Item 1.01 Entry into a Material Definitive Agreement.
Amendment to Systat
License Agreement
On
June 30, 2020 (the “Closing Date”), Inpixon (the “Company”) entered into an amendment and waiver (the “Amendment”)
to that certain Exclusive Software License and Distribution Agreement, dated as of June 19, 2020, with an effective date of June
1, 2020 (as amended by the Amendment, the “License Agreement”), with Cranes Software International Ltd., a company
organized under the laws of India (“Cranes”), and Systat Software, Inc., a Delaware corporation (“Systat,”
and together with Cranes, the “Systat Parties”), which agreement provides that Systat will grant the Company (a) an
exclusive, worldwide license to use, modify, develop, market and distribute the Software, Software Source, User Documentation and
related Systat Intellectual Property and (b) an exclusive, worldwide sub-license to use, modify, develop, market and distribute
Software, Software Source, User Documentation and related Intellectual Property licensed to Systat by Cranes (collectively, the
“Licenses”), on the terms and subject to the satisfaction of the conditions set forth in the License Agreement (the
“Transaction”). All defined terms used herein and not otherwise defined have the meanings set forth in the License
Agreement.
The
Amendment provides that in connection with the closing of the Transaction, the Parties agree to waive certain of the closing delivery
requirements set forth in Article 8 of the License Agreement, which shall be provided within ten (10) business days of the Closing
Date (the “Extension Date”), provided, however, that the cash consideration of $2.2 million (the “Cash Consideration”)
will be delivered, at the Company’s option, by the later of the Extension Date or the date on which all such closing deliverables
are actually delivered to the Company (the “Delivery Date”).
Closing of Systat
License Transaction
Following
the execution of the Amendment, on the Closing Date, the Transaction closed and the Company acquired the Licenses. At the closing,
the Company assigned Systat the Company’s right to receive $3.0 million of the principal balance under that certain promissory
note issued by Sysorex, Inc. (“Sysorex”) to the Company (the “Sysorex Note”) in accordance with the terms
and conditions of that certain Promissory Note Assignment and Assumption Agreement, dated as of the Closing Date (the “Assignment
Agreement”). An additional $3.3 million of the principal balance will be assigned to Systat in accordance with the following
schedule: (i) $1.3 million on the three month anniversary of the Closing Date; (ii) $1.0 million on the six month anniversary of
the Closing Date; and (iii) $1.0 million on the nine month anniversary of the Closing Date. Each assignment under the Sysorex Note
will be represented by new secured promissory notes (each, a “Partitioned Note”). Pursuant to the Amendment, the Cash
Consideration will be paid by the Company prior to the later of the Extension Date or the Delivery Date. In connection with the
Assignment Agreement, the Company, Sysorex and Systat entered into that certain Intercreditor Agreement (the “Intercreditor
Agreement”), pursuant to which the Company agreed that, to the extent any of the Partitioned Notes have not yet been assigned,
transferred and conveyed by the Company to Systat pursuant to the Assignment Agreement, and to the extent that the Company has
not exercised the Offset Right (as defined below), such that there remain obligations of Sysorex to the Company under the Sysorex
Note, Sysorex’s obligation to make any payment to the Company pursuant to the Sysorex Note, including any costs and expenses
(including, without limitation, reasonable attorneys’ fees) due thereunder, will be subordinate and junior to Sysorex’s
obligation to make any payment to Systat under the Partitioned Notes, including any costs and expenses (including, without limitation,
reasonable attorneys’ fees) due thereunder.
In
connection with the grant of the Licenses, the Systat Parties provided the Equipment to the Company, for the Company to use at
no additional cost for a minimum period of six months following the Closing Date. In addition, the Company has the right, but not
the obligation, to assume all of the Systat Parties’ rights, interests, and obligations under the Systat Customer Contracts
and the Systat Distribution Agreements. The Company is also entitled to any Customer Maintenance revenue, new license fees, or
license renewal fees, received by any of the Systat Parties after June 1, 2020 in connection with the Systat Customer Contracts
and/or Systat Distribution Agreements assigned to and assumed by the Company in connection with the License Agreement. The Licenses
will remain in effect for a period of 15 years following the Closing Date (the “Term”), unless terminated sooner upon
mutual written consent of Systat and the Company or upon termination by either for the other party’s specified breach. Upon
termination or expiration of the License Agreement, Systat will have the right, but not the obligation, to assume certain customer,
reseller and subdistributor contracts that were assigned to and assumed by the Company in connection with the License Agreement.
At
any time during the first 5-year period of the Term, the Company may exercise its option to purchase the Software, Software Source,
User Documentation, Systat Intellectual Property, Customer Information and Equipment (the “Assets”) from the Systat
Parties in exchange for an assignment of the Company’s right to receive an additional $1.0 million in principal under the
Sysorex Note.
The Systat Parties
have agreed to indemnify the Company, including its affiliates, related parties, officers, directors, agents and other representatives,
from losses arising from or related to any third party claim or action relating to: (a) the license, distribution or use of the
Products or Assets prior to the Closing Date, (b) a claim that the Products, the Software Source, or any other Systat Intellectual
Property infringes any Intellectual Property rights of a third party, except where such claim of infringement is based on a modification
of the Products or Software Source Modifications made by the Company, (c) any material inaccuracy in or breach of any representation
and warranties of the Systat Parties or Starcom Information Technology Limited, a subdistributor of Systat (“Starcom”),
contained in the Transaction Documents, (d) any breach or non-fulfillment of any covenant, agreement or obligations to be performed
by the Systat Parties or Starcom pursuant to the Transaction Documents, and (e) except as described in the License Agreement, any
termination, amendment or other modification to the Systat Distribution Agreements or other action that results in the termination
or revocation of the rights granted to the Company. The Company, in its sole discretion, has the right to offset any losses, on
a dollar for dollar basis, against the amount owed, or to be owed, by Sysorex to Systat under a Partitioned Note so long as such
Partitioned Note remains outstanding (the “Offset Right”). To the extent the Company exercises the Offset Right, the
amount of any losses made subject to the Offset Right shall first reduce, on a dollar for dollar basis, the amount owed by Sysorex
to Systat under any Partitioned Note not yet conveyed to Systat (the “Retained Partitioned Note”), and will reinstate
a payment obligation of Sysorex to the Company under the Sysorex Note in an amount equal to such losses, which will concurrently
reduce the amount owed by Sysorex to Systat under the applicable Retained Partitioned Note by an amount equal to such losses.
Nadir
Ali, the Company’s chief executive officer and a director, is a related party in connection with the Transaction as a result
of his service as a director of Sysorex, the issuer of the Sysorex Note that was assigned in accordance with the terms and conditions
of the License Agreement. In addition, Tanveer Khader and Kareem Irfan, members of the Company’s board of directors, are
also related parties in connection with the Transaction as a result of their respective employment relationships with the Systat
Parties.
The
foregoing description of the Amendment, the License Agreement, the Assignment Agreement, the Partitioned Notes, the Intercreditor
Agreement and the transactions contemplated thereby do not purport to be complete and are qualified in their entirety by reference
to the full text of the Amendment, the License Agreement, the Assignment Agreement, the form of Partitioned Note and the Intercreditor
Agreement, copies of which are filed as Exhibits 10.1, 10.2, 10.3, 99.1 and 10.4 to this Current Report on Form 8-K, respectively,
and are incorporated by reference herein.