ARISING OUT
OF ANY DISPUTE IN CONNECTION WITH THIS THIRD AMENDED AND RESTATED NOTE, ANY
RIGHTS OR OBLIGATIONS HEREUNDER OR THE PERFORMANCE OF ANY SUCH RIGHTS OR
OBLIGATIONS. Except as prohibited by law, the Maker waives any right which it
may have to claim or recover in any litigation referred to in the preceding
sentence any special, exemplary, punitive or consequential damages or any
damages other than, or in addition to, actual damages. The Maker (i) certifies
that neither the Lender nor any representative, agent or attorney of the Lender
has represented, expressly or otherwise, that the Lender would not, in the event
of litigation, seek to enforce the foregoing waivers and (ii) acknowledges that,
in entering into the Third Amended and Restated Note, the Lender is relying
upon, among other things, the foregoing waivers and certifications.
16. ENTIRE AGREEMENT; AMENDMENTS; INVALIDITY. This Third Amended and
Restated Note constitutes the entire agreement and understanding of the parties
with respect to the subject
matter hereof, and supercedes and replaces in their entirety any prior
discussions, agreements, etc., all of which are merged herein and therein,
including the Second Amended Note. None of the terms of this Third Amended and
Restated Note may be amended or otherwise modified except by an instrument
executed by each of the Maker and the Lender. If any term of this Third Amended
and Restated Note shall be held to be invalid, illegal or unenforceable, the
validity of all other terms hereof shall in no way be affected thereby, and this
Third Amended and Restated Note shall be construed and be enforceable as if such
invalid, illegal or unenforceable term had not been included herein. This Third
Amended and Restated Note amends and restates the Second Amended Note in its
entirety and the Second Amended Note shall have no further force or effect.
*****
IN WITNESS WHEREOF, this Third Amended and Restated Note has been duly
executed as an instrument under seal as of the date first set forth above.
LENDER: BOSTON LIFE SCIENCES, INC.
By: /s/ Kenneth L. Rice, Jr.
------------------------------------
Printed Name: Ken Rice
Title: EVP and CFO
Address: 85 Main Street
Hopkinton, MA 01748
ATTEST:
By: /s/ Robert L. Gipson
---------------------------------
Robert L. Gipson