Exhibit 10.2

EXECUTION COPY

 

SECURITIES PURCHASE AGREEMENT

 

THIS SECURITIES PURCHASE AGREEMENT is made as of July 31, 2012 by and between
Iron Mountain Incorporated, a Delaware corporation (the “Investor”), and
Crossroads Systems, Inc., a Delaware corporation (the “Company”).

 

RECITALS

 

A.           The Company desires to issue and sell, the Investor desires to
purchase from the Company, shares of the Company’s common stock, par value
$0.001 per share (the “Common Stock”).

 

B.           As an inducement to the Investor to purchase the shares of Common
Stock from the Company at the closing pursuant to this Agreement, (i) the
parties have agreed to execute and deliver a Registration Rights Agreement, in
the form attached hereto as Exhibit A (the “Registration Rights Agreement”),
pursuant to which the Company has agreed to provide the Investor certain
registration rights under the Securities Act and applicable state securities
laws; and (ii) the Company and Iron Mountain Information Management, Inc., an
Affiliate of the Investor (“IRM”), have become parties to certain agreements
related to the sale and licensing of certain products, and the provision of
certain services, by the Company to IRM.

 

In consideration of the terms and conditions contained in this Agreement and the
parties’ mutual agreement upon the Other Agreements, and other good and valuable
consideration, the receipt and sufficiency of which is acknowledged, the
parties, intending to be legally bound, agree as follows:

 

AGREEMENT

 

ARTICLE I. GENERAL DEFINITIONS

 

Section 1.1           Defined Terms. Capitalized terms, when used herein, shall
have the following meanings if not otherwise defined herein:

 

“Affiliate” means, as to any Person, any other Person (a) that directly or
indirectly, through one or more intermediaries, controls or is controlled by, or
is under common control with, such Person; (b) that directly or indirectly
beneficially owns or holds ten percent or more of any class of voting Capital
Stock of such Person; or (c) ten percent or more of the voting Capital Stock of
which is directly or indirectly beneficially owned or held by the Person in
question. For purposes of this definition, the term “control” means the
possession, directly or indirectly, of the power to direct or cause direction of
the management and policies of a Person, whether through the ownership of voting
securities, by contract or otherwise; provided, however, in no event shall the
Investor be deemed an Affiliate of the Company for the purposes of this
Agreement.

 

 

 

 

“Agreement” means this Securities Purchase Agreement, including all exhibits and
schedules, as the same may be from time to time amended, modified or
supplemented.

 

“Capital Stock” means corporate stock and any and all shares, partnership
interests, limited partnership interests, limited liability company interests,
membership interests, equity interests, participations, rights or other
equivalents (however designated) of corporate stock or any of the foregoing
issued by any entity (whether a corporation, a partnership or another entity).

 

“Closing” means the closing of the purchase and sale to the Investor of the
Shares and the transactions contemplated by this Agreement. The Closing will
take place at the offices of the Company at 10:00 a.m. on the Closing Date, or
as otherwise agreed by the parties.

 

“Closing Date” means the later of the date of this Agreement, or such other date
as the parties agree following the satisfaction of the conditions to closing set
forth in this Agreement.

 

“Common Stock” has the meaning set forth in Recital A.

 

“Company” means Crossroads Systems, Inc., a Delaware corporation.

 

“Company Balance Sheet” has the meaning set forth in Section 3.3.

 

“Company Financial Statements” means the financial statements of the Company,
including the notes thereto, included in the Company SEC Documents.

 

“Company SEC Documents” has the meaning set forth in Section 3.2.

 

“DRS” means the Direct Registration System maintained by the transfer agent for
the Common Stock.

 

“Exchange Act” means the Securities Exchange Act of 1934, as amended, or any
similar federal statute, and the rules and regulations of the SEC thereunder,
all as the same shall be in effect at the time.

 

“GAAP” means United States generally accepted accounting principles as in effect
at the time to which the related reference to such principles pertains.

 

“Governmental Authority” means any nation or government, any state, provincial
or political subdivision thereof and any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to government.

 

“Governmental Requirement” means any law, statute, code, ordinance, order, rule,
regulation, judgment, decree, injunction, franchise, Permit, certificate,
license, authorization or other directive or requirement of any Governmental
Authority.

 

 

 

 

“Intellectual Property” means any U.S. or foreign patents, patent applications,
trademarks, trade names, service marks, mask works, brand names, logos and other
trade designations (including unregistered names and marks), trademark and
service mark registrations and applications, copyrights and copyright
registrations and applications, inventions, invention disclosures, protected
formulae, formulations, processes, methods, trade secrets, computer software,
computer programs and source codes, manufacturing research and similar technical
information, engineering know-how, customer and supplier information, assembly
and test data drawings or royalty rights and all comparable items.

 

“Investor” means Iron Mountain Incorporated, a Delaware corporation, and its
successors and permitted assigns.

 

“Lien” means any lien, mortgage, interest, security interest, tax lien,
financing statement, pledge, charge, hypothecation or other encumbrance of any
kind or nature whatsoever (including, without limitation, any conditional sale
or title retention agreement), whether arising by contract, operation of law or
otherwise.

 

“Lockup Expiration Date” means the one-year anniversary of the Closing Date.

 

“Material Adverse Effect” means any material adverse effect, or the occurrence
of any event or the existence of any condition that could reasonably be expected
to have a material adverse effect on (a) the prospects, business, operations,
assets, liabilities or financial condition or performance of the Company and its
Subsidiaries, taken as a whole; or (b) the validity or enforceability of this
Agreement or any of the Other Agreements or the transactions contemplated by
this Agreement or any of the Other Agreements.

 

“Material Contracts” means, as to any Person, any agreement filed or required to
be filed with the SEC pursuant to applicable securities law.

 

“Other Agreements” means the Registration Rights Agreement and any other
agreements, instruments and documents, whether heretofore, now or hereafter
executed by or on behalf of the Company or its shareholders and delivered to the
Investor with respect to this Agreement, the Registration Rights Agreement and
any and all amendments, modifications, supplements, renewals, extensions or
restatements thereof.

 

“Permit” means any permit, certificate, approval, order, license or other
authorization.

 

“Person” means and includes natural persons, corporations, limited partnerships,
limited liability companies, general partnerships, joint stock companies, joint
ventures, associations, companies, trusts, banks, trust companies, land trusts,
business trusts or other organizations, whether or not legal entities, and
Governmental Authorities.

 

“Property” means property or assets of all kinds, real, personal or mixed,
tangible or intangible (including, without limitation, all rights relating
thereto), whether owned or acquired on or after the Closing Date, as applicable.

 

 

 

 

“Purchase Price” means the per share purchase price for the Common Stock of
$5.15.

 

“Registration Rights Agreement” has the meaning set forth in Recital B.

 

“SEC” means the United States Securities and Exchange Commission.

 

“Securities Act” means the Securities Act of 1933, as amended, or any similar
federal statute, and the rules and regulations of the SEC thereunder, all as the
same shall be in effect at the time.

 

“Shares” has the meaning set forth in Section 2.1.

 

“Subsidiary” means, with respect to any Person, any corporation or other entity
of which at least a majority of the outstanding shares of stock or other
ownership interests having by the terms thereof ordinary voting power to elect a
majority of the board of directors (or Persons performing similar functions) of
such corporation or entity (irrespective of whether or not at the time, in the
case of a corporation, stock of any other class or classes of such corporation
shall have or might have voting power by reason of the happening of any
contingency) is, at the time, directly or indirectly owned or controlled by such
Person or one or more of its Subsidiaries or by such Person and one or more of
its Subsidiaries.

 

“Transfer” has the meaning set forth in Section 2.2(b).

 

ARTICLE II. TRANSACTION AND COVENANTS

 

Subject to the terms and conditions hereof, the Investor and the Company agree
to the following:

 

Section 2.1           Sale and Purchase of Shares. At the Closing, the Company
agrees, upon payment by the Investor to the Company of the aggregate Purchase
Price in immediately available funds by wire transfer, or by other form of
payment acceptable to the Company, equal to $3,000,000, to issue and sell issue
to the Investor, and the Investor agrees to purchase from the Company, 582,524
shares of Common Stock (the “Shares”). At the Closing, the Company shall deliver
to the Investor evidence of the notation in the DRS of the Shares in the name of
the Investor in form satisfactory to the Investor.

 

 

 

 

Section 2.2          Certain Transfer Restrictions.

 

(a)          Until the Lockup Expiration Date, neither the Investor nor any
other holder of the Shares shall Transfer (as defined in Section 2.2(b) below)
any Shares or any portion thereof or any interest therein without the prior
written consent of the Company, which may be granted at the Company’s sole
discretion. Any Transfer of Shares not made in compliance with the provisions of
this Section 2.2 shall not be valid or have any force or effect. Shares which
are Transferred in compliance with this Section 2.2 shall thereafter continue to
be subject to all restrictions on Transfer and all other agreements, provisions,
terms and conditions which are contained in this Agreement and the Other
Agreements. As a condition to any such Transfer, any Person to whom Shares are
so Transferred shall execute and deliver whatever documents are deemed
reasonably necessary by the Company to evidence such party's interest in,
acceptance of and agreement with, the terms and provisions of this Agreement and
the Other Agreements. Notwithstanding the foregoing, the Investor and any Holder
shall be permitted to Transfer the Shares, or any portion thereof, to Iron
Mountain Incorporated or any wholly owned subsidiary, direct or indirect, of
Iron Mountain Incorporated, so long as Iron Mountain Incorporated retains
ownership of the subsidiary, upon prior written notice to the Company and such
Transferee’s written agreement to be bound by this Agreement.

 

(b)          “Transfer” shall mean any transfer, sale, assignment, pledge,
encumbrance or other disposition of securities, irrespective of whether any of
the foregoing are effected voluntarily or involuntarily, by operation of law or
otherwise, or whether inter vivos or upon death.

 

(c)          Each certificate or other instrument evidencing the Shares and each
certificate or other instrument issued in exchange for or upon the Transfer of
any such Shares, so long as such Shares are restricted by this Agreement after
such Transfer, shall bear a legend in substantially the following form:

 

“THE RIGHT TO SELL, TRANSFER OR OTHERWISE DISPOSE OF OR PLEDGE THE SECURITIES
REPRESENTED BY THIS CERTIFICATE IS SUBJECT TO CERTAIN RESTRICTIONS ON THE
TRANSFER AND RESALE OF THESE SECURITIES SET FORTH IN A SECURITIES PURCHASE
AGREEMENT. A COPY OF SUCH AGREEMENT IS ON FILE AT THE CORPORATION'S PRINCIPAL
PLACE OF BUSINESS AND ITS REGISTERED OFFICE”;

 

and appropriate transfer restrictions will be affixed to any notation in the DRS
for any such Shares.

 

ARTICLE III. REPRESENTATIONS AND WARRANTIES OF THE COMPANY

 

The Company represents and warrants to the Investor that the following
statements are true, correct and complete as of the date hereof and as of the
Closing Date, unless another time is specified:

 

Section 3.1          Corporate Existence and Authority. Each of the Company and
its Subsidiaries (a) is an entity, duly organized, validly existing, and in good
standing under the laws of the jurisdiction of its incorporation or
organization; (b) has all requisite corporate or other power and authority to
own its Properties and carry on its business as now being and as proposed to be
conducted; and (c) is qualified to do business in all jurisdictions in which the
nature of its business or the ownership of its assets makes such qualification
necessary. The Company has the corporate power and authority to execute, deliver
and perform its obligations under this Agreement and the Other Agreements to
which it is or may become a party.

 

 

 

 

Section 3.2           SEC Documents; Financial Statements. Except with respect
to the Company’s Current Report on Form 8-K filed with the SEC on January 26,
2012, the Company has filed or furnished, as applicable, on a timely basis, all
forms, statements, certifications, reports and documents required to be filed or
furnished by it with the SEC pursuant to the Exchange Act or the Securities Act
since August 30, 2011 (the forms, statements, certifications, reports and
documents filed or furnished since such date, including any amendments thereto,
the “Company SEC Documents”). Each of the Company SEC Documents, at the time of
its filing or being furnished complied in all material respects with the
applicable requirements of the Securities Act and the Exchange Act and any rules
and regulations promulgated thereunder applicable to the Company SEC Documents.
As of their respective dates (or, if amended prior to the date hereof, as of the
date of such amendment), the Company SEC Documents did not contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements made therein, in light of the
circumstances in which they were made, not misleading. The Company has made
available to the Investor copies of all material correspondence between the SEC
and the Company since January 1, 2010. As of the date of this Agreement, there
are no material outstanding or unresolved comments received from the SEC staff
with respect to the Company SEC Documents.

 

Each of the consolidated balance sheets included in or incorporated by reference
into the Company SEC Documents (including the related notes and schedules)
fairly presents in all material respects, or, in the case of Company SEC
Documents filed after the date hereof, will fairly present in all material
respects, the consolidated financial position of the Company and its
consolidated Subsidiaries as of its date and each of the statements of
consolidated income, cash flows and stockholders’ equity included in or
incorporated by reference into the Company SEC Documents (including any related
notes and schedules) fairly presents in all material respects, or in the case of
Company SEC Documents filed after the date hereof, will fairly present in all
material respects the financial position, results of operations and cash flows,
as the case may be, of the Company and its consolidated Subsidiaries for the
periods set forth therein (subject, in the case of unaudited statements, to
notes and year-end adjustments), in each case in accordance with GAAP applied on
a consistent basis throughout the periods indicated, except as may be noted
therein and in compliance with, in all material respects, applicable accounting
requirements and the rules and regulations of the SEC.

 

Section 3.3           Absence of Undisclosed Liabilities. Neither the Company
nor any of its Subsidiaries has any liabilities or obligations of any nature
(whether accrued, absolute, contingent or otherwise) required by GAAP to be set
forth on a consolidated balance sheet of the Company and its Subsidiaries or in
the notes thereto, other than those liabilities and obligations (a) set forth or
adequately provided for in the Condensed Consolidated Balance Sheets or in the
related Notes to the Condensed Consolidated Financial Statements included in
Company’s Quarterly Report on Form 10-Q for the quarterly period ended April 30,
2012 (the “Company Balance Sheet”), (b) those incurred in the ordinary course of
business consistent with past practice and not required to be set forth in the
Company Balance Sheet under GAAP, and (c) those incurred in the ordinary course
of business consistent with past practice since the date of the Company Balance
Sheet and not reasonably likely to have a Material Adverse Effect.

 

 

 

 

Section 3.4           Corporate Action; No Breach. The Company has all requisite
corporate power and authority to enter into and perform this Agreement and the
Other Agreements to which it is a party and to consummate the transactions
contemplated hereby and thereby and to issue and sell the Shares, in accordance
with the terms hereof. The execution, delivery, and performance by the Company
of this Agreement and the Other Agreements to which it is a party or may become
a party and the consummation of the transactions contemplated hereby and thereby
(including the issuance and sale of the Shares), have been duly authorized by
the Board of Directors of the Company and no further consent or authorization of
Board of Directors of the Company or its stockholders is required. The
execution, delivery and performance by the Company of this Agreement and the
Other Agreements to which the Company is a party and the consummation by the
Company of the transactions contemplated hereby and thereby do not and will not
(a) violate or conflict with, or constitute or result in a breach of (whether
through notice or lapse of time) or require any consent under (i) the
Certificate of Incorporation of the Company, the By-laws of the Company, or any
other organizational documents of the Company or any amendments to any of the
foregoing; (ii) any Governmental Requirements or any order, writ, injunction, or
decree of any Governmental Authority or arbitrator; or (iii) any Material
Contract to which the Company or its Subsidiaries is a party or by which the
Company or its Subsidiaries or any of their Property is bound or subject; or (b)
constitute a default (whether through notice or lapse of time) under any such
Material Contract, or result in the creation or imposition of any Lien upon any
of the revenues or Property of the Company or its Subsidiaries; except, in the
case of clause (a)(iii), for such violations, conflicts, breaches or failures to
obtain consents that have not had and could not reasonably be expected to have a
Material Adverse Effect, and, in the case of clause (b), for such defaults or
Liens that have not had and could not reasonably be expected to have a Material
Adverse Effect. As of the Closing Date, the Shares shall have been duly and
validly authorized and when issued and sold in compliance with the terms of this
Agreement, will be validly issued, fully-paid and nonassessable and, except as
otherwise provided by this Agreement, free of all Liens directly in favor of the
Company and shall not be subject to any preemptive rights or similar rights,
however designated, whether by statute, contract directly with the Company or
otherwise.

 

Section 3.5           Operation of Business. The Company and its Subsidiaries
possess, and as of the Closing Date will possess, all material Permits,
franchises, licenses and authorizations necessary or appropriate to conduct
their respective businesses substantially as now conducted, and no suspension or
cancellation of any such material licenses, Permits, franchises, certificates,
orders, approvals or authority is pending or, to the Company’s knowledge,
threatened; and the transactions contemplated by this Agreement and/or the Other
Agreements will not cause any cancellation or suspension or have any effect upon
any of such licenses, Permits, franchises, certificates, orders, approvals or
authority.

 

 

 

 

Section 3.6           Intellectual Property. Schedule 3.6 attached hereto sets
forth a complete and accurate listing of all the Intellectual Property of the
Company and its Subsidiaries. The Company owns valid title, free and clear of
any Liens, or possesses the requisite valid and current licenses or rights, free
and clear of any Liens, to use all such Intellectual Property in connection with
the conduct of its business as now operated (and, except as set forth in
Schedule 3.6 hereto, to the best of the Company’s knowledge, as presently
contemplated to be operated in the future). There is no claim or action by any
person pertaining to, or proceeding pending, or to the Company’s knowledge
threatened, which challenges the right of the Company or of a Subsidiary with
respect to any Intellectual Property necessary to enable it to conduct its
business as now operated (and, except as set forth in Schedule 3.6 hereto, to
the best of the Company’s knowledge, as presently contemplated to be operated in
the future). To the best of the Company’s knowledge, the Company or its
Subsidiaries’ current and intended products, services and processes do not
infringe on any Intellectual Property or other rights held by any Person, and
the Company is unaware of any facts or circumstances which might give rise to
any of the foregoing. Except as set forth in Schedule 3.6 hereto, the Company
has not received any notice of infringement of, or conflict with, the asserted
rights of others with respect to its or its Subsidiaries’ Intellectual Property.
The Company and each of its Subsidiaries have taken reasonable security measures
to protect the confidentiality of the material information the Company deems
confidential.

 

Section 3.7           Litigation. Except as otherwise disclosed in the Company
SEC Documents, there is no action, suit, investigation or proceeding before or
by any court, Governmental Authority, or arbitrator pending, or to the knowledge
of the Company, threatened against or affecting the Company or any of its
Subsidiaries, that could reasonably be expected to, if adversely determined,
have a Material Adverse Effect or could adversely affect the ability of the
Company or any of its Subsidiaries to pay and perform its obligations hereunder
or under the Other Agreements.

 

Section 3.8           Enforceability. This Agreement and the Other Agreements to
which the Company is or will become a party have been duly and validly executed
and delivered by the Company, and this Agreement and the Other Agreements
constitute the legal, valid, and binding obligations of the Company, enforceable
against the Company in accordance with their respective terms, except as may be
limited by (a) applicable bankruptcy, insolvency, reorganization or other
similar laws of general application relating to or affecting the enforcement of
creditor rights; (b) laws and judicial decisions regarding indemnification for
violations of U.S. federal securities laws; (c) the availability of specific
performance or other equitable remedies; and (d) with respect to any
indemnification agreements set forth herein or therein, principles of public
policy.

 

Section 3.9           Approvals. No authorization, approval, or consent of, and
no filing or registration with, or notice to, any court, Governmental Authority
or third party is or will be necessary for the execution, delivery or
performance by the Company of this Agreement or the Other Agreements to which
the Company is a party or for the validity or enforceability thereof.

 

Section 3.10         Taxes. The Company and each of its Subsidiaries have filed
all material tax returns (federal, state, local and foreign) required to be
filed (subject to allowable extensions), including all income, franchise,
employment, property, and sales and use tax returns, and have paid all of their
respective liabilities for taxes, assessments, governmental charges, and other
levies that are due and payable, and there are no pending or, to the knowledge
of the Company, threatened investigations of the Company or any of its
Subsidiaries by any taxing authority or of any pending but unassessed tax
liability of the Company or any of its Subsidiaries, other than with respect to
taxes in an aggregate amount as to which would not, if an adverse determination
is made with respect to such taxes, have a Material Adverse Effect. No tax Liens
have been filed and no claims are being asserted against the Company or any of
its Subsidiaries or any of their Affiliates, with respect to any taxes. None of
the income tax returns of the Company or any of its Subsidiaries or any of their
Affiliates are under audit. The charges, accruals and reserves on the books of
the Company and each of its Subsidiaries in respect of taxes or other
governmental charges are in accordance with GAAP.

 

 

 

 

Section 3.11         Capitalization; Subsidiaries. As of July 26, 2012, the
authorized capital stock of the Company consists of 100,000,000 shares, of which
(a) 75,000,000 shares are Common Stock, of which 11,075,318 shares are issued
and outstanding, and 1,840,238 shares are reserved for issuance pursuant to the
Company’s 2010 Stock Incentive Plan (the “2010 Plan”) (subject to adjustments as
provided for in the 2010 Plan)(under which, stock options to purchase 1,043,971
shares of Common Stock are granted and outstanding) and 998,096 shares are
reserved for issuance upon exercise of Common Stock warrants; (b) 25,000,000
shares are preferred stock, par value $0.001 per share, of which none are issued
and outstanding and 175,000 shares have been designated as Series A junior
participating preferred stock in connection with the Company’s shareholder
rights plan. Options to purchase 1,045,138 shares of Common Stock remain granted
and outstanding under the Company’s expired 1999 Stock Incentive Plan (the “1999
Plan”). All of such outstanding shares of Capital Stock are duly authorized,
validly issued, fully paid and nonassessable. No shares of Capital Stock of the
Company are subject to preemptive rights or any other similar rights of the
stockholders of the Company or any Lien directly in favor of the Company imposed
through the actions or failure to act of the Company. Except as described in the
previous sentences of this Section 3.11 (i) there are no outstanding options,
warrants, scrip, rights to subscribe for, puts, calls, rights of first refusal,
agreements, understandings, claims or other commitments or rights of any
character whatsoever relating to, or securities or rights convertible into or
exchangeable for any shares of capital stock of the Company or any of its
Subsidiaries, or arrangements by which the Company or any of its Subsidiaries is
or may become bound to issue additional shares of capital stock of the Company
or any of its Subsidiaries, and (ii) there are no anti-dilution or price
adjustment provisions contained in any security issued by the Company (or in any
agreement providing rights to security holders) that will be triggered by the
issuance of the Shares, and the Company is not currently contemplating any
issuances of its debt or equity securities which would trigger any such
anti-dilution or price adjustment provisions. None of the Company or any of its
Subsidiaries has outstanding any bonds, debentures, notes or other obligations
the holders of which have the right to vote (or are convertible into or
exercisable for securities having the right to vote) with the stockholders of
the Company on any matter. Except as set forth in the Company’s certificate of
incorporation or the Company’s bylaws or this Agreement, there are no agreements
or understandings to which the Company is a party with respect to the voting of
any Shares or which restrict the transfer of any such shares, nor as of the date
of this Agreement does the Company have knowledge of any third party agreements
or understandings with respect to the voting of any such shares. The Company
owns all of the Capital Stock of its Subsidiaries. A complete list of the
Company’s Subsidiaries is attached hereto as Schedule 3.11.

 

Section 3.12         Agreements. The Company is not in default in the
performance, observance or fulfillment of any of the obligations, covenants or
conditions contained in any agreement, document or instrument binding on it or
its Properties, except for instances of noncompliance that, individually or in
the aggregate, could not reasonably be expected to have a Material Adverse
Effect.

 

 

 

 

Section 3.13         Compliance with Laws. None of the Company or any of its
Subsidiaries is in violation of any Governmental Requirement, except for
instances of non-compliance that, individually or in the aggregate, could not
have a Material Adverse Effect. The Company and each of its Subsidiaries have
complied, and will comply with, all material requirements of applicable federal,
state, local and foreign laws, and regulations thereunder, including federal and
state securities laws.

 

Section 3.14         Material Contracts. Each of the Material Contracts to which
the Company or any Subsidiary is a party constitutes valid and binding
obligations of the Company or its Subsidiary that is a party thereto and is in
full force and effect, and none of the Company or any of its Subsidiaries is in
material default under any Material Contract and, to the knowledge of the
Company after due inquiry, no other Person that is a party thereto is in default
under any of the Material Contracts. None of the Material Contracts prohibit the
transactions contemplated under this Agreement and the Other Agreements.

 

Section 3.17         Registration Rights. Other than pursuant to the
Registration Rights Agreement and that certain Registration Rights Agreement,
dated as of October 23, 2010, by and between the Company and the purchasers
party thereto, the Company is not under any contractual obligation to register
any of its presently outstanding securities or any of its securities that may
hereafter be issued.

 

Section 3.18         Environmental Matters. The Company never has been to its
knowledge, and is not in, material violation of any applicable statute, law or
regulation relating to the environment or occupational health and safety, and to
its knowledge, no material expenditures are required in order to comply with any
such existing statute, law or regulation. No Hazardous Materials (as defined
below) are used or have been used, stored, or disposed of by the Company or, to
the Company’s knowledge, by any other Person on any property owned, leased or
used by the Company. For the purposes of the preceding sentence, “Hazardous
Materials” shall mean (a) materials which are listed or otherwise defined as
“hazardous” or “toxic” under any applicable local, state, federal and/or foreign
laws and regulations that govern the existence and/or remedy of contamination on
property, the protection of the environment from contamination, the control of
hazardous wastes, or other activities involving hazardous substances, including
building materials or (b) any petroleum products or nuclear materials.

 

Section 3.19         Rights in and Sufficiency of Properties. The Company and
its Subsidiaries hold no title in fee simple to any real property. The Company
and each of its Subsidiaries have good and marketable title to, or valid
leasehold interests in, all of their respective Properties reflected in the
Company Financial Statements, except for goods sold in the ordinary course of
business since the date of the most recent of such financial statements for each
of them. The Company and each of its Subsidiaries own, and have good and
marketable title to or valid leasehold interests in, all material Properties and
assets, including furniture, fixtures, real property and equipment necessary to
conduct their respective businesses, as conducted and to complete the
transactions and fulfill the obligations contemplated hereby, and the Company
each of its Subsidiaries is in material compliance with all leases which it has
assumed or to which it is a party.

 

 

 

 

Section 3.20         Absence of Certain Changes. Since the date of the most
recent Company Financial Statements and except as otherwise disclosed in the
Company SEC Documents, neither the Company nor any of its Subsidiaries has (a)
suffered any change that has had, or could reasonably be expected to have, a
Material Adverse Effect; (b) contracted for the purchase of any material capital
assets or paid any capital expenditures (other than in the ordinary course of
business); (c) incurred any material indebtedness for borrowed money or issued
or sold any debt securities; (d) incurred or discharged any liabilities or
obligations, except in the ordinary course of business; (e) paid any material
amount on any indebtedness prior to the due date, or forgiven or canceled any
debts; (f) mortgaged, pledged or subjected to any Lien any of its material
properties or assets; (g) suffered any damage or destruction to or loss of any
assets or Property (whether or not covered by insurance) that has had, or could
reasonably be expected to have, a Material Adverse Effect; (h) acquired or
disposed of any assets, except in the ordinary course of business; (i) written
up or written down the carrying value of any of its assets; (j) changed any
accounting principles, methods or practices previously followed or changed the
costing system or depreciation methods of accounting for its assets; (k) lost or
terminated the relationship with any officer or material customer or supplier,
which termination or change has had, or could reasonably be expected to have, a
Material Adverse Effect; (l) formed or acquired or disposed of any interest in
any corporation, partnership, joint venture, limited liability company or other
entity; (m) except in the ordinary course of business consistent with past
practice and otherwise in accordance with the 1999 Plan and the 2010 Plan,
issued any Capital Stock or other securities or any rights, options or warrants
with respect thereto, except as contemplated hereby; (n) declared or made any
payment or distribution of cash or other property to stockholders with respect
to its stock, or purchased or redeemed any shares of its Capital Stock; (o)
amended or adopted any employee benefits or plans relating thereto; (p)
experienced any union organizing effort or strike problems with labor or
management in connection with terms and conditions of employment; (q) suffered
any material damage, destruction or casualty loss; or (r) committed to do any of
the foregoing or entered into any other commitment or transaction or experienced
any other event that is material to this Agreement or to any of the other
agreements and documents executed or to be executed pursuant to this Agreement
or to the transactions contemplated hereby or thereby, or that has had, or could
reasonably be expected to have, a Material Adverse Effect.

 

3.21         Certain Transactions. None of the directors, executive officers,
holders of more than 5% of any class of the Company’s voting securities, or any
member of the immediate family of any of the foregoing persons, is presently a
party to any transaction with the Company or a Subsidiary (other than for
services as officers or directors), which would require disclosure under Item
404(a) of SEC Regulation S-K.

 

3.22         ERISA. Schedule 3.22 sets forth all employee benefit plans
maintained, established or sponsored by the Company, or in or to which the
Company participates or contributes, which is subject to the Employee Retirement
Income Security Act of 1974, as amended (“ERISA”). The Company has made all
required contributions and has no liability to any such employee benefit plan,
other than liability for health plan continuation coverage described in Part 6
of Title I(B) of ERISA, and has complied with all applicable laws for any such
employee benefit plan.

 

 

 

 

3.23         Employees. The Company has no collective bargaining agreements with
any of its employees. There is no labor union organizing activity pending or, to
the Company’s knowledge, threatened with respect to the Company. Except as set
forth on Schedule 3.23, the Company is not a party to or bound by any currently
effective employment contract, deferred compensation arrangement, bonus plan,
incentive plan, profit sharing plan, retirement agreement or other employee
compensation plan or agreement. Except as set forth on Schedule 3.23, no
employee of the Company has been granted the right to continued employment by
the Company or to any material compensation following termination of employment
with the Company. To the Company’s knowledge, no employee of the Company, nor
any consultant with whom the Company has contracted, is in violation of any term
of any employment contract, proprietary information agreement or any other
agreement relating to the right of any such individual to be employed by, or to
contract with, the Company. The Company has not received any notice alleging
that any such violation has occurred. The Company is not aware that any officer,
key employee or group of employees intends to terminate his, her or their
employment with the Company, nor does the Company have a present intention to
terminate the employment of any officer, key employee or group of employees.
There are no actions pending, or to the Company’s knowledge, threatened, by any
former or current employee concerning such person’s employment by the Company.

 

3.24         Insurance. The Company and each of its Subsidiaries are insured by
insurers of recognized financial responsibility against such losses and risks
and in such amounts as management of the Company believes to be prudent and
customary in the businesses in which the Company and its Subsidiaries are
engaged. Neither the Company nor any such Subsidiary has any reason to believe
that it will not be able to renew its existing insurance coverage as and when
such coverage expires or to obtain similar coverage from similar insurers as may
be necessary to continue its business at a cost that would not have a Material
Adverse Effect.

 

3.25         Internal Accounting Controls. The Company and has not received,
orally or in writing, any adverse notification (including any “management
letters”) from its auditors relating to the Company’s internal financial
controls and procedures. To the Company’s knowledge, it maintains internal
control over financial reporting designed to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of
financial statements for external purposes in accordance with generally accepted
accounting principles and such internal control over financial reporting is
effective.

 

3.26         Books and Records. The books of account, ledgers, order books,
records and documents of the Company and each of its Subsidiaries taken as a
whole accurately and completely reflect all material information relating to the
business of the Company and its Subsidiaries, the location and collection of
their respective assets, and the nature of all transactions giving rise to the
obligations or accounts receivable of the Company or any of its Subsidiaries.

 

3.27         Assumptions or Guaranties of Indebtedness of Other Persons. Except
as set forth on Schedule 3.27 attached hereto, neither the Company nor any of
its Subsidiaries has assumed, guaranteed, endorsed, or otherwise become directly
or contingently liable on, any Indebtedness or any other agreement of any other
person.

 

3.28         Investments in Other Persons. Except as set forth in Schedule 3.28
attached hereto, neither the Company nor any of its Subsidiaries has made any
loan or advance to any person which is outstanding, nor is it committed or
obligated to make any such loan or advance, nor does the Company or any of its
Subsidiaries own any capital stock, assets compromising the business of,
obligations of, or any equity, ownership or other interest in, any person.

 

 

 

 

3.29         Disclosure. All information and statements made by the Company
relating to or concerning the Company or any of its Subsidiaries, officers,
directors, employees, customers or clients (including, without limitation, all
information regarding the Company’s internal financial accounting controls and
procedures) set forth in this Agreement is true and correct in all material
respects and the Company has not omitted to state any material fact necessary in
order to make the statements made herein or therein, in light of the
circumstances under which they were made, not misleading.

 

ARTICLE IV. REPRESENTATIONS, WARRANTIES AND ADDITIONAL AGREEMENTS OF THE
INVESTOR

 

The Investor represents and warrants to the Company that the following
statements are true, correct and complete as of the date hereof and as of the
Closing Date, unless another time is specified:

 

Section 4.1           Organization. The Investor is duly organized and validly
existing under the laws of the jurisdiction of its organization.

 

Section 4.2           Corporate Power. The Investor has the corporate power and
authority to execute and deliver this Agreement and the Other Agreements, to own
the Shares, and to carry out the transactions contemplated by this Agreement and
the Other Agreements.

 

Section 4.3           Authorization. All corporate action on the part of the
Investor necessary for (a) the authorization, execution, delivery and
performance of this Agreement and the Other Agreements by the Investor; and (b)
the performance of all of the Investor’s obligations hereunder and under the
Other Agreements has been taken. This Agreement, the Other Agreements and all
documents executed pursuant hereto or thereto are valid, legal and binding
obligations of the Investor, enforceable according to their respective terms,
except as may be limited by enforceable against the Company in accordance with
their respective terms, except as may be limited by applicable bankruptcy,
insolvency, reorganization or other similar laws of general application relating
to or affecting the enforcement of creditor rights and general principles of
equity that restrict the availability of equitable or legal remedies.

 

Section 4.4           Investment Representations. The Investor (a) is an
“accredited investor,” as that term is defined in Regulation D under the
Securities Act; (b) has such knowledge, skill and experience in business and
financial matters that it is capable of evaluating the merits and risks of an
investment in the Company and the suitability thereof as an investment for the
Investor; (c) has received such documents and information as it has requested
and has had an opportunity to ask questions of representatives of the Company
concerning the terms and conditions of the investment proposed herein, and such
questions were answered to the satisfaction of the Investor; and (d) is in a
financial position to hold the Shares for an indefinite time and is able to bear
the economic risk and withstand a complete loss of its investment in the
Company. The Investor is acquiring the Shares for investment for its own account
and not with a view to, or for resale in connection with, any distribution
thereof.

 

 

 

 

Section 4.5           Restrictions on Transferability. The Investor understands
that because the Shares have not have been registered under the Securities Act,
the Investor cannot dispose of any or all of the Shares unless they are
subsequently registered under the Securities Act or exemptions from registration
are available. The Investor acknowledges and understands that, except as
provided in the Registration Rights Agreement, it has no registration rights.
Although it may be possible in the future to make limited public sales of the
Shares without registration under the Securities Act, Rule 144 is not now
available and there is no assurance that it will become available for any
purpose. By reason of these restrictions, the Investor understands that it may
be required to hold the Shares for an indefinite period of time. The Investor
understands that each certificate or other instrument representing the Shares
will bear appropriate state “blue sky” legends and a legend substantially as
follows:

 

“THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
EITHER THE SECURITIES ACT OF 1933, AS AMENDED (THE “1933 ACT”), OR APPLICABLE
STATE SECURITIES LAWS (THE “STATE ACTS”), AND SHALL NOT BE SOLD, ASSIGNED,
PLEDGED, HYPOTHECATED, DONATED OR OTHERWISE TRANSFERRED (WHETHER OR NOT FOR
CONSIDERATION) BY THE HOLDER EXCEPT BY REGISTRATION OR PURSUANT TO AN EXEMPTION
FROM REGISTRATION UPON THE ISSUANCE TO THE COMPANY OF A FAVORABLE OPINION OF
COUNSEL OR OTHER EVIDENCE REASONABLY SATISFACTORY TO THE COMPANY TO THE EFFECT
THAT ANY SUCH TRANSFER SHALL NOT BE IN VIOLATION OF THE 1933 ACT AND THE STATE
ACTS”;

 

and appropriate transfer restrictions will be affixed to any notation in the DRS
for any Shares.

 

ARTICLE V. COVENANTS OF THE COMPANY

 

In addition to the other agreements and covenants set forth herein, unless
waived or consented to in writing by the Investor, the Company covenants as
follows

 

5.1           Form D; Blue Sky Laws. The Company agrees to file a Form D with
respect to the Shares as required under Regulation D. The Company shall take
such action as the Company shall reasonably determine is necessary to qualify
the Shares for sale to the Investor at the applicable closing pursuant to this
Agreement under applicable securities or “blue sky” laws of the states of the
United States (or to use an exemption from such qualification).

 

5.2           Reporting Status. The Company shall use its reasonable best
efforts timely to file all reports required to be filed with the SEC pursuant to
the Exchange Act, and the Company shall not terminate its status as an issuer
required to file reports under the Exchange Act even if the Exchange Act or the
rules and regulations thereunder would permit such termination.

 

 

 

 

5.3           Corporate Existence. So long as the Investor beneficially owns any
of the Shares, the Company shall maintain its corporate existence, except in
connection with an amalgamation, consolidation, conversion or merger of the
Company, any transfer of any or all or substantially all of the assets of the
Company or any other strategic or business transaction at the discretion of the
Company.

 

5.4           Sarbanes-Oxley Matters. When and if required to do so, the Company
will comply with any and all applicable requirements of the Sarbanes-Oxley Act
of 2002 (“Sarbanes-Oxley”) that are effective for the Company, and any and all
applicable rules and regulations promulgated by the SEC thereunder. The Company
shall implement such programs and shall take such steps reasonably necessary to
provide for its future compliance (not later than the relevant statutory and
regulatory deadline therefor) with all provisions of Section 404 of the
Sarbanes-Oxley Act that may or shall become applicable to the Company. Nothing
in this Section 5.4 shall defer, delay, obstruct or prevent the Company from
using any safe harbor, grace period or reporting company status which permits
the Company to avoid compliance with any or all of the provisions of
Sarbanes-Oxley and the rules and regulations promulgated thereunder.

 

5.5           No Integration. The Company shall not make any offers or sales of
any security (other than the Shares) under circumstances that would cause the
offering and sales of the Shares pursuant to this Agreement to be integrated
with another transaction in violation of Section 5 of the Securities Act.

 

5.6           Intellectual Property. Subject to the Company’s business judgment,
each of the Company and each of its Subsidiaries shall use commercially
reasonable efforts maintain in full force and effect all licenses and other
rights to use Intellectual Property owned or possessed by it and deemed by the
Company in its sole discretion to be necessary to the conduct of its business.

 

5.7            Taxes. The Company shall duly pay and discharge all material
taxes or other material claims, which might become a lien upon any of its
material property except to the extent that any thereof are being disputed in
good faith appropriately contested with adequate reserves provided therefor.

 

The obligations under Sections 5.1 through 5.10 shall terminate upon the
earliest to occur of (a) the Investor becomes eligible to sell the Shares
pursuant to Rule 144 without restriction pursuant to such rule on the volume of
securities that may be sold in any single transaction, assuming for this purpose
that the Investor is not an affiliate of the Company, (b) the date on which the
Investor and all of its Affiliates no longer own any of the Shares, or (c) the
acquisition of the Company by another corporation or entity by sale of capital
stock, consolidation, merger, or other reorganization in which the holders of
the Company’s outstanding voting stock immediately prior to such transaction
own, immediately after such transaction, securities representing less than 50%
of the voting power of the corporation or other entity surviving such
transaction.

 

 

 

 

ARTICLE VI. CONDITIONS PRECEDENT

 

Section 6.1         Conditions to the Obligations of the Investor. The
obligation of the Investor to consummate the transactions contemplated by this
Agreement on the Closing Date is subject to the satisfaction of the following
conditions precedent or execution and delivery to the Investor of the following
agreements, documents or instruments, as the case may be:

 

(a)          Compliance with Laws. As of the Closing Date, the Company shall
have complied with all Governmental Requirements necessary to consummate the
transactions contemplated by this Agreement and the Other Agreements.

 

(b)          No Prohibitions. No Governmental Requirement shall prohibit the
consummation of the transactions contemplated by this Agreement or any of the
Other Agreements and no order, judgment or decree of any Governmental Authority
or arbitrator shall, and no litigation or other proceeding shall be pending or
threatened which seeks to, enjoin, prohibit, restrain or otherwise adversely
affect in any material manner the consummation of the transactions contemplated
by this Agreement or the Other Agreements or otherwise have a Material Adverse
Effect.

 

(c)          Representations and Warranties. The representations and warranties
made by the Company in this Agreement and the Other Agreements or that are
contained in any certificate, document or financial or other statement of the
Company furnished under or in connection with this Agreement or the Other
Agreements shall be true and correct on and as of the Closing Date.

 

(d)          Registration Rights Agreement. The Registration Rights Agreement
shall have been properly executed by the Company and delivered to the Investor.

 

(e)          Evidence of Shares. The Investor shall have received evidence of
Crossroads’ instructions to the transfer agent for the Common Stock directing
the transfer agent to issue the Shares in the name of the Investor in form and
substance satisfactory to the Investor.

 

(f)          Due Diligence. The Investor shall have completed and been satisfied
with the results of its due diligence review of the Company.

 

Section 6.2         Conditions to the Obligations of the Company. The obligation
of the Company to consummate the transactions contemplated by this Agreement on
the Closing Date is subject to the satisfaction of the following conditions
precedent or execution and delivery to the Company of the following agreements,
documents or instruments, as the case may be:

 

(a)          Representations and Warranties. The representations and warranties
made by the Investor in this Agreement and the Other Agreements or that are
contained in any certificate or document of the Investor furnished under or in
connection with this Agreement shall be true and correct on and as of the
Closing Date.

 

 

 

 

(b)          No Prohibitions. No Governmental Requirement shall prohibit the
consummation of the transactions contemplated by this Agreement or any of the
Other Agreements and no order, judgment or decree of any Governmental Authority
or arbitrator shall, and no litigation or other proceeding shall be pending or
threatened which seeks to, enjoin, prohibit, restrain or otherwise adversely
affect in any material manner the consummation of the transactions contemplated
by this Agreement or the Other Agreements or otherwise have a Material Adverse
Effect.

 

(c)          Payment of Purchase Price. The Company shall have received the
aggregate Purchase Price from the Investor.

 

ARTICLE VII. MISCELLANEOUS

 

Section 7.1          Indemnification.

 

(a)          Except for the representations and warranties set forth in Sections
3.1, 3.4 and 3.11, which shall survive for the duration of their respective
statute of limitations, the representations and warranties of the Company set
forth in Section 3 hereof shall survive for 24 months following the Closing
Date, notwithstanding any due diligence investigation conducted by or on behalf
of the Investor. The representations and warranties of the Investor set forth in
Section 4 shall survive the Closing for 24 months notwithstanding any due
diligence investigation conducted by or on behalf of the Company.

 

(b)          The Company agrees to indemnify and hold harmless the Investor and
all of its officers, directors, employees, agents and representatives from and
against any and all claims, costs, expenses, liabilities, obligations, losses or
damages (including reasonable legal fees) of any nature (“Losses”), incurred by
or imposed upon any such party arising as a result of or related to any actual
breach by the Company of any of its representations, warranties set forth in
Section 3 hereof or any of its covenants, agreements and obligations under this
Agreement.

 

(c)          The Investor agrees to indemnify and hold harmless the Company and
its officers, directors, employees and agents for Losses arising as a result of
or related to any actual breach by the Investor of any of its representations or
warranties set forth in Section 4 hereof or any of its covenants, agreements and
obligations under this Agreement.

 

(d)          Notwithstanding the foregoing: (i) no indemnifying party shall not
be liable for any claim for indemnification or Losses associated therewith
unless and until the aggregate amount of indemnifiable Losses which may be
recovered from the indemnifying party equals or exceeds $50,000 (the “Basket”)
after which the indemnifying party shall be liable, subject to the provisions
hereof, for all Losses, including the initial $50,000 of Losses, and (ii) in no
event shall the aggregate amount paid by an indemnifying party pursuant to this
Section 7.1 exceed the purchase price of the Shares hereunder. For the avoidance
of doubt the Basket shall not apply to Losses related to breaches of any
agreements, covenants, representations or warranties set forth in the
Registration Rights Agreement.

 

 

 

 

Section 7.2           Modification of Agreement; Assignment. This Agreement may
not be modified, altered or amended, except by an agreement in writing signed by
the Investor and the Company. Without the prior written consent of the other
party, no party hereto may sell, assign or transfer this Agreement, or any
rights, titles, interests, remedies, powers, obligations and/or duties
hereunder, provided, however, that nothing in this Agreement shall defer, delay,
obstruct or prevent any amalgamation, consolidation, conversion or merger of the
Company, any transfer of any or all or substantially all of the assets of the
Company or any other strategic or business transaction at the discretion of the
Company.

 

Section 7.3           Expenses. Except as set forth in the Other Agreements,
each party shall bear its own expenses in connection with the transactions
contemplated by this Agreement and the Other Agreements.

 

Section 7.4           Waiver by the Investor. The Investor’s failure, at any
time or times hereafter, to require performance by the Company of any provision
of this Agreement shall not waive, affect or diminish any right of the Investor
thereafter to demand compliance and performance therewith. Any suspension or
waiver by the Investor of a breach under this Agreement or the Other Agreements
shall not suspend, waive or affect any other breach by the Company under this
Agreement or the Other Agreements, whether the same is prior or subsequent
thereto and whether it is of the same or of a different type. None of the
undertakings, agreements, warranties, covenants and representations of the
Company or its Subsidiaries contained in this Agreement or the Other Agreements
and no breach by the Company under this Agreement or the Other Agreements shall
be deemed to have been suspended or waived by the Investor, unless such
suspension or waiver is by an instrument in writing signed by an officer of the
Investor and directed to the Company specifying such suspension or waiver.

 

Section 7.5           Severability. Wherever possible, each provision of this
Agreement shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement shall be prohibited by,
or invalid under, applicable law, such provision shall be ineffective to the
extent of such prohibition or invalidity, without invalidating the remainder of
such provision or the remaining provisions of this Agreement.

 

Section 7.6           Parties. This Agreement shall be binding upon and inure to
the benefit of the successors and permitted assigns of the Company and the
Investor.

 

Section 7.7           No Fiduciary Relationship. The Investor has no fiduciary
or other special relationship with the Company, and no term or condition of the
Agreement or the Other Agreements shall be construed so as to deem the
relationship between the Company and the Investor, to be such. No joint venture
or partnership is created by this Agreement between the Company and the
Investor.

 

Section 7.8           Entire Agreement. This Agreement, the Other Agreements and
any documents referred to herein or therein constitute the entire agreement of
the parties.

 

 

 

 

Section 7.9           Equitable Relief. The Company recognizes that, in the
event it fails to perform, observe or discharge any of its obligations or
liabilities under this Agreement or the Other Agreements, any remedy of law may
prove to be inadequate relief to the Investor; therefore, the Company agrees
that the Investor, if the Investor so requests, shall be entitled to temporary
and permanent injunctive relief in any such case without the necessity of
proving actual damages.

 

Section 7.10         Governing Law. This Agreement shall be governed by and
construed under the laws of the State of Texas without giving effect to any
choice or conflict of law provision or rule (whether of the State of Texas or
any other jurisdiction) that would cause the application of the laws of any
jurisdiction other than the State of Texas, and each of the parties consents to
the jurisdiction of the courts of the State of Texas (and of the appropriate
appellate courts) and waives any objection to venue laid therein.

 

Section 7.11         Notices. All notices, requests, consents, approvals or
demands to or upon the respective parties hereto shall be given or made to each
party at the address set forth for such party under “Address for Notices”
specified below such party’s name on the signature page to this Agreement.
Unless otherwise specified herein, all such notices, requests, consents,
approvals and demands given or made in connection with the terms and provisions
of this Agreement shall be deemed to have been given or made when personally
delivered, or, if mailed, upon the earlier of actual receipt by the addressee or
three days after sent by registered or certified mail, postage prepaid, or, in
the case of overnight courier service (which may be utilized hereunder), when
delivered by the overnight courier company to the respective address specified
above, or, in the case of telecopy or facsimile transmission (which may be
utilized hereunder), within the first business hour (9:00 a.m. to 5:00 p.m.,
local time for the recipient, on any business day) after receipt by the
respective addressee. Any party may change the address or transmission number to
which notices shall be directed hereunder by giving ten (10) days written notice
of such change to the other party.

 

Section 7.12         Confidential Treatment. Each party agrees that it will not,
and the Company will not permit any Subsidiary to, without the prior written
consent of the other party, issue or publish a press release, tombstone or other
similar announcement or publication relating to this Agreement or the Other
Agreements or the transactions contemplated hereby or thereby, prior to or after
the Closing Date, unless they or it are required to do so by the order of any
court or administrative agency or in accordance with applicable law; provided,
however, that the disclosing party will deliver to the Company or the Investor,
as applicable, written notice of any intention or obligation of any disclosing
party to deliver or provide a copy of this Agreement or any other related
agreement or any term or provision hereof or thereof to any Governmental
Authority at least two business days prior to, or such lesser time as is
practicable given the date upon which such Governmental Authority first requires
delivery, the initial date upon which any such delivery or provision occurs and
the disclosing party shall use all reasonable efforts to redact or delete from
such copy or such term or provision such terms or provisions or language
relating to confidential information as may be requested by the Company or the
Investor, as applicable, to be so redacted or deleted before the same is so
delivered or provided.

 

Section 7.13         Counterparts. This Agreement may be executed in a number of
identical counterparts, each of which, for all purposes, is to be deemed an
original, and all of which collectively constitute one agreement, but in making
proof of this Agreement, it shall not be necessary to produce or account for
more than one such counterpart. A facsimile or photocopy of an executed
counterpart of this Agreement shall be sufficient to bind the party or parties
whose signature(s) appear thereon.

 

 

 

 

Section 7.14         Further Assurances. Each party will execute and deliver
such further agreements, documents and instruments and take such further action
as may be reasonably requested by the other party to carry out the provisions
and purposes of this Agreement and the Other Agreements.

 

Section 7.15         Termination. This Agreement may be terminated (a) by the
Investor by written notice to the Company given prior to the Closing (i) in the
event that the Company shall have failed, refused or been unable to perform all
obligations and satisfy all conditions on its part to be performed or satisfied
hereunder at or prior thereto, (ii) upon the occurrence of an event having a
Material Adverse Effect, or (iii) if the Closing has not been consummated on or
prior to 5:00 p.m., Central time, on the day that is the thirtieth (30th) day
following the date of this Agreement (the “Outside Date”) and (b) by the Company
upon notice to the Investor prior to the Closing; provided, however , that the
right to terminate this Agreement under this Section 7.15 shall not be available
to any Person whose failure to comply with its obligations under this Agreement
has been the cause of or resulted in the failure of the Closing to occur on or
before such time. Nothing in this Section 7.15 shall be deemed to release any
party from any liability for any breach by such party of the terms and
provisions of this Agreement or the Other Agreements. Upon a termination in
accordance with this Section, the Company and the Investor shall not have any
further obligation or liability (including arising from such termination) to the
other.

 

[Signature page follows.]

 

 

 

 

IN WITNESS WHEREOF, this Securities Purchase Agreement has been duly executed
and delivered as of the day and year first written above.

 

  THE INVESTOR:       Iron Mountain Incorporated         By: /s/ C. Richard
Reese   Name: C. Richard Reese   Title: Chairman & CEO

 

  Address for Notices:       745 Atlantic Avenue   Boston, Massachusetts  02111
  Attn: General Counsel: Ernest W. Cloutier   Fax: (617) 451-0409

 

  THE COMPANY:       Crossroads Systems, Inc.         By: /s/ Brian Bianchi  
Name: Brian Bianchi   Title: COO   Address for Notices:

 

  11000 North MoPac Expressway   Austin, Texas  78759   Attn:  Jennifer Crane  
Telecopy:  (512) 349-0304