EXHIBIT 10.1


 


	 	Promissory Note	 
	 	 	 
	Date	Loan Amount	Interest Rate after Deferment Period	Deferment Period
	May 01, 2020	$404,221.00	1.00% fixed per annum	6 months


 


This
Promissory Note (“Note”) sets forth and confirms the terms and conditions of a term loan to Biostage Inc (whether
one or more than one, “Borrower”) from Bank of America, NA, a national banking association having an address of P.O.
Box 15220, Wilmington, DE 19886-5220 (together with its agents, affiliates, successors and assigns, the “Bank”) for
the Loan Amount and at the Interest Rate stated above (the “Loan”). The Loan is made pursuant to the Paycheck Protection
Program under the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”). The funding of the Loan is
conditioned upon approval of Borrower’s application for the Loan and Bank’s receiving confirmation from the SBA that
Bank may proceed with the Loan. The date on which the funding of the Loan takes place is referred to as the “Funding Date”.
If the Funding Date is later than the date of this Note, the Deferment Period commences on the Funding Date and ends six months
from the Funding Date. After sixty (60) days from the date the Loan is funded, but not more than ninety (90) days from the date
the Loan is funded, Borrower shall apply to Bank for loan forgiveness. If the SBA confirms full and complete forgiveness of the
unpaid balance of the Loan, and reimburses Bank for the total outstanding balance, principal and interest, Borrower’s obligations
under the Loan will be deemed fully satisfied and paid in full. If the SBA does not confirm forgiveness of the Loan, or only partly
confirms forgiveness of the Loan, or Borrower fails to apply for loan forgiveness, Borrower will be obligated to repay to the
Bank the total outstanding balance remaining due under the Loan, including principal and interest (the “Loan Balance”),
and in such case, Bank will establish the terms for repayment of the Loan Balance in a separate letter to be provided to Borrower,
which letter will set forth the Loan Balance, the amount of each monthly payment, the interest rate (not in excess of a fixed
rate of one per cent (1.00%) per annum), the term of the Loan, and the maturity date of two (2) years from the funding date of
the Loan. No principal or interest payments will be due prior to the end of the Deferment Period. Borrower promises, covenants
and agrees with Bank to repay the Loan in accordance with the terms for repayment as set forth in that letter (the “Repayment
Letter”). Payments greater than the monthly payment or additional payments may be made at any time without a prepayment
penalty but shall not relieve Borrower of its obligations to pay the next succeeding monthly payment.


 


In
consideration of the Loan received by Borrower from Bank, Borrower agrees as follows:


 


		1.	DEPOSIT ACCOUNT /USE OF LOAN PROCEEDS: Borrower is required
to maintain a deposit account with Bank of America, N.A. (the “ Deposit Account”) until the Loan is either forgiven
in full or the Loan is fully paid by Borrower. Borrower acknowledges and agrees that the proceeds of the Loan shall be deposited
by Bank into the Deposit Account. The Loan proceeds are to not be used by Borrower for any illegal purpose and Borrower represents
to the Bank that it will derive material benefit, directly and indirectly, from the making of the Loa n.



 


		2.	DIRECT DEBIT. If the Loan is not forgiven and a Loan
Balance remains, Borrower agrees that on the due date of any amount due as set forth in the Repayment Letter, Bank will debit
the amount due from the Deposit Account established by Borrower in connection with this Loan. Should there be insufficient funds
in the Deposit Account to pay all such sums when due, the full amount of such deficiency be shall be immediately due and payable
by Borrower.



 


		3.	INTEREST RATE: Bank shall charge interest on the unpaid
principal balance of the Loan at the interest rate set forth above under “Interest Rate” from the date the Loan was
funded until the Loan is paid in full.



 


		4.	REPRESENTATIONS,
WARRANTIES AND COVENANTS. (1) Borrower represents and warrants to Bank, and covenants and agrees with Bank, that: (i) Borrower
has read the statements included in the Application, including the Statements Required by Law and Executive Orders, and Borrower
understands them. (ii) Borrower was and remains eligible to receive a loan under the rules in effect at the time Borrower submitted
to Bank its Paycheck Protection Program Application Form (the “Application”) that have been issued by the SBA implementing
the Paycheck Protection Program under Division A, Title I of the CARES Act (the “Paycheck Protection Program Rule”).
(iii) Borrower (a) is an independent contractor, eligible self-employed individual, or sole proprietor or (b) employs no more
than the greater of 500 employees or, if applicable, the size standard in number of employees established by the SBA in 13 C.F.R.
121.201 for Borrower’s industry. (iv) Borrower will comply whenever applicable, with the civil rights and other limitations
in the Application. (v) All proceeds of the Loan will be used only 
 



 






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	 	for business-related purposes as specified
in the Application and consistent with the Paycheck Protection Program Rule. (vi) To the extent feasible, Borrower will purchase
only American-made equipment and products. (vii) Borrower is not engaged in any activity that is illegal under federal, state
or local law. (viii) Borrower certifies that any loan received by Borrower under Section 7(b)(2) of the Small Business Act between
January 31, 2020 and April 3, 2020 that will remain outstanding after funding of this Loan was for a purpose other than paying
payroll costs and other allowable uses loans under the Paycheck Protection Program Rule. (ix) Borrower was in operation on February
15, 2020 and had employees for whom Borrower paid salaries and payroll taxes or paid independent contractors (as reported on Form(s)
1099-MISC). (x) The current economic uncertainty makes the request for the Loan necessary to support the ongoing operations of
Borrower. (xi) All proceeds of the Loan will be used to retain workers and maintain payroll or make mortgage interest payments,
lease payments, and utility payments, as specified under the Paycheck Protection Program Rule and Borrower acknowledges that if
the funds are knowingly used for unauthorized purposes, the federal government may hold Borrower and/or Borrower’s authorized
representative legally liable, such as for charges of fraud. (xii) Borrower has provided Bank true, correct and complete information
demonstrating that Borrower had employees for whom Borrower paid salaries and payroll taxes on or around February 15, 2020. (xiii)
Borrower has provided to Bank all documentation available to Borrower on a reasonable basis verifying the dollar amounts of average
monthly payroll costs for the calendar year 2019, which documentation shall include, as applicable, copies of payroll processor
records, payroll tax filings and/or Form 1099-MISC. (xiv) Borrower will promptly provide to Bank (a) any additional documentation
that Bank requests in order to verify payroll costs and (b) documentation verifying the number of full-time equivalent employees
on payroll as well as the dollar amounts of payroll costs, covered mortgage interest payments, covered rent payments, and covered
utilities for the eight week period following the Loan. (xv) Borrower acknowledges that (a) loan forgiveness will be provided
by the SBA for the sum of documented payroll costs, covered mortgage interest payments, covered rent payments, and covered utilities,
and not more than 25% of the Forgivable Amount may be for non -payroll costs (xvi) During the period beginning on February 15,
2020 and ending on December 31, 2020, Borrower has not and will not receive any other loan under the Paycheck Protection Program.
(xvii) Borrower certifies that the information provided in the Application and the information that Borrower provided in all supporting
documents and forms is true and accurate in all material respects. Borrower acknowledges that knowingly making a false statement
to obtain a guaranteed loan from SBA is punishable under the law, including under 18 USC 1001 and 3571 by imprisonment of not
more than five years and/or a fine of up to $250,000; under 15 USC 645 by imprisonment of not more than two years and/or a fine
of not more than $5,000; and, if submitted to a Federally insured institution, under 18 USC 1014 by imprisonment of not more than
thirty years and/or a fine of not more than $1,000,000. (xviii) Borrower understands, acknowledges and agrees that Bank can share
any tax information received from Borrower or any Owner with SBA's authorized representatives, including authorized representatives
of the SBA Office of Inspector General, for the purpose of compliance with SBA Loan Program Requirements and all SBA reviews.
(xix) Neither Borrower nor any Owner, is presently suspended, debarred, proposed for debarment, declared ineligible, voluntarily
excluded from participation in this transaction by any Federal department or agency, or presently involved in any bankruptcy.
(xx) Neither Borrower, nor any Owner, nor any business owned or controlled by any of them, ever obtained a direct or guaranteed
loan from SBA or any other Federal agency that is currently delinquent or has defaulted in the last 7 years and caused a loss
to the government. (xxi) Neither Borrower, nor any Owner, is an owner of any other business or has common management with any
other business, except as disclosed to the Bank in connection with the Borrower’s Application. (xxii) Borrower did not receive
an SBA Economic Injury Disaster Loan between January 31, 2020 and April 3, 2020, except as disclosed to the Bank in connection
with the Borrower’s Application. (xxiii) Neither Borrower (if an individual), nor any individual owning 20% or more of the
equity of Borrower (each, an “ Owner”), is subject to an indictment, criminal information, arraignment, or other means
by which formal criminal charges are brought in any jurisdiction, or presently incarcerated, on probation or parole. (xx iv) Neither
Borrower (if an individual), nor any Owner, has within the last 5 years been convicted; pleaded guilty; pleaded nolo contendere;
been placed on pretrial diversion; or been placed on any form of parole or probation (including probation before judgment) for
any felony. (xxv) The United States is the principal place of residence for all employees of Borrower included in Borrower’s
payroll calculation included in the Application. (xxvi) The Borrower correctly indicated on its Application whether it is a franchise
that is listed in the SBA’s franchise directory. (xxvii) If Borrower is claiming an exemption from all SBA affiliation rules





 


 






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	 	applicable to Paycheck Protection Program loan eligibility
under the religious exemption to the affiliation rules, Borrower has made a reasonable, good faith determination that it qualifies
for such religious exemption under 13 C.F.R. 121.103(b)(10), which provides that “[t]he relationship of a faith- based organization
to another organization is not considered an affiliation with the other organization...if the relationship is based on a
religious teaching or belief or otherwise constitutes a part of the exercise of religion.” (2) At all times during the term
the of the Loan, Borrower represents and warrants to the Bank, that (i) if Borrower is anything other than a natural person, it
is duly formed and existing under the laws of the state or other jurisdiction where organized; (ii) this Note, and any instrument
or agreement required under this Note, are within Borrower's powers, have been duly authorized, and do not conflict with any of
its organizational papers; (iii) the information included in the Beneficial Ownership Certification most recently provided to
the Bank, if applicable, is true and correct in all respects; and (iv) in each state in which Borrower does business, it is properly
licensed, in good standing, and, where required, in compliance with fictitious name (e.g. trade name or d/b/a) statutes. IF
THE FUNDING DATE IS AFTER THE DATE OF THIS NOTE, BORROWER AGREES THAT BORROWER SHALL BE DEEMED TO HAVE REPEATED AND REISSUED,
IMMEDIATELY PRIOR TO THE FUNDING ON THE FUNDING DATE, THE REPRESENTATIONS, WARRANTIES, COVENANTS AND AGREEMENTS SET FORTH ABOVE
IN THIS PARAGRAPH



 


		5.	EVENTS OF DEFAULT: If the Loan is not forgiven and a
Loan Balance remains, then from the date the Repayment Letter is sent to Borrower until the Loan Balance is fully paid, the occurrence
and continuation of any of the following events shall constitute a default hereunder: (i) insolvency, bankruptcy, dissolution,
issuance of an attachment or garnishment against Borrower; (ii) failure to make any payment when due under the Loan or any or
all other loans made by Bank to Borrower, and such failure continues for ten (10) days after it first became due; (iii) failure
to provide current financial information promptly upon request by Bank; (iv) the making of any false or materially misleading
statement on any application or any financial statement for the Loan or for any or all other loans made by Bank to Borrower; (v)
Bank in good faith believes the prospect of payment under the Loan or any or all other loans made by Bank to Borrower is impaired;
(vi) Borrower under or in connection with the Loan or any or all other loans made by Bank to Borrower fails to timely and properly
observe, keep or perform any term, covenant, agreement, or condition therein; (vii) default shall be made with respect to any
other indebtedness for borrowed money of Borrower, if the default is a failure to pay at maturity or if the effect of such default
is to accelerate the maturity of such indebtedness for borrowed money or to permit the holder or obligee thereof or other party
thereto to cause any such indebtedness for borrowed money to become due prior to its stated maturity; (viii) the Bank in its sole
discretion determines in good faith that an event has occurred that materially and adversely affects Borrower; (ix) any change
shall occur in the ownership of the Borrower; (x) permanent cessation of Borrower’s business operations; (xi) Borrower,
if an individual, dies, or becomes disabled, and such disability prevents the Borrower from continuing to operate its business;
(xii) Bank receives notification or is otherwise made aware that Borrower, or any affiliate of Borrower, is listed as or appears
on any lists of known or suspected terrorists or terrorist organizations provided to Bank by the U.S. government under the USA
Patriot Act of 2001; and (xiii) Borrower fails to maintain the Deposit Account with the Bank.



 


		6.	REMEDIES: If the Loan is not forgiven and a Loan Balance
remains, then from the date the Repayment Letter is sent to Borrower, upon the occurrence of a default, all or any portion of
the entire amount owing on the Loan, and any and all other loans made by Bank to Borrower, shall, at Bank’s option, become
immediately due and payable without demand or notice. Upon a default, Bank may exercise any other right or remedy available to
it at law or in equity. All persons included in the term “Borrower” are jointly and severally liable for repayment,
regardless of to whom any advance of credit was made. Borrower shall pay any costs Bank may incur including without limitation
reasonable attorney’s fees and court costs should the Loan and/or any and all other loans made by Bank to Borrower be referred
to an attorney for collection to the extent permitted under applicable state law. EACH PERSON INCLUDED IN THE TERM BORROWER WAIVES
ALL SURETYSHIP AND OTHER SIMILAR DEFENSES TO THE FULL EXTENT PERMITTED BY APPLICABLE LAW.



 


		7.	CREDIT INVESTIGATION: If the Loan is not forgiven and
a Loan Balance remains, then from the date the Repayment Letter is sent to Borrower until the Loan Balance is fully paid, Borrower
authorizes Bank and any of its affiliates at any time to make whatever credit investigation Bank deems is proper to evaluate Borrower’s
credit, financial standing and employment and Borrower authorizes Bank to exchange Borrower’s credit experience with credit
bureaus and other creditors Bank reasonably believes are doing business with Borrower. Borrower also agrees to furnish Bank with
any financial statements Bank may request at any time and in such detail as Bank may require.



 






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		8.	NOTICES: Borrower’s request for Loan forgiveness,
and the documentation that must accompany that request, shall be submitted to Bank by transmitting the communication to the electronic
address, website, or other electronic transmission portal provided by Bank to Borrower. Otherwise, all notices required under
this Note shall be personally delivered or sent by first class mail, postage prepaid, or by overnight courier, to the addresses
on the signature page of this Note, or sent by facsimile to the fax number(s) listed on the signature page, or to such other addresses
as the Bank and the Borrower may specify from time to time in writing (any such notice a “ Written Notice”).
Written Notices shall be effective (i) if mailed, upon the earlier of receipt or five (5) days after deposit in the U.S. mail,
first class, postage prepaid, (ii) if telecopied, when transmitted, or (iii) if hand-delivered, by courier or otherwise (including
telegram, lettergram or mailgram), when delivered. In lieu of a Written Notice, notices and/or communications from the Bank to
the Borrower may, to the extent permitted by law, be delivered electronically (i) by transmitting the communication to the electronic
address provided by the Borrower or to such other electronic address as the Borrower may specify from time to time in writing,
or (ii) by posting the communication on a website and sending the Borrower a notice to the Borrower’s postal address or
electronic address telling the Borrower that the communication has been posted, its location, and providing instructions on h
ow to view it (any such notice, an “ Electronic Notice”). Electronic Notices shall be effective when presented
to the Borrower, or is sent to the Borrower’s electronic address or is posted to the Bank’s website. To retain a copy
for your records, please download and print or save a copy to your device.



 


		9.	CHOICE OF LAW; JURISDICTION; VENUE. (1) At all times
that Bank is the holder of this Note, except to the extent that any law of the United States may apply, this Note shall be governed
and interpreted according to the internal laws of the state of Borrower’s principal place of business (the “Governing
Law State”), without regard to any choice of law, rules or principles to the contrary. However, the charging and calculating
of interest on the obligations under this Note shall be governed by, construed and enforced in accordance with the laws of the
state of North Carolina and applicable federal law. Nothing in this paragraph shall be construed to limit or otherwise affect
any rights or remedies of Bank under federal law. Borrower and Bank agree and consent to be subject to the personal jurisdiction
of any state or federal court located in the Governing Law State so that trial shall only be conducted by a court in that state.
(2) Notwithstanding the foregoing, when SBA is the holder, this Note will be interpreted and enforced under federal law, including
SBA regulations. Lender or SBA may use state or local procedures for filing papers, recording documents, giving notice, foreclosing
liens, and other purposes. By using such procedures, SBA does not waive any federal immunity from state or local control, penalty,
tax, or liability. As to this Note, Borrower may not claim or assert against SBA any local or state law to deny any obligation,
defeat any claim of SBA, or preempt federal law.



 


		10.	MISCELLANEOUS. The Loan may be sold or assigned by Bank
without notice to Borrower. Borrower may not assign the Loan or its rights hereunder to anyone without Bank’s prior written
consent. If any provision of this Note is contrary to applicable law or is found unenforceable, such provision shall be severed
from this Note without invalidating the other provisions thereof. Bank may delay enforcing any of its rights under this Note without
losing them, and no failure or delay on the part of Bank in exercising any right, power or privilege hereunder shall operate as
a waiver thereof; nor shall any single or partial exercise of any right, power or privilege hereunder preclude any other or future
exercise thereof or the exercise of any other right, power or privilege. Bank, by its acceptance hereof, and the making of the
Loan and Borrower understand and agree that this Note constitutes the complete understanding between them. This Note shall be
binding upon Borrower, and its successors and assigns, and inure to the benefit of Bank and its successors and assigns.



 


		11.	BORROWING AUTHORIZED. The signer for Borrower represents,
covenants and warrants to Bank that he or she is certified to borrow for the Borrower and is signing this Note as the duly authorized
sole proprietor, owner, sole shareholder, officer, member, managing member, partner, trustee, principal, agent or representative
of Borrower, and further acknowledges and confirms to Bank that by said signature he or she has read and understands all of the
terms and provisions contained in this Note and agrees and consents to be bound by them. This Note and any instrument or agreement
required herein, are within the Borrower's powers, have been duly authorized, and do not conflict with any of its organizational
papers. The individuals signing this Agreement on behalf of each Borrower are authorized to sign such documents on behalf of such
entities. For purposes of this Note only, the Bank may rely upon and accept the authority of only one signer on behalf of the
Borrower, and for this Note, this resolution supersedes and replaces any prior and existing contrary resolution provided by Borrower
to Bank.



 






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		12.	ELECTRONIC COMMUNICATIONS AND SIGNATURES. This Note and
any document, amendment, approval, consent, information, notice, certificate, request, statement, disclosure or authorization
related to this Note (each a “ Communication”), including Communications required to be in writing, may, if
agreed by the Bank, be in the form of an Electronic Record and may be executed using Electronic Signatures, including, without
limitation, facsimile and/or .pdf. The Borrower agrees that any Electronic Signature (including, without limitation, facsimile
or .pdf) on or associated with any Communication shall be valid and binding on the Borrower to the same extent as a manual, original
signature, and that any Communication entered into by Electronic Signature, will constitute the legal, valid and binding obligation
of the Borrower enforceable against the Borrower in accordance with the terms thereof to the same extent as if a manually executed
original signature was delivered to the Ban k. Any Communication may be executed in as many counterparts as necessary or convenient,
including both paper and electronic counterparts, but all such counterparts are one and the same Communication. For the avoidance
of doubt, the authorization under this paragraph may include, without limitation, use or acceptance by the Bank of a manually
signed paper Communication which has been converted into electronic form (such as scanned into PDF format), or an electronically
signed Communication converted into another format, for transmission, delivery and/or retention. The Bank may, at its option,
create one or more copies of any Communication in the form of an imaged Electronic Record (“Electronic Copy”),
which shall be deemed created in the ordinary course of the Bank’s business, and destroy the original paper document. All
Communications in the form of an Electronic Record, including an Electronic Copy, shall be considered an original for all purposes,
and shall have the same legal effect, validity and enforceability as a paper record. Notwithstanding anything contained herein
to the contrary, the Bank is under no obligation to accept an Electronic Signature in any form or in any format unless expressly
agreed to by the Bank pursuant to procedures approved by it; provided, further, without limiting the foregoing, (a) to the extent
the Bank has agreed to accept such Electronic Signature, the Bank shall be entitled to rely on any such Electronic Signature without
further verification and (b) upon the request of the Bank any Electronic Signature shall be promptly followed by a manually executed,
original counterpart. For purposes hereof, “Electronic Record” and “ Electronic Signature”
shall have the meanings assigned to them, respectively, by 15 USC §7006, as it may be amended from time to time.



 


		13.	CONVERSION TO PAPER ORIGINAL. At the Bank’s discretion
the authoritative electronic copy of this Note ("Authoritative Copy") may be converted to paper and marked as the original
by the Bank (the "Paper Original"). Unless and until the Bank creates a Paper Original, the Authoritative Copy of this
Agreement: (1) shall at all times reside in a document management system designated by the Bank for the storage of authoritative
copies of electronic records, and (2) is held in the ordinary course of business. In the event the Authoritative Copy is converted
to a Paper Original, the parties hereto acknowledge and agree that: (1) the electronic signing of this Agreement also constitutes
issuance and delivery of the Paper Original, (2) the electronic signature(s) associated with this Agreement, when affixed to the
Paper Original, constitutes legally valid and binding signatures on the Paper Original, and (3) the Borrower’s obligations
will be evidenced by the Paper Original after such conversion.



 


		14.	BORROWER ATTESTATION. Borrower attests and certifies
to Bank that it has not provided false or misleading information or statements to the Bank in its application for the Loan, and
that the certifications, representations, warranties, and covenants made to the Bank in this Note and elsewhere relating to the
Loan are true, accurate, and correct. Borrower further attests and certifies to Bank that it is has read, understands, and acknowledges
that the Loan is being made under the CARES Act, and any use of the proceeds of the Loan other than as permitted by the CARES
Act, or any false or misleading information or statements provided to the Bank in its application for the Loan or in this Note
may subject the Borrower to criminal and civil liability under applicable state and federal laws and regulations, including but
not limited to, the False Claims Act, 31 U.S.C. Section 3729, et. seq. Borrower further acknowledges and understands that this
Note is not valid and effective until and unless Borrower’s application for the Loan is approved and Bank’s receiving
confirmation from the SBA that Bank may proceed with the Loan.



 






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IN
WITNESS WHEREOF, I, the authorized representative of the Borrower, hereto have caused this Promissory Note to be duly executed
as of the date set forth below.


 


 


 


	
        BORROWER: Biostage Inc

         

         

        /s/ Peter Chakoutis

	Signature of Authorized Representative of Borrower
	 
	Peter Chakoutis
	Print Name
	 
	Authorized Representative
	Title
	 
	 
	
        STREET ADDRESS: 84 October Hill Rd

	 
	CITY/STATE/ZIP CODE: Holliston, MA, 01746-1388


 






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