Form of Promissory Note, dated September 26, 2024, of Venus Concept USA Inc

FOR VALUE RECEIVED, VENUS CONCEPT USA INC., a Delaware corporation (the “Borrower”) hereby covenants and promises to pay to the order [MADRYN HEALTH PARTNERS (CAYMAN MASTER), LP]/[MADRYN HEALTH PARTNERS, LP], its successors and/or assigns (the “Lender”), at 330 Madison Avenue, 33rd Floor, New York, NY 10017, or at such other place as Lender may designate to Borrower in writing from time to time, in legal tender of the United States, [ONE MILLION SIX HUNDRED SEVENTY SEVEN THOUSAND TWO HUNDRED FORTY ONE AND 31/100 DOLLARS ($1,677,241.31)]/[NINE HUNDRED EIGHTY FIVE THOUSAND FORTY SIX AND 48/100 DOLLARS ($985,046.48)], together with all accrued interest, which shall be due and payable upon the following terms and conditions contained in this Promissory Note (this “Note”) and the Loan Agreement (as defined herein).  Any capitalized term not otherwise defined herein shall have the meaning given to such term in the Loan Agreement. This Note is issued pursuant to that certain Exchange Agreement, dated as of the Effective Date, and made among the Borrower, Venus Concept Inc., the Lender, and [MADRYN HEALTH PARTNERS, LP]/[MADRYN HEALTH PARTNERS, LP].

A.          Interest Rate:

(a)           Interest shall accrue on the unpaid principal balance of this Note from October 4, 2023 at a variable rate per annum equal to the Term SOFR Rate (as defined below), plus three and one quarter percent (3.25%) (the “Interest Rate Margin”) (as the same may be modified as set forth below, the “Interest Rate”). The Interest Rate is subject to adjustment from time to time based on changes in Term SOFR. Such adjustments shall be made on the 8th day of every month (the “Reset Date”), beginning October 8, 2023.

(b)            As used herein, “Term SOFR Rate” means the rate of interest per annum equal to the 1-Month Term SOFR, as published by CME Group Benchmarks Administration Limited (or a successive administrator designated by the relevant authority) for the date that is two (2) U.S. Government Securities Business Days prior to the Reset Date. The Interest Rate will be effective on and from October 4, 2023, based on the most recent rate information available, and will be effective until the day immediately preceding the next Reset Date. The interest rate shall thereafter be adjusted on each Reset Date to the current Term SOFR Rate or, if applicable, the current Term SOFR Successor Rate (as defined below), plus the Interest Rate Margin, or, if applicable, the Successor Interest Rate Margin (as defined below), based on the most recent rate information available on the date that the interest rate is adjusted and such rate shall be effective until the day immediately preceding the next Reset Date.

(c)            If the Lender determines in good faith (which determination shall be conclusive, absent manifest error) that: (A) adequate and fair means do not exist for ascertaining Term SOFR; (B) Term SOFR does not accurately reflect the cost to the Lender of the Loan; or (C) a Regulatory Change (as hereinafter defined) shall, in the reasonable determination of the Lender, make it unlawful or commercially unreasonable for the Lender to use Term SOFR as the index for purposes of determining the Interest Rate, then: (i) Term SOFR shall be replaced with an alternative or successor rate or index chosen by the Lender in its reasonable discretion (the “Term SOFR Successor Rate”); and (ii) the Interest Rate Margin may also be adjusted by Lender in its reasonable discretion, giving due consideration to market convention for determining rates of interest on comparable loans (the “Successor Interest Rate Margin”). “Regulatory Change” shall mean a change in any applicable law, treaty, rule, regulation or guideline, or the interpretation or administration thereof, by the administrator of the relevant benchmark or its regulatory supervisor, any governmental authority, central bank or other fiscal, monetary or other authority having jurisdiction over Lender or its lending office.

(d)           For purposes hereof, “U.S. Government Securities Business Day” means any day except for (i) a Saturday, (ii) a Sunday or (iii) a day on which the Securities Industry and Financial Markets Association recommends that the fixed income departments of its members be closed for the entire day for purposes of trading in United States government securities.

B.          [Reserved].

C.          Payment Terms:

Commencing on January 8, 2022, and continuing on the eighth (8th) day of each month thereafter, Borrower shall make consecutive monthly payments of accrued interest. In addition to the monthly payments of accrued interest, on December 8, 2024 (the “Principal Payment Date”), the Borrower shall make an annual payment of principal, inclusive of any capitalized or paid-in-kind interest, in an amount equal to seven and a half percent (7.5%) of the outstanding principal balance of this Note (inclusive of any capitalized or paid-in-kind interest) as of the Principal Payment Date. Unless this Note is otherwise accelerated in accordance with the terms and conditions hereof, the entire outstanding principal balance of this Note (inclusive of any capitalized or paid-in-kind interest) plus all accrued and unpaid interest shall be due and payable in full on December 8, 2025 (the “Maturity Date”). Unless otherwise expressly agreed in writing, the payments due hereunder shall be paid in cash by Borrower to Lender.

D.          Loan Documents:

This Note, that certain Loan and Security Agreement dated as of the Original Issuance Date by and between Borrower and the Lender’s predecessor in interest, CITY NATIONAL BANK OF FLORIDA (as the same may be amended, restated, modified or replaced from time to time, the “Loan Agreement”), the Guaranty (as defined in the Loan Agreement), the Financing Statement(s) (as defined in the Loan Agreement), and all other documents and instruments executed in connection with this Note are hereinafter individually and/or collectively referred to as the “Loan Documents”.

E.          Default Interest Rate:

All principal and installments of interest shall bear interest from the date that said payments are due and unpaid or from the date of occurrence of any other Event of Default (as hereinafter defined) under this Note or any other Loan Document, at a rate equal to the highest rate authorized by applicable law (the “Default Rate”).

F.           Prepayment:

The Borrower may prepay all or any portion of this Note at any time without fee, premium or penalty.

G.          Late Charges:

Lender may collect a late charge not to exceed an amount equal to five percent (5%) of any installment which is not paid within ten (10) days of the due date thereof, to cover the extra expense involved in handling delinquent payments, provided that collection of said late charge shall not be deemed a waiver by Lender of any of its rights under this Note.  Notwithstanding the foregoing, there shall be no grace period or late charges for payments due on the outstanding principal balance due on the Maturity Date or upon acceleration, as set forth in Section H below, but such outstanding balance shall accrue interest at the Default Rate.  The late charge is intended to compensate the Lender for administrative and processing costs incident to late payments.  The late charge payments are not interest.  The late charge payment shall not be subject to rebate or credit against any other amount due.  Any late charge shall be in addition to any other interest due.

H.          Default and Acceleration:

If any of the following “Events of Default” occur, at the Lender’s option, exercisable in its sole discretion, all sums of principal and interest under this Note shall be accelerated and become immediately due and payable without notice of default, presentment or demand for payment, protest or notice of nonpayment or dishonor, or other notices or demands of any kind or character, and the Lender shall be immediately entitled to exercise all of its available remedies under the Loan Documents:

a.          Borrower fails to perform any obligation under this Note to pay principal or interest when due; or

b.         Borrower fails to perform any other obligation, liability or indebtedness under the Loan Documents to pay money when due beyond any applicable notice and cure periods; or

c.          A “Default” or an “Event of Default” (as defined in each respective document) beyond any applicable notice and cure period occurs under the Loan Agreement or any of the other Loan Documents; or

d.          Borrower fails to comply with the terms and conditions of the Facility.

In any such event, all sums of principal and interest under this Note shall automatically become immediately due and payable without notice of default, presentment or demand for payment, protest or notice of nonpayment or dishonor, or other notices or demands of any kind or character.  All persons now or at any time liable for payment of this Note hereby waive presentment, protest, notice of protest and dishonor.  The Borrower expressly consents to any extension or renewal, in whole or in part, and all delays in time of payment or other performance which Lender may grant at any time and from time to time without limitation and without any notice or further consent of the undersigned.

The remedies of Lender as provided herein, or in the Loan Agreement or the other Loan Documents shall be cumulative and concurrent and may be pursued singularly, successively or together, at the sole discretion of Lender, and may be exercised as often as the occasion therefor shall arise.

The Lender may, in the sole discretion of Lender, accept payments made by Borrower after any default has occurred, without waiving any of Lender’s rights herein.

I.            Costs:

In the event that this Note is collected by law or through attorneys at law, or under advice therefrom (whether such attorneys are employees of Lender or an affiliate of Lender or are outside counsel), Borrower and any endorser, guarantor or other person primarily or secondarily liable for payment hereof hereby, severally and jointly agree to pay all costs of collection, including attorneys’ fees, including charges for paralegals, appraisers, experts and consultants working under the direction or supervision of Lender’s attorneys whether or not suit is brought, and whether incurred in connection with collection, trial, appeal, bankruptcy or other creditors’ proceedings or otherwise.

J.            Loan Charges:

Nothing herein contained, nor any transaction related thereto, shall be construed or so operate as to require Borrower or any person liable for the repayment of same, to pay interest in an amount or at a rate greater than the maximum allowed by applicable law.  Should any interest or other charges paid by Borrower, or any parties liable for the payment of the loan made pursuant to this Note, result in the computation or earning of interest in excess of the maximum legal rate of interest permitted under the law in effect while said interest is being earned, then any and all of such excess shall be and is waived by Lender, and all such excess shall be automatically credited against and in reduction of the principal balance, and any portion of the excess that exceeds the principal balance shall be paid by Lender to Borrower or any parties liable for the payment of the loan made pursuant to this Note so that under no circumstances shall the Borrower, or any parties liable for the payment of the loan hereunder, be required to pay interest in excess of the maximum rate allowed by applicable law.

K.          Jurisdiction:

The laws of the State of New York shall govern the interpretation and enforcement of this Note.  In the event that legal action is instituted to collect any amounts due under, or to enforce any provision of, this instrument, Borrower and any endorser, guarantor or other person primarily or secondarily liable for payment hereof consent to, and by execution hereof submit themselves to, the jurisdiction of the courts of the State of New York, and, notwithstanding the place of residence of any of them or the place of execution of this instrument, such litigation may be brought in or transferred to a court of competent jurisdiction in and for The City of New York, Borough of Manhattan.

L.           Assignment:

Lender shall have the unrestricted right at any time and from time to time and without Borrower’s or any Guarantor’s consent, to assign all or any portion of its rights and obligations hereunder to one or more lenders or purchasers (each, an “Assignee”) under this Note and the Loan Documents and all information now or hereafter in its possession relating to the Borrower and the Guarantors (all rights of privacy hereby being waived), and to retain any compensation received by Lender in connection with any such transaction and Borrower and each Guarantor agree that they shall execute such documents, including without limitation, the delivery of an estoppel certificate and such other documents as Lender shall deem necessary to effect the foregoing.  The Borrower hereby waives any notice of the transfer of this Note by the Lender or by any other subsequent holder of this Note and agrees to be bound by the terms of this Note subsequent to any transfer and agrees that the terms of this Note may be fully enforced by any subsequent holder of this Note.

M.         Non-Waiver:

The failure at any time of Lender to exercise any of its options or any other rights hereunder shall not constitute a waiver thereof, nor shall it be a bar to the exercise of any of its options or rights at a later date.  All rights and remedies of Lender shall be cumulative and may be pursued singly, successively or together, at the option of Lender.

N.          Right of Setoff:

In addition to all liens upon and rights of setoff against the Borrower’s money, securities or other property given to the Lender by law, the Lender shall have, with respect to the Borrower’s obligations to the Lender under this Note and to the extent permitted by law, a contractual possessory security interest in and a contractual right of setoff against, and the Borrower hereby grants the Lender a security interest in, and hereby assigns, conveys, delivers, pledges and transfers to the Lender, all of the Borrower’s right, title and interest in and to, all of the Borrower’s deposits, moneys, securities and other property now or hereafter in the possession of or on deposit with, or in transit to, the Lender, whether held in a general or special account or deposit, whether held jointly with someone else, or whether held for safekeeping or otherwise, excluding, however, all IRA, Keogh, and trust accounts.  Every such security interest and right of setoff may be exercised without demand upon or notice to the Borrower.  Every such right of setoff shall be deemed to have been exercised immediately upon the occurrence of an Event of Default hereunder without any action of the Lender, although the Lender may enter such setoff on its books and records at a later time.

O.          Miscellaneous:

P.          Waiver of Jury Trial:

BORROWER AND LENDER HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE THE RIGHT EITHER MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED HEREON OR ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS NOTE AND ANY AGREEMENT CONTEMPLATED TO BE EXECUTED IN CONJUNCTION HEREWITH, OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS OF EITHER PARTY.  THIS PROVISION IS A MATERIAL INDUCEMENT FOR LENDER TO EXTEND TO BORROWER THE LOAN EVIDENCED BY THIS NOTE.

Borrower has duly executed this Note effective as of the date set forth hereinabove.