Exhibit 10.3

 

SUBSCRIPTION AGREEMENT

 

BioPharmX Corporation

1098 Hamilton Court

Menlo Park, CA 94025

 

Ladies and Gentlemen:

 

The undersigned (the “Investor”) hereby confirms its agreement to the terms of
this Subscription Agreement (“Agreement”) with BioPharmX Corporation, a Delaware
corporation (the “Company”), as follows:

 

1.                The Company has authorized the sale and issuance to certain
investors of up to $3,000,000.00 in aggregate principal of the Company’s
Convertible Promissory Notes (the “Notes” and individually, the “Note”), which
Notes, upon the occurrence of certain events, are convertible into shares (the
“Conversion Shares”) of the Company’s common stock, par value $0.001 per share
(the “Common Stock”) pursuant to the terms of each Note.  The Notes and the
Conversion Shares or any other security of the Company into which Notes shall
convert are collectively referred to as the “Securities”.

 

2.                Pursuant to this Agreement, the Company will sell to the
Investor, and the Investor will purchase from the Company, upon the terms and
conditions set forth herein, a Note in the form attached hereto as Exhibit A in
the principal amount set forth on the last page of this Agreement (the
“Signature Page”) for the Aggregate Purchase Price set forth on the Signature
Page. The Company proposes to enter into substantially this same form of
Subscription Agreement with certain other investors (the “Other Investors”) and
expects to complete sales of Securities to them. The Investor and the Other
Investors are hereinafter sometimes collectively referred to as the “Investors,”
and this Agreement and the Subscription Agreements executed by the Other
Investors are hereinafter sometimes collectively referred to as the
“Agreements.”  The completion of the purchase and sale of the Notes (the
“Closing”) shall occur after this Agreement has been signed by the Investor and
the Company and the Company has received the Aggregate Purchase Price. Promptly
after the Closing, the Company shall deliver to the Investor the Note purchased
by the Investor as set forth on the Signature Page.  The Company may conduct
more than one Closing, at its sole discretion, regardless of the amounts and
timing of the Company’s receipt of Agreements from Other Investors.

 

3.                The offering and sale of the Securities (the “Offering”) are
being made pursuant to an exemption from registration under the Securities Act
of 1933, as amended (the “Securities Act”), by virtue of Section 4(a)(2) of the
Securities Act and the provisions of Regulation D (“Regulation D”) promulgated
by the United States Securities and Exchange Commission (the “SEC”) thereunder,
based, in part, upon the representations, warranties and agreements of the
Investor contained in this Subscription Agreement and the Note(s) issues to the
Investor pursuant hereto.

 

4.                The Company and the Investor agree that pursuant to this
Agreement, the Investor will purchase from the Company and the Company will
issue and sell to the Investor a Note in principal amount set forth on the
signature page hereto for the Aggregate Purchase Price set forth on the
signature page hereto. The Investor acknowledges that the Offering is not being
underwritten, the Company has not engaged any placement agents (although it
reserves the right to do so at its sole discretion) and that there no minimum
offering amount that must be raised.  Investor acknowledges that the Company
may, at its sole discretion, engage registered broker-dealers (“Placement
Agents”) to offer and sell the Securities and may pay such Placement Agent a
cash fee and issue warrants to purchase common stock of the Company to such
Placement Agents.

 

5.                INSTRUCTIONS FOR INVESTING are as follows:

 

a.                    Please review and execute the signature pages to this
Subscription Agreement and e-mail a scanned copy of your signature pages for
these items to Joyce Goto at:  jgoto@biopharmx.com

 

b.                    You may also hand deliver your signed subscription
documents to an officer of the Company, or mail printed and wet-ink signed
versions of your subscription documents to: Attn: Joyce Goto, BioPharmX
Corporation, 1098 Hamilton Court, Menlo Park, California 94025.

 

c.                    Upon receipt of the completed and signed Subscription
Agreement, the Company will inform you whether it has accepted this Agreement
and within two business days of the Company’s notification of its acceptance of
your subscription you should send payment of your subscription amount in full by
wire transfer to the following account:

 

Wire to:

Bank of America

A/C#:

 

 

315 Montgomery Street

ABA#:

026009593

 

San Francisco, CA 94104

SWIFT Code:

B0FAUS3N

 

NOTE: if the name of the Investor is different from the sender of the wire
transfer, please inform the Company (via email to jgoto@biopharmx.com) to ensure
that your funds are properly credited.

 

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6                 Please note that the Company may reject this subscription for
any reason (regardless of whether any wire transfer relating to this
subscription is sent to the Company), and the Company will promptly return your
funds without interest, and without deduction of any expenses, if rejected. The
Company will send to you a fully executed copy of this Agreement if your
subscription is accepted. If you have any questions about completing the
foregoing documents, please contact Joyce Goto at jgoto@biopharmx.com.

 

7.                 The Investor represents that, except as set forth below,
(a) it has had no position, office or other material relationship within the
past three years with the Company or persons known to it to be affiliates of the
Company, (b) it is not a member of the Financial Industry Regulatory
Authority, Inc. (“FINRA”) or an Associated Person (as such term is defined under
the FINRA’s NASD Membership and Registration Rules Section 1011) as of the
Closing, and (c) neither the Investor nor any group of Investors (as identified
in a public filing made with the SEC) of which the Investor is a part in
connection with the Offering, acquired, or obtained the right to acquire, 20% or
more of the Common Stock (or securities convertible into or exercisable for
Common Stock) or the voting power of the Company on a post-transaction basis.

 

Please note any exceptions to the statement above:

 

(If no exceptions, write “none.” If left blank, response will be deemed to be
“none.”)

 

8.                By its signature and by taking possession of the Note, which
the Investor hereby agrees to countersign in agreement and acknowledgement of
all covenants, agreements, representations and warranties made therein, the
Investor hereby represents that (i) it is an “accredited investor” as defined in
applicable securities laws, it is purchasing the Securities as principal, it was
not created or used solely to purchase or hold the Securities as an accredited
investor, and will continue to be an “accredited investor” and the forgoing will
describe it at the Closing and upon taking possession of the Note; and (ii) it
is knowledgeable, sophisticated and experienced in making, and is qualified to
make decisions with respect to, investments in securities presenting an
investment decision like that involved in the purchase of the Securities,
including investments in securities issued by the Company and investments in
comparable companies.

 

YOU SHOULD NOT SIGN AND RETURN THIS STATEMENT IF ANY OF THE ABOVE INFORMATION
DOES NOT ACCURATELY REFLECT YOUR FINANCIAL SITUATION, INVESTMENT EXPERIENCE, AND
INVESTMENT OBJECTIVES. YOU AGREE TO NOTIFY THE COMPANY IN WRITING IF ANY OF THE
ABOVE INFORMATION CHANGES.

 

9.                Notwithstanding any investigation made by any party to this
Agreement, all covenants, agreements, representations and warranties made by the
Company and the Investor herein will survive the execution of this Agreement,
the delivery to the Investor of the Notes being purchased and the payment
therefor.

 

10.              All notices, requests, consents and other communications
hereunder shall be given in accordance with the provisions set forth in the
Note.

 

11.              This Agreement may not be modified or amended except pursuant
to an instrument in writing signed by the Company and the Investor.

 

12.              The headings of the various sections of this Agreement have
been inserted for convenience of reference only and will not be deemed to be
part of this Agreement.

 

13.              In case any provision contained in this Agreement should be
invalid, illegal or unenforceable in any respect, the validity, legality and
enforceability of the remaining provisions contained herein will not in any way
be affected or impaired thereby.

 

14.              This Agreement will be governed by, and construed in accordance
with, the internal laws of the State of Delaware, without giving effect to the
principles of conflicts of law that would require the application of the laws of
any other jurisdiction.

 

15.              This Agreement may be executed in two or more counterparts,
each of which will constitute an original, but all of which, when taken
together, will constitute but one instrument, and will become effective when one
or more counterparts have been signed by each party hereto and delivered to the
other parties.

 

[signature page follows]

 

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Signature Page to Subscription Agreement

 

Principal Amount of Note: One Million USD

 

Aggregate Purchase Price For the Securities: U.S. $1,000,000

 

Please confirm that the foregoing correctly sets forth the agreement between us
and that you are an “accredited investor” as defined in applicable securities
laws by signing in the space provided below for that purpose.

 

 

Dated as of: August 17, 2016

 

 

 

RTW Master Fund, LTD

 

INVESTOR

 

 

 

By:

/s/ Roderick Wong

 

Print Name:

Roderick Wong

 

Title:

Managing Member

 

Address:

250 West 55th Street, 16th Floor, Suite A

 

 

New York, NY 10019

 

Telephone number:

646-597-6980

 

Email address:

trades@rtwfunds.com

 

Agreed and Accepted

this 17 day of August 2016:

 

BIOPHARMX CORPORATION

 

By:

/s/ Anja Krammer

 

Name:

Anja Krammer

 

Title:

President

 

 

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EXHIBIT A

TO

SUBSCRIPTION AGREEMENT

-FORM OF CONVERTIBLE PROMISSORY NOTE-

 

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NEITHER THIS NOTE NOR THE SECURITIES ISSUABLE UPON CONVERSION OF THIS NOTE HAVE
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR
UNDER THE SECURITIES LAWS OF APPLICABLE STATES.  THIS NOTE AND SUCH SECURITIES
ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND RESALE AND MAY NOT BE
TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER THE ACT AND THE APPLICABLE STATE
SECURITIES LAWS, PURSUANT TO REGISTRATION UNDER SUCH LAWS OR AN EXEMPTION FROM
SUCH REGISTRATION REQUIREMENTS.  INVESTORS SHOULD BE AWARE THAT THEY MAY BE
REQUIRED TO BEAR THE FINANCIAL RISKS OF THIS INVESTMENT FOR AN INDEFINITE PERIOD
OF TIME.  THE ISSUER OF THIS NOTE AND ANY SECURITIES ISSUABLE UPON CONVERSION OF
THIS NOTE MAY REQUIRE AN OPINION OF COUNSEL IN FORM AND SUBSTANCE SATISFACTORY
TO THE ISSUER TO THE EFFECT THAT ANY PROPOSED TRANSFER OR RESALE IS IN
COMPLIANCE WITH THE ACT AND ALL APPLICABLE STATE SECURITIES LAWS.

 

BIOPHARMX CORPORATION

 

SECURED CONVERTIBLE PROMISSORY NOTE

 

Note No.: 2016-01

 

$1,000,000

Made as of August 17, 2016

 

Subject to the terms and conditions of this Note, for value received, BioPharmX
Corporation, a Delaware corporation (the “Company”), with chief executive
offices at 1098 Hamilton Court, Menlo Park, CA 94025, hereby promises to pay to
the order of RTW Master Fund, LTD or registered assigns (“Holder”), the
principal sum of one million dollars ($1,000,000), or such lesser amount as
shall then equal the outstanding principal amount hereunder, together with
interest accrued on the unpaid principal amount at the Applicable Rate (as
defined below).  Interest shall begin to accrue on the date of this Note and
shall continue to accrue on the outstanding principal until the entire Balance
is converted and shall be computed based on the actual number of days elapsed
and on a year of 365 days.

 

This Note will be subordinated to any future secured indebtedness with banks,
lessors or other financial or lending institutions. The following is a statement
of the rights of Holder and the terms and conditions to which this Note is
subject, and to which Holder, by the acceptance of this Note, agrees.

 

1.                                                 DEFINITION.  The following
definitions shall apply for purposes of this Note.

 

“Actual Conversion Amount” means all (or if permitted by the terms of this Note,
that lesser portion) of the Balance actually converted into Conversion Stock
pursuant to Section 6.1, on an Actual Conversion Date, including, if accrued
interest and expenses convert pursuant to the terms of this Note, interest and
expenses accrued through such Actual Conversion Date and actually converted into
Conversion Stock.

 

“Actual Conversion Date” means a date on which all (or if permitted by this
Note, a lesser portion) of the Balance of this Note is converted pursuant to
Section 6.1.

 

“Affiliate” has the meaning ascribed to it in Rule 144 promulgated under the
Securities Act.

 

“Applicable Rate” means a rate equal to the lower of: (a) the Highest Lawful
Rate; and (b) ten percent (10.00%) per annum.

 

“Balance” means, at the applicable time, the sum of all then outstanding
principal of this Note, all then accrued but unpaid interest and all other
amounts then accrued but unpaid under this Note.

 

“Business Day” means a weekday on which banks are open for general banking
business in San Francisco, California.

 

“Company” shall include, in addition to the Company identified in the opening
paragraph of this Note, any corporation or other entity which succeeds to the
Company’s obligations under this Note, whether by permitted assignment, by
merger or consolidation, operation of law or otherwise.

 

“Conversion Price” means $0.80.

 

“Conversion Stock” means Common Stock of the Company, $0.001 par value per
share.  The number and character of shares of Conversion Stock are subject to
adjustment as provided in this Note and the term “Conversion Stock” shall
include the stock and other securities and property that are, on an Actual
Conversion Date, receivable or issuable upon such conversion of this Note in
accordance with its terms.

 

“Event of Default” has the meaning set forth in Section 5.

 

“Financing Document” means this Note, the Purchase Agreement, and any document
entered into, executed or delivered under

 

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or in connection with, or for the purpose of amending, this Note.

 

“Highest Lawful Rate” means the maximum non-usurious rate of interest, as in
effect from time to time, which may be charged, contracted for, reserved,
received or collected by Holder in connection with this Note under applicable
law.

 

“Liquidation Event” means (a) any acquisition of the Company in any transaction
or series of related transactions by means of merger, consolidation,
reorganization, stock acquisition or otherwise in which outstanding shares of
the Company are exchanged for securities or other consideration issued, or
caused to be issued, by the acquiring entity or its subsidiary (other than a
merger effected primarily for the purpose of changing the domicile of the
Company) that results in the transfer of fifty percent (50%) or more of the
outstanding voting power of the Company, or (b) a sale or an irrevocable and
exclusive license of all or substantially all of the assets or intellectual
property of the Company to a third party.

 

“Lost Note Documentation” means documentation satisfactory to the Company with
regard to a lost or stolen Note, including, if required by the Company, an
affidavit of lost note and an indemnification agreement by Holder in favor of
the Company with respect to such lost or stolen Note.

 

“Maturity Date” means the earlier of (a) the date that is thirty-six (36) months
from the date of this Note, or (b) the time at which the Balance of this Note is
due and payable upon an Event of Default; provided , however that if the Event
of Default is cured as permitted in this Note, then the Maturity Date shall not
thereafter be deemed to have occurred with regard to such Event of Default under
this clause (b).

 

“Note” means this Convertible Promissory Note.

 

“Person” means an individual, corporation, limited liability company,
partnership, association, joint-stock company, trust, unincorporated
organization, joint venture or other entity or any governmental authority.

 

“Public Offering” means any public offering of equity securities or securities
convertible into equity securities of and by the Company pursuant to an
effective registration statement on Form S-1 or Form S-3 filed under the
Securities Act.

 

“Purchase Agreement” means the Subscription Agreement between the Holder and the
Company pursuant to which the Holder agreed to purchase this Note.

 

“Qualified Financing Event” means the occurrence of any of the following events
so long as the Company receives gross proceeds of at least eight million dollars
($8,000,000) as a result of such event: (a) a Public Offering; (b) a sale of
equity securities or securities convertible into equity securities of the
Company by the Company in a private offering; or (c) entry by the Company into a
credit facility or other financing transaction.

 

“Registration Rights Agreement” means that certain registration rights agreement
executed by and between the Company and the Holder on the date of this Note.

 

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

 

“Security Agreement” means that certain security agreement executed by and
between the Company and the Holder on the date of this Note.

 

“Senior Indebtedness” means the principal of, accrued but unpaid interest on and
other amounts with respect to, any and all future indebtedness of the Company,
hereafter created or incurred in connection with secured indebtedness with
banks, lessors or other financial or lending institutions.

 

2.                                                 PAYMENT AT MATURITY DATE;
INTEREST.

 

2.1                            Payment at Maturity Date.  If this Note has not
been previously converted (as provided in Section 6), then on the Maturity Date,
all of the Balance then outstanding shall be due and payable to the Holder in
whose name this Note is registered, and at such address as is registered, on the
records of the Company.

 

2.2                               Payment of Interest.  Anything herein to the
contrary notwithstanding, if during any period for which interest is computed
hereunder, the amount of interest computed on the basis provided for in this
Note, together with all fees, charges and other payments which are treated as
interest under applicable law, as provided for herein or in any other document
executed in connection herewith, would exceed the amount of such interest
computed on the basis of the Highest Lawful Rate, then the Company shall not be
obligated to pay, and Holder shall not be entitled to charge, collect, receive,
reserve or take, interest in excess of the Highest Lawful Rate, and during any
such period the interest payable hereunder shall be computed on the basis of the
Highest Lawful Rate.

 

3.                                                 PREPAYMENT. The principal and
accrued but unpaid interest, if any, of this Note may be prepaid in whole or in
part without premium or penalty. To the extent any amount remains due and unpaid
after any prepayment, thereafter, the Company

 

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shall have the right at any time and from time to time to prepay such amount due
under this Note in whole or in part without premium or penalty.

 

4.                                                 SECURITY INTEREST. This Note
is secured by substantially all of the assets of the Company in accordance with
the terms and subject to the conditions of the Security Agreement.  In the case
of an Event of Default, the Holder shall have the rights set forth in the
Security Agreement.

 

5.                                                 EVENTS OF DEFAULT.  Each of
the following events shall constitute an “Event of Default” hereunder:

 

(a)                               The Company fails to make any payment when due
under this Note on the applicable due date;

 

(b)                               A receiver is appointed for any material part
of the Company’s property, the Company makes a general assignment for the
benefit of creditors, or the Company becomes a debtor or alleged debtor in a
case under the U.S. Bankruptcy Code or becomes the subject of any other
bankruptcy or similar proceeding for the general adjustment of its debts or for
its liquidation;

 

(c)                                The Company breaches any material obligation
to Holder under this Note or under any other Financing Document and does not
cure such breach within 20 days after written notice thereof has been given by
or on behalf of Holder to the Company;

 

(d)                               The Company is in default under any Senior
Indebtedness and such default is not waived by the holder of such Senior
Indebtedness or cured by the Company within the applicable grace period, if any,
provided in the agreements evidencing such Senior Indebtedness; or

 

(e)                                The Company’s Board of Directors or
stockholders adopt a resolution for the liquidation, dissolution or winding up
of the Company.

 

Upon the occurrence of any Event of Default, all accrued but unpaid expenses,
accrued but unpaid interest, all principal and any other amounts outstanding
under this Note shall (i) in the case of any Event of Default under
Section 5(b), become immediately due and payable in full without further notice
or demand by Holder and (ii) in the case of any Event of Default other than
under Section 5(b), become immediately due and payable upon written notice by or
on behalf of the Holder to the Company.

 

6.                                                 CONVERSION.

 

6.1                            Conversion Upon Qualified Financing, Maturity. 
Subject to Section 6.3, on the earlier of (a) the closing of a Qualified
Financing Event, (b) the Maturity Date, or (c) a Liquidation Event, the entire
Balance then outstanding shall automatically be cancelled and converted into
that number of shares of Conversion Stock obtained by dividing (i) the entire
Balance by (ii) the Conversion Price.  Subject to Section 6.3, in the event of a
Qualified Financing Event or a Liquidation Event, such conversion shall be
deemed to occur under this Section 6.1 as of immediately prior to the closing of
the Qualified Financing Event or Liquidation Event, as applicable, without
regard to whether Holder has then delivered to the Company this Note (or the
Lost Note Documentation where applicable).

 

6.2                            Termination of Rights.  Except for the right to
obtain certificates representing the Conversion Stock under Section 7, all
rights with respect to this Note shall terminate upon the effective conversion
of the entire Balance of the Note as provided in Section 6.1.  Notwithstanding
the foregoing, Holder agrees to surrender this Note to the Company (or Lost Note
Documentation where applicable) as soon as practicable after conversion.  In any
event, Holder shall not be entitled to receive any stock certificates
representing the shares of Conversion Stock issuable upon conversion of this
Note unless and until Holder has surrendered the original of this Note (or Lost
Note Documentation where applicable).

 

6.3                            Shareholder Approval.  Conversion of the Balance
into shares of Conversion Stock as provided in Section 6.1 is subject to, and
conditioned upon, the Company obtaining shareholder approval prior to any such
conversion, if such approval is required by applicable law, including the
rules and regulations of any market or exchange on which the Company’s
securities are then listed or otherwise traded. If shareholder approval is
required, the conversion of the Balance into shares of Conversion Stock pursuant
to Section 6.1 shall be deemed to occur as of immediately after such shareholder
approval has been obtained.

 

7.                                                 CERTIFICATES; NO FRACTIONAL
SHARES.  Subject to Section 6.2, as soon as practicable after conversion of this
Note pursuant to Section 6.1, the Company at its expense will cause to be issued
in the name of Holder and to be delivered to Holder, a certificate or
certificates for the number of shares of Conversion Stock to which Holder shall
be entitled upon such conversion (bearing such legends as may be required by
applicable state and federal securities laws in the opinion of legal counsel of
the Company, by any lockup agreement, by the Company’s Certificate of
Incorporation and Bylaws and by any agreement between the Company and Holder),
together with any other securities and property to which Holder is entitled upon
such conversion under the terms of this Note.  No fractional shares shall be
issued upon conversion of this Note.  If upon any conversion of this Note a
fraction of a share would otherwise be issued, then in lieu of such fractional
share, the Company shall pay to Holder an amount in cash equal to such fraction
of a share multiplied by the Conversion Price.

 

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8.                                                 ADJUSTMENT PROVISIONS.  So
long as any of the Balance of this Note remains outstanding and conversion under
Sections 6.1 has not occurred, the number and character of shares of Conversion
Stock issuable upon conversion of this Note upon an Actual Conversion Date and,
to the extent set forth in this Section 8, the Conversion Price therefor, are
each subject to adjustment upon each occurrence of an adjustment event described
in Sections 8.1 through 8.4 occurring between the date this Note is issued and
such Actual Conversion Date.

 

8.1                            Adjustment for Stock Splits and Stock Dividends. 
The Conversion Price and the number of shares of Conversion Stock shall each be
proportionally adjusted to reflect any stock dividend, stock split, reverse
stock split or other similar event affecting the number of outstanding shares of
Conversion Stock without the payment of consideration to the Company therefor at
any time before an Actual Conversion Date.

 

8.2                            Adjustment for Other Dividends
and Distributions.  If the Company shall make or issue, or shall fix a record
date for the determination of eligible holders of its capital stock entitled to
receive, a dividend or other distribution payable with respect to the Conversion
Stock that is payable in securities of the Company (other than issuances with
respect to which adjustment is made under Sections 8.1 or 8.3), or in assets
(other than cash dividends) (each, a “ Dividend Event “), and such dividend or
other distribution is actually made, then, and in each such case, Holder, upon
conversion of an Actual Conversion Amount at any time after such Dividend Event,
shall receive, in addition to the Conversion Stock issuable upon such conversion
of the Note, the securities or other assets that would have been issuable to
Holder had Holder, immediately prior to such Dividend Event, converted such
Actual Conversion Amount into Conversion Stock.

 

8.3                            Adjustment for Consolidation or Merger.  If the
Company shall consolidate with or merge into one or more other corporations or
other entities, and pursuant to such consolidation or merger, stock, other
securities or other property is issued or paid to holders of Conversion Stock
(each, a “Reorganization Event”), then, and in each such case, Holder, upon
conversion of an Actual Conversion Amount after the consummation of such
Reorganization Event, shall be entitled to receive (in lieu of the stock or
other securities and property that Holder would have been entitled to receive
under the terms of this Note upon such conversion but for such Reorganization
Event), the stock or other securities or property that Holder would have been
entitled to receive upon the consummation of such Reorganization Event if,
immediately prior to such Reorganization Event, Holder had converted such Actual
Conversion Amount into Conversion Stock, all subject to further adjustment as
provided in this Note, and the successor corporation or other successor entity
in such Reorganization Event shall duly execute and deliver to Holder a
supplement to this Note acknowledging such corporation’s or other entity’s
obligations under this Note; and in each such case, the terms of the Note shall
be applicable to the shares of stock or other securities or property receivable
upon the conversion of this Note after the consummation of such Reorganization
Event.

 

8.4                            Conversion of Stock.  In each case not otherwise
covered in Section 8.3 where (a) all the outstanding Conversion Stock is
converted, pursuant to the terms of the Company’s Certificate of Incorporation,
into Common Stock or other securities or property, or (b) the Conversion Stock
otherwise ceases to exist or to be authorized under the Company’s Certificate of
Incorporation (each a “Stock Event “), then Holder, upon conversion of this Note
at any time after such Stock Event, shall receive, in lieu of the number of
shares of Conversion Stock that would have been issuable upon conversion of this
Note immediately prior to such Stock Event, the stock and other securities and
property that Holder would have been entitled to receive upon the Stock Event,
if immediately prior to such Stock Event, Holder had converted the Actual
Conversion Amount into Conversion Stock.

 

8.5                            Notice of Adjustments.  The Company shall
promptly give written notice of each adjustment of the Conversion Price or the
number or type of shares of Conversion Stock or other securities or property
issuable upon conversion of this Note that is required under this Section 8. 
The notice shall describe the adjustment or readjustment and show in reasonable
detail the facts on which the adjustment or readjustment is based.

 

8.6                            No Change Necessary.  The form of this Note may,
but need not, be changed because of any adjustment in the Conversion Price or in
the number or type of shares of Conversion Stock issuable upon its conversion.

 

8.7                            Reservation of Stock.  If the number of shares of
Conversion Stock or other securities authorized and reserved for issuance upon
conversion of this Note shall not be sufficient to effect the conversion of the
Balance of this Note, then the Company shall take such corporate action as may,
in the opinion of its counsel, be necessary to increase its authorized but
unissued shares of Conversion Stock or other securities issuable upon conversion
of this Note as shall be sufficient for such purpose.

 

9.                                                 PROVISIONS RELATING TO
STOCKHOLDERS RIGHTS.

 

9.1                            Rights as Investor; “Market Stand-Off”
Agreement.  Upon conversion of the Balance in connection with a Public Offering,
Holder shall be entitled to the rights and be subject to all other obligations
of the investors in the Conversion Stock issued in such Public Offering.  Holder
hereby agrees that Holder shall not, to the extent requested by the Company or
an underwriter of securities of the Company, sell or otherwise transfer or
dispose of any shares of stock or other securities of the Company then or
thereafter owned by Holder (other than to donees or partners of Holder who agree
to be similarly bound) for up to one hundred eighty (180) days, plus up to an
additional 18 days to the extent necessary to comply with applicable regulatory
requirements, following the effective date of a registration statement of the
Company filed under the Securities Act; provided, however , that such agreement
shall be applicable only to the first such registration statement of the Company
which covers securities to be sold on its behalf to the public in an
underwritten offering, but shall not apply to any securities sold pursuant to
such registration statement.

 

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For purposes of this Section 9.1, the term “Company” shall include any
wholly-owned subsidiary of the Company into which the Company merges or
consolidates.  In order to enforce the foregoing covenant, the Company shall
have the right to place restrictive legends on the certificates representing the
securities of the Company subject to this Section and to impose stop transfer
instructions with respect to the securities of the Company held by Holder (and
the shares or securities of every other person subject to the foregoing
restriction) until the end of such period.  Holder further agrees to enter into
any agreement reasonably required by the underwriters to implement the foregoing
within any reasonable timeframe so requested.

 

9.2                            No Voting or Other Rights.  This Note does not
entitle Holder to any voting rights or other rights as a stockholder of the
Company, unless and until (and only to the extent that) this Note is actually
converted into shares of the Company’s capital stock in accordance with its
terms.  In the absence of conversion of this Note into Conversion Stock, no
provisions of this Note and no enumeration herein of the rights or privileges of
Holder, shall cause Holder to be a stockholder of the Company for any purpose.

 

9.3                            Inspection Rights.  Holder shall also be entitled
to standard inspection and visitation rights pursuant to Delaware law.

 

9.4                            Registration Rights. Upon conversion of the
Balance into Conversion Stock pursuant to Section 6.1, Holder shall have no
registration rights with respect to the Conversion Stock except as provided in
the Registration Rights Agreement.

 

10.                                          REPRESENTATIONS AND WARRANTIES OF
HOLDER.

 

In order to induce the Company to issue this Note to the original Holder, the
original Holder has made representations and warranties to the Company as set
forth in the Purchase Agreement and below.

 

10.1                     Authorization.  This Note constitutes Holder’s valid
and legally binding obligations, enforceable against Holder in accordance with
its terms, except as may be limited by  (i) applicable bankruptcy, insolvency,
reorganization or other laws of general application relating to or affecting the
enforcement of creditors’ rights generally and (ii) the effect of rules of law
governing the availability of equitable remedies.  Holder represents and
warrants to the Company that Holder has full power and authority to enter into
this Note.

 

10.2                     Purchase for Own Account.  The Note and the Conversion
Stock issuable upon the conversion of the Note, (collectively, the “Securities”)
will be acquired for investment for Holder’s own account, not as a nominee or
agent, and not with a view to the public resale or distribution thereof within
the meaning of the Securities Act, and Holder has no present intention of
selling, granting any participation in, or otherwise distributing the same.

 

10.3                     No Solicitation.  At no time was Holder presented with
or solicited by any publicly issued or circulated newspaper, mail, radio,
television or other form of general advertising or solicitation in connection
with the offer, sale and purchase of the Securities.

 

10.4                     Disclosure of Information.  Holder has received or has
had full access to all the information Holder considers necessary or appropriate
to make an informed investment decision with respect to the Securities.  Holder
further has had an opportunity to ask questions and receive answers from the
Company regarding the terms and conditions of the offering of the Securities and
to obtain additional information (to the extent the Company possessed such
information or could acquire it without unreasonable effort or expense)
necessary to verify any information furnished to Holder or to which Holder had
access.

 

10.5                     Investment Experience.  Holder understands that the
purchase of the Securities involves substantial risk.  Holder (i) has experience
as an investor in securities of companies in the development stage and
acknowledges that such Investor is able to fend for itself, can bear the
economic risk of Holder’s investment in the Securities and has such knowledge
and experience in financial or business matters that Holder is capable of
evaluating the merits and risks of this investment in the Securities and
protecting Holder’s own interests in connection with this investment in the
Securities or (ii) has a preexisting personal or business relationship with the
Company and certain of its officers, directors or controlling persons of a
nature and duration that enables Holder to be aware of the character, business
acumen and financial circumstances of such persons.

 

10.6                     Accredited Investor Status.  Holder is familiar with
the definition of, and qualifies as, an “accredited investor” within the meaning
of Regulation D promulgated under the Securities Act.

 

10.7                     Restricted Securities.  Holder understands that the
Securities are characterized as “restricted securities” under the Securities Act
and Rule 144 promulgated thereunder (“Rule 144”) since they are being acquired
from the Company in a transaction not involving a public offering, and that
under the Securities Act and applicable regulations thereunder the Securities
may be resold without registration under the Securities Act only in certain
limited circumstances.  Holder further understands that the Company is under no
obligation to register the Securities, and the Company has no present plans to
do so.  Furthermore, Holder is familiar with Rule 144, as presently in effect,
and understands the limitations imposed thereby and by the Securities Act on
resale of the Securities without such registration.  Holder understands that,
whether or not the Securities may be resold in the future without registration
under the Securities Act, no assurances can be made that a public market will
exist for the Securities.

 

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10.8                     Further Limitations on Disposition.  Without in any way
limiting the representations set forth above, Holder further agrees not to make
any disposition of all or any portion of the Securities unless and until:

 

(a)                  there is then in effect a registration statement under the
Securities Act covering such proposed disposition and such disposition is made
in accordance with such effective registration statement; or

 

(b)                  Holder shall have notified the Company of the proposed
disposition and shall have furnished the Company with a statement of the
circumstances surrounding the proposed disposition and, at the expense of Holder
or its transferee, with an opinion of counsel reasonably satisfactory in form
and substance to the Company that such disposition will not require registration
of such Securities under the Securities Act.

 

Notwithstanding the provisions of paragraphs (a) and (b) of this Section 10.8,
no such registration statement or opinion of counsel shall be required for any
transfer:  (i) of any Securities in compliance with Rule 144 or Rule 144A
promulgated under the Securities Act when the Company is promptly provided
evidence of such compliance; (ii) of any Securities by a Holder that is a
partnership or a corporation to (A) a partner of such partnership or stockholder
of such corporation, (B) an affiliate of such partnership or corporation, (C) a
retired partner of such partnership who retires after the date hereof, (D) the
estate of any deceased partner of such partnership or deceased stockholder of
such corporation; or (iii) by gift, will or intestate succession by any Holder
to his or her spouse or lineal descendants or ancestors or any trust for any of
the foregoing;  provided  that in each of the foregoing cases the transferee
agrees in writing to be subject to the terms of this Section 10.8 to the same
extent as if the transferee had been an original Holder hereunder.

 

10.9                     Legends.  Holder understands and agrees that the
certificates evidencing the Securities will bear legends substantially similar
to those set forth below in addition to any other legend that may be required by
applicable law, the Company’s Certificate of Incorporation or Bylaws,
Section 9.2 above or any other agreement between the Company and Holder:

 

(a)                  THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR UNDER THE
SECURITIES LAWS OF APPLICABLE STATES.  THESE SECURITIES ARE SUBJECT TO
RESTRICTIONS ON TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED OR RESOLD
EXCEPT AS PERMITTED UNDER THE ACT AND APPLICABLE STATE SECURITIES LAWS, PURSUANT
TO REGISTRATION UNDER SUCH LAWS OR AN EXEMPTION FROM SUCH REGISTRATION
REQUIREMENT.  INVESTORS SHOULD BE AWARE THAT THEY MAY BE REQUIRED TO BEAR THE
FINANCIAL RISKS OF THIS INVESTMENT FOR AN INDEFINITE PERIOD OF TIME.  THE ISSUER
OF THESE SECURITIES MAY REQUIRE AN OPINION OF COUNSEL IN FORM AND SUBSTANCE
SATISFACTORY TO THE ISSUER TO THE EFFECT THAT ANY PROPOSED TRANSFER OR RESALE IS
IN COMPLIANCE WITH THE ACT AND ALL APPLICABLE STATE SECURITIES LAWS.

 

(b)                  Any legend pursuant to a lock up agreement, required by the
laws of the State of California, including any legend required by the California
Department of Corporations or any other state securities laws.

 

The legend set forth in (a) above shall be removed by the Company from any
certificate evidencing the Securities upon delivery to the Company of an opinion
of counsel, reasonably satisfactory in form and substance to the Company, that
either (i) a registration statement under the Securities Act is at that time in
effect with respect to the legended security or (ii) such security can be freely
transferred in a public sale (other than pursuant to Rule 144, Rule 144A or
Rule 145 promulgated under the Securities Act) without such a registration
statement being in effect and that such transfer will not jeopardize the
exemption or exemptions from registration pursuant to which the Company issued
the Securities.

 

10.10              Disqualification.  Holder represents that neither Holder, nor
any person or entity with whom Holder shares beneficial ownership of the Company
securities, is subject to any Disqualification Event (as defined in
Rule 506(d)(1)(i) through (viii) under the Securities Act), except for
Disqualification Events covered by Rule 506(d)(2)(ii) or (iii) or (d)(3) under
the Securities Act and disclosed reasonably in advance of the date hereof in
writing in reasonable detail to the Company.

 

11.                                          GENERAL PROVISIONS.

 

11.1                     Waivers.  The Company and all endorsers of this Note
hereby waive notice, presentment, protest and notice of dishonor.

 

11.2                     Attorneys’ Fees.  In the event any party is required to
engage the services of an attorney for the purpose of enforcing this Note, or
any provision thereof, the prevailing party shall be entitled to recover its
reasonable expenses and costs in enforcing this Note, including attorneys’ fees.

 

11.3                     Transfer.  Neither this Note nor any rights hereunder
may be assigned, conveyed or transferred, in whole or in part, without the
Company’s prior written consent, which the Company may withhold in its sole
discretion.  Subject to the foregoing, the rights and obligations of the Company
and Holder under this Note shall be binding upon and benefit their respective
permitted successors, assigns, heirs, administrators and transferees.

 

11.4                     Governing Law.  This Note shall be governed by and
construed under the internal laws of the State of

 

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California as applied to agreements among California residents entered into and
to be performed entirely within the State of California, without reference to
principles of conflict of laws or choice of laws.

 

11.5                     Headings.  The headings and captions used in this Note
are used only for convenience and are not to be considered in construing or
interpreting this Note.  All references in this Note to sections and exhibits
shall, unless otherwise provided, refer to sections hereof and exhibits attached
hereto, all of which exhibits are incorporated herein by this reference.

 

11.6                     Notices.  Unless otherwise provided herein, any notice
required or permitted under this Note shall be given in writing and shall be
deemed effectively given (a) at the time of personal delivery, if delivery is in
person; (b) one (1) Business Day after deposit with an express overnight courier
for United States deliveries, or three (3) Business Days after deposit with an
international express overnight air courier for deliveries outside of the United
States, in each case with proof of delivery from the courier requested; or
(c) four (4) Business Days after deposit in the United States mail by certified
mail (return receipt requested) for United States deliveries, when addressed to
the party to be notified at the address indicated below, or at such other
address as any party hereto may designate for itself to receive notices by
giving ten (10) days’ advance written notice to all other parties in accordance
with the provisions of this Section.  For purposes of this Section 11.6, a
“business day” means a weekday on which banks are open for general banking
business in San Francisco, California.

 

COMPANY ADDRESS

BioPharmX Corporation

1098 Hamilton Court

Menlo Park, California 94025

 

HOLDER ADDRESS

RTW Master Fund, LTD

250 West 55th Street
16th Floor, Suite A
New York, NY 10019

 

11.7                     Amendments and Waivers.  Any term of this Note may be
amended and the observance of any term of this Note may be waived (either
generally or in a particular instance and either retroactively or
prospectively), only with the written consent of the Company and Holder.  Any
amendment or waiver effected in accordance with this Section 11.7 shall be
binding upon Holder, each future holder of the Note, and the Company.

 

11.8                     Severability.  If one or more provisions of this Note
are held to be unenforceable under applicable law, then such provision(s) shall
be excluded from this Note to the extent they are held to be unenforceable and
the remainder of the Note shall be interpreted as if such provision(s) were so
excluded and shall be enforceable in accordance with its terms.

 

[Signature page follows]

 

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IN WITNESS WHEREOF, the Company has caused this Convertible Promissory Note to
be signed in its name as of the date first written above.

 

 

THE COMPANY

 

 

 

BioPharmX Corporation

 

 

 

 

By:

/s/ Anja Krammer

 

Name:

Anja Krammer

 

Title:

President

 

 

AGREED AND ACKNOWLEDGED:

 

 

 

HOLDER

 

 

 

RTW MASTER FUND, LTD

 

 

 

 

By:

/s/ Roderick Wong

 

Name:

Roderick Wong

 

Title:

Managing Member

 

 

[SIGNATURE PAGE TO CONVERTIBLE PROMISSORY NOTE OF BIOPHARMX CORPORATION]

 

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