EXCHANGE AGREEMENT
Exhibit 10.4
This
Exchange Agreement (this “Agreement”) is dated as of
September __, 2018 (the “Closing Date”), by and among
ImageWare Systems, Inc., a Delaware corporation (the
“Company”), and
________ (“______”).
RECITALS
WHEREAS, the
Company and Xxxxxxx are currently parties to that certain
Convertible Promissory Note, dated _________, as amended ________
(as amended, the “Note”), which Note provides for
maximum borrowings of up to $_______;
WHEREAS, as of
September __, 2018, the total amount of advances under the Note,
including outstanding principal and all accrued and unpaid interest
thereon, equals $_______ (the “Outstanding Amount”);
and
WHEREAS, subject to
the terms and conditions set forth herein, the Company and _______
desire that, concurrently with the execution and delivery of this
Agreement by the Company and ____________, (i) the Outstanding
Amount shall be exchanged for shares of the Company’s Series
A Convertible Preferred Stock, par value $0.01 per share, with a
stated value of $1,000 per share (the “Exchange Shares”) (the
“Exchange”),
which Exchange Shares shall be convertible into shares of common
stock of the Company, par value $0.01 per share
(“Conversion
Shares”), and (ii) all indebtedness, liabilities and
other obligations arising under or relating to the Note (including,
without limitation, principal, interest, fees, expenses, costs,
disbursements, premium, and indemnification) be deemed cancelled,
extinguished, released, discharged and satisfied in full without
the requirement for the payment or provision of any consideration
or other amounts (except for the issuance of the Exchange Shares in
exchange for the Outstanding Amount as contemplated herein), each
on the terms and conditions set forth in this
Agreement.
NOW,
THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby agreed and acknowledged, the
parties hereby agree as follows:
AGREEMENT
1. Securities
Exchange.
(a) In consideration of
and in express reliance upon the representations, warranties,
covenants, terms and conditions of this Agreement, ____________
hereby exchanges the Outstanding Amount for that number of Exchange
Shares equal to the Outstanding Amount divided by 1,000 (rounded
down to the nearest whole share), it being understood that the
number of Exchange Shares issued in connection with the Exchange
shall include accrued and unpaid interest on such Note up to and
including the Closing Date. In consideration for the foregoing, the
Company agrees to issue and deliver the Exchange Shares to
____________, as directed by ____________. For the avoidance of
doubt, the number of Exchange Shares issued by the Company in
exchange for the Outstanding Amount pursuant to this Section 1(a)
is _________ (_____) Exchange Shares.
(b) Within five
business days after the Closing Date, the Company shall issue and
deliver to ____________ a certificate evidencing the Exchange
Shares against delivery of the Note to the Company. Following the
Closing Date, the parties agree that all indebtedness, liabilities and other
obligations arising under or relating to the Note (including,
without limitation, principal, interest, fees, expenses, costs,
disbursements, premium, and indemnification) shall be deemed
cancelled, extinguished, released, discharged and satisfied in full
without the requirement for the payment or provision of any
consideration or other amounts (except for the issuance of the
Exchange Shares in exchange for the Outstanding Amount as
contemplated herein), and the Note shall be marked cancelled and
paid in full. As a result of the foregoing the Note shall be
terminated and of no further force and effect.
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2. Representations,
Warranties and Covenants of ____________. ____________ hereby makes the
following representations and warranties to the Company, and
covenants for the benefit of the Company:
(a) This Agreement has
been duly authorized, validly executed and delivered by
____________ and is a valid and binding agreement and obligation of
____________ enforceable against ____________ in accordance with
its terms, subject to limitations on enforcement by general
principles of equity and by bankruptcy or other laws affecting the
enforcement of creditors’ rights generally, and ____________
has full power and authority to execute and deliver the Agreement
and the other agreements and documents contemplated hereby and to
perform its obligations hereunder and thereunder.
(b) ____________
understands that the Exchange Shares are being offered and sold to
it in reliance on the truth and accuracy of the representations,
warranties, agreements, acknowledgments and understandings of
____________ set forth herein.
(c) ____________ is and
will be acquiring the Exchange Shares for ____________’s own
account, for investment purposes, and not with a view to any resale
or distribution in whole or in part, in violation of the Securities
Act of 1933, as amended (“Securities Act”) or any
applicable securities laws.
(d) ____________ owns
and holds, beneficially and of record, the entire right, title, and
interest in and to the Note free and clear of all rights and
Encumbrances (as defined below). ____________ has full power and
authority to transfer and dispose of the Note free and clear of any
right or Encumbrance. Other than the transactions contemplated by
this Agreement, there is no outstanding plan, pending proposal, or
other right of any person to acquire all or any of the Note.
Encumbrances shall mean any
security or other property interest or right, claim, lien, pledge,
option, charge, security interest, contingent or conditional sale,
or other title claim or retention agreement, interest or other
right or claim of third parties, whether perfected or not
perfected, voluntarily incurred or arising by operation of law, and
including any agreement (other than this Agreement) to grant or
submit to any of the foregoing in the future.
(e) ____________ agrees
and acknowledges that it is currently an “affiliate” of
the Company, as such term is defined in the Securities Act, and as
a result cannot resell the Exchange Shares or Conversion Shares, as
such term is defined in the Certificate of Designations,
Preferences and Rights of the Exchange Shares, except in compliance
with the Securities Act and any applicable state blue sky
laws.
3. Representations,
Warranties and Covenants of the Company. The Company represents and warrants to
____________, and covenants for the benefit of ____________, as
follows:
(a) The Company has
been duly incorporated and is validly existing and in good standing
under the laws of the State of Delaware, with full corporate power
and authority to own, lease and operate its properties and to
conduct its business as currently conducted, and is duly registered
and qualified to conduct its business and is in good standing in
each jurisdiction or place where the nature of its properties or
the conduct of its business requires such registration or
qualification, except where the failure to register or qualify
would not have a Material Adverse Effect. For purposes of this
Agreement, “Material Adverse
Effect” shall mean any material adverse effect on the
business, operations, properties, prospects, or financial condition
of the Company and its subsidiaries and/or any condition,
circumstance, or situation that would prohibit or otherwise
materially interfere with the ability of the Company to perform any
of its obligations under this Agreement in any material
respect.
(b) The Exchange Shares
have been duly authorized by all necessary corporate action and,
when paid for or issued in accordance with the terms hereof, the
Exchange Shares shall be validly issued and outstanding, fully paid
and nonassessable, free and clear of all liens, encumbrances and
rights of refusal of any kind.
(c) This Agreement has
been duly authorized, validly executed and delivered on behalf of
the Company and is a valid and binding agreement and obligation of
the Company enforceable against the Company in accordance with its
terms, subject to limitations on enforcement by general principles
of equity and by bankruptcy or other laws affecting the enforcement
of creditors’ rights generally, and the Company has full
power and authority to execute and deliver the Agreement and the
other agreements and documents contemplated hereby and to perform
its obligations hereunder and thereunder.
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(d) The Company has
complied and will comply with all applicable federal and state
securities laws in connection with the offer, issuance and delivery
of the Exchange Shares hereunder.
4. Governing
Law; Consent to Jurisdiction. This Agreement shall be governed by
and interpreted in accordance with the laws of the State of
California without giving effect to conflict of law principles that
would result in the application of the substantive laws of another
jurisdiction. Each of the parties consents to the exclusive
jurisdiction of the Federal courts whose districts encompass any
part of the State of California in connection with any dispute
arising under this Agreement and hereby waives, to the maximum
extent permitted by law, any objection, including any objection
based on forum non
conveniens, to the bringing of any such proceeding in such
jurisdictions. Each party waives its right to a trial by jury. Each
party to this Agreement irrevocably consents to the service of
process in any such proceeding by the mailing of copies thereof by
registered or certified mail, postage prepaid, to such party at its
address set forth herein. Nothing herein shall affect the right of
any party to serve process in any other manner permitted by
law.
5. Entire
Agreement. This
Agreement constitutes the entire understanding and agreement of the
parties with respect to the subject matter hereof and supersedes
all prior and/or contemporaneous oral or written proposals or
agreements relating thereto all of which are merged herein. This
Agreement may not be amended or any provision hereof waived in
whole or in part, except by a written amendment signed by both of
the parties.
6. Counterparts.
This Agreement may be executed by facsimile signature and in
counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same
instrument.
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REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK]
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IN
WITNESS WHEREOF, this Agreement was duly executed on the date first
written above.
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IMAGEWARE SYSTEMS, INC.
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By:______________________________________
Name:
Title:
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______________:
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________________________________________
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