NOTE PURCHASE AGREEMENT

 

This Note Purchase Agreement, dated as of October 14, 2016 (this “Agreement”),
is entered into by and between Bone Biologics Corporation, a Delaware
corporation, (the “Company”) and Hankey Capital, LLC (“HIC”) and The
Musculoskeletal Transplant Foundation (“MTF”) (each an “Investor” and
collectively the “Investors”).

 

RECITALS

 

A.           The Company is offering an aggregate of $1,200,000 principal amount
of its secured convertible promissory notes (each, a “Note” and collectively,
the “Notes”).

 

B.           On the terms and subject to the conditions set forth herein, each
Investor is willing to purchase from the Company, and the Company is willing to
sell to Investor, a Note in the principal amount of $600,000 (the “Purchase
Price”).

 

C.           Capitalized terms not otherwise defined herein shall have the
meaning set forth in the Note.

 

AGREEMENT

 

NOW THEREFORE, in consideration of the foregoing, and the representations,
warranties, and conditions set forth below, the parties hereto, intending to be
legally bound, hereby agree as follows:

 

1.              The Notes.

 

(a)                Issuance of Notes. Subject to all of the terms and conditions
hereof, the Company agrees to issue and sell to each Investor, and each Investor
agrees to purchase, a Note in the principal amount of the Purchase Price.

 

(b)               Delivery. The sale and purchase of the Note shall take place
at a closing (the “Closing”) to be held at such place and time as the Company
and the Investors may determine following satisfaction or waiver of the
conditions set forth herein (the “Closing Date”). At the Closing, the Company
will deliver to each Investor a Note against receipt by the Company of the
Purchase Price in immediately available funds.

 

(c)                Use of Proceeds. The proceeds of the sale and issuance of the
Notes shall be used to focus on prioritizing operations on essential research
and development activities. For avoidance of doubt, no cash payments may be made
pursuant to those certain Professional Service Agreements between the Company
and each of Chia Soo, Eric Tang and Ben Wu (the “Founders”).

 

(d)               Payments. The Company will make all cash payments due under
the Notes in immediately available funds by 1:00 p.m. eastern time on the date
such payments are due.

 

 

 

2.              Representations and Warranties of the Company. The Company
represents and warrants to each Investor that:

 

(a)                Due Incorporation, Qualification, etc. The Company (i) is a
corporation duly incorporated, and is validly existing under, the laws of the
state of Delaware; (ii) has the power and authority to own, lease and operate
its properties and carry on its business as now conducted; and (iii) is duly
qualified, licensed to do business and in good standing as a foreign entity in
each jurisdiction where the failure to be so qualified or licensed could
reasonably be expected to have a material adverse effect on the Company.

 

(b)               Authority. The execution, delivery and performance by the
Company of this Agreement and the Notes (collectively, the “Loan Documents”) and
the consummation of the transactions contemplated thereby (i) are within the
power of the Company and (ii) have been duly authorized by all necessary actions
on the part of the Company.

 

(c)                Enforceability. The Loan Documents have been duly executed
and delivered by the Company and constitute, or will constitute, a legal, valid
and binding obligation of the Company, enforceable against the Company in
accordance with their terms, except as limited by bankruptcy, insolvency or
other laws of general application relating to or affecting the enforcement of
creditors’ rights generally and general principles of equity.

 

(d)               Non-Contravention. The execution and delivery by the Company
of the Loan Documents and the performance and consummation of the transactions
contemplated thereby do not and will not (i) violate the Company’s Certificate
of Incorporation or By-Laws (as amended, the “Charter Documents”) or any
material judgment, order, writ, decree, statute, rule or regulation applicable
to the Company; (ii) violate any provision of, or result in the breach or the
acceleration of, or entitle any other Person to accelerate (whether after the
giving of notice or lapse of time or both), any material mortgage, indenture,
agreement, instrument or contract to which the Company is a party or by which it
is bound; or (iii) other than the security interest created upon issuance of the
Notes, result in the creation or imposition of any lien upon any property, asset
or revenue of the Company or the suspension, revocation, impairment, forfeiture,
or nonrenewal of any material permit, license, authorization or approval
applicable to the Company, its business or operations, or any of its assets or
properties.

 

(e)                Approvals. No consent, approval, order or authorization of,
or registration, declaration or filing with, any governmental authority or other
Person is required in connection with the execution and delivery of this
Agreement or the Notes and the performance and consummation of the transactions
contemplated thereby, other than such as have been obtained and remain in full
force and effect and other than such qualifications or filings under applicable
securities laws as may be required in connection with the transactions
contemplated by this Agreement.

 

(f)                No Violation or Default. To the knowledge of the Company, it
is not in violation of or in default with respect to (i) its Charter Documents
or any material judgment, order, writ, decree, statute, rule or regulation
applicable to it; or (ii) any material mortgage, indenture, agreement,
instrument or contract to which the Company is a party or by which it is bound
(nor is there any waiver in effect which, if not in effect, would result in such
a violation or default), where, in each case, such violation or default,
individually, or together with all such violations or defaults, could reasonably
be expected to have a material adverse effect on the Company.

 

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(g)               Intellectual Property. To its knowledge, the Company owns or
possesses (or can obtain on commercially reasonable terms) sufficient legal
rights to all patents, trademarks, service marks, trade names, copyrights, trade
secrets, licenses, information, processes and other intellectual property rights
necessary for its business as now conducted and as proposed to be conducted,
without any conflict with, or infringement of the rights of, others.

 

(h)               Accuracy of Information Furnished. The Company has given
Investor access to the corporate records and accounts of the Company and to all
information in its possession relating to the Company, has made its officers and
representatives available for interview by the Investor, and has furnished such
Investor with all documents and other information required for the Investor to
make an informed decision with respect to the purchase of the Notes. Neither the
Loan Documents nor any of the other certificates, statements or information
furnished to Investors by or on behalf of the Company in connection with the
transactions contemplated thereby contains or will contain any untrue statement
of a material fact or omits or will omit to state a material fact necessary to
make the statements therein, in light of the circumstances under which they were
made, not misleading.

 

3.               Representations and Warranties of Each Investor. Each Investor
represents and warrants to the Company upon the acquisition of a Note as
follows:

 

(a)                Binding Obligation. Investor has full legal capacity, power
and authority to execute and deliver this Agreement and to perform its
obligations hereunder. The Loan Documents constitute valid and binding
obligations of Investor, enforceable in accordance with their terms, except as
limited by bankruptcy, insolvency or other laws of general application relating
to or affecting the enforcement of creditors’ rights generally and general
principles of equity.

 

(b)               Securities Law Compliance. Investor has been advised that the
Notes and the underlying securities have not been registered under the
Securities Act of 1933, as amended (the “Securities Act”), or any state
securities laws and, therefore, cannot be resold unless they are registered
under the Securities Act and applicable state securities laws or unless an
exemption from such registration requirements is available. Investor is aware
that the Company is under no obligation to effect any such registration with
respect to the Notes or the underlying securities or to file for or comply with
any exemption from registration. Investor has not been formed solely for the
purpose of making this investment and is purchasing the Notes for its own
account for investment, not as a nominee or agent, and not with a view to, or
for resale in connection with, the distribution thereof, and Investor has no
present intention of selling, granting any participation in, or otherwise
distributing the same. Investor has such knowledge and experience in financial
and business matters that Investor is capable of evaluating the merits and risks
of such investment, is able to incur a complete loss of such investment without
impairing Investor’s financial condition and is able to bear the economic risk
of such investment for an indefinite period of time. Investor is an accredited
investor as such term is defined in Rule 501 of Regulation D under the
Securities Act and shall submit to the Company such further assurances of such
status as may be reasonably requested by the Company.

 

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4.              Conditions to Closing of the Investors. Each Investor’s
obligations at the Closing are subject to the fulfillment, on or prior to the
Closing Date, of all of the following conditions, any of which may be waived in
whole or in part by all of such Investor:

 

(a)                Representations and Warranties. The representations and
warranties made by the Company in Section 2 hereof shall have been true and
correct when made, and shall be true and correct on the Closing Date.

 

(b)               Governmental Approvals and Filings. Except for any notices
required or permitted to be filed after the Closing Date with certain federal
and state securities commissions, the Company shall have obtained all
governmental approvals required in connection with the lawful sale and issuance
of the Note.

 

(c)                Transaction Documents. The Company shall have duly executed
and delivered to the Investor the Loan Documents.

 

(d)               Funding. The Company shall have received an aggregate amount
of $1,200,000 from its Investors.

 

(e)                Deferral of Compensation. The Company shall have obtained
from its employees an agreement to defer 20% of earned compensation which
deferred amount shall be due, owing and paid only upon closing of at least
$5,000,000 in cumulative funding from non-current stockholders.

 

(f)                Director Compensation. The Company’s board of directors shall
have authorized a change in director cash compensation to the effect that 50% of
such compensation including as committee members shall be in the form of stock
options for shares of common stock in the Company, which shall not be
exercisable until after the Maturity Date or the earlier Mandatory Conversion of
the Notes.

 

5.              Conditions to Obligations of the Company. The Company’s
obligation to issue and sell the Notes at the Closing is subject to the
fulfillment, on or prior to the Closing Date, of the following conditions, any
of which may be waived in whole or in part by the Company:

 

(a)                Representations and Warranties. The representations and
warranties made by the Investors in Section 3 hereof shall be true and correct
when made, and shall be true and correct on the Closing Date.

 

(b)               Governmental Approvals and Filings. Except for any notices
required or permitted to be filed after the Closing Date with certain federal
and state securities commissions, the Company shall have obtained all
governmental approvals required in connection with the lawful sale and issuance
of the Notes.

 

(c)                Purchase Price. Each Investor shall have delivered to the
Company the Purchase Price in respect of the Note being purchased by such
Investor referenced in Section 1(b) hereof.

 

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6.             Covenants of the Company. From the date of Closing through the
earliest to occur of the Maturity Date or the Mandatory Conversion of the Notes,
the Company agrees as follows:

 

(a)                The Company shall take all necessary steps to (i) focus on
prioritizing operations on essential research and development activities, (ii)
complete any existing ongoing studies, (iii) continue to seek outside funding
and (iv) file all required documents with the Securities and Exchange
Commission.

 

(b)               Within ninety days of the Closing, the Company will
investigate and report to its board of directors the potential benefits and
disadvantages of taking the Company private.

 

(c)                The Company shall not enter into any new agreements with any
Founder which requires the Company to make cash payments or provide cash
compensation to any Founder until such time as the Company has received at least
$10,000,000 in gross proceeds from funding from non-current stockholders.

 

7.             Miscellaneous.

 

(a)                Waivers and Amendments. Any provision of this Agreement and
the Notes may be amended, waived or modified only upon the written consent of
the Company and the Investors.

 

(b)               Governing Law. This Agreement and all actions arising out of
or in connection with this Agreement shall be governed by and construed in
accordance with the laws of the State of California, without regard to the
conflicts of law provisions of the State of California or of any other state.

 

(c)                Survival. The representations, warranties, covenants and
agreements made herein shall survive the execution and delivery of this
Agreement.

 

(d)               Successors and Assigns. Subject to the restrictions on
transfer described in Sections 7(e) below, the rights and obligations of the
Company and the Investor shall be binding upon and benefit the successors,
assigns, heirs, administrators and transferees of the parties.

 

(e)                Assignment by the Company. The rights, interests or
obligations hereunder may not be assigned, by operation of law or otherwise, in
whole or in part, by the Company without the prior written consent of the
Investors. Any such impermissible assignment shall be void.

 

(f)                Entire Agreement. This Agreement together with the other Loan
Documents constitute and contain the entire agreement among the Company and
Investor and supersede any and all prior agreements, negotiations,
correspondence, understandings and communications among the parties, whether
written or oral, respecting the subject matter hereof.

  

(g)               Notices. All notices, requests, demands, consents,
instructions or other communications required or permitted hereunder shall in
writing and faxed, mailed or delivered to each party as follows: (i) if to an
Investor, at such Investor’s address or facsimile number set forth in Schedule
I, or at such other address as such Investor shall have furnished the Company in
writing, or (ii) if to the Company, at the Company’s address or facsimile number
set forth on the signature page to this Agreement, or at such other address or
facsimile number as the Company shall have furnished to the Investor in writing.
All such notices and communications will be deemed effectively given the earlier
of (i) when received, (ii) when delivered personally, (iii) one business day
after being delivered by facsimile (with receipt of appropriate confirmation),
(iv) one business day after being deposited with an overnight courier service of
recognized standing or (v) four days after being deposited in the U.S. mail,
first class with postage prepaid.

 

(h)               Counterparts. This Agreement may be executed in one or more
counterparts, each of which will be deemed an original, but all of which
together will constitute one and the same agreement. Facsimile copies of signed
signature pages will be deemed binding originals.

 

(Signature Page Follows)

 

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The parties have caused this Agreement to be duly executed and delivered by
their proper and duly authorized officers as of the date first written above.

 

  INVESTORS:         The Musculoskeletal Transplant Foundation   Name of
Investor         By:     Name:     Title:           Hankey Capital, LLC   Name
of Investor         By:     Name:     Title:           COMPANY:         Bone
Biologics Corporation         By:     Name:     Authorized Signatory    Title:  

 

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