Blueprint





 











Exhibit 10.8



 



AMENDMENT NO. 2 TO



SECURED CONVERTIBLE PROMISSORY NOTE


 

 


This Amendment No.
2 (the “Amendment”) to that
certain Secured Convertible Promissory Note (the
“Note”)
issued to the undersigned (the “Holder”) pursuant to that
certain Securities Purchase Agreement dated as of September 9, 2016
(as amended, the “Agreement”), by and among
root9B Holdings, Inc. (f/k/a root9B Technologies, Inc.), a Delaware
corporation (the “Company”) and the
Purchasers (as defined therein), is entered into effective as of
March 24, 2017 (the “Effective Date”).
Capitalized terms used in this Amendment that are not otherwise
defined herein shall have the respective meanings assigned to them
in the Note.

 



RECITALS


 



Whereas, the
Company desires to raise additional capital pursuant to the
Agreement;

 



Whereas, the
Company and the Holder have agreed to amend the Note as set forth
herein;

 



Whereas,
pursuant to Section 11 of the Note, the Note may be amended only
with the written consent of the Company and the Holder;
and

 



Whereas, the
Holder and the Company desire to amend the Note as set forth
herein.

 


 



AGREEMENT


 



Now, Therefore, in consideration of the foregoing and of the
mutual promises and conditions hereinafter set forth, the parties
hereto agree as follows:


 

 




A.

Amendment of Definition of Maturity
Date. The definition of “Maturity Date” set
forth in the Note is hereby amended to be September 9,
2019.





 




B.

Amendment of Section 1(c).
Section 1(c) of the Note is hereby amended in order to add the
following sentence at the end of such section:





 


“Notwithstanding
the provisions of this Section 1(c), the Company shall only be
permitted to prepay this Note if concurrently with such prepayment
the Company prepays all Notes issued pursuant to the Purchase
Agreement on a pro-rata basis.”

 




C.

Amendment of Section 1(e).
Section 1(e) of the Note is hereby amended and restated as
follows:





 



“(e)    



Ranking. The
Note shall rank senior in all respects to indebtedness, liabilities
or obligations of the Company to other parties outstanding as of
the date of this Note and shall rank pari passu with any Note
issued pursuant to the Purchase Agreement.”





 




D.

Amendment of Section 1(f)(i).
The definition of “Interest Conversion Rate” set forth
in Section 1(f)(i) of the Note is hereby amended and restated as
follows:





 



(i)      



“Interest Conversion Rate”
means a per share price equal to 85% of the quotient of the sum of
the VWAP of the Common Stock as of each Trading Day during the five
(5) consecutive Trading Day period ending and including the Trading
Day ended immediately prior to the Additional Closing Date, divided
by five (5), but in no event less than $10.00 per
share.”





 


 




 








 








E.

Amendment of Section 2(a). The
definition of “Conversion Price” set forth in Section
2(a) of the Note is hereby amended to reduce the “Conversion
Price” of the Note from $12.00 per share (as previously adjusted to reflect
the Company’s one-for-fifteen reverse stock split on December
1, 2016) to $10.00 per share.





 




F.

Amendment of Section 4(g).
Section 4(g) of the Note is hereby amended and restated as
follows:





 



“(g)      



Cross-Default.
There shall have occurred an “Event of Default” (or
other comparable event) under any currently or future existing
indebtedness of the Company and such “Event of Default”
(or other comparable event) shall be continuing and not subject to
forbearance. For clarity, a default under any Note shall constitute
a default under this Section 4(g);
or”





 




G.

Amendment of Section 4. Section
4 of the Note is hereby amended to include the following Sections
4(i) and 4(j):





 



“(i)     



Working
Capital. Following April 30, 2017, the Company, excluding
IPSA, shall fail to maintain positive Working Capital (at least $1)
as of each month end. For purposes of this Note, “Working
Capital” shall mean cash plus accounts receivable within 60 days
old minus accounts payable
more than 60 days old of a measurement date.





 



(j)


Payroll
Requirement. Following April 30, 2017, the Company,
excluding IPSA, shall fail to have sufficient cash on hand
(“COH”)
equal to or greater than 1.0 times the largest salary payroll paid
during the preceding 90 days, as adjusted for any reductions in
force (but in any event after April 30, 2017). COH will be computed
at the end of each calendar month and equal to the average COH for
that month. For purposes of clarity, this payroll amount is
exclusive of any severance, bonus or commission payments made but
shall include payroll taxes on salary.”





 




H.

Amendment of Section 5. Section
5 of the Note is hereby amended and restated as
follows:





 



“5.      



Rights of Holder
upon Default.





 



(a)           

Rights upon Default. Upon the
occurrence or existence of any Event of Default (other than an
Event of Default referred to in Sections 4(b) or 4(c)) and at any
time thereafter during the continuance of such Event of Default,
following the applicable cure or grace period, the Holder, may, by
written notice to the Company, declare all Outstanding Amounts
hereunder to be immediately due and payable without presentment,
demand, protest or any other notice of any kind, all of which are
hereby expressly waived, anything contained herein to the contrary
notwithstanding. Upon the occurrence or existence of any Event of
Default described in Sections 4(b) or 4(c), immediately and without
notice, all Outstanding Amounts payable by the Company hereunder
shall automatically become immediately due and payable, without
presentment, demand, protest or any other notice of any kind, all
of which are hereby expressly waived, anything contained herein to
the contrary notwithstanding. In addition to the foregoing
remedies, upon the occurrence or existence of any Event of Default,
and following the applicable cure or grace period, Holder may
exercise any other right power or remedy granted to it by this Note
or otherwise permitted to it by law, either by suit in equity or by
action at law, or both. Any payment made by the Company upon an
Event of Default shall be made on a pro-rata basis to all Notes
issued pursuant to the Purchase Agreement.





 




 








 







(b)           

Right to Designate Directors.
In addition to any other right or remedy, upon the occurrence or
existence of any Event of Default, and until the Event of Default
is cured or the Notes are converted, the Majority Note Holders (as
such term as defined in the Agreement) may designate up to two (2)
candidates (the “Note Designees”)
reasonably acceptable to the Company to serve as directors on the
Company’s Board of Directors and the Company shall take such
actions necessary to cause such candidates to be added to the
Company’s Board of Directors. The right to designate the Note
Designees set forth in Section 5(b) may only be
exercised once and in no event may the Note Designees elected
pursuant to this provision constitute a majority of the
Company’s Board of Directors.





 



(c)           

Right of First Refusal. In
addition to any other right or remedy, upon the occurrence or
existence of any Event of Default, until such Event of Default is
cured, Holder shall have a right of first refusal to match any Deal
offered by a third party (which may include directors, officers or
stockholders, or affiliates or associates thereof). A
“Deal”
shall mean any written proposal or offer involving (i) a debt or
equity financing transaction involving the receipt by the Company
of at least $2,000,000, or (ii) the sale or exclusive license of
substantially all of the Company’s assets or acquisition of
control of the Company in whatever form. The Company shall provide
to Holder written notice of the Company’s receipt of any
proposal relating to a Deal that the Company receives after the
occurrence of an Event of Default until such Event of Default is
cured, which Holder shall maintain in confidence until publicly
disclosed by the Company. If more than one Holder of a Note issued
pursuant to the Agreement exercises its right of first refusal,
then the right shall be apportioned based on the principal owed to
each Holder. Holder must provide written notice of its desire to
match any proposal relating to a Deal within 7 business days of its
receipt of written notice of such proposal, and if one or more
holders of Notes elects to match such proposal, the parties shall
endeavor to close any such Deal as promptly as practicable
thereafter.”





 




I.

Amendment of Section 7(b)(ix).
Section 7(b)(ix) of the Note is hereby amended and restated as
follows:





 


(ix)
Liens arising from judgments, decrees or attachments in
circumstances not constituting an Event of Default;

 




J.

New Section 14. Section 14 is
hereby added to the Note as follows:





 


 




 








 







“14.     



Company
Covenants.





 



(a)           

Following April 30,
2017, within fifteen (15) days following each month end, the
Company shall deliver to holder a certificate setting forth the
Company’s Working Capital at the end of such month certified
by the Company’s chief financial officer.





 



(b)           

Following April 30,
2017, the Company shall provide written notice to Holder, within
twenty-four hours of a determination by the Company, excluding
IPSA, that it ceases to have sufficient cash on hand
(“COH”)
equal to or greater than 1.0 times the largest salary payroll paid
during the preceding 90 days, as adjusted for any reductions in
force (but in any event after April 30, 2017). COH will be computed
at the end of each calendar month and equal to the average COH for
that month. For purposes of clarity, this payroll amount is
exclusive of any severance, bonus or commission payments made but
shall include payroll taxes on salary.”





 




K.

New Section
15.





 



“15.     



More Favorable
Terms. So long as any portion of the principal amount of
this Note is unpaid and outstanding, if after the date hereof the
Company issues a convertible promissory note(s) (each, a
“Future
Note”) to any lender having terms and conditions that
are, individually or in the aggregate, more favorable than the
terms and conditions granted to the Holder hereunder, then this
Note shall be deemed to immediately be amended as of the date of
the first issuance of such Future Note to reflect substantially
equivalent terms and conditions to the Holder hereunder. For
purposes of this Section 15, the determination regarding whether
any such terms and conditions are more favorable than those granted
hereunder shall be made by the Company’s Board of Directors
in its reasonable good faith judgment.





 




L.

Representations of the Company.
The Company represents and warrants as follows:





 




a.

Organization. The Company is a
corporation duly organized and validly existing under the laws of
the jurisdiction of its incorporation and has all requisite
corporate power and legal authority to own and use its properties
and assets and carry on its business as now conducted. The Company
is not in violation of any of the provisions of its Certificate of
Incorporation or Bylaws.





 




b.

Authorization; Enforcement. The
Company has all corporate right, power and authority to enter into
this Amendment and to consummate the transactions contemplated
hereby. All corporate action on the part of the Company, its
directors and stockholders necessary for the authorization,
execution, delivery and performance of this Amendment by the
Company, the authorization, sale, issuance and delivery of the
Securities contemplated herein and the performance of the
Company’s obligations hereunder and thereunder has been
taken, other than obtaining the requisite filings necessary to
authorize and effect the issuance or the shares upon conversion of
the Note or the Interest Shares. This Amendment has been duly
executed and delivered by the Company and constitutes the legal,
valid and binding obligation of the Company, enforceable against
the Company in accordance with its terms, except: (i) as limited by
general equitable principles and applicable bankruptcy, insolvency,
reorganization, moratorium and other laws of general application
affecting enforcement of creditors’ rights generally, (ii) as
limited by laws relating to the availability of specific
performance, injunctive relief or other equitable remedies and
(iii) insofar as indemnification and contribution provisions may be
limited by applicable law.





 


 




 








 








M.

Representations of Holder.
Holder hereby represents and warrants as follows:





 




a.

Organization; Authority. Holder
is either an individual or an entity duly incorporated or formed,
validly existing and in good standing under the laws of the
jurisdiction of its incorporation or formation with full right,
corporate, partnership, limited liability company or similar power
and authority to enter into and to consummate the transactions
contemplated by this Amendment and otherwise to carry out its
obligations hereunder. The execution and delivery of this Amendment
and performance by Holder of the transactions contemplated by this
Amendment have been duly authorized by all necessary corporate,
partnership, limited liability company or similar action, as
applicable, on the part of Holder. This Amendment has been duly
executed by Holder, and when delivered by Holder in accordance with
the terms hereof, shall constitute the valid and legally binding
obligation of Holder, enforceable against it in accordance with its
terms, except: (i) as limited by general equitable principles and
applicable bankruptcy, insolvency, reorganization, moratorium and
other laws of general application affecting enforcement of
creditors’ rights generally, (ii) as limited by laws relating
to the availability of specific performance, injunctive relief or
other equitable remedies and (iii) insofar as indemnification and
contribution provisions may be limited by applicable
law.





 




b.

Holder Status. As of the date
hereof, Holder is an “accredited investor” as defined
in Rule 501 under the Securities Act. Holder is not a broker-dealer
registered under Section 15 of the Exchange Act. Holder is acting
alone in its determination as to whether to invest in the Notes.
Such Holder is not a party to any voting agreements or similar
arrangements with respect to the Notes. Except as expressly
disclosed in a Schedule 13D or Schedule 13G (or amendments thereto)
filed by Holder with the Securities and Exchange Commission with
respect to the beneficial ownership of the Company’s Common
Stock, Holder is not a member of a partnership, limited
partnership, syndicate, or other group for the purpose of
acquiring, holding, voting or disposing of the Notes. Each Holder
represents and warrants that it (i) is not and shall not become a
party to (A) any agreement, arrangement or understanding with, and
has not given any commitment or assurance to, any Person as to how
such Person, if serving as a director or if elected as a director
of the Company, shall act or vote on any issue or question (a
“Voting Commitment”) or (B) any Voting Commitment that
could limit or interfere with such Person’s ability to
comply, if serving as or elected as a director of the Company, with
such Person’s fiduciary duties under applicable law; (ii) is
not and shall not become a party to any agreement, arrangement or
understanding with any Person other than the corporation with
respect to any direct or indirect compensation, reimbursement or
indemnification in connection with service or action as a director
of the Company.





 




 








 








c.

Compliance with Laws. Holder
has complied, or will comply, with the reporting requirements of
the Securities Exchange Act of 1934, as amended, including, but not
limited to, Section 13 and 16 thereunder, arising from, or in
connection with, the transactions contemplated by this Amendment,
the Agreement and the Note.





 




N.

Full Force and Effect. All of
the provisions of the Note are ratified and confirmed except as
modified by this Amendment.





 




O.

Counterpart. This Amendment may
be executed in counterparts, each of which shall be deemed an
original but all of which together shall be deemed one original.
PDF or facsimile copies of manually executed signature pages to
this Amendment are fully binding and enforceable without the need
for delivery of the original manually executed signature
page.





 




P.

Governing Law. This Amendment
shall be governed by the laws of the state of Delaware, without
giving effect to conflict of law principles.





 




Q.

Independent Counsel. Each of
the Holder and the Company represents that it has had the
opportunity to consult with independent counsel concerning entry
into this Amendment, including, but not limited to, any potential
reporting requirements and trading restrictions under the
Securities Exchange Act of 1934, as amended (the
“Exchange
Act”), arising from or in connection with the
transactions contemplated by this Amendment and the Agreement
(including Sections 10, 13 and 16 of the Exchange
Act).





 




R.

Cooperation. Each party hereto
agrees to execute and deliver such additional documents and
instruments and to perform such additional acts as any party may
reasonably request or as may be reasonably necessary or appropriate
to effectuate, consummate and perform any other terms, provisions,
or conditions of this Amendment.





 



[Remainder of page intentionally left blank. Signature page
follows.]

 


 




 








 






IN
WITNESS WHEREOF, the parties hereto have caused this Amendment to
be duly executed by their respective authorized signatories as of
the Effective Date.

 

 


	

 

	
ROOT9B
HOLDINGS, INC.

	

 


	

 

	

 

	

 

	

 


	
 

	
By:  

	
/s/ 

	

 


	

 

	Name:	
 

	

 


	

 

	Title:	

 

	

 







 







[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

 


[SIGNATURE
PAGE FOR HOLDER FOLLOWS]

 


 




 








 






Agreed
to and accepted:


 


HOLDER:


 


By:


 



By:           








Name:


Its: