Document:

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                                                                    EXHIBIT 10.1

NEITHER THIS NOTE PURCHASE, THE NOTES ISSUED HEREUNDER NOR THEE SECURITIES
ISSUABLE UPON CONVERSION OF THE NOTES HAVE BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE "ACT"), NOR UNDER ANY STATE SECURITIES LAWS AND
NONE OF THE FOREGOING MAY BE PLEDGED, SOLD, ASSIGNED OR OTHERWISE TRANSFERRED
UNTIL A (1) REGISTRATION STATEMENT UNDER THE ACT AND ANY APPLICABLE STATE
SECURITIES LAW HAS BECOME EFFECTIVE WITH RESPECT THERETO, OR (2) RECEIPT BY THE
COMPANY OF AN OPINION OF COUNSEL TO THE COMPANY TO THE EFFECT THAT REGISTRATION
UNDER THE ACT OR APPLICABLE STATE SECURITIES LAW IS NOT REQUIRED IN CONNECTION
WITH THE PROPOSED TRANSFER

                 CONVERTIBLE PROMISSORY NOTE PURCHASE AGREEMENT

     This CONVERTIBLE PROMISSORY NOTE PURCHASE AGREEMENT, dated as of March 22,
2007, is made between the purchasers listed on Schedule 2.1 hereto (each a
"PURCHASER" and collectively, the "PURCHASERS"), and BOSTON LIFE SCIENCES, INC.,
a Delaware corporation (the "COMPANY").

                                    RECITALS

     WHEREAS, the Company requires certain funds for the operation of its
business; and

     WHEREAS, the Purchasers are willing to provide the Company with such funds
through the purchase of the Convertible Notes (as defined below) on the terms
and conditions hereafter provided;

     NOW, THEREFORE, in order to induce Purchasers to purchase the Convertible
Notes and for other good and valuable consideration, the receipt and adequacy of
which are hereby acknowledged, and intending to be legally bound, the Purchasers
and the Company hereby agree as follows:

     1. DEFINED TERMS. When used in this Agreement the following terms shall
have the following meanings (such meanings being equally applicable to both the
singular and plural forms of the terms defined):

     "AFFILIATES" shall mean any corporation, company, partnership, joint
venture and/or firm that controls, is controlled by, or is under common control
with the Company. For purposes of this definition, "control" shall mean (a) in
the case of corporate entities, direct or indirect ownership of at least fifty
percent (50%) of the stock or shares having the right to vote for the election
of directors and (b) in the case of non-corporate entities, direct or indirect
ownership of at least fifty percent (50%) of the equity interest with the power
to direct the management and policies of such non-corporate entities.

     "AGREEMENT" means this Convertible Promissory Note Purchase Agreement, as
it may be amended or modified and in effect from time to time.

     "BUSINESS DAY" means any day other than a Saturday, Sunday, or other day on
which commercial banks in the Commonwealth of Massachusetts are authorized or
required to close.

     "COMMON STOCK" means the common stock, $0.01 par value per share, of the
Company.

     "CONVERTIBLE NOTES" shall have the meaning assigned to such term in Section
2.1 hereof.

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     "EFFECTIVE DATE" means the date of this Agreement.

     "EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended.

     "EVENT OF DEFAULT" shall have the meaning assigned to such term in Article
IX hereof.

     "FIRST COMMERCIAL SALE" shall mean, with respect to each Molecular Imaging
Product, the first commercial sale in a country as part of a nationwide
introduction by the Company, its Affiliates or its or its Affiliates' licensees
or sublicensees.

     "HIGHEST LAWFUL RATE" means the maximum lawful interest rate, if any, that
at any time or from time to time may be contracted for, charged, or received
under the laws applicable to the Purchasers which are presently in effect or, to
the extent allowed by law, under such applicable laws which allow a higher
maximum nonusurious interest rate than applicable laws now allow.

     "LOAN DOCUMENTS" means collectively, this Agreement and the Convertible
Notes.

     "MATURITY DATE" means the earliest to occur of (a) December 31, 2010 and
(b) the date on which a Purchaser declares a Default (as defined in Section 9
below) to have occurred.

     "MOLECULAR IMAGING PRODUCTS" shall mean products approved for sale by the
appropriate U.S. and/or foreign regulatory body containing as the active
ingredient the Company's radio-labeled molecular imaging agents, currently in
development or developed by the Company in the future, including, without
limitation, the ALTROPANE(R) and FLUORATEC molecular imaging agents, for the
diagnosis and monitoring of Parkinson's Disease and Attention Deficit
Hyperactivity Disorder using SPECT or PET camera imaging techniques.

     "NET SALES" shall mean the gross amount received by the Company, its
Affiliates and/or its or its Affiliates' licensees or sublicensees on sales or
other dispositions of Molecular Imaging Products to Third Parties (other than
licensees or sublicensees) in bona fide, arm's-length transactions, less the
following deductions:

     (a) Trade, cash and/or quantity discounts actually allowed and taken
directly with respect to such sales, as reflected in the amount invoiced;

     (b) Tariffs, duties, excises, sales taxes or other taxes imposed upon and
paid directly by the Company with respect to the production, sale, delivery or
use of the Molecular Imaging Product (excluding national, state or local taxes
based on income), as reflected in the amount invoiced;

     (c) Amounts repaid or credited by reason of rejections, defects, recalls or
returns, or because of chargebacks, refunds, rebates, retroactive price
reductions or delayed ship orders;

     (d) Amounts credited for uncollectible amounts on previously sold products;

     (e) Freight, insurance and other transportation charges incurred in
shipping a Molecular Imaging Product to Third Parties, as reflected in the
amount invoiced;

     (f) Deduction of one percent (1%) for distribution and warehousing
expenses; and

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     (g) Any other reduction or specifically identifiable amounts included in
the gross invoice that are creditable for reasons substantially equivalent to
those listed above.

     Notwithstanding anything in this Agreement to the contrary, "NET SALES"
shall exclude any sales or other disposition of Molecular Imaging Products for
test marketing, clinical trial purposes or compassionate or similar use.

     Net Sales amounts shall be determined from the books and records of the
Company, its Affiliates and/or its or its Affiliates' licensees or sublicensees,
maintained in accordance with generally accepted accounting principles,
consistently applied.

     Sales between or among the Company, its Affiliates or their respective
licensees and sublicensees shall be disregarded for purposes of calculating Net
Sales. In the case of any sale or other disposal of a Molecular Imaging Product
between or among the Company and its Affiliates, licensees and sublicensees, for
resale, Net Sales shall be calculated as above only on the value charged or
invoiced on the first arm's-length sale thereafter to a Third Party.

     In the case of any sale or other disposal for value, such as barter or
counter-trade, of any Molecular Imaging Product, or part thereof, other than in
an arm's-length transaction exclusively for money, Net Sales shall be calculated
as above on the value of the non-cash consideration received or the fair market
price (if higher) of the Molecular Imaging Product in the country of sale or
disposal.

     In the event the Molecular Imaging Product is sold in a finished dosage
form in combination with one or more other active ingredients (a "COMBINATION
PRODUCT"), the Net Sales of the Molecular Imaging Product, for the purposes of
determining royalty payments, shall be determined by multiplying the Net Sales
(as defined above) of the Combination Product by the fraction, 'A/(A+B)' where
'A' is the weighted (by sales volume) average sale price in the relevant country
of the Molecular Imaging Product when sold separately in finished form and 'B'
is the weighted average sale price in that country of the other product(s) sold
separately in finished form. In the event that such average sale price cannot be
determined for both the Molecular Imaging Product and the other product(s) in
the Combination Product, Net Sales for purposes of determining royalty payments
shall be agreed by the Parties based on the relative value contributed by each
component, such agreement not to be unreasonably withheld.

     "OBLIGATIONS" means all unpaid principal of and accrued and unpaid interest
on the Convertible Notes, and all other obligations, interest, fees, charges and
expenses of the Company to the Purchasers arising under the Loan Documents.

     "PRE-COMMERCIAL INCOME" shall mean, with respect to each Molecular Imaging
Product, all license fees, milestone payments and other amounts received by the
Company and/or its Affiliates from Third Parties in connection with or related
to the licensing or sublicensing to such Third Parties of the Company's and/or
its Affiliate's rights under the intellectual property covering the Molecular
Imaging Product. Notwithstanding anything in the foregoing to the contrary,
"Pre-Commercial Income" shall exclude (a) any royalty payments or milestone
payments based upon commercial sales levels, (b) amounts received for research
and development activities undertaken for, or in collaboration with, such Third
Parties, (c) amounts received for debt or equity securities of the Company
and/or its Affiliates, provided that any amounts received in excess of the then
current fair market value of such debt or equity securities shall, to the extent
of such excess, be deemed to be Pre-Commercial Income, and (d) transfer pricing
amounts paid in respect of Molecular Imaging Products supplied to such Third
Parties.

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     "SECURITIES ACT" means the Securities Act of 1933, as amended.

     "THIRD PARTY" shall mean any person or entity other than the Company or any
of its Affiliates.

     "VALID CLAIM" means a claim of any issued, unexpired United States or
foreign patent, which shall not be disclaimed, nor held invalid or unenforceable
by a court of competent jurisdiction in an unappealed or unappealable decision.

     2. CONVERTIBLE NOTE FACILITY.

          2.1 PURCHASE AND SALE OF CONVERTIBLE NOTES. At each Closing (as
defined below), each Purchaser agrees, severally and not jointly, on the terms
of and subject to the conditions specified in this Agreement, to purchase from
the Company, according to each Purchaser's pro rata share (based upon the
respective "Commitment Percentage" of each Purchaser as set forth on Schedule
2.1 attached hereto), and the Company agrees to sell to the Purchasers,
convertible promissory notes dated as of the date of such Closing in the form
attached to this Agreement as Exhibit A (the "CONVERTIBLE NOTES"); provided,
however, that in no event shall the Purchasers be obligated hereunder to
purchase, in the aggregate, more than a principal amount of Fifteen Million
Dollars ($15,000,000) of Convertible Notes.

          2.2 ADVANCES. From time to time prior to December 31, 2007, and so
long as no Default then exists, the Purchasers shall make advances (the
"ADVANCES") to the Company based upon their respective Commitment Percentage,
and the Company may borrow funds from the Purchasers hereunder. Each request for
an Advance shall be made by the Company in writing, delivered to the Purchasers
at least seven (7) business days prior to the requested date of such Advance
(the "ADVANCE NOTICE") and shall specify the date of such Advance, and the
amount of such Advance. Each Advance shall be in the minimum amount of
$3,000,000. The Purchasers shall, and each Purchaser is hereby authorized to,
record on the schedule attached hereto, or to otherwise record in accordance
with its usual practice, the date and amount of each Advance and the date and
amount of each principal payment hereunder (a "PAYMENT"), provided, however,
that any failure to so record any Advance or Payment shall not in any manner
affect the obligation of the Company to repay any Advance in accordance with the
terms hereof. Each Advance shall be documented by a new Convertible Note to be
issued by the Company, dated as of the date of such Advance.

          2.3 CLOSING. The closing of the issuance and sale of each Convertible
Note issued hereunder and representing an Advance shall be held at the offices
of counsel to the Company at 10:00 a.m. on the date set forth in each Advance
Notice, or at such other time and place as the Company and each Purchaser
mutually agree in writing (each such date, a "CLOSING").

          2.4 PAYMENT OF CONVERTIBLE NOTE PURCHASE PRICE. At each Closing, (i)
the Company shall deliver to each Purchaser a Convertible Note in the amount of
the Advance from each Purchaser at such Closing, and (ii) as payment in full for
the Convertible Note being purchased by each Purchaser at such Closing, each
Purchaser shall pay its respective purchase amount to the Company by wire
transfer of immediately available funds to an account designated by the Company
in the Advance Notice.

          2.5 INTEREST. Interest shall accrue on each Convertible Note from the
date of issuance until such Convertible Note is paid in full or otherwise
converted pursuant to Section 4 hereof. The Company promises to pay interest on
the outstanding principal amount of each Convertible Note (i) until the Maturity
Date, or if earlier, conversion pursuant to Section 4 hereof, at a per annum
interest rate

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equal to five percent (5%), (ii) from and after the Maturity Date, or during the
continuance of an Event of Default, at a per annum rate equal to ten percent
(10%) or (iii) if less than the rates applicable under both clauses (i) and
(ii), the Highest Lawful Rate. Interest shall be calculated on the basis of a
360-day year for the actual number of days elapsed. Interest shall accrue until
paid in full and all unpaid interest shall be due and payable on the Maturity
Date, unless otherwise converted pursuant to Section 4 hereof.

          2.6 METHOD OF PAYMENT. All payments of principal, interest, and fees
hereunder shall be made on the date when due in immediately available funds in
United States Dollars to the Purchasers at the Purchaser's address specified on
the signature page hereof, or at such other address as shall be directed by the
applicable Purchaser in a writing received by the Company.

          2.7 PREPAYMENTS. The Company may not prepay any amounts under any
Convertible Notes whether principal or interest.

          2.8 USURY SAVINGS CLAUSE. Notwithstanding any other provision herein,
the aggregate interest rate charged with respect to any of the Obligations,
shall not exceed the Highest Lawful Rate. If the rate of interest (determined
without regard to the preceding sentence) under this Agreement at any time
exceeds the Highest Lawful Rate, the outstanding amount under the Convertible
Notes issued hereunder shall bear interest at the Highest Lawful Rate until the
total amount of interest due hereunder equals the amount of interest which would
have been due hereunder if the stated rates of interest set forth in this
Agreement had at all times been in effect. In addition, if when the Convertible
Notes issued hereunder are repaid in full the total interest due hereunder is
less than the total amount of interest which would have been due hereunder if
the stated rates of interest set forth in this Agreement had at all times been
in effect, then to the extent permitted by law, the Company shall pay to
Purchasers an amount equal to the difference between the amount of interest paid
and the amount of interest which would have been paid if the Highest Lawful Rate
had at all times been in effect. Notwithstanding the foregoing, it is the
intention of Purchasers and the Company to conform strictly to any applicable
usury laws. Accordingly, if the Purchasers contract for, charge, or receive any
consideration which constitutes interest in excess of the Highest Lawful Rate,
then any such excess shall be cancelled automatically and, if previously paid,
shall be applied to the outstanding principal amount of the Convertible Notes
issued hereunder or be refunded to the Company.

     3. CONDITIONS PRECEDENT. The obligations of the Purchasers to purchase any
Convertible Notes shall be subject to the following conditions precedent that on
the date of the Closing:

          3.1 Each of the representations and warranties of the Company
contained in this Agreement and the Loan Documents shall be true and correct in
all material respects; and

          3.2 At the time of, and immediately after giving effect to, the
issuance of such Convertible Notes, no Event of Default shall have occurred and
be continuing.

     4. OPTIONAL CONVERSION.

          4.1 CONVERSION TO EQUITY.

               (a) After December 31, 2007, at any time during which Convertible
Notes remain outstanding, up to all of the outstanding principal and accrued
interest under any particular Convertible Note then outstanding may be
converted, at the sole option of the holder thereof and by

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written notice to the Company, into shares of Common Stock of the Company at a
conversion price equal to $2.50 per share.

               (b) Notwithstanding anything to the contrary contained herein,
each Purchaser shall be prohibited from effecting a conversion pursuant to this
Section 4.1 if at the time of such conversion (i) the Common Stock issuable to
such Purchaser pursuant to such conversion or as a result of such conversion,
when taken together with all shares of Common Stock then held or otherwise
beneficially owned by such Purchaser exceeds 19.9% of the total number of issued
and outstanding shares of Common Stock of the Company immediately prior to such
conversion, (ii) the Common Stock issuable to such Purchaser pursuant to such
conversion or as a result of such conversion, exceeds 19.9% of the total number
of issued and outstanding shares of Common Stock of the Company immediately
prior to such conversion, in each case unless and until the stockholders of the
Company approve the conversion of all of the shares of Common Stock issuable
hereunder and the transactions contemplated hereby pursuant to Nasdaq
Marketplace Rule 4350(i)(1)(D)(ii) and any other applicable rules and
regulations ("STOCKHOLDER APPROVAL"). The forgoing provision however shall not
restrict the number of shares of Common Stock which the Purchaser may receive or
beneficially own in order to determine the amount of securities or other
consideration that such Purchaser may receive in the event of a merger, sale or
other business combination involving the Company.

               (c) The Company hereby covenants and agrees that (i) in the event
a Purchaser is prohibited from effecting a conversion of Convertible Notes
pursuant to this Section 4.1, then upon receipt of written notice of such event
from such Purchaser, the Company shall use its best efforts to seek Stockholder
Approval and (ii) upon any conversion pursuant to this Section 4.1, the Company
shall use its best efforts to effect an amendment to that certain Amended and
Restated Registration Rights Agreement, dated March 9, 2005, as amended (the
"REGISTRATION AGREEMENT"), to cause any shares of Common Stock issuable in
connection with such conversion to be included as Registrable Securities in the
Registration Agreement.

4.2      CONVERSION TO ROYALTY STREAM.

          (a) At any time all or any of the Purchasers may elect (as such,
collectively, the "ELECTING PURCHASERS", and, individually, an "ELECTING
PURCHASER"), at their sole option and by written notice to the Company, to
convert, in $1 million increments, up to the entire amount of the principal and
accrued interest then outstanding on all Convertible Notes then held by such
Electing Purchaser (the "TOTAL CONVERTED BALANCE"), into the right to receive
from the Company the following payments related to the Company's Molecular
Imaging Products::

               (i) For each One Million ($1,000,000) of Total Converted Balance,

                    (A)  2% of Pre-Commercial Income; plus

                    (B)  a royalty at a rate of one half of one percent (0.5%)
                         of Net Sales of Molecular Imaging Products.

               By way of example only, if the Total Converted Balance being
converted by the Electing Purchaser is $3.5 million, the Company would be
required to pay 7% of Pre-Commercial Income (2% x 3.5) to such Electing
Purchaser plus a royalty of 1.75% on Net Sales of Molecular Imaging Products
(0.5% x 3.5).

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               (ii) The Company agrees to provide each Purchaser with at least
30 days prior written notice of the execution of a partnership agreement for the
Molecular Imaging products to enable them to make an election to convert under
this Section 4.2. Upon receipt of such notice, each Purchaser will have 30 days
to elect such conversion. For purposes of clarity, any amounts which may be owed
by the Company under Section 4.2(a)(i) above after proper notice is given and no
election is made, shall be owed on a going-forward basis and shall not apply
retroactively to any Pre-Commercial Income received by the Company and/or its
Affiliates or Net Sales of Molecular Imaging Products prior to the date of such
election to convert.

          (b) The Company shall make the payments set forth in Section 4.2(a)(i)
above on a calendar quarterly basis to each Electing Purchaser.

          (c) The Company shall deliver to each Electing Purchaser within sixty
(60) days after the end of each calendar quarter following such Electing
Purchaser's election to convert, reasonably detailed written accountings of
Pre-Commercial Income and Net Sales of Molecular Imaging Products that are
subject to payments due to such Electing Purchaser hereunder for such calendar
quarter. When the Company delivers such accountings to such Electing Purchaser,
the Company shall also deliver all payments due under Section 4.2(a)(i) for such
calendar quarter.

          (d) On a country-by-country and Molecular Imaging Product-by-Molecular
Imaging Product basis, the royalty obligation of the Company hereunder shall
cease at the expiration of the last-to-expire Valid Claim covering a Molecular
Imaging Product in said country or, in the case of countries where no Valid
Claims covering a Molecular Imaging Product have been granted, ten (10) years
after the First Commercial Sale of a Molecular Imaging Product in said country.
In no event will the Company's royalty obligation hereunder cease so long as
royalties in excess of those owed hereunder are paid to the Company by its
licensee of any or all of the Molecular Imaging Products.

     5. REPRESENTATIONS AND WARRANTIES. The Company represents and warrants to
each Purchaser that on the date hereof:

          5.1 The Company is duly organized, validly existing, and in good
standing under the laws of its jurisdiction of incorporation and is duly
qualified and in good standing in every other jurisdiction where the nature of
its business or the location or ownership of its properties requires such
qualification and where the failure to be so qualified would reasonably be
expected to have a material adverse effect on the Company's business,
operations, properties, assets or condition (financial or otherwise).

          5.2 The Company has the corporate power and authority to execute and
deliver this Agreement and the Convertible Notes and to perform all of the
obligations hereunder, and all necessary corporate action has been taken to
execute and deliver this Agreement and the Convertible Notes and to issue and
sell the Convertible Notes hereunder.

          5.3 This Agreement and the Convertible Notes constitute the legal,
valid, and binding obligations of the Company, enforceable against the Company
in accordance with their respective terms, subject to applicable bankruptcy,
insolvency, reorganization or similar laws generally affecting the enforcement
of the rights of creditors.

          5.4 The execution, delivery and performance by the Company of this
Agreement and the Convertible Notes does not (i) violate any provisions of the
Company's Certificate of Incorporation, as amended, bylaws, as amended, or any
material contract, agreement, law, regulation, order, decree or

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writ to which the Company or any of its properties are subject or (ii) require
the consent or approval of any person, entity or authority, including, without
limitation, any regulatory authority or governmental body of the United States
of America or any state thereof or any political subdivision of any of the
foregoing.

     6. REPRESENTATIONS AND WARRANTIES OF INVESTORS. Each Purchaser represents
and warrants, severally and not jointly, to the Company as follows:

          6.1 Investment Intent. Such Purchaser understands that the Convertible
Notes have not been registered under the Securities Act or any applicable state
securities law and is acquiring the Convertible Notes as principal for its own
account for investment purposes only and not with a view to or for distributing
or reselling such Convertible Notes, has no present intention of distributing
the Convertible Notes and has no arrangement or understanding with any other
persons regarding the distribution of the Convertible Notes. Such Purchaser is
acquiring the Convertible Notes hereunder in the ordinary course of its
business. Such Purchaser does not have any agreement or understanding, directly
or indirectly, with any person to distribute the Convertible Notes.

          6.2 Purchaser Status. At the time such Purchaser was offered the
Convertible Notes, it was, and at the date hereof it is an "accredited investor"
as defined in Rule 501(a) under the Securities Act. Such Purchaser (if not
already a registered broker-dealer under Section 15 of the Exchange Act) is not
required to be registered as a broker-dealer under Section 15 of the Exchange
Act.

          6.3 Experience of Purchaser. Such Purchaser, either alone or together
with its representatives, has such knowledge, sophistication and experience in
business and financial matters so as to be capable of evaluating the merits and
risks of the prospective investment in the Convertible Notes, and has so
evaluated the merits and risks of such investment. Such Purchaser is able to
bear the economic risk of an investment in the Convertible Notes and, at the
present time, is able to afford a complete loss of such investment.

          6.4 General Solicitation. Such Purchaser is not purchasing the
Convertible Notes as a result of any advertisement, article, notice or other
communication regarding the Convertible Notes published in any newspaper,
magazine or similar media or broadcast over television or radio or presented at
any seminar or any other general solicitation or general advertisement.

          6.5 Certain Fees. No brokerage or finder's fees or commissions are or
will be payable by such Purchaser to any broker, financial advisor or
consultant, finder, placement agent, investment banker, bank or other person
with respect to the transactions contemplated by this Agreement. The Company
shall have no obligation with respect to any fees or with respect to any claims
made by or on behalf of other persons for fees of a type contemplated in this
Section 6.5 that may be due in connection with the transactions contemplated by
this Agreement.

          6.6 Acquiring Person. Such Purchaser, after giving effect to the
transactions contemplated hereby, will not, either individually or with a group
(as defined in Section 13(d)(3) of the Exchange Act), be the beneficial owner of
20% or more of the Company's outstanding Common Stock. For purposes of this
Section 6.6, beneficial ownership shall be determined pursuant to a Rule 13d-3
under the Exchange Act.

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     7. AFFIRMATIVE COVENANTS. During the term of this Agreement and while the
Convertible Notes remain outstanding, unless each Purchaser consents thereto in
writing:

          7.1 The Company shall maintain its corporate existence, business and
assets, keep its business and assets adequately insured, maintain its chief
executive office at the location listed on the signature page hereof, and comply
in all material respects with all requirements of applicable law.

          7.2 The Company (a) shall provide each Purchaser at least 10 days
prior written notice of the Company's intent to change its name or its mailing
address and (b) shall not change its type of organization or jurisdiction of
organization.

     8. NEGATIVE COVENANTS. So long as any principal and interest remains
outstanding under the Convertible Notes, the Company shall not:

          8.1 Create, incur, assume, guaranty, become liable with respect to
(contingently or otherwise), or permit to be outstanding any indebtedness for
money borrowed (including, without limitation, any indebtedness evidenced by any
notes, instruments or agreements or in connection with any capitalized lease),
except for obligations under this Agreement and the Convertible Notes together
with interest thereon;

          8.2 (i) Declare or pay any cash dividend, or make a distribution on,
repurchase, or redeem, any class of stock of the Company, other than pursuant to
repurchase obligations under existing employee stock purchase or option plans or
(ii) Sell, lease, transfer or otherwise dispose of any material assets or
property of the Company; or

          8.3 dissolve or liquidate.

     9. DEFAULTS. The occurrence of any one or more of the following events
shall constitute a "DEFAULT" or an "EVENT OF DEFAULT":

          9.1 The Company fails to pay any of the principal, interest or any
other amounts payable under this Agreement or any of the Convertible Notes when
and as the same becomes due and payable;

          9.2 The Company files any petition or action for relief under any
bankruptcy, reorganization, insolvency or moratorium law or any other law for
the relief of, or relating to, Company, now or hereafter in effect, or seeks the
appointment of a custodian, receiver, trustee (or other similar official) of the
Company or all or any substantial portion of the Company's assets, or makes any
assignment for the benefit of creditors or takes any action in furtherance of
any of the foregoing, or fails to generally pay its debts as they become due;

          9.3 An involuntary petition is filed, or any proceeding or case is
commenced, against the Company (unless such proceeding or case is dismissed or
discharged within ninety (90) days of the filing or commencement thereof) under
any bankruptcy, reorganization, arrangement, insolvency, adjustment of debt,
liquidation or moratorium statute now or hereafter in effect, or a custodian,
receiver, trustee, assignee for the benefit of creditors (or other similar
official) is applied for, appointed for the Company or to take possession,
custody or control of any property of the Company, or an order for relief is
entered against the Company in any of the foregoing; or

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          9.4 Any representation or warranty made by the Company under this
Agreement shall have been false or misleading in any material respect when made
or deemed made.

     10. REMEDIES.

          10.1 Upon the occurrence and during the continuance of an Event of
Default hereunder, the Purchasers may, without notice or demand upon the
Company, do any or all of the following:

               (a) Declare all unpaid principal and accrued interest owing under
the Convertible Notes held by the Purchaser, and, in the case of an Event of
Default pursuant to Section 9.2 or 9.3 above, automatically, to be immediately
due, payable and collectible by the Purchaser pursuant to applicable law;

               (b) Declare any and all unpaid principal and accrued interest due
under the Convertible Notes held by the Purchaser to thereafter bear interest at
the maximum rate set forth in Section 2.5 hereof;

               (c) Terminate any and all of such Purchaser's obligations to
purchase any additional Convertible Notes hereunder; and

               (d) Exercise any and all rights and remedies it may have under
this Agreement, under the Convertible Notes held by the Purchaser or under
applicable law.

          10.2 All of the foregoing rights and remedies shall be cumulative and
not exclusive. The failure to exercise all or any rights, remedies, powers or
privileges hereunder, under the Convertible Notes or under applicable law, in
any instance shall not constitute a waiver thereof in that or any other
instance.

     11. WAIVERS, AMENDMENTS AND OTHER PROVISIONS.

          11.1 ENTIRE AGREEMENT; AMENDMENTS; INVALIDITY. This Agreement and the
Convertible Notes constitute the entire agreement and understanding of the
parties, and supercedes and replaces in their entirety any prior discussions or
agreements, all of which are merged herein and therein. None of the terms of
this Agreement or any Convertible Note may be amended or otherwise modified
except by an instrument executed by the Company and each Purchaser. If any term
of this Agreement or any Convertible Notes shall be held to be invalid, illegal
or unenforceable, the validity of all other terms hereof shall in no way be
affected thereby, and this Agreement and the Convertible Notes shall be
construed and be enforceable as if such invalid, illegal or unenforceable term
had not been included herein.

          11.2 EXPENSES. The Company agrees to and shall pay to the Purchasers
on demand, any and all expenses, including, without limitation, reasonable
attorney's fees and disbursements, incurred or paid by the Purchasers in
connection with the collection on or enforcement of amounts outstanding
hereunder, for protecting, preserving or enforcing the Purchaser's rights or
remedies (including fees, costs and expenses relating to any proceedings with
respect to the bankruptcy, reorganization, insolvency, readjustment of debt,
dissolution or liquidation of the Company).

                                      -10-

<PAGE>

          11.3 NONLIABILITY OF PURCHASERS; SEVERAL OBLIGATIONS. The relationship
between the Company and the Purchasers shall be solely that of Company and
Purchasers. The Purchasers shall have no fiduciary responsibilities to the
Company as holders of Convertible Notes.

          11.4 GOVERNING LAW; CONSENT TO JURISDICTION. THIS AGREEMENT AND THE
CONVERTIBLE NOTES ARE INTENDED TO TAKE EFFECT AS A SEALED INSTRUMENT AND SHALL
BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS (AND NOT THE LAWS OF
CONFLICT) OF THE COMMONWEALTH OF MASSACHUSETTS. THE COMPANY HEREBY IRREVOCABLY
SUBMITS TO THE JURISDICTION OF THE COURTS OF THE COMMONWEALTH OF MASSACHUSETTS
AND THE UNITED STATES DISTRICT COURT FOR THE COMMONWEALTH OF MASSACHUSETTS FOR
THE PURPOSE OF ANY SUIT, ACTION OR OTHER PROCEEDING ARISING OUT OF OR RELATING
TO THIS AGREEMENT AND THE CONVERTIBLE NOTES AND THE COMPANY HEREBY IRREVOCABLY
AGREES THAT ALL CLAIMS IN RESPECT OF SUCH ACTION OR PROCEEDING MAY BE HEARD AND
DETERMINED IN ANY SUCH COURT AND IRREVOCABLY WAIVES ANY OBJECTION IT MAY NOW OR
HEREAFTER HAVE AS TO THE VENUE OF ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN
ANY SUCH COURT OR THAT SUCH COURT IS AN INCONVENIENT FORUM. NOTHING HEREIN SHALL
LIMIT THE RIGHT OF THE PURCHASERS TO BRING PROCEEDINGS AGAINST THE COMPANY IN
THE COURTS OF ANY OTHER JURISDICTION. ANY JUDICIAL PROCEEDING BY THE COMPANY
AGAINST ANY PURCHASER OR ANY AFFILIATE OF ANY PURCHASER UNDER OR INVOLVING,
DIRECTLY OR INDIRECTLY, ANY MATTER IN ANY WAY ARISING OUT OF, RELATED TO, OR
CONNECTED WITH THIS AGREEMENT OR ANY CONVERTIBLE NOTE SHALL BE BROUGHT ONLY IN A
COURT IN THE COMMONWEALTH OF MASSACHUSETTS.

          11.5 WAIVER OF JURY TRIAL AND CERTAIN DAMAGES. THE COMPANY AND EACH
PURCHASER WAIVES ITS RIGHT TO A JURY TRIAL WITH RESPECT TO ANY ACTION OR CLAIM
ARISING OUT OF ANY DISPUTE IN CONNECTION WITH THIS AGREEMENT OR ANY CONVERTIBLE
NOTE, ANY RIGHTS OR OBLIGATIONS HEREUNDER OR THEREUNDER OR THE PERFORMANCE OF
ANY SUCH RIGHTS OR OBLIGATIONS. Except as prohibited by law, the Company waives
any right which it may have to claim or recover in any litigation referred to in
the preceding sentence any special, exemplary, punitive or consequential damages
or any damages other than, or in addition to, actual damages. The Company (i)
certifies that neither the Purchasers nor any representative, agent or attorney
of the Purchasers has represented, expressly or otherwise, that the Purchasers
would not, in the event of litigation, seek to enforce the foregoing waivers and
(ii) acknowledges that, in entering into this Agreement and the Convertible
Notes, the Purchasers are relying upon, among other things, the foregoing
waivers and certifications.

          11.6 SUCCESSORS AND ASSIGNS. This Agreement and the other Loan
Documents and all obligations of the Company hereunder and thereunder shall be
binding upon the successors and assigns of the Company, and shall, together with
the rights and remedies of the Purchasers hereunder, inure to the benefit of the
Purchasers, any future holder of this Agreement or any other Loan Document and
their respective successors and assigns, provided, however, the Company may not
transfer or assign its rights or obligations hereunder or thereunder without the
express written consent of each Purchaser, and any purported transfer or
assignment by the Company without the approval of each Purchaser shall be null
and void. Each Purchaser may assign, transfer, participate or endorse its rights
under this Agreement or any of the other Loan Documents without the consent or
approval of the Company, and all such rights shall inure to the Purchasers'
successors and assigns; provided, that such transferee agrees in writing to be

                                      -11-

<PAGE>

bound by all of the terms of this Agreement. No sales of participations, other
sales, assignments, transfers, endorsements or other dispositions of any rights
hereunder or thereunder or any portion hereof or thereof or interest herein or
therein shall in any manner affect the obligations of the Company under this
Agreement or the other Loan Documents. The Company agrees that in connection
with any such assignment, to execute and deliver such additional documents or
agreements, including, without limitation, new Convertible Notes, as may be
reasonably requested.

          11.7 COUNTERPARTS. This Agreement may be executed in any number of
separate counterparts, all of which, when taken together, shall constitute one
and the same instrument, notwithstanding the fact that all parties did not sign
the same counterpart.

          11.8 NO RELIANCE. Each of the Purchasers hereby acknowledges (i) that
Wilmer Cutler Pickering Hale and Dorr LLP has served as counsel solely to the
Company in connection with entering into this Agreement and the Convertible
Notes and the transactions contemplated hereby and thereby and not as counsel to
any of the Purchasers, and (ii) that each Purchaser (a) has sought the advice of
his own legal counsel and has not relied upon Wilmer Cutler Pickering Hale and
Dorr LLP, (b) has had an opportunity to fully discuss and review the terms of
this Agreement and the Convertible Notes and the transactions contemplated
hereby and thereby with such Purchaser's counsel, and (c) understands the
contents herein and freely and voluntarily assents to all of the terms and
conditions hereof and the transactions contemplated hereby.

                  [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

                                      -12-

<PAGE>

     IN WITNESS WHEREOF, this Agreement has been duly executed as an instrument
under seal as of the date first set forth above.

COMPANY:                                PURCHASERS:

BOSTON LIFE SCIENCES, INC.              ROBERT GIPSON

By: /s/ Kenneth L. Rice, Jr.            Signature: /s/ Robert L. Gipson
    ---------------------------------              -----------------------------
Printed Name: Kenneth L. Rice, Jr.      Address: c/o Ingalls & Snyder LLC
Title: EVP & CFO                                 61 Broadway, NY, NY 10006
Address: 85 Main Street Hopkinton,
         Massachusetts 01748

                                        THOMAS GIPSON

                                        Signature: /s/ Thomas O. Boucher Jr.
                                                   -----------------------------
                                        Address: By Thomas O. Boucher Jr.
                                                 His Attorney In Fact
                                                 c/o Ingalls & Snyder LLC
                                                 61 Broadway, NY, NY 10006

                                        ARTHUR KOENIG

                                        Signature: /s/ Thomas O. Boucher Jr.
                                                   -----------------------------
                                        Address: By Thomas O. Boucher Jr.
                                                 His Attorney In Fact
                                                 c/o Gipson
                                                 Ingalls & Snyder LLC
                                                 61 Broadway, NY, NY 10006

                                      -13-

<PAGE>

                                  SCHEDULE 2.1

<TABLE>
<CAPTION>
PURCHASER NAME   COMMITMENT PERCENTAGE
--------------   ---------------------
<S>              <C>
THOMAS GIPSON           33.333%
ROBERT GIPSON           33.333%
ARTHUR KOENIG           33.333%
                        ------
   TOTAL:                  100%
                        ======
</TABLE>

<PAGE>

                                    EXHIBIT A

THIS CONVERTIBLE PROMISSORY NOTE AND THE SECURITIES ISSUABLE UPON CONVERSION OF
THIS NOTE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE "ACT"), NOR UNDER ANY STATE SECURITIES LAWS AND MAY NOT BE PLEDGED, SOLD,
ASSIGNED OR OTHERWISE TRANSFERRED UNTIL A (1) REGISTRATION STATEMENT UNDER THE
ACT AND ANY APPLICABLE STATE SECURITIES LAW HAS BECOME EFFECTIVE WITH RESPECT
THERETO, OR (2) RECEIPT BY THE COMPANY OF AN OPINION OF COUNSEL TO THE COMPANY
TO THE EFFECT THAT REGISTRATION UNDER THE ACT OR APPLICABLE STATE SECURITIES LAW
IS NOT REQUIRED IN CONNECTION WITH THE PROPOSED TRANSFER

                           CONVERTIBLE PROMISSORY NOTE

$[___________]                                                    _____ __, 2007
                                                        Hopkinton, Massachusetts

     FOR VALUE RECEIVED, on the Maturity Date, BOSTON LIFE SCIENCES, INC., a
Delaware corporation having a principal place of business at 85 Main Street,
Hopkinton, Massachusetts 01748 (the "COMPANY"), hereby unconditionally promises
to pay to [PURCHASER] (the "PURCHASER"), or order, at [___], or such other place
as Purchasers or any holder hereof may from time to time designate, the
principal sum of [___] Dollars [($___)], in United States Dollars and in
immediately available funds as provided in the Convertible Promissory Note
Purchase Agreement of even date among the Company and the Purchasers (the
"AGREEMENT"), together with interest on the unpaid principal amount hereof from
time to time outstanding at the rate and on the dates set forth in the
Agreement. This Convertible Promissory Note is one of a series of Convertible
Promissory Notes issued pursuant to the Agreement and each such Convertible
Promissory Note shall rank pari passu in right of repayment to such other
Convertible Promissory Note.

     This Convertible Promissory Note is issued pursuant to, and is entitled to
the benefits of, the Agreement, as it may be amended from time to time.
Reference is hereby made thereto for a statement of the terms and conditions
under which this Convertible Promissory Note may be converted, prepaid or its
maturity date accelerated. This Convertible Promissory Note is convertible at
the election of the Purchaser pursuant to Sections 4.1 and 4.2 of the Agreement.
Capitalized terms used herein and not otherwise defined herein are used with the
meanings attributed to them in the Agreement.

     No delay or omission on the part of the Purchaser in exercising any right
hereunder shall operate as a waiver of such right or of any other right of
Purchaser, nor shall any delay, omission or waiver on any one occasion be deemed
a bar to or waiver of the same or any other right on any future occasion. The
Company and every endorser or guarantor of this Convertible Promissory Note
regardless of the time, order or place of signing waives presentment, demand,
protest and notices of every kind and assents to any extension or postponement
of the time of payment or any other indulgence, and to the addition or release
of any other party or person primarily or secondarily liable.

     The terms and provisions of this Convertible Promissory Note may be
excluded, modified, or amended only as set forth in the Agreement. This
Convertible Promissory Note shall be binding upon the successors and assigns of
the Company and inure to the benefit of Purchasers and its successors, endorsees
and assigns as set forth in the Agreement. If any term or provision of this
Convertible Promissory Note shall be held to be invalid or unenforceable, in
whole or in part in any jurisdiction, then

                                       1

<PAGE>

such invalidity or unenforceability shall only effect such term or provision,
and shall not effect such term or provision in any other jurisdiction or any
other term or provision of this Convertible Promissory Note.

     The Company hereby waives its right to a jury trial with respect to any
action or claim arising out of any dispute in connection with this Convertible
Promissory Note or any of the other Loan Documents, any rights or obligations
hereunder or thereunder or the performance of such rights and obligations.

     All rights and obligations hereunder shall be governed by the laws of the
Commonwealth of Massachusetts (without giving effect to principles of conflicts
or choice of laws) and this Convertible Promissory Note shall be deemed to be
made under seal.

                                        BOSTON LIFE SCIENCES, INC.

                                        By
                                           -------------------------------------
                                        Name:
                                              ----------------------------------
                                        Title:
                                               ---------------------------------

                                       2<PAGE>

                                                                  EXHIBIT 10.6.3

                           MICROFINANCIAL INCORPORATED
                           1998 EQUITY INCENTIVE PLAN
                        INCENTIVE STOCK OPTION AGREEMENT

      This Agreement is by and between MicroFinancial Incorporated (the
"Company") and _____ (the "Optionee").

                              W I T N E S S E T H:

      1. GRANT OF OPTION. Pursuant to the provisions of the MicroFinancial
Incorporated 1998 Equity Incentive Plan (the "Plan"), effective _______________
(the "Grant Date"), the Company awarded to the Optionee, subject to the terms
and conditions of the Plan and the terms and conditions contained herein, the
right and option to purchase from the Company all or any part of an aggregate of
____________ shares of the common stock ($.01 par value) of the Company ("Common
Shares"), at a purchase price equal to $____________ per share, such option to
be exercised as hereinafter provided. It is intended that the option evidenced
hereby constitute an incentive stock option within the meaning of Section 422 of
the Internal Revenue Code of 1986, as amended (the "Code"). Capitalized terms
not defined herein shall have the meanings given to such terms in the Plan.

      2. TERMS AND CONDITIONS. In addition to the terms and conditions contained
in the Plan, it is understood and agreed that the option evidenced hereby is
subject to the following additional terms and conditions:

      (a) Expiration Date. The option shall expire on the tenth anniversary of
the Grant Date.

      (b) Period of Exercise. Subject to the other terms of this Agreement
regarding the exercisability of this option, this option shall become
exercisable in cumulative installments in accordance with the following
schedule:

                                          Percentage of Options
On or after                                     Exercisable
-----------                               ---------------------
[       ]                                       [  ]%
[       ]                                       [  ]%
[       ]                                       [  ]%
[       ]                                        100%

      (c) Exercise of Option. This option shall be exercised by submitting a
written notice to the Committee authorized to administer the Plan pursuant to
Section 4 thereof (the "Committee") signed by the Optionee and specifying the
number of Common Shares as to which the option is being exercised. Such notice
shall be accompanied by the payment of the full option price for the Common
Shares being purchased. Payment shall be made in cash, which may be paid by
check, or other instrument acceptable to the Company, (ii) with the consent of
the Committee or the Chief Executive Officer, in Common Shares, valued at the
Fair Market Value (as defined in the Plan) on the date prior to exercise, or if
there were no sales on such date, on the next preceding day on which there were
sales, (iii) with the consent of the Committee and subject to such terms and
conditions as it may determine, by surrender of outstanding options under the
1998 Plan, (iv) with the consent of the Committee, the delivery of a promissory
note containing such terms as deemed acceptable to the Committee, or (v) any
combination of the above. In addition, any amount necessary to satisfy
applicable federal, state or local tax requirements shall be paid
<PAGE>

promptly upon notification of the amount due. The Committee may permit such
amount to be paid in Common Shares previously owned by Optionee, or a portion of
the Common Shares that otherwise would be distributed to Optionee upon exercise
of the option, or a combination of cash and such Common Shares. A certificate or
certificates for the Common Shares purchased shall be issued by the Company
after the exercise of the option and payment therefor, including the provision
for any federal and state withholding taxes, and other applicable employment
taxes.

      In lieu of delivering all or a portion of the Common Shares as to which an
option has been exercised, the Committee may elect to pay the Optionee an amount
in cash or Common Shares, or a combination of cash or Common Shares, equal to
the excess of the Fair Market Value of the Common Shares the Optionee would have
received upon exercise over the aggregate exercise price, as determined in
accordance with the Plan.

      (d) Termination of Option upon Termination of Employment, Death or Total
Disability.

      (i) Unless the Committee in its discretion determines otherwise, upon the
termination of Optionee's employment with the Company for any reason other than
a Breach of Conduct (as defined in the Plan), death or Total Disability (as
defined in the Plan), any portion of this option that is not exercisable by
reason of Paragraph 2(b) hereof shall immediately terminate. Any portion of this
option that is exercisable on the employment termination date shall continue to
be exercisable for three months following such termination date, unless sooner
terminated by reason of Paragraph 2(a) hereof.

      (ii) If termination of employment is by reason of death or Total
Disability, any portion of this option which is not exercisable on the date of
death or Total Disability by reason of Paragraph 2(b) hereof shall immediately
terminate, and any remaining portion of this option shall terminate if not
exercised within one year following the date of death or commencement of Total
Disability, unless sooner terminated by reason of Paragraph 2(a) hereof.

      (iii) In the event of a Breach in Conduct by Optionee at any time while
employed by the Company or within two years of termination of employment, (i)
any unexercised portion of this option, whether exercisable pursuant to
Paragraph 2(b) hereof or not exercisable, shall immediately terminate upon
action by the Committee. The Committee's action shall be communicated in writing
to the Optionee as soon as practicable. In addition, the Committee may, in its
sole discretion, by written notice demand that any or all stock certificates for
Common Shares acquired pursuant to the exercise of this option, or any profit
realized from the sale or transfer of such Common Shares, be returned to the
Company within five (5) days of receipt of such notice. Any exercise price paid
by the Optionee shall be returned to Optionee by the Company immediately
thereafter, without interest. The Company shall be entitled to reimbursement of
reasonable attorney fees and expenses incurred in seeking to enforce it rights
under this subparagraph 2(d)(iii) and Section 15 of the Plan.

      (e) Non-transferability. This option and all rights hereunder shall be
exercisable during the Optionee's lifetime only by the Optionee and shall be
non-assignable and non-transferable by the Optionee except, in the event of the
Optionee's death, by will or by the laws of descent and distribution. In the
event the death of the Optionee occurs, the representative or representatives of
the Optionee's estate, or the person or persons who acquire (by bequest or
inheritance) the rights to exercise this option in whole or in part, may
exercise this option prior to the expiration of the applicable exercise period,
as specified in Paragraph 2(d) above.

      (f) Change in Control. Unless the Committee determines otherwise, this
option shall accelerate and become immediately exercisable for a period of
fifteen days (or such longer or shorter period as the

                                      -2-
<PAGE>

Committee may prescribe) immediately prior to the scheduled consummation of a
Change in Control (as defined in the Plan). Such acceleration of exercisability
shall be conditioned upon the consummation of the Change in Control and, any
exercise of any portion of the option that becomes exercisable by reason of this
Paragraph 2(f) shall become effective only immediately before the consummation
of such Change in Control.

      Unless the Committee determines otherwise, upon consummation of any such
Change in Control, the Plan and any unexercised portion of this option shall
terminate. Notwithstanding the foregoing, to the extent provision is made in
writing in connection with such Change in Control for the continuation of the
Plan and the assumption of this option, or for the substitution for this option
of new options covering the stock of a successor company, or a parent or
subsidiary thereof, with appropriate adjustments as to the number and kinds of
shares or units and exercise prices, then the Plan and this option shall
continue in the manner and under the terms contained herein, and the
acceleration and termination provisions set forth in the first two sentences of
this Paragraph 2(f) shall be of no effect. The Company shall send written notice
of a Change in Control to Optionee not later than the time at which the Company
gives notice thereof to its shareholders.

      (g) Modification or cancellation of option. The Committee shall have the
authority to effect, at any time and from time to time, with the consent of the
Optionee, the modification of the terms of this option agreement (subject to the
limitations contained in the Plan).

      (h) No Rights as Shareholder. The Optionee shall have no rights as a
shareholder with respect to any Common Shares subject to this option prior to
the date of issuance to Optionee of a certificate or certificates for such
shares.

      (i) No Right to Continued Employment. This option shall not confer upon
the Optionee any right with respect to continuance of employment by the Company,
nor shall it interfere in any way with the right of the Company to terminate the
Optionee's employment at any time.

      (j) Compliance with Law and Regulations. This option and the obligation of
the Company to sell and deliver shares hereunder shall be subject to all
applicable federal and state laws, rules and regulations and to such approvals
by any government or regulatory agency as may be required. The Company shall not
be required to issue or deliver any certificates for Common Shares prior to (i)
the listing of such Common Shares on any stock exchange on which the Common
Shares may then be listed, and (ii) the completion of any registration or
qualification of such Common Shares under any federal or state law, or any rule
or regulation of any government body which the Company shall, in its sole
discretion, determine to be necessary or advisable. Moreover, this option may
not be exercised if its exercise, or the receipt of Common Shares pursuant
thereto, would be contrary to applicable law.

      3. DISQUALIFYING DISPOSITION OF SHARES. This option shall not qualify as
an incentive stock option within the meaning of Section 422 of the Code if the
Common Shares acquired pursuant to the exercise of the option are transferred,
other than by will or by the laws of descent and distribution, within two years
of the Grant Date or within one year after the transfer of the Common Shares to
the Optionee pursuant to such exercise.

      4. OPTIONEE BOUND BY PLAN. The Optionee hereby agrees to be bound by all
of the terms and provisions of the Plan. In the event of any inconsistency
between this Agreement and the terms of the Plan, the terms of the Plan shall
govern.

                                      -3-
<PAGE>

      5. WITHHOLDING TAXES. Optionee acknowledges and agrees that the Company
has the right to deduct from payments of any kind otherwise due to Optionee any
federal, state or local taxes of any kind required by law to be withheld with
respect to the exercise of this option hereunder.

      6. NOTICES. Any notice hereunder to the Company shall be addressed to it
at its principal business office, 10-M Commerce Way, Woburn, Massachusetts
01801, and any notice hereunder to the Optionee shall be sent to the address
reflected on the payroll records of the Company, subject to the right of either
party to designate at any time hereafter in writing some other address.

      7. MASSACHUSETTS LAW TO GOVERN. This Agreement shall be construed and
administered in accordance with and governed by the laws of the Commonwealth of
Massachusetts.

      IN WITNESS WHEREOF, the Company has caused this Agreement to be executed
by its duly authorized officer and the Optionee has executed this Agreement this
___ day of _______ ________.

                                          MICROFINANCIAL INCORPORATED

                                          By:___________________________________

                                          Title:________________________________

                                          ______________________________________

                                      -4-

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