NOTE
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SBA Loan
#
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XXXXXXXX-XX
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SBA Loan
Name
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ImageWare Systems,
Inc.
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Date
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April 30,
2020
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Loan
Amount
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$1,570,600.00
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Interest
Rate
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One percent (1.0%)
fixed rate note
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Borrower
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ImageWare Systems,
Inc.
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Operating
Company
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ImageWare Systems,
Inc.
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Lender
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COMERICA
BANK
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In return for the
Loan, Borrower promises to pay to the order of Lender the amount of
One Million Five Hundred Seventy Thousand Six Hundred And
00/100
Dollars, interest
on the unpaid principal balance, and all other amounts required by
this Note.
“Collateral”
means any property taken as security for payment of this Note or
any guarantee of this Note.
“Guarantor”
means each person or entity that signs a guarantee of payment of
this Note.
“Loan”
means the loan evidenced by this Note.
“Loan
Documents” means the documents related to this loan signed by
Borrower, any Guarantor, or anyone who pledges
collateral.
“SBA”
means the Small Business Administration, an Agency of the United
States of America.
Borrower must make
all payments at the place Lender designates. The payment terms for
this Note are:
1.
Maturity: This
Note will mature in 2 years from date of Note.
The interest rate
is 1.00% per year.
Lender will apply
each installment payment first to pay interest accrued to the day
Lender receives the payment, then to bring principal current, then
to pay any late fees, and will apply any remaining balance to
reduce principal.
Loan
Prepayment:
Notwithstanding
any provision in this Note to the contrary:
Borrower may
prepay this Note. Borrower may prepay 20 percent or less of the
unpaid principal balance at any time without notice. If Borrower
prepays more than 20 percent and the Loan has been sold on the
secondary market, Borrower must:
a.
Give Lender
written notice;
b.
Pay all accrued
interest; and
c.
If the prepayment
is received less than 21 days from the date Lender receives the
notice, pay an amount equal to 21 days' interest from the date
lender receives the notice, less any interest accrued during the 21
days and paid under subparagraph b., above.
If Borrower does
not prepay within 30 days from the date Lender receives the notice,
Borrower must give Lender a new notice.
All remaining
principal and accrued interest is due and payable 2 years from date
of Note.
Payment Dates:
Borrower shall
make monthly payments of interest and principal commencing of
November 1st, 2020 (the “First Payment Date”), and
continuing on the 1st day of each month through the term of this
Note. Although no payments will be due until the First Payment
Date, Borrower acknowledge(s) and agree(s) that this Note will
begin accruing interest from the date of this
Note.
Payment
Amount:
Each monthly
payment shall be in the amount which would fully amortize the
principal balance outstanding under this Note as of the First
Payment Date, inclusive of accrued interest, in equal monthly
payments over the remaining term of this Note.
Lender must adjust
the payment amount at least annually as needed to amortize
principal over the remaining term of the Note.
Borrower is in
default under this Note if Borrower does not make a payment when
due under this Note, or if Borrower or Operating
Company:
A.
Fails to do
anything required by this Note and other Loan
Documents;
B.
Defaults on any
other loan with Lender;
C.
Does not preserve,
or account to Lender’s satisfaction for, any of the
Collateral or its proceeds;
D.
Does not disclose,
or anyone acting on their behalf does not disclose, any material
fact to Lender or SBA;
E.
Makes, or anyone
acting on their behalf makes, a materially false or misleading
representation to Lender or SBA;
F.
Defaults on any
loan or agreement with another creditor, if Lender believes the
default may materially affect
Borrower’s ability to pay this
Note;
G.
Fails to pay any
taxes when due;
H.
Becomes the
subject of a proceeding under any bankruptcy or insolvency
law;
I.
Has a receiver or
liquidator appointed for any part of their business or
property;
J.
Makes an
assignment for the benefit of creditors;
K.
Has any adverse
change in financial condition or business operation that Lender
believes may materially affect
Borrower’s ability to pay this
Note;
L.
Reorganizes,
merges, consolidates, or otherwise changes ownership or business
structure without Lender’s
prior written consent; or
M.
Becomes the
subject of a civil or criminal action that Lender believes may
materially affect Borrower’s
ability to pay this Note.
5.
LENDER’S
RIGHTS IF THERE IS A DEFAULT:
Without notice or
demand and without giving up any of its rights, Lender
may:
A.
Require immediate
payment of all amounts owing under this Note;
B.
Collect all
amounts owing from any Borrower or Guarantor;
C.
File suit and
obtain judgment;
D.
Take possession of
any Collateral; or
E.
Sell, lease, or
otherwise dispose of, any Collateral at public or private sale,
with or without advertisement.
6.
LENDER’S
GENERAL POWERS:
Without notice and
without Borrower’s consent, Lender may:
A.
Bid on or buy the
Collateral at its sale or the sale of another lienholder, at any
price it chooses;
B.
Incur expenses to
collect amounts due under this Note, enforce the terms of this Note
or any other Loan Document, and preserve or dispose of the
Collateral. Among other things, the expenses may include payments
for property taxes, prior liens, insurance, appraisals,
environmental remediation costs, and reasonable attorney’s
fees and costs. If Lender incurs such expenses, it may demand
immediate repayment from Borrower or add the expenses to the
principal balance;
C.
Release anyone
obligated to pay this Note;
D.
Compromise,
release, renew, extend or substitute any of the Collateral;
and
E.
Take any action
necessary to protect the Collateral or collect amounts owing on
this Note.
7.
WHEN FEDERAL LAW
APPLIES:
When SBA is the
holder, this Note will be interpreted and enforced under federal
law, including SBA regulations. Lender or SBA may use state or
local procedures for filing papers, recording documents, giving
notice, foreclosing liens, and other purposes. By using such
procedures, SBA does not waive any federal immunity from state or
local control, penalty, tax, or liability. As to this Note,
Borrower may not claim or assert against SBA any local or state law
to deny any obligation, defeat any claim of SBA, or preempt federal
law.
8.
SUCCESSSORS AND
ASSIGNS:
Under this Note,
Borrower and Operating Company include the successors of each, and
Lender includes its successors and assigns.
A.
All individuals
and entities signing this Note are jointly and severally
liable.
B.
Borrower waives
all suretyship defenses.
C.
Borrower must sign
all documents necessary at any time to comply with the Loan
Documents and to enable Lender to
acquire, perfect, or maintain Lender’s liens on
Collateral.
D.
Lender may
exercise any of its rights separately or together, as many times
and in any order it chooses. Lender may delay or forgo enforcing
any of its rights without giving up any of
them.
E.
Borrower may not
use an oral statement of Lender or SBA to contradict or alter the
written terms of this Note.
F.
If any part of
this Note is unenforceable, all other parts remain in
effect.
G.
To the extent
allowed by law, Borrower waives all demands and notices in
connection with this Note, including presentment, demand, protest,
and notice of dishonor. Borrower also waives any defenses based
upon any claim that Lender did not obtain any guarantee; did not
obtain, perfect, or maintain a lien upon Collateral; impaired
Collateral; or did not obtain the fair market value of Collateral
at a sale.
10.
STATE SPECIFIC
PROVISIONS:
ARIZONA (for
residents of Arizona):
In no event shall
the interest payable under this Note at any time exceed the maximum
rate permitted by law.
CALIFORNIA (for
residents of California):
In no event shall
the interest payable under this Note at any time exceed the maximum
rate permitted by law. THE MAXIMUM INTEREST RATE SHALL NOT EXCEED
THE HIGHEST APPLICABLE USURY CEILING.
MICHIGAN (for
residents of Michigan):
In no event shall
the interest payable under this Note at any time exceed the maximum
rate permitted by law. THE MAXIMUM INTEREST RATE SHALL NOT EXCEED
25% PER ANNUM OR THE HIGHEST APPLICABLE USURY CEILING, WHICHEVER IS
LESS.
FLORIDA (for
residents of Florida):
In no event shall
the interest payable under this Note at any time exceed the maximum
rate permitted by law. IF THE LOAN AMOUNT IS GREATER THAN $500,000,
THE MAXIMUM INTEREST RATE SHALL NOT EXCEED 25% PER ANNUM OR THE
HIGHEST APPLICABLE USURY CEILING, WHICHEVER IS LESS. IF THE LOAN
AMOUNT IS LESS THAN OR EQUAL TO $500,000, THE MAXIMUM INTEREST RATE
SHALL NOT EXCEED 18% PER ANNUM OR THE HIGHEST APPLICABLE USURY
CEILING, WHICHEVER IS LESS.
If Borrower is an
individual, Borrower consent(s) pursuant to Section 222.11(2)(b),
Florida Statutes, to attachment or garnishment to the fullest
extent permitted therein.
TEXAS (for
residents of Texas):
In no event shall
the interest payable under this Note at any time exceed the Maximum
Rate. The term "Maximum Rate", as used herein, shall mean at the
particular time in question the maximum nonusurious rate of
interest which, under applicable law, may then be charged on this
Note. If on any day the applicable interest rate(s) hereunder in
respect of any Indebtedness under this Note shall exceed the
Maximum Rate for that day, the rate of interest applicable to such
Indebtedness shall be fixed at the Maximum Rate on that day and on
each day thereafter until the total amount of interest accrued on
the unpaid principal balance of this Note equals the total amount
of interest which would have accrued if there had been no Maximum
Rate. If such maximum rate of interest changes after the date
hereof, the Maximum Rate shall be automatically increased or
decreased, as the case may be, without notice to the undersigned
from time to time as of the effective date of each change in such
maximum rate. For purposes of determining the Maximum Rate under
the law of the State of Texas, the applicable interest rate ceiling
shall be the "weekly ceiling" from time to time in effect under
Chapter 303 of the Texas Finance Code, as
amended.
This Note and all
other documents, instruments and agreements evidencing, governing,
securing, guaranteeing or otherwise relating to or executed
pursuant to or in connection with this Note or the Indebtedness
evidenced hereby (whether executed and delivered prior to,
concurrently with or subsequent to this Note), as such documents
may have been or may hereafter be amended from time to time (the
"Loan Documents") are intended to be performed in accordance with,
and only to the extent permitted by, all applicable usury laws. If
any provision hereof or of any of the other Loan Documents or the
application thereof to any person or circumstance shall, for any
reason and to any extent, be invalid or unenforceable, neither the
application of such provision to any other person or circumstance
nor the remainder of the instrument in which such provision is
contained shall be affected thereby and shall be enforced to the
greatest extent permitted by law.
10.
STATE-SPECIFIC
PROVISIONS: (CONTINUED)
TEXAS (Continued):
It is expressly
stipulated and agreed to be the intent of the holder hereof to at
all times comply with the usury and other applicable laws now or
hereafter governing the interest payable on the indebtedness
evidenced by this Note. If the applicable law is ever revised,
repealed or judicially interpreted so as to render usurious any
amount called for under this Note or under any of the other Loan
Documents, or contracted for, charged, taken, reserved or received
with respect to the indebtedness evidenced by this Note, or if
Lender’s exercise of the option to accelerate the maturity of
this Note, or if any prepayment by the undersigned or prepayment
agreement results (or would, if complied with, result) in the
undersigned having paid, contracted for or being charged for any
interest in excess of that permitted by law, then it is the express
intent of the undersigned and Lender that this Note and the other
Loan Documents shall be limited to the extent necessary to prevent
such result and all excess amounts theretofore collected by Lender
shall be credited on the principal balance of this Note or, if
fully paid, upon such other Indebtedness as shall then remain
outstanding (or, if this Note and all other Indebtedness have been
paid in full, refunded to the undersigned), and the provisions of
this Note and the other Loan Documents shall immediately be deemed
reformed and the amounts thereafter collectable hereunder and
thereunder reduced, without the necessity of the execution of any
new document, so as to comply with the then applicable law, but so
as to permit the recovery of the fullest amount otherwise called
for hereunder or thereunder. All sums paid, or agreed to be paid,
by the undersigned for the use, forbearance, detention, taking,
charging, receiving or reserving of the indebtedness of the
undersigned to Lender under this Note or arising under or pursuant
to the other Loan Documents shall, to the maximum extent permitted
by applicable law, be amortized, prorated, allocated and spread
throughout the full term of such indebtedness until payment in full
so that the rate or amount of interest on account of such
indebtedness does not exceed the usury ceiling from time to time in
effect and applicable to such indebtedness for so long as such
indebtedness is outstanding. To the extent federal law permits
Lender to contract for, charge or receive a greater amount of
interest, Lender will rely on federal law instead of the Texas
Finance Code, as supplemented by Texas Credit Title, for the
purpose of determining the Maximum Rate. Additionally, to the
maximum extent permitted by applicable law now or hereafter in
effect, Lender may, at its option and from time to time, implement
any other method of computing the Maximum Rate under the Texas
Finance Code, as supplemented by Texas Credit Title, or under other
applicable law, by giving notice, if required, to the undersigned
as provided by applicable law now or hereafter in effect.
Notwithstanding anything to the contrary contained herein or in any
of the other Loan Documents, it is not the intention of Lender to
accelerate the maturity of any interest that has not accrued at the
time of such acceleration or to collect unearned interest at the
time of such acceleration.
THIS WRITTEN LOAN
AGREEMENT (AS DEFINED BY SECTION 26.02 OF THE TEXAS BUSINESS AND
COMMERCE CODE) REPRESENTS THE FINAL AGREEMENT BETWEEN THE PARTIES
AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS
OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO
UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
11.
BORROWER’S
NAME(S) AND SIGNATURE(S):
By signing below,
each individual or entity becomes obligated under this Note as
Borrower.
Borrower:
ImageWare Systems,
Inc.
By:
/s/ Wayne G.
Wetherell
Name:
Wayne G.
Wetherell
Title:
Corporate
Secretary