Exhibit 10.1

 

FORBEARANCE AND AMENDMENT AGREEMENT

 

This Waiver and Amendment Agreement (this "Agreement"), dated as of May 17,
2016, is made by and between JGB (Cayman) Waltham Ltd. (the "Holder") and
InterCloud Systems, Inc., a Delaware corporation (the "Company").

 

WHEREAS, the Holder and the Company have entered into a Securities Purchase
Agreement dated as of December 29, 2015 (as the same may be amended, amended and
restated, supplemented or otherwise modified from time to time in accordance
with its provisions, the "Securities Purchase Agreement"), whereby the Company
issued and sold to the Holder, and the Holder purchased from the Company, a 10%
Original Issue Discount Senior Secured Convertible Debenture in the original
principal amount of $7,500,000 (as subsequently amended and restated, and as may
be amended, amended and restated, supplemented or otherwise modified from time
to time in accordance with its provisions, the “Debenture”);

 

WHEREAS, the outstanding principal balance owed by Company to Holders under the
Debenture is $6,100,000;

 

WHEREAS, the Company’s obligations under the Debenture and the other Transaction
Documents are unconditionally guaranteed by each of the entities executing the
guarantor acknowledgment attached hereto (collectively, the “Guarantors” and
each a “Guarantor”);

 

WHEREAS, as security for all of the indebtedness and obligations due to Holders
under the Debenture and the other Transaction Documents (collectively, the
"Obligations"), Company and the Guarantors executed and delivered to the Holder
a certain Security Agreement dated as of December 29, 2015 (as the same may be
amended, amended and restated, supplemented or otherwise modified from time to
time in accordance with its provisions, the "Security Agreement"), granting to
Holders a security interest in the collateral, as defined in the Security
Agreement (the "Collateral");

 

WHEREAS, the Company is in default under the Debenture;

 

WHEREAS, the Company and the Guarantors have requested that the Holder forbear
from exercising its rights and remedies under the Debenture and the other
Transaction Documents;

 

WHEREAS, the Holder is willing to forbear from exercising such rights and
remedies for a limited period of time, provided that the Company and the
Guarantors comply with the terms and conditions of this Agreement;

 

WHEREAS, in partial consideration of such forbearance, the Company has agreed to
amend the Securities Purchase Agreement, and amend and restate the Debenture;

 

 

 

 

WHEREAS, in partial consideration of such forbearance, and in replacement of
substantial rights of the Holder foregone in connection with such forbearance
and the amendment and restatement of the Debenture, and as an extension of the
Company’s original obligations under the Debenture, the Company and the
Guarantors have agreed to issue to the Holder a 0.67% Senior Secured Note made
by the Company in substantially the form attached hereto as Exhibit A (the
“Note”).

 

NOW, THEREFORE, in consideration of the premises set forth above and other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties agree as follows:

 

1.         Definitions. Capitalized terms used and not defined in this Agreement
shall have the respective meanings given them in the Debenture.

 

2.         Borrower Acknowledgments. The Company and the Guarantors acknowledge
and agree that:

 

2.1              Defaults. The following Events of Default have occurred and are
continuing under Section 8(a)(ii) and Section 8(a)(iii) of the Debenture and
Section 4 of that certain Consent, dated February 18, 2016, by and between the
Company and the Holder (collectively, the "Existing Defaults").

 

2.2              Transaction Documents. The Debenture, the Securities Purchase
Agreement, the Subsidiary Guaranty, the Security Agreement, the other
Transaction Documents and all other agreements, instruments and other documents
executed in connection with or relating to the Obligations or the Collateral
(the "Debenture Documents") are legal, valid, binding and enforceable against
the Company and Guarantors in accordance with their terms.

 

2.3              Obligations. The Obligations are not subject to any setoff,
deduction, claim, counterclaim or defenses of any kind or character whatsoever.

 

2.4              Collateral. The Holder has valid, enforceable and perfected
security interests in and liens on the Collateral, as to which there are no
setoffs, deductions, claims, counterclaims or defenses of any kind or character
whatsoever.

 

2.5              Right to Accelerate Obligations. As a result of the Existing
Defaults, the Holder has the right to accelerate the maturity and demand
immediate payment of the Obligations.

 

2.6              Default Notice. The Holder and each Guarantor hereby waive any
rights to receive further notice of the Existing Defaults. All applicable cure
periods relating to the Existing Defaults have lapsed.

 

2.7              Default Interest Rate. By reason of the Existing Defaults, the
Holder has the right, as of April 13, 2016, to impose the default rate of
interest under the Debenture. Effective April 13, 2016 through the Effective
Date (as defined below), the interest rate under the Debenture was fifteen
percent (15%) per annum.

 

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2.8              No Waiver of Defaults. Except as expressly set forth herein,
neither this Agreement, nor any actions taken in accordance with this Agreement
or the Debenture Documents shall be construed as a waiver of or consent to the
Existing Defaults or any other existing or future defaults under the Debenture
Documents, as to which the Holder’s rights shall remain reserved.

 

2.9              Preservation of Rights and Remedies. Upon expiration of the
Forbearance Period (as defined below), all of the Holder’s rights and remedies
under the Debenture Documents and at law and in equity shall be available
without restriction or modification, as if the forbearance had not occurred.

 

2.10            Holder Conduct. The Holder has fully and timely performed all of
its obligations and duties in compliance with the Debenture Documents and
applicable law, and has acted reasonably, in good faith and appropriately under
the circumstances.

 

2.11          Purpose of Forbearance. The purpose of this Agreement is to
provide the Company with a period of time to file its annual report on Form 10-K
for the fiscal year ended December 31, 2015, and thereby cure the Existing
Defaults.

 

2.12           Request to Forbear. The Company and the Guarantors have requested
the Holder’s forbearance as provided herein, which shall inure to their direct
and substantial benefit.

 

3.         Amendment and Restatement of the Debenture; Reconfirmation of
Guaranty and Security Interest.

 

3.1              Amendment and Restatement. As partial consideration for
Holder’s forbearance, effective upon the Effective Date, the Debenture shall be
amended and restated in its entirety in substantially the form attached hereto
as Exhibit B (the “A&R Debenture”). Notwithstanding the amendment and
restatement of the Debenture, the Company acknowledges and agrees that, as of
the Effective Date, the Existing Defaults under the Debenture shall continue to
constitute Existing Defaults under the A&R Debenture.

 

3.2              Reconfirmation of Liens and Security Interest. Nothing herein
or the A&R Debenture shall impair or limit the continuation of the liens and
security interests granted to the Holder under the Security Agreement, the other
Security Documents (as defined in the Securities Purchase Agreement), pursuant
to the Consent, dated March 9, 2016, by and among the Company and the Holder, or
any deposit account control agreement with any depositary bank (collectively,
the “Security Instruments”), which liens are continued in full force and effect
pursuant to and as provided therein, and which liens secure all Obligations (as
defined in the Security Agreement). In addition, the Company and each Guarantor
agrees that all references to the “Obligations” in any Security Instrument
includes the Note and all of the Company’s obligations under the Note. The
Company and each Guarantor agrees that any reference to the Debenture in any
Security Instrument means the Debenture as amended and restated pursuant to this
Agreement and the Note. The Company and each Guarantor acknowledges the
continuing existence and priority of all liens and security interests granted,
conveyed, and assigned pursuant to the Security Instruments to which it is a
party, in accordance with such instruments, and agrees to perform such acts and
duly authorize, execute, acknowledge, deliver, file, and record such additional
documents and certificates as the Holder requests in order to perfect, preserve,
and protect such liens and security interests.

 

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3.3              Reconfirmation of Guarantees. Each Guarantor acknowledges the
amendment and restatement of the Debenture pursuant to this Agreement and
ratifies and confirms that the Subsidiary Guaranty executed by such Guarantor is
not released, diminished, impaired, reduced, or otherwise adversely affected by
such amendment and restatement and continues to guarantee and assure the full
payment and performance of all present and future obligations under the A&R
Debentures and the other Debenture Documents.

 

4.         Amendments to the Securities Purchase Agreement. As partial
consideration for the Holder’s forbearance, effective upon the Effective Date,
the Company and the Holder hereby agree that Section 4.4(b) of the Securities
Purchase Agreement is deleted in its entirety.

 

5.         Conditions Precedent. This Agreement shall not become effective
unless and until the date (the "Effective Date") that each of the following
conditions shall have been satisfied in the Holder’s sole discretion, unless
waived in writing by the Holder:

 

5.1              Delivery of this Agreement. The Company and each Guarantor
shall have delivered or caused to be delivered a duly executed copy of this
Agreement.

 

5.2              Delivery of A&R Debenture. The Company shall have delivered a
duly executed “ink original” copy of the A&R Debenture.

 

5.3              Delivery of Note. The Company shall have delivered a duly
executed “ink original” copy of the Note. The Company acknowledges and agrees
that, as of the Effective Date, the Existing Defaults under the Debenture shall
apply to and constitute Existing Defaults under the Note.

 

5.4              Non-Accountable Expense Reimbursement. The Company shall have
reimbursed the Holder the non-accountable sum of $37,500 for expenses by wire
transfer of immediately available funds in accordance with the wire instructions
set forth on Schedule A hereto by 12PM New York time on May 18, 2016.

 

5.5              Professional Fees and Other Expenses. The Company shall have
paid to the Holder an expense reimbursement for the reasonable costs and
expenses (including attorneys' fees) incurred in connection the Holder’s
management of investment in the Debentures in amount equal to $28,000 by wire
transfer of immediately available funds to Haynes & Boone LLP in accordance with
the wire instructions set forth on Exhibit B hereto by 12PM New York time on May
18, 2016.

 

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6.         JGB Forbearance.

 

6.1              Forbearance Period. Subject to compliance by Company and
Guarantors with the terms and conditions of this Agreement, the Holder hereby
agrees to forbear from exercising its rights and remedies against Company and
the Guarantors under the Debenture Documents and the Note with respect to the
Existing Defaults during the period (the "Forbearance Period") commencing on the
Effective Date and ending on the earlier to occur of (i) June 15, 2016 (which
date shall be extended to June 30, 2016 in the event the Company receives an
extension from NASDAQ until at least July 5, 2016, to comply with its listing
requirements and the Common Stock continues to be listed and is trading (without
any suspension) on the Principal Market), and (ii) the date that any Forbearance
Default (as defined below) occurs. The Holder’s forbearance with respect to the
Existing Defaults, as provided herein, shall immediately and automatically cease
without notice or further action on the earlier to occur of clause (i) or (ii)
of the preceding sentence (the "Termination Date"). On and from the Termination
Date, the Holder may, in its sole discretion, exercise any and all remedies
available to it under the Debenture Documents or the Note by reason of the
continuation of the Existing Defaults.

 

6.2              Interest During Forbearance Period. For the avoidance of doubt,
during the Forbearance Period, interest under the A&R Debenture and the Note
shall accrue at 0.67% per annum.

 

6.3              Extension of Forbearance Period. In the sole discretion of the
Holder and without obligation, after the Termination Date, the Holder may renew
or extend the Forbearance Period, or grant additional forbearance periods.

 

6.4              Scope of Forbearance. During the Forbearance Period, the Holder
will not solely on account of the Existing Defaults (i) accelerate the maturity
of the Obligations or initiate proceedings to collect the Obligations or (ii)
initiate proceedings to enforce the Subsidiary Guarantee. Notwithstanding the
foregoing or any other provision of this Agreement to the contrary, and for the
avoidance of doubt, the Holder reserves all rights with respect to any Events of
Default under the Debenture Documents and the Note other than the continuation
of the Existing Defaults and does not agree to forbear, and does not forbear,
during the Forbearance Period or otherwise, from taking any action or exercising
any rights or remedies available to it under the Debenture Documents or the Note
or at law or in equity in connection with any Event of Default other than solely
the Existing Defaults.

 

7.         Right of First Offer.

 

7.1             Right of First Offer. Each time the Company proposes to raise
any capital to refinance any indebtedness owed to Forward Investments LLC (the
“Forward Notes Refinancing”), the Company shall first make an offering of such
Forward Notes Refinancing in accordance with the following provisions of this
Section 7.

 

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7.2              Offer Notice. The Company shall give written notice (the “Offer
Notice”) to the Holder stating the existence of the proposed Forward Notes
Refinancing and specifying the material terms and conditions as known, agreed to
or proposed at that time pursuant to which the Company proposes to enter into
the Forward Notes Refinancing. The Offer Notice shall constitute the Company’s
offer to the Holder to enter into the Forward Notes Refinancing with the Holder,
which offer shall be irrevocable for a period of fifteen (15) days (the “ROFO
Notice Period”). During the ROFO Notice Period, the Company will negotiate
exclusively with the Holder and will not, directly or indirectly, solicit any
offers from, respond to any unsolicited offers from, or enter into or conduct
any discussions or negotiations with other financing sources.

 

7.3              Exercise of Right of First Offer. Upon receipt of the Offer
Notice, the Holder shall have until the end of the ROFO Notice Period to elect
to enter into the Forward Notes Refinancing by delivering a written notice (a
“ROFO Offer Notice”) to the Company stating that it offers to enter into the
Forward Notes Refinancing on the exact terms specified in the Offer Notice. If
the Holder does not deliver a ROFO Offer Notice during the ROFO Notice Period,
the Holder shall be deemed to have waived all its rights to participate in the
Forward Notes Refinancing under this Section 7, and the Company may, during the
thirty (30) day period following the expiration of the ROFO Notice Period (the
“Waived ROFO Period”), consummate the Forward Notes Refinancing with an
independent third party on material terms and conditions no more favorable to
the independent third party than those set forth in the Offer Notice. If the
Company does not consummate the Forward Notes Refinancing within the Waived ROFO
Transfer Period, the rights provided hereunder shall be deemed to be revived and
the Forward Notes Refinancing shall not be offered to any person unless first
re-offered to the Holder in accordance with this Section 7. A waiver of one
Forward Notes Refinancing will not constitute a waiver on any other future
Forward Notes Refinancing.

 

8.         Release of Claims and Waiver of Defenses. In further consideration of
the Holder’s execution of this Agreement, Company and the Guarantors, on behalf
of themselves and their successors, assigns, parents, subsidiaries, affiliates,
officers, directors, employees, agents and attorneys hereby forever, fully,
unconditionally and irrevocably waive and release the Holder and its successors,
assigns, parents, subsidiaries, affiliates, officers, directors, employees,
attorneys and agents (collectively, the "Releasees") from any and all claims,
liabilities, obligations, debts, causes of action (whether at law or in equity
or otherwise), defenses, counterclaims, setoffs, of any kind, whether known or
unknown, whether liquidated or unliquidated, matured or unmatured, fixed or
contingent, directly or indirectly arising out of, connected with, resulting
from or related to any act or omission by the Holder or any other Releasee with
respect to the Debenture Documents and the Note and any Collateral, other than
the Holder’s or any Releasee's willful misconduct on or before the date of this
Agreement (collectively, the "Claims"). The Company and the Guarantors further
agree that neither Company nor any Guarantor shall commence, institute, or
prosecute any lawsuit, action or other proceeding, whether judicial,
administrative or otherwise, to collect or enforce any Claim.

 

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9.         Forbearance Defaults. The occurrence of one or more of the following
shall constitute a "Forbearance Default" under this Agreement: (1) Company or
the Guarantors shall fail to abide by or observe any term, condition, covenant
or other provision contained in this Agreement or any document related to or
executed in connection with this Agreement; (2) a default or event of default
shall occur under any Debenture Document or the Note or any document related to
or executed in connection with this Agreement (other than the Existing
Defaults); (3) any Guarantor ceases to exist or attempts to revoke or terminate
its liability under its Subsidiary Guarantee, or challenges the validity or
enforceability of its Subsidiary Guaranty, or denies any further liability or
obligation thereunder; (4) the Company or any Guarantor: (a) becomes insolvent;
(b) is generally not, or is unable to, or admits in writing its inability to,
pay its debts as they become due; (c) (i) commences any case, proceeding or
other action under any existing or future law relating to bankruptcy,
insolvency, reorganization, or other relief of debtors, seeking (A) to have an
order for relief entered with respect to it, or (B) to adjudicate it as bankrupt
or insolvent, or (C) reorganization, arrangement, adjustment, winding-up,
liquidation, dissolution, composition or other relief with respect to it or its
debts, or (D) appointment of a receiver, trustee, custodian, conservator or
other similar official for it or for all or any substantial part of its assets,
or (ii) makes a general assignment for the benefit of its creditors; (d) has
commenced against it in a court of competent jurisdiction any case, proceeding
or other action of a nature referred to in clause (c) above which (i) results in
the entry of an order for relief or any such adjudication or appointment or (ii)
remains undismissed, undischarged, unstayed or unbonded for 10 days; or (e)
ceases to conduct business in the ordinary course; (5) a tax lien, warrant or
levy is imposed on the Company or any Collateral; (6) the Company, any
Guarantor, or any of their respective creditors commences a case, proceeding or
other action against the Holder relating to any of the Obligations, Collateral,
Debenture Documents, the Note, this Agreement, or any action or omission by the
Holder or its agents in connection with any of the foregoing; (7) any other
creditor of Company or any Guarantor obtains a judgment against the Company or
any Guarantor in excess of $250,000 seeking to collect any material debt,
obligation or liability; (8) any representation or warranty of the Company or
any Guarantor made herein shall be false, misleading or incorrect in any
material respect when made; and/or (9) the Company or any Guarantor takes an
action, or any event or condition occurs or exists, which the Holder reasonably
believes in good faith is inconsistent in any material respect with any
provision of this Agreement, or impairs, or is likely to impair, the prospect of
payment or performance by Company of its obligations under this Agreement or any
of the Debenture Documents or the Note.

 

10.       Remedies. Immediately upon the occurrence of a Forbearance Default:
(1) the Forbearance Period shall immediately and automatically cease without
notice or further action without notice to, or action by, any party, (2) the
Holder shall be entitled to exercise any or all of its rights and remedies under
the Debenture Documents, the Note, this Agreement, or any stipulations or other
documents executed in connection with or related to this Agreement or any of the
Debenture Documents or the Note, or applicable law, including, without
limitation, the appointment of a receiver, (3) the Company and each Guarantor
shall cooperate with the Holder’s repossession of all personal property
Collateral, and the Company and each Guarantor shall immediately surrender to
the Holder upon the Holder’s request, at the time and place designated by the
Holder, all Collateral in its possession, and/or (4) the Holder may set off or
apply to the payment of any or all of the Obligations and the obligations due to
the Holder under the Note, any deposit balances, any or all of the Collateral or
proceeds thereof.

 

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11.       Representations, Warranties and Covenants.

 

11.1             The Company represents and warrants to the Holder that, as of
the date hereof:

 

(a)          Other than the Existing Defaults, no Event of Default under the
Debenture has occurred or is continuing.

 

(b)          The Company and each Guarantor has complied in all material
respects with their respective obligations under the Transaction Documents.

 

(c)          Pursuant to Rule 144 promulgated under the Securities Act, the
holding period of the A&R Debenture and the Conversion Shares 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 the
Holder or the Company’s transfer agent necessary to issue the Conversion Shares
without restriction and not containing any restrictive legend without the need
for any action by the Holder in connection with a sale of the Conversion Shares
by the Holder.

 

(d)          All Conversion Shares issuable under the A&R Debenture may be
issued without violating the rules and regulations of the NASDAQ Capital Market
and without any requirement for stockholder approval.

 

11.2            In the event, at any time following the Effective Date, the
Company’s representation in Section 11.1(d) of this Agreement is no longer true
and correct, the Company shall take all actions necessary to allow the
Conversion Shares to be issued in accordance with the terms of the A&R
Debenture.

 

12.       Successors and Assigns. This Agreement shall inure to the benefit of
and be binding upon the Company and the Holder, and each of their respective
successors and assigns.

 

13.       Governing Law. This Agreement shall be governed by, and construed in
accordance with, the laws of the State of New York. The parties agree that the
state and federal courts located in New York County, New York shall have
exclusive jurisdiction over any action, proceeding or dispute arising out of
this Agreement and the parties submit to the personal jurisdiction of such
courts.

 

14.       Counterparts. This Agreement may be executed in any number of
counterparts, all of which shall constitute one and the same agreement, and any
party hereto may execute this Agreement by signing and delivering one or more
counterparts. Delivery of an executed counterpart of this Agreement
electronically or by facsimile shall be effective as delivery of an original
executed counterpart of this Agreement.

 

15.       Disclosure. Company confirms that neither it nor any other person or
entity acting on its behalf has provided JGB or its counsel with any information
that constitutes or might constitute material, nonpublic information. The
Company will disclose the material terms of this Agreement and the transactions
contemplated hereby by not later than 8 a.m. on May 20, 2016, or such earlier
time as may be required by law, by means of a Current Report on Form 8-K filed
with the Securities and Exchange Commission. Such Current Report on Form 8-K
shall include as exhibits this Agreement, the A&R Debenture, and any other
material agreement related to the foregoing. The Current Report on Form 8-K
shall be subject to the prior review and comment of the Holder. From and after
the filing of the Current Report on Form 8-K with the SEC, the Company
acknowledges and agrees that the Holder shall not be in possession of any
material, nonpublic information received from the Company, any Guarantor or any
of their respective officers, directors, employees or agents.

 

[SIGNATURE PAGE FOLLOWS]

 

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

 

 

InterCloud Systems, Inc.,

as Company

      By     Name:     Title:          

JGB (Cayman) Waltham Ltd.,

as Holder

      By     Name: Brett Cohen   Title: President

 

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ACKNOWLEDGED:

 

 

T N S, INC.

 

By: _____________________________________

 

Name:

 

Its:

INTEGRATION PARTNERS – NY CORPORATION

 

By: _________________________________

 

Name:

 

Its:

 

ADEX CORPORATION

  

By: _________________________________

 

Name:

 

Its:

AW SOLUTIONS, INC.

  

By: _________________________________

 

Name:

 

Its:

 

RENTVM INC.

  

By: _________________________________

 

Name:

 

Its:

ADEX PUERTO RICO LLC

  

By: _________________________________

 

Name:

 

Its:

 

ADEXCOMM CORPORATION

  

By: _________________________________

 

Name:

 

Its:

TROPICAL COMMUNICATIONS, INC.

  

By: _________________________________

 

Name:

 

Its:

 

AW SOLUTIONS PUERTO RICO, LLC

  

By: _____________________________________

 

Name:

 

Its:

RIVES MONTEIRO LEASING, LLC

 

By: _____________________________________

 

Name:

 

Its:

 

RIVES MONTEIRO ENGINEERING, LLC

 

By: _________________________________

 

Name:

 

Its:

 

NOTTINGHAM ENTERPRISES, LLC

  

By: _________________________________

 

Name:

 

Its:

 

 

[GUARANTOR ACKNOWLEDGEMENT TO FORBEARANCE AND AMENDMENT AGREEMENT DATED MAY 17,
2016].

 

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EXHIBIT A

 

 

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