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NOTE

 

 

SBA Loan #

 

15790471-07

SBA Loan Name

CynergisTek, Inc.

 

Date

 

April 16, 2020

 

Loan Amount

 

$2,825,500.00

 

Interest Rate

 

1.00%

Borrower

CynergisTek, Inc.

Operating Company

N/A

Lender

BMO Harris Bank National Association

 

1.PROMISE TO PAY: 

In return for the Loan, Borrower promises to pay to the order of Lender the
amount of $2,825,500.00, interest on the unpaid principal balance, and all other
amounts required by this Note.

 

2.DEFINITIONS: 

 

“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.

 

 

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1.PAYMENT TERMS: 

Borrower must make all payments at the place Lender designates. The payment
terms for this Note are:

 

Maturity: This Note will mature in 2 years and 0 months from date of Note.

 

Repayment terms:

 

The interest rate is 1% per year. The interest rate may only be changed in
accordance with SOP 50 10.

 

Borrower must pay principal and interest payments of $159,004.86 every month,
beginning 7 months from the date of the Note; payments must be made on the same
day as the date of the Note in the months they are due.

 

Lender will apply each installment 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 this 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 and 0
months from date of Note.

 

Late Charge: If payment on this Note is more than10 days late, Lender may charge
Borrower a late fee of up to 5.00 % of the unpaid portion of the regularly
scheduled payment.

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1.DEFAULT: 

 

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.

 

 

2.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. 

 

 

3.LENDER’S GENERAL POWERS: 

 

Without notice and without Borrower’s consent, Lender may:

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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. 

 

4.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.

 

 

5.SUCCESSORS AND ASSIGNS: 

 

Under this Note, Borrower and Operating Company include the successors of each,
and Lender includes its successors and assigns.

 

 

6.GENERAL PROVISIONS: 

 

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. 

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1.STATE-SPECIFIC PROVISIONS: 

 

 

 

The following provision applies when a borrower is a resident of WISCONSIN:

Each Borrower who is married represents that this obligation is incurred in the
interest of his or her marriage or family.

 

The following Confession of Judgment provision applies when a borrower is a
resident of DELAWARE:

WARRANT OF ATTORNEY/CONFESSION OF JUDGMENT. In addition to any other remedies
Lender may possess, Borrower knowingly, voluntarily and intentionally authorizes
any attorney to appear on behalf of Borrower, from time to time, in any court of
record possessing jurisdiction over this Note and to waive issuance and service
of process and to confess judgment in favor of Lender against Borrower, for the
unpaid principal, accrued interest, accrued charges, reasonable attorney fees
and court costs and such other amount due under this Note.

 

The following Confession of Judgment provision applies when a borrower is a
resident of MARYLAND: WARRANT OF ATTORNEY/CONFESSION OF JUDGMENT. Borrower
authorizes an attorney to appear in a court of record and confess judgment,
without process, against Borrower in favor of Lender for all indebtedness owed
in connection with the loan, including but not limited to service charges, other
charges and reasonable attorney's fees.

 

The following Confession of Judgment provision applies when a borrower is a
resident of OHIO:

WARRANT OF ATTORNEY/CONFESSION OF JUDGMENT. In addition to any other remedies
Lender may possess, Borrower knowingly, voluntarily and intentionally authorizes
any attorney to appear on behalf of Borrower, from time to time, in any court of
record possessing jurisdiction over this Note and to waive issuance and service
of process and to confess judgment in favor of Lender against Borrower, for the
unpaid principal, accrued interest, accrued charges, reasonable attorney fees
and court costs and such other amount due under this Note. WARNING: BY SIGNING
THIS PAPER YOU GIVE UP YOUR RIGHT TO NOTICE AND COURT TRIAL. IF YOU DO NOT PAY
ON TIME, A COURT JUDGMENT MAY BE TAKEN AGAINST YOU WITHOUT YOUR PRIOR KNOWLEDGE
AND THE POWERS OF THE COURT CAN BE USED TO COLLECT FROM YOU REGARDLESS OF ANY
CLAIMS YOU MAY HAVE AGAINST THE CREDITOR WHETHER FOR RETURNED GOODS, FAULTY
GOODS, FAILURE ON HIS PART TO COMPLY WITH THE AGREEMENT OR ANY OTHER CAUSE.

 

The following Confession of Judgment provision applies when a borrower is a
resident of PENNSYLVANIA: WARRANT OF ATTORNEY/CONFESSION OF JUDGMENT. Borrower
irrevocably authorizes and empowers the prothonotary, any attorney or any clerk
of any court of record, upon default, to appear for and confess judgment against
Borrower for such sums as are due and/or may become due under this Note
including costs of suit, without stay of execution, and for attorney's fees and
costs as set forth in this Note and knowingly, voluntarily and intentionally
waives any and all rights Borrower may have to notice and hearing under the
state and federal laws prior to entry of a judgment. To the extent permitted by
law, Borrower releases all errors in such proceedings. If a copy of this Note,
verified by or on behalf of the holder shall have been filed in such action, it
shall not be necessary to file the original Note as a warrant of attorney. The
authority and power to appear for and confess judgment against Borrower shall
not be exhausted by the initial exercise thereof and may be exercised as often
as the holder shall find it necessary and desirable and this Note shall be a
sufficient warrant for such authority and power.

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The following Confession of Judgment provision applies when a borrower is a
resident of VIRGINIA: IMPORTANT NOTICE: THIS INSTRUMENT CONTAINS A CONFESSION OF
JUDGMENT PROVISION WHICH CONSTITUTES A WAIVER OF IMPORTANT RIGHTS YOU MAY HAVE
AS A DEBTOR AND ALLOWS THE CREDITOR TO OBTAIN A JUDGMENT AGAINST YOU WITHOUT ANY
FURTHER NOTICE. WARRANT OF ATTORNEY/CONFESSION OF JUDGMENT. In addition to

any other remedies Lender may possess, Borrower knowingly, voluntarily and
intentionally authorizes to appear on behalf of Borrower, from time to time, in
the District Court of Alexandria, Virginia and to waive issuance and service of
process and to confess judgment in favor of Lender against Borrower, for the
unpaid principal, accrued interest, accrued charges, reasonable attorney fees
and court costs and such other amount due under this Note. The following Oral
Agreements Disclaimer provision applies when the borrower is a resident of
MISSOURI: Oral or unexecuted agreements or commitments to loan money, extend
credit or to forbear from enforcing repayment of a debt including promises to
extend or renew such debt are not enforceable, regardless of the legal theory
upon which it is based that is in any way related to the credit agreement. To
protect you (Borrowers(s)) and us (Creditor) from misunderstanding or
disappointment, any agreements we reach covering such matters are contained in
this writing, which is the complete and exclusive statement of the agreement
between us, except as we may later agree in writing to modify it.

 

The following Oral Agreements Disclaimer provision applies when the borrower is
a resident of MISSOURI: Oral or unexecuted agreements or commitments to loan
money, extend credit or to forbear from enforcing repayment of a debt including
promises to extend or renew such debt are not enforceable, regardless of the
legal theory upon which it is based that is in any way related to the credit
agreement. To protect you (Borrowers(s)) and us (Creditor) from misunderstanding
or disappointment, any agreements we reach covering such matters are contained
in this writing, which is the complete and exclusive statement of the agreement
between us, except as we may later agree in writing to modify it.

 

The following Oral Agreements Disclaimer provision applies when the borrower is
a resident of OREGON: UNDER OREGON LAW, MOST AGREEMENTS, PROMISES AND
COMMITMENTS MADE BY [BENEFICIARY]/ US CONCERNING LOANS AND OTHER CREDIT
EXTENSIONS WHICH ARE NOT FOR PERSONAL, FAMILY, OR HOUSEHOLD PURPOSES OR SECURED
SOLELY BY GRANTOR'S/BORROWER'S RESIDENCE MUST BE IN WRITING, EXPRESS
CONSIDERATION AND BE SIGNED BY [AN AUTHORIZED REPRESENTATIVE OF BENEFICIARY]/US
TO BE ENFORCEABLE.

 

The following Oral Agreements Disclaimer provision applies when the borrower is
a resident of WASHINGTON:

Oral agreements or oral commitments to loan money, extend credit, or to forbear
from enforcing repayment of a debt are not enforceable under Washington law.

 

The following provision applies when the borrower is a resident of ALASKA:

The Mortgagor or Trustor (Borrower) is personally obligated and fully liable for
the amount due under the Note. The Mortgagee or Beneficiary (Lender) has the
right to sue on the Note and obtain a personal judgment against the Mortgagor or
Trustor for the satisfaction of the amount due under the Note either before or
after a judicial foreclosure of the Mortgage or Deed of Trust as under AS
09.45.170-09.45.220.

 

The following Oral Agreements Disclaimer provision applies when the borrower is
a resident of IOWA: IMPORTANT: READ BEFORE SIGNING. The terms of this agreement
should be read carefully because only those terms in writing are enforceable. No
other terms or oral promises not contained in this written contract may be
legally enforced. You may change the terms of this agreement only by another
written agreement.

 

The following Oral Agreements Disclaimer provision applies when the borrower is
a resident of UTAH: This is a final expression of the agreement between the
creditor and debtor and the written agreement may not be contradicted by
evidence of any alleged oral agreement.

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1.BORROWER’S NAME(S) AND SIGNATURE(S): 

By signing below, each individual or entity becomes obligated under this Note as
Borrower.

 

 

 

 

 

 

CynergisTek, Inc.

 

 

 

 

 

/s/ Paul T. Anthony                                        
                                      

 

04-16-2020

Signature of Authorized Representative of Borrower                  

 

Date

 

 

 

Paul T. Anthony            

 

Chief Financial Officer

Name of Authorized Representative of Borrower                        

 

Title

 

 

 

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