Exhibit 10.2

 

THE OFFER AND SALE OF THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED. THIS NOTE MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR
HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT AS TO THE
SECURITIES UNDER SAID ACT OR AN OPINION OF COUNSEL SATISFACTORY TO THE
CORPORATION THAT SUCH REGISTRATION IS NOT REQUIRED. FURTHER, THIS NOTE IS
SUBJECT TO SIGNIFICANT RESTRICTIONS ON TRANSFER BY THE HOLDER HEREOF, AS
DESCRIBED MORE FULLY HEREIN.

 

8% CONVERTIBLE PROMISSORY NOTE

 

$1,258,555.56 October 7, 2020

 

FOR VALUE RECEIVED, SPECIALTY RENAL PRODUCTS, INC, a Delaware corporation (the
“Borrower”), by means of this Promissory Note (this “Note”) hereby
unconditionally promises to pay to the order of NEPHROS, INC., a Delaware
corporation (the “Lender”), the aggregate principal sum equal to the amount
advanced by the Lender from time to time under the Loan Agreement (as defined
below) to or for the benefit of the Borrower (the “Loan”), in lawful money of
the United States of America and in immediately available funds, on the dates
provided in the Loan Agreement. The maximum principal sum payable under this
Note shall be $1,258,555.56.

 

The principal balance of this Note outstanding at any time shall bear interest
from the date of disbursement until full payment, conversion or other
satisfaction of the principal hereof as set forth in the Loan Agreement dated as
of October 7, 2020, among the Borrower and the Lender (as modified and
supplemented and in effect from time to time, the “Loan Agreement”). All
capitalized terms used but not otherwise defined in this Note shall have the
meanings ascribed to such terms in the Loan Agreement. Each Disbursement made by
the Lender to the Borrower pursuant to the Loan Agreement, and all payments made
on account of principal thereof, shall be recorded by the Lender and, prior to
any transfer hereof, endorsed on the grid attached hereto which is part of this
Note; provided that the failure of the Lender to make any such recordation or
endorsement shall not affect the obligations of the Borrower hereunder or under
the Loan Agreement. Borrower shall make all payments to the Lender of principal
under this Note in the manner provided in and otherwise in accordance with the
Loan Agreement. The outstanding principal balance of this Note shall be due and
payable in full on the Final Payment Date

 

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

 

1. Ranking. Unless otherwise agreed by the Lender, the obligations of Borrower
under this Note shall senior to all other Indebtedness of the Borrower, except
Permitted Indebtedness.

 

   

 

 

2. No Transfer and Exchange. Subject to compliance with this Section 2, the
holder of this Note may, prior to the Final Payment Date or the conversion in
full of such Note in accordance with Section 2.9 of the Loan Agreement,
surrender such Note at the principal office of the Borrower for transfer or
exchange. Within a reasonable time after notice to the Borrower from such holder
of its intention to make such exchange and without expense to such holder,
except for any transfer or similar tax which may be imposed on the transfer or
exchange, the Borrower shall issue in exchange therefor another note or notes
for the same aggregate principal amount as the unpaid principal amount of the
Note so surrendered, having the same maturity and rate of interest, containing
the same provisions and subject to the same terms and conditions as the Note so
surrendered. Each new Note shall be made payable to such person or persons, or
transferees, as the holder of such surrendered Note may designate, and such
transfer or exchange shall be made in such a manner that no gain or loss of
principal or interest shall result therefrom. The Borrower may elect not to
permit a transfer of the Note if it has not obtained satisfactory assurance that
such transfer: (a) is exempt from the registration requirements of, or covered
by an effective registration statement under, the Act and the rules and
regulations thereunder and (b) is in compliance with all applicable state
securities laws, including without limitation receipt of an opinion of counsel,
which opinion shall be satisfactory to the Borrower.

 

3. New Note. Upon receipt of evidence reasonably satisfactory to the Borrower of
the loss, theft, destruction or mutilation of the Note, the Borrower shall issue
a new Note, of like tenor and amount and dated the date to which interest has
been paid, in lieu of such lost, stolen, destroyed or mutilated Note, and in
such event the Lender agrees to indemnify and hold harmless the Borrower in
respect of any such lost, stolen, destroyed or mutilated Note.

 

4. Conversion of Note. The Balance shall be convertible into Conversion
Securities in accordance with the terms of Section 2.9 of the Loan Agreement.
This Note does not by itself entitle the Lender to any voting rights or other
rights as a stockholder of the Borrower. In the absence of conversion of this
Note, no provisions of this Note, and no enumeration herein of the rights or
privileges of the Lender, shall cause the Lender to be a stockholder of the
Borrower for any purpose.

 

5. Events of Default. If default is made in the punctual payment of principal or
any other amount under this Note in accordance with the Loan Agreement, or if
any other Event of Default has occurred, this Note shall, at the Payee’s option
exercised at any time upon or after the occurrence of any such payment default
or other Event of Default, become immediately due and payable.

 

7. Governing Law. This Note shall be governed by the internal law of the State
of Delaware without regard to principles of conflicts of law.

 

8. Waiver. Borrower hereby waives presentment, protest, demand for payment,
notice of dishonor, and any and all other notices or demands in connection with
the deliver, acceptance, performance, default, or enforcement of this Note.

 

9. Severability. The invalidity or unenforceability of any provision hereof
shall in no way affect the validity or enforceability of any other provision.

 

10. Registered Instrument. This Note is a registered instrument and is not a
bearer instrument. This Note is registered as to both principal and interest
with the Borrower and all payments hereunder shall be made to the named Lender
or, in the event of a transfer pursuant to Section 6.6 of the Loan Agreement, to
the transferee identified in the record of ownership of this Note maintained by
the Lender on behalf of the Borrower. Transfer of this Note may not be effected
except in accordance with the provisions hereof.

 

11. Notices. Any notice required or permitted hereunder shall be made in the
manner set forth in Section 6.1 of the Loan Agreement.

 

12. Headings; Interpretation. In this Note, (i) the meaning of defined terms
shall be equally applicable to both the singular and plural forms of the terms
defined, (ii) the captions and headings are used only for convenience and are
not to be considered in construing or interpreting this Note and (iii) the words
“including,” “includes” and “include” shall be deemed to be followed by the
words “without limitation”. All references in this Note to sections, paragraphs,
exhibits and schedules shall, unless otherwise provided, refer to sections and
paragraphs hereof and exhibits and schedules attached hereto, all of which
exhibits and schedules are incorporated herein by this reference.

 

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IN WITNESS WHEREOF, the undersigned has caused this instrument to be executed by
its duly authorized officers as of the date first above written.

 

  BORROWER:       SPECIALTY RENAL PRODUCTS, INC.         By: /s/ Daron Evans  
Name: Daron Evans   Title: Chief Executive Officer

 

Signature Page to Convertible Promissory Note