Exhibit 10.1

 

Final Form

 

UNIT SUBSCRIPTION AGREEMENT

 

_________, 2015

 

Crossroads Systems, Inc.

 

Ladies and Gentlemen:

 

The undersigned (the “Investor”) hereby confirms and agrees with you as follows:

 

1.          This Unit Subscription Agreement (the “Agreement”) is made as of the
date hereof between Crossroads Systems, Inc., a Delaware corporation
(“Crossroads” or the “Company”), and the Investor that is a signatory to this
Agreement.

 

2.          The Company has authorized the sale and issuance (the “Offering”) of
up to 3,071,739 shares of the Company’s common stock, par value $0.001 (the
“Common Stock”) and warrants (“Warrants”) exercisable for 1,535,870 shares of
Common Stock , with such Common Stock and Warrants to be sold as units (“Units”)
composed of one share of Common Stock and one Warrant exercisable for one-half
shares of Common Stock (such Units also referred to as the “Offered
Securities”).  The Offering is being made pursuant to an effective shelf
registration statement on Form S-3 (SEC File No. 333-196379).

 

3.          The Company and the Investor agree that the Offering is being made
subject to the execution by the Company and the Placement Agents (as defined in
Annex I attached hereto) of the Placement Agency Agreement (as defined in Annex
I attached hereto), delivery of the preliminary prospectus relating to the
Offered Securities and delivery of additional offering information, including
pricing information.  A final prospectus supplement will be delivered to the
Investor as required by law. The Company and the Investor agree that the
Investor will purchase from the Company and the Company will issue and sell to
the Investor the number of Offered Securities set forth below the Investor’s
name on Schedule I hereto, at a purchase price of $2.30 per Unit, pursuant to
the Terms and Conditions for Purchase of Offered Securities attached hereto as
Annex I and incorporated herein by reference as if fully set forth herein.  The
Investor acknowledges that the Offering is not being underwritten by the
Placement Agents and that there is no minimum offering amount.  Shares of Common
Stock will be credited to the Investor using customary book-entry procedures and
Warrants will be delivered in paper form. The investor also acknowledges that
the following individuals or entities may purchase Units in this offering: (i)
affiliates of the Placement Agents; (ii) Lone Star Value Investors, LP, an
affiliate of Jeffrey Eberwein (Chairman of the Company's board of directors), or
its affiliates; and (iii) entities owned by certain directors, officers,
management and other employees of the Company.

 

4.          The Investor represents that, except as set forth below, (a) it has
had no position, office or other material relationship within the past three
years with the Company or persons known to it to be affiliates of the Company,
(b) neither it, nor any group of which it is a member or to which it is related,
beneficially owns (including the right to acquire or vote) more than 19.9% of
any class of securities of the Company and (c) it is not a FINRA member as of
the date hereof.

 

5.          The Investor confirms that it has had full access to all filings
made by the Company with the Securities and Exchange Commission, including the
registration statement and preliminary prospectus relating to the Offered
Securities, and the documents incorporated by reference therein, and that it was
able to read, review, download and print each such filing.  In subscribing to
the Units, Investor agrees that Investor has conducted substantive due diligence
with respect to Crossroads and the Units including, without limitation,
reviewing in detail the Registration Statement (including exhibits thereto) and
discussing the proposed business and activities of Crossroads with management.
 In addition, Investor understands that there is a high degree of risk in
subscribing to the Units and that Investor may lose the entire investment in the
Units.

 

6.          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.  Execution may be made by delivery by facsimile or via
electronic format.

 

[Signature Page to Follow]

 

 

 

 

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Please confirm that the foregoing correctly sets forth the agreement between us
by signing in the space provided below for that purpose.

 

  Name of Investor:                       By:                   Name:          
        Title:  

 

AGREED AND ACCEPTED:

 

CROSSROADS SYSTEMS, INC.

 

By:               Name:               Title:      

 

 

 

 

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SCHEDULE I

 

SCHEDULE OF INVESTORS

 

Name of Investor:    

Name of Individual Representing Investor:

   

Title of Individual Representing Investor:

 

 

Address:     Telephone:     Telecopier:    

  

Number of Units to
Be Purchased  Price Per Unit In
Dollars   Aggregate
Purchase Price    $2.30   $  

 

 

 

 

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ANNEX I

 

TERMS AND CONDITIONS FOR PURCHASE OF OFFERED SECURITIES

 

1.              Agreement to Sell and Purchase the Offered Securities; Placement
Agents.

 

1.1           Upon the terms and subject to the conditions hereinafter set
forth, at the Closing (as defined in Section 2 below), the Company will sell to
the Investor, and the Investor will purchase from the Company, the number of
Units set forth on Schedule I of this Agreement below such Investor’s name at
the purchase price set forth therein.

 

1.2           The Company may enter into agreements similar to this Agreement
with certain other investors (the “Other Investors”) and expects to complete
sales of Offered Securities to them. (The Investor and the Other Investors
hereinafter collectively are referred to as the “Investors,” and this Agreement
and the agreements executed by the Other Investors are hereinafter collectively
referred to as the “Agreements”). The Company may accept or reject any one or
more Agreements in its sole discretion.

 

1.3           The Company has entered into a Placement Agency Agreement (the
“Placement Agency Agreement”) dated the date hereof with Roth Capital Partners,
LLC (“Roth”) and Northland Securities, Inc. in their capacities as Placement
Agents for the Offering (together, the “Placement Agents”), and the Company has
agreed to pay the Placement Agents a fee in respect of the sale of the Units.

 

2.             Delivery of the Units at Closing.  The completion of the purchase
and sale of the Offered Securities (the “Closing”) shall take place at a place
and time (the “Closing Date”) to be specified by the Company and the Placement
Agents, in accordance with Rule 15c6-1 promulgated under the Securities Exchange
Act of 1934, as amended (the “Exchange Act”).

 

The Company’s obligation to issue and sell the Offered Securities at Closing to
the Investor shall be subject to the accuracy of the representations and
warranties made by the Investor and the fulfillment of those undertakings of the
Investor to be fulfilled prior to the Closing.

 

The Investor’s obligation to purchase the Offered Securities shall be subject to
the accuracy of the representations and warranties made by the Company and the
fulfillment of those undertakings of the Company to be fulfilled prior to the
Closing and to the condition that the Placement Agents shall not have (a)
terminated the Placement Agency Agreement pursuant to the terms thereof or (b)
determined that the conditions to closing in the Placement Agency Agreement have
not been satisfied.

 

Warrants purchased by the Investor shall be delivered in paper form to the
address set forth for such Investor on Schedule I hereto, or at such other
address or addresses as may have been furnished to the Company in writing by
such Investor.

 

The manner of settlement of the Common Stock purchased by the Investor shall be
determined by such Investor as follows (check one):

 

[____]A.           Delivery by crediting the account of the Investor’s prime
broker (as specified by such Investor on Exhibit A annexed hereto) with the
Depository Trust Company (“DTC”) through its Deposit/Withdrawal At Custodian
(“DWAC”) system, whereby Investor’s prime broker shall initiate a DWAC
transaction on the Closing Date using its DTC participant identification number,
and released by American Stock Transfer & Trust Company, the Company’s transfer
agent (the “Transfer Agent”), at the Company’s direction. NO LATER THAN ONE (1)
BUSINESS DAY AFTER THE EXECUTION OF THIS AGREEMENT BY THE INVESTOR AND THE
COMPANY, THE INVESTOR SHALL:

 

(I)DIRECT THE BROKER-DEALER AT WHICH THE ACCOUNT OR ACCOUNTS TO BE CREDITED WITH
THE SHARES ARE MAINTAINED TO SET UP A DWAC INSTRUCTING THE TRANSFER AGENT TO
CREDIT SUCH ACCOUNT OR ACCOUNTS WITH THE SHARES, AND

 

 

 

 

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(II)REMIT BY WIRE TRANSFER THE AMOUNT OF FUNDS EQUAL TO THE AGGREGATE PURCHASE
PRICE FOR THE OFFERED SECURITIES BEING PURCHASED BY THE INVESTOR TO THE
FOLLOWING ACCOUNT:

 

Silicon Valley Bank

9020 Capital of Texas Highway, North

Building One, Suite 350

Austin, Texas 78759

Phone (512) 372-6750

Fax (512) 346-9207

 

Account Name: [***]

ABA: [***]

Swift Code: [***]

Account Number: [***]

 

—OR—

 

[____]B.           Delivery Versus Payment (“DVP”) through DTC (i.e., on the
Closing Date, the Company shall issue the Offered Securities registered in the
Investor’s name and address as set forth below and released by the Transfer
Agent directly to the account(s) at Roth identified by the Investor; upon
receipt of such Offered Securities, Roth shall promptly electronically deliver
such Offered Securities to the Investor, and simultaneously therewith payment
shall be made by Roth by wire transfer to the Company). NO LATER THAN ONE (1)
BUSINESS DAY AFTER THE EXECUTION OF THIS AGREEMENT BY THE INVESTOR AND THE
COMPANY, THE INVESTOR SHALL:

 

(I)NOTIFY ROTH OF THE ACCOUNT OR ACCOUNTS AT ROTH TO BE CREDITED WITH THE SHARES
BEING PURCHASED BY SUCH INVESTOR, AND

 

(II)CONFIRM THAT THE ACCOUNT OR ACCOUNTS AT ROTH TO BE CREDITED WITH THE SHARES
BEING PURCHASED BY THE INVESTOR HAVE A MINIMUM BALANCE EQUAL TO THE AGGREGATE
PURCHASE PRICE FOR THE UNITS BEING PURCHASED BY THE INVESTOR.

 

IT IS THE INVESTOR’S RESPONSIBILITY TO (A) MAKE THE NECESSARY WIRE TRANSFER OR
CONFIRM THE PROPER ACCOUNT BALANCE IN A TIMELY MANNER AND (B) ARRANGE FOR
SETTLEMENT BY WAY OF DWAC OR DVP IN A TIMELY MANNER. IF THE INVESTOR DOES NOT
DELIVER THE AGGREGATE PURCHASE PRICE FOR THE OFFERED SECURITIES OR DOES NOT MAKE
PROPER ARRANGEMENTS FOR SETTLEMENT IN A TIMELY MANNER, THE OFFERED SECURITIES
MAY NOT BE DELIVERED AT CLOSING TO THE INVESTOR OR THE INVESTOR MAY BE EXCLUDED
FROM THE CLOSING ALTOGETHER.

 

3.              Representations, Warranties and Covenants of the Company.  The
Company hereby represents and warrants to, and covenants with, the Investor, as
follows:

 

3.1           The issuance and sale of each of the Offered Securities have been
duly authorized by the Company, and the Offered Securities, when issued and paid
for in accordance with this Agreement, will be duly and validly issued, fully
paid and nonassessable and will not be subject to preemptive or similar rights.

 

3.2           This Agreement constitutes a valid and binding obligation of the
Company enforceable against the Company in accordance with its terms, subject to
the effect of applicable bankruptcy, insolvency or similar laws affecting
creditors’ rights generally and equitable principles of general applicability.

 

3.3           The Company shall not effect any offer or sale of any equity or
equity-related securities that would result in the transactions contemplated
hereby becoming subject to stockholder approval under the rules and regulations
of FINRA or the NASDAQ Global Market.

 

 

 

 

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3.4           It is understood and acknowledged by the Company that: (i) except
pursuant to the terms of this Agreement and any confidentiality agreement
entered into by the Investor with respect to the transactions contemplated
hereby, the Investor has not been asked by the Company to agree, nor has the
Investor agreed, to desist from purchasing or selling, long and/or short,
securities of the Company, or “derivative” securities based on securities issued
by the Company or to hold the Offered Securities for any specified term; (ii)
past or future open market or other transactions by the Investor, specifically
including, without limitation, Short Sales or “derivative” transactions, before
or after the closing of this or future private placement transactions, may
negatively impact the market price of the Company’s publicly-traded securities;
(iii) the Investor, and counter-parties in “derivative” transactions to which
the Investor is a party, directly or indirectly, presently may have a “short”
position in the Common Stock, and (iv) the Investor shall not be deemed to have
any affiliation with or control over any arm’s length counter-party in any
“derivative” transaction merely by reason of such “derivative” transaction. The
Company further understands and acknowledges that (y) subject to the terms of
this Agreement and any confidentiality agreement entered into by the Investor
with respect to the transactions contemplated hereby, the Investor may engage in
hedging activities at various times during the period that the Offered
Securities are outstanding, and (z) such hedging activities (if any) could
reduce the value of the existing stockholders’ equity interests in the Company
at and after the time that the hedging activities are being conducted.

 

3.5           The Company will use its commercially reasonable efforts to
maintain the effectiveness of the registration statement through the Closing in
accordance with the rules and regulations promulgated by the Securities and
Exchange Commission.

 

3.6           Prior to 9:30 a.m., New York City time, on January 27, 2015, the
Company will issue a press release (the “Press Release”) via BusinessWire (or
other national wire service) announcing the transaction contemplated by this
Agreement. In connection with the transactions contemplated by this Agreement,
the Company has not disclosed, or caused to be disclosed, to the Investor any
material non-public information regarding the Company that will not at the time
of the issuance of the Press Release be in the public domain.

 

4.             Representations, Warranties and Covenants of the Investor.  The
Investor represents and warrants to the Company as follows:

 

4.1           The Investor has received the Company’s preliminary prospectus
relating to the Offered Securities describing the terms of the proposed
Offering.  The Investor acknowledges that the Investor has received certain
additional information regarding the Offering, including pricing information
(the “Offering Information”). Such Offering Information may be provided to the
Investor by any means permitted under the Securities Act of 1933, as amended,
including through a prospectus supplement, a free writing prospectus and oral
communications.

 

4.2           The Investor has full right, power, authority and capacity to
enter into this Agreement and to consummate the transactions contemplated hereby
and has taken all necessary action to authorize the execution, delivery and
performance of this Agreement, and this Agreement constitutes a valid and
binding obligation of the Investor enforceable against the Investor in
accordance with its terms, subject to the effect of applicable bankruptcy,
insolvency or similar laws affecting creditors’ rights generally and equitable
principles of general applicability.

 

4.3           The Investor is knowledgeable, sophisticated and experienced in
making, and is qualified to make, decisions with respect to investments in
shares representing an investment decision like that involved in the purchase of
the Offered Securities and has, in connection with its decision to purchase the
number of Offered Securities set forth on Schedule I to the Agreement, relied
solely upon the registration statement, the preliminary prospectus, the
preliminary term sheet, the Offering Information and any amendments or
supplements thereto and has not relied upon any information provided by the
Placement Agents.

 

4.4           The Investor understands that nothing in the registration
statement, the preliminary prospectus, the preliminary term sheet, the Offering
Information and any amendments or supplements thereto, this Agreement or any
other materials presented to such Investor in connection with the purchase and
sale of the Offered Securities constitutes legal, tax or investment advice.  The
Investor has consulted such legal, tax and investment advisors as it, in its
sole discretion, has deemed necessary or appropriate in connection with its
purchase of Offered Securities.

 

4.5           The Investor will not, upon the Closing of the transactions
contemplated by this Agreement, beneficially own (individually or together with
other person with whom the Investor has identified, or will have identified,
itself as part of a “group” in a public filing made with the Securities and
Exchange Commission involving the Company’s securities), as calculated in
accordance with Section 13(d) of the Securities Exchange Act of 1934, as amended
(the “Exchange Act”), in excess of, 19.99% of the shares of Common Stock
outstanding. The Investor acknowledges that it, and not the Company, is
responsible for complying with the Investors’ obligations, if any, under
Sections 13 or 16 of the Exchange Act.

 

 

 

 

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4.6           From and after obtaining knowledge of the sale of the Offered
Securities contemplated hereby, the Investor has not engaged in any purchases or
sales of the securities of the Company (including, without limitation, any Short
Sales (as defined herein) involving the Company’s securities), and has not
violated its obligations of confidentiality.  The Investor covenants that it
will not engage in any purchases or sales of the securities of the Company
(including Short Sales) or disclose any information about the contemplated
offering (other than to its advisors that are under a legal obligation of
confidentiality) prior to the time that the transactions contemplated by this
Agreement are publicly disclosed.  The Investor agrees that it will not use any
of the Units acquired pursuant to this Agreement to cover any short position in
the Common Stock if doing so would be in violation of applicable securities
laws.  For purposes hereof, “Short Sales” include, without limitation, all
“short sales” as defined in Rule 200 promulgated under Regulation SHO under the
Exchange Act, whether or not against the box, and all types of direct and
indirect stock pledges, forward sales contracts, options, puts, calls, short
sales, swaps, “put equivalent positions” (as defined in Rule 16a-1(h) under the
Exchange Act) and similar arrangements (including on a total return basis), and
sales and other transactions through non-US broker dealers or foreign regulated
brokers.

 

 

5.          Survival of Representations, Warranties and
Agreements.  Notwithstanding any investigation made by any party to this
Agreement, all covenants, agreements, representations and warranties made by the
Company and the Investor herein shall survive the execution of this Agreement,
the delivery to such Investor of the Offered Securities being purchased and the
payment therefor.

 

6.           Notices.  All notices, requests, consents and other communications
hereunder shall be in writing, shall be mailed (A) if within domestic United
States, by first-class registered or certified airmail, or nationally recognized
overnight express courier, postage prepaid, or by facsimile, or (B) if delivered
from outside the United States, by International Federal Express or facsimile,
and shall be deemed given (i) if delivered by first-class registered or
certified mail domestic, three business days after so mailed, (ii) if delivered
by a nationally recognized overnight carrier, one business day after so mailed,
(iii) if delivered by International Federal Express, two business days after so
mailed, (iv) if delivered by facsimile, upon electronic confirmation of receipt
and shall be delivered as addressed as follows: (a) if to the Company, to
Crossroads Systems, Inc., 11000 North Mopac Expressway, Suite 150, Austin, TX,
with copies (which shall not constitute notice) to: Andrews Kurth LLP, 111
Congress Avenue, Suite 1700, Austin, Texas 78701, Attn: J. Matthew Lyons; and
(b) if to an Investor, at its address on Schedule I hereto, or at such other
address or addresses as may have been furnished to the Company in writing by
such Investor.

 

7.          Changes.  This Agreement may not be modified or amended except
pursuant to an instrument in writing signed by the Company and the Investor.

 

8.          Headings.  The headings of the various sections of this Agreement
have been inserted for convenience or reference only and shall not be deemed to
be part of this Agreement.

 

9.          Severability.  In case any provision contained in this Agreement
should be invalid, illegal or unenforceable in any respect, the validity,
legality and enforceability of the remaining provisions contained herein shall
not in any way be affected or impaired thereby.

 

10.         Governing Law.  This Agreement shall be governed by, and construed
in accordance with, the internal laws of the State of New York, without giving
effect to the principles of conflicts of law.

 

11.         Counterparts; Facsimile.  This Agreement may be executed in two or
more counterparts, each of which shall constitute an original, but all of which,
when taken together, shall constitute one instrument, and shall become effective
when one or more counterparts have been signed by each party hereto and
delivered to the other parties.  Facsimile signatures shall be as effective as
original signatures.

  

 

 

 

Final Form

Annex II

 

CROSSROADS SYSTEMS, INC.

 

INVESTOR QUESTIONNAIRE

 

Pursuant to Annex I to the Agreement, please provide us with the following
information:

 

1. The exact name that your Offered Securities are to be registered in. You may
use a nominee name if appropriate:            2. The relationship between the
Investor and the registered holder listed in response to item 1 above:          
 3. The mailing address of the registered holder listed in response to item 1
above:            4. The Social Security Number or Tax Identification Number of
the registered holder listed in the response to item 1 above:            5. Name
of DTC Participant (broker-dealer at which the account or accounts to be
credited with the Shares are maintained):            6. DTC Participant Number:
           7. Name of Account at DTC Participant being credited with the Offered
Securities:            8. Account Number at DTC Participant being credited with
the Offered Securities:    

 

 

9. Current ownership of Company Securities Type of Security Number of (other
than Offered Securities):   Securities