CONVERTIBLE PROMISSORY NOTE
Exhibit 4.8
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_____________,
2016
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CONVERTIBLE
PROMISSORY NOTE
1.
Principal and Interest.
FOR
VALUE RECEIVED, Endra, Inc., a Delaware corporation
(“Borrower”),
promises to pay to the order of _____________ (“Lender”) the principal sum of
________________ Dollars ($_______), or such other amount as shall
have been advanced and be outstanding hereunder and remain unpaid,
with interest thereon compounded annually from the date hereof
until paid at a rate OF eight percent (8%) per annum. On the date
hereof, Xxxxxx made a loan to Borrower in the amount of $_______.
Following making such loan, the principal amount of this
convertible promissory note (this “Note”) at any time shall be
equal to such amount less the aggregate amount of all repayments of
principal of this Note made by Borrower through such time. Unless
otherwise defined herein, capitalized terms used herein that are
defined in the UCC shall have the meanings assigned to them in the
UCC, however, if a term is defined in Article 9 of the UCC
differently than in another Article of the UCC, the term has the
meaning specified in Article 9.
(a) All outstanding
amounts under this Note shall be due and payable upon the one-year
anniversary of the date hereof (the “Maturity Date”). All payments
hereunder shall be applied first to payment of accrued interest as
of the date of such payment, and the balance, if any, shall be
applied in reduction of the outstanding principal.
(b) This Note is one of
several identical convertible promissory notes issued by Borrower
to certain stockholders of the Borrow on the date hereof
(collectively, the “Notes”). All payments to be made
by Borrower upon any Note shall be paid proportionally among the
holders of all such Notes (the “Lenders”) based upon the total
outstanding principal amounts thereof.
(c) Upon at least ten
(10) days advanced written notice Borrower shall have the right at
any time and from time to time to prepay this Note in whole or in
part, without any prepayment premium. Any prepayment shall be
applied in the manner above provided.
2. Conversion.
(a) All outstanding
principal and interest on this Note will convert automatically
concurrently with the completion by Borrower of an equity financing
of $3.0 million or more on or before the Maturity Date into the
type, kind and character of securities issued in the financing, on
the same terms, including price, and with the same rights,
preferences and privileges as are received by investors in the
financing, and such conversion securities shall be issued pursuant
to the same agreements for the issuance of the securities in the
financing.
(b) Lender may, at any
time before the Maturity Date, elect to convert this Note in full
into shares of Borrower Common Stock. Upon such conversion, Xxxxxx
shall surrender this Note to Xxxxxxxx and Borrower shall issue to
Lender a number of shares of Common Stock equal to the outstanding
amount due hereunder divided by $0.40. For avoidance of doubt,
partial conversion of this Note shall not be permitted. In order to
provide Lender the opportunity to convert pursuant to this Section
2(b), the Borrower shall provide Lender at least ten (10) days
advanced written notice of the sale of all or substantially all the
assets of Borrower or any merger, consolidation or acquisition of
Borrower with, by or into another corporation, entity or person; or
any change in the ownership of more than fifty percent (50%) of the
voting capital stock of Borrower in one or more related
transactions (each, a “Change
of Control”).
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(c) Upon the election
of Xxxxxxx holding a majority of the outstanding principal amount
of the Notes (such holders, the “Required Lenders”), all
outstanding Notes may be converted into a number of shares of
Common Stock equal to the outstanding amounts due on such Notes
divided by $0.40 per share.
3.
Security.
(a) As security for the
payment of all principal and interest due under this Note (the
“Obligations”),
Borrower hereby pledges and grants to ______________ as collateral
agent (in such capacity, the “Agent”) for the ratable benefit of
itself and the other Lenders, a first priority security interest in
and to the Collateral (as defined below) owned by Borrower. For
purposes hereof, “Collateral” shall mean shall mean
all the Borrower's present and future right, title and interest in
and to any and all of the assets and personal property of the
Borrower (including the Borrower’s intellectual property)
whether such assets or property are now existing or hereafter
created, acquired or arising and wherever located from time to
time. Except for sales of inventory in the ordinary course of
business, Xxxxxxxx agrees not to transfer or assign any of the
Collateral as long as any Obligations remain unpaid. Lender shall
have all of the rights, powers and privileges of a secured party
under the Delaware Uniform Commercial Code in force and effect from
time to time with respect to the security interest granted
hereunder.
(b) Borrower
hereby irrevocably authorizes Agent at any time and from time to
time to file in any relevant jurisdiction any financing statements
(including fixture filings) and amendments thereto that contain the
information required by Article 9 of the UCC of each applicable
jurisdiction for the filing of any financing statement or amendment
relating to the Collateral. Borrower hereby further authorizes
Agent to file with the United States Patent and Trademark Office
and the United States Copyright Office (and any successor office
and any similar office in any United States state or other country)
this Note and other documents for the purpose of perfecting,
confirming, continuing, enforcing or protecting the security
interest granted by Borrower hereunder, without the signature of
Borrower where permitted by law, and naming Borrower as debtor, and
Agent as secured party.
(c) Borrower represents
and warrants that on the date hereof, any and all financing
statements, agreements, instruments and other documents necessary
to perfect the security interest granted by it to Lenders in
respect of the Collateral and, to the extent necessary or
appropriate, to the extent requested and delivered to Borrower by
Xxxxxx, have been duly executed and delivered to Agent. Xxxxxxxx
agrees that it will maintain the security interest created by this
Note in the Collateral as a perfected first priority security
interest.
(d) Borrower shall take
such further actions, and execute and/or deliver to Agent such
additional financing statements, amendments, assignments,
agreements, supplements, powers and instruments, as Agent may in
its judgment deem necessary or appropriate in order to perfect,
preserve and protect the security interest in the Collateral as
provided herein and the rights and interests granted to Lenders
hereunder, and enable Agent, on behalf of Xxxxxxx, to exercise and
enforce its rights, powers and remedies hereunder with respect to
any Collateral. If an Event of Default has occurred and is
continuing, Agent may institute and maintain, in its own name, such
suits and proceedings as Agent may deem to be necessary or
expedient to prevent any impairment of the security interest in or
the perfection thereof in the Collateral. Borrower shall cooperate
with all of the foregoing at the sole cost and expense of
Borrower.
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(e) Borrower has good
title to, or a valid license to or leasehold interest in, all the
Collateral, and none of such property is subject to any lien,
claim, option or right of others, except for the security interest
granted to Lenders hereunder. This Section is effective to create
in favor of Xxxxxxx, a legal, valid and enforceable security
interest in the Collateral and the proceeds thereof.
(f) Borrower shall, at
its own cost and expense, defend title to the Collateral and the
security interest and lien granted to Lenders with respect thereto
against all claims and demands of all persons at any time claiming
any interest therein adverse to Lenders.
(g) Borrower shall not
change: (a) its legal name, identity, type of organization or
corporate structure (it being agreed that the creation of new
classes of stock and other corporate changes necessary to
facilitate Borrower’s equity financing shall not be
considered a violation of the foregoing); (b) the location of its
chief executive office or its principal place of business, except
with not less than thirty (30) days written notice to Agent; (c)
its organizational identification number (if any); or (d) its
jurisdiction of organization.
(h) In the event that
the proceeds of any casualty insurance claim are paid to Borrower,
such net cash proceeds shall be used to repair or replace the
damaged or lost property within 180 days of such damage or loss, or
in the event that such repair or replacement is not feasible
following the casualty, such net cash proceeds shall instead be
held in trust for the benefit of Lenders and immediately after
receipt thereof shall be paid to Agent for application in
accordance with this Note.
(i) If any Event of
Default shall have occurred and be continuing:
(i)
Agent may exercise, without any other
notice to or demand upon Borrower, in addition to the other rights
and remedies provided for herein or otherwise available to it, all
the rights and remedies of a secured party upon default under the
UCC (whether or not the UCC applies to the affected Collateral) and
also may, in compliance with applicable law:
(1) require Borrower
to, and Xxxxxxxx hereby agrees that it will at its expense and upon
request of Agent immediately, assemble the Collateral or any part
thereof, as directed by Agent and make it available to Agent at
Xxxxxxxx’s principal place of business;
(2) with written
notice specified below, sell, resell, assign and deliver or grant a
license to use or otherwise dispose of the Collateral or any part
thereof, in one or more parcels at public or private sale (in which
Borrower and/or any of its stockholders, creditors or designees
shall be entitled to participate), at Agent’s election, for
cash, on credit or for future delivery, and upon such other terms
as are commercially reasonable;
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(3) occupy any
premises owned or leased by Borrower where the Collateral or any
part thereof is assembled or located for a reasonable period in
order to effectuate its rights and remedies hereunder or under law,
without monetary obligation to Borrower in respect of such
occupation; and
(4) exercise any and
all rights and remedies of Lenders under or in connection with the
Collateral, or otherwise in respect of the Collateral.
(j) Agent shall give at
least 10 days' written notice to Borrower of the time and place of
any public or private sale of Collateral. At any sale of the
Collateral, if permitted by applicable law, Agent may be the
purchaser, licensee, assignee or recipient of the Collateral or any
part thereof and shall be entitled, for the purpose of bidding and
making settlement or payment of the purchase price for all or any
portion of the Collateral sold, assigned or licensed at such sale,
to use and apply any of the obligations under this Note as a credit
on account of the purchase price of the Collateral or any part
thereof payable at such sale. To the extent permitted by applicable
law, Xxxxxxxx waives all claims, damages and demands it may acquire
against Agent arising out of the exercise by it of any rights
hereunder. Borrower hereby waives and releases to the fullest
extent permitted by law any right or equity of redemption with
respect to the Collateral after any sale hereunder, and all rights,
if any, of marshaling the Collateral and any other security for the
obligations under the Note or otherwise. Agent shall not be liable
for failure to collect or realize upon any or all of the Collateral
or for any delay in so doing, nor shall it be under any obligation
to take any action with regard thereto. Agent shall not be
obligated to make any sale of Collateral regardless of notice of
sale having been given. Agent may adjourn any public or private
sale from time to time by announcement at the time and place fixed
therefore, and such sale may, without further notice, be made at
the time and place to which it was so adjourned. Agent shall not be
obligated to clean-up or otherwise prepare the Collateral for
sale.
(k) Upon the exercise
by Agent of its remedies hereunder, any proceeds received by Agent
in respect of any realization upon any Collateral shall be applied
pursuant to this Note. Borrower shall remain liable for any
deficiency if the proceeds of any sale or other disposition of the
Collateral are insufficient to pay the obligations under this Note
and the fees and other charges of any attorneys employed by Agent
to collect such deficiency.
(l) Upon payment in
full of all Obligations, the security interest in the Collateral
shall be terminated and Agent will, at Borrower’s request and
expense, take all necessary action and make such appropriate
filings as required to terminate the security
interest.
4. Default.
(a) Each of the
following shall constitute an “Event of Default” hereunder: (1)
commencement by Borrower of a voluntary case or other proceeding
seeking liquidation, a reorganization or other relief with respect
to itself or its debts under any bankruptcy, insolvency or other
similar laws now or hereafter in effect or seeking the appointment
of a trustee, receiver, liquidator, custodian or other similar
official of it or all or substantially of its property, or consent
by Borrower to any such relief or to the appointment of or taking
possession by any such official in an involuntary case or other
proceeding commenced against it, or the making of a general
assignment for the benefit of creditors; (2) commencement of an
involuntary case or other proceeding against Borrower seeking
liquidation, reorganization or other relief with respect to
Borrower or its debts under any bankruptcy, insolvency or other
similar law now or hereafter in effect or seeking the appointment
of a trustee, receiver, liquidator, custodian or other similar
official for Borrower or all or substantially all of its property,
and such involuntary case or other proceeding shall remain
undismissed and unstayed for period of 30 consecutive days; (3) a
Change of Control; and (4) failure to pay amounts outstanding and
due and payable under this Note following five days written notice
thereof from Agent.
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(b) Upon the occurrence
of an Event of Default, the entire principal balance of this Note
and all accrued interest shall become immediately due and payable
whereupon the holder hereof shall also have such other rights and
remedies as may be available hereunder and under applicable law,
all of which shall be cumulative.
5. Miscellaneous.
(a) Borrower shall pay
all reasonable out-of-pocket costs and expenses reasonably incurred
by Agent or then holder of this Note to enforce payment of this
Note when due and payable, including reasonable attorney’s
fees and other out-of-pocket expenses of collection.
(b) All parties to this
Note, including endorsers, sureties and guarantors, if any, hereby
waive presentment for payment, demand, protest, notice of
nonpayment, or dishonor, and any and all other notices and demands
whatsoever, and agree to remain bound until the principal of and
interest on this Note is paid in full, notwithstanding any
extension or extensions of time for payment which may be granted,
even though the period or periods of extension may be indefinite,
and notwithstanding any inaction by, or failure to assert any legal
rights available to, the holder of this Note. This Note shall be
governed, constructed and enforced in accordance with the laws of
the State of Delaware.
(c) This Note may be
modified or amended, and any provision hereof may be waived, only
pursuant to a writing signed by Xxxxxxxx, and the Required Lenders
at the time of such amendment, modification or waiver.
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IN
WITNESS WHEREOF, the undersigned has caused this instrument to be
duly executed as of the day and year first above
written.
ENDRA,
INC.
By:
Name:
Xxxxxxxx Xxxxxxxx
Title:
CEO
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