Document:

Exhibit 4.7

 

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

 

BIOPHARMX CORPORATION

 

SECURED CONVERTIBLE PROMISSORY NOTE

 

	
Note No.: 2016–04
    	
 
    	
 
    
	
$35,148
    	
 
    	
Made as of September 8,   2016
    

 

Subject to the terms and conditions of this Note, for value received, BioPharmX Corporation, a Delaware corporation (the “Company”), with chief executive offices at 1098 Hamilton Court, Menlo Park, CA 94025, hereby promises to pay to the order of RTW Innovation Master Fund, Ltd. or registered assigns (“Holder”), the principal sum of $35,148, or such lesser amount as shall then equal the outstanding principal amount hereunder, together with interest accrued on the unpaid principal amount at the Applicable Rate (as defined below).  Interest shall accrue on the outstanding principal of this Note beginning as of August 17, 2016 until the entire Balance is converted and shall be computed based on the actual number of days elapsed and on a year of 365 days.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

“Conversion Price” means $0.80.

 

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

 

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

 

“Financing Document” means this Note, the Purchase Agreement, and any document entered into, executed or delivered under or in connection with, or for the purpose of amending, this Note.

 

 

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

 

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

 

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

 

“Maturity Date” means the earlier of (a) the date that is thirty-six (36) months from the date of August 17, 2016, or (b) the time at which the Balance of this Note is due and payable upon an Event of Default; provided , however that if the Event of Default is cured as permitted in this Note, then the Maturity Date shall not thereafter be deemed to have occurred with regard to such Event of Default under this clause (b).

 

“Note” means this Convertible Promissory Note.

 

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

 

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

 

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

 

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

 

“Registration Rights Agreement” means that certain registration rights agreement executed by and between the Company and the Holder, dated August 17, 2016.

 

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

 

“Security Agreement” means that certain security agreement executed by and between the Company and the Holder, dated August 17, 2016.

 

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

 

2.                                                PAYMENT AT MATURITY DATE; INTEREST.

 

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

 

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

 

3.                                                PREPAYMENT. The principal and accrued but unpaid interest, if any, of this Note may be prepaid in whole or in part without premium or penalty. To the extent any amount remains due and unpaid after any prepayment, thereafter, the Company shall have the right at any time and from time to time to prepay such amount due under this Note in whole or in part without premium or penalty.

 

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

6.                                                CONVERSION.

 

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

 

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

 

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

 

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

 

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

9.                                                PROVISIONS RELATING TO STOCKHOLDERS RIGHTS.

 

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

 

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

 

 

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

 

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

 

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

 

10.                                         REPRESENTATIONS AND WARRANTIES OF HOLDER.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

11.                                         GENERAL PROVISIONS.

 

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

 

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

 

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

 

11.4                        Governing Law.  This Note shall be governed by and construed under the internal laws of the State of California as applied to agreements among California residents entered into and to be performed entirely within the State of California, without reference to principles of conflict of laws or choice of laws.

 

 

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

 

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

 

COMPANY ADDRESS

BioPharmX Corporation

1098 Hamilton Court

Menlo Park, California 94025

 

HOLDER ADDRESS

RTW Innovation Master Fund, Ltd.

250 West 55th Street

16th Floor, Suite A

New York, NY 10019

 

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

 

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

 

[Signature page follows]

 

 

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

 

	
 
    	
THE   COMPANY
    
	
 
    	
 
    
	
 
    	
BioPharmX   Corporation
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ Anja Krammer
    
	
 
    	
 
    	
 
    
	
 
    	
Name:
    	
Anja Krammer
    
	
 
    	
 
    	
 
    
	
 
    	
Title:
    	
President
    
	
 
    	
 
    
	
AGREED AND   ACKNOWLEDGED:
    	
 
    
	
 
    	
 
    
	
HOLDER
    	
 
    
	
 
    	
 
    
	
RTW   INNOVATION MASTER FUND, LTD.
    	
 
    
	
 
    	
 
    
	
By:
    	
/s/ Roderick Wong
    	
 
    
	
 
    	
 
    	
 
    
	
Name:
    	
 Roderick Wong
    	
 
    
	
 
    	
 
    	
 
    
	
Title:
    	
Director
    	
 
    

 

[SIGNATURE PAGE TO CONVERTIBLE PROMISSORY NOTE OF BIOPHARMX CORPORATION]Exhibit 10.1

 

EXECUTION VERSION

 

October 14, 2016

 

By Mail

 

Joseph L. Welch

c/o ITC Holdings Corp.

27175 Energy Way

Novi, Michigan 48377

 

Re:                             Acceptance of Retirement and Terms of Transition

 

Dear Joe:

 

This letter agreement (this “Agreement”) is to confirm our understanding regarding your upcoming retirement as Chief Executive Officer of ITC Holdings Corp. (the “Company”). The Company looks forward to a mutually beneficial and smooth transition, and to that end, this Agreement sets forth the terms of your transition, provides you certain benefits and supersedes the Employment Agreement with the Company, dated December 21, 2012, as amended by the Letter Agreement between you and the Company, dated February 8, 2016 (the “Employment Agreement”) in its entirety.

 

1.              Retirement Date/Transition Services.  You agree that your retirement as Chief Executive Officer and President of the Company and its subsidiaries will be effective on November 1, 2016 (the “Retirement Date”). Between now and the Retirement Date, you agree to carry out the duties and responsibilities of your position as directed by the Company’s board of directors (the “Board”). Additionally, you agree that following your Retirement Date, you shall from time to time provide other transition services in a non-employee capacity as may reasonably be requested by the Board, including transition of the responsibilities, duties, and knowledge relative to your position, as well as cooperate with the Board’s reasonable requests regarding communications with employees, customers and others regarding the Company and its business.  For the avoidance of doubt, such services shall be limited in time and scope so that your Retirement Date constitutes the date of your “separation from service” under Section 409A of the Internal Revenue Code of 1986, as amended, and the rules and regulations promulgated thereunder.

 

2.              Accrued Rights. In connection with your retirement, you will be entitled to receive any payments and benefits owed to you under Section 7(a)(iii) of the Employment Agreement. Except for the accrued rights described in Section 7(a)(iii) of the Employment Agreement, you acknowledge that you are owed no further compensation or benefits related to the Employment Agreement and that the Company has properly paid you all past wages and benefits as of the Retirement Date.  For the avoidance of doubt, you acknowledge and agree that you are not eligible to receive any severance benefits under Section 7(b) and/or Section 7(c) of the Employment Agreement. All compensation and benefits cease as of the Retirement Date, except as expressly provided in this Agreement or as otherwise required by law (and as may otherwise be agreed in connection with your continued services on the Board and to the board of directors of Fortis Inc. from time to time).

 

 

3.              Consideration.  In consideration of (i) the transition services described above, (ii) your efforts on behalf of the Company in respect of 2016 and the successful completion of the merger of Element Acquisition Sub Inc., an indirect subsidiary of Fortis Inc., with and into the Company (the “Merger”), (iii) your waiving any potential right to receive the severance payments and benefits described in Section 7(c) of the Employment Agreement and (iv) your entering into this Agreement (including the Release set forth in Section 4 not revoking the Release 7 days of date hereof), the Company will also provide you with a lump sum payment of $1,550,000, payable to you on October 21, 2016.

 

4.              Release.

 

a.              For and in consideration of the payment of the amounts and the provision of the benefits described above, you hereby agree on behalf of yourself, your agents, assignees, attorneys, successors, assigns, heirs and executors, to, and you hereby, fully and completely forever release the Company and its respective past, current and future affiliates, shareholders, predecessors and successors and all of their respective past and/or present representatives, administrators, attorneys, insurers and fiduciaries, in their individual and/or representative capacities (hereinafter collectively referred to as the “Company Releasees”), from any and all causes of action, suits, agreements, promises, damages, disputes, controversies, contentions, differences, judgments, claims, debts, dues, sums of money, accounts, reckonings, bonds, bills, specialities, covenants, contracts, variances, trespasses, extents, executions and demands of any kind whatsoever, which you or your agents, assignees, attorneys, successors, assigns, heirs and executors ever had, now have or may have against the Company Releasees or any of them, in law, admiralty or equity, whether known or unknown to you, for, upon, or by reason of, any matter, action, omission, course or thing whatsoever occurring up to the date this Agreement is signed by you.  Without limiting the generality of the foregoing, you hereby agree on behalf of yourself, your agents, assignees, attorneys, successors, assigns, heirs and executors, to, and you hereby, fully and completely forever release the Company Releasees and all of their respective past and/or present officers, directors, partners, members, managing members, managers, employees, agents, representatives, administrators, attorneys, insurers and fiduciaries, in their individual and/or representative capacities in connection with or in relationship to your employment, the termination of any such employment and any applicable employment or compensatory arrangement with the Company (including, without limitation, the Employment Agreement, any exhibits attached thereto, any amendments thereto, and any other equity or employee benefit plans, programs, policies or other arrangements), any claims of breach of contract, wrongful termination, retaliation, fraud, defamation, infliction of emotional distress or national origin, race, age, sex, sexual orientation, disability, medical condition or other discrimination or harassment, (such released claims are collectively referred to herein as the “Released Claims”); provided that such Released Claims shall not include any claims to enforce your rights or obligations under, or with respect to, (i) this Agreement, or (ii) any indemnification provisions in the charter, by-laws or similar organizational documents of the Company or its subsidiaries of which you are a director or officer, or any directors and officers’ liability insurance policy thereof or otherwise.

 

 

b.              Notwithstanding the generality of Section 4(a) above, the Released Claims include, without limitation: (i) any and all claims relating to base salary or bonus payments or benefits pursuant to the Employment Agreement, other than those payments and benefits specifically provided for in this Agreement; (ii) any and all claims under Title VII of the Civil Rights Act of 1964, the Age Discrimination in Employment Act of 1967, the Civil Rights Act of 1971, the Civil Rights Act of 1991, the Fair Labor Standards Act, Employee Retirement Income Security Act of 1974, the Americans with Disabilities Act, the Family and Medical Leave Act of 1993, the Fair Employment and Housing Act, and any and all other federal, state or local laws, statutes, rules and regulations pertaining to employment or otherwise; and (iii) any claims for wrongful discharge, breach of contract, fraud, misrepresentation or any compensation claims or any other claims under any statute, rule or regulation or under the common law, including compensatory damages, punitive damages, attorney’s fees, costs, expenses and all claims for any other type of damage or relief.

 

THIS MEANS THAT, BY SIGNING THIS AGREEMENT, YOU WILL HAVE WAIVED ANY RIGHT YOU MAY HAVE HAD TO BRING A LAWSUIT OR MAKE ANY CLAIM AGAINST COMPANY RELEASEES BASED ON ANY ACTS OR OMISSIONS OF COMPANY RELEASEES UP TO THE DATE OF THE SIGNING OF THIS AGREEMENT.

 

c.               You represent that you have read carefully and fully understand the terms of this Section 4, and that you have been advised to consult with an attorney and have availed yourself of the opportunity to consult with an attorney prior to signing this Agreement.  You acknowledge and agree that you are executing this Agreement willingly, voluntarily and knowingly, of your own free will, in exchange for the payments and benefits described in this Agreement, and that you have not relied on any representations, promises or agreements of any kind made to you in connection with your decision to accept the terms of this Section 4.  You further acknowledge, understand, and agree that your employment with the Company has terminated.  You acknowledge that you have been advised that you are entitled to take at least twenty-one (21) days to consider whether you want to agree to this Section 4 and that the Age Discrimination in Employment Act gives you the right to revoke this Section 4 within seven (7) days after it is signed, and you understand that you will not receive any payments under this Agreement until such seven (7) day revocation period has passed and then, only if you have not revoked this Section 4 or the Agreement.  To the extent you have executed this Agreement within less than twenty-one (21) days after its delivery to you, you hereby acknowledge that your decision to execute this Section 4 prior to the expiration of such twenty-one (21) day period was entirely voluntary, and taken after consultation with and upon the advice of your attorney.

 

Within 10 days following your Retirement Date, you agree to execute and deliver an additional release of claims in the form attached as Exhibit A.  If you fail to timely execute (and not revoke) such additional release, you will be required to repay to the Company the amount of the lump sum payment described in Section 3.

 

5.              Entire Agreement.  Upon its effectiveness, this Agreement and the General Release contain the entire agreement and understanding of the parties relating to the subject matter hereof

 

 

and supersedes and replaces all prior and contemporaneous agreements, representations and understandings (whether oral or written) regarding monetary payments associated with your employment relationship with and separation from Company, including the Employment Agreement, other than any confidentiality agreements that are intended to survive the termination of your employment and any post-employment payments payable to you under Section 7(a)(iii) of the Employment Agreement (all of which shall remain in full force and effect). You acknowledge that no promises or representations, oral or written, have been made other than those expressly stated herein, and that you have not relied on any other promises or representations in signing this Agreement. This Agreement may be modified only in a document signed by the parties and referring specifically hereto, and no handwritten changes to this Agreement will be binding unless initialed by each party.

 

6.              Counterparts.  This Agreement may be executed in counterparts, each of which will be deemed an original, but all of which will be deemed one and the same instrument.  All payments and benefits provided hereunder shall be subject to the withholding of all applicable taxes and deductions required by any applicable law.

 

Thank you again for your hard work and service to the Company. As discussed, we anticipate your continued service on the Board of the Company and, following the closing of the Merger, you are expected to be named to the board of directors of Fortis Inc. in accordance with the terms of Section 7.19 of that certain merger agreement, dated as of February 9, 2016 by and among FortisUS Inc., Element Acquisition Sub Inc., Fortis Inc., and the Company.

 

	
 
    	
Sincerely,
    
	
 
    	
 
    
	
 
    	
ITC Holdings Corp.
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
/s/ Christine Mason   Soneral
    
	
 
    	
 
    
	
 
    	
By: Christine Mason   Soneral
    
	
 
    	
Title: SVP and General   Counsel
    
	
 
    	
 
    
	
 
    	
 
    
	
Voluntarily Agreed to   and Accepted:
    	
 
    
	
 
    	
 
    
	
/s/ Joseph L. Welch
    	
 
    	
 
    
	
Joseph L. Welch
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
Date:
    	
10/14/16
    	
 
    	
 
    
				

 

 

Exhibit A
 Form of Release

 

GENERAL RELEASE

 

Section 1.                                           Release.  For and in consideration of the payment of the amounts and the provision of the benefits described in that certain letter agreement dated October 14, 2016 (the “Letter Agreement”), the Executive hereby agrees on behalf of himself, his agents, assignees, attorneys, successors, assigns, heirs and executors, to, and the Executive does hereby, fully and completely forever release the Company and its respective past, current and future affiliates, shareholders, predecessors and successors and all of their respective past and/or present representatives, administrators, attorneys, insurers and fiduciaries, in their individual and/or representative capacities (hereinafter collectively referred to as the “Company Releasees”), from any and all causes of action, suits, agreements, promises, damages, disputes, controversies, contentions, differences, judgments, claims, debts, dues, sums of money, accounts, reckonings, bonds, bills, specialities, covenants, contracts, variances, trespasses, extents, executions and demands of any kind whatsoever, which the Executive or his agents, assignees, attorneys, successors, assigns, heirs and executors ever had, now have or may have against the Company Releasees or any of them, in law, admiralty or equity, whether known or unknown to the Executive, for, upon, or by reason of, any matter, action, omission, course or thing whatsoever occurring up to the date this General Release is signed by the Executive.  Without limiting the generality of the foregoing, the Executive hereby agrees on behalf of himself, his agents, assignees, attorneys, successors, assigns, heirs and executors, to, and the Executive does hereby, fully and completely forever release the Company Releasees and all of their respective past and/or present officers, directors, partners, members, managing members, managers, employees, agents, representatives, administrators, attorneys, insurers and fiduciaries, in their individual and/or representative capacities in connection with or in relationship to the Executive’s employment with the Company, the termination of any such employment and any applicable employment or compensatory arrangement with the Company (including, without limitation, the Employment Agreement, any exhibits attached thereto, any amendments thereto, and any other equity or employee benefit plans, programs, policies or other arrangements), any claims of breach of contract, wrongful termination, retaliation, fraud, defamation, infliction of emotional distress or national origin, race, age, sex, sexual orientation, disability, medical condition or other discrimination or harassment, (such released claims are collectively referred to herein as the “Released Claims”); provided that such Released Claims shall not include any claims to enforce the Executive’s rights or obligations under, or with respect to, (i) the Letter Agreement, or (ii) any indemnification provisions in the charter, by-laws or similar organizational documents of the Company or its subsidiaries of which Executive is a director or officer, or any directors and officers’ liability insurance policy thereof or otherwise.

 

Section 2.                                           Waiver.  Notwithstanding the generality of Section 1 above, the Released Claims include, without limitation: (i) any and all claims relating to base salary or bonus payments or benefits pursuant to the Employment Agreement, other than those payments and benefits specifically provided for in the Letter Agreement; (ii) any and all claims under Title VII of the Civil Rights Act of 1964, the Age Discrimination in Employment Act of 1967, the Civil Rights Act of 1971, the Civil Rights Act of 1991, the Fair Labor Standards Act, Employee Retirement Income Security Act of 1974, the Americans with Disabilities Act, the Family and Medical Leave Act of 1993, the Fair Employment and Housing Act, and any and all other federal, state or local laws,

 

 

statutes, rules and regulations pertaining to employment or otherwise; and (iii) any claims for wrongful discharge, breach of contract, fraud, misrepresentation or any compensation claims or any other claims under any statute, rule or regulation or under the common law, including compensatory damages, punitive damages, attorney’s fees, costs, expenses and all claims for any other type of damage or relief.

 

THIS MEANS THAT, BY SIGNING THIS GENERAL RELEASE, THE EXECUTIVE WILL HAVE WAIVED ANY RIGHT THE EXECUTIVE MAY HAVE HAD TO BRING A LAWSUIT OR MAKE ANY CLAIM AGAINST COMPANY RELEASEES BASED ON ANY ACTS OR OMISSIONS OF COMPANY RELEASEES UP TO THE DATE OF THE SIGNING OF THIS GENERAL RELEASE.

 

Section 3.                                           The Executive’s Representations and Warranties.  The Executive represents that he has read carefully and fully understands the terms of this General Release, and that the Executive has been advised to consult with an attorney and has availed himself of the opportunity to consult with an attorney prior to signing this General Release.  The Executive acknowledges and agrees that he is executing this General Release willingly, voluntarily and knowingly, of his own free will, in exchange for the payments and benefits described in the Letter Agreement, and that he has not relied on any representations, promises or agreements of any kind made to him in connection with his decision to accept the terms of the General Release.  The Executive further acknowledges, understands, and agrees that his employment with the Company has terminated.  The Executive acknowledges that he has been advised that he is entitled to take at least twenty-one (21) days to consider whether he wants to sign this General Release and that the Age Discrimination in Employment Act gives him the right to revoke this General Release within seven (7) days after it is signed, and the Executive understands that he will not receive any payments under the Letter Agreement until such seven (7) day revocation period has passed and then, only if he has not revoked this General Release or the Letter Agreement.  To the extent the Executive has executed this General Release within less than twenty-one (21) days after its delivery to him, the Executive hereby acknowledges that his decision to execute this General Release prior to the expiration of such twenty-one (21) day period was entirely voluntary, and taken after consultation with and upon the advice of his attorney.

 

This General Release is final and binding and may not be changed or modified, except by written agreement by both of the Company and the Executive.

 

 

	
 
    	
 
    
	
 
    	
Joseph L. Welch
    
	
 
    	
 
    
	
 
    	
Date:            , 2016

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