Document:

Exhibit 10.2

 

SUBORDINATION AGREEMENT

 

This Subordination
Agreement (the “Agreement”) is made as of February 28, 2013, by and between ACT Capital Partners, LP (“Creditor”),
and SILICON VALLEY BANK, a California corporation, with its principal place of business at 3003 Tasman Drive, Santa
Clara, California 95054 (“Bank”).

 

Recitals

 

A.           CROSSROADS
SYSTEMS (TEXAS), INC., a Texas corporation (“Borrower”), has requested and/or obtained certain loans or
other credit accommodations from Bank which are or may be from time to time secured by assets and property of Borrower.

 

B.           Creditor
has extended loans or other credit accommodations to Borrower, and/or may extend loans or other credit accommodations to Borrower
from time to time.

 

C.           To
induce Bank to extend credit to Borrower and, at any time or from time to time, at Bank’s option, to make such further loans,
extensions of credit, or other accommodations to or for the account of Borrower, or to purchase or extend credit upon any instrument
or writing in respect of which Borrower may be liable in any capacity, or to grant such renewals or extension of any such loan,
extension of credit, purchase, or other accommodation as Bank may deem advisable, Creditor is willing to subordinate, subject to
the limitations set forth in this Agreement: (i) all of Borrower’s indebtedness and obligations to Creditor (including, without
limitation, principal, premium (if any), interest, fees, charges, expenses, costs, professional fees and expenses, and reimbursement
obligations), plus any dividends and/or distributions or other payments pursuant to call, put, or conversion features in connection
with equity securities of Borrower issued to or held by Creditor, whether presently existing or arising in the future (the “Subordinated
Debt”) to all of Borrower’s indebtedness and obligations to Bank; and (ii) all of Creditor’s security interests,
if any, to all of Bank’s security interests in Borrower’s property.

 

NOW, THEREFORE, THE PARTIES AGREE AS FOLLOWS:

 

1.          Creditor
subordinates to Bank any security interest or lien that Creditor may have in any property of Borrower. Notwithstanding the respective
dates of attachment or perfection of the security interests of Creditor and the security interests of Bank, all now existing and
hereafter arising security interests of Bank in any property of Borrower and all proceeds thereof (the “Collateral”),
including, without limitation, the “Collateral”, as defined in a certain Fourth Amended and Restated Loan and Security
Agreement between Borrower and Bank dated as of December 27, 2012 (as may be amended, modified, restated, replaced or supplemented
from time to time, the “Loan Agreement”), shall at all times be senior to the security interests of Creditor.
Creditor hereby (a) acknowledges and consents to (i) Borrower granting to Bank a security interest in
the Collateral, (ii) Bank filing any and all financing statements and other documents as deemed necessary by Bank in order to perfect
Bank’s security interest in the Collateral, and (iii) the entering into of the Loan Agreement and all documents in connection
therewith by Borrower, (b) acknowledges and agrees that the Senior Debt, the entering into of the Loan Agreement and all documents
in connection therewith by Borrower, and the security interest granted by Borrower to Bank in the Collateral shall be permitted
under the provisions of the Subordinated Debt documents (notwithstanding any provision of the Subordinated Debt documents to the
contrary), (c) acknowledges, agrees and covenants that Creditor shall not contest, challenge or dispute the validity, attachment,
perfection, priority or enforceability of Bank’s security interest in the Collateral, or the validity, priority or enforceability
of the Senior Debt, and (d) acknowledges and agrees that the provisions of this Agreement will
apply fully and unconditionally even in the event that Bank’s security interest in the Collateral (or any portion thereof)
shall be unperfected. Notwithstanding the foregoing sentences or anything to the contrary set forth in this Agreement, the Loan
Agreement or any other documents executed in connection herewith or therewith, Bank acknowledges and agrees that the proceeds from
the loans or other credit accommodations received by the Borrower from Creditor shall not constitute Collateral and shall not be
subject to any security interest or lien in favor of Bank.

 

    	 

    	 

    

 

2.          Subject
to the limitations set forth in this Agreement, all Subordinated Debt is subordinated in right of payment to all obligations of
Borrower to Bank now existing or hereafter arising, including, without limitation, the Obligations (as defined in the Loan Agreement),
together with all costs of collecting such obligations (including attorneys’ fees), including, without limitation, all obligations
under any agreement in connection with the provision by Bank to Borrower of products and/or credit services
facilities, including, without limitation, any letters of credit, cash management services (including, without limitation, merchant
services, direct deposit of payroll, business credit cards, and check cashing services), interest rate swap arrangements, and foreign
exchange services, all interest accruing after the commencement by or against Borrower of any bankruptcy, reorganization
or similar proceeding (such obligations, collectively, the “Senior Debt”). Notwithstanding the foregoing sentences
or anything to the contrary set forth in this Agreement, the Loan Agreement or any other documents executed in connection herewith
or therewith, Bank acknowledges and agrees that Borrower may repay the loans and other credit accommodations of Borrower owed to
Creditor from the net proceeds received by Borrower from any financing transaction consummated subsequent to the date of this Agreement,
so long as such net proceeds received by Borrower are equal to or greater than $3,000,000.

 

3.          Subject
to the limitations set forth in this Agreement, Creditor will not receive from Borrower (and Borrower will not pay to Creditor)
all or any part of the Subordinated Debt, by way of payment, prepayment, setoff, lawsuit or otherwise, nor will Creditor exercise
any remedy with respect to any property of Borrower, nor will Creditor accelerate the Subordinated Debt, or commence, or cause
to commence, prosecute or participate in any administrative, legal or equitable action against Borrower, until such time as (a)
the Senior Debt has been fully paid in cash, (b) Bank has no commitment or obligation to lend any further funds to Borrower, and
(c) all financing agreements between Bank and Borrower are terminated. Nothing in the foregoing paragraph shall prohibit Creditor
from converting all or any part of the Subordinated Debt into equity securities of Borrower, provided that, if such securities
have any call, put or other conversion features that would obligate Borrower to declare or pay dividends, make distributions, or
otherwise pay any money or deliver any other securities or consideration to the holder, Creditor hereby agrees that Borrower may
not declare, pay or make such dividends, distributions or other payments to Creditor, and Creditor shall not accept any such dividends,
distributions or other payments.

 

4.          Subject
to the limitations set forth in this Agreement, Creditor shall promptly deliver to Bank in the form received (except for endorsement
or assignment by Creditor where required by Bank) for application to the Senior Debt any payment, distribution, security or proceeds
received by Creditor with respect to the Subordinated Debt other than in accordance with this Agreement.

 

5.          In
the event of Borrower’s insolvency, reorganization or any case or proceeding under any bankruptcy or insolvency law or laws
relating to the relief of debtors, including, without limitation, any voluntary or involuntary bankruptcy, insolvency, receivership
or other similar statutory or common law proceeding or arrangement involving Borrower, the readjustment of its liabilities, any
assignment for the benefit of its creditors or any marshalling of its assets or liabilities (each, an “Insolvency Proceeding”),
(a) this Agreement shall remain in full force and effect in accordance with Section 510(a) of the United States Bankruptcy Code,
(b) the Collateral shall include, without limitation, all Collateral arising during or after any such Insolvency Proceeding, and
(c) Bank’s claims against Borrower and the estate of Borrower shall be paid in full before any payment is made to Creditor.

 

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6.          Creditor
shall give Bank prompt written notice of the occurrence of any default or event of default under any document, instrument or agreement
evidencing or relating to the Subordinated Debt, and shall, simultaneously with giving any notice of default to Borrower, provide
Bank with a copy of any notice of default given to Borrower. Creditor acknowledges and agrees that any default or event of default
under the Subordinated Debt documents shall be deemed to be a default and an event of default under the Senior Debt documents.

 

7.          Subject
to the limitations set forth in this Agreement, until the Senior Debt has been fully paid in cash and Bank’s agreements to
lend any funds to Borrower have been terminated, Creditor irrevocably appoints Bank as Creditor’s attorney-in-fact, and grants
to Bank a power of attorney with full power of substitution, in the name of Creditor or in the name of Bank, for the use and benefit
of Bank, without notice to Creditor, to perform at Bank’s option the following acts in any Insolvency Proceeding involving
Borrower:

 

		a)	To file the appropriate claim or claims in respect of the Subordinated Debt on behalf of Creditor if Creditor does not do so
prior to 30 days before the expiration of the time to file claims in such Insolvency Proceeding and if Bank elects, in its sole
discretion, to file such claim or claims; and

 

		b)	To accept or reject any plan of reorganization or arrangement on behalf of Creditor and to otherwise vote Creditor’s
claims in respect of any Subordinated Debt in any manner that Bank deems appropriate for the enforcement of its rights hereunder.

 

In addition to and without
limiting the foregoing: (x) until the Senior Debt has been fully paid in cash and Bank’s agreements to lend any funds to
Borrower have been terminated, Creditor shall not commence or join in any involuntary bankruptcy petition
or similar judicial proceeding against Borrower, and (y) if an Insolvency Proceeding occurs: (i) Creditor shall not assert,
without the prior written consent of Bank, any claim, motion, objection or argument in respect of the Collateral in connection
with any Insolvency Proceeding which could otherwise be asserted or raised in connection with such Insolvency Proceeding, including,
without limitation, any claim, motion, objection or argument seeking adequate protection or relief from the automatic stay in respect
of the Collateral, (ii) Bank may consent to the use of cash collateral on such terms and conditions and in such amounts as it shall
in good faith determine without seeking or obtaining the consent of Creditor as (if applicable) holder of an interest in the Collateral,
(iii) if use of cash collateral by Borrower is consented to by Bank, Creditor shall not oppose such use of cash collateral on the
basis that Creditor’s interest in the Collateral (if any) is impaired by such use or inadequately protected by such use,
or on any other ground, and (iv) Creditor shall not object to, or oppose, any sale or other disposition of any assets comprising
all or part of the Collateral, free and clear of security interests, liens and claims of any party, including Creditor, under Section
363 of the United States Bankruptcy Code or otherwise, on the basis that the interest of Creditor in the Collateral (if any) is
impaired by such sale or inadequately protected as a result of such sale, or on any other ground (and, if requested by Bank, Creditor
shall affirmatively and promptly consent to such sale or disposition of such assets), if Bank has consented to, or supports, such
sale or disposition of such assets.

 

8.          Creditor
represents and warrants that Creditor has provided Bank with true and correct copies of all of the documents evidencing or relating
to the Subordinated Debt. Creditor shall immediately affix a legend to the instruments evidencing the Subordinated Debt stating
that the instruments are subject to the terms of this Agreement. By the execution of this Agreement, Creditor hereby authorizes
Bank to amend any financing statements filed by Creditor against Borrower as follows: “In accordance with a certain Subordination
Agreement by and among the Secured Party, the Debtor and Silicon Valley Bank, the Secured Party has subordinated any security interest
or lien that Secured Party may have in any property of the Debtor to the security interest of Silicon Valley Bank in all assets
of the Debtor, notwithstanding the respective dates of attachment or perfection of the security interest of the Secured Party and
Silicon Valley Bank.”

 

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9.          No
amendment of the documents evidencing or relating to the Subordinated Debt shall directly or indirectly modify the provisions of
this Agreement in any manner which might terminate or impair the subordination of the Subordinated Debt or the subordination of
the security interest or lien that Creditor may have in any property of Borrower. By way of example, such instruments shall not
be amended to (a) increase the rate of interest with respect to the Subordinated Debt, or (b) accelerate the payment of the principal
or interest or any other portion of the Subordinated Debt. Bank shall have the sole and exclusive right to restrict or permit,
or approve or disapprove, the sale, transfer or other disposition of property of Borrower except in accordance with the terms of
the Senior Debt. Upon written notice from Bank to Creditor of Bank's agreement to release its lien on all or any portion of the
Collateral in connection with the sale, transfer or other disposition thereof by Bank (or by Borrower with consent of Bank), Creditor
shall be deemed to have also, automatically and simultaneously, released its lien on the Collateral, and Creditor shall upon written
request by Bank, immediately take such action as shall be necessary or appropriate to evidence and confirm such release. All proceeds
resulting from any such sale, transfer or other disposition shall be applied first to the Senior Debt until payment in full thereof,
with the balance, if any, to the Subordinated Debt, or to any other entitled party. If Creditor fails to release its lien as required
hereunder, Creditor hereby appoints Bank as attorney in fact for Creditor with full power of substitution to release Creditor's
liens as provided hereunder. Such power of attorney being coupled with an interest shall be irrevocable.

 

10.         All
necessary action on the part of Creditor, its officers, directors, partners, members and shareholders, as applicable, necessary
for the authorization of this Agreement and the performance of all obligations of Creditor hereunder has been taken. This Agreement
constitutes the legal, valid and binding obligation of Creditor, enforceable against Creditor in accordance with its terms. The
execution, delivery and performance of and compliance with this Agreement by Creditor will not (a) result in any material violation
or default of any term of any of Creditor’s charter, formation or other organizational documents (such as Articles or Certificate
of Incorporation, bylaws, partnership agreement, operating agreement, etc.) or (b) violate any material applicable law, rule or
regulation.

 

11.         If,
at any time after payment in full of the Senior Debt any payments of the Senior Debt must be disgorged by Bank for any reason (including,
without limitation, any Insolvency Proceeding), this Agreement and the relative rights and priorities set forth herein shall be
reinstated as to all such disgorged payments as though such payments had not been made and Creditor shall immediately pay over
to Bank all payments received with respect to the Subordinated Debt to the extent that such payments would have been prohibited
hereunder. At any time and from time to time, without notice to Creditor, Bank may take such actions with respect to the Senior
Debt as Bank, in its sole discretion, may deem appropriate, including, without limitation, terminating advances to Borrower, increasing
the principal amount, extending the time of payment, increasing applicable interest rates, renewing, compromising or otherwise
amending the terms of any documents affecting the Senior Debt and any collateral securing the Senior Debt, and enforcing or failing
to enforce any rights against Borrower or any other person. No such action or inaction shall impair or otherwise affect Bank’s
rights hereunder. Creditor waives the benefits, if any, of any statutory or common law rule that may permit a subordinating creditor
to assert any defenses of a surety or guarantor, or that may give the subordinating creditor the right to require a senior creditor
to marshal assets, and Creditor agrees that it shall not assert any such defenses or rights.

 

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12.         This
Agreement shall bind any successors or assignees of Creditor and shall benefit any successors or assigns of Bank, provided, however,
Creditor agrees that, prior and as conditions precedent to Creditor assigning all or any portion of the Subordinated Debt: (a)
Creditor shall give Bank prior written notice of such assignment, and (b) such successor or assignee, as applicable, shall execute
a written agreement whereby such successor or assignee expressly agrees to assume and be bound by all terms and conditions of this
Agreement with respect to Creditor. This Agreement shall remain effective until terminated in writing by Bank. This Agreement is
solely for the benefit of Creditor and Bank and not for the benefit of Borrower or any other party. Creditor further agrees that
if Borrower is in the process of refinancing any portion of the Senior Debt with a new lender, and if Bank makes a request of Creditor,
Creditor shall agree to enter into a new subordination agreement with the new lender on substantially the terms and conditions
of this Agreement.

 

13.         Creditor
hereby agrees to execute such documents and/or take such further action as Bank may at any time or times reasonably request in
order to carry out the provisions and intent of this Agreement, including, without limitation, ratifications and confirmations
of this Agreement from time to time hereafter, as and when requested by Bank.

 

14.         This
Agreement may be executed in two or more counterparts, each of which shall be deemed an original and all of which together shall
constitute one instrument.

 

15.         This
Agreement shall be governed by and construed in accordance with the laws of the State of Texas, without giving effect to conflicts
of laws principles. Creditor and Bank submit to the exclusive jurisdiction of the state and federal courts located in Travis County,
Texas in any action, suit, or proceeding of any kind, against it which arises out of or by reason of this Agreement. CREDITOR AND
BANK WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS AGREEMENT
OR ANY OF THE TRANSACTIONS CONTEMPLATED HEREIN.

 

16.         This
Agreement represents the entire agreement with respect to the subject matter hereof, and supersedes all prior negotiations, agreements
and commitments. Creditor is not relying on any representations by Bank or Borrower in entering into this Agreement, and Creditor
has kept and will continue to keep itself fully apprised of the financial and other condition of Borrower. This Agreement may be
amended only by written instrument signed by Creditor and Bank.

 

[Signature page follows.]

 

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IN WITNESS WHEREOF,
the undersigned have executed this Agreement as of the date first above written.

 

	“Creditor”	 	“Bank”
	 	 	 
	ACT Capital Partners, L.P.	 	SILICON VALLEY BANK
	a	 	 	 	 
	 	 	 	 	 
	By: 	/s/ Amir L. Ecker	 	By: 	/s/ Scott Power
	Name: 	Amir L. Ecker	 	Name: 	Scott Power
	Title: 	General Partner	 	Title:	Vice President

 

The undersigned approves of the terms of
this Agreement.

 

	“Borrower”	 
	 	 
	CROSSROADS SYSTEMS (TEXAS), INC.,	 
	a Texas corporation	 
	 	 	 
	By: 	/s/ Brian Bianchi	 
	Name: 	Brian Bianchi	 
	Title: 	COO	 

 

    	6Exhibit 10.3

PROMISSORY NOTE

 

	$250,000.00	Austin, Texas	February 28, 2013

 

FOR VALUE RECEIVED,
Crossroads Systems, Inc., a Delaware corporation (the “Maker”), promises to pay to James E. Besser, an individual
investor (the “Payee”), at 131 Charles Street, Boston, MA 02114, or at such other place as Payee may from time
to time designate, in lawful money of the United States of America, the principal sum of Two Hundred and Fifty Thousand and no/100
Dollars ($250,000.00), or such lesser or greater amount that may be outstanding pursuant to the terms of this Promissory Note (this
“Note”), together with interest on the unpaid principal balance hereof from time to time outstanding, as set
forth below.

 

1.            Payments;
Warrants; Conversion.

 

(a)          All
principal on this Note shall be due and payable on the earlier of: (i) subject to the conversion option set forth in Section
1(b) below, the date that Maker consummates a financing transaction that results in net proceeds to Maker of at least Three
Million and no/100 Dollars ($3,000,000.00) (the “Next Financing”), and (ii) April 15, 2013 (collectively,
the “Maturity Date”), unless accelerated pursuant to the terms hereof. In the event that any principal amounts
remain outstanding on this Note as of the Maturity Date then, on the next succeeding day, Maker shall issue to Payee warrants as
set forth herein (the “Note Warrants”). The Note Warrants shall (A) be exercisable for 1,000 shares of the common
stock of Maker for each $10,000 of principal amount that remains outstanding on this Note as of the Maturity Date, (B) have a term
of five (5) years from the date of issuance, and (C) have an exercise price per share equal to the weighted average closing price
per share for Maker’s common stock on the primary market where Maker’s common stock is listed or quoted as of the date
of issuance of each Note Warrant. On each succeeding thirtieth (30th) day anniversary after the date of the initial issuance of
any Note Warrants, Maker shall issue to Payee additional Note Warrants exercisable for 1,000 shares of the common stock of Maker
for each $10,000 of principal amount that remains outstanding on this Note as of such thirtieth (30th) day anniversary.

 

(b)          In
the event that there are any amounts that remain outstanding under this Note and the Next Financing is completed prior to the occurrence
of item (ii) from Section 1(a), then Payee may elect to convert some or all of the principal that is still outstanding under
this Note into the securities that are issued in the Next Financing. Payee shall exercise this right by giving written notice to
Maker of its election to convert amounts of principal under this Note on or prior to the date that is two (2) days subsequent to
the date that Payee receives written notice of the consummation of the Next Financing from Maker. Such notice shall state how much
of the outstanding principal under this Note that Payee is electing to convert. Such conversion shall be at a discount of fifteen
percent (15%) to the issue price that securities are issued in the Next Financing. The conversion of this Note shall be deemed
to have been effected as of the close of business on the date on which Payee has given written notice to Maker of its election
to convert. At such time as the conversion has been effected, the rights of Payee under this Note, to the extent of the conversion,
shall cease and the person in whose name this Note is held upon such conversion shall be deemed to have become the holder of record
of the appropriate kind and quantity of securities issued in the Next Financing. As soon as possible after a conversion has been
effected (but in any event within five (5) business days), Maker shall deliver to the converting Payee (i) a certificate or certificates
representing the appropriate kind and quantity of securities issued in the Next Financing by reason of such conversion and (ii)
payment in an amount equal to the sum of all interest and the amount of any principal not so converted under this Note, and the
converting Payee shall execute and deliver to Maker such documents, instruments and agreements as the other parties to the Next
Financing have executed and delivered.

 

    	 

    	 

    

 

2.            Interest
Charges. Interest on this Note shall be equal to Twenty Five Thousand and no/100 Dollars ($25,000). Such interest shall
be payable on the Maturity Date (unless accelerated pursuant to the terms hereof).

 

3.            Prepayments.
Maker shall have the right to prepay, in whole or in part, the principal of this Note without premium or penalty.

 

4.            Covenants.
Maker covenants and agrees that, as long as any obligations owed by Maker to Payee or any part thereof are outstanding, Maker will
perform and observe, or cause to be performed and observed, the following covenants:

 

(a)          Reporting
Requirements. Maker will furnish to Payee:

 

(i)          Notice
of Litigation. Promptly after the commencement thereof, notice of all material actions, suits, and proceedings before any governmental
authority or arbitrator affecting Maker or its assets;

 

(ii)         Notice
of Default. As soon as possible and in any event immediately upon Maker’s knowledge of the occurrence of any Event of
Default (as defined herein) (or any event that with notice or lapse of time or both would become an Event of Default), a written
notice setting forth the details of such Event of Default and the action that Maker has taken and proposes to take with respect
thereto; and

 

(iii)        Notice
of a Next Financing. Within one (1) day of the occurrence thereof, written notice of the consummation of the Next Financing.

 

(b)          Maintenance
of Existence; Conduct of Business. Maker will use its commercially reasonable efforts to preserve and maintain its legal existence
and all of its material leases, privileges, licenses, permits, franchises, qualifications, and rights that are necessary in the
ordinary conduct of its business.

 

(c)          Maintenance
of Properties. Maker will use its commercially reasonable efforts maintain, keep, and preserve all of its properties necessary
to the proper conduct of its business in good repair, working order, and condition (ordinary wear and tear excepted) and make all
necessary repairs, renewals, replacements, betterments, and improvements thereof.

 

(d)          Further
Assurances. Maker will execute and deliver such further documents, instruments and agreements, and take such further actions
as may be requested by Payee to carry out the provisions and purposes of this Note, to evidence the obligations, and to create,
preserve, maintain, and perfect the liens of Payee.

 

(e)          Commitments.
Maker shall not commit to do or undertake any action the actual taking of which would be a breach of the covenants set forth herein.

 

5.            Events
of Default and Remedies.

 

(a)          Upon
the occurrence of an Event of Default, Payee or other holder of this Note may proceed to protect and enforce its rights against
Maker pursuant to the terms of this Note and applicable law. Payee shall have the following rights and remedies:

 

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(i)          Acceleration.
Payee may declare all outstanding principal of this Note immediately due and payable, and the same shall thereupon become immediately
due and payable, without notice, demand, presentment, notice of dishonor, notice of acceleration, notice of intent to accelerate,
protest, or other formalities of any kind, all of which are hereby expressly waived by Maker;

 

(ii)         Judgment.
Payee may reduce any claim to judgment;

 

(iii)        Other
Rights. Payee may exercise any and all rights and remedies afforded by the laws of the State of Texas or any other jurisdiction,
by equity, or otherwise;

 

provided, however, that upon
the occurrence of an Event of Default under Section 5(b)(iv), Section 5(b)(v) or Section 5(b)(vi)
below, the aforesaid amounts payable by Maker under this Note shall thereupon become immediately and automatically due and payable.

 

(b)          An
“Event of Default” shall occur if:

 

(i)          Maker
fails to pay when due, whether by demand or otherwise, any amounts due under this Note when due;

 

(ii)         Maker
breaches any of its representations, warranties or covenants contained in this Note and such breach continues uncured or unremedied
for a period of five (5) days after the receipt of written notice of such default from Payee;

 

(iii)        An
“Event of Default” has occurred under that certain Fourth Amended and Restated Loan and Security Agreement effective
as of December 27, 2012 between Silicon Valley Bank and Crossroads Systems (Texas), Inc. and Silicon Valley Bank has accelerated
the maturity of Maker’s obligations thereunder;

 

(iv)         Maker
shall (A) apply for or consent to the appointment of, or the taking of possession by, a receiver, custodian, trustee, examiner,
liquidator or the like of himself or of all or any substantial part of his property, (B) make a general assignment for the benefit
of his creditors, (C) commence a voluntary case under the United States Bankruptcy Code (as now or hereafter in effect, the “Bankruptcy
Code”), (D) institute any proceeding or file a petition seeking to take advantage of any other law relating to bankruptcy,
insolvency, reorganization, liquidation, dissolution, winding-up, or composition or readjustment of debts, (E) fail to controvert
in a timely and appropriate manner, or acquiesce in writing to, any petition filed against him in an involuntary case under the
Bankruptcy Code, or (F) other action for the purpose of effecting any of the foregoing;

 

(v)          A
proceeding or case shall be commenced, without the application, approval, or consent of Maker in any court of competent jurisdiction,
seeking (A) the composition or readjustment of his debts, (B) the appointment of a receiver, custodian, trustee, examiner, liquidator
or the like of Maker or of all or any substantial part of his property, or (C) similar relief in respect of Maker under any law
relating to bankruptcy, insolvency, reorganization, winding-up, or composition or adjustment of debts, and such proceeding or case
shall continue undismissed, or an order, judgment or decree approving or ordering any of the foregoing shall be entered and continue
unstayed and in effect, for a period of sixty (60) or more days, or (D) an order for relief against Maker shall be entered in an
involuntary case under the Bankruptcy Code; or

 

(vi)         Maker
admits in writing its inability to, or becomes generally unable to, pay his debts as such debts become due.

 

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6.            No
Waiver. No failure on the part of Payee to exercise and no delay in exercising, and no course of dealing with respect to,
any right, power, or privilege hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any right,
power, or privilege hereunder preclude any other or further exercise thereof or the exercise of any other right, power, or privilege
or impair any other right, power, or privilege. The rights and remedies provided for hereunder are cumulative and not exclusive
of any rights and remedies provided by law. Enforcement by the holder of this Note for the payment hereof shall not constitute
an election by such holder of remedies so as to preclude the exercise of any other remedy available to such holder.

 

7.            Waiver.
Maker and all endorsers, sureties, and guarantors hereof hereby jointly and severally waive
all exemption rights under any applicable law, and also waive presentment for payment, demand, notice of nonpayment, valuation,
appraisement, protest, demand, dishonor, notice of protest, notice of intent to accelerate, notice of acceleration, and all other
notices, and without further notice hereby consent to all renewals, extensions, or partial payments either before or after maturity.

 

8.            Costs
of Collection. If this Note is placed in the hands of any attorney for collection, or is collected by suit or through bankruptcy
proceedings, Maker agrees to pay Payee’s reasonable attorneys’ fees and disbursements in addition to other amounts
due.

 

9.            Severability.
If any provisions of this Note are held to be invalid, illegal or unenforceable, the validity, legality and enforceability of the
remaining provisions will not be affected, and in lieu of such unenforceable provision there shall be added automatically as part
of this Note a provision as similar in terms as may be valid and enforceable.

 

10.         Notices.
All notices, demands and other communications provided for or permitted hereunder shall be made in writing, and shall be addressed
to the parties at the addresses of each party given in writing to the other parties. All notices shall be given (a) by personal
delivery, or (b) by electronic communication, with a confirmation sent by registered or certified mail, return receipt requested,
or (c) by registered or certified mail, return receipt requested. All notices shall be deemed delivered (i) if by personal delivery,
on the date of delivery if delivered during normal business hours, and, if not delivered during normal business hours, on the next
business day following delivery, (ii) if by electronic communication, on the date of receipt of the electronic communication, and
(iii) if solely by mail, on the date of the deposit of the mailing in an official U.S. post office mail depository. A party may
change its address by notice to the other party.

 

11.         Continuing
Agreement; Successors and Assigns. This Note shall (a) remain in full force and effect until payment and performance
in full of all of the obligations of Maker to Payee hereunder, and (b) be binding on Maker and its successors and assigns,
and shall inure to the benefit of Payee and its successors, transferees, and assigns.

 

12.         Counterparts.
This Note may be executed in any number of counterparts, each of which shall be deemed to be an original, but all of which together
shall be deemed to constitute one instrument. Delivery of an executed counterpart of a signature page to this Note by facsimile
or other electronic transmission (including email and .pdf format) shall be as effective as delivery of a manually executed counterpart
of this Note.

 

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13.         Effect
of Headings; Construction. The descriptive headings in this Note have been inserted for convenience only and shall not
be deemed to limit or otherwise affect the construction of any provision thereof or hereof. The parties have participated jointly
in the negotiation and drafting of this Note with counsel sophisticated in investment transactions. In the event an ambiguity or
question of intent or interpretation arises, this Note and the agreements, documents and instruments executed and delivered in
connection herewith shall be construed as if drafted jointly by the parties and no presumption or burden of proof shall arise favoring
or disfavoring any party by virtue of the authorship of any provisions of this Note and the agreements, documents and instruments
executed and delivered in connection herewith.

 

14.         Use
of Terms. Whenever used in this Note, the singular number will include the plural, and the plural number will include the
singular, and pronouns in the masculine, feminine, or neuter gender will include each other gender.

 

15.         Survival.
The representations, warranties and covenants of the parties contained in this Note shall survive the execution and delivery of
this Note.

 

16.         Waiver.
Maker and each surety, guarantor, endorser, and other party ever liable for payment of any sums of money payable on this Note jointly
and severally waive notice, presentment, demand for payment, protest, notice of protest and non-payment or dishonor, notice of
acceleration, notice of intent to accelerate, notice of intent to demand, diligence in collecting, grace, and all other formalities
of any kind, and consent to all extensions without notice for any period or periods of time and partial payments, before or after
maturity, and any impairment of any collateral securing this Note, all without prejudice to the holder.

 

17.         Governing
Law. This Note shall be governed by and construed in accordance with the laws of the State of Texas and the applicable
laws of the United States of America. 

 

18.         Waiver
of Jury Trial; Punitive Damages. Maker and Payee each irrevocably waives its right to a trial by jury of any claim or cause
of action based upon or arising out of or related to this Note or the transactions contemplated hereby or thereby, in any action,
proceeding or other litigation of any kind brought by either against the other, whether with respect to contract claims, tort claims,
or otherwise. Maker and Payee each agrees that any such claim or cause of action shall be tried by a court without a jury. Without
limiting the foregoing, the parties further agree that its right to a trial by jury is waived as to any action, counterclaim or
other proceeding which seeks, in whole or in part, to challenge the validity or enforceability of this Note or any provision hereof.
This waiver shall apply to any subsequent amendments, renewals, supplements or modifications to this Note, whether or not specifically
set forth therein. Maker and Payee each irrevocably waives any right such party may have to claim or recover in any litigation
any and all special, consequential, exemplary, or punitive damages (regardless of how named).

 

19.         Entire
Agreement. This Note embodies the final, entire agreement of Maker and Payee with respect to the indebtedness evidenced
hereby and supersedes any and all prior commitments, agreements, representations and understandings, whether written or oral, relating
thereto and may not be contradicted or varied by evidence of prior, contemporaneous or subsequent oral agreements or discussions
of Maker and Payee. There are no oral agreements between Maker and Payee.

 

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IN WITNESS WHEREOF,
the undersigned has executed this Note at Austin, Texas to be effective as of the date first written above.

 

	 	MAKER:
	 	 
	 	CROSSROADS SYSTEMS, INC.
	 	 
	 	By:	/s/Brian Bianchi
	 	Name:	Brian Bianchi
	 	Title:	COO

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