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EXHIBIT 10.1
NEITHER THIS NOTE PURCHASE, THE NOTES ISSUED HEREUNDER NOR THEE
SECURITIES
ISSUABLE UPON CONVERSION OF THE NOTES HAVE BEEN REGISTERED UNDER
THE SECURITIES
ACT OF 1933, AS AMENDED (THE "ACT"), NOR UNDER ANY STATE SECURITIES
LAWS AND
NONE OF THE FOREGOING MAY BE PLEDGED, SOLD, ASSIGNED OR OTHERWISE
TRANSFERRED
UNTIL A (1) REGISTRATION STATEMENT UNDER THE ACT AND ANY APPLICABLE
STATE
SECURITIES LAW HAS BECOME EFFECTIVE WITH RESPECT THERETO, OR (2)
RECEIPT BY THE
COMPANY OF AN OPINION OF COUNSEL TO THE COMPANY TO THE EFFECT THAT
REGISTRATION
UNDER THE ACT OR APPLICABLE STATE SECURITIES LAW IS NOT REQUIRED IN
CONNECTION
WITH THE PROPOSED TRANSFER
CONVERTIBLE PROMISSORY NOTE PURCHASE AGREEMENT
This
CONVERTIBLE PROMISSORY NOTE PURCHASE AGREEMENT, dated as of March
22,
2007, is made between the purchasers listed on Schedule 2.1 hereto
(each a
"PURCHASER" and collectively, the "PURCHASERS"), and BOSTON LIFE
SCIENCES, INC.,
a Delaware corporation (the "COMPANY").
RECITALS
WHEREAS, the Company requires certain funds for the operation of
its
business; and
WHEREAS, the Purchasers are willing to provide the Company with
such funds
through the purchase of the Convertible Notes (as defined below) on
the terms
and conditions hereafter provided;
NOW,
THEREFORE, in order to induce Purchasers to purchase the
Convertible
Notes and for other good and valuable consideration, the receipt
and adequacy of
which are hereby acknowledged, and intending to be legally bound,
the Purchasers
and the Company hereby agree as follows:
1.
DEFINED TERMS. When used in this Agreement the following terms
shall
have the following meanings (such meanings being equally applicable
to both the
singular and plural forms of the terms defined):
"AFFILIATES" shall mean any corporation, company, partnership,
joint
venture and/or firm that controls, is controlled by, or is under
common control
with the Company. For purposes of this definition, "control" shall
mean (a) in
the case of corporate entities, direct or indirect ownership of at
least fifty
percent (50%) of the stock or shares having the right to vote for
the election
of directors and (b) in the case of non-corporate entities, direct
or indirect
ownership of at least fifty percent (50%) of the equity interest
with the power
to direct the management and policies of such non-corporate
entities.
"AGREEMENT" means this Convertible Promissory Note Purchase
Agreement, as
it may be amended or modified and in effect from time to time.
"BUSINESS DAY" means any day other than a Saturday, Sunday, or
other day on
which commercial banks in the Commonwealth of Massachusetts are
authorized or
required to close.
"COMMON STOCK" means the common stock, $0.01 par value per share,
of the
Company.
"CONVERTIBLE NOTES" shall have the meaning assigned to such term in
Section
2.1 hereof.
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"EFFECTIVE DATE" means the date of this Agreement.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended.
"EVENT OF DEFAULT" shall have the meaning assigned to such term in
Article
IX hereof.
"FIRST COMMERCIAL SALE" shall mean, with respect to each Molecular
Imaging
Product, the first commercial sale in a country as part of a
nationwide
introduction by the Company, its Affiliates or its or its
Affiliates' licensees
or sublicensees.
"HIGHEST LAWFUL RATE" means the maximum lawful interest rate, if
any, that
at any time or from time to time may be contracted for, charged, or
received
under the laws applicable to the Purchasers which are presently in
effect or, to
the extent allowed by law, under such applicable laws which allow a
higher
maximum nonusurious interest rate than applicable laws now
allow.
"LOAN DOCUMENTS" means collectively, this Agreement and the
Convertible
Notes.
"MATURITY DATE" means the earliest to occur of (a) December 31,
2010 and
(b) the date on which a Purchaser declares a Default (as defined in
Section 9
below) to have occurred.
"MOLECULAR IMAGING PRODUCTS" shall mean products approved for sale
by the
appropriate U.S. and/or foreign regulatory body containing as the
active
ingredient the Company's radio-labeled molecular imaging agents,
currently in
development or developed by the Company in the future, including,
without
limitation, the ALTROPANE(R) and FLUORATEC molecular imaging
agents, for the
diagnosis and monitoring of Parkinson's Disease and Attention
Deficit
Hyperactivity Disorder using SPECT or PET camera imaging
techniques.
"NET
SALES" shall mean the gross amount received by the Company, its
Affiliates and/or its or its Affiliates' licensees or sublicensees
on sales or
other dispositions of Molecular Imaging Products to Third Parties
(other than
licensees or sublicensees) in bona fide, arm's-length transactions,
less the
following deductions:
(a)
Trade, cash and/or quantity discounts actually allowed and
taken
directly with respect to such sales, as reflected in the amount
invoiced;
(b)
Tariffs, duties, excises, sales taxes or other taxes imposed upon
and
paid directly by the Company with respect to the production, sale,
delivery or
use of the Molecular Imaging Product (excluding national, state or
local taxes
based on income), as reflected in the amount invoiced;
(c)
Amounts repaid or credited by reason of rejections, defects,
recalls or
returns, or because of chargebacks, refunds, rebates, retroactive
price
reductions or delayed ship orders;
(d)
Amounts credited for uncollectible amounts on previously sold
products;
(e)
Freight, insurance and other transportation charges incurred in
shipping a Molecular Imaging Product to Third Parties, as reflected
in the
amount invoiced;
(f)
Deduction of one percent (1%) for distribution and warehousing
expenses; and
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(g)
Any other reduction or specifically identifiable amounts included
in
the gross invoice that are creditable for reasons substantially
equivalent to
those listed above.
Notwithstanding anything in this Agreement to the contrary, "NET
SALES"
shall exclude any sales or other disposition of Molecular Imaging
Products for
test marketing, clinical trial purposes or compassionate or similar
use.
Net
Sales amounts shall be determined from the books and records of
the
Company, its Affiliates and/or its or its Affiliates' licensees or
sublicensees,
maintained in accordance with generally accepted accounting
principles,
consistently applied.
Sales between or among the Company, its Affiliates or their
respective
licensees and sublicensees shall be disregarded for purposes of
calculating Net
Sales. In the case of any sale or other disposal of a Molecular
Imaging Product
between or among the Company and its Affiliates, licensees and
sublicensees, for
resale, Net Sales shall be calculated as above only on the value
charged or
invoiced on the first arm's-length sale thereafter to a Third
Party.
In
the case of any sale or other disposal for value, such as barter
or
counter-trade, of any Molecular Imaging Product, or part thereof,
other than in
an arm's-length transaction exclusively for money, Net Sales shall
be calculated
as above on the value of the non-cash consideration received or the
fair market
price (if higher) of the Molecular Imaging Product in the country
of sale or
disposal.
In
the event the Molecular Imaging Product is sold in a finished
dosage
form in combination with one or more other active ingredients (a
"COMBINATION
PRODUCT"), the Net Sales of the Molecular Imaging Product, for the
purposes of
determining royalty payments, shall be determined by multiplying
the Net Sales
(as defined above) of the Combination Product by the fraction,
'A/(A+B)' where
'A' is the weighted (by sales volume) average sale price in the
relevant country
of the Molecular Imaging Product when sold separately in finished
form and 'B'
is the weighted average sale price in that country of the other
product(s) sold
separately in finished form. In the event that such average sale
price cannot be
determined for both the Molecular Imaging Product and the other
product(s) in
the Combination Product, Net Sales for purposes of determining
royalty payments
shall be agreed by the Parties based on the relative value
contributed by each
component, such agreement not to be unreasonably withheld.
"OBLIGATIONS" means all unpaid principal of and accrued and unpaid
interest
on the Convertible Notes, and all other obligations, interest,
fees, charges and
expenses of the Company to the Purchasers arising under the Loan
Documents.
"PRE-COMMERCIAL INCOME" shall mean, with respect to each Molecular
Imaging
Product, all license fees, milestone payments and other amounts
received by the
Company and/or its Affiliates from Third Parties in connection with
or related
to the licensing or sublicensing to such Third Parties of the
Company's and/or
its Affiliate's rights under the intellectual property covering the
Molecular
Imaging Product. Notwithstanding anything in the foregoing to the
contrary,
"Pre-Commercial Income" shall exclude (a) any royalty payments or
milestone
payments based upon commercial sales levels, (b) amounts received
for research
and development activities undertaken for, or in collaboration
with, such Third
Parties, (c) amounts received for debt or equity securities of the
Company
and/or its Affiliates, provided that any amounts received in excess
of the then
current fair market value of such debt or equity securities shall,
to the extent
of such excess, be deemed to be Pre-Commercial Income, and (d)
transfer pricing
amounts paid in respect of Molecular Imaging Products supplied to
such Third
Parties.
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"SECURITIES ACT" means the Securities Act of 1933, as amended.
"THIRD PARTY" shall mean any person or entity other than the
Company or any
of its Affiliates.
"VALID CLAIM" means a claim of any issued, unexpired United States
or
foreign patent, which shall not be disclaimed, nor held invalid or
unenforceable
by a court of competent jurisdiction in an unappealed or
unappealable decision.
2.
CONVERTIBLE NOTE FACILITY.
2.1 PURCHASE AND SALE OF CONVERTIBLE NOTES. At each Closing (as
defined below), each Purchaser agrees, severally and not jointly,
on the terms
of and subject to the conditions specified in this Agreement, to
purchase from
the Company, according to each Purchaser's pro rata share (based
upon the
respective "Commitment Percentage" of each Purchaser as set forth
on Schedule
2.1 attached hereto), and the Company agrees to sell to the
Purchasers,
convertible promissory notes dated as of the date of such Closing
in the form
attached to this Agreement as Exhibit A (the "CONVERTIBLE NOTES");
provided,
however, that in no event shall the Purchasers be obligated
hereunder to
purchase, in the aggregate, more than a principal amount of Fifteen
Million
Dollars ($15,000,000) of Convertible Notes.
2.2 ADVANCES. From time to time prior to December 31, 2007, and
so
long as no Default then exists, the Purchasers shall make advances
(the
"ADVANCES") to the Company based upon their respective Commitment
Percentage,
and the Company may borrow funds from the Purchasers hereunder.
Each request for
an Advance shall be made by the Company in writing, delivered to
the Purchasers
at least seven (7) business days prior to the requested date of
such Advance
(the "ADVANCE NOTICE") and shall specify the date of such Advance,
and the
amount of such Advance. Each Advance shall be in the minimum amount
of
$3,000,000. The Purchasers shall, and each Purchaser is hereby
authorized to,
record on the schedule attached hereto, or to otherwise record in
accordance
with its usual practice, the date and amount of each Advance and
the date and
amount of each principal payment hereunder (a "PAYMENT"), provided,
however,
that any failure to so record any Advance or Payment shall not in
any manner
affect the obligation of the Company to repay any Advance in
accordance with the
terms hereof. Each Advance shall be documented by a new Convertible
Note to be
issued by the Company, dated as of the date of such Advance.
2.3 CLOSING. The closing of the issuance and sale of each
Convertible
Note issued hereunder and representing an Advance shall be held at
the offices
of counsel to the Company at 10:00 a.m. on the date set forth in
each Advance
Notice, or at such other time and place as the Company and each
Purchaser
mutually agree in writing (each such date, a "CLOSING").
2.4 PAYMENT OF CONVERTIBLE NOTE PURCHASE PRICE. At each Closing,
(i)
the Company shall deliver to each Purchaser a Convertible Note in
the amount of
the Advance from each Purchaser at such Closing, and (ii) as
payment in full for
the Convertible Note being purchased by each Purchaser at such
Closing, each
Purchaser shall pay its respective purchase amount to the Company
by wire
transfer of immediately available funds to an account designated by
the Company
in the Advance Notice.
2.5 INTEREST. Interest shall accrue on each Convertible Note from
the
date of issuance until such Convertible Note is paid in full or
otherwise
converted pursuant to Section 4 hereof. The Company promises to pay
interest on
the outstanding principal amount of each Convertible Note (i) until
the Maturity
Date, or if earlier, conversion pursuant to Section 4 hereof, at a
per annum
interest rate
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equal to five percent (5%), (ii) from and after the Maturity Date,
or during the
continuance of an Event of Default, at a per annum rate equal to
ten percent
(10%) or (iii) if less than the rates applicable under both clauses
(i) and
(ii), the Highest Lawful Rate. Interest shall be calculated on the
basis of a
360-day year for the actual number of days elapsed. Interest shall
accrue until
paid in full and all unpaid interest shall be due and payable on
the Maturity
Date, unless otherwise converted pursuant to Section 4 hereof.
2.6 METHOD OF PAYMENT. All payments of principal, interest, and
fees
hereunder shall be made on the date when due in immediately
available funds in
United States Dollars to the Purchasers at the Purchaser's address
specified on
the signature page hereof, or at such other address as shall be
directed by the
applicable Purchaser in a writing received by the Company.
2.7 PREPAYMENTS. The Company may not prepay any amounts under
any
Convertible Notes whether principal or interest.
2.8 USURY SAVINGS CLAUSE. Notwithstanding any other provision
herein,
the aggregate interest rate charged with respect to any of the
Obligations,
shall not exceed the Highest Lawful Rate. If the rate of interest
(determined
without regard to the preceding sentence) under this Agreement at
any time
exceeds the Highest Lawful Rate, the outstanding amount under the
Convertible
Notes issued hereunder shall bear interest at the Highest Lawful
Rate until the
total amount of interest due hereunder equals the amount of
interest which would
have been due hereunder if the stated rates of interest set forth
in this
Agreement had at all times been in effect. In addition, if when the
Convertible
Notes issued hereunder are repaid in full the total interest due
hereunder is
less than the total amount of interest which would have been due
hereunder if
the stated rates of interest set forth in this Agreement had at all
times been
in effect, then to the extent permitted by law, the Company shall
pay to
Purchasers an amount equal to the difference between the amount of
interest paid
and the amount of interest which would have been paid if the
Highest Lawful Rate
had at all times been in effect. Notwithstanding the foregoing, it
is the
intention of Purchasers and the Company to conform strictly to any
applicable
usury laws. Accordingly, if the Purchasers contract for, charge, or
receive any
consideration which constitutes interest in excess of the Highest
Lawful Rate,
then any such excess shall be cancelled automatically and, if
previously paid,
shall be applied to the outstanding principal amount of the
Convertible Notes
issued hereunder or be refunded to the Company.
3.
CONDITIONS PRECEDENT. The obligations of the Purchasers to purchase
any
Convertible Notes shall be subject to the following conditions
precedent that on
the date of the Closing:
3.1 Each of the representations and warranties of the Company
contained in this Agreement and the Loan Documents shall be true
and correct in
all material respects; and
3.2 At the time of, and immediately after giving effect to, the
issuance of such Convertible Notes, no Event of Default shall have
occurred and
be continuing.
4.
OPTIONAL CONVERSION.
4.1 CONVERSION TO EQUITY.
(a) After December 31, 2007, at any time during which
Convertible
Notes remain outstanding, up to all of the outstanding principal
and accrued
interest under any particular Convertible Note then outstanding may
be
converted, at the sole option of the holder thereof and by
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written notice to the Company, into shares of Common Stock of the
Company at a
conversion price equal to $2.50 per share.
(b) Notwithstanding anything to the contrary contained herein,
each Purchaser shall be prohibited from effecting a conversion
pursuant to this
Section 4.1 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, (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 su
