Exhibit 10.3

 

SECURED PROMISSORY NOTE (REVOLVING LOANS)

 

Up to $10,000,000 November 14, 2016

 

FOR VALUE RECEIVED, the undersigned, SYSOREX GLOBAL, a Nevada corporation with
offices at 2479 East Bayshore Road, Suite 195, Palo Alto, CA 94303 (“SG”),
SYSOREX USA, a California corporation with offices at 2479 East Bayshore Road,
Suite 195, Palo Alto, CA 94303 (“SUSA”) and SYSOREX GOVERNMENT SERVICES, INC., a
Virginia corporation with offices at 2479 East Bayshore Road, Suite 195, Palo
Alto, CA 94303 (“SGS” and together with SUSA and SG, jointly and severally the
“Borrower”) hereby unconditionally promises to pay to the order of GEMCAP
LENDING I, LLC, a Delaware limited liability company with offices at 24955
Pacific Coast Highway, Suite A202, Malibu, CA 90265 (together with its
successors, transferees and assigns, “Lender”), on or before the Maturity Date,
the principal sum of up to Ten Million Dollars ($10,000,000) in accordance with
the terms of this Secured Promissory Note (Revolving Loans) (this “Note”) and
the Loan and Security Agreement, of even date herewith, entered into by and
between Borrower and Lender (as amended from time to time, the “Loan
Agreement”). Capitalized terms used herein and not defined herein shall have the
meanings given to them in the Loan Agreement.

 

INTEREST; DUE DATE; PREPAYMENT: Interest on the unpaid principal balance of
Revolving Loans shall be computed on the basis of the actual number of days
elapsed and a year of 360 days and shall accrue on the unpaid principal balance
of Advances at an annual rate equal to the greater of (I) nine and one-half
percent (9.5%), and (II) sum of (i) the “Prime Rate” as reported in the “Money
Rates” column of The Wall Street Journal, adjusted as and when such Prime Rate
changes, plus (ii) six percent (6%) (the “Interest Rate”). Following and during
the continuation of an Event of Default, interest on the unpaid principal
balance shall accrue at an annual rate equal to the Interest Rate plus four
percent (4%) (the “Default Interest Rate”).

 

All accrued interest on the unpaid principal balance of Revolving Loans
hereunder, including interest charges for Collection Days, shall be payable by
Borrower in arrears (x) prior to the Maturity Date, on the seventh (7th) day of
each calendar month (if such date is not a Business Day, then on the first
Business Day thereafter), commencing on December 7, 2016, (y) in full on the
Maturity Date, and (z) on demand after the Maturity Date.

 

Subject to the prepayment provisions hereof, Borrower may borrow, repay and
reborrow Revolving Loans, as set forth in the Loan Agreement.

 

The entire principal balance of this Note then outstanding, plus any accrued and
unpaid interest thereon, plus unpaid fees, together with all penalties and late
payment fees, if any, shall be due and payable on the Maturity Date pursuant to
the terms of the Loan Agreement and the other Loan Documents.

 

 

 

 

Prior to the Maturity Date, Borrower may voluntarily prepay the entire unpaid
principal amount of the Revolving Loans without premium or penalty, provided,
however, that, (i) such prepayment is no less than the amount of the
then-outstanding aggregate principal sum of all Revolving Loans hereunder and
all accrued and unpaid interest thereon, (ii) as part of such prepayment,
Borrower shall pay Lender all other amounts due to Lender pursuant to this Note,
the Loan Agreement and the other Loan Documents, and (iii) in the event Borrower
makes such prepayment on or before November 13, 2017, then Borrower shall pay to
Lender an amount equal to the Revolving Loan Prepayment Fee. The Revolving Loan
Prepayment Fee is intended to compensate Lender for committing and deploying
funds for Borrower’s Revolving Loans pursuant to the Loan Agreement and for
Lender’s loss of investment of such funds in connection with such early
termination, and is not intended as a penalty. The Revolving Loan Prepayment Fee
also shall be due and payable by Borrower to Lender if Lender accelerates the
payment of the Obligations on or before November 13, 2017, due to the occurrence
of an Event of Default.

 

PAYMENT AND COLLECTION: In order to satisfy Borrower’s payment of amounts due
under the Loans and all fees, expenses and charges with respect thereto that are
due and payable under this Note, the Loan Agreement and the other Loan
Documents, Borrower hereby irrevocably authorizes Lender to initiate manual and
automatic electronic (debit and credit) entries through the Automated Clearing
House or other appropriate electronic payment system (“ACH”) to all deposit
accounts maintained by Borrower, wherever located. At the request of Lender,
Borrower shall complete, execute and deliver to the institution set forth below
(with a copy to the Lender) an ACH agreement, voided check, information and/or
direction letter reasonably necessary to so instruct Borrower’s depository
institutions. Borrower (i) shall maintain in all respects this ACH arrangement;
(ii) shall not change depository institutions without Lender’s prior written
consent, and if consent is received, shall immediately execute similar ACH
instruction(s), and (iii) waives any and all claims for loss or damage arising
out of debits or credits to/from the depository institution, whether made
properly or in error. Borrower has communicated with and instructed the
institution(s) set forth below:

 

  Bank Name: Bridge Bank NA   Address: 55 Almaden Boulevard, San Jose, CA 95113
  ABA#: 121143260   Account #: 101587129   Phone: (408) 556-8391   Fax: (408)
283-0513   Reference: Sysorex   Contact Person: Susan Wadi

 

MAXIMUM RATE OF INTEREST: It is intended that the Interest Rate and the Default
Interest Rate shall never exceed the maximum rate, if any, which may be legally
charged in the State of California for commercial loans made to corporations
(the “Maximum Rate”). If the provisions for interest contained in this Note
would result in a rate higher than the Maximum Rate, interest shall nevertheless
be limited to the Maximum Rate and any amounts which may be paid toward interest
in excess of the Maximum Rate shall be applied to the reduction of principal,
or, at the option of Lender, returned to Borrower.

 

FEES AND COSTS: All fees, costs and expenses set forth in this Note, the Loan
Agreement and other Loan Documents shall be paid by Borrower in accordance with
the terms hereof and thereof. All fees, costs and expenses as provided in this
Note, the Loan Agreement and other Loan Documents not paid when due shall be
added to principal and shall thereafter bear interest at the Default Interest
Rate.

 

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PLACE OF PAYMENT; NOTICES: All payments hereon shall be made, and all notices to
the Lender required or authorized hereby shall be given, at the office of Lender
at the address designated in the Loan Agreement, or to such other place as
Lender may from time to time direct by written notice to Borrower.

 

APPLICATION OF PAYMENTS: All payments made hereunder shall be made without
defense or set-off for any debt or other claim which Borrower may assert against
Lender. All payments received hereunder shall be applied in accordance with the
provisions of the Loan Agreement.

 

AMOUNTS DUE: All amounts payable hereunder are payable by check, ACH payment or
wire transfer in immediately available funds to the account number specified by
Lender, in lawful money of the United States. At Lender’s option, Lender may
charge the Borrower’s accounts for the interest accrued hereunder. Borrower
agrees to perform and comply with each of the covenants, conditions, provisions
and agreements contained in every instrument now evidencing or securing the
indebtedness evidenced hereby.

 

SECURITY: This Note is secured by a pledge of the Collateral as described in the
Loan Documents. Borrower hereby acknowledges, admits and agrees that Borrower’s
obligations under this Note, the Loan Agreement and the other Loan Documents are
full recourse obligations of Borrower to which Borrower pledges its full faith
and credit.

 

DEFAULTS; REMEDIES: If either any amount under this Note is not paid in full
when due or upon the occurrence of an Event of Default, the Lender may declare
the unpaid principal sum, accrued and unpaid interest and all other amounts
under this Note immediately due and payable and all amounts due under the Loan
Agreement and the other Loan Documents immediately due and payable. In such
event, the Lender shall have all of the rights and remedies set forth in the
Loan Agreement and the other Loan Documents. The failure to exercise any of the
rights and remedies set forth in the Loan Agreement or the other Loan Documents
shall not constitute a waiver of the right to exercise the same or any other
option at any subsequent time in respect of the same event or any other event.
The acceptance by Lender of any payment which is less than payment in full of
all amounts due and payable at the time of such payment shall not constitute a
waiver of the right to exercise any rights and remedies at that time or at any
subsequent time or nullify any prior exercise of any such rights and remedies.

 

WAIVERS: The Borrower waives demand for payment, presentment for payment,
protest, notice of nonpayment or dishonor and any and all other notices and
demands whatsoever.

 

TERMINOLOGY: Any reference herein to Lender shall be deemed to include and apply
to every subsequent holder of this Note.

 

LOAN AGREEMENT: Reference is made to the Loan Agreement for provisions as to the
Loan Documents, Loans, Collateral, fees, charges, remedies and other matters. If
there is any conflict between the terms of this Note and the terms of the Loan
Agreement, the terms of the Loan Agreement shall control.

 

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HEADINGS: The headings in this Note are for convenience of reference only and
shall not affect the meaning or interpretation of this Note or any provision
hereof.

 

ATTORNEYS’ FEES AND COSTS: If the Lender incurs any loss, costs or expenses in
enforcing or collecting this Note, in whole or in part, or enforcing any of the
terms of any of the other Loan Documents, the Borrower agrees to pay all losses,
costs and expenses so paid or incurred by Lender including, without limitation,
attorneys’ fees and costs.

 

NON-PAYMENT OF FEES AND COSTS: All fees, costs and expenses as provided in this
Note, the Loan Agreement and other Loan Documents not paid when due shall be
added to principal and shall thereafter bear interest at the Default Interest
Rate.

 

APPLICABLE LAW. THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED AND INTERPRETED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF CALIFORNIA, THE LAWS OF WHICH THE
BORROWER HEREBY EXPRESSLY ELECTS TO APPLY TO THIS NOTE, WITHOUT GIVING EFFECT TO
PROVISIONS FOR CHOICE OF LAW THEREUNDER. THE BORROWER AGREES THAT ANY ACTION OR
PROCEEDING BROUGHT TO ENFORCE OR ARISING OUT OF THIS NOTE SHALL BE COMMENCED IN
ACCORDANCE WITH THE PROVISIONS OF THIS NOTE.

 

WAIVER OF JURY TRIAL. TO THE EXTENT PERMITTED BY APPLICABLE LAW, BORROWER HEREBY
WAIVES ANY AND ALL RIGHTS THAT IT MAY NOW OR HEREAFTER HAVE UNDER THE LAWS OF
THE UNITED STATES OF AMERICA OR ANY STATE TO A TRIAL BY JURY OF ANY AND ALL
ISSUES ARISING EITHER DIRECTLY OR INDIRECTLY IN ANY ACTION OR PROCEEDING BETWEEN
BORROWER, LENDER OR ITS SUCCESSORS AND ASSIGNS, OUT OF OR IN ANY WAY CONNECTED
WITH THIS NOTE, THE OTHER LOAN DOCUMENTS, THE OBLIGATIONS AND/OR THE COLLATERAL.
IT IS INTENDED THAT SAID WAIVER SHALL APPLY TO ANY AND ALL DEFENSES, RIGHTS,
AND/OR COUNTERCLAIMS IN ANY ACTION OR PROCEEDINGS BETWEEN BORROWER AND LENDER.
BORROWER WAIVES ALL RIGHTS TO INTERPOSE ANY CLAIMS, DEDUCTIONS, SETOFFS OR
COUNTERCLAIMS OF ANY KIND, NATURE OR DESCRIPTION IN ANY ACTION OR PROCEEDING
INSTITUTED BY LENDER WITH RESPECT TO THIS NOTE, THE OTHER LOAN DOCUMENTS, THE
OBLIGATIONS, THE COLLATERAL OR ANY MATTER ARISING THEREFROM OR RELATING THERETO,
EXCEPT COMPULSORY COUNTERCLAIMS.

 

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CONSENT TO JURISDICTION. BORROWER HEREBY (a) IRREVOCABLY SUBMITS AND CONSENTS TO
THE EXCLUSIVE JURISDICTION OF THE STATE AND FEDERAL COURTS LOCATED IN THE STATE
OF CALIFORNIA, LOS ANGELES COUNTY WITH RESPECT TO ANY SUIT, ACTION OR PROCEEDING
ARISING OUT OF THIS NOTE, THE OTHER LOAN DOCUMENTS, THE OBLIGATIONS AND/OR THE
COLLATERAL OR ANY MATTER ARISING THEREFROM OR RELATING THERETO, AND (b) WAIVES
ANY OBJECTION IT MAY NOW OR HEREAFTER HAVE BASED ON VENUE OR FORUM NON
CONVENIENS WITH RESPECT THERETO. IN ANY SUCH ACTION OR PROCEEDING, BORROWER
WAIVES PERSONAL SERVICE OF THE SUMMONS AND COMPLAINT OR OTHER PROCESS AND PAPERS
THEREIN AND AGREES THAT THE SERVICE THEREOF MAY BE MADE BY CERTIFIED MAIL,
RETURN RECEIPT REQUESTED, DIRECTED TO BORROWER AT ITS OFFICES SET FORTH HEREIN
OR OTHER ADDRESS THEREOF OF WHICH LENDER HAS RECEIVED NOTICE AS PROVIDED IN THE
LOAN AGREEMENT. NOTWITHSTANDING THE FOREGOING, BORROWER CONSENTS TO THE
COMMENCEMENT BY LENDER OF ANY SUIT, ACTION OR PROCEEDING IN ANY OTHER
JURISDICTION TO ENFORCE LENDER’S RIGHTS AND BORROWER WAIVES ANY OBJECTIONS WHICH
IT MAY NOW OR HEREAFTER HAVE BASED ON VENUE AND/OR FORUM NON CONVENIENS OF ANY
SUCH SUIT, ACTION OR PROCEEDING.

 

ASSIGNMENT: Lender reserves the right to sell, assign, transfer, negotiate, or
grant participation interests in all or any part of this Note, or any interest
in Lender’s rights and benefits hereunder.

 

LOST NOTE: In the event of the loss, theft, destruction or mutilation of this
Note, upon request of Lender and submission of evidence reasonably satisfactory
to the Borrower of such loss, theft, destruction or mutilation, and, in the case
of any such loss, theft, or destruction, upon delivery of a bond or indemnity
reasonably satisfactory to Borrower, or in the case of any such mutilation, upon
surrender and cancellation of this Note, Borrower will issue a new Note of like
tenor as the lost, stolen, destroyed or mutilated Note.

 

JOINT AND SEVERAL OBLIGATIONS: The obligations of SG, SUSA and SGS under this
Note and all Obligations under the other Loan Documents are the joint are
several obligations of SG, SUSA and SGS.

 

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IN WITNESS WHEREOF, this Secured Promissory Note (Revolving Loans) has been duly
executed and delivered by Borrower as of the day and year first above written.

 

  BORROWER: SYSOREX GLOBAL           By:   /s/ Nadir Ali   Name:  Nadir Ali   
Title: CEO          SYSOREX USA           By:   /s/ Nadir Ali   Name:  Nadir
Ali    Title: CEO          SYSOREX GOVERNMENT SERVICES, INC.           By:   /s/
Wendy Loundermon   Name:  Wendy Loundermon   Title: President

 

 

[SIGNATURE PAGE – SECURED PROMISSORY NOTE (REVOLVING LOANS)]