Exhibit 10.3

 

Execution

 

THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
OR THE SECURITIES LAWS OF ANY STATE AND MAY NOT BE SOLD, TRANSFERRED, OR
OTHERWISE DISPOSED OF EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT
UNDER SUCH ACT AND APPLICABLE STATE SECURITIES LAWS OR PURSUANT TO AN APPLICABLE
EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF SUCH ACT AND SUCH LAWS.

 

PROMISSORY NOTE

 

$50,000 San Antonio, Texas November 22, 2018

 

FOR VALUE RECEIVED, DIGERATI TECHNOLOGIES, INC., a Nevada corporation, whose
address is 1600 NE Loop 410, Suite 126, San Antonio, Texas 78209 (the “Debtor”),
promises to pay to the order of Graham Gardner whose address is 3604 Beverly
Drive, Dallas, Texas 75205, (the “Payee”), the sum of FIFTY THOUSAND DOLLARS
($50,000) in lawful money of the United States of America which shall be legal
tender for the payment of debts from time to time, together with interest on the
outstanding principal amount hereof at the rate of eight percent (8%) interest
per annum, computed on the basis of a 360-day year and 30-day months. This Note
shall be secured by the Debtor in accordance with the Pledge and Security
Agreement (“Agreement”) of the same date between the Debtor and the Payee, which
Agreement sets out the collateral set aside by the Debtor to collateralize its
obligations under this Note.

 

This Note shall be payable in monthly payments of interest only and a single
payment of the outstanding principal amount plus any accrued interest, without
demand, on December 31, 2018 (the “Maturity Date”). If the Maturity Date shall
be a Saturday, Sunday, or day on which Banks in San Antonio, Texas, or the place
of payment are authorized or required to be closed, such payment shall be made
on the next following day that is not a Saturday, Sunday or day on which banks
in San Antonio, Texas, or the place of payment are authorized or required to be
closed and interest thereon shall continue to accrue thereon until such date.
Debtor agrees that it will use its best efforts to pay this Note prior to the
maturity date, and there is no penalty for satisfying the obligations under this
Note prior to the Maturity Date.

 

Time is of the essence of this Note, and the Debtor expressly agrees that in the
event of default in the payment of any principal or interest when due, the Payee
may declare the entirety of this Note immediately due and payable. Upon the
occurrence of any default hereunder, the Payee shall also have the right to
exercise any and all of the rights, remedies and recourses now or hereafter
existing in equity, law, by virtue of statute or otherwise.

 

In the event that any payment is not made when due, either of principal or
interest, and whether upon maturity or as a result of acceleration, interest
shall thereafter accrue at the rate per annum equal to the lesser of (a) the
maximum non-usurious rate of interest permitted by the laws of the State of
Texas or the United States of America, whichever shall permit the higher rate or
(b) twenty percent (20%) per annum, from such date until the entire balance of
principal and accrued interest on this Note has been paid.

 

 

 

 

Debtor has the privilege of making prepayments on this Note from time to time in
any amount without penalty provided that any such prepayment shall be applied to
unpaid interest on this Note and the balance, if any, to the principal amount
payable under this Note.

 

No failure to exercise and no delay on the part of Payee in exercising any power
or right in connection herewith shall operate as a waiver thereof, nor shall any
single or partial exercise of any such right or power, or any abandonment or
discontinuance of steps to enforce such a right or power, preclude any other or
further exercise thereof or the exercise of any other right or power. No course
of dealing between Debtor and Payee shall operate as a waiver of any right of
Payee. No modification or waiver of any provision of this Note or any consent to
any departure therefrom shall in any event be effective unless the same shall be
in writing and signed by the person against whom enforcement thereof is to be
sought, and then such waiver or consent shall be effective only in the specific
instance and for the purpose for which given.

 

In the event of default or if payment of this Note is not made when due or
declared due, and the same is placed in the hands of an attorney for collection,
or suit is brought on same, or the same is collected through any judicial
proceeding whatsoever, or if any action be had hereon, then Debtor agrees and
promises to pay an additional amount as reasonable, calculated and foreseeable
attorneys’ and collection fees incurred by Payee in connection with enforcing
its rights herein contemplated.

 

To the extent permitted by applicable law, Debtor hereby waives grace, notice,
demand or presentment for payment of this Note, dishonor, notice of dishonor,
notice of default or nonpayment, protest, notice of protest, suit, notice of
intention to accelerate, notice of acceleration, diligence or any notice of or
defense on account of the extension of time of payments or change in the method
of payments, and consents to any and all renewals and extensions in the time of
payment hereof, and the release of any party primarily or secondarily liable
hereon.

 

It is expressly provided and stipulated that notwithstanding any provision of
this Note, in no event shall the aggregate of all interest paid by Debtor to
Payee hereunder ever exceed the maximum non-usurious rate of interest which may
lawfully be charged Debtor under the laws of the State of Texas or United States
Federal Government, as applicable, on the principal balance of this Note
remaining unpaid. It is expressly stipulated and agreed by Debtor that it is the
intent of Payee and Debtor in the execution and delivery of this Note to
contract in furtherance of such laws, and that none of the terms of this Note
shall ever be construed to create a contract to pay for the use, forbearance or
detention of money, at any interest rate in excess of the maximum non-usurious
rate of interest permitted to be charged Debtor under the laws of the State of
Texas or United States Federal Government, as applicable. The provisions of this
paragraph shall govern over all other provisions of this Note should any such
provisions be in apparent conflict herewith.

 

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Specifically, and without limiting the generality of the foregoing paragraph, it
is expressly provided that:

 

(i)        In the event of prepayment of the principal of this Note, in whole or
in part, or the payment of the principal of this Note prior to the Maturity
Date, whether resulting from acceleration of the maturity of this Note or
otherwise, if the aggregate amount of interest accruing hereon prior to such
payment plus the amount of any interest accruing after maturity and plus any
other amount paid or accrued in connection with the indebtedness evidenced
hereby which by law are deemed interest on the indebtedness evidenced by the
Note and which aggregate amounts paid or accrued (if calculated in accordance
with the provisions of this Note other than this paragraph) would exceed the
maximum non-usurious rate of interest which could lawfully be charged as above
mentioned on the unpaid principal balance of the indebtedness evidenced by this
Note from time to time advanced (less any discount) and remaining unpaid from
the date advanced to the date of final payment thereof, then in such event the
amount of such excess shall be credited, as of the date paid, toward the payment
of the principal of this Note so as to reduce the amount of the final payment of
principal due on this Note, or if the principal amount hereof has been paid in
full, refunded to Debtor.

 

(ii)        If under any circumstances the aggregate amounts paid on the
indebtedness evidenced by this Note prior to and incident to the final payment
hereof include amounts which by law are deemed interest and which would exceed
the maximum non-usurious rate of interest which could lawfully have been charged
or collected on this Note, as above mentioned, Debtor stipulates that (a) any
non-principal payment shall be characterized as an expense, fee, or premium
rather than as interest and any excess shall be credited hereon by the holder
hereof (or, if this Note shall have been paid in full, refunded to Debtor); and
(b) determination of the rate of interest for determining whether the
indebtedness evidenced hereby is usurious shall be made by amortizing,
prorating, allocating, and spreading, in equal parts during the full stated term
hereof, all interest at any time contracted for, charged, or received from
Debtor in connection with such indebtedness, and any excess shall be canceled,
credited, or refunded as set forth in (a) herein.

 

Any check, draft, money order, or other instrument given in payment of all or
any portion of this Note may be accepted by Payee and handled in collection in
the customary manner, but the same shall not constitute payment hereunder or
diminish any rights of Payee except to the extent that actual cash proceeds of
such instruments are unconditionally received by Payee. If at any time any
payment of the principal of or interest on this Note is rescinded or must be
restored or returned upon the insolvency, bankruptcy or reorganization of Debtor
or otherwise, the obligation under this Note with respect to that payment shall
be reinstated as though the payment had been due but not made at that time.

 

Debtor agrees that this Note shall be freely assignable to any assignee of
Payee, subject to compliance with applicable securities laws.

 

Debtor represents and warrants that the extension of credit represented by this
Note is for business, commercial, investment, or other similar purposes and not
primarily for personal, family, household or agricultural use.

 

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This Note has been executed and delivered and shall be construed in accordance
with and governed by the laws of the State of Texas and of the United States of
America applicable in Texas. Venue for any litigation between Debtor and Payee
with respect to this Note shall be Bexar County, Texas. Debtor and Payee hereby
irrevocably submit to personal jurisdiction in Texas and venue in Bexar County
for purposes of such litigation.

 

THIS NOTE REPRESENTS THE FINAL AGREEMENT BETWEEN DEBTOR AND PAYEE AND MAY NOT BE
CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL
AGREEMENTS BETWEEN DEBTOR AND PAYEE.

 

THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN DEBTOR AND PAYEE.

 

  DIGERATI TECHNOLOGIES, INC.,   a Nevada corporation         By: /s/ Arthur L.
Smith   Name: Arthur L. Smith   Title: CEO

 

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PLEDGE AND SECURITY AGREEMENT

 

This Pledge and Security Agreement (the “Agreement”) is entered into October 22,
2018 by and between Digerati Technologies, Inc., a Nevada corporation (the
“Company”), and TV Fund VII, LP (the “Secured Party”).

 

RECITALS

 

WHEREAS, the Secured Party has made certain financial accommodations for the
benefit of the Company pursuant to that certain Promissory Note of even date
herewith among the Company and Secured Party (the “Note”); and

 

WHEREAS, in order to secure the full and prompt payment when due (whether at the
stated maturity, by acceleration or otherwise) of all of the Company’s
obligations to the Secured Party, or any successor to the Secured Party, under
the Note, the Company has agreed to irrevocably pledge to the Secured Party the
Purchase Price Adjustment in favor of the Company under that certain Agreement
and Plan of Merger dated May 8, 2017 between Shift8 Technologies, Inc., T3
Acquisition, Inc., T3 Communications, Inc. and representative of the
Shareholders of T3 Communications, Inc.

 

NOW, THEREFORE, in consideration of the mutual covenants, agreements,
warranties, and representations herein contained, and for other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto agree as follows:

 

1. Grant of Security Interest. As security for the payment of the Note and any
renewal, extension or modification of the Note, the Company, hereby grants to
the Secured Party a security interest in, and pledges to the Secured Party the
Purchase Price Adjustment in favor of the Company under that certain Agreement
and Plan of Merger dated May 8, 2017 between Shift8 Technologies, Inc., T3
Acquisition, Inc., T3 Communications, Inc. and representative of the
Shareholders of T3 Communications, Inc.

 

2. Warranties. Secured Party hereby warrants that the Company is the owner of
the Collateral and has the right to pledge the Collateral. The Company further
represents and warrants that it has net assets (not including the Collateral) in
excess of the amount of the Note.

 

3. Rights Upon Default. In the event of default in payment when due of any
indebtedness under the Note, the Secured Party may elect then, or at any time
thereafter, to exercise all rights available to a secured party under the
Uniform Commercial Code, including the right to demand transfer of the
Collateral to the Secured Party. The transfer of the Collateral to the Secured
Party, which will be in the form of cash, shall be applied in the following
order:

 

(a) To the extent necessary, cash shall be used to pay all reasonable expenses
of the Secured Party in enforcing this Agreement and the Note, including,
without limitation, reasonable attorneys’ fees and legal expenses incurred by
the Secured Party.

 

(b) To the extent necessary, cash shall be used to satisfy any remaining
indebtedness under the Note.

 

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(c) Any remaining cash shall be returned to the Company.

 

4. Release of Collateral. Promptly after full payment by Company of all
principal, accrued interest and other amounts outstanding under the Note,
Secured Party shall deliver to Company acknowledgement of full payment and
Company shall thereupon be discharged of all further obligations under this
Agreement.

 

5. Payment of Taxes and Other Charges. The Company shall pay, prior to the
delinquency date, all taxes, assessments and other charges against the
Collateral, and in the event of the Company’s failure to do so, the Secured
Party may at its election pay any or all of such taxes and charges without
contesting the validity or legality thereof. Any payments so made by the Secured
Party shall become part of the indebtedness secured hereunder and until paid
shall bear interest at the minimum per annum rate, compounded annually, required
to avoid the imputation of interest income to the Secured Party and income to
the Company under the federal tax laws.

 

6. Assignment of Collateral. In connection with the assignment of the Note
(whether by negotiation, discount or otherwise), the Secured Party may assign
all or any part of the Collateral, and the transferee shall thereupon succeed to
all the rights, powers and remedies granted the Secured Party hereunder with
respect to the Collateral so assigned. Upon such assignment, the Secured Party
shall be fully discharged from all liability and responsibility for the assigned
Collateral.

 

7. Costs and Expenses. All costs and expenses (including reasonable attorneys’
fees) incurred by the Secured Party in the exercise or enforcement of any right,
power or remedy granted it under this Agreement shall become part of the
indebtedness secured hereunder and shall constitute a liability of Company
payable immediately upon demand and bearing interest until paid.

 

8. Severability. Any provision of this Agreement that is deemed invalid or
unenforceable shall be ineffective to the extent of such invalidity or
unenforceability, without rendering invalid or unenforceable the remaining
provisions of this Agreement.

 

9. Waiver. No provision of this Agreement shall be deemed to have been waived
unless such waiver is in writing signed by the waiving party. No failure by any
party to insist upon the strict performance of any provision of this Agreement,
or to exercise any right or remedy consequent upon a breach thereof, shall
constitute a waiver of any such breach, of such provision or of any other
provision. No waiver of any provision of this Agreement shall be deemed a waiver
of any other provision of this Agreement or a waiver of such provision with
respect to any subsequent breach, unless expressly provided in writing.

 

10. Counterparts. This Agreement may be executed in any number of counterparts,
all of which when taken together shall constitute one agreement binding on all
parties, notwithstanding that all parties are not signatories to the same
counterpart. This Agreement may be executed with signatures transmitted among
the parties by facsimile, and no party shall deny the validity of a signature or
this Agreement signed and transmitted by facsimile on the grounds that a
signature is represented by facsimile rather than an original.

 

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11. Further Assurances. Each party agrees, at the request of the other party, at
any time and from time to time after the date hereof, promptly to execute and
deliver all such further documents, and promptly to take and forbear from all
such action, as may be reasonably necessary or appropriate in order to more
effectively confirm or carry out the provisions of this Agreement.

 

The parties have executed this Pledge and Security Agreement as of the date
first set forth above.

 

Digerati Technologies, Inc.       By: /s/ Arthur L. Smith   Name: Arthur L.
Smith   Date: 10/22/2018         SECURED PARTY   TV Fund VII, LP       By: /s/
E. Scott Crist   Name:  E. Scott Crist   Date: 10/22/18  

 

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