Document:

Exhibit 4.1

 

DEMAND PROMISSORY NOTE

 

Rockville, Maryland

 

March 18, 2022

$450,000.00

 

FOR VALUE RECEIVED, mPHASE TECHNOLOGIES, INC.,
a corporation organized and existing under the laws of the State of New Jersey (the “Borrower”), hereby promises to pay
to the order of ANSHU BHATNAGAR, an individual, or his successors or assigns (the “Lender”), the principal amount
of Four Hundred and Fifty Thousand and No/100 United States Dollars (US$450,000.00) payable on demand (the date such demand is made to
the Borrower in writing, the “Maturity Date”), and to pay interest on the unpaid principal balance hereof at the rate of
six percent (6%) per annum commencing on the date hereof (the “Issuance Date”), in accordance with the terms
hereof. This Promissory Note, as may be amended or supplemented from time to time, shall be referred to herein as the “Note”.

 

1. Payments
of Principal and Interest.

 

(a)
Payment of Principal. The principal amount of this Note shall be paid to the Lender on the Maturity Date; provided, however,
in the event of a Qualified Offering, and upon and subject to the election of the Lender, all amounts due under this Note will be converted
into shares of common stock of the Company at the price for share equal to the price per share of common stock in the Qualified Offering
on the date of the Qualified Offering. A “Qualified Offering” is defined as an underwritten offering by the Company pursuant
to which the Company receives aggregate gross proceeds of at least $5,000,000 in consideration of the purchase of its common stock and
(b) the common stock of the Company becomes listed on The Nasdaq Capital Market, the New York Stock Exchange, or the NYSE MKT.

 

(b) Payment of Interest.
Interest on the unpaid principal balance of this Note shall accrue at a rate of six percent (6%) per annum commencing on
the Issuance Date. Interest shall be computed on the basis of a 360-day year and paid for the actual number of days elapsed. Interest
shall be paid on the Maturity Date.

 

(c) Payment of Default Interest.
Any amount of principal or interest on this Note which is not paid within thirty (30) days of the date when due shall bear interest
until such past due amount is paid at a rate of eighteen percent (18%) per annum (the “Default Rate”).

 

(d) General
Payment Provisions. All payments of principal and interest on this Note shall be made in lawful money of the United States of America
by certified bank check or wire transfer to such account as the Lender may designate by written notice to the Borrower in accordance with
the provisions of this Note. Whenever any amount expressed to be due by the terms of this Note is due on any day which is not a Business
Day, the same shall instead be due on the next succeeding Business Day. For purposes of this Note, “Business Day” shall mean
any day other than a Saturday, Sunday or a day on which commercial banks in the State of New York are authorized or required by law or
executive order to remain closed.

 

(e) Optional
Prepayment. At any time, upon receiving the written consent of the Lender, the Borrower may pre-pay this Note without penalty and,
upon such prepayment in full, the Lender shall have no further rights under this Note, including no rights of conversion.

 

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2. Defaults
and Remedies.

 

(a) Events
of Default. An “Event of Default” means: (i) a default for five (5) days in payment of principal or interest on this Note;
(ii) failure by the Borrower to comply with any material provision of this Note; (iii) the Borrower, pursuant to or within the meaning
of any Bankruptcy Law (as defined herein): (A) commences a voluntary case; (B) consents to the entry of an order for relief against it
in an involuntary case; (C) consents to the appointment of a Custodian (as defined herein) of it or for all or substantially all of its
property; (D) makes a general assignment for the benefit of its creditors; or (E) admits in writing that it is generally unable to pay
its debts as the same become due; or (iv) a court of competent jurisdiction enters an order or decree under any Bankruptcy Law that: (A)
is for relief against the Borrower in an involuntary case; (B) appoints a Custodian of the Borrower for all or substantially all of its
property; or (C) orders the liquidation of the Borrower, and the order or decree remains unstayed and in effect for sixty (60) days. “Bankruptcy
Law” means Title 11, U.S. Code, or any similar Federal or state law for the relief of debtors. The term “Custodian”
means any receiver, trustee, assignee, liquidator or similar official under any Bankruptcy Law.

 

(b) Remedies.
If an Event of Default occurs and is continuing, the Lender, may declare all of this Note to be due and payable immediately. The Lender
shall have all rights available to it at law or in equity. Upon the occurrence of an Event of Default, the
interest on this Note shall immediately accrue at the Default Rate. The Lender, may assess reasonable
attorneys’ fees, paralegals’ fees and costs and expenses incurred or
anticipated by the Lender in collecting or enforcing payment hereof (whether such fees, costs or expenses are incurred in negotiations,
all trial and appellate levels, administrative proceedings, bankruptcy proceedings or otherwise), and together with all other sums due
by the Borrower hereunder, all without any relief whatsoever from any valuation or appraisement laws, and payment thereof may be enforced
and recovered in whole or in part at any time by one or more of the remedies provided to the Lender at law, in equity, or under this Note.
In connection with the Lender’s rights hereunder upon an Event of Default, the Lender need not provide, and the Borrower hereby
waives, any presentment, demand, protest or other notice of any kind, and the Lender, may immediately
enforce any and all of its rights and remedies hereunder and all other remedies available to it in equity or under applicable law.

 

3. Lost
or Stolen Note. Upon notice to the Borrower of the loss, theft, destruction or mutilation of this Note, and, in the case of loss,
theft or destruction, of an indemnification undertaking by the Lender to the Borrower in a form reasonably acceptable to the Borrower
and, in the case of mutilation, upon surrender and cancellation of the Note, the Borrower shall execute and deliver a new Note of like
tenor and date and in substantially the same form as this Note; provided, however, the Borrower shall not be obligated to re-issue
a Note if the Lender contemporaneously requests the Borrower to convert such remaining principal amount and interest into Common Stock.

 

4. Cancellation.
After all principal and accrued interest at any time owed on this Note has been paid in full, this Note shall automatically be deemed
canceled, shall be surrendered to the Borrower for cancellation and shall not be re-issued.

 

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5. Waiver
of Notice. To the extent permitted by law, the Borrower hereby waives demand, notice, protest and all other demands and notices in
connection with the delivery, acceptance, performance, default or enforcement of this Note.

 

6. Governing
Law. This Note shall be construed and enforced in accordance with, and all questions concerning the construction, validity, interpretation
and performance of this Note shall be governed by, the laws of the State of New York, without giving effect to provisions thereof regarding
conflict of laws. Each party hereto hereby irrevocably submits to the non-exclusive jurisdiction of the state and federal courts sitting
in the city of New York, Borough of Manhattan in the State of New York for the adjudication of any dispute hereunder or in connection
herewith or with any transaction contemplated hereby or discussed herein, and hereby irrevocably waives, and agrees not to assert in any
suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of any such court, that such suit, action
or proceeding is brought in an inconvenient forum or that the venue of such suit, action or proceeding is improper. Each party hereto
hereby irrevocably waives personal service of process and consents to process being served in any such suit, action or proceeding by sending
by certified mail or overnight courier a copy thereof to such party at the address indicated in the preamble hereto and agrees that such
service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein shall be deemed to limit
in any way any right to serve process in any manner permitted by law. EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY
HAVE, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION HEREWITH OR ARISING OUT OF
THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY.

 

7. Indemnity
and Expenses. The Borrower agrees:

 

(a) To
indemnify and hold harmless the Lender and each of its partners, employees, agent and affiliates from and against any and all claims,
damages, demands, losses, obligations, judgments and liabilities (including, without limitation, attorneys’ fees and expenses) in
any way arising out of or in connection with this Note; and

 

(b) To
pay and reimburse the Lender upon demand for all costs and expenses (including, without limitation, attorneys’ fees and expenses)
that the Lender may reasonably incur in connection with (i) the exercise or enforcement of any rights or remedies (including, but not
limited to, collection) granted hereunder or otherwise available to it (whether at law, in equity or otherwise), or (ii) the failure by
the Borrower to perform or observe any of the provisions hereof. The provisions of this Section shall survive the execution and delivery
of this Note, the repayment of any or all of the principal or interest owed pursuant hereto, and the termination of this Note.

 

8. Remedies,
Characterizations, Other Obligations, Breaches and Injunctive Relief. The remedies provided in this Note shall be cumulative and in
addition to all other remedies available under this Note, at law or in equity.

 

9. Specific
Shall Not Limit General; Construction. No specific provision contained in this Note shall limit or modify any more general provision
contained herein. This Note shall be deemed to be jointly drafted by the Borrower and the Lender and shall not be construed against any
person as the drafter hereof.

 

10. Failure
or Indulgence Not Waiver. No failure or delay on the part of this Note in the exercise of any power, right or privilege hereunder
shall operate as a waiver thereof, nor shall any single or partial exercise of any such power, right or privilege preclude other or further
exercise thereof or of any other right, power or privilege.

 

11. Notice.
Notice shall be given to each party at the address indicated in the preamble or at such other address as provided to the other party in
writing.

 

[signature page follows]

 

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IN WITNESS WHEREOF, the
parties have caused this Note to be executed on and as of the Issuance Date.

 

	 	BORROWER:
	 	 
	 	mPHASE
    TECHNOLOGIES, INC.
	 	 	 
	 	By:
    	/s/
    Angelia Lansinger Hrytsyshyn
	 	Name:	Angelia
    Lansinger Hrytsyshyn
	 	Title:	Chief
    Financial Officer
	 	 	 
	 	LENDER:
	 	 
		/s/
    Anshu Bhatnagar
	 	ANSHU
    BHATNAGAR, an individual

 

[ signature page to Promissory Note ]

 

    	4Document

2022 Variable Compensation Incentive Plan 

Purpose and Objective 
The 2022 Variable Compensation Incentive Plan (the Plan) incents and rewards for Bank and Individual performance.  

Participant Eligibility 
Regular team members who do not participate in an individual sales incentive plan or an individual commission plan are eligible to participate in the Plan.  Temporary and co-operative team members are ineligible to participate in the Plan.  If your hire date is after January 1 of the current plan year, you will be eligible for a pro-rata payout, based on wages earned during the plan year.   Team members who leave the Bank and are rehired within the same Plan year, the payout opportunity will include all regular eligible earnings earned in the Plan year.   

Target Awards 
You will have a target variable compensation opportunity (target percentage), which is a percentage of your eligible regular earnings (base salary) earned in the current plan year.   

Determination of Variable Compensation Incentive Payout  
You will be assigned to a variable compensation incentive group based upon your position and role at the end of the Plan year.  Team members who experience an employment change from one short term incentive plan to another in the middle of the plan year, will have their payout prorated for each plan.   Team members will receive credit for the first part of the year under their current cash incentive Plan and receive credit for the second part of the year under their new cash incentive Plan.

The Bank must attain Net Income of $18.1M (the “trigger”) in the current plan year for payouts to be made.  If the trigger is achieved, the Plan payouts will be determined by the precise financial performance achieved in the plan applied to the target to determine the payout.  The maximum incentive opportunity to be paid under this plan is 150% of target.  The attached addendums outline the specific performance factors. 

Timing of Payouts and Plan Payouts
The performance period is January 1 through December 31 of the current plan year.  If it is determined that participants will receive a payout under the Plan, payouts will be received on or before March 15, following the plan year.   

Payouts will be made in a cash lump sum. Incentive awards will be considered taxable income to participants in the year paid and will be subject to withholding for required income and other applicable taxes.

Team Member Individual Performance
Team member’s individual performance will be taken into consideration when determining final payouts under the 2022 Variable Compensation Incentive Plan based on results and impacts.  Team member’s individual performance may be reduced up to 25% of the total Plan payout if a team member is not meeting performance expectations.

Termination of Employment 
If a Plan participant terminates employment before the payout out date, an incentive award will not be paid.  Participants must be an active team member of the Bank on the date the Plan incentive is paid to receive the award. 

If a participant retires at or after the age of 62 and has been employed for at least three months in the current plan year, the participant is eligible to receive a pro-rata payout to be received within 30 days following the retirement date.  If a participant passes away or employment ends as a result of disability during the Plan year, the participant or the participant’s beneficiary is eligible to receive a pro rata payout to be received within 30 days following death or disability.  Payouts will be based upon the participant’s wages earned in the current Plan year and management’s estimate of year-end results at the participant’s employment end date. 

Plan Authorization and Discretion 
This Plan was developed based on the Bank’s existing business, market and economic conditions, current services, and staff assignments and is authorized by the Board of Directors and administered by the Compensation and Human Resources Committee.  If changes occur that are substantial enough to affect these conditions, services, or assignments, the Compensation and Human Resources Committee may add to, amend, modify, or discontinue any of the terms and conditions of the Plan at any time as it deems appropriate.  The Compensation and Human Resources Committee will determine on at least an annual basis, those team members of the Bank that will be eligible to participate in the Plan.

Extraordinary Event 
An extraordinary event, such as a windfall, or a federal or state compliance, Community Reinvestment Act (CRA) or safety and soundness rating below satisfactory, or another unusual event, may either positively or negatively impact the Bank’s financial results and conditions.  The Compensation and Human Resources Committee will have discretion whether the extraordinary event will impact the payout under the Plan. 

Clawback Provision 
If the Bank’s reported financial or operating results are determined to be subject to material negative restatement due to material noncompliance with any financial reporting requirement under the securities laws, fraud, or misconduct (other than a restatement caused by a change in applicable accounting rules or interpretations), the Compensation and Human Resources Committee may require recoupment of full or partial payout made to participants with an officer status of Senior Vice President (SVP) or above. 

Ethics and Interpretation
If there is any ambiguity as to the meaning of any terms or provisions of this Plan or any questions as to the correct interpretation of any information contained therein, the Bank’s interpretation expressed by the Compensation and Human Resources Committee will be final and binding.

The altering, inflating, and/or inappropriate manipulation of performance/financial results or any other infraction of recognized ethical business standards, will subject the team member to disciplinary action up to and including termination of employment.  In addition, any incentive compensation as provided by the Plan to which the team member would otherwise be entitled will be revoked.

Miscellaneous 
The Plan will not be deemed to give any participant the right to be retained in the employ of the Bank nor will the Plan interfere with the right of the Bank to discharge any participant at any time.  The relationship between team members and the Bank is one of at-will employment.  

This Plan and the transactions and payments hereunder shall, in all respect, be governed by, and construed and enforced in accordance with applicable governmental laws and regulations.  Each provision in this Plan is severable, and if any provision is held to be invalid, illegal, or unenforceable, the validity, legality, and enforceability of the remaining provisions shall not, in any way, be affected or impaired thereby.

Addendum:  Bankwide Group with Multiplier
                               

Performance Factor Grid for Participant Scorecard*
																											
	Performance Factor 
	Weight
	Threshold
	

		Target 
	  
		Stretch 

	0%
	25%
	50%
	100%
	125%
	150%
	200%

	Income* 	50%	41.40	45.40	49.40	57.40	61.40	65.40	73.40
	YTD Average Low Cost Deposits	10%	2.321M	2.343M	2.365M	2.409M	2.431M	2.453M	2.497M
	Loan Growth 	20%	2.907M	2.964M	3.021M	3.135M	3.192M	3.249M	3.363M
	Loan Quality 	10%	0.80%	0.70%	0.60%	0.40%	0.30%	0.20%	0.00%
	Non-Interest Fee Revenue 	10%	15.95	16.56	17.18	18.41	19.02	19.64	20.86

*    Income is defined as pre-tax income excluding income taxes, variable compensation plan expense, the provision for credit losses, and gains or losses on sales or terminations of bonds, other real estate owned, derivatives, and borrowings. 

Additional Performance Factor         
                                                                                                                                              
Annualized salaries and benefits expense multiplier for 2022:       
•If less than $60,245,898, multiply actual payout percentage by 1.05 
•If between $60,245,899 to $61,045,898, multiply actual payout percentage by 1.0 
•If more than $61,045,899, multiply actual payout percentage by 0.95 

Scorecard Adjustor for the Provision for Credit Losses: 
A favorable or unfavorable variance to budget for the Provision for Credit Losses expense will be applied to the Income performance factor at 50% of the variance.  For example, if the Provision for Credit Losses is favorable or unfavorable to budget by $1 million, the Income performance factor results would be increased or decreased by $500 thousand.

Scorecard Calculation Information: 
The scorecard will be calculated using a precise payout level based on actual performance between levels.  For example, if the Bank’s unadjusted Income result is $55.00M and the Provision for Credit Losses is $1.00M favorable to budget, the final Income result will be adjusted to $55.50M ($55.00M + 50% x $1.00M) and the Income performance metric would be adjusted to 88%.   If the Provision for Credit Losses is $1.00M unfavorable to budget, the final Income result will be adjusted to $54.50M ($55.00M - 50% x $1.00M) and the Income performance metric would be adjusted to 82%.

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