Exhibit 4.3


 


Execution Version


 


THIS
CONVERTIBLE PROMISSORY NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY
STATE OF THE UNITED STATES OR IN ANY OTHER JURISDICTION AND ARE BEING OFFERED AND SOLD IN RELIANCE UPON EXEMPTIONS FROM THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT. THE SECURITIES REPRESENTED HEREBY MAY NOT BE OFFERED, SOLD, TRANSFERRED, HYPOTHECATED
OR OTHERWISE DISPOSED OF IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT RELATED THERETO UNLESS THE HOLDER HEREOF PROVIDES
EVIDENCE SATISFACTORY TO THE ISSUER (WHICH, IN THE DISCRETION OF THE ISSUER, MAY INCLUDE AN OPINION OF COUNSEL SATISFACTORY
TO THE ISSUER) AND ARE BEING OFFERED AND SOLD IN RELIANCE UPON EXEMPTIONS FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES
ACT OR IN A TRANSACTION NOT SUBJECT TO U.S. FEDERAL OR STATE SECURITIES LAWS.


 


CONVERTIBLE
PROMISSORY NOTE


 


	$[_______________]	[__],2019




 


For value received
Vallon Pharmaceuticals, Inc., a Delaware corporation (the “Company”),
promises to pay to [__________________] or its assigns (“Holder”) the principal sum of $[________________]
together with accrued and unpaid interest thereon, each due and payable on the date and in the manner set forth below.


 


This convertible promissory
note (the “Note”) is issued as part of a series of similar convertible promissory notes (collectively,
the “Notes”) pursuant to the terms of that certain Convertible Promissory Note Purchase Agreement (as
amended, the “Agreement”), dated as of [__], 2019, to the persons and entities listed on the Schedule
of Purchasers attached to the Agreement (collectively, the “Holders”). Capitalized terms used herein
without definition shall have the meanings given to such terms in the Agreement.


 


1.            Repayment.
All payments of interest and principal shall be in lawful money of the United States
of America. All payments shall be applied first to accrued interest, and thereafter to principal. The outstanding principal amount
of the Loan shall be due and payable on January [__], 2020 (the “Maturity Date”).


 


2.            Interest
Rate. The Company promises to pay simple interest on the outstanding principal amount
hereof from the date hereof until payment in full, which interest shall be payable at the rate of 7.0% per annum or the maximum
rate permissible by law, whichever is less. Interest shall be due and payable on the Maturity Date and shall be calculated on
the basis of a 365-day year for the actual number of days elapsed.


 


3.            Conversion;
Repayment Premium Upon Sale of the Company.


 


(a)           Automatic
Conversion. In the event that the Company issues and sells shares of its Equity Securities to investors (the “Investors”)
on or before the date of the repayment in full of this Note in an equity financing resulting in gross proceeds to the Company
of at least $3,000,000 (excluding the conversion of the Notes and other debt) (a “Qualified Financing”),
then the outstanding principal balance of this Note shall automatically convert in whole without any further action by the Holder
into such Equity Securities at a conversion price equal to (i) 90% of the per share price paid by the Investors if such Qualified
Financing occurs on or prior to the forty-fifth (45th) day after the Effective Date, or (ii) 80% of the per share price paid
by the Investors if such Qualified Financing occurs after the forty-fifth (45th) day after the Effective Date, and in each case
otherwise on the same terms and conditions as given to the Investors. Any unpaid accrued interest on this Note shall be converted
into Equity Securities issued in such Qualified Financing on the same terms as the principal of the Notes.


 






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(b)            Optional
Conversion.


 


(i)            In
the event that the Company issues and sells shares of its Equity Securities to Investors on or before the date of the repayment
in full of this Note in an equity financing that does not constitute a Qualified Financing (such financing being hereinafter referred
to as a “Non-Qualified Financing”), the Company will give the Holder at least ten (10) calendar
days prior written notice of the anticipated Non-Qualified Financing, then the Requisite Holders may elect, by written notice
delivered to the Company not less than five (5) calendar days prior to such Non-Qualified Financing, to convert the outstanding
principal balance of this Note and each other Notes in whole into such Equity Securities at a conversion price equal to the lower
of (i) the per share price paid by the Investors in such Non-Qualified Financing and otherwise on the same terms and conditions
as given to such Investors, or (ii) the quotient of $11,000,000 divided by the aggregate number of outstanding shares of
common stock of the Company (“Common Stock”) as of the date of the initial closing of the Non-Qualified
Financing (assuming full conversion or exercise of all convertible and exercisable securities then outstanding, other than the
Notes and the Equity Securities offered in such Non-Qualified Financing) (the “Cap Price”). Any unpaid
accrued interest on this Note shall be converted in full into Equity Securities issued in such Non-Qualified Financing on the
same terms as the principal of the Notes.


 


(ii)          In
the event that (A) the Company files a registration statement with the U.S. Securities and Exchange Commission, using a Form 10
or a similar form, with respect to its Common Stock (other than a registration statement relating to the sale of securities of
the Company), (B) such registration statement becomes effective, and (C) the Common Stock begins trading or quotation,
as the case may be, on a Trading Market (as defined below), then on the Maturity Date, the Holder shall have the option, by five
(5) calendar days written notice to the Company, to convert the outstanding principal balance and any unpaid accrued interest
under this Note and each of the other Notes into shares of Common Stock at a conversion price equal to the lower of (i) the
Fair Market Value (as defined below) of a share of Common Stock, or (ii) the Cap Price.


 


(c)           Sale
of the Company. Notwithstanding any provision of this Note to the contrary, in the event that the Company consummates a Sale
of the Company (as defined below) prior to the conversion or repayment in full of this Note, (i) the Company will give the
Holder at least five (5) calendar days prior written notice of the anticipated closing date of such Sale of the Company,
and (ii) at the closing of such Sale of the Company, the Company will pay the Holder an aggregate amount equal to the greater
of (A) the aggregate amount of principal and interest then outstanding under this Note in full satisfaction of the Company’s
obligations under this Note, or (B) such amount the Holder would have been entitled to if the principal and accrued but unpaid
interest under this Note had converted into shares of Common Stock at a conversion price equal to the Cap Price.


 






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(d)           Conversion
upon Maturity. In the event that this Note is not converted pursuant to Sections 3(a) through (c), or Section 7
prior to the Maturity Date, then, at the election of the Requisite Holders made at least five (5) calendar days prior to
the Maturity Date, effective upon the Maturity Date, the outstanding principal balance and any unpaid accrued interest under this
Note and each of the other Notes shall be converted into shares of Common Stock at a conversion price equal to the Cap Price;
provided that, if the Common Stock is traded or quoted, as the case may be, on a Trading Market, the conversion price shall
be the lower of (i) the Fair Market Value of a share of Common Stock, or (ii) the Cap Price.


 


(e)           No
Fractional Shares. If, after aggregation, the conversion of this Note would result in the issuance of a fractional share,
the Company shall, in lieu of issuance of any fractional share, pay the Holder otherwise entitled to such fraction a sum in cash
equal to the product resulting from multiplying the then current Fair Market Value of one share of the class and series of capital
stock into which this Note has converted by such fraction.


 


(f)            Definitions.
For purposes of this Note:


 


(i)            “Sale
of the Company” shall mean (i) any consolidation or merger of the Company with or into any other corporation
or other entity or person, or any other corporate reorganization, other than any such consolidation, merger or reorganization
in which the stockholders of the Company immediately prior to such consolidation, merger or reorganization, continue to hold at
least a majority of the voting power of the surviving entity in substantially the same proportions (or, if the surviving entity
is a wholly owned subsidiary, its parent) immediately after such consolidation, merger or reorganization; (ii) any transaction
or series of related transactions to which the Company is a party in which in excess of 50% of the Company’s voting power
is transferred; provided, however, that a Sale of the Company shall not include any transaction or series of transactions
principally for bona fide equity financing purposes in which cash is received by the Company or any successor or indebtedness
of the Company is cancelled or converted or a combination thereof; or (iii) a sale, lease, exclusive license or other disposition
of all or substantially all of the assets of the Company.


 


(ii)           “Equity
Securities” shall mean the Company’s Common Stock, or Preferred Stock or any securities conferring the right
to purchase the Company’s Common Stock or Preferred Stock or securities convertible into, or exchangeable for (with or without
additional consideration), the Company’s Common Stock or Preferred Stock, except that such defined term shall not include
any security (x) granted, issued and/or sold by the Company to any employee, director or consultant in such capacity or (y) issued
upon the conversion or exercise of any option or warrant outstanding as of the date of this Note.


 


(iii)         “Fair
Market Value” shall mean, (a) if the applicable security of the Company is then traded or quoted on a nationally
recognized securities exchange, inter-dealer quotation system or over-the-counter market, including, without limitation, a platform
operated by the OTC Markets Group Inc. (with any such exchange, quotation system or platform being hereinafter referred to as
a “Trading Market”), the 5-day weighted-average closing price of a share of Common Stock reported for
the last five (5) business days immediately prior to the applicable date, or (b) if such applicable security of the
Company is not traded on a Trading Market, (1) the price per security paid by Investors in the applicable Qualified Financing,
Non-Qualified Financing, or (2) the amount per share that a holder of Common Stock would be entitled to receive at the closing
of a Sale of the Company.


 






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4.            Maturity.
Unless this Note has been previously converted in accordance with the terms of Sections 3(a) through
(c), above or satisfied in accordance with the terms of Section 3(d) above, the entire outstanding principal balance
and all unpaid accrued interest shall become fully due and payable on the Maturity Date.


 


5.            Expenses.
 In the event of any default hereunder, the Company shall pay all reasonable attorneys’
fees and court costs incurred by Holder in enforcing and collecting this Note.


 


6.            Prepayment.
The Company may not prepay this Note prior to the Maturity Date without the consent of
the Requisite Holders.


 


7.            Default.
If there shall be any Event of Default hereunder, at the option and upon the declaration
of the Requisite Holders and upon written notice to the Company (which election and notice shall not be required in the case of
an Event of Default under Section 7(c) or 7(d)), this Note shall accelerate and all principal and unpaid accrued interest
shall become due and payable. During the existence of any Event of Default, at the election of the Requisite Holders, by five
(5) calendar days written notice to the Company, the outstanding principal balance and any unpaid accrued interest under
this Note and each of the other Notes shall be converted into shares of Common Stock at a conversion price equal to the Cap Price.
The occurrence of any one or more of the following shall constitute an Event of Default:


 


(a)           The
Company fails to pay timely any of the principal amount due under this Note on the date the same becomes due and payable or any
accrued interest or other amounts due under this Note on the date the same becomes due and payable;


 


(b)           The
Company shall default in its performance of any covenant under the Agreement or any Note;


 


(c)           The
Company files any petition or action for relief under any bankruptcy, reorganization, insolvency or moratorium law or any other
law for the relief of, or relating to, debtors, now or hereafter in effect, or makes any assignment for the benefit of creditors
or takes any corporate action in furtherance of any of the foregoing; or


 


(d)           An
involuntary petition is filed against the Company (unless such petition is dismissed or discharged within sixty (60) calendar
days under any bankruptcy statute now or hereafter in effect, or a custodian, receiver, trustee, assignee for the benefit of creditors
(or other similar official) is appointed to take possession, custody or control of any property of the Company.


 






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8.            Waiver.
The Company hereby waives demand, notice, presentment, protest and notice of dishonor.


 


9.            Governing
Law. This Note shall be governed by and construed under the laws of the State of Delaware,
as applied to agreements among Delaware residents, made and to be performed entirely within the State of Delaware, without giving
effect to conflicts of laws principles.


 


10.          Parity
with Other Notes. The Company’s repayment obligation to the Holder under this Note
shall be on parity with the Company’s obligation to repay all Notes issued pursuant to the Agreement. In the event that
the Company is obligated to repay the Notes and does not have sufficient funds to repay all the Notes in full, payment shall be
made to the Holders of the Notes on a pro rata basis. The preceding sentence shall not, however, relieve the Company of
its obligations to the Holder hereunder.


 


11.          Modification;
Waiver. Any term of this Note may be amended or waived with the written consent of the
Company and the Requisite Holders.


 


12.          Assignment.
This Note may be transferred only upon its surrender to the Company for registration
of transfer, duly endorsed, or accompanied by a duly executed written instrument of transfer in form satisfactory to the Company.
Thereupon, this Note shall be reissued to, and registered in the name of, the transferee, or a new Note for like principal amount
and interest shall be issued to, and registered in the name of, the transferee. Interest and principal shall be paid solely to
the registered holder of this Note. Such payment shall constitute full discharge of the Company’s obligation to pay such
interest and principal.


 


[signature page follows]


 






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	 	Vallon Pharmaceuticals, Inc.
	 	 	 
	 	By:	                                             




	 	Name:	 
	 	Title:	 




 


 


	Holder:	 	 




	Principal Amount of Note:	 	 




	Date of Note:	 	 




 


[Signature page to Convertible Promissory
Note of Vallon Pharmaceuticals, Inc.]