Exhibit 4.1
SECURED PROMISSORY NOTE
| U.S. $1,290,000.00 |
May 24, 2024 |
FOR VALUE RECEIVED, XTI Aerospace,
Inc., a Nevada corporation (“Borrower”), promises to pay in lawful money of the United States of America to the order
of Streeterville Capital, LLC, a Utah limited liability company, or its successors or assigns (“Lender”), the principal
sum of $1,290,000.00, together with all other amounts due under this Secured Promissory Note (this “Note”). This Note
is issued pursuant to that certain Note Purchase Agreement, dated May 1, 2024, between Borrower and Lender (the “Purchase Agreement”).
1. PAYMENT.
Borrower shall pay to Lender the entire outstanding balance of this Note on or before the date that is twelve (12) months from the date
hereof (the “Maturity Date”). Borrower will make all payments of sums due hereunder to Lender at Lender’s address
set forth in the Purchase Agreement, or at such other place as Lender may designate in writing. Unless otherwise agreed or required by
applicable law, payments will be applied first to any unpaid collection costs and late charges, then to accrued interest and finally to
principal.
2. INTEREST.
Interest shall accrue on the outstanding balance of this Note at the rate of ten percent (10%) per annum from the date hereof until this
Note is paid in full. Upon the occurrence of an Event of Default (as defined below), interest shall accrue on the outstanding balance
of this Note at the lesser of the rate of twenty-two percent (22%) per annum or the maximum rate permitted by applicable law. All interest
calculations hereunder shall be computed on the basis of a 360-day year comprised of twelve (12) thirty (30) day months, shall
compound daily and shall be payable in accordance with the terms of this Note.
3. ORIGINAL
ISSUE DISCOUNT. This Note carries an original issue discount of $290,000.00.
4. PREPAYMENT.
Borrower may pay all or any portion of the amount owed earlier than it is due; provided that in the event Borrower elects to prepay
all or any portion of the outstanding balance, it shall pay to Lender 115% of the portion of the outstanding balance Borrower elects to
prepay. Early payments of less than all principal, fees and interest outstanding will not, unless agreed to by Lender in writing, relieve
Borrower of Borrower’s remaining obligations hereunder. After the occurrence of any Event of Default, each time Borrower sells any
of its common or preferred stock in a financing for the purpose of raising capital, it will be required to make a mandatory prepayment
hereunder in amount equal to the lesser of (x) twenty-five percent (25%) of the amount raised in such financing (less the aggregate amount
of any mandatory prepayments of any other Notes (as defined in the Purchase Agreement)made by Borrower on such date in compliance with
the corresponding prepayment provision thereunder) and (y) the outstanding balance due under this Note as of the closing date of such
financing, payable within five (5) days of receiving such amount.
5. REDEMPTIONS.
Beginning on the date that is six (6) months from the date hereof and at the intervals indicated below until this Note is paid in full,
Lender shall have the right to require Borrower to redeem up to an aggregate of one sixth (1/6) of the initial principal balance of this
Note plus any interest accrued hereunder each month (each monthly exercise, a “Monthly Redemption Amount”) by providing
written notice (each, a “Monthly Redemption Notice”) delivered to Borrower by facsimile, email, mail, overnight courier,
or personal delivery; provided, however, that if Lender does not exercise any Monthly Redemption Amount in its corresponding
month then such Monthly Redemption Amount shall be available for Lender to redeem in any future month in addition to such future month’s
Monthly Redemption Amount. Upon receipt of any Monthly Redemption Notice, Borrower shall pay the applicable Monthly Redemption Amount
in cash to Lender within five (5) Business Days of Borrower’s receipt of such Monthly Redemption Notice. For purposes of this Note,
“Business Day” shall mean any day that is not a Saturday, a Sunday or other day on which the office of the Nevada Secretary
of State is closed.
6. Monitoring
FeeS. Borrower shall be charged a separate fee equal to ten percent (10%) of the outstanding balance on the date that is six
(6) months from the issuance date of this Note to cover Lender’s accounting, legal and other costs incurred in monitoring this Note
based on the then-current outstanding balance of this Note. The foregoing fee shall automatically be added to the outstanding balance
on the applicable date without any further action by either party.
7. EVENT
OF DEFAULT. The occurrence of any of the following shall constitute an “Event of Default” under this Note:
(a) Failure
to Pay. Borrower shall fail to pay when due, whether at stated maturity, upon acceleration or otherwise, any principal or interest
payment, or any other payment required under the terms of this Note on the date due.
(b) Breaches
of Covenants. Borrower or any other person or entity defaults or otherwise fails to observe or perform in any material respect any
covenant, obligation, condition or agreement of Borrower contained herein or in any other Transaction Document (as defined in the Purchase
Agreement), only if such default or breach remains uncured for a period of at least five (5) Business Days.
(c) Representations
and Warranties. Any representation or warranty made by Borrower to Lender in this Note, the Purchase Agreement, any other Transaction
Document, or any related agreement shall be false, incorrect, incomplete or misleading in any material respect when made or furnished.
(d) Voluntary
Bankruptcy or Insolvency Proceedings. Borrower shall (i) apply for or consent to the appointment of a receiver, trustee, liquidator
or custodian of itself or of all or a substantial part of its property, (ii) make a general assignment for the benefit of its or
any of its creditors, (iii) be dissolved or liquidated, or (iv) commence a voluntary case or other proceeding seeking liquidation,
reorganization or other relief with respect to itself or its debts under any bankruptcy, insolvency or other similar law now or hereafter
in effect or consent to any such relief or to the appointment of or taking possession of its property by any official in an involuntary
case or other proceeding commenced against it.
(e) Involuntary
Bankruptcy or Insolvency Proceedings. Proceedings for the appointment of a receiver, trustee, liquidator, or custodian of Borrower
or of all or a substantial part of its property, or an involuntary case or other proceedings seeking liquidation, reorganization, or other
relief with respect to Borrower or its debts under any bankruptcy, insolvency or other similar law now or hereafter in effect shall be
commenced and an order for relief entered or such proceeding shall not be dismissed or discharged within sixty (60) days of commencement.
(f) Judgment.
A judgment or judgments for the payment of money in excess of the sum of $600,000.00 in the aggregate shall be rendered against Borrower
and either (i) the judgment creditor executes on such judgment or (ii) such judgment remains unpaid or undischarged for more than sixty
(60) days from the date of entry thereof or such longer period during which execution of such judgment shall be stayed during an appeal
from such judgment.
(g) Attachment.
Any execution or attachment shall be issued whereby any substantial part of the property of Borrower shall be taken and the same shall
not have been vacated or stayed within thirty (30) days after the issuance thereof.
(h) Cross
Default. Borrower breaches in any material respect or any event of default occurs under any term or provision of any Other Agreement
(as defined hereafter. For purposes hereof, “Other Agreement” means collectively, all existing and future agreements
and instruments between, among or by Borrower, on the one hand, and Lender, on the other hand.
8. ACCELERATION;
REMEDIES.
(a) At
any time following the occurrence of an Event of Default (other than an Event of Default referred to in Sections 6(d) and 6(e)),
Lender may, by written notice to Borrower, declare all unpaid principal, plus all accrued interest and other amounts due hereunder to
be immediately due and payable without presentment, demand, protest or any other notice of any kind, all of which are hereby expressly
waived, anything contained herein to the contrary notwithstanding. After the occurrence or existence of any Event of Default described
in Sections 6(d) and 6(e), immediately and without notice, all outstanding unpaid principal, plus all accrued interest and
other amounts due hereunder shall automatically become immediately due and payable, without presentment, demand, protest or any other
notice of any kind, all of which are hereby expressly waived, anything contained herein to the contrary notwithstanding. In addition to
the foregoing remedies, upon the occurrence or existence of any Event of Default, Lender may exercise any other right, power or remedy
permitted to it by law, either by suit in equity or by action at law, or both.
(b) Upon
the occurrence of a Change in Control (as defined below), and without further notice to Borrower, all unpaid principal, plus all accrued
interest, original issue discount, and other amounts due hereunder, shall become immediately due and payable. For purposes hereof, a “Change
in Control” means a sale of all or substantially all of Borrower’s assets, or a merger, consolidation, or other capital
reorganization of Borrower with or into another company, and does not include a significant equity financing; provided, however
that a merger, consolidation, or other capital reorganization in which the holders of the equity of Borrower outstanding immediately prior
to such transaction continue to hold (either by the voting securities remaining outstanding or by being converted into voting securities
of the surviving entity) more than fifty percent (50%) of the total voting power represented by the voting securities of Borrower, or
such surviving entity, outstanding immediately after such transaction shall not constitute a Change in Control.
9. COLLATERAL.
This Note is secured by the collateral described in the Pledge Agreement and the Security Agreement (each as defined in the Purchase Agreement),
10. UNCONDITIONAL
OBLIGATION; NO OFFSET. Borrower acknowledges that this Note is an unconditional, valid, binding and enforceable obligation of Borrower
not subject to offset, deduction or counterclaim of any kind. Borrower hereby waives any rights of offset it now has or may have hereafter
against Lender, its successors and assigns, and agrees to make all payments due hereunder in accordance with the terms of this Note.
11. NO
USURY. Notwithstanding any other provision contained in this Note or in any instrument given to evidence the obligations evidenced
hereby: (a) the rates of interest and charges provided for herein and therein shall in no event exceed the rates and charges which result
in interest being charged at a rate equaling the maximum allowed by law; and (b) if, for any reason whatsoever, Lender ever receives as
interest in connection with the transaction of which this Note is a part an amount which would result in interest being charged at a rate
exceeding the maximum allowed by law, such amount or portion thereof as would otherwise be excessive interest shall automatically be applied
toward reduction of the unpaid principal balance then outstanding hereunder and not toward payment of interest.
12. ATTORNEYS’
FEES. If this Note is placed in the hands of an attorney for collection or enforcement prior to commencing arbitration or legal proceedings,
or is collected or enforced through any arbitration or legal proceeding, or Lender otherwise takes action to collect overdue amounts due
under this Note or to enforce the provisions of this Note, then Borrower shall pay the reasonable costs incurred by Lender for such collection,
enforcement or action including, without limitation, reasonable attorneys’ fees and disbursements.
13. GOVERNING
LAW; VENUE. 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 Utah, without giving effect to any
choice of law or conflict of law provision or rule (whether of the State of Utah or any other jurisdictions) that would cause the application
of the laws of any jurisdictions other than the State of Utah. The provisions set forth in the Purchase Agreement to determine the proper
venue for any disputes are incorporated herein by this reference.
14. ARBITRATION
OF DISPUTES. Borrower agrees that any dispute arising under this Note shall be subject to the Arbitration Provisions (as defined in
the Purchase Agreement) set forth as an exhibit to the Purchase Agreement.
15. WAIVERS.
Borrower hereby waives presentment, notice of nonpayment, notice of dishonor, protest, demand and diligence.
16. LOSS
OR MUTILATION. On receipt by Borrower of evidence reasonably satisfactory to Borrower of the loss, theft, destruction or mutilation
of this Note and, in the case of any such loss, theft or destruction of this Note, on delivery of an indemnity agreement reasonably satisfactory
in form and amount to Borrower or, in the case of any such mutilation, on surrender and cancellation of such Note, Borrower at its expense
will execute and deliver, in lieu thereof, a new Note of like amount and tenor.
17. NOTICES.
Any notice required or permitted hereunder shall be given in the manner provided in the subsection titled “Notices” in the
Purchase Agreement, the terms of which are incorporated herein by this reference.
18. AMENDMENT
AND WAIVER. This Note and its terms and conditions may be amended, waived or modified only in writing by Borrower and Lender.
19. SEVERABILITY.
If any part of this Note is construed to be in violation of any law, such part shall be modified to achieve the objective of the parties
to the fullest extent permitted and the balance of this Note shall remain in full force and effect.
20. ASSIGNMENTS.
Borrower may not assign this Note without the prior written consent of Lender. This Note may be offered, sold, assigned or transferred
by Lender without the consent of Borrower.
21. FINAL
NOTE. This Note, together with the other Transaction Documents, contains the complete understanding and agreement of Borrower and
Lender and supersedes all prior representations, warranties, agreements, arrangements, understandings, and negotiations. THIS NOTE, TOGETHER
WITH THE OTHER TRANSACTION DOCUMENTS, REPRESENTS THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF ANY
ALLEGED PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
22. Waiver
of Jury Trial. BORROWER IRREVOCABLY WAIVES ANY AND ALL RIGHTS IT MAY HAVE TO DEMAND THAT ANY ACTION, PROCEEDING OR COUNTERCLAIM
ARISING OUT OF OR IN ANY WAY RELATED TO THIS NOTE OR THE RELATIONSHIPS OF THE PARTIES HERETO BE TRIED BY JURY. THIS WAIVER EXTENDS TO
ANY AND ALL RIGHTS TO DEMAND A TRIAL BY JURY ARISING UNDER COMMON LAW OR ANY APPLICABLE STATUTE, LAW, RULE OR REGULATION. FURTHER, BORROWER
ACKNOWLEDGES THAT IT KNOWINGLY AND VOLUNTARILY IS WAIVING SUCH PARTY’S RIGHT TO DEMAND TRIAL BY JURY.
23. TIME
IS OF THE ESSENCE. Time is of the essence of this Note and each and every provision hereof in which time is an element.
24. LIQUIDATED
DAMAGES. Lender and Borrower agree that in the event Borrower fails to comply with any of the terms or provisions of this Note, Lender’s
damages would be uncertain and difficult (if not impossible) to accurately estimate because of the parties’ inability to predict
future interest rates and other relevant factors. Accordingly, Lender and Borrower agree that any fees, balance adjustments, default interest
or other charges assessed under this Note are not penalties but instead are intended by the parties to be, and shall be deemed, liquidated
damages.
IN WITNESS WHEREOF, Borrower
has caused this Note to be issued as of the date first set forth above.
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BORROWER: |
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XTI AEROSPACE, INC. |
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By: |
/s/ Scott Pomeroy |
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Scott Pomeroy, CEO |
ACKNOWLEDGED, ACCEPTED AND AGREED:
LENDER:
| Streeterville Capital, LLC |
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| By: |
/s/ John M. Fife |
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John M. Fife, President |
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[Signature Page to Secured Promissory Note]
