Document:

Exhibit 10.37

 

FORM OF FORTRESS BIOTECH,
INC.

 

PROMISSORY NOTE

 

	Original Issuance Date: __________	Original Principal Amount: U.S. $________

 

FOR VALUE
RECEIVED, FORTRESS BIOTECH, INC., a Delaware corporation (the “Company”), hereby promises to pay to
the order of [NAM BIOTECH FUND II, LLC – SERIES I / NAM SPECIAL SITUATIONS FUND I QP, LLC - FBIO SERIES I] or its
registered assigns (“Holder”) the amount set out above as the Original Principal Amount (the
“Principal”) on the Maturity Date (as defined below), and to pay interest (“Interest”)
on any outstanding Principal (as defined below) at the applicable Interest Rate (as defined below) from the date set out
above as the Original Issuance Date (the “Issuance Date”) until the same becomes due and payable. This
Promissory Note (including all Promissory Notes issued in exchange, transfer or replacement hereof, as amended, supplemented
or otherwise modified from time to time, this “Note”) is one of an issue of Promissory Notes issued
pursuant to the Note Purchase Agreements (as defined below) on the Closing Dates (as defined below) (collectively, the
“Notes”). Certain capitalized terms used herein are defined in Section 17.

 

1.            PAYMENTS
OF PRINCIPAL. The last day of the 36th month after the Issuance Date will be the “Maturity Date”;
provided that the Company may extend the Maturity Date for two one-year periods in its discretion by giving written notice to the
Holder (such extension being the “Maturity Date Extension”). If the Company elects to exercise a Maturity Date
Extension, it shall provide Holders with ninety (90) days’ advance notice of such Maturity Date Extension, and each such
Maturity Date Extension shall result in a one percent (1%) increase in the Interest Rate (as defined below), such that, if elected,
an annualized Interest Rate of nine percent (9%) shall take effect in Year 4 and an annualized Interest Rate of ten percent (10%)
shall take effect in Year 5. On the Maturity Date, the Company shall pay to the Holder an amount in cash representing all outstanding
Principal, accrued and unpaid Interest and accrued and unpaid Late Charges on such Principal and Interest. The Company may prepay
any portion of the outstanding Principal, accrued and unpaid Interest or accrued and unpaid Late Charges on Principal and Interest,
if any, at any time after the first twelve months of the term. For the avoidance of doubt, interest rate applicable to the PIK
Shares will not increase in the event that the Company elects to extend the maturity date of any Notes.

 

2.            INTEREST;
PIK INTEREST.

 

(a)          Interest
on this Note shall commence accruing on the Issuance Date and shall be computed on the basis of a 365-day year, and shall be payable
in arrears for each quarter on January 1, April 1, July 1 and October 1 of each year (each date that interest is payable is an
“Interest Date”), with the first Interest Date being April 1, 2017. Interest shall be payable in cash to the
Holder of this Note on each Interest Date.

 

(b)          Interest
on this Note shall accrue at the rate of eight percent (8%) per annum (the “Interest Rate”). From and after
the occurrence and during the continuance of any Event of Default (as defined in Section 3(a) below), the Interest Rate shall automatically
be increased to twelve percent (12%). In the event that such Event of Default is subsequently cured, the adjustment referred to
in the preceding sentence shall cease to be effective as of the calendar day immediately following the date of such cure; provided
that the Interest as calculated and unpaid at such increased rate during the continuance of such Event of Default shall continue
to apply to the extent relating to the days after the occurrence of such Event of Default through and including the date of such
cure of such Event of Default.

 

     

     

    

 

(c)          Additional
Interest (“PIK Interest”) shall accrue at the rate of seven percent (7%) per annum of the outstanding principal
amount of the Notes, payable in PIK Shares on a quarterly basis on each Interest Date. The value of the PIK Shares will be determined
based on a ten percent (10%) discount to the 10-day volume weighted average price for such PIK Shares (the “Share VWAP”).
For the avoidance of any doubt, the Share VWAP will be based on the 10-day period immediately preceding the Calculation Date. The
Company will provide the Holder with five (5) Business Days’ advance notice of which securities and in what amounts the PIK
Shares will be comprised. If the Holder does not approve of the receipt of any PIK Shares, it must notify the Company of any such
deficiency in reasonably specific terms to enable the Company to assess the concern and correct such deficiency. If the Company
and the Holder disagree on the deficiency, the parties shall have five (5) Business Days to meet to discuss and agree on a resolution.
If no agreement is reached then NHLD’s independent auditors will review the PIK Shares and make a determination, binding
on both parties, of the adequacy of the consideration based solely on compliance with the terms of the Note Purchase Agreement.
If NHLD’s independent auditors determine that there is a deficiency regarding the relevant PIK Shares, then the Company will
make such adjustments as will be necessary to satisfy NHLD’s independent auditors. Notwithstanding the foregoing, if the
Holder determines that the particular Subsidiary of the Company to which the PIK Shares relate presents a unique conflict that
it is unable to approve, then the Company will propose PIK Shares of the Company such other Subsidiary of the Company as will be
satisfactory to the Holder, including but not limited to, the Company. To the extent that any such distribution would result in
distribution of fractional shares to the Holder or its beneficial owners, the Holder may return such fractional shares to the Company
in exchange for cash.

 

3.            RIGHTS
UPON EVENT OF DEFAULT.

 

(a)           Event
of Default. Each of the following events shall constitute an “Event of Default”:

 

(i)          the
Company’s failure to pay to the Holder any amount of Principal, Interest, Late Charges or other amounts when and as due under
this Note or any other agreement, document, certificate or other instrument delivered in connection with the transactions contemplated
hereby, except, in the case of a failure to pay Interest and Late Charges when and as due, only if such failure remains uncured
for a period of at least five (5) business days;

 

(ii)         bankruptcy,
insolvency, reorganization or liquidation proceedings or other proceedings for the relief of debtors shall be instituted against
the Company and, shall not be dismissed within thirty (30) days of their initiation; or

 

(iii)        the
commencement by the Company of a voluntary case or proceeding under any applicable federal, state or foreign bankruptcy, insolvency,
reorganization or other similar law, or the consent by it to the filing of such petition or to the appointment of or taking possession
by a custodian, receiver, liquidator, assignee, trustee, sequestrator or other similar official of the Company or of any substantial
part of its property, or the making by it of an assignment for the benefit of creditors, or the execution of a composition of debts,
or the occurrence of any other similar federal, state or foreign proceeding, or the admission by it in writing of its inability
to pay its debts generally as they become due.

 

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4.            VOTING
RIGHTS. The Holder shall have no voting rights in respect of the Company as the holder of this Note, except as required by
law (including, without limitation, the Delaware General Corporation Law) and as expressly provided in this Note.

 

5.            AMENDING
THE TERMS OF THIS NOTE. Excluding a Maturity Date Extension, the prior written consent of the Holders of at least 66 2/3% of
the total Principal outstanding under the Notes shall be required for any change or amendment to this Note.

 

6.           TRANSFER.
This Note may be offered, sold, assigned or transferred by the Holder without the consent of the Company, subject to the terms
and conditions of the Note Purchase Agreement.

 

7.           REISSUANCE
OF THIS NOTE.

 

(a)          Transfer.
If this Note is to be transferred, the Holder shall surrender this Note to the Company, whereupon the Company will forthwith issue
and deliver upon the order of the Holder a new Note, registered as the Holder may request, representing the outstanding Principal
being transferred by the Holder and, if less than the entire outstanding Principal is being transferred, a new Note to the Holder
representing the outstanding Principal not being transferred.

 

(b)          Lost,
Stolen or Mutilated Note. Upon receipt by the Company of evidence reasonably satisfactory to the Company of the loss, theft,
destruction or mutilation of this Note (as to which a written certification and the indemnification contemplated below shall suffice
as such evidence), and, in the case of loss, theft or destruction, of any indemnification undertaking by the Holder to the Company
in customary and reasonable form and, in the case of mutilation, upon surrender and cancellation of this Note, the Company shall
execute and deliver to the Holder a new Note representing the outstanding Principal.

 

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 and Note Purchase Agreement at law or in equity (including a decree
of specific performance and/or other injunctive relief), and nothing herein shall limit the Holder’s right to pursue actual
and consequential damages for any failure by the Company to comply with the terms of this Note. The Company covenants to the Holder
that there shall be no characterization concerning this instrument other than as expressly provided herein. Amounts set forth or
provided for herein with respect to payments, shall be the amounts to be received by the Holder and shall not, except as expressly
provided herein, be subject to any other obligation of the Company (or the performance thereof). The Company acknowledges that
a breach by it of its obligations hereunder may cause irreparable harm to the Holder and that the remedy at law for any such breach
may be inadequate. The Company therefore agrees that, in the event of any such breach or threatened breach, the Holder shall be
entitled, in addition to all other available remedies, to seek an injunction restraining any such breach or any such threatened
breach, without the necessity of showing economic loss and without any bond or other security being required. The Company shall
provide all information and documentation to the Holder that is requested by the Holder to enable the Holder to confirm the Company’s
compliance with the terms and conditions of this Note.

 

9.            PAYMENT
OF COLLECTION, ENFORCEMENT AND OTHER COSTS. If (a) this Note is placed in the hands of an attorney for collection or enforcement
or is collected or enforced through any legal proceeding or the Holder otherwise takes action to collect amounts due under this
Note or to enforce the provisions of this Note or (b) there occurs any bankruptcy, reorganization, receivership of the Company
or other proceedings affecting Company creditors’ rights and involving a claim under this Note, then the Company shall pay
the reasonable costs incurred by the Holder for such collection, enforcement or action or in connection with such bankruptcy, reorganization,
receivership or other proceeding, including, without limitation, attorneys’ fees and disbursements.

 

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10.           CONSTRUCTION;
HEADINGS. This Note shall be deemed to be jointly drafted by the Company and the Holder and shall not be construed against
any Person as the drafter hereof. The headings of this Note are for convenience of reference and shall not form part of, or affect
the interpretation of, this Note. Terms used in this Note but defined in the Note Purchase Agreement shall have the meanings ascribed
to such terms on the Closing Date in such Note Purchase Agreement unless otherwise consented to in writing by the Holder.

 

11.           FAILURE
OR INDULGENCE NOT WAIVER. No failure or delay on the part of the Holder 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. No waiver shall be effective unless it is in writing and
signed by the Holders of at least 66 2/3% of the total Principal outstanding under the Notes.

 

12.           NOTICES;
CURRENCY; PAYMENTS.

 

(a)           Notices.
Whenever notice is required to be given under this Note, unless otherwise provided herein, such notice shall be given in accordance
with Section 6.1 of the Note Purchase Agreement. The Company shall provide the Holder with prompt written notice of all actions
taken pursuant to this Note, including in reasonable detail a description of such action and the reason therefore.

 

(b)          Currency.
All dollar amounts referred to in this Note are in United States Dollars (“U.S. Dollars”), and all amounts owing
under this Note shall be paid in U.S. Dollars.

 

(c)          Payments.
Whenever any payment of cash is to be made by the Company to any Person pursuant to this Note, unless otherwise expressly set forth
herein, such payment shall be made in lawful money of the United States of America by a check drawn on the account of the Company
and sent to such Person at such address as previously provided to the Company in writing (which address, in the case of each of
the Buyers, shall initially be as set forth on the Note Purchase Agreement), provided that the Holder may elect to receive a payment
of cash via wire transfer of immediately available funds by providing the Company with prior written notice setting out such request
and the Holder’s wire transfer instructions. 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 day which is a Business Day. Any amount
of Principal or Interest which is not paid when due shall result in a late charge being incurred and payable by the Company in
an amount equal to interest on such amount at the rate of twelve (12%) per annum from the date such amount was due until the same
is paid in full (“Late Charge”). 

 

13.           CANCELLATION.
After all Principal, accrued Interest, Late Charges and other amounts at any time owed on this Note have been paid in full, this
Note shall automatically be deemed canceled, shall be surrendered to the Company for cancellation and shall not be reissued.

 

14.           WAIVER
OF NOTICE. To the extent permitted by law, the Company hereby irrevocably waives demand, notice, presentment, protest and all
other demands and notices in connection with the delivery, acceptance, performance, default or enforcement of this Note and the
Note Purchase Agreement.

 

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15.           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 internal laws of the State of New York, without giving effect
to any choice of law or conflict of law provision or rule (whether of the State of New York or any other jurisdictions) that would
cause the application of the laws of any jurisdictions other than the State of New York. The Company hereby irrevocably submits
to the exclusive jurisdiction of the state and federal courts sitting in The City of New York, Borough of Manhattan, 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. Nothing contained herein shall be deemed to limit in any way any right to serve
process in any manner permitted by law. In the event that any provision of this Note is invalid or unenforceable under any applicable
statute or rule of law, then such provision shall be deemed inoperative to the extent that it may conflict therewith and shall
be deemed modified to conform with such statute or rule of law. Any such provision which may prove invalid or unenforceable under
any law shall not affect the validity or enforceability of any other provision of this Note. Nothing contained herein shall be
deemed or operate to preclude the Holder from bringing suit or taking other legal action against the Company in any other jurisdiction
to collect on the Company’s obligations to the Holder, to realize on any collateral or any other security for such obligations,
or to enforce a judgment or other court ruling in favor of the Holder. THE COMPANY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY
HAVE TO, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION WITH OR ARISING
OUT OF THIS NOTE OR ANY TRANSACTION CONTEMPLATED HEREBY.

 

16.           MAXIMUM
PAYMENTS. Nothing contained herein shall be deemed to establish or require the payment of a rate of interest or other charges
in excess of the maximum permitted by applicable law. In the event that the rate of interest required to be paid or other charges
hereunder exceed the maximum permitted by such law, any payments in excess of such maximum shall be credited against amounts owed
by the Company to the Holder and thus refunded to the Company.

 

17.           CERTAIN
DEFINITIONS. For purposes of this Note, the following terms shall have the following meanings:

 

(a)           “Business
Day” means any day other than Saturday, Sunday or other day on which commercial banks in the City of New York are authorized
or required by law to remain closed.

 

(b)           “Closing
Date” has the meaning set forth in the Note Purchase Agreement, which date is the date the Company issued the Note pursuant
to the terms of the Note Purchase Agreement.

 

(c)           “NHLD”
means National Holdings Corporation.

 

(d)           “Note
Purchase Agreement” means those certain Note Purchase Agreements by and among the Company and the Holders pursuant to
which the Company issued the Notes, as may be amended from time to time.

 

(e)           “Person”
means an individual, a limited liability company, a partnership, a joint venture, a corporation, a trust, an unincorporated organization,
any other entity or a government or any department or agency thereof.

 

(f)           “PIK
Shares” means, at the Company’s discretion: (i) shares of the Company, (ii) shares of common stock of Subsidiaries
that are traded on NASDAQ or the NYSE MKT, in good standing in regards to both corporate and financial reporting, and have minimum
per-share prices of at least $1.00, market capitalizations of at least $50 million and average daily trading volume of at least
20,000 shares as of the date that is five (5) Business Days before the Interest Date (the “Calculation Date”),
and (iii) any combination of the foregoing clauses (i) and (ii).

 

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(g)           “Quarter”
means each of: (i) the period beginning on and including January 1 and ending on and including March 31; (ii) the period beginning
on and including April 1 and ending on and including June 30; (iii) the period beginning on and including July 1 and ending on
and including September 30; and (iv) the period beginning on and including October 1 and ending on and including December 31.

 

(h)           “Subsidiary”
means, as of any date of determination, any Person which the Company, directly or indirectly) controls.

 

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IN WITNESS WHEREOF,
the Company has caused this Promissory Note to be duly executed as of the Issuance Date set out above.

 

	 	FORTRESS BIOTECH, INC.
	 	 	 
	 	By:	 
	 	Name: 
	 	Title:Exhibit

Exhibit 10.1

WAIVER OF ANNUAL BONUS FOR 2017 FISCAL YEAR

WHEREAS, Jeffrey T. Schlarbaum (“Executive”) and IEC Electronics Corp. (“Company”), collectively referred to as “the Parties,” are parties to an Employment Agreement (“Agreement”) dated March 20, 2015, which sets forth the terms and conditions of the Executive’s employment by the Company; and

WHEREAS, Section 3.2 of the Agreement provides that Executive shall be eligible to receive an annual performance bonus for each fiscal year of the Company; and  

WHEREAS, Section 3.2 of the Agreement further provides that Executive’s eligibility for the annual performance bonus shall be determined pursuant to the terms of the Company’s Management Incentive Plan or any successor arrangement thereto (“MIP”), with payment to be made within 15 days of the receipt by the Company of the audited financial statements for such fiscal year; and

WHEREAS, based on the Company’s current performance year to date for fiscal year 2017, the Parties acknowledge that it is unlikely that reasonable eligibility targets will be achieved or that Executive will be eligible for an annual performance bonus for the 2017 fiscal year; and

WHEREAS, the Parties wish to waive the requirement, in Section 3.2 of the Agreement, for an annual performance bonus for each of the fiscal years 2017 and 2018 only, so as to allow the Company to instead implement an MIP that looks at performance over a two-year period rather than on a single fiscal year basis; 

NOW, THEREFORE, in consideration of Executive’s continued employment by the Company and in exchange for the other mutual covenants and promises herein, the Parties agree as follows:

1.Executive waives his right to be considered for, or paid, an annual performance bonus for the 2017 fiscal year, regardless of whether targets for the 2017 fiscal year are likely to be achieved, or whether Executive would otherwise be eligible for a performance bonus based solely on 2017 fiscal year performance.  Executive also waives his right to be considered for, or paid, an annual performance bonus based solely on 2018 fiscal year performance.  
2.In exchange for Executive’s waiver of his right to be considered for an annual performance bonus based solely on single year performance for each of the 2017 and 2018 fiscal years, the Company will implement a two-year MIP that will cover the 2017 and 2018 fiscal years.  Executive’s eligibility for a performance bonus under the two-year MIP will be determined based on performance against targets over the combined two-year period, with payment of the bonus to be made within 15 days of receipt of the Company’s audited financial statements for the 2018 fiscal year.  The target value of Executive’s bonus shall be at least 65% of his base salary for the combined two-year period.  

Exhibit 10.1

3.In light of Executive’s waiver of his right to an annual performance bonus based on single year performance for each of the 2017 and 2018 fiscal years, Executive acknowledges and agrees that the Company’s failure to determine Executive’s eligibility for an annual performance bonus based solely on fiscal year performance in each of the 2017 and 2018 fiscal years, or to pay an annual performance bonus based on fiscal year performance within 15 days of the Company’s receipt of the audited financial statements for each of the 2017 and 2018 fiscal years, shall not constitute a material breach under Section 4.5 of the Agreement or otherwise provide “good cause” for Executive to terminate the Agreement.
	
			
	DATED:  March 23, 2017
	JEFFREY T. SCHLARBAUM

	 
	 
	 

	 
	 
	/s/ Jeffrey T. Schlarbaum

	 
	By:
	Jeffrey T. Schlarbaum

	
			
	DATED:  March 23, 2017
	IEC ELECTRONICS CORP.

	 
	 
	 

	 
	 
	/s/ Lynn Hartrick 

	 
	By:
	Lynn Hartrick 

	 
	Title:
	Board of Director

2

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