EXHIBIT
10.3


 


Promissory
Note


 


FOR
VALUE RECEIVED, Cachet Financial Solutions, Inc. a Delaware corporation (“Borrower”), having an office at Southwest
Tech Center A, 18671 Lake Drive East, Minneapolis, MN 55317 , unconditionally promises to pay to the order of James L. Davis (“Lender”),
with an office at 6446 Flying Cloud Drive, Eden Prairie, MN 55344 the principal sum of Two Hundred Twenty Six Thousand Six Hundred
Fifty Dollars ($226,650) (the “Loan”) outstanding hereunder together with all accrued interest thereon, as
provided in this Promissory Note (the “Note”).


 


1.Repayment.
This Note shall be repaid in six monthly installments of $38,650.16, which includes interest. Unless Lender otherwise designates
in writing to the Borrower, such monthly installment shall be paid to KLC Financial on behalf of Lender


 


2.Payments.
Payments made under this Note shall be in accordance with the following:


 


2.1Manner
of Payments. All payments of interest
and principal shall be made in lawful money of the United States of America.


 


2.2Application
of Payments. All payments, including
insufficient payments, shall be credited, regardless of their designation by Borrower, first to collection expenses due hereunder,
then to interest due and payable but not yet paid, and the remainder, if any, to principal.


 


3.Interest.
Interest under this Note shall be as follows:


 


3.1Interest
Rate. If any portion of this Note
is not paid when due, Borrower shall pay interest to Lender on the unpaid principal amount of the Loan outstanding hereunder,
accruing from the date such payment was due to the date on which the entire principal sum hereof has been paid in full, computed
on the basis of the actual number of days elapsed in a 365 day year, at a rate per annum which shall be equal to 10%, compounded
annually as of the last day of each calendar year. In no event shall interest exceed the maximum legal rate permitted by law.


 


3.2Interest
Payable. Any interest which shall
become payable pursuant to Section 3.1 shall be payable ON DEMAND. Borrower may make whole or partial interest payments at any
time prior to demand, without penalty and without affecting any other provisions of this Note.


 


4.Representations
and Warranties of Borrower.
Borrower hereby represents and warrants as of the date of this Note, as follows:


 


4.1Existence.
Borrower is a corporation duly incorporated/, validly existing and in good standing under the laws of its state of organization.


 






    	 	 	 



    	 



    

 


4.2Power
and Authority. Borrower has the power
and authority, and the legal right, to execute and deliver this Note and to perform its obligations hereunder.


 


4.3Authorization,
Execution and Delivery. The execution
and delivery of this Note by Borrower and the performance of its obligations hereunder have been duly authorized by all necessary
corporate action in accordance with all applicable laws. Borrower has duly executed and delivered this Note.


 


4.4Enforceability.
This Note is a valid, legal and binding obligation of Borrower, enforceable against Borrower in accordance with its terms except
as enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the
enforcement of creditors’ rights generally and by general equitable principles (whether enforcement is sought by proceedings
in equity or at law).


 


4.5No
Approvals. No consent or authorization
of, filing with, notice to or other act by, or in respect of, any governmental authority or any other person is required in order
for Borrower to execute, deliver, or perform any of its obligations under this Note.


 


4.6No
Violations. The execution and delivery of this Note and the consummation by Borrower of the transactions contemplated
hereby do not and will not (a) violate any provision of Borrower’s organizational documents; (b) violate any law or order
applicable to Borrower or by which any of its properties or assets may be bound; or (c) constitute a default under any material
agreement or contract by which Borrower may be bound.


 


5.Representations
and Warranties of Lender. Lender hereby represents and warrants as of the date of this Note, as follows:


 


5.1Acquisition
of Securities. Lender is acquiring the warrant (“Warrant”) referred to herein and common stock (“Common
Stock”) received upon exercise of the warrant (the “Underlying Shares,” and together with the Warrants, the
“Securities”) as principal for its own account and has no direct or indirect arrangement or understandings with any
other persons to distribute or regarding the distribution of the Securities. Lender understands that the Common Stock, Warrant
and Underlying Shares are “restricted securities” and have not been registered under the Securities Act or any applicable
state securities law and is acquiring the Securities as principal for its own account and not with a view to or for distributing
or reselling the Securities or any part thereof in violation of the Securities Act or any applicable state securities law, has
no present intention of distributing any of the Securities in violation of the Securities Act or any applicable state securities
law and has no direct or indirect arrangement or understandings with any other persons to distribute or regarding the distribution
of the Securities in violation of the Securities Act or any applicable state securities law. 


 


5.2Accredited
Investor. At the time such Lender was offered the Securities, it was, and as of the date hereof it is, and on each date on
which it exercises the Warrant, it will be an “accredited investor” as defined in Rule 501 under the Securities Act.


 


5.3Legend.
Lender acknowledges the Warrant and Underlying Shares will include an appropriate legend identifying the Securities as restricted
securities.


 






    	 	 	 



    	 



    

 


6.Events
of Default. The occurrence and continuance of any of the following shall constitute an Event of Default hereunder:


 


6.1Failure
to Pay. The Borrower fails to pay any monthly installment when due and such failure continues for 5 days after written notice
to the Borrower.


 


6.2Bankruptcy.


 


(a)the
Borrower commences any case, proceeding or other action (i) under any existing or future law relating to bankruptcy, insolvency,
reorganization, or other relief of debtors, seeking to have an order for relief entered with respect to it, or seeking to adjudicate
it as bankrupt or insolvent, or seeking reorganization, arrangement, adjustment, winding-up, liquidation, dissolution, composition
or other relief with respect to it or its debts or (ii) seeking appointment of a receiver, trustee, custodian, conservator or
other similar official for it or for all or any substantial part of its assets, or the Borrower makes a general assignment for
the benefit of its creditors; or


 


(b)there
is commenced against the Borrower any case, proceeding or other action of a nature referred to in Section 6.2(a) above which (i)
results in the entry of an order for relief or any such adjudication or appointment or (ii) remains undismissed, undischarged
or unbonded for a period of 30 days


 


7.Remedies.
Upon the occurrence of any Event of Default and at any time thereafter during the continuance of such Event of Default, Lender
may at its option, by written notice to the Borrower declare the entire principal amount of this Note, together with all accrued
interest thereon and all other amounts payable hereunder, immediately due and payable provided, however that, if an Event
of Default described in Section 6.2 shall occur, the principal of and accrued interest on this Note shall become immediately due
and payable without any notice, declaration or other act on the part of the Lender.


 


8.Miscellaneous.
Lender and Borrower further agree as follows:


 


8.1Notices.
All notices, requests or other communications required or permitted to be delivered hereunder shall be delivered in writing at
the addresses set forth above of this Note or such other address as either Borrower or Lender may from time to time specify in
writing. Notices mailed by certified or registered mail or sent by hand or overnight courier service shall be deemed to have been
given when received. Notices sent by facsimile during the recipient’s normal business hours shall be deemed to have been
given when sent (and if sent after normal business hours shall be deemed to have been given at the opening of the recipient’s
business on the next business day). Notices sent by e-mail shall be deemed received upon the sender’s receipt of an acknowledgment
from the intended recipient (such as by the “return receipt requested” function, as available, return e-mail or other
written acknowledgment).


 


8.2Warrants.
As an additional inducement to Lender to advance amounts hereunder, Borrower shall issue to Lender a warrant to acquire 339,975
shares of Borrower’s common stock at $0.27 per share. Such warrants shall be exercisable for five years from the date of
issuance and shall be on Borrower’s standard form.


 






    	 	 	 



    	 



    

 


8.3Origination
Fee. Borrower shall pay Lender’s origination fee in the amount of $10,470 to KLC Financial.


 


8.4Governing
Law. This Note and any claim, controversy,
dispute or cause of action (whether in contract or tort or otherwise) based upon, arising out of or relating to this Note and
the transactions contemplated hereby shall be governed by the laws of the State of Minnesota, excluding its conflicts of law provisions.


 


8.5Waiver
of Jury Trial. BORROWER HEREBY IRREVOCABLY
WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY
OR INDIRECTLY RELATING TO THIS NOTE OR THE TRANSACTIONS CONTEMPLATED HEREBY WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY.


 


8.6Counterparts,
Integration, Effectiveness. This Note
and any amendments, waivers, consents or supplements hereto may be executed in counterparts, each of which shall constitute an
original, but all taken together shall constitute a single contract. This Note constitutes the entire contract between the parties
with respect to the subject matter hereof and supersede all previous agreements and understandings, oral or written, with respect
thereto. Delivery of an executed counterpart of a signature page to this Note by facsimile or in electronic (i.e., “pdf”
or “tif”) format shall be effective as delivery of a manually executed counterpart of this Note.


 


8.7Successors
and Assigns. This Note may not be
assigned, transferred or negotiated by Lender to any entity without the consent of Borrower. Borrower may not assign or transfer
this Note or any of its rights hereunder without the prior written consent of Lender. This Note shall inure to the benefit of
and be binding upon the parties hereto and their permitted successors and assigns.


 


8.8Amendment
and Waiver. No term of this Note may
be waived, modified or amended except by an instrument in writing signed by both of the parties hereto. Any waiver of the terms
hereof shall be effective only in the specific instance and for the specific purpose given.


 


8.9Headings.
The headings of the various Sections and subsections herein are for reference only and shall not define, modify, expand or limit
any of the terms or provisions hereof.


 


8.10No
Waiver; Cumulative Remedies. No failure
to exercise and no delay in exercising on the part of Lender, of any right, remedy, power or privilege hereunder shall operate
as a waiver thereof; nor shall any single or partial exercise of any right, remedy, power or privilege hereunder preclude any
other or further exercise thereof or the exercise of any other right, remedy, power or privilege. The rights, remedies, powers
and privileges herein provided are cumulative and not exclusive of any rights, remedies, powers and privileges provided by law.


 


8.11Severability.
If any term or provision of this Note is invalid, illegal or unenforceable in any jurisdiction, such invalidity, illegality or
unenforceability shall not affect any other term or provision of this Note or invalidate or render unenforceable such term or
provision in any other jurisdiction.


 


[signature
page follows]


 




    	 	 	 



    	 



    


 


IN
WITNESS WHEREOF, the parties hereto have executed this Note as of May 9, 2016.


 


	 	CACHET FINANCIAL SOLUTIONS, INC., 
	 	as Borrower
	 	 	 
	 	By:	/s/
    Jeffrey C. Mack
	 	Name:	Jeffrey
    C. Mack
	 	Title:	CEO
	 	 	 
	 	By:	/s/
    James L. Davis
	 	Name:	James
    L. Davis