Exhibit 10.18

 

AMENDMENT NUMBER THREE TO BUSINESS FINANCING AGREEMENT AND WAIVER OF DEFAULTS

 

 

This AMENDMENT NUMBER THREE TO BUSINESS FINANCING AGREEMENT AND WAIVER OF
DEFAULTS (this “Amendment”), dated and effective as of December 31, 2014, is
entered into by and among BRIDGE BANK, NATIONAL ASSOCIATION (“Lender”), on the
one hand, and LILIEN SYSTEMS, a California corporation (“Lilien”), and SYSOREX
GOVERNMENT SERVICES, INC., a Virginia corporation (“SGSI”) (Lilien and SGSI are
sometimes collectively referred to herein as “Borrowers” and each individually
as a “Borrower”), on the other hand, with reference to the following facts:

 

A. Borrowers and Lender previously entered into that certain Business Financing
Agreement, dated as of March 15, 2013, as amended by that certain Amendment
Number One to Business Financing Agreement, Waiver of Defaults and Consent,
dated as of August 29, 2013, and that certain Amendment Number Two to Business
Financing Agreement, Waiver and Consent, dated as of May 13, 2014 to be
effective as of April 16, 2014 (as so amended, the “Agreement”);

 

B. Borrowers are in default of the provisions of the Agreement set forth on
Schedule 1 attached hereto, as at the dates indicated in such Schedule (the
“Existing Defaults”).

 

C. Borrowers have requested that Lender waive the Existing Defaults, and Lender
has agreed with such request, subject to the terms and conditions set forth in
this Amendment.

 

NOW, THEREFORE, in consideration of the foregoing, the parties hereto hereby
agree as follows:

 

1. Defined Terms. All initially capitalized terms used but not defined herein
shall have the meanings assigned to such terms in the Agreement.

 2. Amendment to Section 2.2. A new clause (h) is hereby added to Section 2.2 of
the Agreement, immediately following clause (g) thereof, as follows:

 

(h)Waiver Fee. Borrowers shall pay to Lender a fully-earned non- refundable
waiver fee in the amount of $51,216.55 (“Waiver Fee”). The Waiver Fee shall be
due and payable as follows: (i) $10,000 upon Borrowers’ execution of the Third
Amendment, and (ii) $41,216.55 upon the earliest to occur of (x) Borrowers’
delivery of their monthly financial statements pursuant to Section 4.8(b) of
this Agreement for the fiscal month ending March 31, 2015, (y) April 30, 2015,
or (z) the occurrence of an Event of Default; provided that Lender shall waive
receipt of the second installment of the Waiver Fee if, and only, if, (1) no
Event of Default has occurred and is continuing as of Borrower’s fiscal month
and quarter ended March 31, 2015, as determined by Lender in its sole discretion
based upon Borrowers’ financial statements and compliance certificate delivered
by Borrowers pursuant to Sections 4.8(b) and (f), respectively, of this
Agreement and such other information available to Lender, and (2) no Event of
Default has occurred and is continuing as of the date of Lender’s determination
pursuant to clause (1) of this Section 2.2(h).

 

3. Amendment to Section 4.12(b). :Section 4.12(b) of the Agreement is hereby
amended in its entirety as follows:

 

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(b)Adjusted EBITDA for each fiscal quarter not at any time less than the amount
set forth in the table below opposite the applicable fiscal quarter:

 

Fiscal Quarter Ending

Minimum Quarterly

Adjusted EBITDA

December 31, 2014 $125,000 March 31, 2015 and each fiscal quarter ending
thereafter $200,000

 

4. Amendments to Section 12.1. The following new definitions are hereby added to
Section 12.1 of the Agreement in alphabetical order:

 

“Adjusted EBITDA” means Borrowers’ combined Net Income plus interest expense,
taxes, depreciation expense, amortization expense, and non-cash, non-recurring
expenses, calculated in accordance with GAAP.

 

“Third Amendment” means that certain Amendment Number Three to Business
Financing Agreement and Waiver of Defaults, dated as of December 31, 2014, among
Borrowers and Lender, amending this Agreement.

 

5. Replacement Exhibit A. Exhibit A attached to the Agreement is hereby replaced
with Exhibit A attached to this Amendment.

6. Waiver of Existing Defaults. Upon the terms and subject to the conditions set
forth in this Amendment, Lender hereby waives the Existing Defaults. This waiver
of the Existing Defaults shall be effective only in this specific instance and
for the specific purpose for which it is given, and shall not entitle Borrowers
to any other or further waiver in any similar or other circumstances.

7. Conditions Precedent to Effectiveness of Amendment. The effectiveness of this
Amendment and the waiver of the Existing Defaults set forth in Section 6 above
are subject to and contingent upon the fulfillment of each and every one of the
following conditions to the satisfaction of Lender:

 

(a) Lender shall have received (i) this Amendment, duly executed by Borrowers,
(ii) the Acknowledgment and Agreement of Guarantors attached hereto, duly
executed by each Guarantor, and (iii) the Acknowledgment and Agreement of
Creditors attached hereto, duly executed by each Creditor;

(b) Lender shall have received the first installment of the Waiver Fee;

(c) After giving effect to this Amendment, no Event of Default or Default shall
have occurred and be continuing; and 

(d) After giving effect to this Amendment, all of the representations and
warranties set forth herein and in the Agreement shall be true, complete and
accurate in all respects as of the date hereof (except for representations and
warranties which are expressly stated to be true and correct as of the date of
the Agreement).

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8. Representations and Warranties. In order to induce Lender to enter into this
Amendment, each Borrower hereby represents and warrants to Lender that:

 (a) After giving effect to this Amendment, no Event of Default or Default is
continuing;

 

(b) After giving effect to this Amendment, all of the representations and
warranties set forth in the Agreement and in the Agreement are true, complete
and accurate in all respects (except for representations and warranties which
are expressly stated to be true and correct as of the date of the Agreement);
and

(c) This Amendment has been duly executed and delivered by Borrowers, and the
Agreement continues to constitute the legal, valid and binding agreements and
obligations of Borrowers, enforceable in accordance with its terms, except as
enforceability may be limited by bankruptcy, insolvency, and similar laws and
equitable principles affecting the enforcement of creditors’ rights generally.

9. Counterparts; Telefacsimile Execution. This Amendment may be executed in any
number of counterparts and by different parties on separate counterparts, each
of which, when executed and delivered, shall be deemed to be an original, and
all of which, when taken together, shall constitute but one and the same
Amendment. Delivery of an executed counterpart of this Amendment by
telefacsimile shall be equally as effective as delivery of a manually executed
counterpart of this Amendment. Any party delivering an executed counterpart of
this Amendment by telefacsimile also shall deliver a manually executed
counterpart of this Amendment but the failure to deliver a manually executed
counterpart shall not affect the validity, enforceability, and binding effect of
this Amendment.

10. Integration. The Agreement as amended by this Amendment constitutes the
entire agreement and understanding between the parties hereto with respect to
the subject matter hereof and thereof, and supersedes any and all prior
agreements and understandings, oral or written, relating to the subject matter
hereof and thereof.

11. No Other Waiver. The execution of this Amendment and the acceptance of all
other agreements and instruments related hereto shall not be deemed to be a
waiver of any Default or Event of Default (other than the Existing Defaults),
whether or not known to Lender and whether or not existing on the date of this
Amendment.

12. Release.

(a) Each Borrower, each Guarantor signing the Acknowledgment and Agreement of
Guarantors set forth below, and each Creditor signing the Acknowledgment and
Agreement of Creditors set forth below, hereby absolutely and unconditionally
releases and forever discharges Lender, and any and all participants, parent
corporations, subsidiary corporations, affiliated corporations, insurers,
indemnitors, successors and assigns thereof, together with all of the present
and former directors, officers, agents and employees of any of the foregoing,
from any and all claims, demands or causes of action of any kind, nature or
description, whether arising in law or equity or upon contract or tort or under
any state or federal law or otherwise, which such Borrower, such Guarantor, or
such Creditor, has had, now has or has made claim to have against any such
person for or by reason of any act, omission, matter, cause or thing whatsoever
arising from the beginning of time to and including the date of this Amendment,
whether such claims, demands and causes of action are matured or unmatured or
known or unknown. Each Borrower, each Guarantor signing the Acknowledgment and
Agreement of Guarantors set forth below, and each Creditor signing the
Acknowledgment and Agreement of Creditors set forth below, certifies that it has
read the following provisions of California Civil Code Section 1542:

A general release does not extend to claims which the creditor does not know or
suspect to exist in his or her favor at the time of executing the release, which
if known by him or her must have materially affected his or her settlement with
the debtor.

 

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(b) Each Borrower, each Guarantor signing the Acknowledgment and Agreement of
Guarantors set forth below, and each Creditor signing the Acknowledgment and
Agreement of Creditors set forth below, understands and acknowledges that the
significance and consequence of this waiver of California Civil Code Section
1542 is that even if it should eventually suffer additional damages arising out
of the facts referred to above, it will not be able to make any claim for those
damages. Furthermore, each Borrower, each Guarantor signing the Acknowledgment
and Agreement of Guarantors set forth below, and each Creditor signing the
Acknowledgment and Agreement of Creditors set forth below, acknowledges that it
intends these consequences even as to claims for damages that may exist as of
the date of this release but which it does not know exist, and which, if known,
would materially affect its decision to execute this Agreement, regardless of
whether its lack of knowledge is the result of ignorance, oversight, error,
negligence, or any other cause.

13. Reaffirmation of the Agreement. The Agreement as amended hereby and the Loan
Documents remain in full force and effect.

 

[remainder of page intentionally left blank]

 

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IN WITNESS WHEREOF, the parties hereto have duly executed and delivered this
Amendment as of the date first hereinabove written.

 

  LILIEN SYSTEMS,   a California corporation           By:  /s/ Nadir Ali    
Name: Nadir Ali
Title: Chairman

 

        SYSOREX GOVERNMENT SERVICES, INC.,   a Virginia corporation            
      By:  /s/ Wendy Loundermon     Name: Wendy Loundermon
Title: President and Chief Financial Officer

 

 

 

 

 

 

[Signatures continue on the following page].

 

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  BRIDGE BANK, NATIONAL ASSOCIATION           By:  /s/ David Feiock     Name:
David Feiock
Title: Assistant Vice President

 

 

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ACKNOWLEDGMENT AND AGREEMENT OF GUARANTORS

 

The undersigned, as guarantors of the obligations of LILIEN SYSTEMS, a
California corporation (“Lilien”), and SYSOREX GOVERNMENT SERVICES, INC., a
Virginia corporation (“SGSI”) (Lilien and SGSI are sometimes collectively
referred to herein as “Borrowers” and each individually as a “Borrower”), to
BRIDGE BANK, NATIONAL ASSOCIATION (“Lender”), pursuant to the separate Guaranty
of each of the undersigned (each, a “Guaranty”), hereby (i) acknowledges receipt
of the foregoing Amendment; (ii) consents to the terms (including without
limitation the release set forth in Section 12 of the Amendment) and execution
thereof; (iii) reaffirms all obligations to Lender pursuant to the terms of his
Guaranty; and (iv) acknowledges that Lender may amend, restate, extend, renew or
otherwise modify the Loan Documents and any indebtedness or agreement of
Borrowers, or enter into any agreement or extend additional or other credit
accommodations, without notifying or obtaining the consent of the undersigned
and without impairing the obligations of the undersigned under her or her
Guaranty.

 

  SYSOREX FEDERAL, INC.,     a Delaware corporation           By: /s/ Nadir Ali
    Name: Nadir Ali     Title: President                 SYSOREX GLOBAL HOLDINGS
CORP.,     a Nevada corporation           By: /s/ Nadir Ali     Name: Nadir Ali
    Title: President                 SHOOM, INC.,     a California corporation  
        By: /s/ Nadir Ali     Name: Nadir Ali     Title: Director              
  AIRPATROL CORPORATION, a     Nevada corporation           By: /s/ Nadir Ali  
  Name: Nadir Ali     Title: Director  

  

Acknowledgement and Agreement of Guarantors

 

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ACKNOWLEDGMENT AND AGREEMENT OF CREDITORS

 

The undersigned, as creditors of LILIEN SYSTEMS, a California corporation
(“Lilien”), and SYSOREX GOVERNMENT SERVICES, INC., a Virginia corporation
(“SGSI”) (Lilien and SGSI are sometimes collectively referred to herein as
“Borrowers” and each individually as a “Borrower”), subordinated to the
obligations of Borrowers owing to BRIDGE BANK, NATIONAL ASSOCIATION (“Lender”),
pursuant to the separate Subordination Agreement of each of the undersigned
(each, a “Subordination Agreement”), hereby (i) acknowledges receipt of the
foregoing Amendment; (ii) consents to the terms (including without limitation
the release set forth in Section 12 of the Amendment) and execution thereof;
(iii) reaffirms all obligations to Lender pursuant to the terms of his
Subordination Agreement; and (iv) acknowledges that Lender may amend, restate,
extend, renew or otherwise modify the Loan Documents and any indebtedness or
agreement of Borrowers, or enter into any agreement or extend additional or
other credit accommodations, without notifying or obtaining the consent of the
undersigned and without impairing the obligations of the undersigned under her
or her Subordination Agreement.

 

 

  SYSOREX CONSULTING, INC.,     a California corporation           By: /s/ Salam
Qureishi     Name: Salam Qureishi     Title: Chairman               /s/ Abdus
Salam Qureishi     Abdus Salam Qureishi, trustee of QUREISHI 1998     FAMILY
TRUST                 /s/ Bret R. Osborn   BRET R. OSBORN               /s/
Dhruv Gulati     DHRUV GULATI             /s/ Geoffrey I. Lilien     GEOFFREY I.
LILIEN      

  

 

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SCHEDULE 1

TO

AMENDMENT NUMBER THREE TO BUSINESS FINANCING AGREEMENT, AND WAIVER OF DEFAULTS

 

EXISTING DEFAULTS

 

Section of Agreement Required Performance Actual Performance

Section 4.12(b) – Performance to

Plan

Combined revenue not to deviate by more than 20% or $100,000 from the
projections of combined revenue approved by Borrowers’ boards of directors with
respect

to the rolling three month period ended on the date of determination, tested as
at the end of each month

Failed to meet in respect of such required performance for the rolling three
month periods ended on November 30, 2014

Section 4.12(b) – Performance to

Plan

Combined Net Income not to deviate by more than 20% or

$100,000 from the projections of combined Net Income approved by Borrowers’
boards of directors with respect to the rolling three month period ended on the
date of determination, tested as at the end of each month

Failed to meet in respect of such required performance for the rolling three
month periods ended on July 31, 2014,

August 31, 2014, September 30,

2014, October 31, 2014, and

November 30, 2014

 

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EXHIBIT A TO

AMENDMENT NUMBER THREE TO BUSINESS FINANCING AGREEMENT, AND WAIVER OF DEFAULTS

 

FORM OF COMPLIANCE CERTIFICATE

 

 

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