Exhibit 10.4


 


U.S.
SMALL BUSINESS ADMINISTRATION PAYCHECK PROTECTION PROGRAM NOTE


 


	SBA
    Loan #:	 [omitted] 
	SBA
    Loan Name:	Paycheck
    Protection Program Loan
	Loan
    Date:	4/22/2020
	Loan
    Amount:	$478,700.00
	Interest
    Rate:	1.00%
    fixed
	Borrower:	Nephros,
    Inc.
	Lender:	First
    Republic Bank


 


This
Note represents the Loan (as defined below) made by Lender pursuant to the Paycheck Protection Program (the “PPP”).
Borrower confirms and agrees that the Loan is subject in all respects to the Coronavirus Aid, Relief, and Economic Security Act
and the requirements, rules, regulations, procedures and guidance concerning the PPP in effect as of the date of this Note and
as may be promulgated from time to time after the date of this Note by the U.S. Department of Treasury and/or SBA (collectively,
the “PPP Regulations”), including, without limitation, all PPP Regulations applicable to permitted uses of
loan proceeds and loan forgiveness.


 


1.
PROMISE TO PAY


 


In
return for the Loan, Borrower promises to pay to the order of Lender the amount of $478,700.00 Dollars, interest on the unpaid
principal balance, and all other amounts required by this Note.


 


2.
DEFINITIONS


 


“Loan”
means the loan evidenced by this Note.


 


“Loan
Documents” means the documents related to this Loan signed by Borrower, including the Borrower Application Form for
the Paycheck Protection Program, the Borrower Certificate executed and delivered by Borrower in connection with this Note and
all other attestations, certificates, agreements and documents delivered by Borrower to Lender in connection with the Loan.


 


“SBA”
means the Small Business Administration, an Agency of the United States of America.


 


3.
PAYMENT TERMS


 


Borrower
must make all payments at the place Lender designates. The payment terms for this Note are:


 


Initial
Deferment Period: No payments are due on this Loan for 6 months from the date of first disbursement of this Loan. Interest
will continue to accrue during the deferment period.


 




    	 



    	 



    

 


Loan
Forgiveness: Borrower may apply to Lender for forgiveness of the amount due on this Loan in an amount equal to the sum of
the following costs incurred by Borrower during the 8-week period beginning on the date of first disbursement of this Loan:


 


	 	a.	Payroll
    costs
	 	b.	Any
    payment of interest on a covered mortgage obligation (which shall not include any prepayment of or payment of principal on
    a covered mortgage obligation)
	 	c.	Any
    payment on a covered rent obligation
	 	d.	Any
    covered utility payment


 


The
amount of Loan forgiveness shall be calculated (and may be reduced) in accordance with the requirements of the PPP, including
the provisions of Section 1106 of the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) (P.L. 116-136). Not more
than 25% of the amount forgiven can be attributable to non-payroll costs. If Borrower has received an EIDL advance, then that
amount shall be subtracted from the loan forgiveness amount.


 


Maturity:
This Note will mature on the date that is two years from date of first disbursement of this Loan.


 


Repayment
Terms:


 


Interest
Rate: The interest rate on this Note is one percent per year. The interest rate is fixed and will not be changed during the
life of the Loan.


 


Installment
Payments Following Deferment Period: Borrower must pay monthly principal and interest payments on the outstanding principal
balance of the Loan amortized over the term of the Loan, unless otherwise forgiven in whole or part in accordance with the PPP
Regulations, beginning 7 months from the date of the first disbursement of this Loan until the maturity date. Payments of principal
and interest must be made on such date as designated by Lender in the months during which they are due. Any Loan balance remaining
following forgiveness pursuant to the PPP Regulations, if any, will be fully reamortized over the remaining term of the Loan.


 


Application
of Installment Payments: Lender will apply each installment payment first to pay interest accrued to the day Lender received
the payment, then to bring principal current, and will apply any remaining balance to reduce principal.


 


Payment
at Maturity. All remaining principal and accrued interest is due and payable two years from the date of first disbursement
of this Loan.


 


Loan
Prepayment: Notwithstanding any provision in this Note to the contrary:


 


Borrower
may prepay this Note at any time without penalty. Borrower may prepay 20 percent or less of the unpaid principal balance at
any time without notice. If Borrower prepays more than 20 percent and the Loan has been sold on the secondary market, Borrower
must:


 


	 	a.	Give
    Lender written notice;
	 	b.	Pay
    all accrued interest; and
	 	c.	If
    the prepayment is received less than 21 days from the date Lender receives the notice, pay an amount equal to 21 days interest
    from the date Lender receives the notice, less any interest accrued during the 21 days and paid under b. of this paragraph.


 




    	 



    	 



    

 


If
Borrower does not prepay within 30 days from the date Lender receives the notice, Borrower must give Lender a new notice.


 


Non-Recourse:
Lender and SBA shall have no recourse against any individual shareholder, member or partner of Borrower for non-payment of
the Loan, except to the extent that such shareholder, member or partner uses the Loan proceeds for an unauthorized purpose.


 


4.
DEFAULT


 


Borrower
is in default under this Note if Borrower does not make a payment when due under this Note, or if Borrower:


 


	 	A.	Fails
    to do anything required by this Note and other Loan Documents;
	 	 	 
	 	B.	Defaults
    on any other loan with Lender;
	 	 	 
	 	C.	Does
    not disclose, or anyone acting on its behalf does not disclose, any material fact to Lender or SBA;
	 	 	 
	 	D.	Makes,
    or anyone acting on its behalf makes, (i) a materially false or misleading representation to Lender or SBA or (ii) a false
    or incorrect statement or certification in any certificate, attestation or agreement included in any Loan Documents;
	 	 	 
	 	E.	Defaults
    on any loan or agreement with another creditor, if Lender believes the default may materially affect Borrower’s ability
    to pay this Note;
	 	 	 
	 	F.	Fails
    to pay any taxes when due;
	 	 	 
	 	G.	Becomes
    the subject of a proceeding under any bankruptcy or insolvency law;
	 	 	 
	 	H.	Has
    a receiver or liquidator appointed for any part of their business or property;
	 	 	 
	 	I.	Makes
    an assignment for the benefit of creditors;
	 	 	 
	 	J.	Has
    any adverse change in financial condition or business operation that Lender believes may materially affect Borrower’s
    ability to pay this Note;
	 	 	 
	 	K.	Reorganizes,
    merges, consolidates, or otherwise changes ownership or business structure without Lender’s prior written consent; or
	 	 	 
	 	L.	Becomes
    the subject of a civil or criminal action that Lender believes may materially affect Borrower’s ability to pay this
    Note.


 


5.
LENDER’S RIGHTS IF THERE IS A DEFAULT


 


Without
notice or demand and without giving up any of its rights, Lender may:


 


	 	A.	Require
    immediate payment of all amounts owing under this Note;
	 	 	 
	 	B.	Collect
    all amounts owing from Borrower; or
	 	 	 
	 	C.	File
    suit and obtain judgment.


 




    	 



    	 



    

 


6.
LENDER’S GENERAL POWERS


 


Without
notice and without Borrower’s consent, Lender may:


 





	 	A.	Incur
    expenses to collect amounts due under this Note, enforce the terms of this Note or any other Loan Document. Among other things,
    the expenses may include payments for property taxes, prior liens, insurance, appraisals, environmental remediation costs,
    and reasonable attorney’s fees and costs. If Lender incurs such expenses, it may demand immediate repayment from Borrower
    or add the expenses to the principal balance; and
	 	 	 
	 	B.	Release
    anyone obligated to pay this Note.











 


7.
WHEN FEDERAL LAW APPLIES; GOVERNING LAW AND VENUE


 


When
SBA is the holder, this Note will be interpreted and enforced under federal law, including SBA regulations. As to this Note, Borrower
may not claim or assert against SBA any local or state law to deny any obligation, defeat any claim of SBA, or preempt federal
law.


 


When
the SBA is not the holder, this Note will be interpreted and enforced under the laws of the State of California. All judicial
proceedings arising in or under or related to the Loan, this Note or any of the other Loan Documents may be brought in any
state or federal court located in a state where Lender has an office (each, a “Lender’s State”). By
execution and delivery of this Note, Borrower generally and unconditionally: (a) consents to nonexclusive personal
jurisdiction in each Lender’s State; (b) waives any objection as to jurisdiction or venue in each Lender’s State;
(c) agrees not to assert any defense based on lack of jurisdiction or venue in the aforesaid courts; and (d) irrevocably
agrees to be bound by any judgment rendered thereby in connection with the Loan, this Loan or the other Loan
Documents.


 


8.
SUCCESSORS AND ASSIGNS


 


Under
this Note, Borrower includes its successors, and Lender includes its successors and assigns.


 


Lender
may at any time assign to one or more assignees all or a portion of its rights and obligations under this Note.


 


9.
OTHER AGREEMENTS AND GENERAL PROVISIONS


 


	 	A.	Borrower
    understands and agrees, and waives and releases Lender, as follows:





 


	 	a.	Forgiveness
    of the Loan is only available for principal that is used for the limited purposes that qualify for forgiveness under the PPP
    Regulations, and that to obtain forgiveness, Borrower must request it and must provide documentation in accordance with the
    PPP Regulations, and certify that the amounts Borrower is requesting to be forgiven qualify under the PPP Regulations. Borrower
    also understands that Borrower shall remain responsible under the Loan for any amounts not forgiven, and that interest payable
    under the Loan will not be forgiven but that the SBA may pay the Loan interest on forgiven amounts.
	 	 	 
	 	b.	Forgiveness
    is not automatic and Borrower must request it. Borrower is not relying on Lender for its understanding of the requirements
    for forgiveness such as eligible expenditures, necessary records/documentation, or possible reductions due to changes in number
    of employees or compensation. Rather Borrower will consult the PPP Regulations and SBA’s program materials.


 




    	 



    	 



    

 


	 	B.	All
    individuals and entities signing this Note are jointly and severally liable.
	 	 	 
	 	C.	Borrower
    waives all suretyship defenses.
	 	 	 
	 	D.	Borrower
    must sign all documents necessary at any time to comply with the Loan Documents.
	 	 	 
	 	E.	Lender
    may exercise any of its rights separately or together, as many times and in any order it chooses. Lender may delay or forgo
    enforcing any of its rights without giving up any of them.
	 	 	 
	 	F.	Borrower
    may not use an oral statement of Lender or SBA to contradict or alter the written terms of this Note.
	 	 	 
	 	G.	If
    any part of this Note is unenforceable, all other parts remain in effect.
	 	 	 
	 	H.	To
    the extent allowed by law, Borrower waives all demands and notices in connection with this Note, including presentment, demand,
    protest, and notice of dishonor. Borrower also waives any defenses based upon any claim that Lender did not obtain any guarantee.


 


10.
FURTHER ASSURANCES


 


The
Loan and this Note are subject in all respects to the PPP Regulations, including any PPP Regulations promulgated after the date
of this Note. If after the date of this Note, any further PPP Regulations are promulgated or if the PPP Regulations mandate a
form of or the terms of the note, loan authorization or other loan documents for PPP loans, Borrower agrees to execute any further
instruments and documents and to take such further actions as Lender requests, including exchanging this Note for new note, executing
an amendment to this Note, or executing any other loan documents that Lender requests. In the event of any exchange of or amendment
to this Note, the disbursement date applicable to the Loan (and all related time periods under the PPP Regulations and the maturity
date applicable to this Loan) shall be the same as set forth in this Note.


 


11.
BORROWER’S NAME AND SIGNATURE


 


By
signing below, each individual or entity executing this Note as “Borrower” becomes obligated under this Note as Borrower.


 








	BORROWER:	 
	 	 
	Nephros,
    Inc.	 
	 	 	 
	By:	 /s/
                                                                                                                Andrew Astor 
	 
	 	Andrew
    Astor	 
	 	COO
    & CFO	 
	 	 	 
	 	4/22/2020	 
	 	Date