THIS INSTRUMENT AND THE RIGHTS AND OBLIGATIONS EVIDENCED HEREBY ARE SUBORDINATE
IN THE MANNER AND TO THE EXTENT SET FORTH IN THAT CERTAIN SUBORDINATION AND
INTERCREDITOR AGREEMENT (THE "SUBORDINATION AGREEMENT") DATED AS OF MARCH 12,
2018 BY AND AMONG MICHAEL HERNANDEZ (THE "SUBORDINATED CREDITOR"), CYNERGISTEK,
INC., A DELAWARE CORPORATION (THE "COMPANY"), CTEK SECURITY, INC., A TEXAS
CORPORATION ("CTEK SECURITY"), CTEK SOLUTIONS, INC., A CALIFORNIA CORPORATION
("CTEK SOLUTIONS"), DELPHIIS, INC., A CALIFORNIA CORPORATION ("DELPHIIS"), EACH
OTHER GUARANTOR PARTY THERETO FROM TIME TO TIME (TOGETHER WITH THE COMPANY, CTEK
SECURITY, CTEK SOLUTIONS, DELPHIIS, AND EACH OTHER OBLIGOR OF THE SENIOR DEBT,
THE "DEBTORS"), AND BMO HARRIS BANK N.A., A NATIONAL BANKING ASSOCIATION (THE
"SENIOR LENDER"), TO THE INDEBTEDNESS (INCLUDING INTEREST) OWED BY THE COMPANY
PURSUANT TO THAT CERTAIN CREDIT AGREEMENT DATED AS OF MARCH 12, 2018 AMONG THE
COMPANY, CTEK SECURITY, CTEK SOLUTIONS, DELPHIIS, EACH OTHER GUARANTOR PARTY
THERETO FROM TIME TO TIME AND THE SENIOR LENDER, AS SUCH CREDIT AGREEMENT MAY BE
AMENDED, SUPPLEMENTED, RESTATED OR OTHERWISE MODIFIED FROM TIME TO TIME AND TO
INDEBTEDNESS REFINANCING THE INDEBTEDNESS UNDER SUCH AGREEMENT AS PERMITTED BY
THE SUBORDINATION AGREEMENT; AND EACH HOLDER OF THIS INSTRUMENT, BY ITS
ACCEPTANCE HEREOF, IRREVOCABLY AGREES TO BE BOUND BY THE PROVISIONS OF THE
SUBORDINATION AGREEMENT
PROMISSORY NOTE
$343,750Effective January 1, 2018
FOR VALUE RECEIVED, CynergisTek, Inc., a Delaware corporation ("Maker"),
promises to pay to the order of Michael Hernandez, an individual ("Payee"), in
lawful money of the United States of America, the principal sum of THREE HUNDRED
FORTY THREE THOUSAND SEVEN HUNDRED FIFTY DOLLARS ($343,750), together with
simple interest payable on the unpaid principal balance at a rate equal to five
percent (5.00%) per annum which will compound annually on the anniversary date
of this Note.
This Note has been executed and delivered pursuant to and in accordance with the
terms and conditions of the Mutual Release and Settlement Agreement, dated
effective March 12, 2018, by and among Maker, Payee, and CTEK Security, Inc.
(the "Mutual Release"), and is the "Severance and Bonus Payment Note" referenced
therein. Capitalized terms used in this Note without definition shall have the
respective meanings set forth in the Mutual Release.
10918239v.1
4840-8021-5899
1. PAYMENTS
1.1Principal and Interest.
Maker shall pay all principal and accrued but unpaid interest to Payee on or
before January 10, 2019 (the "Maturity Date").
Maker does hereby agree that upon the occurrence of an Event of Default, Payee
shall be entitled to receive, and Maker shall pay, interest on the entire
outstanding principal balance and any other amounts due at the rate equal to the
lesser of (a) the Maximum Rate, and (b) the interest rate then applicable under
this Note plus seven percent (7%) (the "Default Rate"), such rate of interest
shall apply from and after the date on which any such payment is due, without
any period of grace or cure.
Interest shall accrue and be payable at the
Default Rate from the occurrence of the Event of Default until all Events of