Document:

Exhibit 10.4

 

ASSET PURCHASE AND
ASSIGNMENT AGREEMENT

 

This ASSET PURCHASE
AND ASSIGNMENT AGREEMENT (this “Agreement”), dated as of March 16, 2021, is made between Anchiano Therapeutics,
Inc., a company organized under the laws of Delaware (“Anchiano”) and Kestrel Therapeutics, Inc.,
a company organized under the laws of Delaware (“Kestrel”; each of Anchiano and Kestrel, a “Party”
and, together, the “Parties”).

 

W I T N E S S E T H:

 

WHEREAS, Anchiano
is a party to a Collaboration and License Agreement (the “Collaboration and License Agreement”) entered into
as of September 13, 2019 by and between ADT Pharmaceuticals, LLC, a company organized and existing under the laws of Delaware (“ADT”),
and Anchiano; and

 

WHEREAS, Anchiano
wishes to sell to Kestrel, and Kestrel wishes to acquire from Anchiano, all of Anchiano’s rights and obligations in its business
to the extent related to the research, development and commercialization of Compounds and Products (as such terms are defined in
the Collaboration and License Agreement) (the “Purchased Business”).

 

NOW, THEREFORE
Anchiano and Kestrel hereby agree as follows:

 

		1.	PURCHASE AND SALE OF ASSETS, Assignment and Assumption.  

 

1.1            
Defined Terms. As used in this Agreement, each capitalized term that is not otherwise defined shall have the respective
meaning specified in Schedule A attached hereto.

 

1.2            
Transferred Assets. Subject to the terms and conditions of this Agreement, at the Closing (as such term is defined below)
Anchiano shall sell to Kestrel, and Kestrel shall purchase from Anchiano, the following assets of Anchiano related to the Purchased
Business (the “Transferred Assets”):

 

(i) all rights,
interests, licenses and obligations of Anchiano in the Collaboration and License Agreement;

 

(ii) all other
assets, used by Anchiano exclusively in connection with the Purchased Business, which consist exclusively of the assets listed
on Schedule 1.2(ii) attached hereto (the “Other Transferred Assets”); and

 

(iii) all books
and records, other than accounting books and records, related to the Collaboration and License Agreement and the Other Transferred
Assets (the “Transferred Records”).

 

1.3            
Consent to Release Data, Reagents and Results. At the Closing, Anchiano will deliver to Kestrel its written consents,
each in the form of Schedule C-1 attached hereto, addressed to each of the parties to the agreements listed on Schedule
C-2 attached hereto (the “Development Services Agreements”), to release to Kestrel all of the data, reagents
and results generated for Anchiano under each of the Development Services Agreements (the “Third Party Consents”).
Kestrel acknowledges and agrees that other than the delivery of the Third Party Consents, Anchiano shall have no obligation, responsibility
or liability with respect to (i) the Development Services Agreements, (ii) the release of the data, reagents and results generated
for Anchiano under each of the Development Services Agreements, and (iii) the data, reagents and results released, if released,
pursuant to the Third Party Consents.

 

     

     

    

 

1.4            
Assumed Liabilities. Subject to the terms and conditions of this Agreement, on and after the Closing Date, Kestrel
shall assume and agree to pay, perform and discharge the following Liabilities of Anchiano (the “Assumed Liabilities”):
(i) any Liabilities resulting from the ownership or use of the Transferred Assets by Kestrel that arise from any event, condition
or circumstance occurring after the Closing Date and not resulting from any breach by Anchiano of any of its obligations under
this Agreement; and (ii) any Taxes imposed on the Transferred Assets or that otherwise arise with respect to the use of the Transferred
Assets, in each case, that are payable on or after the Closing Date.

 

1.5            
Excluded Liabilities. Anchiano shall retain, and shall be responsible for paying, performing and discharging when
due, and Kestrel shall not assume or have any responsibility for paying, performing or discharging, any Liabilities of Anchiano
and its Affiliates other than the Assumed Liabilities (the “Excluded Liabilities”).  Without limiting the
foregoing, neither Kestrel nor its Affiliates shall be obligated to assume, and none of them does assume, and each of them hereby
disclaims responsibility for, any of the following Liabilities of Anchiano and its Affiliates: (i) any Liability attributable to
any asset, property or right that is not included in the Transferred Assets; (ii) any Liabilities payable under the Collaboration
and License Agreement prior to the Closing Date; (iii) any Liability attributable to any action of, or failure to act by, Anchiano
under the Collaboration and License Agreement prior to the Closing Date; (iv) any Liability attributable to the ownership, use,
operation or maintenance of any of the Other Transferred Assets on or prior to the Closing Date; and (v) all Taxes imposed on the
Transferred Assets or that otherwise arise with respect to the use of the Transferred Assets, in each case, that are payable prior
to the Closing Date.

 

1.6            
Purchase Price. As consideration for the assignment of the Transferred Assets, Kestrel shall, at the Closing, (i) pay to
Anchiano the sum of US$875,000 (the “Purchase Price”) (such amount is in addition to the “Upfront Payment”
in the amount of US$125,000 made by Kestrel to Anchiano prior to the Closing Date pursuant to the Term Sheet between the Parties
dated January 11, 2021), and (ii) assume the Assumed Liabilities.

 

1.7            
Bill of Sale; Assignment. The sale by Anchiano, and the purchase by Kestrel, of the Purchased Business shall be effectuated
pursuant to a Bill of Sale between Anchiano, as seller, and Kestrel, as purchaser (the “Bill of Sale”). In addition,
Anchiano shall assign and convey to Kestrel, and Kestrel shall assume, undertake and receive from Anchiano, Anchiano’s rights
and obligations in the Collaboration and License Agreement, pursuant to those certain instruments of Assignment and Assumption,
to be dated as of the date of the Closing, between Anchiano, as assignor, and Kestrel, as assignee (each such instrument, an “Assignment”
and, collectively, the “Assignments”), the form of which is attached hereto as Schedule B.

 

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		2.	Representations and Warranties. 

 

2.1          
Anchiano hereby represents and warrants to Kestrel as follows, subject to any exceptions contained in the Anchiano Disclosure
Schedule attached to this Agreement:

 

(i)       Anchiano
is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware.

 

(ii) Anchiano has all
requisite corporate power and authority to execute, deliver and perform its obligations under this Agreement and all other
documents executed by Anchiano prior to or at the Closing in connection with the sale of the Purchased Business and the assignment
of the Transferred Assets to Kestrel, including without limitation the Bill of Sale and the Assignments (this Agreement and all
such other documents, collectively the “Transaction Agreements”). The execution and delivery by Anchiano of
the Transaction Agreements and the consummation by Anchiano of the transactions contemplated thereby have been duly and validly
authorized by all requisite corporate action. The Transaction Agreements will as of the Closing Date be duly executed and delivered
by, and, assuming each of them constitutes the valid and binding agreement of Kestrel, will constitute as of the Closing Date,
the legal, valid and binding obligation of, Anchiano enforceable against Anchiano in accordance with their respective terms, subject
to bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and similar Laws affecting the enforceability of contractual
obligations and creditor’s rights generally and by the application of equitable principles by courts of competent jurisdiction,
sitting at law or in equity.

 

(iii)       The
execution, delivery and performance of the Transaction Agreements by Anchiano and the consummation by Anchiano of the transactions
contemplated thereby do not and will not: (a) conflict with or violate the organizational documents of Anchiano, (b) conflict
with or violate any Law, Order or Permit applicable to Anchiano, (c) violate any provision of or result in a breach, default
or acceleration of, or require a consent under, any material agreement or instrument to which Anchiano is a party or by which Anchiano
is bound, or constitute an event which, after notice or lapse of time or both, would result in any such violation, breach, default
or acceleration, (d) result in any Third Party having any right to participate in the transactions contemplated by this Agreement
or result in any Third Party having any right of first refusal, option or similar right with respect to any of the Transferred
Assets, or (e) result in the imposition of any Lien on the Transferred Assets.

 

(iv)       The
copy of the Collaboration and License Agreement included in Section 2.1(iv) of the Anchiano Disclosure Schedule attached to this
Agreement is true and correct.

 

(v)       Anchiano
has not previously sold, transferred, leased or assigned, or entered into any agreement to sell, transfer, lease or assign, all
or any portion of the Transferred Assets.

 

(vi)       The
Collaboration and License Agreement is valid and is in full force and effect; has not previously been amended, modified, supplemented
or superseded; is the sole agreement between Anchiano and ADT; and is the valid and binding obligation of Anchiano, enforceable
in accordance with its respective terms.

 

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(vii)       ADT
has not provided Anchiano with written notice regarding any default by Anchiano under such Collaboration and License Agreement.
There are no uncured defaults on the part of Anchiano under the Collaboration and License Agreement, and there are no events that
have occurred which, with notice or lapse of time or both, would constitute a default by Anchiano under the Collaboration and License
Agreement. To the knowledge of Anchiano, ADT is not in default under the Collaboration and License Agreement.

 

(viii) The Transferred
Assets constitute substantially all of the business of Anchiano to which the Collaboration and License Agreement relates.

 

(ix)        Except
as expressly set forth in Sections 2.1(i) though (viii) above, (a) the sale of the Purchased Business and the sale and assignment
of the Transferred Assets is being made on an “as is, where is” basis and (b) TO THE MAXIMUM EXTENT PERMITTED BY APPLICABLE
LAW, ANCHIANO, ANCHIANO’S AFFILIATES AND LICENSORS EXPRESSLY DISCLAIM ALL WARRANTIES OF ANY KIND, WHETHER EXPRESS OR IMPLIED,
REGARDING THE PURCHASED BUSINESS AND THE TRANSFERRED ASSETS, INCLUDING BUT NOT LIMITED TO ANY IMPLIED WARRANTIES OF MERCHANTABILITY,
FITNESS FOR A PARTICULAR PURPOSE AND NON-INFRINGEMENT. UNDER NO CIRCUMSTANCES WILL EITHER PARTY BE LIABLE UNDER ANY CONTRACT, STRICT
LIABILITY, NEGLIGENCE OR OTHER LEGAL OR EQUITABLE THEORY, FOR ANY INCIDENTAL OR CONSEQUENTIAL DAMAGES OR LOST PROFITS IN CONNECTION
WITH THE SUBJECT MATTER OF THIS AGREEMENT EVEN IF ADVISED OF THE POSSIBILITY OF SUCH DAMAGES.

 

2.2            
Kestrel hereby represents and warrants to Anchiano as follows:

 

(i)              
Kestrel is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware.

 

(ii)            
 Kestrel has all requisite corporate power and authority to execute, deliver and perform its obligations under the Transaction
Agreements. The execution and delivery by Kestrel of the Transaction Agreements and the consummation by Kestrel of the transactions
contemplated thereby have been duly and validly authorized by all requisite corporate action. The Transaction Agreements will as
of the Closing Date be, duly executed and delivered by, and, assuming each of them constitutes the valid and binding agreement
of Anchiano, will constitute as of the Closing Date, the legal, valid and binding obligation of, Kestrel enforceable against Kestrel
in accordance with their respective terms, subject to bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium
and similar Laws affecting the enforceability of contractual obligations and creditor’s rights generally and by the application
of equitable principles by courts of competent jurisdiction, sitting at law or in equity.

 

(iii)       The
execution, delivery and performance of the Transaction Agreements by Kestrel do not and will not: (a) conflict with or violate
the organizational documents of Kestrel, or (b) violate any provision of or result in a breach, default or acceleration of,
or require a consent under, any material agreement or instrument to which Kestrel is a party or by which Kestrel is bound, or constitute
an event which, after notice or lapse of time or both, would result in any such violation, breach, default or acceleration.

 

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		3.	CLOSING.

 

3.1                    The transactions contemplated under this Agreement shall occur and take place at a closing (the “Closing”)
to be held on (A) the later of (i) March 31, 2021, and (ii) the date on which the shareholders of Anchiano Therapeutics Ltd. approve
the currently proposed merger with Chemomab Ltd.; (B) April 30, 2021 if such shareholder approval has not occurred by April 30,
2021, or (C) such other date as shall be mutually agreed between the Parties (such date, the “Closing Date”).

 

3.2                    At the Closing, Kestrel shall pay the Purchase Price, and each of the Parties shall execute and deliver or cause to be delivered
to the other Party all documents and instruments, including the Bill of Sale, the Assignments and the Third Party Consents, required
for the performance of the transactions contemplated hereunder.

 

4.                
PARTIES’ OBLIGATIONS. Subject to compliance with the terms described herein, each Party undertakes to take
all necessary steps, perform all acts required and execute and deliver to the other Party all such agreements, instruments or documents
which may be required for the performance of its obligations herein and the consummation of the transaction contemplated hereunder.
Upon and following the Closing, Kestrel shall assume the Assumed Liabilities and shall be bound by the terms and conditions of
the Collaboration and License Agreement and Anchiano shall have no further liability for the Assumed Liabilities in connection
therewith.

 

		5.	MISCELLANEOUS.

 

5.1             
All of the provisions of this Agreement and of any of the documents and instruments executed in connection herewith shall
apply to and be binding upon, and inure to the benefit of Anchiano and Kestrel, and their respective successors and assigns.

 

5.2          
This Agreement and the schedules hereto, together with the other documents and instruments executed and delivered in connection
herewith, including the Bill of Sale, the Assignments and the Existing CDA, set forth the entire agreement between Anchiano and
Kestrel relating to the transactions contemplated hereby, and all other prior or contemporaneous agreements, understandings, representations
or statements, oral or written, relating directly to the transactions contemplated hereby are superseded by this Agreement.

 

5.3          
This Agreement and the terms hereof may not be changed, waived, modified, supplemented, canceled, discharged or terminated
orally, but only by an instrument or instruments in writing executed and delivered by the Parties.

 

5.4           This
Agreement shall be governed by and construed in accordance with the laws of the State of Delaware, without regard to conflict
of laws principles. Each of the Parties hereby agrees to the exclusive jurisdiction and venue of the appropriate state or
federal court located in Miami, Florida in connection with any matter based upon or arising out of this Agreement or the
other Transaction Agreements. Each Party hereby consents to service of process in any such proceeding in any manner permitted
by the law of the jurisdiction in which jurisdiction and venue is located, and further consents to service of process by
internationally recognized courier service (e.g., DHL) at its address specified pursuant to Section ‎5.5.
Notwithstanding the foregoing in this Section ‎5.4, any Party may commence any
action, claim, cause of action or suit in a court other than the above-named courts solely for the purpose of enforcing an
order or judgment issued by one of the above-named courts. TO THE EXTENT NOT PROHIBITED BY APPLICABLE LEGAL REQUIREMENTS
WHICH CANNOT BE WAIVED, EACH OF THE PARTIES IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT TO TRIAL BY JURY ON ANY CLAIMS
OR COUNTERCLAIMS ASSERTED IN ANY LEGAL DISPUTE RELATING TO THIS AGREEMENT OR ANY OTHER TRANSACTION AGREEMENT.

 

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5.5          
Any notice under this Agreement shall be sent to the Parties at their respective addresses set forth below or such other
addresses as may from time to time be notified in accordance with this section. Notices may be sent by hand, by internationally
recognized courier service (e.g., DHL) or by email, and shall be deemed to be given when delivered in the case of delivery by hand
or internationally recognized courier service or when confirmation of transmittal is received by the sender in the case of email.

 

To Anchiano: 

 

Anchiano Therapeutics, Inc.

One Kendall Square, Building1400E,
Suite 14-105, Cambridge, MA 02139

Attn:      CEO

 

with a copy (which shall not constitute notice) to:

 

Goldfarb Seligman & Co.

Ampa Tower, 98 Yigal Alon Street

Tel Aviv 6789141, Israel

Attn:     Aaron M. Lampert

 

To Kestrel:

 

Kestrel Therapeutics, Inc.

102 Sears Road, Wayland, MA 01778

Attn:          Frank
G. Haluska, M.D., Ph.D.

President and CEO

 

with a copy (which shall not constitute
notice) to:

 

Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C.

One Financial Center

Boston, MA 02111

Attn:      John J. Cheney, Esq.

 

6.6       No
delay or omission to exercise any right, power, or remedy accruing to any Party upon any breach or default under this
Agreement, shall be deemed a waiver of any other breach or default theretofore or thereafter occurring. Any waiver, permit,
consent, or approval of any kind or character on the part of any Party of any breach or default under this Agreement, or any
waiver on the part of any Party of any provisions or conditions of this Agreement, must be in writing and shall be effective
only to the extent specifically set forth in such writing. All remedies, either under this Agreement or by law or otherwise
afforded to any of the parties, shall be cumulative and not alternative.

 

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6.7       The
invalidity or unenforceability of any provision or part of any provision of this Agreement shall not affect the validity or enforceability
of any other provision or part thereof, and any invalid or unenforceable provision or part thereof shall be deemed to be separate,
severable and distinct, and no provision or part thereof shall be deemed dependent upon any other provision or part thereof unless
expressly provided for herein.

 

6.8       Neither
Party may assign this Agreement, or any of its rights, interests or obligations under this Agreement without the prior written
consent of the other Party.

 

6.9       This
Agreement may be executed in one or more counterparts, each of which when executed shall constitute an original and all of which
so executed shall constitute one and the same agreement.

 

[Remainder of page intentionally
left blank]

 

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IN WITNESS WHEREOF,
the parties hereto have caused this Agreement to be executed as of the day and year first above written.

 

	 	Anchiano Therapeutics, Inc.
	 	 
	 	By:	/s/ Neil Cohen
	 	 	Name: Neil Cohen
	 	 	Title: CEO
	 	 
	 	Kestrel Therapeutics, Inc.
	 	 
	 	By:	/s/ Frank Haluska
	 	 	Name: Frank Haluska
	 	 	Title: CEO

 

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Schedule A

 

Definitions

 

“Existing NDA” means
that certain Mutual Non-Disclosure Agreement, by and between the Parties, dated October 28, 2020, as amended.

 

“Governmental Entity”
means any court, tribunal, arbitrator, regulatory authority, agency, commission, department, ministry, official or other instrumentality
of the United States or other country, or any supra-national organization, or any foreign or domestic, state, county, city or other
political subdivision.

 

“Law” means any federal,
state, local or foreign law, statute, code or ordinance, or any rule or regulation promulgated by any Governmental Entity including
all decisions of any courts having the effect of law in each such jurisdiction.

 

“Liability” means any
and all debts, liabilities and obligations, whether known or unknown, asserted or unasserted, determinable or otherwise, accrued
or fixed, absolute or contingent, liquidated or unliquidated, incurred or consequential, or matured or unmatured, including, without
limitation, those arising under any Law, Litigation, Order, or agreement.

 

“Lien” means any mortgage,
lien, encumbrance, pledge, security interest, attachment, encumbrance or lien (statutory or otherwise) which (a) creates or confers
an interest in property to secure payment or performance of a Liability or which retains or reserves such an interest for such
purpose; or (b) otherwise constitutes an interest in, or claim against, property.

 

“Litigation”
means any suit, action, arbitration, cause of action, claim, complaint, criminal prosecution, investigation, inquiry, demand letter,
judicial, arbitration or other administrative proceeding, whether at law or at equity, before or by any court, Governmental Entity,
arbitrator or other tribunal.

 

“Order”
means any judgment, order, writ, injunction, ruling, stipulation, determination, award or decree of or by, or any settlement under
the jurisdiction of, any court or Governmental Entity.

 

“Permit”
means any license, permit, application, consent, certificate, registration, approval and authorization pending before, issued,
granted, given or otherwise made available by, or under the authority of, any Governmental Authority.

 

“Tax”
or “Taxes” means all income, excise, gross receipts, ad valorem, sales, use, employment, environmental, franchise,
profits, gains, property, transfer, value added, payroll, escheat or abandoned property, intangibles or other taxes, fees, stamp
taxes, duties, charges, levies or assessments of any kind whatsoever (whether payable directly or by withholding), together with
any interest and any penalties, additions to tax or additional amounts imposed by any Governmental Entity with respect thereto,
whether as a primary obligor, as a result of being a transferee, successor or a member of an affiliated, consolidated, unitary,
combined or other group, by contract, pursuant to Law or otherwise.

 

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Schedule 1.2(ii)

 

Other Assets
Used Exclusively in Connection with the Purchased Business

 

None

 

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Schedule B

 

Form of Instrument of Assignment and
Assumption 

 

On this [__] day of
[______], 2021, Anchiano Therapeutics, Inc., a company organized under the laws of the State of Delaware (“Assignor”),
hereby assigns to Kestrel Therapeutics, Inc., a company organized under the laws of the State of Delaware (“Assignee”),
all right, title and interest of Assignor in and to that certain agreement between Assignor and [______________], dated [_________],
copy of which is attached hereto as Exhibit A and made a part hereof]1
(the “Assigned Asset”).

 

Assignee hereby expressly
assumes all of the obligations imposed upon Assignor under the Collaboration and License Agreement accruing from and after the
date hereof[, and all existing monetary obligations under the Collaboration and License Agreement [other than the Excluded Liabilities]].
Assignor shall be released from all liabilities and responsibilities arising from the assigned contract.

 

This Assignment and
Assumption of the Collaboration and License Agreement is made by Assignor without any express or implied representation or warranty
whatsoever except to the extent expressly provided in that certain Asset Purchase and Assignment Agreement, dated as of March 16,
2021 (the “Agreement”), between Assignor and Assignee.

 

This Assignment and
Assumption of the Collaboration and License Agreement shall be binding upon and inure to the benefit of the parties hereto and
their respective successors and assigns.

 

Any inconsistency between
the terms herein and the terms set forth in the Agreement shall be resolved in favor of the terms of the Agreement.

 

IN WITNESS WHEREOF,
Assignor and Assignee have caused this Assignment and Assumption to be executed as of the date first set forth above.

 

	Anchiano Therapeutics, Inc.	 	Kestrel Therapeutics, Inc.
	 	 	 
	By:	 	 	By:	 
	 	 	 
	Name:	 	Name:
	Title:	 	Title:

 

 

 

1 To be inserted for the applicable Transferred
Agreements

 

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Schedule C-1

 

Form of Third Party Consent

 

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Schedule C-2

 

Development Services Agreements

 

    page 13 | 13simp-ex101_6.htm

 

 

 

Exhibit 10.1

 

 

 

U.S. Small Business Administration

 

NOTE

 

PURSUANT TO THE STATE OF FLORIDA OFFICE OF THE GOVERNOR EXECUTIVE ORDER NUMBER 20-95 (COVID-19 EMERGENCY ORDER – DOCUMENTARY STAMPS FOR SBA LOANS) ISSUED ON APRIL 6, 2020, EFFECTIVE ON APRIL 3, 2020, THE ASSESSMENT AND COLLECTION OF TAXATION IMPOSED UNDER CHAPTER 201, FLORIDA STATUTES, IS SUSPENDED FOR ALL NOTES AND OTHER WRITTEN OBLIGATIONS MADE PURSUANT TO TITLE I OF THE CARES ACT. CONSEQUENTLY, THERE ARE NO DOCUMENTARY STAMP TAXES DUE UPON THIS NOTE.

 

		
	
SBA Loan #
	
4821668507

	
SBA Loan Name
	
Paycheck Protection Program (“PPP”)

	
Date
	
03/10/2021

	
Loan Amount
	
$ 2,000,000.00

	
Interest Rate
	
One Percent (1.00%) per annum

	
Borrower
	
 

COOL HOLDINGS INC

	
Borrower Address
	
2001 NW 84TH AVENUE

 

 

DORALFL 33122

	
Lender
	
City National Bank of Florida, a national banking association 100 S.E. 2nd Street, 13th Floor, Miami, FL 33131

 

	
 
	
1.
	
PROMISE TO PAY:

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

 

	
 
	
2.
	
DEFINITIONS:

 

“CARES Act” means the federal Coronavirus Aid, Relief, and Economic Security Act (Public Law 116- 136), as may be amended, modified or supplemented from time to time.

 

“Collateral” means any property taken as security for payment of this Note or any guarantee of this Note.

“Economic Aid Act” means the Economic Aid to Hard-Hit Small Businesses, Nonprofits, and Venues Act (Public Law 116-260), as may be amended, modified or supplemented from time to time.

 

Page 1

 

 

 
 

 

 

 

 

 

 

“Guarantor” means each person or entity that signs a guarantee of payment of this Note. “Loan” means the loan evidenced by this Note.

“Loan Documents” means the documents related to this loan signed by Borrower, any Guarantor, or anyone who pledges collateral.

“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:

 

Place for Payments: Borrower must make all payments to Lender at the office of Lender at 100 S.E. 2nd Street, 13th Floor, Miami, Florida 33131, or at such other place or in such other manner as Lender from time to time may designate in writing to Borrower.

 

Interest Rate: The interest rate on this Note is one percent (1.00%) per year (the “Interest Rate”).

 

Disbursement Date: The date of first disbursement of this Loan to Borrower (“Disbursement Date”).

 

Maturity: This Note will mature five (5) years from the Disbursement Date (the “Maturity Date”).

 

Deferment Period: No payments are due on this Loan until the earlier of: (a) the date on which the amount of loan forgiveness determined under section 1106 of the CARES Act is remitted to the Lender by the SBA,

(b)the date that the SBA advises Lender that all or part of the loan has not been forgiven, provided that Borrower has applied for forgiveness within 10 months of the end of the Forgiveness Period (as defined below) of the Loan or (c) if the Borrower fails to apply for forgiveness by the end of the Forgiveness Period, a date that is not earlier than the date that is 10 months after the last day of the Forgiveness Period(the “Deferment Period”).

 

Loan Forgiveness Covered Period: The period beginning on the Disbursement Date and ending on any date selected by Borrower that is no earlier than the date 8 weeks from the Disbursement Date and no later than the date 24 weeks from the Disbursement Date (the “Forgiveness Period”). If Borrower fails to notify Lender of its election, the Forgiveness Period shall end on the date 24 weeks from the Disbursement Date.

 

Loan Forgiveness: Subject to compliance with all applicable provisions of the CARES Act, the Paycheck Protection Program Flexibility Act of 2020, the Economic Aid Act, and any rules, regulations, guidance and statutes promulgated thereunder, including as to the allowable uses of proceeds of the Loan, 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 Forgiveness Period:

 

	
 
	
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; and

	
 
	
e.
	
Any covered operations expenditures, property damage, supplier costs, and/or worker protection expenditures (as defined in the Economic Aid Act and the Interim Final Rule dated January 6, 2021).
	
 

 

Page 2

 

 

 

 

 

 

 

 

The amount of loan forgiveness shall be calculated (and may be reduced) in accordance with the requirements of the Paycheck Protection Program, including the provisions of Section 1106 of the Coronavirus Aid, Relief, and Economic Security Act (as may be amended, modified or supplemented from time to time the “CARES Act”) (P.L. 116-136), the Paycheck Protection Program Flexibility Act of 2020, the Economic Aid Act, the Interim Final Rules dated January 6, 2021, and any rules, regulations, guidance and statutes promulgated thereunder. Not more than 40% of the amount forgiven can be attributable to non- payroll costs. The amount of Loan forgiveness is ultimately determined by, and subject to the ultimate approval of, the SBA. To receive loan forgiveness, Borrower must apply for loan forgiveness through Lender. The Borrower must submit to the Lender servicing the Loan a forgiveness application, which must include documents verifying the number of full-time employees and the pay rates for the period described, including payroll tax filings, income, payroll, and unemployment insurance filings, cancelled checks, payment receipts, transcript of accounts, or other documents verifying payments on covered mortgage loan obligations, lease obligations and utility payments, reduction in revenue (if applicable), plus any other documentation the SBA deems necessary. There will be no loan forgiveness without Borrower’s submission of the proper application and documentation to Lender.

 

Repayment Terms: The Interest Rate is fixed and will not be changed during the life of the Loan. Interest shall be calculated at the rate of 1/365 of the annual rate of interest for each day that principal is outstanding (i.e., interest will accrue and be paid on the actual number of calendar days elapsed from the date hereof based on a 365 day year). Interest shall accrue from the Disbursement Date and continue to accrue throughout the life of the Loan, including during the Deferment Period.

 

The outstanding principal balance of this Note, as the same may exist from time to time, shall bear interest at a fixed rate equal to the Interest Rate. Beginning on the 10th day of the first month after the expiration of the Deferment Period, the then outstanding principal balance of this Note shall be repaid in equal monthly payments of principal and interest, to be fully amortized over the remaining term of the Note, and shall be due and payable from Borrower to Lender on the same calendar day of each successive month thereafter (each of the foregoing payments shall be defined as a “Monthly Payment”), with the final Monthly Payment for any partial month being due on the Maturity Date. Lender will calculate the Monthly Payment Amount and provide written notice of the Monthly Payment amount to Borrower after the expiration of the Deferment Period. If any Monthly Payment due under this Note, or the Maturity Date, becomes due and payable on a day other than a Business Day, such payment or Maturity Date shall be extended to the next succeeding Business Day.

 

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.

 

Loan Prepayment: Notwithstanding any provision in this Note to the contrary, Borrower may prepay this Note at any time without penalty.

 

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 or Operating Company:

	
 
	
A.
	
Fails to do anything required by this Note and other Loan Documents;

Page 3

 

 

 

 

 

 

 

	
 
	
B.
	
Defaults on any other loan with Lender;

	
 
	
C.
	
Does not preserve, or account to Lender’s satisfaction for, any of the Collateral or its proceeds;

	
 
	
D.
	
Does not disclose, or anyone acting on their behalf does not disclose, any material fact to Lender or SBA;
	
 

	
 
	
E.
	
Makes, or anyone acting on their behalf makes, a materially false or misleading representation to Lender or SBA;
	
 

	
 
	
F.
	
Defaults on any loan or agreement with another creditor, if Lender believes the default may materially affect Borrower ’s ability to pay this Note;
	
 

	
 
	
G.
	
Fails to pay any taxes when due;

	
 
	
H.
	
Becomes the subject of a proceeding under any bankruptcy or insolvency law;

	
 
	
I.
	
Has a receiver or liquidator appointed for any part of their business or property;

	
 
	
J.
	
Makes an assignment for the benefit of creditors;

	
 
	
K.
	
Has any adverse change in financial condition or business operation that Lender believes may materially affect Borrower ’s ability to pay this Note;
	
 

	
 
	
L.
	
Reorganizes, merges, consolidates, or otherwise changes ownership or business structure without Lender ’s prior written consent; or
	
 

	
 
	
M.
	
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 any Borrower or Guarantor;

	
 
	
C.
	
File suit and obtain judgment;

	
 
	
D.
	
Take possession of any Collateral; or

	
 
	
E.
	
Sell, lease, or otherwise dispose of, any Collateral at public or private sale, with or without advertisement.
	
 

 

	
 
	
6.
	
LENDER ’S GENERAL POWERS:

 

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

 

	
 
	
A.
	
Bid on or buy the Collateral at its sale or the sale of another lienholder, at any price it chooses;

	
 
	
B.
	
Incur expenses to collect amounts due under this Note, enforce the terms of this Note or any other Loan Document, and preserve or dispose of the Collateral. 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;
	
 

	
 
	
C.
	
Release anyone obligated to pay this Note;

 

Page 4

 

 

 

 

 

 

 

	
 
	
D.
	
Compromise, release, renew, extend or substitute any of the Collateral; and

	
 
	
E.
	
Take any action necessary to protect the Collateral or collect amounts owing on this Note.

 

	
 
	
7.
	
WHEN FEDERAL LAW APPLIES:

 

When SBA is the holder, this Note will be interpreted and enforced under federal law, including SBA regulations. Lender or SBA may use state or local procedures for filing papers, recording documents, giving notice, foreclosing liens, and other purposes. By using such procedures, SBA does not waive any federal immunity from state or local control, penalty, tax, or liability. 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.

 

	
 
	
8.
	
SUCCESSORS AND ASSIGNS:

 

Under this Note, Borrower and Operating Company include the successors of each, and Lender includes its successors and assigns.

 

	
 
	
9.
	
GENERAL PROVISIONS:

 

	
 
	
A.
	
All individuals and entities signing this Note are jointly and severally liable.

	
 
	
B.
	
Borrower waives all suretyship defenses.

	
 
	
C.
	
Borrower must sign all documents necessary at any time to comply with the Loan Documents and to enable Lender to acquire, perfect, or maintain Lender ’s liens on Collateral.
	
 

	
 
	
D.
	
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.
	
 

	
 
	
E.
	
Borrower may not use an oral statement of Lender or SBA to contradict or alter the written terms of this Note.
	
 

	
 
	
F.
	
If any part of this Note is unenforceable, all other parts remain in effect.

	
 
	
G.
	
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; did not obtain, perfect, or maintain a lien upon Collateral; impaired Collateral; or did not obtain the fair market of Collateral at a sale.
	
 

 

	
 
	
10.
	
STATE SPECIFIC PROVISIONS:

 

	
 
	
A.
	
Business Day Definition. A “Business Day” is each day except Saturdays, Sundays, Federal Reserve Bank established holidays, or any day which by order or decree Lender is closed.
	
 

 

	
 
	
B.
	
Set Off Rights. Borrower consents to Lender’s right of set off under Florida law.

 

	
 
	
C.
	
Rights and Remedies of Lender; No Waiver. Lender shall be entitled to pursue any and all rights and remedies provided by applicable law and/or under the terms of this Note, all of which shall
	
 

Page 5

 

 

 

 

 

 

 

be cumulative and may be exercised successively or concurrently. Lender’s delay in exercising or failure to exercise any rights or remedies to which Lender may be entitled to pursue upon the occurrence of a Default shall not constitute a waiver of any of Lender’s rights or remedies with respect to that or any subsequent default, whether of the same or a different nature, nor shall any single or partial exercise of any right or remedy by Lender preclude any other or further exercise of that or any other right or remedy. No waiver of any right or remedy by Lender shall be effective unless made in writing and signed by Lender, nor shall any waiver on one occasion apply to any future occasion, but shall be effective only with respect to the specific occasion addressed in that signed writing by Lender.

 

	
 
	
D.
	
Attorney Fees. If a Default occurs and this Note is placed by Lender in the hands of an attorney for collection or is collected through any legal proceeding, Borrower promises to pay Lender’s costs, fees, expenses, disbursements and reasonable attorney and paralegal fees incurred in connection therewith, regardless of whether suit is filed, both before and during trial, and including but not limited to all such fees, costs and expenses incurred in any administrative, appellate, bankruptcy, collection, insolvency, or post judgment proceedings.
	
 

 

	
 
	
E.
	
Choice of Law and Venue. Subject to Section 7 of this Note, this Note shall be governed by the laws of the State of Florida, and the United States of America, whichever the context may require or permit. Borrower agrees that proper venue for any action that may be brought under this Note shall be in Miami-Dade County, Florida, or in the county where Borrower’s principal place of business is located, at Lender’s option. Should Lender institute any action under this Note, Borrower hereby submits itself to the jurisdiction of any federal or state court where Lender files such civil action. Nothing contained in this Note, however, shall be deemed to constitute, or to imply the existence of, any agreement by Lender to bring any such action only in said courts or to restrict in any way any of Lender’s remedies or rights to enforce the terms of this Note as, when and where Lender shall deem appropriate, in its sole discretion.
	
 

 

	
 
	
F.
	
Notices. All notices, requests, instructions, demands, consents, authorizations or other communications hereunder between the parties will be in writing and will be deemed to have been duly delivered and received if: (1) delivered in person with return receipt requested or by courier (e.g., include but are not limited to FedEx, DHL, UPS, etc.); (2) delivered by facsimile or e-mail with acknowledgement returned promptly thereafter by facsimile or e-mail; and (3) if mailed by U.S. mail – then by certified, return receipt requested to the address set forth in this Addendum or to such other address as a party may specify in writing. Notice shall be effective upon receipt except for notice via email, which shall be effective only when the recipient, by return email or notice delivered by other method provided for in this paragraph, acknowledges having received that email (with an automatic “read receipt” or similar notice not constituting an acknowledgement of an email receipt for purposes of this paragraph).
	
 

 

	
 
	
G.
	
Transfer of Loan. Lender may, at any time, sell, transfer, or assign the Note, and any or all servicing rights with respect thereto, in whole but not in part, or grant participations therein. Lender may forward to each purchaser, transferee, assignee, servicer or participant all documents and information which Lender now has or may hereafter acquire relating to Borrower in connection therewith as Lender determines necessary within Lender’s discretion.
	
 

 

	
 
	
H.
	
Authority to Execute Loan Documents. The individual(s) executing this Note on behalf of Borrower represents to Lender that he and/or she has been duly authorized under the Borrower’s organizational documents and Florida law by either (i) the Board of Directors of the Borrower if the Borrower is a corporation; or (ii) the required Manager(s) of the Borrower if the Borrower is a “manager managed” limited liability company; or (iii) the required Managing Member(s) of
	
 

Page 6

 

 

 

 

 

 

 

the Borrower if the Borrower is a “member managed” limited liability company; or (iv) the General Partner of the Borrower if the Borrower is a general partnership; or (v) the General Partner of the Borrower if the Borrower is a limited liability limited partnership to make, execute and deliver this Note and all other Loan Documents in his and/or her capacities as set forth in their respective signature block(s) below. The undersigned represent(s) that the Borrower’s acceptance of this Loan and the execution of all the Loan Documents have all been duly authorized, and that all the Loan Documents are legally binding upon Borrower.

 

	
 
	
I.
	
Maintenance of Deposit Accounts. Borrower shall maintain a deposit account with Lender during the life of the Loan (the “Deposit Account”). Borrower acknowledges that the proceeds of the Loan shall be deposited by Bank into the Deposit Account.
	
 

 

	
 
	
J.
	
Direct Debit. If all or any part of the Loan is not forgiven, Borrower agrees that Lender may debit the Deposit Account for any Monthly Payment due hereunder if the payment is not timely made by Borrower.
	
 

 

	
 
	
K.
	
Miscellaneous. Time shall be of the essence with respect to the terms of this Note. Whenever used in this Note and unless the context otherwise requires, words in the singular include the plural, words in the plural include the singular, and pronouns of any gender include the other genders. Captions and paragraph headings in this Note are for convenience only and shall not affect its interpretation.
	
 

 

	
 
	
L.
	
WAIVER OF TRIAL BY JURY. BORROWER HEREBY, AND LENDER BY ITS ACCEPTANCE OF THIS NOTE, KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE THE RIGHT EITHER MAY HAVE TO A TRIAL BY JURY IN RESPECT TO ANY LITIGATION ARISING OUT OF, UNDER, OR IN CONNECTION WITH THIS NOTE AND ALL LOAN DOCUMENTS AND OTHER AGREEMENTS EXECUTED OR CONTEMPLATED TO BE EXECUTED IN CONNECTION WITH THE LOAN, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTION OF EITHER PARTY, WHETHER IN CONNECTION WITH THE MAKING OF THE LOAN, COLLECTION OF THE LOAN, OR OTHERWISE. THIS PROVISION IS A MATERIAL INDUCEMENT FOR LENDER MAKING THE LOAN EVIDENCED BY THIS NOTE.
	
 

 

	
 
	
M.
	
Electronic Signatures. Borrower and Lender agree to conduct any transaction, use any service, system, product, or enter into any required agreement of Lender (hereinafter each, individually or collectively, the “Electronic Transactions”) via established and commercially accepted electronic commerce applications or methods, with the parties employing appropriate security procedures with respect to the same. The parties agree that the electronic signatures appearing on any of the Electronic Transactions authorized by this Note shall have the same force in law as handwritten signatures for the purpose of validity, enforceability, and admissibility. Records of all such Electronic Transactions electronically signed relating to this Note shall be made available by the parties to one another, consistent with their respective data storage / retention policies / procedures, and, as such, are available to each other. The parties further agree that all Electronic Transactions authorized pursuant to this paragraph shall have the full force and effect of law. The parties agree that to the extent not covered by this paragraph, Florida statutes relating to Electronic Commerce (Chapter 668) or the Electronic Signatures in Global and National Commerce Act (15 USCS §§ 7001 et seq.), as may be amended from time to time or any successor legislation, shall apply to the conduct described herein.
	
 

Page 7

 

 

 

 

 

 

 

	
 
	
11.
	
AGREEMENT TO MAKE CHANGES TO THIS NOTE:

 

Borrower acknowledges that in order to disburse the Loan proceeds to Borrower at the earliest possible time, Lender has prepared this Note based on its current understanding of the Paycheck Protection Program (the “Program”) administered by the SBA and the terms thereof. Borrower agrees that, if Lender deems it necessary or appropriate to amend this Note in any respect in order for this Note to comply with the requirements of the Program or for the SBA to guarantee all or any portion of the amounts outstanding under this Note, Borrower will sign and deliver to Lender any amendment to this Note or a new note in replacement of this Note, with the terms of any amendment or new note retroactive to the date of this Note. Borrower will also execute any additional documentation the Lender requests that Lender believes is consistent with the purposes of the Program.

 

 

	
 
	
12.
	
BORROWER’S NAME(S) AND SIGNATURES:

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

 

 

Executed on:  3/10/2021

 

Borrower:

 

Name of Borrower: COOL HOLDINGS, INC.

 

Signature:  /s/ Vernon A. LoForti

 

Name of Signatory: VERNON LOFORTI

 

Title of Signatory: Authorized Representative of Borrower

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