Exhibit 10.1

 

Form of Convertible Note

 

CONVERTIBLE PROMISSORY NOTE

 

$500,000 Date of Issuance: September 12, 2019

 

FOR VALUE RECEIVED, Arcimoto, Inc.., an Oregon corporation (the “Company”),
hereby promises to pay to the order of FOD Capital LLC, a Florida limited
liability company (together with its permitted successors and assigns,
hereinafter referred to as the “Holder”), the principal sum of $500,000 together
with interest thereon from the date of this note (the “Convertible Note”).
Interest will accrue at a rate of ten (10%) percent per annum, compounded
monthly. Interest shall accrue and be payable to Holder from the date of the
date of this Convertible Note until the earlier of (a) the Second Maturity Date
or (b) the conversion, solely at Holder’s option, of the principal and accrued
interest of the Convertible Note into the Company’s common stock at a conversion
price per share of $4.25. This Convertible Note is issued pursuant to the
Subscription Agreement between the Company and the Holder of even date herewith
(“Subscription Agreement”), and capitalized terms not defined herein will have
the meanings set forth in the Subscription Agreement. This Convertible Note is
secured pursuant to the terms of a Security Agreement, a Patent Security
Agreement and a Lease Collateral Assignment between the Company and the Holder
dated as of the Closing Date.

 

1. Payment. All payments will be made in lawful money of the United States of
America by same day wire transfer of immediately available funds to an account
designated by Holder in writing to the Company at least five (5) Business Days
prior to the date of any payment. Payment will be credited first to accrued
interest due and payable, with any remainder applied to principal. The
Convertible Note may be prepaid in whole or in part prior to the Maturity Date
(which includes the closing of a Qualified Subsequent Financing), at any time at
the election of the Company, upon at least seven (7) days prior written notice
to the Holder.

 

2. Security. This Convertible Note is a general secured obligation of the
Company, as set forth in the Security Agreement, Patent Security Agreement and
Lease Collateral Assignment.

 

3. Conversion of the Convertible Note. This Convertible Note may be converted
into Conversion Shares in the following manner:

 

a. Conversion Rate and Price. The Convertible Note may be converted, at the sole
election of the Holder, into the number of shares of common stock of the Company
as determined by dividing the principal amount of the Convertible Note plus
accrued interest by $4.25 (“Conversion Shares”).

 

b. Conversion Event. The Convertible Note may be converted, at the option of the
Holder into Conversion Shares upon written notice to the Company that Holder
elects to exercise its Conversion Option.

 

c. Financing Agreements. Holder acknowledges that the conversion of the
Convertible Note into common stock pursuant to Section 3(b) may require such
Holder’s execution of certain agreements relating to the purchase and sale of
the common stock, as well as registration rights, (collectively, the “Financing
Agreements”). Holder agrees to execute all of the Financing Agreements in
connection with Holder’s exercise of the Conversion Option.

 

 

 

 

4. Events of Default. a. The occurrence of any one or more of the following
events shall constitute an “Event of Default”:

 

i. The Company shall fail to perform or observe any material agreement,
covenant, term or condition contained in the Subscription Agreement, the Note,
the Convertible Note or the Warrant, including, but not limited to, if the
Company shall fail to pay, when due, any principal, interest, or other sums
payable under either the Note, the Convertible Note or the Subscription
Agreement and/or the Company fails to provide Holder with franchise rights
pursuant to Section 6(l) of Annex A to the Subscription Agreement (an “Economic
Default”); or

 

ii. The Company: (i) becomes insolvent; (ii) is generally unable to pay, or
fails to pay, its debts as they become due; (iii) files, or has filed against
it, a petition for voluntary or involuntary bankruptcy or pursuant to any other
insolvency law; (iv) makes or seeks to make a general assignment for the benefit
of its creditors; (v) applies for, or consents to, the appointment of a trustee,
receiver or custodian for a substantial part of its property or business, or
(vi) if there is an inaccuracy in or breach of any of the representations,
warranties or covenants of the Company contained in the Subscription Agreement
or any of the Other Investor Agreements. Any Event of Default described under
this Section 4, the Note, the Convertible Note, the Security Agreement, the IP
Security Agreement, or the Lease Collateral Assignment, other than an Economic
Default, shall be referred to as a “Non-Economic Default.”

 

b. Remedies of the Holder upon Occurrence of Event of Default. If any Event of
Default described in Section 4(a) occurs and continues for a period of ten (10)
days, in the case of an Economic Default, or thirty (30) days, in the case of a
Non-Economic Default, after written Notice thereof given by the Holder to the
Company, then the Holder shall elect in writing within three (3) days to (i)
either: (a) declare the Note immediately due and payable; or (b) continue to
hold the Note with the rate of interest increased by 8% (from 10% to 18%) for so
long as the Event of Default shall remain uncured and (ii) either: (a) declare
the Convertible Note immediately due and payable; or (b) continue to hold the
Convertible Note with the rate of interest increased by 8% (from 10% to 18%) for
so long as the Event of Default shall remain uncured.

 

5. Amendments and Waivers; Resolutions of Dispute; Notice. The amendment or
waiver of any term of this Convertible Note, the resolution of any controversy
or claim arising out of or relating to this Convertible Note, and the provision
of notice among the Company and the Holder will be governed by the terms of the
Subscription Agreement.

 

6. Successors and Assigns. This Convertible Note applies to, inures to the
benefit of, and binds the respective successors and assigns of the parties
hereto; provided, however, that the Company may not assign its obligations under
this Convertible Note without the written consent of the Electing Holders. Any
transfer of this Convertible Note may be affected only pursuant to the
Subscription Agreement and by surrender of this Convertible Note to the Company
and reissuance of a new note to the transferee. The Holder and any subsequent
holder of this Convertible Note receives this Convertible Note subject to the
foregoing terms and conditions, and agrees to comply with the foregoing terms
and conditions for the benefit of the Company and any other purchasers (or their
respective successors or assigns).

 

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7. Officers and Directors not Liable. In no event will any officer or director
of the Company be liable for any amounts due and payable pursuant to this
Convertible Note.

 

8. Limitation on Interest. In no event will any interest charged, collected, or
reserved under this Convertible Note exceed the maximum rate then permitted by
applicable law, and if any payment made by the Company under this Convertible
Note exceeds such maximum rate, then such excess sum will be credited by the
Holders as a payment of principal.

 

9. Governing Law. This Convertible Note will be governed by and construed in
accordance with the internal laws of the State of Oregon without giving effect
to any choice or conflict of law provision or rule (whether of the State of
Oregon or any other jurisdiction).

 

10. Approval. The Company hereby represents that its board of directors, in the
exercise of its fiduciary duty, has approved the Company’s execution of this
Convertible Note based upon a reasonable belief that the principal provided
hereunder is appropriate for the Company after reasonable inquiry concerning the
Company’s financing objectives and financial situation. In addition, the Company
hereby represents that it intends to use the principal of this Convertible Note
primarily for the operations of its business, and not for any personal, family,
or household purpose.

 

NOTWITHSTANDING ANYTHING TO THE CONTRARY SET FORTH HEREIN, THIS CONVERTIBLE NOTE
AND THE RIGHTS AND OBLIGATIONS EVIDENCED HEREBY AND PAYMENTS HEREUNDER ARE
SUBORDINATE AND SUBJECT TO ALL PROVISIONS OF THE OF THE SUBSCRIPTION AGREEMENT,
OF WHICH SECTION 7(b) IS INCORPORATED HEREIN BY THIS REFERENCE, AND TO THE
EXTENT OF ANY CONFLICT OR INCONSISTENCY, THE PROVISIONS OF THE SUBSCRIPTION
AGREEMENT SHALL CONTROL OVER THE TERMS OF THIS CONVERTIBLE NOTE.

 

[Signature Page Follows]

 

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The undersigned expressly waives any presentment, demand, protest, notice of
default, notice of intention to accelerate, notice of acceleration or notice of
any other kind except as expressly provided in the Subscription Agreement.

 

  Arcimoto, Inc.         By:     Name: Mark Frohmayer   Title: CEO

 

AGREED AND ACKNOWLEDGED:       PAYEE:       FOD Capital LLC         By:    
Name: Michael T. Raymond   Title: Manager  

 

[Signature Page – Convertible Note]