Document:

ex10_2.htm

AM Draft: 5/20/2011

SECOND AMENDMENT TO

SENIOR SECURED CONVERTIBLE PROMISSORY NOTE PURCHASE AGREEMENT AND

NOTES

THIS SECOND AMENDMENT TO THE SENIOR SECURED CONVERTIBLE PROMISSORY NOTE AGREEMENT AND NOTES (the "Amendment") is entered into as of May __, 2011 (the "Effective Date"), by and among Amarantus Therapeutics, Inc., a Delaware corporation (the "Company"), each of the parties (collectively the "Investors" and individually an "Investor") severally listed on the Schedule of Investors attached hereto as Exhibit A, and Seahawk Capital Partners, Inc., as collateral agent on behalf of the Investors (the "Collateral Agent").

RECITALS

A.           WHEREAS, the Company has issued and sold 5% Secured Convertible Promissory Notes (the "Notes") to the Investors pursuant to the terms of that certain Senior Secured Convertible Promissory Note Purchase Agreement dated as of December 20, 2010 by and among the Company, the Investors named therein and the Collateral Agent, as amended by that certain Amendment to Senior Secured Convertible Promissory Note Purchase Agreement dated as of April 8, 2011 (the "Agreement").

B.           WHEREAS, the parties desire to amend the Agreement and the Notes to terminate the security interest in the Collateral (as defined in the Agreement) granted by the Company to the Investors in consideration for the issuance to the Investors of warrants to purchase capital stock of the Company and certain amendments to the Agreement as described herein.

NOW THEREFORE, in consideration of the mutual covenants set forth herein and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Agreement is hereby amended as follows:

1.           Termination of Security Interest. The security interest granted pursuant to Section 2 of the Agreement is hereby terminated and the Collateral Agent and each of the Investors hereby fully and completely releases any and all security interest they may have in the Collateral.

 

 

2.           Delivery of Termination Statement. Concurrently with the execution of this Agreement, Collateral Agent shall execute and file termination statements with respect to any and all Financing Statements (as defined in the Agreement) filed by or on behalf of Collateral Agent or the Investors with respect to the Collateral.

3.           Corresponding Amendments to Agreement and Notes. Sections 2, 4.7, 6.1(e), and 8.12 of the Agreement are hereby deleted in their entirety. Section 3 of each Note is hereby deleted in its entirety.

4.           Amendment to Conversion Provisions.

4.1.           Section 3.1(a) of the Agreement is hereby amended by deleting the number "$5,500,000" and replacing it with "$ 1,750,000."

  

  

  

4.2.           Section 3.2(a) of the Agreement is hereby amended and restated in its entirety to read as follows:

"(a)           Next Equity Financing. In the event the Company consummates a Next Equity Financing during such time as any Note is outstanding. then (i) if the Company has undergone a Change of Control, the Company shall cause the Successor Entity to assume all of the Company's obligations under this Agreement and the Notes and (ii) the outstanding principal amount of each Note and all accrued interest thereon may, at the option of the holder of such Note, be converted into the capital stock of the Company or Successor Entity issued in the Next Equity Financing and subject to the same terms and conditions as all other participants in such Next Equity Financing: provided, however, the number of shares of such capital stock to be issued to each Investor upon such optional conversion shall be equal to the quotient obtained by dividing (x) the outstanding principal amount and all accrued interest due on the Note on the date of conversion by (y) an amount equal to a discount of 66.67% to the lowest price at which a share of capital stock is sold to the investors in the Next Equity Financing. In connection with the conversion pursuant to this Section 3.2(a), the Investor agrees to execute all agreements and documents applicable to investors in the Next Equity Financing."

5.           Amendments to Covenants of the Company. Section 4.9 is hereby amended and restated in its entirety to read as follows:

"4.9           The Company covenants and agrees with the Investors that from

and after the date of this Agreement and until the Company's obligations under all of the Notes have been performed and paid in full:

(a)           Indebtedness.                        The Company shall not incur any

indebtedness for borrowed money except pursuant to an agreement that provides that the repayment of such indebtedness shall be subordinated to the repayment of the Notes. For the avoidance of doubt, indebtedness for borrowed money shall not include any indebtedness for the deferred purchase price of property or services or obligations to trade creditors incurred in the ordinary course of business.

(b)           Limitation on Liens. The Company will not create, incur, or assume any mortgage, deed of trust, or other lien or security interest securing a charge or obligation of or on any of its property, real or personal, whether now owned or hereafter acquired, except:

(1)           any lien or charge for a tax, assessment, or other

governmental charge that is not delinquent or remains payable without any penalty or the validity of which is contested in good faith by appropriate proceedings on stay of execution of the enforcement of the lien or charge:

(2)           deposits or pledges to secure (a) statutory

Obligations, (b) surety or appeal bonds, (c) bonds for release of attachment, stay of execution or injunction, or (d) performance of bids, tenders, contracts (other than for the repayment of 

borrowed money), or leases, or for purposes of like general nature in the ordinary course of business;

 

  

  

  

 

(3) mechanics', materialmen's, landlords', warehousemen's, carriers', or other like statutory or common law liens arising in the ordinary course of business for obligations that are not due and payable or that are being contested in good faith;

 

(4)  purchase-money security interest in personal property.

 

(c)           Compliance with Laws.  The Company will comply, in all material respects, with all provisions of all foreign, federal, state and local laws and regulations applicable to the Company, including, but not limited to, those relating to the conduct and licensing of the Company's business."

 

6. Issuance of Warrants.  In consideration for the termination of the security interest as set forth above, the Company shall issue a warrant to each Investor in substantially the form attached hereto as Exhibit B (each a " Warrant").

 

7. Registration Rights.  Whenever the Company proposes to register any of its securities under the Securities Act of 1933, as amended (the "Securities Act"), the Company will give notice to Investor of its intention to effect such a registration.  The Company will include in such registration all Common Stock acquired by each Investor upon conversion of any Note or exercise of any Warrant (the "Registrable Common Stock") provided that (a) the Company has received written request for inclusion therein within ten (10) days following receipt of the Company's notice (a "Piggyback Registration"), and (b) such Piggyback Registration shall be available on the registration statement on which the Company is filing.  If the Company is selling securities in an underwritten offering and the managing underwriters advise the Company in writing that in their opinion, the number of securities requested to be included in such registration exceeds the number which can be sold in an orderly manner in such offering within a price range acceptable to the Company, the Company may exclude Investor's Registrable Common Stock from such registration.  In order to participate in any underwritten offering hereunder, the Investor must (i) agree to sell his Registrable Common Stock on the basis provided in any underwriting arrangements approved by the Company and the holders of a majority of the securities to be included in such underwritten offering, and (ii) complete and execute all questionnaires, indemnities, underwriting agreements and other documents required under the terms of such underwriting arrangements.

 

8. Miscellaneous

 

8.1. Further Acts.  Each party hereto agrees to perform any further acts, and to execute and deliver (with acknowledgment, verification, and /or affidavit, if required) any further documents and instruments, as may be reasonably necessary or desirable to implement and/or accomplish the provisions of this Amendment and the transactions contemplated herein.

 

8.2. Effect on Agreement and Notes.  Except as specifically amended as set forth herein, all other terms of the Agreement and the Notes shall remain in full force and effect.

 

8.3. Counterparts.  This Amendment may be executed in multiple counterparts, each of which shall be deemed an original, but all of which, taken together, shall constitute one and the same agreement, binding on the parties hereto.  The signature of any party hereto to any counterpart hereof shall be deemed a signature to, and may be appended to, any other counterpart hereof.

 

8.4. No Third Party Beneficiaries.  Except as otherwise provided herein, this Amendment is solely for the benefit of the parties hereto, and no other person or entity is entitled to rely upon or benefit from this Amendment or any term hereof or thereof.

 

8.5. Severability.  Every provision of this Amendment is intended to be severable.  If any term or provision hereof is declared by a court of competent jurisdiction to be illegal or invalid, such illegal or invalid terms or provisions shall not affect the other terms and provisions hereof, which terms and provisions shall remain binding and enforceable.

 

8.6. Governing Law; Actions; Waiver of Jury Trial.  The validity, interpretation and performance of this Amendment shall be construed under and controlled by the laws of the State of New York, without regard to its choice-of-law principles.  All disputes and controversies arising out of or in connection with this Amendment shall be resolved exclusively by the state and federal courts located in New York, NY, and each party hereto agrees to submit to the jurisdiction of said courts and agrees that venue shall lie exclusively with such courts.

 

8.7. Binding Effect.  This Amendment shall be binding upon and inure to the benefit of the Company and each Investor and their respective successors and assigns.  The Company may not assign its rights or interest under this Amendment without the prior written consent of the Requisite Holders (as defined in the Agreement).

 

[Signatures appear on the following page]

 

  

  

  

 

    IN WITNESS WHEREOF, the parties have executed this Second Amendment to the Senior Secured Convertible Promissory Note Purchase Agreement as of the day and year first written above.

	
COMPANY:

	
AMARANTUS THERAPEUTICS, INC.

	  	  
	  	
/s/ Martin D. Cleary

	  	
By:  Martin D. Cleary

	  	
Its:  Chief Executive Officer

	  	  
	
COLLATERAL AGENT:

	
SEAHAWK CAPITAL PARTNERS, INC.

	 	 
	  	/s/ Michael Caridi  
	  	
By: Michael Caridi

	  	
Its: Vice President

	  	  
	
INVESTORS:

	
CHINA DISCOVERY INVESTMENTS LIMITED

	  	  
	  	
/s/ M. Sieber 

	  	
By:  M. Seiber

	  	
Its:  General Partner

	  	  
	  	
SEAHAWK CAPITAL PARTNERS, INC.

	  	  
	  	
/s/ Michael Caridi  

	  	
By: Michael Caridi

	  	
Its: Vice President

	  	  
	  	  
	  	
/s/ Joyce N. Westmoreland

	  	
JOYCE N. WESTMORELAND

	  	  
	  	/s/ Richard G. David  
	  	
RICHARD G. DAVID

  

  

  

EXHIBIT A

Schedule of Investors

	
Investor

	
Principal Amount of Note

	
China Discovery Investments Limited

	
$125,000.00

	
Seahawk Capital Partners. Inc.

	
$62,500.00

	
Jovce N. Westmoreland

	
$25,000.00

	
Richard G. David

	
$ 100,000.00

 

EXHIBIT A

  

  

  

EXHIBIT B

Form of Warrant

  

  

  

AM Draft: 5/20/2011

THIS WARRANT AND THE SECURITIES ISSUABLE UPON EXERCISE OF THIS WARRANT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAW, AND MAY NOT BE OFFERED FOR SALE, SOLD OR TRANSFERRED UNLESS IN ACCORDANCE WITH THE PROVISIONS OF REGULATIONS PROMULGATED UNDER THE SECURITIES ACT, A REGISTRATION STATEMENT UNDER SUCH ACT AND APPLICABLE STATE SECUIHTIES LAWS SHALL BE EFFECTIVE WITH RESPECT THERETO, OR AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS IS AVAILABLE IN CONNECTION WITH SUCH OFFER, SALE OR TRANSFER.

WARRANT TO PURCHASE STOCK

OF

AMARANTUS THERAPEUTICS, INC.

	
Issue Date:  May__,2011

	
Warrant No. 2011-___

THIS CERTIFIES that _________________________________(the "Holder") of this Warrant (this "Warrant"), has the right to purchase from AMARATUS THERAPEUTICS, INC., a Delaware corporation (the "Company"), the Agreed Number (as defined below) of fully-paid and nonassessable shares of the Company's Next Financing Stock (as defined below), subject to adjustment as provided herein, at a price per share equal to the Exercise Price (as defined below), at any time during the Exercise Period (as defined below).

This Warrant has been issued in connection with the Second Amendment to Senior Secured Convertible Promissory Note Purchase Agreement and Notes, dated May __. 2011, among the Company, each of the Investors (as defined therein) and Seahawk Capital Partners., Inc., as collateral agent on behalf of the Investors (the "Second Amendment").

       1.   Definitions.    Thefollowing terms shall have the meaning assigned below:

(a) "Agreed Number" shall have the meaning as set forth in Section 2(b).

(b) "Business Day" means any day other than Saturday, a Sunday or a day on which the New York Stock Exchange is closed or on which banks in San Francisco are required or authorized by law to be closed.

(c) "Change of Control" means (A) a consummation of the acquisition of more than 50% of the outstanding stock of the Company (other than a stock financing principally for capital raising purposes), (B) the consummation of a merger, consolidation or other reorganization of the Company, if after giving effect to such merger, consolidation or other reorganization of the Company. the stockholders of the company immediately prior to such merger, consolidation or other reorganization do not hold a majority of the outstanding equity securities of the surviving or resulting entity after such merger, consolidation or other reorganization, or (C) the sale of all or substantially all of the stock of the Company to a third party.  Nowithstanding the foregoing. any such Change of Control shall be limited to the reorganization of the Company as contemplated in that certain term sheet dated October 27. 20 I 0 by and among the Company and Seahawk Capital Partners. Inc .. as such term sheet may be amended from time to time (the "Term Sheet").

  

  

  

(d)           "Exercise Price" means 100% of the purchase price per share of the Next

Financing Stock, as adjusted from time to time pursuant to Section 4 hereof.

                       

              (e)    "Exercise Period" shall have the meaning set forth in Section 2(a).

(f)            "Next Equity Financing" means the next sale (in one or more closings) after the date hereof by the Company or any Successor Entity of its capital stock whereby the issuer commits to register the capital stock offered for sale in such financing by filing a registration statement in compliance with the Securities Act of 1933, as amended, and from which the Company or any Successor Entity receives gross proceeds of at least $1,750,000 (excluding any convertible promissory notes which are converted into such capital stock).

(g)           "Next Financing Stock" means the shares of capital stock sold in an offering which qualifies as a Next Equity Financing.

(h)            "Successor Entity" means any entity having beneficial ownership of at least a majority of the outstanding capital stock of the Company as a result of a Change of Control after the date hereof.

       2.   Exercise.

 

(a)           Exercise Period. This Warrant shall be exercisable at any time following the occurrence of a Next Equity Financing until five years from the date hereof. The period during which this Warrant may be exercised is referred to herein as the "Exercise Period".

(b)           Right to Exercise. Subject to the terms and conditions set forth herein, the

Holder shall have the right to exercise this Warrant at any time and from time to time during the Exercise Period as to all, but not less than all, of the Agreed Number of shares of Next Financing Stock covered hereby (the "Warrant Shares"). The "Agreed Number" of shares of the Company's Next Financing Stock that may be purchased by the Holder upon the exercise of this Warrant shall mean the quotient determined by dividing (a) the initial principal amount of the Note issued by the Company to the Holder by the Exercise Price.

(c)           Exercise Notice. In order to exercise this Warrant, the Holder shall deliver, at any time prior to 5:00 p.m. San Francisco time on the Business Day on which the Holder wishes to effect such exercise (the "Exercise Date"), to the Company an executed copy of the notice of exercise in the form attached hereto as Exhibit A (the "Exercise Notice") and, the Exercise Price by cash or by wire transfer of immediately available funds.

(d)           The Exercise Notice shall also state the name or names (with address) in which the shares of Next Financing Stock that are issuable on such exercise shall be issued. After delivery of the Exercise Notice, the Holder shall promptly deliver the original warrant to the Company for cancellation.

(e)           Holder of Record. The Holder shall for all purposes be deemed to have become the holder of record of the Warrant Shares specified in an Exercise Notice as of 5:00 p.m. San Francisco time on the Exercise Dale. irrespective of the date of delivery of such Warrant Shares.

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Except as specifically provided herein. nothing in this Warrant shall he construed as conferring upon the Holder hereof any rights as a stockholder of the Company prior to the Exercise Date.

(f)           Cancellation of Warrant. This Warrant shall be canceled upon its exercise and, if this Warrant is exercised in part, the Company shall, at the time that it delivers Warrant Shares to the Holder pursuant to such exercise as provided herein, issue a new warrant, and deliver to the Holder a certificate representing such new warrant, with terms identical in all respects to this Warrant (except that such new warrant shall be exercisable into the number of shares of Next Financing Stock with respect to which this Warrant shall remain unexercised); provided, however, that the Holder shall be entitled to exercise all or any portion of such new warrant at any time following the time at which this Warrant is exercised, regardless of whether the Company has actually issued such new warrant or delivered to the Holder a certificate therefor.

3.           Delivery of Warrant Shares Upon Exercise. Upon exercise pursuant to Section 1 of this Warrant, the Company shall issue and deliver or caused to be delivered to the Holder the number of Warrant Shares as shall be determined as provided herein within a reasonable time not to exceed two business days if the Company's has appointed a transfer agent to administer its securities and five business days if it has not (the “Delivery Date”). The Company shall effect delivery of Warrant Shares to the Holder by delivering to the Holder or its nominee physical certificates representing such Warrant Shares, no later than the close of business on such Delivery Date. The certificates representing the Warrant Shares may bear legends in accordance with the legend set forth on the face of this Warrant or applicable law.

4.           Adjustments. The Warrant Shares and the Warrant Exercise Price arc subject to

adjustment as follows:

(a)           Adjustment for Change in Capital Stock.  If the Company:

(1)           pays a dividend or makes a distribution on its Next Financing Stock in shares of its Next Financing Stock or other shares of its capital stock.

(2)           subdivides or reclassifies its outstanding shares of Next Financing Stock into a greater number of shares: or

(3)           combines or reclassifies its outstanding shares of Next Financing Stock into a smaller number of shares:

then the number of Warrant Shares issuable upon exercise of the Warrant and the corresponding Warrant Exercise Price immediately prior to such action shall be proportionately adjusted so that the Holder may receive the aggregate number and kind of shares of capital stock of the Company that the Holder would have owned immediately following such action if the Warrant had been exercised immediately prior to such action.

The adjustment shall become effective immediately after the record date in the case of a dividend or distribution and immediately after the effective date in the case of a subdivision, combination or reclassification.

(b)           Adjustment for Recapitalization. Reclassification. Exchange. Substitution.

Reorganization. Merger. Consolidation or Sale of Assets.  If a Reorganization occurs or the Next Financing Stock issuable upon exercise of the Warrant is otherwise changed into the same or a different number of shares of any class or classes of stock, whether by recapitalization,

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reclassification or otherwise (other than a liquidation or subdivision or combination of shares or stock dividend or any other event otherwise provided for in this Section 4), then and in such event Holder shall have the right to purchase and receive the kind and amount of stock and other securities and property receivable upon such Reorganization or other change in an amount equal to the amount that the Holder would have been entitled to had it exercised such Warrant immediately prior to such Reorganization, recapitalization, reclassification or other change, all subject to further adjustment as provided herein. As a part of such Reorganization, recapitalization, reclassification or other change, provision shall be made by the Company so that the Holder shall thereafter be entitled to receive such stock, securities and property.

(c)           Notice of Adjustment. Upon any adjustment required by this Section 4, the

Company shall give written notice thereof, by national overnight delivery service with tracking capability, addressed to Holder at the address shown on the books of the Company, which notice shall state the increase or decrease, if any, in the Warrant Shares and Warrant Exercise Price, setting forth in reasonable detail the method of calculation and the facts upon which such calculation is based.

 

 

	
  (d)  

	
   Other Notices. In case at anytime:

(1)           the Company shall declare any dividend upon Next Financing Stock or make any other distribution to the holders of Next Financing Stock;

(2)           the Company shall ol1"cr for subscription pro-rata to the holders of Next Financing Stock any additional shares of stock of any class or other securities or rights;

 

 

(3)           there shall be any capital reorganization or reclassification of the capital stock of the Company, or any sale of substantially all of the Company's assets or merger (collectively, a

                   "Reorganization"); or

(4)           there shall be a voluntary or involuntary dissolution, liquidation or winding up of the Company (collectively. "Dissolution");

then the Company shall give, by national overnight delivery service with tracking capability, addressed to the Holder at the address shown on the books of the Company (i) at least 20 days' prior written notice of the date on which the books of the Company shall close or a record shall be taken for such dividend, distribution or subscription rights or for determining rights to vote in respect of any such Reorganization or Dissolution, and (iv) in the case of any Reorganization or Dissolution, at least 20 days' prior written notice of the date when the same shall take place. Such notice in accordance with the foregoing clause (ii) shall also specify, in the case of any such dividend, distribution or subscription rights, the date on which the holders of Next Financing Stock shall be entitled thereto, and such notice in accordance with the foregoing clause (iii) shall also specify the date on which the holders of Next Financing Stock shall be entitled to exchange their j ext Financing Stock for securities or other property deliverable upon such Reorganization or Dissolution, as the case may be.

5.           Distributions. If the Company distributes to any or all holders of its Next Financing Stock any of its assets (including but not limited to cash), securities (other than capital stock), or any rights or warrants to purchase securities (including but not limited to Next Financing Stock) of the Company, the Company shall, upon exercise by the Holder of this Warrant, make the same distribution to the Holder as though, immediately prior to the record date with respect to such distribution, the Holder owned the number of shares of Next Financing Stock the Holder could have purchased upon the exercise of the Warrant; provided, that the Company shall irrevocably deposit or cause to be deposited in a trust account for the benefit of the Holder an amount of money sufficient to pay such distribution, such distribution to be distributed by the trust to the Holder at the time this Warrant is exercised.

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6.            Fractional Interests. No fractional shares or scrip representing fractional shares shall be issuable upon the exercise of this Warrant. If, on exercise of this Warrant, the Holder hereof would be entitled to a fractional share of Next Financing Stock or a right to acquire a fractional share of Next Financing Stock, the Company shall, in lieu of issuing any such fractional share, pay to the Holder an amount in cash equal to the product resulting from multiplying such fraction by the fair market value of one share of the Company's Next Financing Stock as of the Exercise Date, as determined in good faith by the Company's Board of Directors.

7.           Compliance With Securities Act Transfers.

(a)           The Holder, by acceptance of this Warrant, agrees that this Warrant and the

Warrant Shares are being acquired for investment and that the Holder will not offer, sell, or otherwise dispose of this Warrant or any Warrant Shares except under circumstances which will not result in a violation of the Securities Act. In addition, this Warrant may not be transferred by Holder except to a transferee who has been issued a warrant pursuant to the Second Amendment.  Upon exercise of this Warrant, the holder hereof shall, if requested by the Company, confirm in writing its investment purpose and acceptance of the restrictions on transfer of the Warrant Shares.

(b)           Subject to such restrictions, the Company shall transfer this Warrant from time to time upon the books to be maintained by the Company for that purpose, upon surrender thereof for transfer properly endorsed or accompanied by appropriate instructions for transfer and such other documents as may be reasonably required by the Company to establish that such transfer is being made in accordance with the terms hereof, and a new Warrant shall be issued to the transferee and the surrendered Warrant shall be canceled by the Company.

8.           Benefits of this Warrant. This Warrant shall be for the sale and exclusive benefit of the Holder of this Warrant and nothing in this Warrant shall be construed to confer upon any person other than the Holder of this Warrant any legal or equitable right, remedy or claim hereunder.

9.            Legends. The shares of Next Financing Stock issuable upon exercise of this Warrant will be subject to agreements between the initial Holder hereof and the Company relating to certain matters. Holder by accepting this warrant acknowledges and agrees that the following (or a substantially similar) legends will be placed on the certificates evidencing the Next Financing Stock:

"THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, (THE "SECURITIES ACT") OR ANY APPLICABLE STATE SECURITIES LAWS, AND MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED EXCEPT PURSUANT TO REGISTRATION UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM REGISTRATION OR AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED."

10.           Loss, Theft, Destruction or Mutilation of Warrant. Upon receipt by the Company of evidence of the loss, theft, destruction or mutilation of this Warrant, and (in the case of loss, theft or destruction) of indemnity reasonably satisfactory to the Company, and upon surrender of this Warrant, if mutilated, the Company shall execute and deliver a new Warrant of like tenor and date.

11.           Notice or Demands. Any notice. demand or request required or permitted to be given by the Company or the Holder pursuant to the terms of this Warrant shall be in writing and shall be deemed delivered (i) when delivered personally or by verifiable facsimile transmission, unless such delivery is made on a day that is not a Business Day, in which case such delivery will be deemed

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to be made on the next succeeding Business Day, (ii) on the next Business Day after timely delivery to a reputable overnight courier, and (iii) on the Business Day actually received if deposited in the U.S. mail (certified or registered mail. return receipt requested. postage prepaid), addressed as follows:

If to the Company:                               Amarantus Therapeutics. Inc.

c/o The Parknson's Institute

675 Almanor Ave.

Sunnyvale. CA 94085

(or such other address as may be designated by the Company in writing to Holder) and if to the Holder, to such address as shall be designated by the Holder in writing to the Company.

 

12.           Applicable Law. This Warrant is issued under and shall for all purposes be governed by and construed in accordance with the laws of the State of New York applicable to contracts made and to be performed entirely within the State of New York, without regard to the choice of law principals of said State. The exclusive venue of any action, suit counterclaim or cross claim arising under, out of, or in connection with this Agreement shall be the state or federal courts in New York. New York.

13.           Amendments. No amendment, modification or other change to, or waiver of any provision of, this Warrant may be made unless such amendment, modification or change is set forth in writing and is signed by the Company and the Holder.

 

14.           Entire Agreement. This Warrant constitutes the entire agreement and supersedes all prior agreements and understandings among the parties hereto with respect to the subject matter hereof and thereof.

15.           Headings. The headings in this Warrant are for convenience of reference only and shall not limit or otherwise affect the meaning hereof.

16.           Restrictions. The Holder acknowledges that the shares of Next Financing Stock acquired upon exercise of this Warrant, if not registered, will have restrictions on resale imposed by state and federal securities laws.

17.           Successors and Assigns. Subject to applicable securities laws, this Warrant and the rights and obligations evidenced hereby shall inure to the benefit of and be binding upon the successors of the Company and the successors and permitted assigns of the Holder.

[Remainder of Page Intentionally Left Blank]

 

 

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IN WITNESS WHEREOF, the Company has duly executed and delivered this Warrant as or the Issue Date.

 

	
AMARANTUS THERAPEUTICS, INC.

	
a Delaware corporation

 

	
/s/ Martin D. Cleary

	
By:  Martin D. Cleary

	
Its:  Chief Executive Officer

 

 

 

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EXHIBIT A to WARRANT

EXERCISE NOTICE

The undersigned Holder hereby irrevocably exercises the right to purchase shares of the Financing Stock ("Warrant Shares") of AMARANTUS THERAPEUTICS, INC. evidenced by the attached Warrant (the "Warrant") as set forth below. Capitalized terms used herein and not otherwise defined shall have the respective meanings set forth in the Warrant.

Purchase   _______ Warrant Shares pursuant to the terms of the Warrant.

Payment of the Exercise Price required under such Warrant accompanies this notice.

Date: ________________

EXHIBIT A to

WARRANT

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By: /s/ Jayakumar Patil

Name: Jayakumar Patil

Address: 1721 Corooba Lane, Unit C

Las Vegas, NV 89102

Telephone: (603) 714-4632

 

By: /s/ Purinma Patil

Name: Purinma Patil 

Address: 1721 Corooba Lane, Unit C

Las Vegas, NV 89102

Telephone: (603) 714-4632

 

 

  

  

  

 

By: /s/ Gad Janay

Name: Gad Janay

Address: 4041 Ibis Point Circle

Boca Raton, FL 33431

Telephone: (561) 362-8342

 

By: /s/ Marlene Janay

Name: Marlene Janay

Address: 4041 Ibis Point Circle

Boca Raton, FL 33431

Telephone: (561) 362-8342

 

 

 

 

 

By: /s/ Richard Martella

Name: Richard Marella, JTWROS

Address: 28575 Danvers Court

Farmington Hills, MI 48334

Telephone: (248) 855-2787

 

By: /s/ Jennifer Martella

Name: Jennifer Matella, JTWROS

Address: 28575 Danvers Court

Farmington Hills, MI 48334

Telephone: (248) 855-2787

  

  

  

 

By: /s/ Joyce Westmoreland

Name: Joyce Westmoreland

Address: 6946 Moniteau Ct.

Baton Rogue, LA 70809

Telephone: (225) 927-7645 

 

  

  

  

 

By: /s/ Timothy Ling

Name: Timothy Ling

Address: Fora Greenhouse Swilltub Lane 

Bacton Suffolk 1R44HW UK

Telephone: 011-44-1449-781309

 

  

  

  

 

By: /s/ Richard Davis

Name: Richard Davis

Address: 6041 Loganwort Drive

Rockville, MD 20852

Telephone: (202 494-5904ex10_3.htm

AMARANTUS THERAPEUTICS, INC.

CONVERTIBLE PROMISSORY NOTE AGREEMENT 

AS AMENDED MARCH 23, 2011

 

This Convertible Promissory Note Agreement, dated as of April 22, 2011, (this "Agreement") is entered into by and among Amarantus Therapeutics, Inc., a Delaware corporation (the "Company"), and the persons and entities listed on the schedule of investors attached hereto as Schedule I (each an "Investor" and, collectively, the "Investors").

 

RECITALS

 

A.           On the terms and subject to the conditions set forth herein, each Investor is willing to purchase from the Company, and the Company is willing to sell to such Investor, a convertible promissory note in the principal amount set forth opposite such Investor's name on Schedule I hereto, to acquire shares of the Company's capital stock.

 

B.           Capitalized terms not otherwise defined herein shall have the meaning set forth in the form of Note (as defined below) attached hereto as Exhibit A.

 

AGREEMENT

 

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

 

1.           The Convertible Notes.

 

(a)           Issuance a/Convertible Notes. The Company agrees to issue and sell to each of the Investors and, subject to all of the terms and conditions hereof, each of the Investors severally agrees to purchase a convertible promissory note in the form of Exhibit A hereto (each, a "Note" and, collectively, the "Notes") in the principal amount set forth opposite the respective Investor's name on Schedule I hereto. The obligations of the Investors to purchase Notes are several and not joint.

 

(b)           Closing. The sale and issuance of the Notes shall take place at one or more closings (each of which is referred to herein as a "Closing"). The initial Closing ("Initial Closing"), shall take place at the offices of Amarantus Therapeutics, Inc., 675 Almanor Avenue, Sunnyvale, CA 94085, at 10:00 a.m. local time on December 13,2010, or such other date as the Company shall determine, in its sole discretion. If the aggregate value of the Notes sold at the Initial Closing is less than $1 million, then, subject to the terms and conditions of this Agreement, the Company may sell and issue at one or more subsequent closings (each, a "Subsequent Closing"), up to the balance of the unissued Company equity to such persons or entities as may be approved by the Company.

 

(c)           Delivery. The sale and purchase of the Notes shall take place at a closing (the "Closing") to be held at such place and time as the Company and the Investors may determine (the Convertible Promissory Note Agreement "Closing Date"). At the Closing, the Company will deliver to each of the Investors the respective Note to be purchased by such Investor, against receipt by the Company of the corresponding purchase price set forth on Schedule I hereto (the "Purchase Price"). Each of the Notes will be registered in such Investor's name in the Company's records.

  

  

  

 

(d)           Use of Proceeds. The proceeds of the sale and issuance of the Notes shall be used for general corporate purposes.

 

(e)           Payments. The Company will make all cash payments due under the Notes in immediately available funds by 11 :00 a.m. Pacific time on the date such payment is due in the manner and at the address for such purpose specified below each Investor's name on Schedule I hereto, or at such other address as a Investor or other registered holder of a Note may from time to time direct in writing.

 

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

 

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

 

(b)           Authority. The execution, delivery and performance by the Company of the agreements to be entered in connection with the transaction contemplated hereby (collectively, the "Transaction Documents") and the consummation of the transactions contemplated thereby (i) are within the power of the Company and (ii) have been duly authorized by all necessary actions on the part of the Company.

 

(c)           Enforceability. Each Transaction Document executed, or to be executed, by the Company has been, or will be, duly executed and delivered by the Company and constitutes, or will constitute, a legal, valid and binding obligation of the Company, enforceable against the Company in accordance with its terms, except as limited by bankruptcy, insolvency or other laws of general application relating to or affecting the enforcement of creditors' rights generally and general principles of equity.

 

3.           Representations and Warranties of Investors. Each Investor, for that Investor alone, represents and warrants to the Company upon the acquisition of the Note as follows:

 

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

  

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           (b)           Securities Law Compliance. Investor has been advised that the Notes and the underlying securities have not been registered under the Securities Act, or any state securities laws and, therefore, cannot be resold unless they are registered under the Securities Act and applicable state securities laws or unless an exemption from registration requirements is available. Investor is aware that the Company is under no obligation to effect any such registration with respect to the Notes or the underlying securities or to file for or comply with any exemption from registration. Investor has not been formed solely for the purpose of making this investment and is purchasing the Notes to be acquired by Investor hereunder for its own account for investment, not as a nominee or agent, and not with a view to, or for resale in connection with, the distribution thereof. Investor has such knowledge and experience in financial and business matters that Investor is capable of evaluating the merits and risks of such investment, is able to incur a complete loss of such investment and is able to bear the economic risk of such investment for an indefinite period of time. Investor is an accredited investor as such term is defined in Rule 501 of Regulation D under the Securities Act.

 

(c)           Access to Information. Investor acknowledges that the Company has given Investor access to the corporate records and accounts of the Company and to all information in its possession relating to the Company, has made its officers and representatives available for interview by Investor, and has furnished Investor with all documents and other information required for Investor to make an informed decision with respect to the purchase of the Notes. Investor acknowledges that he is relying solely on his own counsel and not on any statements or representations of the Company or its agents for legal advice with respect to this investment or the transactions contemplated by the Agreements.

 

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

 

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

 

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

 

(c)           Legal Requirements. At the Closing, the sale and issuance by the Company, and the purchase by the Investors, of the Notes shall be legally permitted by all laws and regulations to which the Investors or the Company are subject.

 

(d)           Proceedings and Documents. All corporate and other proceedings in connection with the transactions contemplated at the Closing and all documents and instruments incident to such transactions shall be reasonably satisfactory in substance and form to the Investors.

  

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(e)           Transaction Documents. The Company shall have duly executed and delivered to the Investors the following documents:

 

(i)         This Agreement;

 

  (ii)        Each Note issued hereunder;

 

(f)           Maximum Investment. The maximum aggregate value of all notes issued to Investors under this Agreement shall not exceed $1,000,000.

 

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

 

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

 

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

 

(c)           Legal Requirements. At the Closing, the sale and issuance by the Company, and the purchase by the Investors, of the Notes shall be legally permitted by all laws and regulations to which the Investors or the Company are subject.

 

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

 

6.           Miscellaneous.

 

(i)         Waivers and Amendments. Any provision of this Agreement may be amended, waived or modified only upon the written consent of the Company and Investors holding Notes with a principle amount equal to more than fifty percent of the Principal then outstanding under all Notes (a "Majority in Interest"). Any waiver or amendment effected in accordance with this Section 6(a) shall be binding upon each holder of any securities purchased under the Agreement at the time outstanding (including securities into which such securities have been converted), each future holder of all such securities, and the Company. EACH INVESTOR ACKNOWLEDGES THAT BY THE OPERATION OF THIS SECTION 6(A)(i) THE HOLDERS OF ISSUED NOTES REPRESENTING MORE THAN 5% OF THE OUTSTANDING PRINCIPAL AMOUNT OF ALL THEN OUTSTANDING NOTES UNDER THE AGREEMENT WILL HAVE THE RIGHT AND POWER TO DIMINISH OR ELIMINATE ALL RIGHTS OF ALL INVESTORS UNDER THIS AGREEMENT.

  

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

 

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

 

(d)           Successors and Assigns. Subject to the restrictions on transfer described in Sections 6(e) and 6(f) below, the rights and obligations of the Company and the Investors shall be binding upon and benefit the successors, assigns, heirs, administrators and transferees of the parties.

 

(e)           Registration, Transfer and Replacement of the Notes. The Notes issuable under this Agreement shall be registered notes. The Company will keep, at its principal executive office, books for the registration and registration of transfer of the Notes. Prior to presentation of any Note for registration of transfer, the Company shall treat the person in whose name such Note is registered as the owner and holder of such Note for all purposes whatsoever, whether or not such Note shall be overdue, and the Company shall not be affected by notice to the contrary. Subject to any restrictions on or conditions to transfer set forth in any Note, the holder of any Note, at its option, may in person or by duly authorized attorney surrender the same for exchange at the Company's chief executive office, and promptly thereafter and at the Company's expense, except as provided below, receive in exchange therefor one or more new Note(s), each in the principal requested by such holder, dated the date to which interest shall have been paid on the Note so surrendered or, if no interest shall have yet been so paid, dated the date of the Note so surrendered and registered in the name of such person or persons as shall have been designated in writing by such holder or its attorney for the same principal amount as the then unpaid principal amount of the Note so surrendered. Upon receipt by the Company of evidence reasonably satisfactory to it of the ownership of and the loss, theft, destruction or mutilation of any Note and (a) in the case of loss, theft or destruction, of indemnity reasonably satisfactory to it; or (b) in the case of mutilation, upon surrender thereof, the Company, at its expense, will execute and deliver in lieu thereof a new Note executed in the same manner as the Note being replaced, in the same principal amount as the unpaid principal amount of such Note and dated the date to which interest shall have been paid on such Note or, if no interest shall have yet been so paid, dated the date of such Note.

 

(f)           Assignment by the Company. The rights, interests or obligations hereunder may not be assigned, by operation of law or otherwise, in whole or in part, by the Company without the prior written consent of Investors holding a Majority in Interest.

 

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

 

(h)           Notices. All notices, requests, demands, consents, instructions or other communications required or permitted hereunder shall in writing and faxed, mailed or delivered to each party as follows: (i) if to a Investor, at such Investor's address or facsimile number set forth in the Schedule of Investors attached as Schedule I, or at such other address as such Investor shall have furnished the Company in writing, or (ii) if to the Company, at 675 Almanor Avenue, Sunnyvale, CA 94085, or at such other address or facsimile number as the Company shall have furnished to the Investors in writing. All such notices and communications will be deemed effectively given the earlier of (i) when received, (ii) when delivered personally, (iii) one business day after being delivered by facsimile (with receipt of appropriate confirmation), (iv) one business day after being deposited with an overnight courier service of recognized standing or (v) four days after being deposited in the U.S. mail, first class with postage prepaid.

  

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(i)           Separability of Agreements; Severability of this Agreement. The Company's agreement with each of the Investors is a separate agreement and the sale of the Notes to each of the Investors is a separate sale. Unless otherwise expressly provided herein, the rights of each Investor hereunder are several rights, not rights jointly held with any of the other Investors. Any invalidity, illegality or limitation on the enforceability of the Agreement or any part thereof, by any Investor whether arising by reason of the law of the respective Investor's domicile or otherwise, shall in no way affect or impair the validity, legality or enforceability of this Agreement with respect to other Investors. If any provision of this Agreement shall be judicially determined to be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby.

 

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

 

(k)           Lock-Up. Each Investor agrees that, in connection with registrations of the offering of any securities of the Company under the Securities Act for the account of the Company, if so requested by the Company or any representative of the underwriters (the "Managing Underwriter"), such Investor shall not sell or otherwise transfer any securities of the Company during the period specified by the Company's Board of Directors at the request of the Managing Underwriter (the "Market Standoff Period"), with such period not to exceed (i) with respect to the Company's initial public offering, 180 days following the effective date of a registration statement of the Company filed under the Securities Act and (ii) with respect to subsequent underwritten public offerings, 90 days following the effective date of a registration statement of the Company filed under the Securities Act; provided that: all officers, directors, founders, and holders of at least one percent (1 %) of the Company's voting securities enter into similar agreements. The Company may impose stop transfer instructions with respect to securities subject to the foregoing restrictions until the end of such Market Standoff Period. Each Investors agrees not to transfer any of the securities subject to the foregoing restriction without first requiring the proposed transferee to agree in writing to such transfer restrictions. Each Investor acknowledges that the Company will be caused to be placed on the Notes (and any securities issued directly or indirectly on conversion or exercise of such Notes) the following legend:

 

"THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO A LOCKUP PERIOD OF UP TO 180-DAYS FOLLOWING THE EFFECTIVE DATE OF A REGISTRATION STATEMENT OF THE COMPANY FILED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AS SET FORTH IN

  

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AN AGREEMENT BETWEEN THE ISSUER AND THE ORIGINAL HOLDER OF THESE SHARES, A COPY OF WHICH MAY BE OBTAINED AT THE PRINCIPAL OFFICE OF THE ISSUER. SUCH LOCKUP PERIOD IS BINDING ON TRANSFEREES OF THESE SHARES."

 

(Signature Page Follows)

  

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

 

COMPANY:

AMARANTUS THERAPEUTICS, INC.

a Delaware corporation

By: /s/ Martin D. Cleary

Martin D. Cleary, Chief Executive Officer

[Signature page for Convertible Promissory Note Agreement]

  

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SCHEDULE I

SCHEDULE OF INVESTORS

 

	
December 13, 2010

	
Robert L. Harris

	
$100,000.00

	
April 11, 2011

	
Warren Strudwick

	
$25,000

	
April 15, 2011

	
PENSCO Trust Company Custodian

	
$35,000

	  	
FBO Arnold T. Grisham, IRA

	  
	
April 27, 2011

	
Glenda Newell-Harris

	
$50,000

	
April 22, 2011

	
Sheryl Clark

	
$10,000

  

  

  

Exhibit A

 

FORM OF NOTE

 

  

  

  

 

THIS NOTE AND THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. THEY MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT AS TO THE SECURITIES UNDER SAID ACT OR AN OPINION OF COUNSEL SATISFACTORY TO THE CORPORATION THAT SUCH REGISTRATION IS NOT REQUIRED.

THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO A LOCKUP PERIOD OF UP TO 180 DAYS FOLLOWING THE EFFECTIVE DATE OF A REGISTRATION STATEMENT OF THE COMPANY FILED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AS SET FORTH IN AN AGREEMENT BETWEEN THE ISSUER AND THE ORIGINAL HOLDER OF THESE SHARES, A COPY OF WHICH MAY BE OBTAINED AT THE PRINCIPAL OFFICE OF THE ISSUER. SUCH LOCKUP PERIOD IS BINDING ON TRANSFEREES OF THESE SHARES.

AMARANTUS THERAPEUTICS, INC.

CONVERTIBLE PROMISSORY NOTE

	
$____________________

	
_________________, __________________

FOR VALUE RECEIVED, Amarantus Therapeutics, Inc., a Delaware corporation (the "Company") promises to pay to __________________________ (the "Investor"), or its registered assigns, in lawful money of the United States of America the principal sum of _________________________________________________________ ($________________._____), or such lesser amount as shall equal the outstanding principal amount hereof, together with simple interest from the date of this Convertible Promissory Note (the "Note") on the unpaid principal balance at a rate equal to 5.00% per annum. This Note is one of the "Notes" issued pursuant to the Convertible Promissory Note Agreement dated April 22, 2011 (as amended, modified or supplemented, the "Convertible Promissory Note Agreement"). Outstanding principal and accrued interest shall be due and payable on demand by a Majority in Interest of the Investors made after Apri1 22, 2013 (the "Maturity Date"). Capitalized terms not otherwise defined herein shall have the meaning set forth in the Convertible Promissory Note Agreement.

The following is a statement of the rights of the Investor and the conditions to which this Note is subject, and to which the Investor, by the acceptance of this Note, agrees:

	
1.  

	
Prepayment. This Note may not be prepaid.

  

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2.  

	
Conversion.

	
(a)  

	
Conversion.

(i)         Automatic Conversion on Next Equity Financing. The outstanding principal balance and unpaid accrued interest on this Note shall automatically convert into shares of the Company's equity securities at the closing of the Company's next equity financing in which gross aggregate proceeds to the company exceeds $1,000,000 (the "Next Equity Financing"), including this Note and all other Notes which are converted into Company equity; provided that the sale of the Company's Common Stock to its employees, directors, and consultants, or the issuance of Common Stock upon exercise or conversion of securities outstanding prior to the date hereof shall not constitute a Next Equity Financing. The number of shares of such equity securities to be issued upon such conversion shall be equal to the quotient obtained by dividing (a) the outstanding principal and unpaid accrued interest due on this Note on the date of conversion, by (b) the price per share of the equity securities sold to the investors in the Next Equity Financing after applying a two thirds discount (2/3 or 66.67%). For example, if the price per share of the Next Equity Financing were $9.00 per share then the conversion price would be $3.00 per share. The issuance of such shares upon conversion of this Note pursuant to this Section 2(a)(i) shall be upon and subject to the same terms and conditions applicable to the Next Equity Financing. Investor agrees to execute all necessary documents in connection with the conversion of this Note and the Next Equity Financing, including, but not limited to, a definitive stock purchase agreement.

(ii)          Conversion at Company's Option. At any time after the Maturity Date, in the event that the Next Equity Financing has not yet occurred, the outstanding principal balance and unpaid accrued interest on this Note shall, at the Company's option, be converted into shares issued to investors at the most recently closed Company equity financing (excluding issuances to Company employees and consultants pursuant to compensation plans approved by the Company's Board of Directors). The number of shares of Company stock to be issued upon such conversion shall be equal to the quotient obtained by dividing (a) the outstanding principal and unpaid accrued interest due on this Note on the date of conversion, by (b) the price per share of the equity securities sold to the investors at the most recently closed Company equity financing. The issuance of Company equity upon conversion of this Note pursuant to this Section 2(a)(ii) shall be upon terms and conditions of the most recently closed Company equity financing. Investor agrees to execute all necessary documents in connection with such conversion of this Note, including, but not limited to, a definitive stock purchase agreement.

(b)           Mechanics of Conversion. The Company shall, as soon as practicable after the Investor presents the Note for conversion under Section 2(a), issue and deliver at such office to Investor a certificate or certificates for the number of shares of Company equity to which Investor shall be entitled upon conversion (bearing such legends as are required by the Company equity purchase agreement, the Convertible Promissory Note Agreement and applicable state and federal securities laws in the opinion of counsel to the Company), together with a replacement Note (if any principal amount is not converted) and any other securities and property to which Investor is entitled upon such conversion under the terms of this Note, including a check payable to Investor for any cash amounts payable as described in Section 2(c). The conversion shall be deemed to have been made immediately prior to the close of business on the date of the surrender of this Note, and the person or persons entitled to receive the shares of Company equity upon such conversion shall be treated for all purposes as the record Investor or Investors of such shares of Company equity as of such date.

  

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(1)           Fractional Shares; Interest; Effect of Conversion. No fractional shares shall be issued upon conversion of this Note. In lieu of the Company issuing any fractional shares to Investor upon the conversion of this Note, the Company shall pay to Investor an amount equal to the product obtained by multiplying the conversion price by the fraction of a share not issued pursuant to the previous sentence. Upon conversion of this Note in full and the payment of any amounts specified in this Section 2(c), the Company shall be forever released from all its obligations and liabilities under this Note

3.           Waiver and Amendment. Any provision of this Note may be amended, waived or modified upon the written consent of Company and a Majority in Interest of the Investors.

4.           Notices. All notices, requests, demands, consents, instructions or other communications required or permitted hereunder shall in writing and faxed, mailed or delivered to each party at the respective addresses of the parties as set forth in the Convertible Promissory Note Agreement, or at such other address or facsimile number as Company shall have furnished to Investor in writing. All such notices and communications shall be effective (a) when sent by Federal Express or other overnight service of recognized standing, on the business day following the deposit with such service; (b) when mailed, by registered or certified mail, first class postage prepaid and addressed as aforesaid through the United States Postal Service, upon receipt; (c) when delivered by hand, upon delivery; and (d) when faxed, upon confirmation of receipt.

5.           Pari Passu Notes. Investor acknowledges and agrees that the payment of all or any portion of the outstanding principal amount of this Note and all interest hereon shall be pari passu in right of payment and in all other respects to the other Notes issued pursuant to the Convertible Promissory Note Agreement or pursuant to the terms of such Notes.

6.           Usury. In the event any interest is paid on this Note is deemed to be in excess of the then legal maximum rate, then that portion of the interest payment representing an amount in excess of the then legal maximum rate shall be deemed a payment of principal and applied against the principal of this Note.

7.           Waivers. Company hereby waives notice of default, presentment or demand for payment, protest or notice of nonpayment or dishonor and all other notices or demands relative to this instrument.

  

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8.           Transfer of this Note or Securities Issuable on Conversion Hereof With respect to any offer, sale or other disposition of this Note or securities into which such Note may be converted, Investor will give written notice to the Company prior thereto, describing briefly the manner thereof, together with a written opinion of Investor's counsel, or other evidence if reasonably satisfactory to the Company, to the effect that such offer, sale or other distribution may be effected without registration or qualification (under any federal or state law then in effect). Upon receiving such written notice and reasonably satisfactory opinion, if so requested, or other evidence, the Company, as promptly as practicable, shall notify Investor that Investor may sell or otherwise dispose of this Note or such securities, all in accordance with the terms of the notice delivered to the Company. If a determination has been made pursuant to this Section 8 that the opinion of counsel for Investor, or other evidence, is not reasonably satisfactory to the Company, the Company shall so notify Investor promptly after such determination has been made. Each Note thus transferred and each certificate representing the securities thus transferred shall bear a legend as to the applicable restrictions on transferability in order to ensure compliance with the Securities Act, unless in the opinion of counsel for the Company such legend is not required in order to ensure compliance with the Securities Act. The Company may issue stop transfer instructions to its transfer agent in connection with such restrictions. Subject to the foregoing, transfers of this Note shall be registered upon registration books maintained for such purpose by or on behalf of the Company. Prior to presentation of this Note for registration of transfer, the Company shall treat the registered holder hereof as the owner and holder of this Note for the purpose of receiving all payments of principal and interest hereon and for all other purposes whatsoever, whether or not this Note shall be overdue and the Company shall not be affected by notice to the contrary.

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

[Remainder of page intentionally left blank.]

  

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

AMARANTUS THERAPEUTICS, INC.

a Delaware corporation

By: ______________________________

Martin D. Cleary, Chief Executive Officer

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