Document:

Exhibit 10.4

 

Loan Election Agreement Between

the California Institute for Regenerative
Medicine and Capricor, Inc.

 

This agreement (the “Agreement”)
between the California Institute for Regenerative Medicine (“CIRM”) and Capricor, Inc. (“Capricor”) is
entered into and is effective as of June 20, 2016, and sets forth the terms pursuant to which Capricor and CIRM agree to negotiate
a loan agreement should Capricor elect to treat its award (CLIN2-08334)
(the “Award”) as a loan pursuant to CIRM’s loan election policy (Clinical Grants Administration Policy,
art. IV (c)) (the “Loan Policy”).

 

RECITALS

 

A.           Whereas,
CIRM’s Governing Board approved the Award on March 16, 2016, to provide $3,376,259 to Capricor to support Capricor’s
on-going Phase I/II clinical trial known as “HOPE-Duchenne” using allogeneic cardiosphere-derived cells (CDCs, CAP-1002)
to treat patients with Duchenne muscular dystrophy (DMD) associated cardiomyopathy;

 

B.           Whereas,
the Loan Policy authorizes an awardee, upon completion of the CIRM-funded project, to elect to treat its award as a loan and provides
that the loan must be repaid within ten days of the election, unless the parties negotiate different terms;

 

C.           Whereas,
Capricor has proposed to extend the repayment term, should Capricor elect to treat its Award as a loan; and

 

D.           Whereas,
CIRM is willing to accept Capricor’s proposal in light of the following factors: the trial involves a pediatric orphan indication;
the trial is already in progress; and the Award is relatively small.

 

NOW, THEREFORE, in reliance on the mutual representations,
warranties and agreements herein contained, the parties agree that if Capricor elects to treat its Award as a loan pursuant to
the Loan Policy, the following terms shall apply:

 

1.          Term
of Loan: The term of the loan shall be five (5) years from the date of execution of the Loan Agreement (the “Loan Date”);
provided that the term of the loan will not exceed ten (10) years from the date of execution of the Notice of Award (“Grant
Date”). By way of example, if the election to convert to a loan is not made until the seventh year following the original
Grant Date, the maximum term of the Loan will be three (3) years. The loan may be prepaid at any time without any pre-payment penalty.

 

2.          Interest:
Beginning on the Loan Date, the loan shall bear interest on the unpaid principal balance plus the interest that was accrued prior
to the election point according to the terms set forth in the Loan Policy (the “New Loan Balance”) at a per annum rate
equal to the London Inter-Bank Offered Rate (“LIBOR”) for a three-month deposit in U.S. dollars, as published by the
Wall Street Journal (or if the Wall Street Journal is not available, a comparable source) on the Loan Date, plus one percent (1%).
Interest shall be compounded annually on the outstanding New Loan Balance commencing with the Loan Date and the interest shall
be payable, together with the New Loan Balance, upon the due date of the Loan.

 

     

     

    

 

3.          Loan
Agreement: The parties shall negotiate and execute a loan agreement reflecting the terms of the loan, including those described
above, within 30 days of the date of Capricor’s notice to CIRM that it elects to treat the Award as a loan pursuant to the
Loan Policy. The parties shall each use their reasonable best efforts to get the loan agreement completed within such 30-day period;
provided, however, that nothing contained herein shall obligate Capricor to execute the loan agreement if the final terms thereof
are not acceptable to Capricor in its discretion.

 

4.          Attorneys’
Fees: Capricor shall reimburse CIRM for the attorneys’ fees CIRM reasonably incurs in negotiating the loan agreement, not
to exceed $15,000.

 

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

 

	CAPRICOR, INC.	 
	 	 
	By:  	/s/ AJ Bergmann	 
	 	 	 
	Title: 	Vice President of Finance	 
	 	 	 
	Address:	8840 Wilshire Blvd. 2nd Floor	 
	 	Beverly Hills, CA 90211	 
	 	______________________	 
	 	 
	CALIFORNIA INSTITUTE FOR 	 
	REGENERATIVE MEDICINE 	 
	 	 
	By:  	/s/ Randy Mills	 
	 	 	 
	Title: 	CEO	 

 

    	 	2CERTIFICATE OF DESIGNATION

OF RIGHTS, PREFERENCES AND PRIVILEGES OF

SERIES A PREFERRED STOCK

OF

SAFETY QUICK LIGHTING & FANS CORP.

 

Pursuant to Sections 607.0601 and 607.0602
of the Florida Statutes, Safety Quick Lighting & Fans Corp., a corporation organized and existing under laws of the State
of Florida (the “Company”), does hereby submit the following:

 

WHEREAS, pursuant to the Company’s
Articles of Incorporation, dated November 16, 2012, the Company has 500,000,000 shares of common stock, no par value per share
(“Common Stock”), and 20,000,000 shares of preferred stock, no par value (the “Preferred Stock”),
outstanding, and the Company’s Board of Directors is authorized to issue and establish one or more series of the Preferred
Stock and to fix the designation, rights, preferences, powers, restrictions and limitations thereof;

 

WHEREAS, no series of the Preferred
Stock has been designated, and no shares of Preferred Stock have heretofore been issued; and

 

WHEREAS, it is the desire of the Company,
its Board of Directors, and a majority of its shareholders to establish and fix the number of shares to be included in a new series
of Preferred Stock and the designation, rights, preferences and limitations of the shares of such new series.

 

NOW, THEREFORE, BE IT RESOLVED, that,
pursuant to the authority conferred upon as of June 8, 2016, the Company’s Board of Directors and an absolute majority of
the Company’s voting shareholders of record as of June 1, 2016 do hereby provide for the issuance of a series of Preferred
Stock and to establish and fix and herein state and express, by this Certificate of Designation (the “Certificate of
Designation”), the designation, rights, preferences, powers, restrictions and limitations of such series of Preferred
Stock as follows:

 

		1.	DESIGNATION
                                         AND AMOUNT. There shall be a series of Preferred Stock that shall be designated as
                                         “Series A Convertible Preferred Stock” (the "Series A Preferred Stock")
                                         and the number of shares (the “Shares”) constituting such series shall
                                         be 20,000,000. The rights, preferences, powers, restrictions and limitations of the Series
                                         A Preferred Stock shall be as set forth herein.

 

		2.	ISSUANCE
                                         OF SHARES. Each Share of Series A Preferred Stock shall be issuable only to the holders
                                         of the Company’s Secured Convertible Promissory Notes issued on November 26, 2013,
                                         May 8, 2014 or June 25, 2014 (the “Notes”) who have amended their
                                         Notes outstanding to be convertible into the Series A Preferred Stock, pursuant to a
                                         written election by such holder, at a conversion price of USD $0.25 per Share based on
                                         the original purchase price of the one or more Note(s) issued to the holder thereof,
                                         plus any accrued but unpaid interest or amounts due in connection therewith (in the aggregate,
                                         the “Note Balance”).

 

		3.	INTEREST.
                                         

 

(a)   
Interest. From and after the date of issuance of any Share, cumulative interest on such Share shall accrue, whether or
not declared by the Board and whether or not there are funds legally available for the payment of interest, on a monthly basis
at the rate of 6% per annum on the sum of the Liquidation Value thereof plus all unpaid accrued and accumulated interest thereon.
All accrued interest on any Share shall be paid in cash to the holder thereof quarterly, with the first such payment due beginning
on September 30, 2016 and payable on the last day of the month of each calendar quarter thereafter.

 

    	 	

	 

    	 

    

(b)  
Priority. All accrued and accumulated interest on the Shares shall be prior and in preference to any dividend or interest
on any Junior Securities and shall be fully declared and paid before any dividends are declared and paid, or any other distributions
or redemptions are made, on any Junior Securities, other than to (i) declare or pay any dividend or distribution payable on the
Common Stock in shares of Common Stock or (ii) repurchase Common Stock held by employees or consultants of the Corporation upon
termination of their employment or services pursuant to agreements providing for such repurchase.

 

		4.	RANK
                                         AND LIQUIDATION. 

 

(a)   
Rank. With respect to payment of dividends and distribution of assets upon liquidation, dissolution or winding up of the
Company, whether voluntary or involuntary, all Shares of the Series A Preferred Stock shall rank senior to all Common Stock and
any other class of securities that is specifically designated as junior to the Series A Preferred Stock (“Junior Securities”).

 

(b)  
Liquidation. In the event of any voluntary or involuntary liquidation, dissolution or winding up of the Company, the holders
of Shares of Series A Preferred Stock then outstanding shall be entitled to be paid out of the assets of the Company available
for distribution to its shareholders, before any payment shall be made to the holders of Junior Securities by reason of their
ownership thereof, an amount in cash equal to the aggregate Liquidation Value (as defined below), plus all unpaid accrued and
accumulated dividends on all such Shares (whether or not declared). In the event that the funds are not sufficient to pay out
the full Liquidation Value to all holders of Shares of Series A Preferred Stock, the Liquidation Value shall be paid to such holders
pro rata based each holder’s Liquidation Value relative to the Liquidation Value of all holders of Shares of Series A Preferred
Stock.

 

(c)   
“Liquidation Value” means, with respect to a holder of Shares, the aggregate value of the Note Balance converted
by such holder into Shares of Series A Preferred Stock.

 

		5.	CONVERSION
                                         RIGHTS. 

 

(a)   
Elective Conversion. Each Share of Series A Preferred Stock shall be convertible at any time by the holder thereof into
one (1) share of Common Stock.

 

(b)  
 Effect of Conversion. All Shares of Series A Preferred Stock converted as provided herein shall no longer be deemed issued
and outstanding as of the effective time of the applicable conversion, and all rights with respect to such Shares shall immediately
cease and terminate as of such time, other than the right of the holder to receive shares of Common Stock in exchange therefor.

 

		6.	VOTING
                                         RIGHTS.  Each Share of Series A Preferred Stock shall have no right to vote on any
                                         matter to be submitted for a vote to shareholders of the Company.

 

		7.	ADJUSTMENT.
                                         In the event that the Company shall, at any time after the issuance of any Share
                                         of Series A Preferred Stock, (a) declare any dividend on Common Stock payable in shares
                                         of Common Stock, (b) subdivide or effectuate any stock-split of the outstanding Common
                                         Stock or (c) combine or recapitalize the outstanding Common Stock into a different number
                                         of shares, then in each such case the Company shall simultaneously effect a proportional
                                         adjustment to the number of outstanding Shares of Series A Preferred Stock.

 

    	 	

	 

    	 

    

		8.	CONSOLIDATION,
                                         MERGER, ETC.  In the event the Company enters into any consolidation, merger, combination
                                         or other transaction in which the shares of Common Stock are exchanged for or changed
                                         into other stock or securities, cash and/or any other property, then in any such case
                                         the Shares of Series A Preferred Stock shall at the same time be similarly exchanged
                                         or changed into preferred stock of the surviving Company with the same rights and preferences
                                         as the Series A Preferred Stock.

 

		9.	WAIVER.
                                         Any of the rights, powers, preferences and other terms of the Series A Preferred
                                         Stock set forth herein may be waived on behalf of a holder of Shares in its sole discretion.

 

		10.	REPURCHASE
                                         AND PUT OPTION. 

 

(a)   
Repurchase Notice. The Company may, at any time after the issuance of any Share of Series A Preferred Stock, by providing
30 day’s prior written notice to all holders of the Shares (a “Repurchase Notice”), repurchase some or
all of the Shares outstanding from the holders thereof at a purchase price of USD $3.50 per Share (the “Repurchase Price”).
Any Repurchase Notice for less than the full number of Shares issued and outstanding shall be for purchase pro rata, based
each holder’s number of Shares outstanding relative to the aggregate number of Shares outstanding. 

 

(b)  
Repurchase Period. Each holder of Shares must sell to the Company the number of Shares specified in a Repurchase Notice
on the date set forth therein, such date being no less than thirty (30) days following the date of such Repurchase Notice (the
“Repurchase Period”), except where the Shares subject to the Repurchase Notice are converted, by election or
automatically, into Common Stock prior to the end of the Repurchase Period and such holder thereafter no longer holds Shares of
Series A Preferred Stock. 

 

(c)   
Put Option. Any holder of Shares may, at any time after the issuance of any Share of Series A Preferred Stock, by providing
a written request to the Company, require the Company to purchase some or all such holder’s Shares outstanding at a purchase
price of USD $0.25 per Share, and the Company shall promptly purchase the number of Shares so specified and owned by the holder
thereof.

 

(d)  
Effect of Repurchase. All Shares of Series A Preferred Stock repurchased or purchased by the Company as provided in this
Section 10 shall no longer be deemed issued and outstanding as of the effective time of the applicable repurchase or purchase,
and all rights with respect to such Shares shall immediately cease and terminate as of such time.

 

		11.	ASSIGNMENT.
                                         Each holder of Shares of Series A Preferred Stock shall be entitled to transfer some
                                         or all of its Shares to one or more affiliated partnerships or funds managed by it or
                                         any of such holder’s respective directors, officers or partners; provided, however,
                                         that any such transferee agrees in writing to be subject to the identical terms of any
                                         conversion and/or related agreements entered into by the holder thereof in connection
                                         with the issuance of the transferred Shares.

 

    	 	

	 

    	 

    

		12.	AMENDMENT.
                                         No provision of this Certificate of Designation may be amended, modified or waived
                                         except by an instrument in writing executed by the Company and the holders of a majority
                                         of Shares of Series A Preferred Stock, and any such written amendment, modification or
                                         waiver will be binding upon the Company and each holder of Series A Preferred Stock;
                                         provided, that no such action shall change or waive (a) the definition of Liquidation
                                         Value, (b) the rate at which or the manner in which interest on the Series A Preferred
                                         Stock accrues or accumulates, (c) the Repurchase Price, or (d) this Section 12, without
                                         the prior written consent of holders of at least seventy-five (75%) of all outstanding
                                         Shares of Series A Preferred Stock. 

 

IN WITNESS WHEREOF, this Certificate
of Designation is executed on behalf of the Company by its Chief Executive Officer on July 27, 2016.

 

 

/s/ John P. Campi

John P. Campi, Chief Executive
Officer

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