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Promissory
Note
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Date
05/01/2020
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Loan
Amount
$414,362.00
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Interest Rate after
Deferment Period
1.00%
fixed per annum
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Deferment
Period
6
months
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1.
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DEPOSIT
ACCOUNT/USE OF LOAN PROCEEDS. Borrower is required to maintain a
deposit account with Bank of America, N.A. (the “Deposit
Account”) until the Loan is either forgiven in full or the
Loan is fully paid by Borrower. Borrower acknowledges and agrees
that the proceeds of the Loan shall be deposited by Bank into the
Deposit Account. The Loan proceeds are to not be used by Borrower
for any illegal purpose and Borrower represents to the Bank that it
will derive material benefit, directly and indirectly, from the
making of the Loan.
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2.
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DIRECT
DEBIT. If the Loan is not forgiven and a Loan Balance remains,
Borrower agrees that on the due date of any amount due as set forth
in the Repayment Letter, Bank will debit the amount due from the
Deposit Account established by Borrower in connection with this
Loan. Should there be insufficient funds in the Deposit Account to
pay all such sums when due, the full amount of such deficiency be
shall be immediately due and payable by Borrower.
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3.
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INTEREST
RATE: Bank shall charge interest on the unpaid principal balance of
the Loan at the interest rate set forth above under “Interest
Rate” from the date the Loan was funded until the Loan is
paid in full.
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4.
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REPRESENTATIONS,
WARRANTIES AND COVENANTS. (1) Borrower represents and warrants to
Bank, and covenants and agrees with Bank, That (i) Borrower has
read the statements included in the Application, including the
Statements Required by Law and Executive Orders, and Borrower
understands them. (ii) Borrower was and remains eligible to receive
a loan under the rules in effect at the time Borrower submitted to
Bank its Paycheck Protection Program Application Form (the
“Application”) that have been issued by the SBA
implementing the Paycheck Protection Program under Division A,
Title I of the CARES Act (the “Paycheck Protection Program
Rule”). (iii) Borrower (a) is an independent contractor,
eligible self-employed individual, or sole proprietor or (b)
employs no more than the greater of 500 employees or, if
applicable, the size standard in number of employees established by
the SBA in 13 C.F.R. 121.201 for Borrower’s industry. (iv)
Borrower will comply whenever applicable, with the civil rights and
other limitations in the Application. (v) All proceeds of the Loan
will be used only for business-related purposes as specified in the
Application and consistent with the Paycheck Protection Program
Rule. (vi) To the extent feasible, Borrower will purchase only
American-made equipment and products. (vii) Borrower is not engaged
in any activity that is illegal under federal, state or local law.
(viii) Borrower certifies that any loan received by Borrower under
Section 7(b)(2) of the Small Business Act between January 31, 2020
and April 3, 2020 that will remain outstanding after funding of
this Loan was for a purpose other than paying payroll costs and
other allowable uses loans under the Paycheck Protection Program
Rule. (ix) Borrower was in operation on February 15, 2020 and had
employees for whom Borrower paid salaries and payroll taxes or paid
independent contractors (as reported on Form(s) 1099-MISC). (x) The
current economic uncertainty makes the request for the Loan
necessary to support the ongoing operations of Borrower. (xi) All
proceeds of the Loan will be used to retain workers and maintain
payroll or make morttgage interest payments, lease payments, and
utility payments, as specified under the Paycheck Protection
Program Rule and Borrower acknowledges that if the funds are
knowingly used for unauthorized purposes, the federal government
may hold Borrower and/or Borrower’s authorized representative
legally liable, such as for charges of fraud. (xii) Borrower has
provided Bank true, correct and complete information demonstrating
that Borrower had employees for whom Borrower paid salaries and
payroll taxes on or around February 15, 2020. (xiii) Borrower has
proviided to Bank all documentation available to Borrower on a
reasonable basis verifying the dollar amounts of average monthly
payroll costs for the calendar year 2019, which documentation shall
include, as applicable, copies of payroll processor records,
payroll tax filings and/or Form 9-109MISC. (xiv) Borrower will
promptly provide to Bank (a) any additional documentation that Bank
requests in order to verify payroll costs and (b) documentation
verifying the number of full-time equivalent employees on payroll
as well as the dollar amounts of payroll costs, covered mortgage
interest payments, covered rent payments, and covered utilities for
the eight week period following the Loan. (xv) Borrower
acknowledges that (a) loan forgiveness will be provided by the SBA
for the sum of documented payroll costs, covered mortgage interest
payments, covered rent payments, and covered utilities, and not
more than 25% of the Forgivable Amount may be for non-payroll costs
(xvi) During the period beginning on February 15, 2020 and ending
on December 31, 2020, Borrower has not and will not receive any
other loan under the Paycheck Protection Program. (xvii) Borrower
certifies that the information provided in the Application and the
information that Borrower provided in all supporting documents and
forms is true and accurate in all material respects. Borrower
acknowledges that knowingly making a false statement to obtain a
guaranteed loan from SBA is punishable under the law, including
under 18 USC 1001 and 3571 by imprisonment of not more than five
years and/or a fine of up to $250,000; under 15 USC 645 by
imprisonment of not more than two years and/or a fine of not more
than $5,000; and, if submitted to a Federally insured institution,
under 18 USC 1014 by imprisonment of not more than thirty years
and/or a fine of not more than $1,000,000. (xviii) Borrower
understands, acknowledges and agrees that Bank can share any tax
information received from Borrower or any Owner with SBA's
authorized representatives, including authorized representatives of
the SBA Office of Inspector General, for the purpose of compliance
with SBA Loan Program Requirements and all SBA reviews. (xix)
Neither Borrower nor any Owner is presently suspended, debarred,
proposed for debarment, declared ineligible, voluntarily excluded
from participation in this transaction by any Federal department or
agency, or presently involved in any bankruptcy. (xx) Neither
Borrower, nor any Owner, nor any business owned or controlled by
any of them, ever obtained a direct or guaranteed loan from SBA or
any other Federal agency that is currently delinquent or has
defaulted in the last 7 years and caused a loss to the government.
(xxi) Neither Borrower, nor any Owner, is an owner of any other
business or has common management with any other business, except
as disclosed to the Bank in connection with the Borrower’s
Application. (xxii) Borrower did not receive an SBA Economic Injury
Disaster Loan between January 31, 2020 and April 3, 2020, except as
disclosed to the Bank in connection with the Borrower’s
Application. (xxiii) Neither Borrower (if an individual), nor any
individual owning 20% or more of the equity of Borrower (each, an
“Owner”), is subject to an indictment, criminal
information, arraignment, or other means by which formal criminal
charges are brought in any
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jurisdiction, or
presently incarcerated, on probation or parole.(xxiv) Neither
Borrower (if an individual), nor any Owner, has within the last 5
years been convicted; pleaded guilty; pleaded nolo contendere; been
placed on pretrial diversion; or been placed on any form of parole
or probation (including probation before judgment) for any felony.
(xxv) The United States is the principal place of residence for all
employees of Borrower included in Borrower’s payroll
calculation included in the Application. (xxvi) The Borrower
correctly indicated on its Application whether it is a franchise
that is listed in the SBA’s franchise directory. (xxvii) If
Borrower is claiming an exemption from all SBA affiliation rules
applicable to Paycheck Protection Program loan eligibility under
the religious exemption to the affiliation rules, Borrower has made
a reasonable, good faith determination that it qualifies for such
religious exemption under 13 C.F.R. 121.103(b)(10), which provides
that “[t]he relationship of a faith-based organization to
another organization is not considered an affiliation with the
other organization…if the relationship is based on a
religious teaching or belief or otherwise constitutes a part of the
exercise of religion.” (2) At all times during the term of
the Loan, Borrower represents and warrants to the Bank, that (i) if
Borrower is anything other than a natural person, it is duly formed
and existing under the laws of the state or other jurisdiction
where organized; (ii) this Note, and any instrument or agreement
required under this Note, are within Borrower's powers, have been
duly authorized, and do not conflict with any of its organizational
papers; (iii) the information included in the Beneficial Ownership
Certification most recently provided to the Bank, if applicable, is
true and correct in all respects; and (iv) in each state in which
Borrower does business, it is properly licensed, in good standing,
and, where required, in compliance with fictitious name (e.g. trade
name or d/b/a) statutes. IF THE FUNDING DATE IS AFTER THE DATE OF
THIS NOTE, BORROWER AGREES THAT BORROWER SHALL BE DEEMED TO HAVE
REPEATED AND REISSUED, IMMEDIATELY PRIOR TO THE FUNDING ON THE
FUNDING DATE, THE REPRESENTATIONS, WARRANTIES, COVENANTS AND
AGREEMENTS SET FORTH ABOVE IN THIS PARAGRAPH.
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5.
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EVENTS
OF DEFAULT. If the Loan is not forgiven and a Loan Balance remains,
then from the date the Repayment Letter is sent to Borrower until
the Loan Balance is fully paid, the occurrence and continuation of
any of the following events shall constitute a default hereunder:
(i) insolvency, bankruptcy, dissolution, issuance of an attachment
or garnishment against Borrower; (ii) failure to make any payment
when due under the Loan or any or all other loans made by Bank to
Borrower, and such failure continues for ten (10) days after it
first became due; (iii) failure to provide current financial
information promptly upon request by Bank; (iv) the making of any
false or materially misleading statement on any application or any
financial statement for the Loan or for any or all other loans made
by Bank to Borrower; (v) Bank in good faith believes the prospect
of payment under the Loan or any or all other loans made by Bank to
Borrower is impaired; (vi) Borrower under or in connection with the
Loan or any or all other loans made by Bank to Borrower fails to
timely and properly observe, keep or perform any term, covenant,
agreement, or condition therein; (vii) default shall be made with
respect to any other indebtedness for borrowed money of Borrower,
if the default is a failure to pay at maturity or if the effect of
such default is to accelerate the maturity of such indebtedness for
borrowed money or to permit the holder or obligee thereof or other
party thereto to cause any such indebtedness for borrowed money to
become due prior to its stated maturity; (viii) the Bank in its
sole discretion determines in good faith that an event has occurred
that materially and adversely affects Borrower; (ix) any change
shall occur in the ownership of the Borrower; (x) permanent
cessation of Borrower’s business operations; (xi) Borrower,
if an individual, dies, or becomes disabled, and such disability
prevents the Borrower from continuing to operate its business;
(xii) Bank receives notification or is otherwise made aware that
Borrower, or any affiliate of Borrower, is listed as or appears on
any lists of known or suspected terrorists or terrorist
organizations provided to Bank by the U.S. government under the USA
Patriot Act of 2001; and (xiii) Borrower fails to maintain the
Deposit Account with the Bank.
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6.
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REMEDIES.
If the Loan is not forgiven and a Loan Balance remains, then from
the date the Repayment Letter is sent to Borrower, upon the
occurrence of a default, all or any portion of the entire amount
owing on the Loan, and any and all other loans made by Bank to
Borrower, shall, at Bank’s option, become immediately due and
payable without demand or notice. Upon a default, Bank may exercise
any other right or remedy available to it at law or in equity. All
persons included in the term “Borrower” are jointly and
severally liable for repayment, regardless of to whom any advance
of credit was made. Borrower shall pay any costs Bank may incur
including without limitation reasonable attorney’s fees and
court costs should the Loan and/or any and all other loans made by
Bank to Borrower be referred to an attorney for collection to the
extent permitted under applicable state law. EACH PERSON INCLUDED
IN THE TERM BORROWER WAIVES ALL SURETYSHIP AND OTHER SIMILAR
DEFENSES TO THE FULL EXTENT PERMITTED BY APPLICABLE
LAW.
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7.
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CREDIT
INVESTIGATION. If the Loan is not forgiven and a Loan Balance
remains, then from the date the Repayment Letter is sent to
Borrower until the Loan Balance is fully paid, Borrower authorizes
Bank and any of its affiliates at any time to make whatever credit
investigation Bank deems is proper to evaluate Borrower’s
credit, financial standing and employment and Borrower authorizes
Bank to exchange Borrower’s credit experience with credit
bureaus and other creditors Bank reasonably believes are doing
business with Borrower. Borrower also agrees to furnish Bank with
any financial statements Bank may request at any time and in such
detail as Bank may require.
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8.
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NOTICES.
Borrower’s request for Loan forgiveness, and the
documentation that must accompany that request, shall be submitted
to Bank by transmitting the communication to the electronic
address, website, or other electronic transmission portal provided
by Bank to Borrower. Otherwise, all notices required under this
Note shall be personally delivered or sent by first class mail,
postage prepaid, or by overnight courier, to the addresses on the
signature page of this Note, or sent by facsimile to the fax
number(s) listed on the signature page, or to such other addresses
as the Bank and the Borrower may specify from time to time in
writing (any such notice a “Written Notice”). Written
Notices shall be effective (i) if mailed, upon the earlier of
receipt or five (5) days after deposit in the U.S. mail, first
class, postage prepaid, (ii) if telecopied, when transmitted, or
(iii) if hand-delivered, by courier or otherwise (including
telegram, lettergram or mailgram), when delivered. In lieu of a
Written Notice, notices and/or communications from the Bank to the
Borrower may, to the extent permitted by law, be delivered
electronically (i) by transmitting the communication to the
electronic address provided by the Borrower or to such other
electronic address as the Borrower may specify from time to time in
writing, or (ii) by posting the communication on a website and
sending the Borrower a notice to the Borrower’s postal
address or electronic address telling the Borrower that the
communication has been posted, its location, and providing
instructions on how to view it (any such notice, an
“Electronic Notice”). Electronic Notices shall be
effective when presented to the Borrower, or is sent to the
Borrower’s electronic address or is posted to the
Bank’s website. To retain a copy for your records, please
download and print or save a copy to your device.
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9.
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CHOICE
OF LAW; JURISDICTION; VENUE. (1) At all times that Bank is the
holder of this Note, except to the extent that any law of the
United States may apply, this Note shall be governed and
interpreted according to the internal laws of the state of
Borrower’s principal place of business (the “Governing
Law State”), without regard to any choice of law, rules or
principles to the contrary. However, the charging and calculating
of interest on the obligations under this Note shall be governed
by, construed and enforced in accordance with the laws of the state
of North Carolina and applicable federal law. Nothing in this
paragraph shall be construed to limit or otherwise affect any
rights or remedies of Bank under federal law. Borrower and Bank
agree and consent to be subject to the personal jurisdiction of any
state or federal court located in the Governing Law State so that
trial shall only be conducted by a court in that state. (2)
Notwithstanding the foregoing, 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.
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10.
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MISCELLANEOUS.
The Loan may be sold or assigned by Bank without notice to
Borrower. Borrower may not assign the Loan or its rights hereunder
to anyone without Bank’s prior written consent. If any
provision of this Note is contrary to applicable law or is found
unenforceable, such provision shall be severed from this Note
without invalidating the other provisions thereof. Bank may delay
enforcing any of its rights under this Note without losing them,
and no failure or delay on the part of Bank in exercising any
right, power or privilege hereunder shall operate as a waiver
thereof; nor shall any single or partial exercise of any right,
power or privilege hereunder preclude any other or future exercise
thereof or the exercise of any other right, power or privilege.
Bank, by its acceptance hereof, and the making of the Loan and
Borrower understand and agree that this Note constitutes the
complete understanding between them. This Note shall be binding
upon Borrower, and its successors and assigns, and inure to the
benefit of Bank and its successors and assigns.
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11.
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BORROWING
AUTHORIZED. The signer for Borrower represents, covenants and
warrants to Bank that he or she is certified to borrow for the
Borrower and is signing this Note as the duly authorized sole
proprietor, owner, sole shareholder, officer, member, managing
member, partner, trustee, principal, agent or representative of
Borrower, and further acknowledges and confirms to Bank that by
said signature he or she has read and understands all of the terms
and provisions contained in this Note and agrees and consents to be
bound by them. This Note and any instrument or agreement required
herein, are within the Borrower's powers, have been duly
authorized, and do not conflict with any of its organizational
papers. The individuals signing this Agreement on behalf of each
Borrower are authorized to sign such documents on behalf of such
entities. For purposes of this Note only, the Bank may rely upon
and accept the authority of only one signer on behalf of the
Borrower, and for this Note, this resolution supersedes and
replaces any prior and existing contrary resolution provided by
Borrower to Bank.
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12.
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ELECTRONIC
COMMUNICATIONS AND SIGNATURES. This Note and any document,
amendment, approval, consent, information, notice, certificate,
request, statement, disclosure or authorization related to this
Note (each a “Communication”), including Communications
required to be in writing, may, if agreed by the Bank, be in the
form of an Electronic Record and may be executed using Electronic
Signatures, including, without limitation, facsimile and/or .pdf.
The Borrower agrees that any Electronic Signature (including,
without limitation, facsimile or .pdf) on or associated with any
Communication shall be valid and binding on the Borrower to the
same extent as a manual, original signature, and that any
Communication entered into by Electronic Signature, will constitute
the legal, valid and binding obligation of the Borrower enforceable
against the Borrower in accordance with the terms thereof to the
same extent as if a manually executed original signature was
delivered to the Bank. Any Communication may be executed in as many
counterparts as necessary or convenient, including both paper and
electronic counterparts, but all such counterparts are one and the
same Communication. For the avoidance of doubt, the authorization
under this paragraph may include, without limitation, use or
acceptance by the Bank of a manually signed paper Communication
which has been converted into electronic form (such as scanned into
PDF format), or an electronically signed Communication converted
into another format, for transmission, delivery and/or retention.
The Bank may, at its option, create one or more copies of any
Communication in the form of an imaged Electronic Record
(“Electronic Copy”), which shall be deemed created in
the ordinary course of the Bank’s business, and destroy the
original paper document. All Communications in the form of an
Electronic Record, including an Electronic Copy, shall be
considered an original for all purposes, and shall have the same
legal effect, validity and enforceability as a paper record.
Notwithstanding anything contained herein to the contrary, the Bank
is under no obligation to accept an Electronic Signature in any
form or in any format unless expressly agreed to by the Bank
pursuant to procedures approved by it; provided, further, without
limiting the foregoing, (a) to the extent the Bank has agreed to
accept such Electronic Signature, the Bank shall be entitled to
rely on any such Electronic Signature without further verification
and (b) upon the request of the Bank any Electronic Signature shall
be promptly followed by a manually executed, original counterpart.
For purposes hereof, “Electronic Record” and
“Electronic Signature” shall have the meanings assigned
to them, respectively, by 15 USC §7006, as it may be amended
from time to time.
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13.
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CONVERSION
TO PAPER ORIGINAL. At the Bank’s discretion the authoritative
electronic copy of this Note ("Authoritative Copy") may be
converted to paper and marked as the original by the Bank (the
"Paper Original"). Unless and until the Bank creates a Paper
Original, the Authoritative Copy of this Agreement: (1) shall at
all times reside in a document management system designated by the
Bank for the storage of authoritative copies of electronic records,
and (2) is held in the ordinary course of business. In the event
the Authoritative Copy is converted to a Paper Original, the
parties hereto acknowledge and agree that: (1) the electronic
signing of this Agreement also constitutes issuance and delivery of
the Paper Original, (2) the electronic signature(s) associated with
this Agreement, when affixed to the Paper Original, constitutes
legally valid and binding signatures on the Paper Original, and (3)
the Borrower’s obligations will be evidenced by the Paper
Original after such conversion.
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14.
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BORROWER
ATTESTATION. Borrower attests and certifies to Bank that it has not
provided false or misleading information or statements to the Bank
in its application for the Loan, and that the certifications,
representations, warranties, and covenants made to the Bank in this
Note and elsewhere relating to the Loan are true, accurate, and
correct. Borrower further attests and certifies to Bank that it has
read, understands, and acknowledges that the Loan is being made
under the CARES Act, and any use of the proceeds of the Loan other
than as permitted by the CARES Act, or any false or misleading
information or statements provided to the Bank in its application
for the Loan or in this Note may subject the Borrower to criminal
and civil liability under applicable state and federal laws and
regulations, including but not limited to, the False Claims Act, 31
U.S.C. Section 3729, et. seq. Borrower further acknowledges and
understands that this Note is not valid and effective until and
unless Borrower’s application for the Loan is approved and
Bank’s receiving confirmation from the SBA that Bank may
proceed with the Loan.
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BORROWER:
WRAP TECHNOLOGIES, INC.
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By
checking this box, you acknowledge that: (a) the funding of the
Loan is conditioned upon approval of the Borrower’s
Application for the Loan and the Bank’s receiving
confirmation from the SBA that the Bank may proceed with the Loan
and (b) your electronic signature as authorized representative for
the Borrower will be applied to this Note and will have the same
legal effect as a handwritten signature.
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Signature of
Authorized Representative of Borrower
JAMES A
BARNES
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Print
Name
Authorized
Representative
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Title
STREET
ADDRESS: 4620 ARVILLE ST STE E
CITY/STATE/ZIP
CODE: LAS VEGAS , NV, 89103-5340
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