Exhibit 10.1

 

THIRD AMENDED AND RESTATED

2014 CREDIT FACILITY AGREEMENT

 

THIRD AMENDED AND RESTATED 2014 CREDIT FACILITY AGREEMENT (the “Agreement”) by
and between Protalex, Inc., a Delaware corporation (the “Company”) and Niobe
Ventures, LLC, a Delaware limited liability company (“Niobe”), dated as of
October 31, 2016.

 

WHEREAS, the Company and Niobe are currently parties to the Seconded Amended and
Restated 2014 Credit Facility Agreement, dated as of June 30, 2016, covering up
to $9.0 million of loans from Niobe to the Company (the “Credit Facility”), of
which an aggregate of $8.885 million in loans have been funded to date (the
“Current Credit Facility Balance”); and

 

WHEREAS, incremental to the Credit Facility and the Current Credit Facility
Balance, Niobe is the holder of a Consolidated, Amended and Restated Promissory
Note in the principal amount of $9,219,366 issued by the Company on October 11,
2013 (the “Outstanding Note”); and

 

WHEREAS, Niobe and the Company desire to increase the maximum amount of the
Credit Facility to $11.25 million and to provide for further loans thereunder by
the Company.

 

NOW THEREFORE, the parties hereby agree as follows:

 

1.Credit Facility.

 

(a)          Niobe hereby agrees that it will make available to the Company up
to $11.25 million (including the Current Credit Facility Balance) in the form of
secured loans at the request of the Company made at any time prior to June 15,
2017 (the “Expiration Date”) in increments of up to $400,000 in any calendar
month; provided, however, that there shall have been no material adverse
development in the Company’s clinical testing of PRTX-100 (a “Material Adverse
Event”) prior to any proposed funding date.

 

(b)          Niobe shall only be obligated to make loans to the Company
hereunder to the extent that the conditions set forth herein are satisfied.

 

(c)          Notwithstanding anything to the contrary that may be contained
herein, in no event shall Niobe be required to loan the Company more than $11.25
million hereunder, or to make any loan at any time after the Expiration Date.

 

2.Request for Loans.

 

At any time prior to the Expiration Date, the Company may request that Niobe
make a loan to the Company by submitting to Niobe a written request therefor (a
“Loan Request”), which Loan Request must contain: (i) the amount of the loan
requested to be made; (ii) a certification that no Material Adverse Event has
occurred; and (iii) the aggregate principal amount of all loans made to the
Company by Niobe pursuant to the 2014 Credit Facility Agreement, as amended,
prior to such request. Such Loan Request must be accompanied by a written
certification signed by an executive officer of the Company certifying that no
Event of Default has occurred and is continuing under any outstanding note of
the Company.

 

 

 

 

3.Loans.

 

(a)          Within ten (10) days of the receipt of a Loan Request which
satisfies the terms and conditions hereunder, Niobe shall make a loan to the
Company in an amount equal to the lesser of (i) the amount sought in such Loan
Request, or (ii) $11.25 million less the aggregate amount of all loans
previously made to the Company by Niobe pursuant to the 2014 Credit Facility
Agreement, as amended (the “Available Amount”);

 

(b)          If the amount sought in a Loan Request is in excess of the
Available Amount, Niobe, in its sole and absolute discretion, may (but shall not
be obligated to) make a loan to the Company for all or any portion of such
excess.

 

(c)          Each loan made to the Company by Niobe shall be represented by a
Senior Secured Promissory Note in the form of Exhibit A annexed hereto (a
“Note”).

 

(d)          The obligations of the Company pursuant to each Note shall be
secured by a first priority perfected security interest in all of the assets of
the Company pursuant to the Fourth Consolidated, Amended and Restated Security
Agreement in the form of Exhibit B annexed hereto.

 

4.Notices.

 

All notices or other communications which are required or permitted hereunder
shall be in writing and sufficient if delivered personally or sent by
nationally-recognized overnight courier or by registered or certified mail,
postage prepaid, return receipt requested or by facsimile, with confirmation as
provided above addressed as follows:

 

If to Company:

Protalex, Inc.

131 Columbia Turnpike, Suite 1

Florham Park, NJ 07932

Attention: Chief Financial Officer

 

With copies to

Morse, Zelnick, Rose & Lander LLP

825 Third Avenue, 16th Floor

New York, NY 10022

Attention: Kenneth S. Rose, Esq.

Fax: 212-208-6809

 

If to Niobe:

Niobe Ventures, LLC

c/o Arnold P. Kling

410 Park Avenue, 17th Floor

New York, NY 10022

Attention: Arnold P. Kling, Manager

Fax: 212-713-1818

 

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5.Governing Law.

 

All questions concerning the construction, validity, enforcement and
interpretation of this Agreement, and any claim, controversy or dispute arising
under or related to this Agreement, the relationship of the parties, and/or the
interpretation and enforcement of the rights and duties of the parties hereunder
shall be governed by and construed and enforced in accordance with the internal
laws of the State of New York, without regard to the principles of conflicts of
law thereof. Each party agrees that all legal proceedings concerning the
interpretations, enforcement and defense of the transactions contemplated by
this Agreement (whether brought against a party hereto or its respective
affiliates, directors, officers, shareholders, employees or agents) shall be
commenced in the state or federal courts sitting in the City of New York,
Borough of Manhattan (the “New York Courts”). Each party hereto hereby
irrevocably submits to the exclusive jurisdiction of the New York Courts for the
adjudication of any dispute hereunder or in connection herewith or with any
transaction contemplated hereby or discussed herein, and hereby irrevocably
waives, and agrees not to assert in any suit, action or proceeding, any claim
that it is not personally subject to the jurisdiction of any such court, or such
New York Courts are improper or inconvenient venue for such proceeding. Each
party hereby irrevocably waives personal service of process and consents to
process being served in any such suit, action or proceeding by mailing a copy
thereof via registered or certified mail or overnight delivery (with evidence of
delivery) to such party at the address in effect for notices to it under this
Agreement and agrees that such service shall constitute good and sufficient
service of process and notice thereof Nothing contained herein shall be deemed
to limit in any way any right to serve process in any manner permitted by law.
Each party hereto hereby irrevocably waives, to the fullest extent permitted by
applicable law, any and all right to trial by jury in any legal proceeding
arising out of or relating to this Agreement or the transactions contemplated
hereby. If either party shall commence an action or proceeding to enforce any
provisions of this Agreement, then the prevailing party in such action or
proceeding shall be reimbursed by the other party for its attorney’s fees and
other costs and expenses incurred with the investigation, preparation and
prosecution of such action or proceeding.

 

6.Waiver.

 

Any waiver by the Company or Niobe of a breach of any provision of this
Agreement shall not operate as or be construed to be a waiver of any other
breach of such provision or of any breach of any other provision of this
Agreement.

 

7.Severability.

 

If any provision of this Agreement is invalid, illegal or unenforceable, the
balance of this Agreement shall remain in effect, and if any provision is
inapplicable to any person or circumstance, it shall nevertheless remain
applicable to all other persons and circumstances.

 

  PROTALEX, INC.         By:       Kirk M. Warshaw       Chief Financial Officer
        NIOBE VENTURES, LLC         By:       Arnold P. Kling       Manager

 

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EXHIBIT A

 

SECURED PROMISSORY NOTE

 

$__________________ ___________, 2016   New York, New York

 

FOR VALUE RECEIVED, PROTALEX, INC., a Delaware corporation (“Protalex”), having
an address at 131 Columbia Turnpike, Suite 1, Florham Park, NJ 07932 (the
“Company”), unconditionally promise to pay to the order of NIOBE VENTURES, LLC,
a Delaware limited liability company (hereinafter referred to as the “Holder”),
at the offices of Morse, Zelnick, Rose & Lander LLP, 825 Third Avenue, 16th
floor, New York, New York 10022, or at such other place as Holder may designate
in writing, the principal sum of ________________________________ and 00/100
Dollars ($_________.00) (the “Principal Sum”), with interest thereon computed
from the date hereof until maturity, whether on the Maturity Date (as
hereinafter defined), by acceleration, or otherwise, at the rate of three
percent (3.00%) per annum (the “Interest Rate”), and thereafter, in accordance
with the terms of this Note, at the Default Rate (as hereinafter defined and
governed), together with any costs, expenses and attorneys’ fees incurred by
Holder pursuant to the provisions hereof. Any amounts that remain unpaid after
the Maturity Date shall thereafter bear interest at the rate of twelve percent
(12%) per annum (the “Default Rate”). Interest as aforesaid shall be calculated
on the basis of actual number of days elapsed over a year of 360 days.

 

The Principal Sum and all accrued interest on this Note shall be due on March
31, 2018 or such earlier date as provided for in Section 5 hereof (the “Maturity
Date”). The Maturity Date is subject to acceleration in accordance with Section
4 hereof.

 

Section 1.           Promissory Note. This Note is a direct debt obligation of
the Company and, pursuant to the Fifth Consolidated, Amended and Restated
Security Agreement dated as of October 31, 2016 (the “A/R Security Agreement”)
all of the Company’s obligations hereunder are secured by a first priority
perfected security interest in all of the assets of the Company (the “Security”)
for the benefit of the Holder.

 

Section 2.             Definitions. For the purposes hereof, in addition to the
terms defined elsewhere in this Note the following terms shall have the
following meanings:

 

“Business Day” means any day except Saturday, Sunday and any day which shall be
a federal legal holiday in the United States or a day on which banking
institutions in the State of New York are authorized or required by law or other
government action to close.

 

“Event of Default” shall have the meaning set forth in Section 6.

 

“Fundamental Transaction” shall have the meaning set forth in Section 4.

 

“Liquidity Event” shall have the meaning set forth in Section 5.

 

“Original Issue Date” means the date of the first issuance of this Note
regardless of the number of transfers of any Note and regardless of the number
of instruments which may be issued to evidence such Note.

 

“Person” means a corporation, an association, a partnership, organization, a
business, an individual, a government or political subdivision thereof or a
governmental agency.

 

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“Subsidiary” means any Person in which the Company owns more than 50% of the
outstanding equity.

 

Section 3.              Registration of Transfers and Exchanges.

 

a)            Different Denominations. This Note is exchangeable for an equal
aggregate principal amount of Notes of different authorized denominations as
requested by the Holder surrendering the same, no service charge will be made
for such registration of transfer or exchange.

 

b)             Reliance on Note Register. Prior to due presentment to the
Company for transfer of this Note, the Company and any agent of the Company may
treat the Person in whose name this Note is duly registered on the Company’s
books and records as the owner hereof for the purpose of receiving payment as
herein provided and for all other purposes, whether or not this Note is overdue,
and neither the Company nor any such agent shall be affected by notice to the
contrary.

 

Section 4.             Acceleration of Maturity Date. If, at any time while this
Note is outstanding: (A) the Company effects any merger or consolidation of the
Company with or into another Person, (B) the Company effects any sale of all or
substantially all of its assets in one or a series of related transactions, (C)
any tender offer or exchange offer (whether by the Company or another Person) is
completed pursuant to which holders of Common Stock are permitted to tender or
exchange their shares for other securities, cash or property, or (D) the Company
effects any reclassification of the Common Stock or any compulsory share
exchange pursuant to which the Common Stock is effectively converted into or
exchanged for other securities, cash or property (in any such case, a
“Fundamental Transaction”), then, immediately prior to the occurrence of such
Fundamental Transaction the Principal Sum and all accrued but unpaid interest
payable hereunder shall automatically become, at the Holder’s election,
immediately due and payable in cash.

 

Section 5.           Mandatory Prepayment, Partial Prepayment. If, at any time
while this Note is outstanding, the Company receives in the aggregate, from a
single or multiple “Liquidity Events” (as defined below), gross proceeds in
excess of $10,000,000 (“Gross Proceeds”), then, in such event, a payment, in the
aggregate (each, a “Mandatory Prepayment Amount”), in reduction of the amount
then outstanding under this Note and any other note from the Company to the
Holder shall immediately be due and payable in an amount equal to twenty-five
(25%) percent of the Gross Proceeds received (each, a “Mandatory Prepayment
Event”). The Mandatory Prepayment Amount shall be allocated pro rata to reduce
the amount then outstanding under this Note and any other note from the Company
to the Holder. A “Liquidity Event” shall mean each of (a) the sale of any of the
Company’s equity, or equity-linked, securities, and (b) the receipt of proceeds,
directly or indirectly related to a development and/or commercialization
relationship entered into with an unaffiliated third party.

 

Section 6.              Events of Default.

 

a)            Event of Default. Wherever used herein, means any one of the
following events (whatever the reason and whether it shall be voluntary or
involuntary or effected by operation of law or pursuant to any judgment, decree
or order of any court, or any order, rule or regulation of any administrative or
governmental body):

 

i.            any default in the payment of (A) the principal, or (B) interest
on this Note or any other note issued by the Company to the Holder as and when
the same shall become due and payable (whether on the Maturity Date, upon a
Mandatory Prepayment Event or by acceleration or otherwise) which default is not
cured within ten (10) Business Days after written notice from the Holder;

 

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ii.         (A) there is commenced against the Company or any Subsidiary thereof
a case under any applicable bankruptcy or insolvency laws as now or hereafter in
effect or any successor thereto, or any other proceeding under any
reorganization, arrangement, adjustment of debt, relief of debtors, dissolution,
insolvency or liquidation or similar law of any jurisdiction whether now or
hereafter in effect relating to the Company or any Subsidiary thereof which
remains undismissed for a period of 60 days; or (B) the Company or any
Subsidiary thereof is adjudicated by a court of competent jurisdiction insolvent
or bankrupt; or any order of relief or other order approving any such case or
proceeding is entered; or (C) the Company or any Subsidiary thereof suffers any
appointment of any custodian or the like for it or any substantial part of its
property which continues undischarged or unstayed for a period of 60 days.

 

b)             Remedies Upon Event of Default. If any Event of Default occurs,
the full principal amount of this Note, together with interest and other amounts
owing in respect thereof, to the date of acceleration shall become, at the
Holder’s election, immediately due and payable in cash. The Holder need not
provide and the Company hereby waives any presentment, demand, protest or other
notice of any kind, and the Holder may immediately and without expiration of any
grace period enforce any and all of its rights and remedies hereunder and all
other remedies available to it under applicable law. Such declaration may be
rescinded and annulled by Holder at any time prior to payment hereunder and the
Holder shall have all rights as a Note holder until such time, if any, as the
full payment under this Section shall have been received by it. No such
rescission or annulment shall affect any subsequent Event of Default or impair
any right consequent thereon.

 

Section 7.          Miscellaneous.

 

a)              Priority of Payment. Payments under this Note shall be applied
first to accrued and unpaid interest and then to the Principal Sum outstanding.
All amounts due under this Note shall be payable without setoff, counterclaim or
any other deduction whatsoever.

 

b             Notices. Any and all notices or other communications or deliveries
to be provided by the Holder hereunder shall be in writing and delivered
personally, by facsimile, sent by a nationally recognized overnight courier
service, addressed to the Company, at 131 Columbia Turnpike, Suite 1, Florham
Park, NJ 07932, attention: Chief Financial Officer, or such other address or
facsimile number as the Company may specify for such purposes by notice to the
Holder delivered in accordance with this Section. Any and all notices or other
communications or deliveries to be provided by the Company hereunder shall be in
writing and delivered personally, by facsimile, sent by a nationally recognized
overnight courier service addressed to the Holder at the facsimile, telephone
number or address of such Holder appearing on the books of the Company, or if no
such facsimile telephone number or address appears, at the principal place of
business of the Holder. Any notice or other communication or deliveries
hereunder shall be deemed given and effective on the earliest of (i) the date of
transmission, if such notice or communication is delivered via facsimile at the
facsimile telephone number specified in this Section prior to 5:30 p.m. (New
York City time), (ii) the date after the date of transmission, if such notice or
communication is delivered via facsimile at the facsimile telephone number
specified in this Section later than 5:30 p.m. (New York City time) on any date
and earlier than 11:59 p.m. (New York City time) on such date, (iii) the second
Business Day following the date of mailing, if sent by nationally recognized
overnight courier service, or (iv) upon actual receipt by the party to whom such
notice is required to be given.

 

c)             Absolute Obligation. Except as expressly provided herein, no
provision of this Note shall alter or impair the obligation of the Company,
which is absolute and unconditional, to pay the principal of, interest and
liquidated damages (if any) on, this Note at the time, place, and rate, and in
the coin or currency, herein prescribed. This Note is a direct debt obligation
of the Company.

 

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d)             Lost or Mutilated Note. If this Note shall be mutilated, lost,
stolen or destroyed, the Company shall execute and deliver, in exchange and
substitution for and upon cancellation of a mutilated Note, or in lieu of or in
substitution for a lost, stolen or destroyed Note, a new Note for the principal
amount of this Note so mutilated, lost, stolen or destroyed but only upon
receipt of evidence of such loss, theft or destruction of such Note, and of the
ownership hereof; and indemnity, if requested, all reasonably satisfactory to
the Company.

 

e)              Governing Law. All questions concerning the construction,
validity, enforcement and interpretation of this Note, and any claim,
controversy or dispute arising under or related to this Note, the relationship
of the parties, and/or the interpretation and enforcement of the rights and
duties of the parties hereunder shall be governed by and construed and enforced
in accordance with the internal laws of the State of New York, without regard to
the principles of conflicts of law thereof. Each party agrees that all legal
proceedings concerning the interpretations or enforcement of this Note (whether
brought against a party hereto or its respective affiliates, directors,
officers, shareholders, employees or agents) shall be commenced in the state or
federal courts sitting in the City of New York, Borough of Manhattan (the “New
York Courts”). Each party hereto hereby irrevocably submits to the exclusive
jurisdiction of the New York Courts for the adjudication of any dispute
hereunder or in connection herewith or with any transaction contemplated hereby
or discussed herein (including with respect to the enforcement of any of the
Transaction Documents), and hereby irrevocably waives, and agrees not to assert
in any suit, action or proceeding, any claim that it is not personally subject
to the jurisdiction of any such court, or such New York Courts are improper or
inconvenient venue for such proceeding. Each party hereby irrevocably waives
personal service of process and consents to process being served in any such
suit, action or proceeding by mailing a copy thereof via registered or certified
mail or overnight delivery (with evidence of delivery) to such party at the
address in effect for notices to it under this Note and agrees that such service
shall constitute good and sufficient service of process and notice thereof.
Nothing contained herein shall be deemed to limit in any way any right to serve
process in any manner permitted by law. Each party hereto hereby irrevocably
waives, to the fullest extent permitted by applicable law, any and all right to
trial by jury in any legal proceeding arising out of or relating to this Note or
the transactions contemplated hereby. If either party shall commence an action
or proceeding to enforce any provisions of this Note, then the prevailing party
in such action or proceeding shall be reimbursed by the other party for its
attorney’s fees and other costs and expenses incurred with the investigation,
preparation and prosecution of such action or proceeding.

 

f)              Waiver. Any waiver by the Company or the Holder of a breach of
any provision of this Note shall not operate as or be construed to be a waiver
of any other breach of such provision or of any breach of any other provision of
this Note. The failure of the Company or the Holder to insist upon strict
adherence to any term of this Note on one or more occasions shall not be
considered a waiver or deprive that party of the right thereafter to insist upon
strict adherence to that term or any other term of this Note. Any waiver must be
in writing.

 

g)            Severability. If any provision of this Note is invalid, illegal or
unenforceable, the balance of this Note shall remain in effect, and if any
provision is inapplicable to any person or circumstance, it shall nevertheless
remain applicable to all other persons and circumstances. If it shall be found
that any interest or other amount deemed interest due hereunder violates
applicable laws governing usury, the applicable rate of interest due hereunder
shall automatically be lowered to equal the maximum permitted rate of interest.
The Company covenants (to the extent that it may lawfully do so) that it shall
not at any time insist upon, plead, or in any manner whatsoever claim or take
the benefit or advantage of, any stay, extension or usury law or other law which
would prohibit or forgive the Company from paying all or any portion of the
principal of or interest on this Note as contemplated herein, wherever enacted,
now or at any time hereafter in force, or which may affect the covenants or the
performance of this indenture, and due Company (to the extent it may lawfully do
so) hereby expressly waives all benefits or advantage of any such law, and
covenants that it will not, by resort to any such law, binder, delay or impeded
the execution of any power herein granted to the Holder, but will suffer and
permit the execution of every such as though no such law has been enacted.

 

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h)            Next Business Day. Whenever any payment or other obligation
hereunder shall be due on a day other than a Business Day, such payment shall be
made on the next succeeding Business Day.

 

i)              Headings. The headings contained herein are for convenience
only, do not constitute a part of this Note and shall not be deemed to limit or
affect any of the provisions hereof.

 

IN WITNESS WHEREOF, the Company has caused this Note to be duly executed by a
duly authorized officer as of the date first above indicated.

 

  PROTALEX, INC.         By:       Kirk M. Warshaw, Chief Financial Officer

 

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