Exhibit 10.7

 

AMENDMENT AGREEMENT

 

This Amendment Agreement (this "Agreement"), dated as of May 23, 2016, is made
by and between JGB (Cayman) Waltham Ltd. (the "JGB Waltham"), JGB (Cayman)
Concord Ltd. (“JGB Concord”), InterCloud Systems, Inc., a Delaware corporation
(the "Company"), and VaultLogix, LLC, a Delaware limited liability company
(“VaultLogix” and together with the Company, the “Borrowers”).

 

WHEREAS, JGB Waltham is the holder of the Second Amended and Restated Senior
Secured Convertible Debenture due May 31, 2019, in the original principal amount
of $7,500,000 (as may be subsequently amended, amended and restated,
supplemented or otherwise modified from time to time in accordance with its
provisions, the “December Debenture”) and 0.67% Senior Secured Note due May 31,
2019, in the original principal amount of $2,745,000 (the “December Note”);

 

WHEREAS, the December Debenture was originally issued pursuant to that certain
Securities Purchase Agreement dated as of December 29, 2015, by and among JGB
Waltham and the Company (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") and the December Note is deemed
issued pursuant to the Securities Purchase Agreement;

 

WHEREAS, the outstanding principal balance owed by the Company to JGB Waltham
under the December Debenture is $6,100,000 and the outstanding principal balance
owed by Company to JGB Waltham under the December Note is $2,745,000;

 

WHEREAS, the Company’s obligations under the December Debenture, the December
Note and the other Transaction Documents (as defined in the Securities Purchase
Agreement) are unconditionally guaranteed by each of the entities executing the
guarantor acknowledgment attached hereto (collectively, the “Guarantors” and
each a “Guarantor”) pursuant to a Subsidiary Guaranty (the “December Subsidiary
Guaranty”);

 

WHEREAS, as security for all of the indebtedness and obligations due to JGB
Waltham under the December Debenture and the December Note and the other
Transaction Documents (collectively, the "December Obligations"), Company and
the Guarantors executed and delivered to JGB Waltham 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 "December Security Agreement"), granting to JGB Waltham
a security interest in the collateral, as defined in the December Security
Agreement (the "December Security Agreement Collateral");

 

WHEREAS, the Company and JGB Waltham entered into a Forbearance and Amendment
Agreement, dated May 17, 2016, with respect to certain existing events of
default under the December Debenture (the “December Debenture Forbearance
Agreement”);

 

 

 

 

WHEREAS, JGB Concord is the holder of the Amended and Restated Senior Secured
Convertible Note due May 31, 2019, in the original principal amount of
$11,601,054.62 made by the Company and VaultLogix, as co-borrowers (as may be
subsequently amended, amended and restated, supplemented or otherwise modified
from time to time in accordance with its provisions, the “February Convertible
Note”) and 0.67% Senior Secured Note due May 31, 2019, in the original principal
amount of $5,220,475 made by the Company and VaultLogix, as co-borrowers (the
“February Note” and collectively with the December Debenture, December Note and
February Convertible Note, the “JGB Notes”);

 

WHEREAS, the outstanding principal balance owed by the Company to JGB Concord
under the February Convertible Note is $11,601,054.62 and the outstanding
principal balance owed by Company to JGB Concord under the February Note is
$5,220,475;

 

WHEREAS, the February Convertible Note was issued pursuant to the Securities
Exchange Agreement dated as of February 18, 2016 (as the same may be amended,
amended and restated, supplemented or otherwise modified from time to time in
accordance with its provisions, the "Securities Exchange Agreement"), by and
among JGB Concord, VaultLogix and the Company, and the February Note is deemed
issued pursuant to the Securities Exchange Agreement;

 

WHEREAS, as security for all of the indebtedness and obligations due to JGB
Concord under the February Convertible Note, the February Note and the other
Operative Documents (as defined in the Securities Exchange Agreement)
(collectively, the "February Obligations"), VaultLogix executed and delivered to
JGB Concord a certain Security Agreement dated as of February 18, 2016 (as the
same may be amended, amended and restated, supplemented or otherwise modified
from time to time in accordance with its provisions, the "February Security
Agreement"), granting to JGB Concord a security interest in the collateral, as
defined in the February Security Agreement (the "February Security Agreement
Collateral" and together with the December Security Agreement Collateral, the
“Collateral”);

 

WHEREAS, the Borrowers and JGB Concord entered into a Forbearance and Amendment
Agreement, dated May 17, 2016, with respect to certain existing events of
default under the February Convertible Note (the “February Convertible Note
Forbearance Agreement”);

 

WHEREAS, the Company has requested (i) that JGB Waltham, on the date of this
Agreement, cause an amount in cash equal to $172,000 to be withdrawn from the
Blocked Account (as defined in the December Debenture) to be made available to
the Company, (ii) that JGB Concord, on the date of this Agreement, cause an
amount in cash equal to $328,000 to be withdrawn from the Deposit Account (as
defined in the February Convertible Note) to be made available to VaultLogix and
the Company, and (iii) that the Company, VaultLogix, JGB Concord and JGB Waltham
establish a protocol for future withdrawals of cash from the Blocked Account and
the Deposit Account; and

 

 2 

 

 

WHEREAS, in consideration of the aforementioned withdrawals, (i) VaultLogix has
agreed to enter into a joinder agreement to the December Security Agreement and
the December Subsidiary Guaranty (the “December Joinders”) each joinder
agreement in a form acceptable to JGB Waltham, and (ii) the Guarantors have
agreed to enter into a guaranty in a form acceptable to JGB Concord (the
“February Subsidiary Guaranty”) whereby they will guarantee all indebtedness and
other obligations due to JGB Concord under the February Convertible Note and the
February Note and each Guarantor and InterCloud will execute a joinder agreement
to the February Security Agreement in a form acceptable to JGB Concord (the
“February Security Joinder”);

 

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.         Acknowledgments with respect to the December Debenture and December
Note. The Company and the Guarantors acknowledge and agree that:

 

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

 

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

 

1.3         Collateral. JGB Waltham has valid, enforceable and perfected
security interests in and liens on the December Security Agreement Collateral,
as to which there are no setoffs, deductions, claims, counterclaims or defenses
of any kind or character whatsoever.

 

2.         Acknowledgments with respect to the February Convertible Note and
February Note. The Company and VaultLogix (together, the “Borrowers”)
acknowledge and agree that:

 

2.1         Transaction Documents. The February Convertible Note, the February
Note, the Securities Exchange Agreement, the February Security Agreement, the
February Forbearance Agreement, and the other Operative Documents and all other
agreements, instruments and other documents executed in connection with or
relating to the February Obligations or the February Security Agreement
Collateral (the "February Note Documents") are legal, valid, binding and
enforceable against the Borrowers in accordance with their terms.

 

 3 

 

 

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

 

2.3         Collateral. JGB Concord has valid, enforceable and perfected
security interests in and liens on the February Security Agreement Collateral,
as to which there are no setoffs, deductions, claims, counterclaims or defenses
of any kind or character whatsoever.

 

3.         Withdrawal of Cash.

 

3.1         On the Effective Date, JGB Waltham shall deliver instructions to PNC
Bank, National Association (the “Bank”) in accordance with the Blocked Account
Agreement (as defined in the December Debenture) to deliver immediately
available funds in amount equal to $172,000 from the Blocked Account to the
account of the Company set forth on Schedule A attached hereto (the “Company
Account”).

 

3.2         On the Effective Date, JGB Concord shall deliver instructions to the
Bank in accordance with the Deposit Account Agreement (as defined in the
February Convertible Note) to deliver immediately available funds in amount
equal to $328,000 from the Deposit Account to the Company Account.

 

3.3         At any time, and from time to time, after the Effective Date, the
Company may deliver one or more written notices (each a “Release Request”) to
JGB Concord and JGB Waltham (together, “JGB”) requesting the release of funds
from the Blocked Account and/or the Deposit Account, which notice shall state
the amount requested to be released (the “Requested Amount”); provided, however,
the Requested Amount shall be multiples of $100,000. In addition, the Company
will not deliver a Release Request within the first five (5) Trading Days
immediately after JGB Waltham has delivered a Notice of Conversion (as defined
in the December Debenture) to the Company under the December Debenture or JGB
Concord has delivered a Notice of Conversion (as defined in the February
Convertible Note) to the Borrowers under the February Convertible Note. In
further addition, the Release Request shall not contain any material, non-public
information. Upon receipt of a Release Request, JGB may, in their sole and
absolute discretion, cause the Bank to release the Requested Amount, or such
other amount determined by JGB in its sole and absolute discretion, from the
Blocked Account, the Deposit Account or a combination of both accounts, in JGB’s
sole discretion. JGB shall respond to any Release Request (whether or not JGB
determines to grant such request) within five (5) Trading Days of its receipt
thereof. In its sole discretion, JGB may release, at any time, and from time to
time, up to an aggregate of $3,000,000 from Blocked Account, the Deposit Account
or a combination of both accounts, whether or not the Company has made any
Release Request (other than during the period from August 15, 2016 to August 20,
2016, unless the Company has provided written approval of such withdrawal). For
the avoidance of doubt, JGB shall be under no obligation to grant any Release
Request or otherwise release any funds from the Deposit Account or the Blocked
Account, except as provided in Section 3.1 and Section 3.2. For the further
avoidance of doubt, JGB may condition its acceptance of any Release Request upon
the Company’s agreement to publicly announce the release of the Requested Amount
from the Blocked Account and/or Deposit Account, as the case may be, and any
other information or details related thereto.

 

 4 

 

 

4.         Amendments to the JGB Notes; Reconfirmations; Joinders.

 

4.1         Amendment to the December Debenture.

 

(a)         The December Debenture is hereby amended, effective on the Effective
Date, by replacing the reference to “0.67%” in the definition of “Applicable
Interest Rate” with “1.67%”.

 

(b)         In addition, to the extent that, after the date hereof, JGB grants
any Release Request or otherwise releases any funds in accordance with Section
3.3 of this Agreement, then in such event the December Debenture shall be
amended by increasing the Applicable Interest Rate by 0.20 percentage points for
each $100,000 in the aggregate released from the Blocked Account and/or the
Deposit Account pursuant to Section 3.3. Any such amendment to the December
Debenture shall take effect on the first day of the month immediately following
the month in which such release of funds occurred. Notwithstanding the
foregoing, in no event shall any amendment to the December Debentures cause the
Applicable Interest Rate to exceed 6%.

 

4.2         Amendment to the December Note.

 

(a)         The December Note is hereby amended, effective on the Effective
Date, by replacing the reference to “0.67%” in Section 1(b) thereof with
“1.67%”.

 

(b)         In addition, to the extent that, after the date hereof, JGB grants
any Release Request or otherwise releases any funds in accordance with Section
3.3 of this Agreement, then in such event the December Note shall be amended by
increasing the annual rate of interest by 0.20 percentage points for each
$100,000 in the aggregate released from the Blocked Account and/or the Deposit
Account pursuant to Section 3.3. Any such amendment to the December Note shall
take effect on the first day of the month immediately following the month in
which such release of funds occurred. Notwithstanding the foregoing, in no event
shall any amendment to the December Notes cause the Applicable Interest Rate to
exceed 6%.

 

4.3         Amendment to the February Convertible Note.

 

(a)         The February Convertible Note is hereby amended, effective on the
Effective Date, by replacing the reference to “0.67%” in the definition of
“Applicable Interest Rate” with “1.67%”.

 

 5 

 

 

(b)         In addition, to the extent that, after the date hereof, JGB grants
any Release Request or otherwise releases any funds in accordance with Section
3.3 of this Agreement, then in such event the February Convertible Note shall be
amended by increasing the Applicable Interest Rate by 0.20 percentage points for
each $100,000 in the aggregate released from the Blocked Account and/or the
Deposit Account pursuant to Section 3.3. Any such amendment to the February
Convertible Note shall take effect on the first day of the month immediately
following the month in which such release of funds occurred. Notwithstanding the
foregoing, in no event shall any amendment to the February Convertible Note
cause the Applicable Interest Rate to exceed 6%.

 

4.4         Amendment to the February Note.

 

(a)         The February Note is hereby amended, effective on the Effective
Date, by replacing the reference to “0.67%” in Section 1(b) thereof with
“1.67%”.

 

(b)         In addition, to the extent that, after the date hereof, JGB grants
any Release Request or otherwise releases any funds in accordance with Section
3.3 of this Agreement, then in such event the February Note shall be amended by
increasing the annual rate of interest by 0.20 percentage points for each
$100,000 in the aggregate released from the Blocked Account and/or the Deposit
Account pursuant to Section 3.3. Any such amendment to the Febuary Note shall
take effect on the first day of the month immediately following the month in
which such release of funds occurred. Notwithstanding the foregoing, in no event
shall any amendment to the February Notes cause the Applicable Interest Rate to
exceed 6%.

 

4.5         Illustrative Example. It is the intent of the parties that for each
$100,000 in the aggregate that is released from the Deposit Account and/or the
Block Account the annual rate of interest on each JGB Note shall increase by
0.20 percentage points. For example and illustrative purposes, if (A) on
December 1, 2016, the annual rate of interest in effect under each JGB Note is
1.67%, and (B) on December 2, 2016, $50,000 is released from the Deposit Account
pursuant to Section 3.3 and $50,000 is released from the Blocked Account
pursuant to Section 3.3, then on January 1, 2017, the annual rate of interest on
each JGB Note shall be 1.87% (e.g., an increase of 0.20 percentage points).

 

4.6         Reduction in Interest Rate. To the extent that at the close of
business on August 20, 2016, the balance of the Deposit Account is equal to or
greater than $12,190,054.62 (or such lesser amount required to be on deposit in
the Deposit Account under the February Convertible Note) and the balance of the
Blocked Account is equal to or greater than $4,000,000 (or such lesser amount
required to be on deposit in the Blocked Account under the December Debenture),
in each case, as a result of deposits of funds to each such account by a
Borrower, at such Borrower’s option, then the rate of interest in effect on each
JGB Note shall be 1.17%; provided, there shall be no reduction in any default
rate of interest specified in a JGB Note (regardless of whether or not such
default rate is in effect at such time). For the avoidance of doubt, to the
extent of any release of funds subsequent to August 20, 2016, pursuant to
Section 3.3, the rate of interest for each JGB Note shall be increased as
provided in Sections 4.1 through 4.4. For the avoidance of doubt, the Borrowers
are under no obligation to return any funds released pursuant to Section 3 to
the Blocked Account or Deposit Account.

 

 6 

 

 

4.7         Calculation of Interest. JGB’s calculation of the rate of interest
in effect under each JGB Note shall be final and binding on the Borrowers absent
manifest error and the Company shall certify in writing the rate of interest in
effect under each JGB Note upon JGB’s request.

 

4.8         Reconfirmation of Liens and Security Interest. Nothing herein shall
impair or limit the continuation of the liens and security interests granted to
JGB Waltham under the December 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 JGB Waltham, the December
Forbearance Agreement or any deposit account control agreement with any
depositary bank (collectively, the “December Security Instruments”), which liens
are continued in full force and effect pursuant to and as provided therein, and
which liens secure all December Obligations. For the avoidance of doubt, the
Company and each Guarantor agrees that all references to the “Obligations” in
any Security Instrument include the December Note and the December Debenture as
amended hereby and that reference to the “Debenture” in any December Security
Instrument means the December Debenture and the December Note as amended hereby.
The Company and each Guarantor acknowledges the continuing existence and
priority of all liens and security interests granted, conveyed, and assigned
pursuant to the December 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 JGB Waltham requests in order to perfect,
preserve, and protect such liens and security interests.

 

4.9         Reconfirmation of Guarantees. Each Guarantor acknowledges the
amendment of the December Debenture and the December Note pursuant to this
Agreement and ratifies and confirms that the December Subsidiary Guaranty
executed by such Guarantor is not released, diminished, impaired, reduced, or
otherwise adversely affected by such amendment and continues to guarantee and
assure the full payment and performance of all present and future obligations
under the December Debenture, the December Note and the other December Debenture
Documents. For the avoidance of doubt, the Company and each Guarantor agrees
that all references to the “Indebtedness” in the December Subsidiary Guaranty
include the December Note and the December Debenture as amended hereby and that
reference to the “Debenture” in the December Subsidiary Guaranty means the
December Debenture and the December Note as amended hereby.

 

 7 

 

 

4.10       Joinders.

 

(a)         By its execution of the December Joinders, VaultLogix intends to,
and does, unconditionally guaranty the December Obligations, including, without
limitation, all indebtedness and Obligations under the December Debenture and
the December Note, in accordance with the terms of the December Subsidiary
Guaranty and pledge all of its assets as security for the December Obligations.

 

(b)         By its execution of the February Subsidiary Guaranty and February
Security Joinder, each Guarantor intends to, and does, unconditionally guaranty
the February Obligations, including, without limitation, all indebtedness and
Obligations under the February Convertible Note and the February Note, in
accordance with the terms of the February Subsidiary Guaranty and pledge all of
its assets as security for the February Obligations in accordance with the
February Security Agreement.

 

(c)         By its execution of the February Security Joinder, the Company
intends to, and does, unconditionally pledge all of its assets as security for
the February Obligations, including, without limitation, all indebtedness and
Obligations under the February Convertible Note and the February Note, in
accordance with the February Security Agreement.

 

4.11         Certain Collateral. JGB Concord agrees to hold or control that part
of the Collateral that is in its possession or control, including any deposit
accounts, to the extent that possession or control thereof is taken to perfect a
lien thereon under the Uniform Commercial Code or other applicable law, as an
agent for JGB Waltham (such agency being intended, among other things, to
satisfy the requirements of Sections 8-301(a)(2), 9-104, 9-105, 9-106, and 9-107
of the Uniform Commercial Code), for the purpose of perfecting the security
interest granted under the December Security Instruments or the February
Security Agreement, as applicable. JGB Waltham agrees to hold or control that
part of the Collateral that is in its possession or control, including any
deposit accounts, to the extent that possession or control thereof is taken to
perfect a lien thereon under the Uniform Commercial Code or other applicable
law, as an agent for JGB Concord (such agency being intended, among other
things, to satisfy the requirements of Sections 8-301(a)(2), 9-104, 9-105,
9-106, and 9-107 of the UCC), for the purpose of perfecting the security
interest granted under the December Security Instruments or the February
Security Agreement, as applicable. The Borrowers and Guarantors acknowledge the
foregoing.

 

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 JGB’s sole discretion, unless waived in
writing by JGB:

 

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

 

 8 

 

 

5.2         Delivery of Joinders. Each Guarantor shall have delivered a duly
executed copy of the February Subsidiary Guaranty and each Borrower and each
Guarantor shall have delivered a duly executed copy of each joinder agreement
referred to in Section 4.10.

 

6.         Successors and Assigns. This Agreement shall inure to the benefit of
and be binding upon the Borrowers and JGB, and each of their respective
successors and assigns.

 

7.         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.

 

8.         No Modification. Except as expressly set forth herein, the JGB Notes,
December Debenture Documents and February Note Documents remain unmodified and
in full force effect. This Agreement is a Transaction Document and an Operative
Document.

 

9.         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.

 

10.         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 5:30 p.m. on May 23, 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 JGB. From and after the
filing of the Current Report on Form 8-K with the SEC, the Company acknowledges
and agrees that JGB 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.

 

 9 

 

 

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

 

InterCloud Systems, Inc.         By                                 Name:    
Title:           VaultLogix, LLC         By     Name:     Title:           JGB
(Cayman) Waltham Ltd.         By     Name: Brett Cohen   Title: President       
  JGB (Cayman) Concord Ltd.         By     Name: Brett Cohen   Title: President
 

 

 10 

 

 

ACKNOWLEDGED:

 

T N S, INC.   INTEGRATION PARTNERS – NY CORPORATION       By:
                                    

By:

                                

Name:

   

Name:

  Its:     Its:              ADEX CORPORATION   AW SOLUTIONS, INC.           By:
    By:   Name:     Name:   Its:      Its:              RENTVM INC.   ADEX
PUERTO RICO LLC      

By:

   

By:

  Name:     Name:   Its:      Its:                ADEXCOMM CORPORATION  
TROPICAL COMMUNICATIONS, INC.           By:     By:   Name:     Name:   Its:    
Its:             AW SOLUTIONS PUERTO RICO, LLC   RIVES MONTEIRO LEASING, LLC    
  By:     By:  

Name:

    Name: Its:      Its:             RIVES MONTEIRO ENGINEERING, LLC  
NOTTINGHAM ENTERPRISES, LLC       By:     By:   Name:   Name:

Its:

    Its:    

 

[GUARANTOR ACKNOWLEDGEMENT TO AMENDMENT AGREEMENT DATED MAY 23, 2016].

 

11