Document:

FS Investment Corporation II 8-K

EXHIBIT 10.1

THIRD AMENDMENT TO CREDIT AGREEMENT

THIS THIRD AMENDMENT
TO CREDIT AGREEMENT, dated as of May 13, 2016 (together with all exhibits and schedules hereto, this “Third Amendment”),
is entered into by and between DUNNING CREEK LLC, a Delaware limited liability company (the “Borrower”), and
DEUTSCHE BANK AG, NEW YORK BRANCH (“DBNY”) as Administrative Agent (in such capacity, the “Administrative
Agent”) and as a lender (DBNY and each other Lender party to the Credit Agreement from time to time, the “Lenders”
and each a “Lender”). Capitalized terms used herein and not otherwise defined herein have the meanings assigned
to such terms in the Credit Agreement described below.

RECITALS:

A.

The Borrower and
DBNY are parties to a Credit Agreement dated as of May 14, 2014 by and among the Borrower and DBNY, as Administrative Agent and
as a Lender, as amended pursuant to that (i) First Amendment to Credit Agreement dated as of June 4, 2014 and (ii) Second Amendment
to Credit Agreement dated as of May 14, 2015 (the credit agreement, as amended and amended and restated prior to the date hereof,
the “Credit Agreement” and, the Credit Agreement, as amended by this Third Amendment, the “Amended
Credit Agreement”).

B.

The parties hereto
desire, among other things, to (i) modify certain terms upon which the Lenders can terminate their Commitment prior to the Scheduled
Commitment Termination Date, (ii) extend the Scheduled Commitment Termination Date, (iii) provide for a commitment fee with respect
to unused Commitments, (iv) include certain terms with respect to a minimum utilization of the Commitments, and (v) amend certain
of the definitions in the Credit Agreement.

NOW, THEREFORE, for
good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto agree as follows:

Section 1.

Amendment of Credit
Agreement. Effective as of the Third Amendment Closing Date (as defined below), the Credit Agreement is hereby amended as follows:

(a)

Section
2.02 of the
Credit Agreement
is hereby
deleted and
replaced in
its entirety
with the following:

 

    	  

    	 

    

 

“(a)

Each Lender’s
commitment to make Loans hereunder shall automatically terminate, and the Maximum Commitment shall be reduced to zero, upon the
Commitment Termination Date. Subject to the terms and conditions set forth in Section 2.02(b) below, the Borrower may voluntarily,
from time to time, permanently reduce the amount of the Maximum Commitment upon at least ten (10) days’ prior written notice
to the Administrative Agent specifying the amount of such reduction (the “Commitment Reduction Amount”), which
notice shall be irrevocable once given and state the effective date for such reduction (the “Reduction Effective Date”);
provided that (i) no reduction may reduce the Maximum Commitment below $25,000,000 unless the Maximum Commitment is reduced to
zero; (ii) any partial reduction of the Maximum Commitment shall be in a minimum amount of $10,000,000 and in an integral multiple
of $1,000,000 for amounts in excess thereof; and (iii) no such reduction shall reduce the Maximum Commitment to an amount less
than the sum of the then aggregate outstanding Loans. The Administrative Agent shall promptly notify each Lender of the receipt
of any such notice and the pro rata reduction of such Lender’s Commitment.

(b)

Borrower may
reduce the Maximum Commitment in accordance with Section 2.02(a) in all respects on at least ten (10) days’ prior written
notice to the Administrative Agent if Borrower, concurrently with or prior to the effectiveness of any such reduction in the Maximum
Commitment, pays to the Administrative Agent, for the account of the Lenders, a fee equal to (x) to the extent the Maximum Commitment
is reduced to an amount not less than $75,000,000, the Commitment Fee that would have accrued on such portion of the Commitment
Reduction Amount from the proposed Reduction Effective Date through the Scheduled Commitment Termination Date (assuming no additional
borrowings hereunder with respect to the amount of such reduction following the proposed Reduction Effective Date) and (y)
to the extent the Maximum Commitment is reduced below $75,000,000, the Applicable Margin that would have accrued on such portion
of the Commitment Reduction Amount from the proposed Reduction Effective Date through the Scheduled Commitment Termination Date.”

(b)

Section
2.03(a) of the
Credit Agreement
is hereby
deleted and
replaced in
its entirety
with the following:

“(a)
Setup Fee.
The Borrower
shall pay
to DBNY
a Setup Fee
in an
amount and
at the time as
set forth in
the fee letter between
DBNY and the Borrower dated
as of May
13, 2016 (the
“May 2016 Fee
Letter”).
The Borrower agrees
that, once paid,
the fees
or any
part thereof payable
hereunder are irrevocable and non-refundable
under any circumstances. The May
2016 Fee Letter supersedes
all prior fee
letters, which remain valid
and enforceable until the
execution of the May 2016 Fee
Letter.”

(a)

Section 2.03 of the
Credit Agreement is hereby amended by adding the following Section 2.03(d) immediately following Section 2.03(c) thereof:

“(d)

Aggregate
Excess Unused Fee. The Borrower shall pay any applicable Aggregate Excess Unused Fee to the Administrative Agent, for account
of the Lenders, on each Payment Date and on the Commitment Termination Date.”

(c)

Section 2.04
of the Credit Agreement is hereby replaced in its entirety with the following:

 

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“Section
2.04. [Reserved].

(d)

Article 2 of
the Credit Agreement is hereby amended by adding the following new Section 2.05 thereto immediately following Section 2.04 thereof:

“Section
2.05 Illegality of Lending. If at any time during the term of this Agreement a Lender (the “Affected Lender”)
(a) receives a final, nonappealable order of an applicable court, tribunal or other administrative body of competent jurisdiction
or (b) an applicable Governmental Authority or otherwise determines pursuant to any applicable law or regulation or interpretative
guidance thereof that it is unlawful for the Affected Lender to perform its obligations as contemplated by this Agreement (a “Lending
Prohibition”): then (x) the Affected Lender shall promptly notify the Administrative Agent upon becoming aware of that
event (which notice shall include a reference to such Lending Prohibition and specify the applicable restrictions contained therein);
(y) to the extent required pursuant to the Lending Prohibition, upon Administrative Agent notifying the Borrower (which notice
shall include a reference to such Lending Prohibition and specify the applicable restrictions contained therein), the Commitment
of the Affected Lender will be immediately cancelled; and (z) to the extent that the Affected Lender’s interest, rights and
obligations under the credit facilities provided for herein have not been assigned and assumed by another Lender and solely to
the extent that the Obligations owed to such Affected Lender hereunder have been deemed prohibited, the Borrower shall repay such
Obligations deemed prohibited that are owing to the Affected Lender (notwithstanding anything to the contrary contained herein,
without any prepayment penalty, premium, breakage cost or other cost owed hereunder) solely to the extent required pursuant to
the Lending Prohibition within thirty (30) calendar days after the date of the Borrower’s receipt of such notice from Administrative
Agent or, if earlier, the date specified by the Affected Lender in the notice delivered to Administrative Agent and by the Administrative
Agent to the Borrower (being no earlier than the last day on which such payment may be made pursuant to the Lending Prohibition
after giving effect to any applicable grace period permitted thereunder). Notwithstanding anything to the contrary contained in
this Agreement (including, without limitation, any pro rata payment provision), any required prepayment pursuant to this Section
2.05 will solely be on account of the outstanding Obligations owed to the Affected Lender and no payment or prepayment shall be
required to be made to any other Lender, and the Commitments of the Lenders other than the Affected Lender shall be reallocated
in a manner acceptable to the Administrative Agent so that, after giving effect thereto, the Loans are held ratably by such Lenders
in accordance with the respective Commitments of such Lenders (after giving effect to such prepayment). For the avoidance of doubt
(but subject to the other terms and conditions contained herein), the Borrower may borrow additional Loans from the other Lenders
hereunder to make such prepayment.”

(e)

Section 9.03(a)
of the Credit Agreement is hereby deleted and replaced in its entirety with the following:

 

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“(a) Except
as otherwise expressly provided herein, all notices and other communications provided for hereunder shall be in writing (including
email or telecopier communication) and e-mailed, mailed, telecopied or delivered, if to the Borrower, the Administrative Agent
or any Lender, at its address specified on Schedule 1 or, at such other address as shall be designated by any party in a written
notice to the other parties hereto; provided however that the Administrative Agent or any Lender may request a hard copy of any
e-mailed notice or other communication to be sent to it at any specified address. Any notice or communication provided for hereunder
shall be deemed to have been given or made (i) as of the date so delivered, if delivered personally or by overnight courier; (ii)
on the date a transmission report confirming transmission is generated by the sender’s telecopy machine, if telecopied; (iii)
on the date sent, if e-mailed, so long as the sender does not receive a bounce-back message within a reasonable time after delivery;
and (iv) five (5) calendar days after mailing if sent by registered or certified mail (except that a notice of change of address
shall not be deemed to have been given until actually received by the addressee).”

(f)

The definitions
of “Applicable Margin,” “Commitment Fee,” “Maximum Commitment,” and “Scheduled Commitment
Termination Date” in Annex I to the Credit Agreement are hereby replaced in their entirety with the following:

““Applicable
Margin” means 1.70% per annum.”

““Commitment
Fee” means, for each day following the Third Amendment Closing Date, the Unused Amount as of such day multiplied by a
fraction, the numerator of which is, from and after the Third Amendment Closing Date, 0.75% and the denominator of which is 360.”

““Maximum
Commitment” means, (a) at any date of determination prior to the Commitment Termination Date, the lesser of (x) $150,000,000
or (y) such lesser amount remaining following any reduction of the Maximum Commitment in accordance with Section 2.02 (Voluntary
Reductions or Termination of the Maximum Commitment) or Section 2.05 (Illegality of Lending) and (b) on and after the
Commitment Termination Date, zero.”

““Scheduled
Commitment Termination Date” means May 14, 2017.”

(g)

The
 following  definitions 
are  hereby  added 
to  Annex
 I  to
 the  Credit
Agreement in the applicable alphabetical location:

““Aggregate
Excess Unused Fee” means, for any Interest Period, the sum of the Excess Unused Fee (if any) for each day during such
Interest Period.”

““Excess
Unused Amount” means, for any date of determination, an amount equal to the excess, if any, of (x) $75,000,000 less
(y) the aggregate principal amount of Loans outstanding on such date (including Loans made on such date and Loans to be made
pursuant to a Borrowing Request submitted by the Borrower or the Manager on or prior to such date).”

 

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““Excess
Unused Fee” means, for any day on which an Excess Unused Amount exists, 0.95% of the Excess Unused Amount for
such day multiplied by a fraction the numerator of which is 1 and the denominator of which is 360.”

““May
2016 Fee Letter” has the meaning set forth in Section 2.03(a).”

““Third
Amendment Closing Date” means May 13, 2016.”

(h)

The Commitment
of Deutsche Bank AG, New York Branch, as Lender, shall, from and after the Third Amendment Effective Date, be replaced with the
Commitment of DBNY set forth on its signature page hereto.

(i)

Schedule 1 of
the Credit Agreement is hereby replaced with Schedule 1 hereto.

Section 2.

Conditions Precedent.
It shall be a condition precedent to the effectiveness of Section 1 of this Third Amendment that each of the following conditions
is satisfied (the date on which such effectiveness occurs, the “Third Amendment Closing Date”):

(a)

Agreements.
The Administrative Agent shall have received executed counterparts of this Third Amendment and the May 2016 Fee Letter duly executed
and delivered by an Authorized Representative of the Borrower.

(b)

Evidence of Authority.
The Administrative Agent shall have received:

(1)

a certificate of an
Authorized Representative of the Borrower and a Responsible Officer (which could be the same person as the Authorized Representative),
dated the Third Amendment Closing Date, as to:

(i)

the authority of
the Borrower to execute and deliver this Third Amendment and to perform its obligations under the Amended Credit Agreement, the
Notes, and each other Credit Document executed by it, in each case as amended by this Third Amendment and each other instrument,
agreement or other document to be executed in connection with the transactions contemplated in connection herewith and therewith;

(ii)

the absence of any
changes in the Organic Documents of the Borrower since the copies delivered in connection with the closing of the Credit Agreement;
and

(2)

such other instruments,
agreements or other documents (certified if requested) as the Administrative Agent may reasonably request.

 

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(c)

Officer’s
Certificate. The Administrative Agent shall have received a certificate (which may be the same certificate as reference in
Section 2(b)(i) above) of an Authorized Representative of the Borrower and a Responsible Officer (which could be the same
person as the Authorized Representative), in each case on behalf of the Borrower dated as of the Third Amendment Closing Date,
in form and substance reasonably satisfactory to the Administrative Agent (which shall be deemed to have been given under the Credit
Agreement), to the effect that, as of such date:

(1)

all conditions set
forth in this Section 2 (CONDITIONS PRECEDENT) have been fulfilled;

(2)

all representations
and warranties of the Borrower set forth in Article 5 of the Credit Agreement (REPRESENTATIONS AND WARRANTIES) are true and
correct in all material respects as if made on the Third Amendment Closing Date (unless expressly made as of a certain date, in
which case it shall be true and correct in all material respects as of such date);

(3)

all representations
and warranties set forth in each of the Collateral Documents are true and correct in all material respects as if made on the Third
Amendment Closing Date (unless expressly made as of a certain date, in which case it shall be true and correct in all material
respects as of such date); and

(4)

no Default or Event
of Default shall be continuing.

(d)

Opinion of Counsel.
The Administrative Agent shall have received a legal opinion from Dechert LLP, counsel to the Borrower, the Manager and FSIC II
Advisor, in form and substance reasonably satisfactory to the Administrative Agent covering such matters as the Administrative
Agent may reasonably request.

(e)

Manager Letter.
The Administrative Agent shall have received from the Manager a letter in the form of Exhibit A hereto addressed to
the Administrative Agent reaffirming all of its obligations under the Manager Letter entered into in connection with the Credit
Agreement.

(f)

Equity Owner Letter.
The Administrative Agent shall have received from the Equity Owner a letter in the form of Exhibit B hereto addressed
to the Administrative Agent reaffirming all of its obligations under the Equity Owner Letter entered into in connection with the
Credit Agreement.

(g)

FSIC II Advisor
Letter. The Administrative Agent shall have received from FSIC II Advisor a letter in the form of Exhibit C hereto
addressed to the Administrative Agent reaffirming all of its obligations under the FSIC II Advisor Letter entered into in connection
with the Credit Agreement.

(h)

Closing Fees,
Expenses, etc. The Administrative Agent shall have received for its own account, or for the account of the Lenders, as the
case may be, all fees, costs and expenses (x) then due and payable to it under the Credit Agreement and the May 2016 Fee Letter
and (y) incurred in connection with negotiating and documenting this Third Amendment; it being understood that payment of fees
under the 2016 Fee Letter shall not count toward utilization of the limit set forth in clause (x) of the definition of “Administrative
Expenses” or toward utilization of any other limit, cap or basket set forth in any Credit Document.

 

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(i)

After giving effect
to Section 1 of this Third Amendment and any requested Borrowing on the Third Amendment Closing Date, (1) the aggregate
principal amount of all Loans outstanding will not exceed the Maximum Commitment and (2) the Overcollateralization Test is
satisfied.

(j)

Satisfactory Legal
Form. All limited liability company and other actions or proceedings taken or required to be taken in connection with the transactions
contemplated hereby and all agreements, instruments, documents and opinions of counsel executed, submitted, or delivered pursuant
to or in connection with this Third Amendment by or on behalf of the Borrower shall be reasonably satisfactory in form and substance
to the Administrative Agent and its counsel; all certificates and opinions delivered pursuant to this Third Amendment shall be
addressed to the Administrative Agent and the Lenders, or the Administrative Agent and the Lenders shall be expressly entitled
to rely thereon; the Administrative Agent and its counsel shall have received all information, and such number of counterpart originals
or such certified or other copies of such information, as the Administrative Agent or its counsel may reasonably request; and all
legal matters incident to the transactions contemplated by this Third Amendment shall be reasonably satisfactory to counsel to
the Administrative Agent.

Section 3.

Miscellaneous.

(a)

GOVERNING LAW.
THIS THIRD AMENDMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK INCLUDING SECTIONS 5-1401
AND 5-1402 OF THE GENERAL OBLIGATIONS LAW OF THE STATE OF NEW YORK WITHOUT REGARD TO CONFLICT OF LAW PRINCIPLES.

(b)

Amendments, Etc.
None of the terms of this Third Amendment may be changed, waived, discharged or terminated unless such change, waiver, discharge
or termination is in writing signed by the Borrower and the Administrative Agent (or other applicable party thereto as the case
may be), and each such waiver or consent shall be effective only in the specific instance and for the specific purpose for which
given.

(c)

Severability.
If any one or more of the covenants, agreements, provisions or terms of this Third Amendment shall be for any reason whatsoever
held invalid, then such covenants, agreements, provisions or terms shall be deemed severable from the remaining covenants, agreements,
provisions or terms of this Third Amendment and shall in no way affect the validity or enforceability of the other provisions of
this Third Amendment.

(d)

Counterparts.
This Third Amendment may be executed by the parties hereto in separate counterparts, each of which when so executed and delivered
shall be an original, but all such counterparts shall together constitute one and the same instrument.

 

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(e)

Successors and
Assigns. All covenants and agreements contained herein shall be binding upon, and inure to the benefit of the parties hereto
and their respective successors and permitted assigns.

(f)

Captions.
The captions and section headings appearing herein are included solely for convenience of reference and are not intended to affect
the interpretation of any provision of this Third Amendment.

(g)

Entire Agreement.
This Third Amendment constitutes a final and complete integration of all prior expressions by the parties hereto with respect to
the subject matter hereof and shall (together with the Amended Credit Agreement and the other Credit Documents) constitute the
entire agreement among the parties hereto with respect to the subject matter hereof, superseding all previous oral statements and
other writings with respect thereto.

[Signature pages follow]

 

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IN WITNESS WHEREOF,
the parties hereto have caused this Third Amendment to be duly executed and delivered as of the day and year first above written.

	 	BORROWER
	 	 
	 	DUNNING CREEK LLC,
	 	as Borrower
	 	 	 
	 	 	 
	 	By:	/s/ Gerald F. Stahlecker
	 	 	Name: Gerald F. Stahlecker
	 	 	Title: Executive Vice President

 

 

    	[Signature Page to Third Amendment]

    	 

    

 

	 	ADMINISTRATIVE AGENT:
	 	 
	 	DEUTSCHE BANK AG, NEW YORK

BRANCH as Administrative Agent
	 	 
	 	 
	 	By:	/s/ Ian R. Jackson
	 	 	Name: Ian R. Jackson
	 	 	Title: Director
	 	 	 
	 	 	 
	 	By:	/s/ Miller Brownstein
	 	 	Name: Miller Brownstein
	 	 	Title: Director

 

    	[Signature Page to Third Amendment]

    	 

    

 

	 	DEUTSCHE BANK AG, NEW YORK

BRANCH, as Lender
	 	 
	 	 
	 	By:	/s/ Ian R. Jackson
	 	 	Name: Ian R. Jackson
	 	 	Title: Director
	 	 	 
	 	 	 
	 	By:	/s/ Miller Brownstein
	 	 	Name: Miller Brownstein
	 	 	Title: Director 

 

 

The Commitment of Deutsche Bank AG, New York Branch, as Lender
is as follows:

	Amount of Commitment	Percentage
	$150,000,000	100%ex10-1.htm

Exhibit 10.1

 

EXCHANGE AGREEMENT

THIS EXCHANGE AGREEMENT (the “Agreement”), dated as of _____________, is made by and between Orbital Tracking Corporation, a Delaware corporation (“Company”), and the holder of the Notes (as defined below) signatory hereto (“Holder”).

WHEREAS, pursuant to that certain Note Purchase Agreement (the “Agreement”), dated as of December 28, 2015, by and between the Company and the Holder, whereby, among other things, the Holder purchased from the notes (the “Notes”) with each Note convertible into shares of the Company’s common stock, par value $0.0001 per share (the “Common Stock”);

WHEREAS, as of the date hereof, the Holder holds Notes in the principal amounts as set forth on Schedule A hereto (such Notes, the “Exchange Securities”);

WHEREAS, the Company has authorized a new series of convertible preferred stock of the Company designated as Series G Convertible Preferred Stock, $0.0001 par value, the terms of which are set forth in the Certificate of Designation of Preferences, Rights and Limitations of Series G Convertible Preferred Stock (the “Certificate of Designations”) in the form attached hereto as Exhibit A (together with any convertible preferred shares issued in replacement thereof in accordance with the terms thereof, the “Preferred Stock”), which Preferred Stock shall be convertible into the Company’s Common Stock, in accordance with the terms of the Certificate of Designations;

WHEREAS, subject to the terms and conditions set forth in this Agreement and pursuant to Section 3(a)(9) of the Securities Act of 1933, as amended (the “Securities Act”), the Company desires to exchange with the Holder, and the Holder desires to exchange with the Company, the Exchange Securities for shares of Preferred Stock.

NOW, THEREFORE, IN CONSIDERATION of the mutual covenants contained in this Agreement, and for other good and valuable consideration the receipt and adequacy of which are hereby acknowledged, the Company and Holder agree as follows:

1.             Terms of the Exchange. The Company and Holder agree that the Holder will exchange the Exchange Securities and will relinquish any and all other rights he may have under the Exchange Securities in exchange for such number of shares of Preferred Stock (the “Preferred Shares”, and such Preferred Shares as converted into Common Stock, the “Conversion Shares”, and together with the Conversion Shares, the “Securities”) as set forth on Schedule A, annexed hereto.

2.            Closing. Upon satisfaction of the conditions set forth herein, a closing shall occur at the principal offices of the Company, or such other location as the parties shall mutually agree. At closing, Holder shall deliver the Exchange Securities to the Company and the Company shall deliver to such Holder a certificate evidencing the Preferred Shares, in the name(s) and amount(s) as indicated on Schedule A annexed hereto.  Upon closing, any and all obligations of the Company to Holder under the Exchange Securities shall be fully satisfied, the Notes shall be cancelled and Holder will have no remaining rights, powers, privileges, remedies or interests under the Exchange Securities.  

 

3.           Further Assurances.  Each party shall do and perform, or cause to be done and performed, all such further acts and things, and shall execute and deliver all such other agreements, certificates, instruments and documents, as any other party may reasonably request in order to carry out the intent and accomplish the purposes of this Agreement and the consummation of the transactions contemplated hereby.

 

4.             Representations and Warranties of the Holder. The Holder represents and warrants as of the date hereof and as of the closing to the Company as follows:

  

  

  

 

a.           Authorization; Enforcement. The Holder has the requisite corporate power and authority to enter into and to consummate the transactions contemplated by this Agreement and otherwise to carry out its obligations hereunder and thereunder.  The execution and delivery of this Agreement by the Holder and the consummation by it of the transactions contemplated hereby and thereby have been duly authorized by all necessary action on the part of the Holder and no further action is required by the Holder.  This Agreement has been (or upon delivery will have been) duly executed by the Holder and, when delivered in accordance with the terms hereof, will constitute the valid and binding obligation of the Holder enforceable against the Holder 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.             Tax Advisors. The Holder has reviewed with its own tax advisors the U.S. federal, state, local and foreign tax consequences of this investment and the transactions contemplated by this Agreement. With respect to such matters, the Holder relies solely on such advisors and not on any statements or representations of the Company or any of its agents, written or oral. The Holder understands that it (and not the Company) shall be responsible for its own tax liability that may arise as a result of this investment or the transactions contemplated by this Agreement.

 

c.            Information Regarding Holder.  Holder is an “accredited investor”, as such term is defined in Rule 501 of Regulation D promulgated by the United States Securities and Exchange Commission (the “Commission”)  under the Securities Act, is experienced in investments and business matters, has made investments of a speculative nature and has purchased securities of companies in private placements in the past and, with its representatives, has such knowledge and experience in financial, tax and other business matters as to enable the Holder to utilize the information made available by the Company to evaluate the merits and risks of and to make an informed investment decision with respect to the proposed purchase, which represents a speculative investment.  Holder has the authority and is duly and legally qualified to purchase and own the Securities.  Holder is able to bear the risk of such investment for an indefinite period and to afford a complete loss thereof.  Holder has reviewed the SEC Documents (as defined below) and has had the opportunity to ask questions of the Company and its management.

 

d.           Legend.   The Holder understands that the Securities have been issued (or will be issued in the case of the Conversion Shares) pursuant to an exemption from registration or qualification under the Securities Act and applicable state securities laws, and except as set forth below, the Securities shall bear any legend as required by the “blue sky” laws of any state and a restrictive legend in substantially the following form (and a stop-transfer order may be placed against transfer of such stock certificates):

 

[NEITHER THE ISSUANCE AND SALE OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE CONVERTIBLE HAVE BEEN][THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN] REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS.  THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR (B) AN OPINION OF COUNSEL TO THE HOLDER (IF REQUESTED BY THE COMPANY), IN A FORM REASONABLY ACCEPTABLE TO THE COMPANY, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR (II) UNLESS SOLD OR ELIGIBLE TO BE SOLD PURSUANT TO RULE 144 OR RULE 144A UNDER SAID ACT.  NOTWITHSTANDING THE FOREGOING, THE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED BY THE SECURITIES.

  

  

  

 

e.           Removal of Legends.   Certificates evidencing Securities shall not be required to contain the legend set forth in Section 4(d) above or any other legend (i) while a registration statement covering the resale of such Securities is effective under the Securities Act, (ii) following any sale of such Securities pursuant to Rule 144 (assuming the transferor is not an affiliate of the Company), (iii) if such Securities are eligible to be sold, assigned or transferred under Rule 144 and the Subscriber is not an affiliate of the Company (provided that the Holder provides the Company with reasonable assurances that such Securities are eligible for sale, assignment or transfer under Rule 144 which shall not include an opinion of the Holder’s counsel), (iv) in connection with a sale, assignment or other transfer (other than under Rule 144), provided that the Holder provides the Company with an opinion of counsel to the Holder, in a generally acceptable form, to the effect that such sale, assignment or transfer of the Securities may be made without registration under the applicable requirements of the Securities Act or (v) if such legend is not required under applicable requirements of the Securities Act (including, without limitation, controlling judicial interpretations and pronouncements issued by the SEC).  If a legend is not required pursuant to the foregoing, the Company shall no later than three (3) business days following the delivery by the Holder to the Company or the transfer agent (with notice to the Company) of a legended certificate representing such Securities (endorsed or with stock powers attached, signatures guaranteed, and otherwise in form necessary to affect the reissuance and/or transfer, if applicable), together with any other deliveries from the Holder as may be required above in this Section 4(e), as directed by the Holder, either:  (A) provided that the Company’s transfer agent is participating in the DTC Fast Automated Securities Transfer Program and such Securities are Shares or Conversion Shares, credit the aggregate number of shares of Common Stock to which the Holder shall be entitled to the Holder’s or its designee’s balance account with DTC through its Deposit/Withdrawal at Custodian system or (B) if the Company’s transfer agent is not participating in the DTC Fast Automated Securities Transfer Program, issue and deliver (via reputable overnight courier) to the Holder, a certificate representing such Securities that is free from all restrictive and other legends, registered in the name of the Holder or its designee.  The Company shall be responsible for any transfer agent fees or DTC fees with respect to any issuance of Securities or the removal of any legends with respect to any Securities in accordance herewith, including, but not limited to, fees for the opinions of counsel rendered to the transfer agent in connection with the removal of any legends.

 

f.           Restricted Securities.   The Holder understands that: (i) the Securities have not been and are not being registered under the Securities Act or any state securities laws, and may not be offered for sale, sold, assigned or transferred unless (A) subsequently registered thereunder, (B) the Holder shall have delivered to the Company (if requested by the Company) an opinion of counsel to the Holder, in a form reasonably acceptable to the Company, to the effect that such Securities to be sold, assigned or transferred may be sold, assigned or transferred pursuant to an exemption from such registration, or (C) the Holder provides the Company with reasonable assurance that such Securities can be sold, assigned or transferred pursuant to Rule 144 or Rule 144A promulgated under the Securities Act (or a successor rule thereto) (collectively, “Rule 144”); (ii) any sale of the Securities made in reliance on Rule 144 may be made only in accordance with the terms of Rule 144, and further, if Rule 144 is not applicable, any resale of the Securities under circumstances in which the seller (or the Person through whom the sale is made) may be deemed to be an underwriter (as that term is defined in the Securities Act) may require compliance with some other exemption under the Securities Act or the rules and regulations of the SEC promulgated thereunder; and (iii) neither the Company nor any other Person is under any obligation to register the Securities under the Securities Act or any state securities laws or to comply with the terms and conditions of any exemption thereunder.

 

g.           Ownership of the Subject Notes. Such Holder is, and at all times since December 28, 2015 has been, the beneficial owner of all of its Notes, free and clear of any adverse claim, mortgage, pledge, lien, encumbrance, option, charge or other security interest that would prevent Holder’s compliance with its obligations hereunder.   Holder has the sole right and power to vote and dispose of the Notes, and none of Holders Notes is subject to any voting trust or other agreement, arrangement or restriction with respect to the voting or transfer of any of the Notes, except for this Agreement.

 

5.            Representations and Warranties of the Company. The Company hereby makes the following representations and warranties to the Holder:

 

  

  

  

 

a.           Authorization; Enforcement. The Company has the requisite corporate power and authority to enter into and to consummate the transactions contemplated by this Agreement and each of the other agreements entered into by the parties hereto in connection with the transactions contemplated by this Agreement (collectively, the “Exchange Documents”) and otherwise to carry out its obligations hereunder and thereunder.  The execution and delivery of this Agreement by the Company and the consummation by it of the transactions contemplated hereby and thereby have been duly authorized by all necessary action on the part of the Company and no further action is required by the Company, the Board of Directors of the Company or the Company’s stockholders in connection therewith, including, without limitation, the issuance of the Preferred Shares, and the reservation for issuance and issuance of Conversion Shares issuable upon conversion of the Preferred Shares have been duly authorized by the Company's Board of Directors and no further filing, consent, or authorization is required by the Company, its Board of Directors or its stockholders.  This Agreement and any Other Agreement (as defined herein) have been (or upon delivery will have been) duly executed by the Company and, when delivered in accordance with the terms hereof, will constitute the 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.

 

b.           Organization and Qualification.  Each of the Company and its subsidiaries (the “Subsidiaries”) are entities duly organized and validly existing and in good standing under the laws of the jurisdiction in which they are formed, and have the requisite power and authorization to own their properties and to carry on their business as now being conducted and as presently proposed to be conducted.  Each of the Company and each of its Subsidiaries is duly qualified as a foreign entity to do business and is in good standing in every jurisdiction in which its ownership of property or the nature of the business conducted by it makes such qualification necessary, except to the extent that the failure to be so qualified or be in good standing would not have a Material Adverse Effect.  As used in this Agreement, “Material Adverse Effect” means any material adverse effect on (i) the business, properties, assets, liabilities, operations (including results thereof), condition (financial or otherwise) or prospects of the Company or any Subsidiary, individually or taken as a whole, (ii) the transactions contemplated hereby or in any of the other Exchange Documents or (iii) the authority or ability of the Company to perform any of its obligations under any of the Exchange Documents. Other than its Subsidiaries, there is no Person (as defined below) in which the Company, directly or indirectly, owns capital stock or holds an equity or similar interest.  “Person” means an individual, a limited liability company, a partnership, a joint venture, a corporation, a trust, an unincorporated organization, any other entity and any governmental entity or any department or agency thereof.

 

 c.           No Conflict.  The execution, delivery and performance of the Exchange Documents by the Company and the consummation by the Company of the transactions contemplated hereby and thereby (including, without limitation, the issuance of the Preferred Shares and reservation for issuance and issuance of the Conversion Shares) will not (i) (i) result in a violation of the Certificate of Incorporation (as defined below) or other organizational documents of the Company or any of its Subsidiaries, any capital stock of the Company or any of its Subsidiaries or Bylaws (as defined below) of the Company or any of its Subsidiaries, (ii) conflict with, or constitute a default (or an event which with notice or lapse of time or both would become a default) under, or give to others any rights of termination, amendment, acceleration or cancellation of, any agreement, indenture or instrument to which the Company or any of its Subsidiaries is a party, or (iii) result in a violation of any law, rule, regulation, order, judgment or decree (including foreign, federal and state securities laws and regulations and the rules and regulations of the OTC Markets (the “Principal Market”) applicable to the Company or any of its Subsidiaries or by which any property or asset of the Company or any of its Subsidiaries is bound or affected except, in the case of clause (ii) or (iii) above, to the extent such violations that could not reasonably be expected to have a Material Adverse Effect.

  

  

  

 

d.           No Consents.  Neither the Company nor any Subsidiary is required to obtain any consent from, authorization or order of, or make any filing or registration with, any court, governmental agency or any regulatory or self-regulatory agency or any other Person in order for it to execute, deliver or perform any of its respective obligations under or contemplated by the Exchange Documents, in each case, in accordance with the terms hereof or thereof. All consents, authorizations, orders, filings and registrations which the Company or any Subsidiary is required to obtain pursuant to the preceding sentence have been obtained or effected on or prior to the date of this Agreement, and neither the Company nor any of its Subsidiaries is aware of any facts or circumstances which might prevent the Company or any of its Subsidiaries from obtaining or effecting any of the registration, application or filings contemplated by the Exchange Documents.  The Company is not in violation of the requirements of the Principal Market and has no knowledge of any facts or circumstances which could reasonably lead to delisting or suspension of the Common Stock in the foreseeable future.

 

e.           Securities Law Exemptions.  Assuming the accuracy of the representations and warranties of the Holder contained herein, the offer and issuance by the Company of the Securities is exempt from registration under the Securities Act.  The offer and issuance of the Securities is exempt from registration under the Securities Act pursuant to the exemption provided by Section 3(a)(9) thereof.  The Company covenants and represents to the Holder that neither the Company nor any of its Subsidiaries has received, anticipates receiving, has any agreement to receive or has been given any promise to receive any consideration from the Holder or any other Person in connection with the transactions contemplated by the Exchange Documents.

 

 f.           Issuance of Securities.  The issuance of the Preferred Shares is duly authorized and upon issuance in accordance with the terms of the Exchange Documents shall be validly issued, fully paid and non-assessable and free from all taxes, liens, charges and other encumbrances with respect to the issue thereof.  Upon issuance or conversion in accordance with the Certificate of Designations, the Conversion Shares, when issued, will be validly issued, fully paid and nonassessable and free from all preemptive or similar rights, taxes, liens, charges and other encumbrances with respect to the issue thereof, with the holders being entitled to all rights accorded to a holder of Common Stock.

 

g.           Transfer Taxes.  As of the date of this Agreement, all share transfer or other taxes (other than income or similar taxes) which are required to be paid in connection with the issuance of the Preferred Shares to be exchanged with the Holder hereunder will be, or will have been, fully paid or provided for by the Company, and all laws imposing such taxes will be or will have been complied with.

 

 h.           Equity Capitalization.   Neither the Company nor any of its Subsidiaries have any liabilities or obligations required to be disclosed in the in the Company’s filings with the SEC (the “SEC Documents”) which are not so disclosed in the SEC Documents, other than those incurred in the ordinary course of the Company’s or its Subsidiaries’ respective businesses and which, individually or in the aggregate, do not or could not have a Material Adverse Effect. The Company has furnished to the Holder true, correct and complete copies of the Company’s Certificate of Incorporation, as amended and as in effect on the date hereof (the “Certificate of Incorporation”), and the Company’s bylaws, as amended and as in effect on the date hereof (the “Bylaws”), and the terms of all securities convertible into, or exercisable or exchangeable for, shares of Common Stock and the material rights of the holders thereof in respect thereto that have not been disclosed in the SEC Documents.

 

            6.           Additional Acknowledgments.  The Holder and the Company confirm that the Company has not received any consideration for the transactions contemplated by this Agreement.  Pursuant to Rule 144 promulgated by the Commission pursuant to the Securities Act and the rules and regulations promulgated thereunder as such Rule 144 may be amended from time to time, or any similar rule or regulation hereafter adopted by the Commission having substantially the same effect as such Rule 144, the holding period of the  Shares and the Preferred Shares (including the Conversion Shares upon conversion of the Preferred Shares) tacks back to December 17, 2014, the issue date of the Exchange Securities.  The Company agrees not to take a position contrary to this paragraph.

  

  

  

 

7.            Release by the Holder.

 

In consideration of the foregoing, Holder releases and discharges Company, Company’s officers, directors, principals, control persons, past and present employees, insurers, successors, and assigns (“Company Parties”) from all actions, cause of action, suits, debts, dues, sums of money, accounts, reckonings, bonds, bills, specialties, covenants, contracts, controversies, agreements, promises, variances, trespasses, damages, judgments, extents, executions, claims, and demands whatsoever, in law, admiralty or equity, which against Company Parties ever had, now have or hereafter can, shall or may, have for, upon, or by reason of any matter, cause or thing whatsoever, whether or not known or unknown, arising under the Exchange Securities.  It being understood that this Section shall be limited in all respects to only matters arising under or related to the Exchange Securities and shall under no circumstances constitute a release, waiver or discharge with respect to the Securities, the Agreement, or any Exchange Documents or limit the Holder from taking action for matters with respect to the Securities, the Agreement or any Exchange Document or events that may arise in the future.

 

 

	
8.  

	
Miscellaneous.

 

a.   Successors and Assigns.  This Agreement shall be binding upon and inure to the benefit of the parties and their respective successors and assigns.

 

b.   Governing Law; Jurisdiction; Waiver of Jury Trial.  This Agreement shall be governed by and construed under the laws of the State of New York without regard to the choice of law principles thereof. Each party hereby irrevocably submits to the exclusive jurisdiction of the state and federal courts sitting in the State of New York located in The City of New York, Borough of Manhattan for the adjudication of any dispute hereunder or in connection herewith or therewith or with any transaction contemplated hereby or thereby, and hereby irrevocably waives any objection that such suit, action or proceeding is brought in an inconvenient forum or that the venue of such suit, action or proceeding is improper.  Nothing contained herein shall be deemed to limit in any way any right to serve process in any manner permitted by law.  EACH PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION WITH OR ARISING OUT OF THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY.

 

 c.   Severability.  If any provision of this Agreement shall be invalid or unenforceable in any jurisdiction, such invalidity or unenforceability shall not affect the validity or enforceability of the remainder of this Agreement in that jurisdiction or the validity or enforceability of any provision of this Agreement in any other jurisdiction.

 

 d.   Counterparts/Execution.  This Agreement may be executed in two or more identical counterparts, all of which shall be considered one and the same agreement and shall become effective when counterparts have been signed by each party and delivered to the other party. In the event that any signature is delivered by facsimile transmission or by an e-mail which contains an electronic file of an executed signature page, such signature page shall create a valid and binding obligation of the party executing (or on whose behalf such signature is executed) with the same force and effect as if such facsimile or electronic file signature page (as the case may be) were an original thereof.

  

  

  

 

e.   Notices.  Any notice or communication permitted or required hereunder shall be in writing and shall be deemed sufficiently given if hand-delivered or sent (i) postage prepaid by registered mail, return receipt requested, or (ii) by facsimile, to the respective parties as set forth below, or to such other address as either party may notify the other in writing.

 

	  	
If to the Company, to:

 

 

Attention:  

	
Orbital Tracking Corp.

18851 NE 29th Avenue, Suite 700

Aventura, FL 33180

Chief Executive Officer

 

	 	If to Holder, to the address set forth on the signature page of the Holder

 

                    f.   Expenses.  The parties hereto shall pay their own costs and expenses in connection herewith.

 

 g.   Entire Agreement; Amendments.  This Agreement constitutes the entire agreement between the parties with regard to the subject matter hereof and thereof, superseding all prior agreements or understandings, whether written or oral, between or among the parties.  This Agreement may be amended, modified, superseded, cancelled, renewed or extended, and the terms and conditions hereof may be waived, only by a written instrument signed by all parties, or, in the case of a waiver, by the party waiving compliance.  Except as expressly stated herein, no delay on the part of any party in exercising any right, power or privilege hereunder shall operate as a waiver thereof, nor shall any waiver on the part of any party of any right, power or privilege hereunder preclude any other or future exercise of any other right, power or privilege hereunder.

 

h.   Headings.  The headings used in this Agreement are used for convenience only and are not to be considered in construing or interpreting this Agreement.

 

i.   Independent Nature of the Holder’s Obligations and Rights.  The obligations of the Holder under the Exchange Documents are several and not joint with the obligations of any other holder of Notes (each, an “Other Holder”) under any other agreement to exchange Notes (each, an “Other Agreement”), and the Holder shall not be responsible in any way for the performance of the obligations of any Other Holders under any Other Agreement. Nothing contained herein or in any Other Agreement, and no action taken by the Holder pursuant hereto or any Other Holder pursuant to any Other Agreement, shall be deemed to constitute the Holder or any Other Holder as, and the Company acknowledges that the Holder and the Other Holders do not so constitute, a partnership, an association, a joint venture or any other kind of group or entity, or create a presumption that the Holder and any Other Holder are in any way acting in concert or as a group or entity with respect to such obligations or the transactions contemplated by the Exchange Documents, any other agreement or any matters, and the Company acknowledges that the Holder and the Other Holders are not acting in concert or as a group or entity, and the Company shall not assert any such claim, with respect to such obligations or the transactions contemplated by the Exchange Documents and any Other Agreement. The decision of the Holder to acquire the Securities pursuant to the Exchange Documents has been made by the Holder independently of any Other Holder. The Holder acknowledges that no Other Holder has acted as agent for the Holder in connection with the Holder making its acquisition hereunder and that no Other Holder will be acting as agent of the Holder in connection with monitoring the Holder’s Securities or enforcing its rights under the Exchange Documents.  The Company and the Holder confirm that the Holder has independently participated with the Company in the negotiation of the transaction contemplated hereby with the advice of its own counsel and advisors. The Holder shall be entitled to independently protect and enforce its rights, including, without limitation, the rights arising out of this Agreement or out of any of the Other Agreements, and it shall not be necessary for any Other Holder to be joined as an additional party in any proceeding for such purpose. To the extent that any of the Other Holders and the Company enter into the same or similar documents, all such matters are solely in the control of the Company, not the action or decision of the Holder, and would be solely for the convenience of the Company and not because it was required or requested to do so by the Holder or any Other Holder.  For clarification purposes only and without implication that the contrary would otherwise be true, the transactions contemplated by the Exchange Documents include only the transaction between the Company and the Holder and do not include any other transaction between the Company and any Other Holder.

  

  

  

 

j.    Most Favored Nation.  Other than in connection with (i) full or partial consideration in connection with a strategic merger, acquisition, consolidation or purchase of substantially all of the securities or assets of a corporation or other entity, (ii) the Company’s issuance of securities in connection with strategic license agreements and other partnering arrangements so long as such issuances are not primarily for the purpose of raising capital, (iii) issuance of securities in connection with the acquisition of assets or transactions related to the Company’s business as conducted on the date hereof, (iv) the Company’s issuance of Common Stock or the issuances or grants of options to purchase Common Stock to employees, directors, and consultants, pursuant to plans that have been approved by a majority of the stockholders and a majority of the independent members of the board of directors of the Company or in existence as such plans are constituted on the date of this Agreement, (v) the Company’s issuance of securities upon the exercise or exchange of or conversion of any securities exercisable or exchangeable for or convertible into shares of Common Stock issued and outstanding on the date of this Agreement on the terms in effect on the Closing Date,  (vi) an issuance by the Company of securities resulting from the conversion of the Preferred Shares issued pursuant to this Agreement, (vii) the Company’s issuance of Common Stock or the issuances or grants of options to purchase Common Stock to consultants and service providers, and (viii) any and all securities required to be assumed by the Company by the terms thereof as a result of any of the foregoing (collectively, the foregoing (i) through (viii) are “Exempt Issuances”), if at any time during the period beginning on the date hereof and ending December 28, 2016, the Company shall  issue any Common Stock or securities convertible into or exercisable for shares of Common Stock (or modify any of the foregoing  which may be outstanding) to any person or entity at a price per share or conversion or exercise price per share which shall be less than $0.05 per share, being the conversion price of the Preferred Shares hereunder, or as in effect at such time (the “Lower Price Issuance”), then the Company shall issue such additional number of shares of Common Stock or preferred stock convertible into Common Stock such that the Holder shall hold that number of Conversion Shares, in total, had such Holder purchased the Preferred Shares with a conversion price equal to the Lower Price Issuance.  Common Stock issued or issuable by the Company for no consideration or for consideration that cannot be determined at the time of issue will be deemed issuable or to have been issued for $0.0001 per share of Common Stock.  The rights of Holders set forth in this Section 8(j) are in addition to any other rights the Holders have pursuant to this Agreement, or any other agreement referred to or entered into in connection herewith or to which Holders and Company are parties.  Notwithstanding anything herein or in any other agreement to the contrary, the Company shall only be required to make a single adjustment with respect to any Lower Price Issuance, regardless of the existence of multiple bases therefore.

 

 

 

(Signature Pages Follow)

 

  

  

  

 

 

IN WITNESS WHEREOF, the parties have caused this Agreement to be duly executed as of the day and year first above written.

 

 

ORBITAL TRACKING CORP.

 

By:                                                               

 

Name: David Phipps

Title:   Chief Executive Officer

 

 

 

 

HOLDER:                                                                  

 

By:                                                                

 

 

 

	  	
Address for Notices:

	  	
_________________________________________

	  	 

	  	
_________________________________________

	  	
 

_________________________________________

	  	
_________________________________________

	  	
 

Address for delivery of Securities:

	  	
 

_________________________________________

	  	
_________________________________________

	  	
 

_________________________________________

	  	
_________________________________________

 

  

  

  

 

SCHEDULE A

 

	
 

 

 

 

 

Name and Address

of Holder

	 	
  

 

 

Principal Amount of Note to be Cancelled

	 	 	
  

 

Number of Shares of Series G Preferred Stock to be Issued

	 	 	
  

Number of Shares of Common Stock Issuable Upon Conversion of the Series G Preferred Stock

	 
	 	 	 	 	 	 	 	 	 	 	 	 	 
	
Michael Brauser

440 Biscayne Blvd. #850

Miami, FL  33137-3212

	 	$	99,305.76 	 	 	 	 1,986,116 	 	 	 	 1,986,116 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 
	
GRQ Consultants Inc. 401K

555 South Federal Highway Suite 450

Boca Raton, FL  33432-5547

	 	$	99,305.76	 	 	 	1,986,116	 	 	 	1,986,116	 
	  	 	 	 	 	 	 	 	 	 	 	 	 
	  	 	 	 	 	 	 	 	 	 	 	 	 
	
Intracoastal Capital LLC

245 Palm Trail

Del Ray, FL  33483

	 	$	305,555.96	 	 	 	  6,111,119	 	 	 	  6,111,119

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