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EX-10 - CONVERTIBLE PROMISSORY NOTE - IMAGEWARE SYSTEMS INC | ex10-1.htm |
8-K - FORM 8-K - IMAGEWARE SYSTEMS INC | iwsy8k.htm |
Exhibit
10.2
THIS PROMISSORY NOTE HAS BEEN ACQUIRED FOR INVESTMENT AND HAS NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, OR QUALIFIED
UNDER ANY STATE SECURITIES LAWS. THIS PROMISSORY NOTE MAY NOT BE
SOLD OR TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR
QUALIFICATION OR AN EXEMPTION THEREFROM UNDER SAID ACT AND ANY
APPLICABLE STATE SECURITIES LAWS.
CONVERTIBLE PROMISSORY NOTE
$100,000
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June 29, 2020
San Diego,
California
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FOR VALUE RECEIVED, ImageWare Systems,
Inc., a Delaware corporation, (the “Company”), promises to pay to the
order of S. James Miller, or its registered assigns
(“Holder”), the
principal sum of One Hundred Thousand Dollars ($100,000) on October
14, 2020, or such earlier date as more particularly set forth in
Section 2 below (the “Maturity Date”), together with
interest thereon as provided in Section 3 of this Convertible
Promissory Note (this “Note”).
“Business Day” means any
day which is not a Saturday or Sunday or a legal holiday on which
national banks are authorized or required to be
closed.
“Governmental Authority”
means any federal, state, local or other governmental department,
commission, board, bureau, agency or other instrumentality or
authority, domestic or foreign, exercising executive, legislative,
judicial, regulatory or administrative authority or functions of or
pertaining to government.
“Material Adverse Effect”
means any event, matter, condition or circumstance which (i) has or
would reasonably be expected to have a material adverse effect on
the business, properties, operations, condition (financial or
otherwise) or prospects of the Company and its Subsidiaries, taken
as a whole; (ii) would materially impair the ability of the Company
or any other Person to perform or observe their respective
obligations under or in respect of this Note; (iii) would
materially impair the rights and remedies of Holder under this
Note; or (iv) affects the legality, validity, binding effect or
enforceability of this Note.
“Organic Document” means,
relative to any Person, its articles or certificate of
incorporation, or certificate of limited partnership or formation,
its bylaws, partnership or operating agreement or other
organizational documents, and all stockholders agreements, voting
trusts and similar arrangements applicable to any of its capital
stock, partnership interests or other ownership
interests.
“Outstanding Balance”
means the outstanding principal balance of this Note together with
all accrued but unpaid interest hereunder.
“Person” means an
individual, a partnership, a corporation, a limited liability
company, an association, a joint stock company, a trust, a joint
venture, an unincorporated organization and a governmental entity
or any department, agency or political subdivision
thereof.
3.
Payment of
Interest.
(a) Interest Generally. Interest
shall accrue on the outstanding principal amount of this Note at a
rate equal to 5% per annum, calculated based on the date the
proceeds from the sale of this Note, as follows:
Principal Amount
|
Date Received
|
$50,000
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April
14, 2020
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$25,000
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April
22, 2020
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$25,000
|
May 4,
2020
|
Interest (computed
on the basis of actual calendar days elapsed and a year of 365
days) shall be payable in kind, as an addition to the outstanding
principal amount due hereunder, monthly in arrears on the last day
of each calendar month (each such date, an “Interest Payment Date”). The
Company may elect to pay interest in cash on the outstanding
principal balance of this Note on any Interest Payment
Date.
(b) Default
Interest. Upon the occurrence and during the continuance of
any Event of Default, the Outstanding Balance under this Note shall
bear interest at a rate per annum equal to 2% plus the rate
otherwise applicable to this Note. Such incremental interest (i.e.,
the additional 2% added during the continuance of an Event of
Default) shall be payable in cash.
4.
Payments.
(a) Form of Payment. All payments
of cash interest and principal shall be in lawful money of the
United States of America by a check drawn on the account of the
Company and sent via overnight courier service to Holder at such
address as previously provided to the Company in writing (which
address, in the case of Holder as of the date of issuance hereof,
shall initially be the address for Holder as set forth in this
Note); provided, that
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 Holder’s wire
transfer instructions. All payments shall be applied first to
accrued interest, and thereafter to principal.
(b)
No Set-Off. The Company agrees
to make all payments under this Note without set-off or deduction
and regardless of any counterclaim or defense.
(c)
Prepayment. The Company shall
have the right to prepay the Outstanding Balance owed under this
Note in whole or in part at any time.
5. Conditions
Precedent. Holder shall not be obligated to make any advance
under this Note if any Event of Default shall have occurred and is
continuing.
6. Conversion.
At any time prior to the Maturity Date, the Outstanding Balance may
be converted at the election of the Holder into shares of fully
paid, non-assessible shares of Common Stock of the Company at the
conversion price equal to $0.16 per share (“Conversion Shares”), which
conversion shall be affected by the delivery by the Holder to the
Company of a notice of election to convert.
7. Piggyback
Registration Rights. If, at any
time prior to the Maturity Date, the Company shall propose to file
with the Securities and Exchange Commission a registration
statement under the Securities Act of 1933, as amended
(“Securities
Act”) (other than on
Forms S-4 or S-8 or any successor to such forms) providing for the
resale of securities by selling stockholders, and the inclusion of
the Conversion Shares in such registration statement is not
prohibited by a negative covenant set forth in any binding
agreement of the Company, the Company shall give notice to Holder
and include in such registration statement all or any part of the
Conversion Shares that Holder requests to be registered;
provided,
however, that the Company shall
not be required to register any Conversion Shares pursuant to this
Section 7 that are eligible for resale pursuant to Rule 144 under
the Securities Act without any requirement for the Company to
maintain current public information and without any limitation on
volume or manner of sale. The Company shall use best efforts to
cause such registration statement to become effective as soon as
practicable.
8. Representations and Warranties.
The Company hereby makes the following representations and
warranties to Holder:
(a) Organization, Good Standing and
Qualification. The Company is duly organized, validly
existing and in good standing under the laws of the jurisdiction of
its incorporation, and has all requisite power and authority to
execute, deliver and perform its obligations under this Note. The
Company is qualified to do business and is in good standing in each
jurisdiction in which the failure so to qualify or be in good
standing would have a Material Adverse Effect, and has all
requisite power and authority to own its assets and carry on its
business.
(b) Corporate
Power and Authorization; Consents. The execution, delivery
and performance by the Company of this Note have been duly
authorized by all necessary action of the Company and do not and
will not (i) contravene the terms of the Company’s Organic
Documents; (ii) result in a breach of, or constitute a default (or
an event that with notice or lapse of time or both would become a
default) under, or give to others any rights of termination,
amendment, acceleration or cancellation (with or without notice,
lapse of time or both) of, any lease, instrument, contract or other
agreement to which the Company is a party or by which its
properties may be bound or affected; (iii) necessitate the consent,
approval, order or authorization of, or registration,
qualification, designation, declaration or filing with, any
Governmental Authority or any third party; or (iv) violate any
provision of any law, rule, regulation, order, judgment, decree or
the like binding on or affecting the Company, except in the case of
each of clauses (ii), (iii) and (iv), such as would not result in a
Material Adverse Effect.
(c) Enforceability.
This Note constitutes the legal, valid and binding obligation of
the Company, enforceable against the Company in accordance with its
terms
9.
Covenants. So long as any
indebtedness under this Note remains outstanding, the Company shall
provide to Holder, as soon as possible and in any event within
three (3) days after the occurrence thereof, written notice of an
Event of Default, which notice sets forth the details of such event
and the action which is proposed to be taken by the Company with
respect thereto.
10.
Use of Proceeds. The Company
shall use the proceeds from the amounts loaned to the Company under
this Note for general working capital and other lawful corporate
purposes.
11. Default.
(a) Events of Default. For purposes
of this Note, any of the following events which shall occur shall
constitute an “Event
of Default”:
(i) any indebtedness
under this Note is not paid when and as the same shall become due
and payable, whether at maturity, by acceleration, fifteen (15)
days following notice of prepayment or otherwise;
(ii) default
shall occur in the observance or performance of the covenant,
obligation or agreement of the Company contained in Section 8, or
(B) any other provision of this Note, and, in the case of this
clause (B), such default shall continue uncured for a period of
fifteen (15) days;
(iii) any
representation, warranty or certification made herein by or on
behalf of the Company or any of its Subsidiaries shall prove to
have been false or incorrect in any material respect on the date or
dates as of which made (any such falsity being a
“Representation
Default”);
(iv) the
Company shall (A) apply for or consent to the appointment of a
receiver, trustee, custodian or liquidator of itself or any part of
its property, (B) become subject to the appointment of a receiver,
trustee, custodian or liquidator for itself or any part of its
property, (C) make an assignment for the benefit of creditors, (D)
fail generally, become unable or admit in writing to its inability
to pay its debts as they become due, (E) institute any proceedings
under the United States Bankruptcy Code or any other federal or
state bankruptcy, reorganization, receivership, insolvency or other
similar law affecting the rights of creditors generally, or file a
petition or answer seeking reorganization or an arrangement with
creditors to take advantage of any insolvency law, or file an
answer admitting the material allegations of a bankruptcy,
reorganization or insolvency petition filed against it, or (F)
become subject to any involuntary proceedings under the United
States Bankruptcy Code or any other federal or state bankruptcy,
reorganization, receivership, insolvency or other similar law
affecting the rights of creditors generally;
(v) the Company shall
(i) liquidate, wind up or dissolve (or suffer any liquidation,
wind- up or dissolution), (ii) suspend its operations other than in
the ordinary course of business, or (iii) take any action to
authorize any of the actions or events set forth above in this
Section 10(a)(v); or
(vi) this
Note shall for any reason cease to be, or shall be asserted by the
Company not to be, a legal, valid and binding obligation of the
Company.
(b)
Consequences of Events of
Default.
(i) If any Event of
Default shall occur for any reason, whether voluntary or
involuntary, and be continuing, Holder may, upon notice or demand,
declare the Outstanding Balance under this Note to be due and
payable, whereupon the Outstanding Balance under this Note shall be
and become immediately due and payable, and the Company shall
immediately pay to Holder the entire Outstanding Balance. Upon the
occurrence of an actual or deemed entry of an order for relief with
respect to the Company under the United States Bankruptcy Code,
then the Outstanding Balance under this Note shall automatically be
due immediately without notice of any kind. The Company agrees to
pay Holder all out-of-pocket costs and expenses incurred by Holder
(including attorney’s fees) in connection with the
enforcement or protection of its rights in relation to this
Agreement, including any suit, action, claim or other activity of
Holder to collect the Outstanding Balance under this Note or any
portion thereof, or in connection with the transactions
contemplated hereby.
(ii) Holder
shall also have any other rights which Holder may have been
afforded under any contract or agreement at any time and any other
rights which Holder may have pursuant to applicable
law.
If to
the Company:
ImageWare Systems,
Inc.
13500
Evening Creek Drive,
Suite
550 San Diego, CA 92128
Telephone
No.:
858-673-8600
Attention: Chief
Executive Officer
With a
copy to:
Daniel
W. Rumsey
Disclosure Law
Group
501
West Broadway, Suite 800
San
Diego, CA 92101
Facsimile No.:
619-330-2101
Telephone No.:
619-795-1134
If to
Holder:
S.
James Miller
Facsimile No.:
858-673-0291
Telephone No.:
858-722-8700
[Remainder
of Page Intentionally Left Blank]
IN
WITNESS WHEREOF, each of the undersigned has caused this Note to be
duly executed by its officers, thereunto duly authorized as of the
date first above written.
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THE
COMPANY:
ImageWare
Systems, INC.,
By: /s/ Jonathan
Morris
Name: Jonathan Morris
Title: Chief Financial
Officer
HOLDER:
By: /s/ S. James
Miller
Name: S. James
Miller
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