THIS PROMISSORY NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED (THE “ACT”), OR UNDER THE SECURITIES LAWS OF CERTAIN STATES. THESE
SECURITIES MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED, PLEDGED OR
HYPOTHECATED EXCEPT AS PERMITTED UNDER THE ACT AND APPLICABLE STATE SECURITIES
LAWS PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT OR AN EXEMPTION THEREFROM.

 

PROMISSORY NOTE

 

$2,000,000.00   August 3, 2018     Salt Lake City, UT

 

FOR VALUE RECEIVED, CO-DIAGNOSTICS, INC., a Utah corporation (“Borrower”)
promises to pay to the order of ROBERT SALNA, a Canadian resident (“Lender”), in
lawful money of the United States of America, the principal sum of two million
dollars ($2,000,000) together with interest from the date of this Promissory
Note (this “Note”) on the unpaid principal balance at the interest rate(s) set
forth below, computed on the basis of the actual number of days elapsed and a
year of 360 days. All unpaid principal, together with any then unpaid and
accrued interest and other amounts payable hereunder, shall be due and payable
on the earlier of (i) the Maturity Date (as defined below), unless extended
pursuant to the terms and conditions hereof, or (ii) when, upon the occurrence
of an Event of Default, such amounts are declared due and payable by Lender or
made automatically due and payable, in each case, in accordance with the terms
hereof. Advances of the principal of this Note may be made by Lender in one or
more transfers.

 

1. Payment Terms.

 

(a) Maturity Date. The Maturity Date of this Note shall be July 31, 2019 (the
“Maturity Date”).

 

(b) Interest. Subject to the terms and conditions set forth herein, Borrower
shall pay interest on the unpaid principal balance of this Note outstanding from
the date hereof until repayment (whether by acceleration or otherwise), at a
rate equal to Nine Percent (9.0%) per annum (“Note Rate”), quarterly in arrears
on the first Business Day of each calendar quarter, on the date of any
prepayment of this Note and at the Maturity Date; provided, however, that upon
the occurrence and during the continuation of an Event of Default, all
Obligations and other amounts due and owing shall bear interest on the
outstanding balance thereof at a per annum rate equal to Eighteen Percent
(18.0%) from the date such Event of Default first occurred until repaid in full
in accordance with the terms and conditions set forth herein (“Default Interest
Rate”); provided, further, that if any such payment due and payable under this
Note has not been received by Lender within Five (5) Business Days after the
date on which such payment was due and payable, then Borrower shall also pay to
Lender (in addition to such payment then due and payable) an amount equal to
Five Percent (5.0%) of any outstanding interest payment then due and payable
(each, a “Late Fee”).

 

   

 

 

(c) Mandatory Prepayment. In the event of a Change of Control (as defined
below), the outstanding principal amount of this Note, plus all accrued and
unpaid interest, shall be due and payable immediately prior to the closing of
such Change of Control.

 

(d) Prepayment. Borrower may prepay this Note in full or in part at any time.

 

(e) Currency Fluctuations. It is agreed that Borrower assumes the risk of
currency fluctuations between the US and Canadian Dollars in repayment of any
principal amounts. Therefore, whenever Borrower repays any amount of principal,
all such repayments shall be in Canadian Dollars. Provided, however, in no event
shall Borrower pay less than $2,600,000 Canadian in repayment of all principal
owed hereunder.

 

2. Events of Default. The occurrence of any of the following shall constitute an
“Event of Default” under this Note:

 

(a) Failure to Pay. Borrower shall fail to pay when due any principal, interest
or other payment on the due date required under the terms of this Note or any
other Loan Document on the date due and any such failure shall remain uncured
for a period of ten (10) Business Days from the occurrence thereof.

 

(b) Representations and Warranties. Any representation, warranty, certificate or
other statement (financial or otherwise) made or furnished by or on behalf of
Borrower to Lender in writing in connection with this Note, or as an inducement
to Lender to enter into this Note, shall be false, incorrect, incomplete or
misleading in any respect when made or furnished.

 

(c) Breach of Covenants. Borrower shall fail to observe or perform any covenant,
obligation, condition or agreement contained in this Note.

 

(d) Other Payment Obligations. Defaults shall exist under any agreements of
Borrower with any third party or parties which consists of the failure to pay
any indebtedness for borrowed money at maturity or which results in a right by
such third party or parties, whether or not exercised, to accelerate the
maturity of such indebtedness for borrowed money of Borrower, in each case, in
an aggregate amount in excess of $50,000.

 

(e) Voluntary Bankruptcy or Insolvency Proceedings. Borrower shall (i) apply for
or consent to the appointment of a receiver, trustee, liquidator or custodian of
itself or of all or a substantial part of its property, (ii) admit in writing
its inability to pay its debts generally as they mature, (iii) make a general
assignment for the benefit of its or any of its creditors, (iv) be dissolved or
liquidated, (v) commence a voluntary case or other proceeding seeking
liquidation, reorganization or other relief with respect to itself or its debts
under any bankruptcy, insolvency or other similar law now or hereafter in effect
or consent to any such relief or to the appointment of or taking possession of
its property by any official in an involuntary case or other proceeding
commenced against it, or (vi) take any action for the purpose of effecting any
of the foregoing.

 

 -2- 

 

 

(f) Involuntary Bankruptcy or Insolvency Proceedings. Proceedings for the
appointment of a receiver, trustee, liquidator or custodian of Borrower, or of
all or a substantial part of the property thereof, or an involuntary case or
other proceedings seeking liquidation, reorganization or other relief with
respect to Borrower or the debts thereof under any bankruptcy, insolvency or
other similar law now or hereafter in effect shall be commenced and an order for
relief entered or such proceeding shall not be dismissed or discharged within
thirty (30) days of commencement.

 

(g) Judgments. A final judgment or order for the payment of money in excess of
$100,000 (exclusive of amounts covered by insurance) shall be rendered against
Borrower and the same shall remain undischarged for a period of thirty (30) days
during which execution shall not be effectively stayed, or any judgment, writ,
assessment, warrant of attachment, or execution or similar process shall be
issued or levied against a substantial part of the property of Borrower and such
judgment, writ, or similar process shall not be released, stayed, vacated or
otherwise dismissed within 30 days after issue or levy.

 

(h) Material Adverse Change. A Material Adverse Change shall occur, which shall
be defined as any change in the business of the Borrower in addition to any of
those listed in this Paragraph 2 which would materially affect the ability of
the Borrower to repay the loan such as a violation of SEC laws or a delisting of
the Borrowers stock from a recognized stock exchange.

 

(i) Impairment. Lender shall determine, in good faith, that the repayment of the
Note is unlikely to occur or has been jeopardized.

 

(j) Change in Ownership or Control. More than 50% of the then issued and
outstanding shares of common stock entitled to vote on any matter submitted to
the shareholders of Borrower shall be acquired by a single party or parties such
that such holders of common stock can control the Borrower (a “Change of
Control”).

 

3. Rights of Lender upon Default. Upon the occurrence of any Event of Default
which is continuing after the expiration of any applicable notice and cure
period, (other than an Event of Default described in Sections 2(d) or 2(e)) and
at any time thereafter during the continuance of such Event of Default Lender
may declare all outstanding amounts payable by Borrower hereunder to be
immediately due and payable without presentment, demand, protest or any other
notice of any kind, all of which are hereby expressly waived, anything contained
herein to the contrary notwithstanding. Upon the occurrence of any Event of
Default described in Sections 2(d) and 2(e), immediately and without notice, all
outstanding obligations, liabilities or other amounts payable by Borrower
hereunder shall automatically become immediately due and payable, without
presentment, demand, protest or any other notice of any kind, all of which are
hereby expressly waived. In addition to the foregoing remedies, upon the
occurrence and during the continuance of any Event of Default, Lender may
exercise any other right power or remedy against Borrower granted to it or
otherwise permitted to it by law, either by suit in equity or by action at law,
or both.

 

4. Waivers. Borrower waives presentment and demand for payment. Protest notice
of intention to accelerate, notice of acceleration, and notice of protest and
non-payment and agree that their liability on this Note shall not be affected
by, and hereby consent to, any renewal or extension in the time of payment
hereof, any indulgences, or any release or change in any security for the
payment of this Note. No waiver by Lender of any of its rights hereunder shall
be considered a waiver of any other or subsequent right of Lender, and no delay
or omission by Agent in exercising any right hereunder shall impair such right
or be construed as a waiver thereof or any acquiescence therein.

 

 -3- 

 

 

5. Cumulative Rights. For the avoidance of doubt, all rights available to Lender
under this Note shall be cumulative of and in addition to all other rights
granted to Lender at law or in equity, whether or not the Note be due and
payable and whether or not Lender shall have instituted any suit for collection,
foreclosure, or other action under or in connection with the Note.

 

6. Expenses. Borrower shall pay on demand all reasonable fees and expenses,
including attorneys’ fees and expenses, court costs or other amounts incurred by
Lender or its affiliates or agents in connection with the collection,
enforcement or attempted enforcement of any of the obligations or other
liabilities of Borrower to Lender under this Note or in preserving any Lender’s
rights and remedies (including, without limitation, all such fees and expenses
incurred in connection with any “workout” or restructuring affecting the Note or
the obligations thereunder or any bankruptcy or similar proceeding involving
Borrower or any of its subsidiaries).

 

7. 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 Utah, without regard to the conflicts of law provisions of the State of
Utah or of any other state. Jurisdiction for any actions brought under this Note
shall be in any federal or state district court located in Salt Lake County,
Utah.

 

8. Successors and Assigns. This Note shall be binding upon and inure to the
benefit of Borrower and Lender and their respective successors and assigns.
Neither this Note nor any of the rights, interests or obligations hereunder may
be assigned, by operation of law or otherwise, in whole or in part, by Borrower
without the prior written consent of Lender. Lender shall be entitled to assign
its rights and duties hereunder, or any participatory interest therein, to any
person who shall for all purposes hereof be a “Lender” hereunder the same as if
originally named as the “Lender” herein.

 

9. Certain Provisions Regarding Payments. Whenever any payment shall be due
under this Note on a day which is not a Business Day, the date on which such
payment is due shall be extended to the next succeeding Business Day. All
payments made as scheduled on this Note shall be applied, to the extent thereof,
first to accrued but unpaid expenses of Lender, next to interest and then to
unpaid principal,. Acceptance by the holder hereof of any payment in an amount
less than the amount then due on any indebtedness shall be deemed an acceptance
on account only and shall not in any way excuse the existence of an Event of
Default.

 

10. Waivers and Amendments. Any provision of this Note may be amended, waived or
modified only upon the written consent of Borrower, Agent and Lender.

 

11. Entire Agreement. This Note contains the entire agreement between the
parties with respect to the subject matter hereof and thereof. THIS NOTE IS A
FINAL EXPRESSION OF THE AGREEMENT BETWEEN LENDER AND BORROWER, AND THESE
AGREEMENTS MAY NOT BE CONTRADICTED BY EVIDENCE OF ANY ALLEGED ORAL AGREEMENT.

 

 -4- 

 

 

12. Construction. This Note is the result of negotiations among, and has been
reviewed by, Borrower and Lender and their respective counsel. Accordingly, this
Note shall be deemed to be the product of all parties hereto, and no ambiguity
shall be construed in favor of or against Borrower or Lender.

 

13. Notices. All notices, requests, demands or other communications provided for
hereunder shall be in writing. Notices may be given by personal delivery, by
overnight courier, by facsimile transmission, email transmission to an address
expressly approved by Lender or the Borrower, as the case may be, or by
certified or registered United States mail, return receipt requested. Except as
otherwise expressly provided herein, notice shall be deemed to have been given
(a) if by personal delivery, on the date of delivery; (b) if by overnight
courier, on the earlier of the date delivery is first attempted or the next
Business Day after the same has been delivered to a reputable commercial
overnight courier; (c) if by facsimile or email transmission, on the date of
such transmission if sent by 5:00 p.m. Salt Lake City, Utah time on a Business
Day, or if sent thereafter, on the next Business Day; provided, however, that
(i) evidence of a successful transmission shall be retained by the party sending
the same and (ii) a copy of such notice shall also be sent on the same day as
the facsimile or email transmission using another means for giving notice
permitted herein; and (d) if by certified or registered United States Mail, on
the earlier of the date delivery is first attempted or two (2) Business Days
after delivery to the United States Post Office, postage prepaid, return receipt
requested. Notices shall be sent to the intended recipient as follows, or to the
most recent addresses which the indented recipient has provided to the other
parties for purposes of, and in accordance with, this Section 8(j):

 

Borrower:   CO-DIAGNOSTICS, INC.     2401 S. Foothill Drive, Suite D     Salt
Lake City, Utah 84109     Atten: Dwight H. Egan     d.egan@codiagnostics.com

 

 

Lender:   ROBERT SALNA     64 Industrial Road     Richmond Hill,     Ontario,
L4C 2Y1     Canada     robertsalna@me.com

 

14. Counterparts. This Note 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 or other electronic copies of signed signature
pages will be deemed binding originals.

 

15. Assignment. Lender may at any time assign its rights in this Note, or any
part thereof. In addition, Lender may at any time sell one or more
participations in the Note. Borrower may not assign its interest in this Note,
or any other agreement with Lender or any portion thereof, either voluntarily or
by operation of law, without the prior written consent of Lender.

 

(Signature Page Follows)

 

 -5- 

 

 

IN WITNESS WHEREOF, Borrower has caused this Promissory Note to be duly and
validly issued to Lender as of the date first set forth above.

 

  BORROWER:         CO-DIAGNOSTICS, INC.   a Utah corporation           /s/
Dwight H. Egan   By: Dwight H. Egan   Its: President/CEO

  

 -Signature Page to Promissory Note-