Exhibit 10.3

 

SECURITIES EXCHANGE AGREEMENT

 

This SECURITIES EXCHANGE AGREEMENT (this “Agreement”) is made effective as of
February 28, 2017, by and between InterCloud Systems, Inc. (the “Company”), and
JGB (Cayman) Waltham Ltd. (“JGBWL”).

 

RECITALS

 

WHEREAS, the Company and JGBWL are parties to the Securities Purchase Agreement
dated as of December 29, 2015 (as may be amended, amended and restated,
supplemented or otherwise modified from time to time, the “Securities Purchase
Agreement”) pursuant to which the Company and JGBWL have certain rights and
obligations; and

 

WHEREAS, the Company and JGBWL have agreed to enter into this Agreement pursuant
to which JGBWL’s additional investment rights under Section 4.13 of the
Securities Purchase Agreement (the “AIR”) are exchanged for a warrant to
purchase shares of the Company’s common stock in substantially the form set
forth in Exhibit A hereto (the “Warrant”);

 

NOW, THEREFORE, in consideration of the foregoing premises and the mutual
covenants and agreements contained herein and for other good and valuable
consideration, the receipt and adequacy of which are hereby acknowledged,
intending to be legally bound, the parties hereto agree as follows:

 

AGREEMENT

 

ARTICLE I. EXCHANGE

 

1.01        Warrant. On the date of this Agreement, the Company will execute and
deliver the Warrant to JGBWL.

 

1.02        Additional Investment Right. Upon receipt of the Exchange
Consideration (as defined below), JGBWL will transfer, convey and assign all
rights and obligations to the AIR under Section 4.13 of the Securities Purchase
Agreement to the Company.

 

1.03         Legal Opinion. On the date of this Agreement, counsel to the
Company shall issue a legal opinion opining that the exchange contemplated
hereby is exempt from registration under Section 3(a)(9) of the Securities Act
of 1933, as amended (the “Securities Act’).

 

ARTICLE II. REPRESENTATIONS AND WARRANTIES OF THE COMPANY

 

The Company represents and warrants to JGBWL as of the date hereof as follows:

 

2.01         Organization, Good Standing and Power. The Company is a corporation
duly incorporated, validly existing and in good standing under the laws of the
State of Delaware and has the requisite corporate power to own, lease and
operate its properties and assets and to conduct its business as it is now being
conducted.

 

2.02         Authorization; Enforcement. The Company has the requisite corporate
power and authority to enter into and perform this Agreement, the Warrant, and
each other agreement, instrument and certificate executed and delivered by the
Company in connection with the foregoing (collectively, the “Operative
Documents”) and to issue the Warrant in accordance with the terms hereof. The
execution, delivery and performance of the Operative Documents by the Company
and the consummation by it of the transactions contemplated thereby have been
duly and validly authorized by all necessary corporate action, and no further
consent or authorization of the Company or its Board of Directors or
stockholders is required. When executed and delivered by the Company, each of
the Operative Documents shall constitute a valid and binding obligation of the
Company, enforceable against the Company in accordance with its terms, except as
such enforceability may be limited by applicable bankruptcy, reorganization,
moratorium, liquidation, conservatorship, receivership or similar laws relating
to, or affecting generally the enforcement of, creditor’s rights and remedies or
by other equitable principles of general application.

 

 

 

 

2.03        Issuance of Shares. When the shares underlying the Warrant (the
“Warrant Shares”) are issued in accordance with the terms of the Warrant, the
Warrant Shares shall be validly issued and outstanding, fully-paid,
non-assessable and free any clear of all liens, of any pre-emptive rights and
rights of refusal of any kind.

 

2.04         No Conflicts. The execution, delivery and performance of the
Operative Documents by the Company, the performance by the Company of its
obligations under the Operative Documents, and the consummation by the Company
of the transactions contemplated by the Operative Documents, and the issuance of
the Warrant Shares as contemplated by the Operative Documents, do not and will
not (i) violate or conflict with any provision of the Company’s Certificate of
incorporation (the “Certificate of Incorporation”) or Bylaws (the “Bylaws”),
each as amended to date, (ii) conflict with, or constitute a default (or an
event which with notice or lapse of time or both would become a default) under,
or give to others any rights of termination, amendment, acceleration or
cancellation of, any agreement, mortgage, deed of trust, indenture, note, bond,
license, lease agreement, instrument or obligation to which the Company or any
of its subsidiaries is a party or by which the Company or any of its
subsidiaries’ respective properties or assets are bound, (iii) result in a
violation of any foreign, federal, state or local statute, law, rule,
regulation, order, judgment or decree (including federal and state securities
laws and regulations) applicable to the Company or any of its subsidiaries or by
which any property or asset of the Company or any of its subsidiaries are bound
or affected, or (iv) create or impose a lien, mortgage, security interest,
charge or encumbrance of any nature below (each, a “Lien”) on any property or
asset of the Company or its subsidiaries under any agreement or any commitment
to which the Company or any of its subsidiaries is a party or by which the
Company or any of its Subsidiaries is bound or by which any of their respective
properties or assets are bound, except, in the case of clauses (ii), (iii) and
(iv), for such conflicts, defaults, terminations, amendments, violations,
acceleration, cancellations, creations and impositions as would not,
individually or in the aggregate, reasonably be expected to have or result in
any material adverse effect on the business, operations, properties, prospects,
or condition (financial or otherwise) of the Company and its subsidiaries taken
as a whole and/or any condition, circumstance, or situation that would prohibit
in any material respect the ability of the Company to perform any of its
obligations under this Agreement or any of the other Operative Documents in any
material respect. Neither the Company nor any of its Subsidiaries is required
under foreign, federal, state or local law, rule or regulation to obtain any
consent, authorization or order of, or make any filing or registration with, any
court or governmental agency in order for it to execute, deliver or perform any
of its obligations under the Operative Documents or issue the Warrant in
accordance with the terms hereof.

 

2.05         SEC Documents, Financial Statements. The common stock of the
Company is registered pursuant to Section 12(g) of the Securities Exchange Act
of 1934, as amended (the ”1934 Act”), and, since January I, 2013, the Company
has timely filed (or has received a valid extension of such time of filing and
has filed any such reports prior to the expiration of any such extension) all
reports, schedules, forms, statements and other documents required to be filed
by it with the SEC pursuant to the reporting requirements of the 1934 Act (all
of the foregoing including f0ilings incorporated by reference therein being
referred to herein as the “SEC Documents”). At the times of their respective
filings, the SEC Documents complied in all material respects with the
requirements of the 1934 Act and the rules and regulations of the SEC
promulgated thereunder. The SEC Documents did not, and do not, contain
any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading. As of their respective dates, the financial statements of the
Company included in the SEC Documents complied as to form in all material
respects with Regulation S-X and all other published rules and regulations of
the SEC. Such financial statements have been prepared in accordance with
generally accepted accounting principles (“GAAP’) applied on a consistent basis
during the periods involved (except (i) as may be otherwise indicated in such
financial statements or the notes thereto or (ii) in the case of unaudited
interim statements, to the extent they may not include footnotes or may be
condensed or summary statements), and fairly present in all material respects
the financial position of the Company and its consolidated Subsidiaries as of
the dates thereof and the results of operations and cash flows for the periods
then ended (subject, in the case of unaudited statements, to normal year-end
audit adjustments). The Company has no reason to believe that it will not timely
file its Annual Report on From 10-K for the year ended December 31, 2016, or its
Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2017.

 

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2.06         Disclosure. Following the issuance of the press release referred to
in Section 4.04, except for the information concerning the transactions
contemplated by this Agreement, the Company confirms that neither it nor any
other person or entity acting on its behalf has provided JGBWL or its agents or
counsel with any information that constitutes or might constitute material,
nonpublic information. The Company understands and confirms that JGBWL will rely
on the foregoing representation in effecting transactions in the securities of
the Company.

 

2.07         Holding Period. Pursuant to Rule 144 promulgated under the
Securities Act, the holding period of the Warrant tacks back to December 29,
2015. The Company agrees not to take a position contrary to this paragraph. The
Company agrees to take all actions, including, without limitation, the issuance
by its legal counsel of any legal opinions to JGBWL or the Company’s transfer
agent, necessary to issue the Warrant Shares without restriction and not
containing any restrictive legend without the need for any action by JGBWL in
connection with a sale of the Warrant Shares by JGBWL. The Warrant (the
“Exchange Consideration”) is being issued in substitution and exchange for and
not in satisfaction of all rights and obligations under Section 4.13 of the
Securities Purchase Agreement.

 

ARTICLE III. REPRESENTATIONS AND WARRANTIES OF THE HOLDER

 

JGBWL represents and warrants to the Company as of the date hereof as follows:

 

3.01         Organization and Standing of JGBWL. JGBWL is duly organized,
validly existing and in good standing under the laws of the jurisdiction of its
organization.

 

3.02         Authorization and Power. JGBWL has the requisite power and
authority to enter into and perform the Operative Documents. The execution,
delivery and performance of the Operative Documents by JGBWL and the
consummation by it of the transactions contemplated hereby have been duly
authorized by all necessary corporate action, and no further consent or
authorization of JGBWL or its managers or members is required. When executed and
delivered by JGBWL, the Operative Documents shall constitute valid and binding
obligations of JGBWL enforceable against JGBWL in accordance with their terms,
except as such enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium, liquidation, conservatorship,
receivership or similar laws relating to, or affecting generally the enforcement
of, creditor’s rights and remedies or by other equitable principles of general
application.

 

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ARTICLE IV. COVENANTS AND AGREEMENTS

 

Unless otherwise specified in this Article, for so long as the Warrant and/or
the Warrant Shares are outstanding, the Company and JGBWL hereby covenant to
each other:

 

4.01         Compliance with Laws; Commission. The Company shall take all
necessary actions and proceedings as may be required by applicable law, rule and
regulation, for the legal and valid issuance (free from any restriction on
transferability under federal securities laws) of the Warrant Shares to JGBWL or
the subsequent holders.

 

4.02         Registration and Listing. The Company shall cause its common stock
to continue to be registered under Sections 12(g) or Section 12(b) of the 1934
Act, to comply in all material respects with its reporting and filing
obligations under the 1934 Act and to not take any action or file any document
(whether or not permitted by the Securities Act or the rules promulgated
thereunder) to terminate or suspend such registration or to terminate or suspend
its reporting and filing obligations under the 1934 Act or Securities Act even
if the rules and regulations thereunder would permit such termination. Without
limiting the foregoing, the Company shall take all necessary action to satisfy
the requirements of Rule I44(c)(l) and Rule 144(i)(2).

 

4.03         Pledge of Warrant Shares. The Company acknowledges and agrees that
the Warrant Shares may be pledged by JGBWL in connection with a bona fide margin
agreement or other loan or financing arrangement that is secured by the Warrant
Shares. The pledge of the Warrant Shares shall not be deemed to be a transfer,
sale or assignment of the Warrant Shares hereunder, and JGBWL shall not be
required to provide the Company with any notice thereof or otherwise make any
delivery to the Company pursuant to this Agreement or any other Operative
Document. The Company, at JGBWL’s expense hereby agrees to execute and deliver
such documentation as JGBWL may reasonably request in connection with a pledge
of the Warrant Shares by JGBWL.

 

4.04         Disclosure of Transaction. The Company shall on or before 8:00 a.m.
eastern time on March 1, 2017, file a Current Report on Form 8-K, disclosing the
material terms of this Agreement, with the SEC. From and after the issuance of
the press release, the Company represents to JGBWL that it shall have publicly
disclosed all material, non-public information delivered to JGBWL by the
Company, or any of their respective officers, directors, employees or agents.

 

4.5          Further Assurance. JGBWL shall, at any time after the receipt of
the Warrant, promptly (i) execute (to the extent necessary) and deliver all
commercially reasonable documents and instruments reasonably required to assign,
convey and transfer the AIR and related rights and obligations under Section
4.13 of the Securities Purchase Agreement to the Company. The foregoing shall be
at the Company’s sole expense.

 

ARTICLE V. MISCELLANEOUS

 

5.01         Fees and Expenses. The Company shall reimburse JGBWL for all costs
and expenses incurred by JGBWL in connection with the negotiation, drafting and
execution of the Operative Documents and the transactions contemplated thereby
(including all reasonable legal fees, travel, disbursements and due diligence in
connection therewith and all fees incurred in connection with any necessary
regulatory filings and clearances). In addition, the Company shall pay all
reasonable fees and expenses incurred by JGBWL in connection with the
enforcement of this Agreement or any of the other Operative Documents,
including, without limitation, all reasonable attorneys’ fees and expenses;
provided, however, that in the event that the enforcement of this Agreement is
contested and it is finally judicially determined that JGBWL was not entitled to
the enforcement of the Operative Document sought, then JGBWL shall reimburse the
Company for all fees and expenses paid pursuant to this sentence. The Company
shall be responsible for its own fees and expenses incurred in connection with
the transactions contemplated by this Agreement. The Company shall pay all fees
of its transfer agent, stamp taxes and other taxes and duties levied in
connection with the delivery of the Warrant and/or the Warrant Shares to JGBWL.
This provision shall survive termination of this Agreement and the Operative
Documents.

 

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5.02          Specific Performance; Consent to Jurisdiction; Venue.

 

(a)   The Company and JGBWL acknowledge and agree that irreparable damage would
occur in the event that any of the provisions of this Agreement or the other
Operative Documents were not performed in accordance with their specific terms
or were otherwise breached. It is accordingly agreed that the parties shall be
entitled to an injunction or injunctions to prevent or cure breaches of the
provisions of this Agreement or the other Operative Documents and to enforce
specifically the terms and provisions hereof or thereof without the requirement
of posting a bond or providing any other security, this being in addition to any
other remedy to which any of them may be entitled by law or equity.

 

(b)   The parties agree that venue for any dispute arising under this Agreement
will lie exclusively in the state or federal courts located in New York County,
New York, and the parties irrevocably waive any right to raise forum non
conveniens or any other argument that New York is not the proper venue. The
parties irrevocably consent to personal jurisdiction in the state and federal
courts in New York County of the state of New York. The Company and JGBWL
consent to process being served in any such suit, action or proceeding by
mailing a copy thereof to such party at the address in effect for notices to it
under this Agreement and agrees that such service shall constitute good and
sufficient service of process and notice thereof. Nothing in this Section 5.02
shall affect or limit any right to serve process in any other manner permitted
by law. The parties hereby waive all rights to a trial by jury.

 

(c)    Notwithstanding the foregoing, the parties agree that venue for any
dispute arising under this Agreement with respect to any security interests and
liens that JGBWL may have on any property of the Company or any of its direct or
indirect subsidiaries located in the United Kingdom or subject to the
jurisdiction of English courts will lie exclusively in the English courts
located in London, England, and the parties irrevocably waive any right to raise
forum non conveniens or any other argument that such courts are not the proper
venue.

 

5.03         Amendment. No provision of this Agreement may be waived or amended
except in a written instrument signed by the Company and JGBWL.

 

5.04         Notices. Any notice, demand, request, waiver or other communication
required or permitted to be given hereunder shall be in writing and shall be
effective (a) upon hand delivery by telecopy or facsimile at the address or
number designated below (if delivered on a business day during normal business
hours where such notice is to be received), or the first business day following
such delivery (if delivered other than on a business day during normal business
hours where such notice is to be received) or (b) on the second business day
following the date of mailing by express courier service, fully prepaid,
addressed to such address, or upon actual receipt of such mailing, whichever
shall first occur or (c) upon delivery by e-mail (if delivered on a Business Day
during normal business hours where such notice is to be received) upon
recipient’s actual receipt and acknowledgement of such e-mail. The addresses for
such communications shall be:

 

If to the Company: InterCloud Systems, Inc.   1030 Broad Street, Suite 102  
Shrewsbury, NJ 07702   Attention: Chief Financial Officer   Telephone: (732)
898-6320   Facsimile No.:   Email: tlarkin@intercloudsys.com and  
dsullivan@intercloudsys.com     If to JGBWL: JGB (Cayman) Cambridge Ltd.   c/o
JGB Management Inc.   21 Charles Street, Suite 160   Westport, CT 06880  
Attention: Brett Cohen   Telephone No.: (212) 355-5771   Facsimile No.: (212)
253-4093  

E-mail: bcohen@jgbcap.com

 

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Any party hereto may from time to time change its address for notices by giving
written notice of such changed address to the other party hereto.

 

 

5.05        Waivers. No waiver by either party of any default with respect to
any provision, condition or requirement of this Agreement shall be deemed to be
a continuing waiver in the future or a waiver of any other provision, condition
or requirement hereof, nor shall any delay or omission of any party to exercise
any right hereunder in any manner impair the exercise of any such right accruing
to it thereafter.

 

5.06         Headings. The article, section and subsection headings in this
Agreement are for convenience only and shall not constitute a part of this
Agreement for any other purpose and shall not be deemed to limit or affect any
of the provisions hereof.

 

5.07         Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of the parties and their successors and assigns. JGBWL may
assign the Warrant and/or the Warrant Shares and its rights under this Agreement
and the other Operative Documents and any other rights hereto and thereto
without the consent of the Company. The Company may not assign or delegate any
of its rights or obligations hereunder or under any Operative Document.

 

5.08         No Third Party Beneficiaries. This Agreement is intended for the
benefit of the parties hereto and their respective permitted successors and
assigns and is not for the benefit of, nor may any provision hereof be enforced
by, any other person or entity.

 

5.09         Governing Law. This Agreement shall be governed by and construed in
accordance with the internal Jaws of the State of New York, without giving
effect to any of the conflicts of law principles that would result in the
application of the substantive law of another jurisdiction. This Agreement shall
not be interpreted or construed with any presumption against the party causing
this Agreement to be drafted.

 

5.10         Survival. The covenants, agreements and representations and
warranties of the Company under the Operative Documents shall survive the
execution and delivery hereof indefinitely.

 

5.11         Counterparts. This Agreement may be executed in any number of
counterparts, all of which taken together shall constitute one and the same
instrument and shall become effective when counterparts have been signed by each
party and delivered to the other parties hereto, it being understood that all
parties need not sign the same counterpart. Signature pages to this Agreement
may be delivered by facsimile or other means of electronic transmission.

 

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5.12         Publicity. Subject to Section 4.04, the Company agrees that it will
not disclose, and will not include in any public announcement, the names of
JGBWL without the consent of JGBWL, which consent shall not be unreasonably
withheld or delayed, or unless and until such disclosure is required by law,
rule or applicable regulation, and then only to the extent of such requirement.
Notwithstanding the foregoing, JGBWL consents to being identified in any filings
the Company makes with the SEC to the extent required by law or the rules and
regulations of the SEC.

 

5.13         Severability. The provisions of this Agreement are severable and,
in the event that any court of competent jurisdiction shall determine that any
one or more of the provisions or part of the provisions contained in this
Agreement shall, for any reason, be held to be invalid, illegal or unenforceable
in any respect, such invalidity, illegality or unenforceability shall not affect
any other provision or part of a provision of this Agreement and this Agreement
shall be reformed and construed as if such invalid or illegal or unenforceable
provision, or part of such provision, had never been contained herein, so that
such provisions would be valid, legal and enforceable to the maximum extent
possible.

 

5.14         Further Assurances. From and after the date of this Agreement, upon
the request of JGBWL or the Company, the Company and JGBWL shall execute and
deliver such instruments, documents and other writings as may be reasonably
necessary or desirable to confirm and carry out and to effectuate fully the
intent and purposes of this Agreement and the other Operative Documents. Except
as provided herein with respect to Section 4.13 of the Securities Purchase
Agreement, JGBWL’s rights and remedies under the Securities Purchase Agreement
remain unmodified and in full force and effect.

 

5.15        Time Is of the Essence. Time is of the essence of this Agreement and
each Operative Document.

 

[signature page follows]

 

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IN WITNESS WHEREOF, the parties hereto have caused this Securities Exchange
Agreement to be duly executed by their respective authorized officers as of the
date first above written.

 

INTERCLOUD SYSTEMS, INC.       By: /s/ Daniel Sullivan   Name:

Daniel Sullivan

  Title: Chief Accounting Office        

JGB (CAYMAN) WALTHAM LTD.

      By:     Name:     Title:    

 

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EXHIBIT A

 

FORM OF WARRANT