Document:

f10q0313ex10ii_strayer.htm

Exhibit 10.2

 

EMPLOYMENT AGREEMENT

 

THIS EMPLOYMENT AGREEMENT (this “Agreement”) is made and entered into as of May 2, 2013 (the “Effective Date”), by and between STRAYER EDUCATION, INC., a Maryland corporation (the “Company”), and KARL MCDONNELL (the “Executive”).

 

WHEREAS, the Executive has been employed by the Company and currently serves as its Chief Operating Officer; and

 

WHEREAS, the Company desires to continue to employ the Executive from and after the Effective Date  in the capacity of its Chief Executive Officer and the Executive desires to continue to be employed by the Company in such new capacity pursuant to the terms set forth herein; and

 

WHEREAS, the Company and the Executive desire to enter into this Agreement in order to set forth the terms and conditions of the Executive’s employment with the Company as Chief Executive Officer, commencing as of the Effective Date;

 

NOW, THEREFORE, in consideration of the premises and of the mutual covenants herein contained, it is agreed as follows:

 

1.           Employment.  The Company hereby agrees to employ the Executive and the Executive hereby agrees to be employed by the Company as its Chief Executive Officer upon the terms and conditions set forth herein.

 

2.           Term.  The Executive’s employment shall be for a term (the “Employment Term”) commencing on the Effective Date  and, subject to earlier termination under Section 8, expiring on May 2, 2019 ; provided, however, that commencing on May 2, 2019  and each May  2  thereafter, the Employment Term will automatically be extended for an additional year unless, not later than February 1 of the same year, the Company or the Executive shall have given written notice to the other that it or the Executive, as the case may be, does not wish to have the Employment Term extended.

 

3.           Duties of the Executive.  The Executive shall serve as the Company’s Chief Executive Officer, and as such shall have primary responsibility for the oversight, management and general operation of all of the operations of the Company.  The Executive shall report solely to the Company’s Board of Directors (the “Board”) and shall be assigned only those executive policy and management duties that are consistent with the Executive’s position as Chief Executive Officer of the Company.  The Executive shall devote substantially all of his working time and his best efforts, full attention and energies to the business of the Company; provided, however, that it shall not be a violation of this Agreement for Executive to (a) devote reasonable periods of time to charitable and community activities  and engaging in industry or professional activities (including membership on the board of directors or governing body of other corporations or entities and participation on governmental panels and commissions), and/or (b) manage personal business interests and investments, in each case so long as such activities do not interfere with the performance of Executive’s responsibilities under this Agreement.  The Company shall include the Executive in the management slate for election as a director at every stockholders’ meeting during the Employment Term at which his term as a director would otherwise expire.

 

  

  

  

 

4.           Compensation.

 

(a)           Base Salary.  During the Employment Term, the Company shall pay to the Executive a base salary of not less than $ 665,000 per annum (the “Base Salary”).  The Board shall review Executive’s Base Salary annually (after approval of the forthcoming year’s budget and receipt of the prior year’s financial statements) and increase it by an amount no less than the increase in the consumer price index for the Washington, D.C. metropolitan area from the immediately preceding year.

 

(b)           Annual Profit Share Award Target.  In addition to the Base Salary, the Executive shall be eligible to receive an annual profit share award  (the “Profit Share Award ”) for each fiscal year of the Company that ends during the Employment Term, under  the profit sharing plan in effect for senior executives of  the Company (the “Plan”), subject to the approval of the Company’s shareholders as required for purposes of exemption from the limitations on deductibility imposed by Section 162(m) of the Internal Revenue Code of 1986, as amended (the “Code”), and based upon the achievement of objective performance goals meeting the requirements for such exemption.  The Executive’s target Profit Share Award under the Plan for 2013 shall be $835,000, and thereafter for each fiscal year during the Employment Term shall be such amount as shall be determined by the Board in accordance with the Plan, but shall be at least 125% of the Executive’s Base Salary for the year involved, provided that the Company achieves the targeted level of performance under the Plan for the relevant fiscal year.  The targeted level of performance required to earn the targeted Profit Share Award amount shall be as agreed by the Compensation Committee or the Executive Committee of the Board, on the one hand, and the Executive, on the other hand.

 

(c)            Annual Restricted Share Grant Target.  Executive shall be entitled to a target share grant equivalent to $2,000,000 (“Restricted Shares”), awarded at the time of each annual shareholder meeting, with a four-year cliff vesting schedule and applicable performance criteria as may be established by the Compensation Committee of the Board of Directors.  All Restricted Shares shall vest in full on the earlier to occur of the vesting date contained in each award agreement, or the Term hereof on May 2, 2019 (or such later date of extension of the Employment Term pursuant to Section 2 hereof), upon a Change in Control Resulting in Termination (as defined in any award agreement) or upon any other termination of the Executive’s employment without Cause under Section 8(a)(i) or 8(a)(ii), or upon Executive’s death or Disability under Section 8(c) of this Agreement.

 

  

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5.           Executive Benefits.

 

(a)           General.  In addition to the compensation described in Section 4, during the Employment Term, the Company shall make available to the Executive, on the most favorable terms and conditions available to executive and management employees of the Company, (i) all Company sponsored employee benefit plans or arrangements and such other usual and customary benefits now or hereafter generally available to employees of the Company, and (ii) such benefits and perquisites as may be made available to senior executives of the Company as a group, including, without limitation, equity and cash incentive programs, director and officer insurance which includes coverage for service on other boards of directors at the request of the Company, governmental panels, etc., vacations, and retirement, deferred compensation and welfare plans.

 

(b)           Attorneys’ Fees.  The Company shall pay or reimburse the Executive for all reasonable attorneys’ fees and disbursements incurred by the Executive in connection with the negotiation and execution and enforcement of this Agreement.

 

6.           Expenses.  The Company shall also pay or reimburse the Executive for reasonable and necessary expenses incurred by the Executive in connection with his duties on behalf of the Company in accordance with the expense policy of the Company applicable to members of senior management of the Company.

 

7.           Place of Performance.  In connection with his employment by the Company, unless otherwise agreed by the Executive, the Executive shall be based at the principal executive offices of the Company in Herndon, Virginia, except for travel reasonably required for Company business and the Company shall provide the Executive with appropriate office facilities, support staff and resources to perform his duties at such location.

 

  

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8.           Termination.

 

(a)           Termination By the Company without Cause.  The Executive’s employment hereunder and the Employment Term may be terminated by the Company for any reason by written notice as provided in Section 17.  For purposes of this Agreement, the Executive will be treated as having been terminated by the Company without Cause if the Executive terminates his employment with the Company under the following circumstances: (i) the Company breaches any material provision of this Agreement and fails to cure such breach within thirty (30) calendar days after receiving notice thereof from the Executive; (ii) there occurs a material reduction in the Executive’s authority, functions, duties or responsibilities as provided in Section 3 and the Company fails to restore to the Executive such authority, functions, duties or responsibilities within thirty (30) calendar days after receiving notice thereof from the Executive; or (iii) the Executive resigns for any reason, or without reason, during the thirty day period immediately following the six month anniversary of the first  occurrence after the Effective Date hereof of a “Change in Control” of the Company (as defined in Section 10) (a “CIC Termination”).  In the event of such a termination without Cause pursuant to any of subsections 8(a) (i)-(iii) above or any other termination of the Executive’s employment by the Company for any reason other than Cause (as defined in Section 9(d) herein), the Executive shall be entitled to the payments and benefits set forth in Section 9(a).

 

(b)           Termination By the Company for Cause or Voluntary Termination By the Executive.  The Executive may voluntarily terminate his employment and this Agreement at any time by notice to the Company as provided in Section 17.  In the event of a termination of the Executive’s employment by the Executive during the Employment Term other than pursuant to Section  8(a) hereof or a termination by the Company for Cause (as defined in Section 9(d) herein) during the Employment Term, the Executive shall be entitled to the payments and benefits set forth in Section 9(b).

 

(c)           Termination Due to Death or Disability.  In the event of a termination of the Executive’s employment during the Employment Term due to death or Disability (as defined herein), the Executive shall be entitled to the payments and benefits set forth in Section 9(c).

 

9.           Compensation and Benefits Upon Termination of Employment.

 

(a)           Termination by Company Without Cause.  If the Executive’s employment hereunder is terminated by the Company (including within the meaning of any of subsections 8(a)(i)-(iii) herein) for any reason other than for Cause (as defined in Section 9(d) herein) during the Employment Term, the Company shall be obligated to pay to the Executive the following termination payments and make available the following benefits:

 

(i)           Accrued Rights.  The Company shall within ten (10) days of the date of termination pay the Executive a lump-sum amount equal to the sum of (A) his earned but unpaid Base Salary through the date of termination, (B) any earned but unpaid Profit Share Award under Section 4(b) above, and (C) any business expenses due to the Executive from the Company as of the date of termination.  In addition, the Company shall provide to the Executive all payments, rights and benefits due as of the date of termination under the terms of the Company’s employee and fringe benefit plans and programs (other than severance plans or programs) in which the Executive participated during the Employment Term (together with such  lump-sum payment, the “Accrued Rights”).

 

  

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(ii)          Severance Payment.  The Company shall within thirty (30) days of the date of termination pay the Executive a lump sum payment in an amount equal to (A) three times the Base Salary (at the highest rate in effect for any period prior to the date of termination), plus (B) in the case of a COC Termination only, three times the latest previous Profit Share Award actually paid.

 

(iii)         Medical Benefits.  For a period of three (3) years following the date of termination, except as provided in Section  9(f), the Company will arrange to provide the Executive with medical benefits substantially similar to those that the Executive was receiving or entitled to receive immediately prior to the date of termination, provided that if and to the extent that any benefit described in this paragraph is not or cannot be paid or provided under any policy, plan, program or arrangement of the Company or any subsidiary, as the case may be, then the Company will itself pay or provide for the payment to the Executive, his dependents and beneficiaries, of such benefits.

 

(iv)         Restricted Shares.  As of the date of the Executive’s termination hereunder for any reason, including under Section 8(a)(i) and 8(a)(ii) hereof, (other than a voluntary resignation or termination for Cause covered by Section 9(b) below), any unvested Restricted Shares then held by the Executive shall immediately and fully vest, unless provided otherwise in the agreement applicable to such restricted shares.  Notwithstanding any other provision in this Agreement, the Change in Control Resulting in Termination provisions of any restricted stock award agreement and not the Change in Control provision in Section 8(a)(iii) hereof shall control the vesting of shares.

 

(b)           Termination for Cause or Voluntary Termination By the Executive.  If the Executive’s employment hereunder is terminated during the Employment Term by the Company for Cause (as defined in Section 9(d) hereof), or voluntarily terminated by the Executive other than pursuant to Section 8(a), (1) the Company shall have no further obligations to the Executive hereunder, except to pay or provide to the Executive any and all Accrued Rights, and (2) all unvested Restricted Shares shall terminate immediately and be of no further force or effect.

 

(c)           Disability; Death.  If the Executive’s employment hereunder is terminated during the Employment Term by reason of the Executive’s Disability (as defined herein) or death, the Company shall pay and provide the Executive (or his legal representative or estate) with the following:

 

(i)           Accrued Rights.  The Company shall pay and provide to the Executive (or his legal representative or estate) any and all Accrued Rights, including all disability or life insurance benefits as applicable;

 

  

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(ii)          Salary Continuation.  The Company shall provide the Executive (or his legal representative or estate) with continued payment of the Executive’s then-current Base Salary for a period of 12 months; provided, that such payments shall be reduced (but not below zero) by all amounts payable to the Executive (or his legal representative, estate, beneficiaries or dependents) under any Company-provided life insurance or disability benefit plans.

 

(iii)         Restricted Shares.  As of the date of the Executive’s termination under this paragraph, any unvested Restricted Shares shall immediately and fully vest.

 

(d)           Termination for Cause.  For purposes of this Agreement, “Cause” shall mean:

 

(i)           the willful and continued failure by the Executive substantially to perform his duties hereunder (other than any such failure resulting from the Executive’s Disability or the Company’s breach of this Agreement), which failure is not or cannot be cured within thirty (30) business days after the Company has given written notice thereof to the Executive specifying in detail the particulars of the acts or omissions deemed to constitute such failure,

 

(ii)          the engaging by the Executive in willful misconduct which is materially injurious to the Company, monetarily or otherwise,

 

(iii)         the Executive’s conviction of, or entry of a plea of nolo contendere with respect to, any felony, or

 

(iv)         the Executive’s breach of any material provision of this Agreement, if the Executive fails to cure such breach within thirty (30) business days after the Company has given written notice thereof to the Executive.

 

For purposes of this definition, no act, or failure to act, on the Executive’s part shall be considered “willful” unless done, or omitted to be done, by the Executive in bad faith and without reasonable belief that the Executive’s action or omission was in the best interests of the Company.  The Executive shall not be deemed to have been terminated for Cause unless and until the Board finds that the Executive’s termination for Cause is justified and has given the Executive written notice of termination, specifying in detail the particulars of the Executive’s conduct found by the Board to justify such termination for Cause.

 

(e)           Disability Defined.  “Disability” shall mean the Executive’s inability to perform the duties of his position with the Company by reason of a medically determined physical or mental impairment which has existed for a continuous period of at least 26 weeks and which, in the written judgment of a physician, is likely to be of indefinite duration or to result in death.

 

(f)           No Obligation to Mitigate.  The Executive is under no obligation to mitigate damages or the amount of any payment provided for hereunder by seeking other employment or otherwise; provided, however, that the Executive’s coverage under the Company’s medical benefit plans will terminate when the Executive becomes covered under any employee medical plan made available by another employer.  The Executive shall notify the Company within thirty (30) days after the commencement of any such benefits.

 

  

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10.         Change in Control.  As used herein, a “Change in Control” of the Company shall mean the occurrence of any of the following:

 

(a)           The acquisition by any individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) (a “Person”) of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of more than 50% of either: (i) the then- outstanding shares of the Company’s Common Stock or (ii) the combined voting power of the then-outstanding voting securities of the Company entitled to vote generally in the election of directors (“Voting Stock”); provided, however, that for purposes of this subsection (a), the following  shall not constitute a Change in Control:  any acquisition by any Person pursuant to a transaction which complies with clauses (i), (ii) and (iii) of subsection (c) of this Section 10; or

 

(b)           Individuals who constitute the Board of Directors of the Company as of the date hereof (the “Incumbent Board”) cease for any reason (other than death or disability) to constitute at least a majority of the Board; provided, however, that  any individual becoming a director subsequent to the date hereof whose election, or nomination for election by the Company’s shareholders, was approved by a vote of at least a majority of the directors then comprising the Incumbent Board (either by a specific vote or by approval of the proxy statement of the Company in which such person is named as a nominee for director, without objection to such nomination) shall be considered as though such individual were a member of the Incumbent Board, but excluding for this purpose any such individual whose initial assumption of office occurs as a result of an actual or threatened election contest (within the meaning of Rule 14a-11 of the Exchange Act) with respect to the election or removal of directors or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board or any of the Investors; or

 

(c)           Consummation of a reorganization, merger or consolidation or sale or other disposition of all or substantially all of the assets of the Company with or to any Person  (a “Business Combination”), in each case, unless, following such Business Combination, (i) all or substantially all of the individuals and entities who were the beneficial owners, respectively, of the Common Stock and Voting Stock of the Company immediately prior to such Business Combination beneficially own, directly or indirectly, more than 50% of, respectively, the then-outstanding shares of common stock and the combined voting power of the then-outstanding voting securities entitled to vote generally in the election of directors, as the case may be, of the entity resulting from such Business Combination (including, without limitation, an entity which as a result of such transaction owns the Company or all or substantially all of the Company’s assets either directly or through one or more subsidiaries) in substantially the same proportions relative to each other as their ownership, immediately prior to such Business Combination, of the Common Stock and Voting Stock of the Company, as the case may be, (ii) no Person (excluding any entity resulting from such Business Combination or any employee benefit plan (or related trust) sponsored or maintained by the Company or such entity resulting from such Business Combination) beneficially owns, directly or indirectly, more than 50% of, respectively, the then-outstanding shares of common stock of the entity resulting from such Business Combination, or the combined voting power of the then-outstanding voting securities of such corporation except to the extent that such ownership existed prior to the Business Combination and (iii) at least a majority of the members of the board of directors of the corporation resulting from such Business Combination were members of the Incumbent Board at the time of the execution of the initial agreement, or of the action of the Board providing for such Business Combination; or

 

  

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(d)           Approval by the shareholders of the Company of a complete liquidation or dissolution of the Company.

 

11.         Confidentiality Agreement.

 

(a)           The Executive acknowledges that, in the course of his employment by the Company, he will or may have access to and become informed of confidential or proprietary information which is a competitive asset of the Company (“Confidential Information”), including, without limitation, (i) the terms of any agreement between the Company and any employee, customer or supplier, (ii) pricing strategy, (iii) merchandising and marketing methods, (iv) product or course development ideas and strategies, (v) university and Company personnel training and development programs, (vi) financial results, (vii) strategic plans and demographic analyses, (viii) proprietary computer and systems software, and (ix) any non-public information concerning the Company, its employees, suppliers or customers.  The Executive agrees that he will keep all Confidential Information in strict confidence during his employment by the Company and thereafter, and will never directly or indirectly make known, divulge, reveal, furnish, make available, or use any Confidential Information (except in the course of his regular authorized duties or as otherwise authorized on behalf of the Company).  The Executive agrees that the obligations of confidentiality hereunder shall be in effect at all times during the Employment Term and shall survive termination of his employment at the Company  for a period of six (6) years thereafter regardless of any actual or alleged breach by the Company of this Agreement, unless and until any such Confidential Information shall have become, through no fault of the Executive, generally known to the public or the Executive is required by law to make disclosure (after giving the Company notice and an opportunity to contest such requirement).  The Executive’s obligations under this Section 11 are in addition to, and not in limitation of or preemption of, all other obligations of confidentiality which the Executive may have to the Company under general legal or equitable principles.

 

(b)           Except in the ordinary course of the Company’s business, or as otherwise authorized on behalf of the Company, the Executive may not make or cause to be made, any copies, pictures, duplicates, facsimiles or other reproductions or recordings or any abstracts or summaries including or reflecting Confidential Information. All such documents and other property furnished to the Executive by the Company or otherwise acquired or developed by the Company shall at all times be the property of the Company.  Upon termination of the Executive’s employment with the Company, the Executive will return to the Company or destroy any such documents or other property of the Company which are in the possession, custody or control of the Executive; provided that the Executive may maintain a copy in his possession (to be treated confidentially under this Section 11) of any information necessary for the Executive to enforce his legal rights under this Agreement or to file applicable tax returns.

 

  

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(c)           Without the prior written consent of the Company, except in the ordinary course of the Company’s business, or to enforce his legal rights under this Agreement or support any tax filings referenced under subsection (b) above, or to comply with any legal disclosure requirement referenced in subsection (a) above, the Executive shall not at any time following the date of this Agreement use for the benefit or purposes of the Executive or for the benefit or purposes of any other person, firm, partnership, association, trust, venture, corporation or business organization, entity or enterprise or disclose in any manner to any person, firm, partnership, association, trust, venture, corporation or business organization, entity or enterprise any Confidential Information.

 

12.         Investment in Company Common Stock.  The Executive shall while the Executive’s employment with the Company continues,  hold Company Common Stock having a value at least equal to five (5) times, or such other amount as the Board of Directors or a committee thereof may determine, the amount of his Base Salary as in effect from time to time.

 

13.         Covenant Not to Compete.

 

(a)           For six (6) years after the date of termination of employment hereunder,  the Executive shall not, directly or indirectly, individually or on behalf of any other person or entity, (A) engage or  have an economic interest in (whether as owner, stockholder, partner, lender, consultant, employee, agent or otherwise) any business, activity or enterprise which is then directly and materially competitive with the business of any division or operation of the Company or the Company’s subsidiaries (collectively, the “Company Group”) in any region of the United States in which such business is then being conducted, it being understood that the Company Group currently is engaged primarily in the business of for-profit post-secondary education, or (B) hire or employ any person who has been an employee of any member of the Company Group at any time within 12 months prior to the Executive’s termination of employment or solicit, aid or induce such person to leave his or her employment with any member of the Company Group to accept employment with any other person or entity.  It is agreed that (i) not for profit educational entities that do not offer programs comparable to those of the Company  will not be deemed to be a direct competitor of the Company Group hereunder, (ii) foundations or other non-profit organizations furthering the interests of higher education will not be deemed a direct competitor of the Company Group hereunder; (iii) the Executive’s ownership of less than 1% of any class of stock in a publicly-traded corporation or his membership on any board of directors that is permissible under Section 3 hereof shall not be deemed a breach of this Section 13, and (iv) nothing herein shall be construed to prohibit general solicitation of employment by means of advertising.

 

(b)           The Executive acknowledges and agrees that a violation of Section 11 and the foregoing provisions of this Section 13 (referred to collectively as the Confidentiality and Noncompetition Agreement) would cause irreparable harm to the Company, and that the Company’s remedy at law for any such violation would be inadequate.  In recognition of the foregoing, the Executive agrees that, in addition to any other relief afforded by law or this Agreement, including damages sustained by a breach of this Agreement, and without the necessity or proof of actual damages, the Company shall have the right to seek specific enforcement of  this Agreement, which may include, among other things, temporary and permanent injunctions, it being the understanding of the undersigned parties hereto that seeking damages and injunctions shall all be proper modes of relief and are not to be considered as alternative remedies.

 

  

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14.         Agreement.  This Agreement supersedes any and all prior and/or contemporaneous agreements, either oral or in writing, between the parties hereto, with respect to the subject matter hereof.  Each party to this Agreement acknowledges that no representations, inducements, promises, or other agreements, orally or otherwise, have been made by any party, or anyone acting on behalf of any party, pertaining to the subject matter hereof, which are not embodied herein, and that no prior and/or contemporaneous agreement, statement or promise pertaining to the subject matter hereof that is not contained in this Agreement shall be valid or binding on either party.

 

15.         Withholding of Taxes.  The Company may withhold from any amounts payable under this Agreement all federal, state, city or other taxes as the Company is required to withhold pursuant to any law or government regulation or ruling.

 

16.         Successors and Binding Agreement.

 

(a)           The Company will require any successor (whether direct or indirect, by purchase, merger, consolidation, reorganization or otherwise) to all or substantially all of the business or assets of the Company, by agreement in form and substance satisfactory to the Executive, expressly to assume and agree to perform this Agreement in the same manner and to the same extent the Company would be required to perform if no such succession had taken place.  This Agreement will be binding upon and inure to the benefit of the Company and any successor to the Company, including without limitation any persons acquiring directly or indirectly all or substantially all of the business or assets of the Company whether by purchase, merger, consolidation, reorganization or otherwise (and such successor shall thereafter be deemed the “Company” for the purposes of this Agreement), but will not otherwise be assignable, transferable or delegable by the Company.

 

(b)           This Agreement will inure to the benefit of and be enforceable by the Executive’s personal or legal representatives, executors, administrators, successors, heirs, distributees and legatees.

 

(c)           This Agreement is personal in nature and neither of the parties hereto shall, without the consent of the other, assign, transfer or delegate this Agreement or any rights or obligations hereunder except as expressly provided in Sections 16(a) and 16(b).  Without limiting the generality or effect of the foregoing, the Executive’s right to receive payments and benefits hereunder will not be assignable, transferable or delegable by him, whether by pledge, creation of a security interest, or otherwise, other than by a transfer by the Executive’s will or by the laws of descent and distribution and, in the event of any attempted assignment or transfer contrary to this Section 16(c), the Company shall have no liability to pay any amount so attempted to be assigned, transferred or delegated.

 

  

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17.         Notices.  For all purposes of this Agreement, all communications, including without limitation notices, consents, requests or approvals, required or permitted to be given hereunder will be in writing and will be deemed to have been duly given when hand delivered or dispatched by electronic facsimile transmission (with receipt thereof confirmed), or five (5) business days after having been mailed by United States registered or certified mail, return receipt requested, postage prepaid, or three business days after having been sent by a nationally recognized overnight courier service such as Federal Express, UPS, or similar courier service, addressed to the Company (to the attention of the Secretary of the Company) at its principal executive offices and to the Executive at his principal residence, or to such other address as either party may have furnished to the other in writing and in accordance herewith, except that notices of changes of address shall be effective only upon receipt.

 

18.         Governing Law.  The validity, interpretation, construction and performance of this Agreement will be governed by and construed in accordance with the substantive laws of the State of Maryland, without giving effect to the principles of conflict of laws of such State.

 

19.         Validity.  If any provision of this Agreement or the application of any provision hereof to any person or circumstances is held invalid, unenforceable or otherwise illegal, the remainder of this Agreement and the application of such provision to any other person or circumstances will not be affected, and the provision so held to be invalid, unenforceable or otherwise illegal will be reformed to the extent (and only to the extent) necessary to make it enforceable, valid or legal.

 

20.         Survival of Provisions.  Notwithstanding any other provision of this Agreement, the parties’ respective rights and obligations hereunder, will survive any termination or expiration of this Agreement or the termination of the Executive’s employment for any reason whatsoever.

 

21.         Miscellaneous.  No provision of this Agreement may be modified, waived or discharged unless such waiver, modification or discharge is in writing and signed by the party against whom such modification, waiver or discharge is sought to be enforced.  No waiver by either party hereto at any time of any breach by the other party hereto or compliance with any condition or provision of this Agreement to be performed by such other party will be deemed a waiver of similar or dissimilar provisions or conditions at the same or at any prior or subsequent time.  Unless otherwise noted, references to “Sections” are to sections of this Agreement.  The captions used in this Agreement are designed for convenient reference only and are not to be used for the purpose of interpreting any provision of this Agreement.

 

22.         Counterparts.  This Agreement may be executed in one or more counterparts, each of which shall be deemed to be an original but all of which together will constitute one and the same agreement.

 

23.         Board Membership.

 

(a)           The Executive shall recuse himself from all decisions and actions taken by the Board with respect to this Agreement, including without limitation, decisions whether the Company will give any notice that the Employment Term shall not be extended pursuant to Section 2 and any decisions concerning the termination of the Executive’s employment by the Company.

 

  

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(b)           Notwithstanding any other provision of this Agreement, upon the termination of the Executive’s employment with the Company for any reason, unless otherwise requested by the Board he shall immediately resign from the Board and from all boards of directors of subsidiaries and affiliates of the Company of which he may be a member.  The Executive hereby agrees to execute any and all reasonably requested documentation of such resignations upon request by the Company, but he shall be treated for all purposes as having so resigned upon termination of his employment, regardless of when or whether he executes any such documentation.

 

24.         Indemnification under Company By-Laws.  To the maximum extent provided in the Company’s By-Laws and by law, during the term of this Agreement and thereafter, the Company shall indemnify and hold the Executive and his heirs, personal representatives, executors and administrators harmless, against any and all claims, damages liabilities, costs of investigation and reasonable legal expenses as a result of any threatened or actual third-party claim or proceeding  (excluding claims and proceedings by the Company and any of its affiliates)  against the Executive that arises by reason of the Executive having executed and performed under this Agreement (as it may be amended)  or otherwise having provided service as an officer, director, or employee of the Company, any affiliate of the Company or any other entity at the request of the Company.

 

25.         Section 409A.

 

(a)           It is intended that any amounts payable under this Agreement shall either be exempt from or comply with Section 409A of the Code and all regulations, guidance and other interpretive authority issued thereunder, including without limitation any such regulations or other guidance that may be issued in the future (“Section 409A”) so as not to subject the Executive to payment of any additional tax, penalty or interest imposed under Section 409A. The provisions of this Agreement shall be construed and interpreted to avoid imputation of any such additional tax, penalty or interest under Section 409A yet preserve the intended benefit payable to the Executive.

 

(b)           Notwithstanding anything herein to the contrary, if the Executive is a Specified Employee at the time of the Executive’s termination of employment with the Company and the deferral of the commencement of any payments or benefits otherwise payable hereunder as a result of such termination of employment is necessary to prevent any accelerated or additional tax under Section 409A, then the Company will defer the commencement of any such payments or benefits hereunder to the extent that such payments or benefits (after taking into account all exclusions applicable to such payment under Section 409A) constitute “deferred compensation” subject to Section 409A (without any reduction in such payments or benefits ultimately paid or provided to the Executive) until the earlier of (i) the first business day after the expiration of six (6) months following the Executive’s termination of employment (ii) or the Executive’s death or Disability (the “Delayed Payment Date”).

 

(c)           For purposes of this Agreement, any references herein to the Executive’s “termination of employment” or words of similar meaning shall refer to the Executive’s “separation from service” with the Company within the meaning of Section 409A and Treasury Regulation Section 1.409A-1(h) (after giving effect to the presumptions contained therein) and the term “Specified Employee” shall have the meaning given such term in Section 409A and Treasury Regulation Section 1.409A-1(i) as determined in accordance with the Company’s policy for determining Specified Employees.

 

  

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(d)           (i) To the extent any reimbursements or in-kind benefits due to the Executive under this Agreement constitute “nonqualified deferred compensation” subject to Section 409A,  any such reimbursements or in-kind benefits shall be paid to the Executive in a manner consistent with Treasury Regulation Section 1.409A-3(i)(1)(iv), and (ii) to the extent that the Executive’s receipt of any in-kind benefits from the Company or its affiliates must be delayed pursuant to this Section 26 due to the Executive’s status as a Specified Employee, the Executive may elect to instead purchase and receive such benefits during the period in which the provision of benefits would otherwise be delayed by paying the Company (or its affiliates) for the fair market value of such benefits (as determined by the Company in good faith) during such period.  Any amounts paid by the Executive pursuant to the preceding sentence shall be reimbursed to the Executive as described above on the Delayed Payment Date.

 

(e)           Each payment made under this Agreement shall be treated as a separate payment and any right to a series of installment payments under this Agreement shall be treated as a right to a series of separate payments.

 

(f)           The Company shall consult with the Executive in good faith regarding and shall use all reasonable efforts to agree with Executive on the appropriate implementation of the provisions of this Section 26.

 

 [signature page follows]

 

  

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IN WITNESS WHEREOF, with the Company signatory listed below having been duly authorized by the Company to enter into this Agreement by the Company, the parties hereto have executed this Agreement as of the day and year first written.

 

	 	STRAYER EDUCATION, INC.	 
	 	 	 	 
	 	
By: 

	/s/ Viet D. Dinh	 
	 	 	
Name: Viet D. Dinh

	 
	 	 	Title: General Counsel	 
	 	 	 	 
	 	 	/s/ Karl McDonnell	 
	 	 	
Karl McDonnell

	 

 

 

14Unassociated Document

Exhibit 10.1

 

PURCHASE AGREEMENT

 

This Purchase Agreement (this “Agreement”) is dated as of April 26, 2013, among InterCloud Systems, Inc., a Delaware corporation (the “Company”), and ICG USA, LLC (the “Investor”).

 

WHEREAS, subject to the terms and conditions set forth in this Agreement, the Company desires to borrow certain sums from the Investor and, in consideration thereof issue a certain convertible note and warrant to the Investor, and the Investor desires to make a loan to the Company and accept such note and warrant from the Company, all pursuant to the terms set forth herein.

 

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 the Investor agree as follows:

 

ARTICLE I.

DEFINITIONS

 

1.1           Definitions.  In addition to the terms defined elsewhere in this Agreement, for all purposes of this Agreement, the following terms shall have the meanings indicated in this Section 1.1:

 

“Action” means any action, claim, suit, inquiry, notice of violation, proceeding (including, without limitation, any investigation or partial proceeding such as a deposition) or investigation pending or threatened in writing against or affecting the Company, any Subsidiary or any of their respective properties before or by any court, arbitrator, governmental or administrative agency, regulatory authority (federal, state, provincial, county, local or foreign), stock market, stock exchange or trading facility.

 

“Affiliate” means any Person that, directly or indirectly through one or more intermediaries, controls or is controlled by or is under common control with a Person, as such terms are used in and construed under Rule 144.

 

“Bankruptcy Event” means any of the following events:  (a) the Company or any Subsidiary commences a proceeding under any bankruptcy, reorganization, arrangement, adjustment of debt, relief of debtors, dissolution, insolvency or liquidation or similar law of any jurisdiction relating to the Company or any Subsidiary thereof; (b) there is commenced against the Company or any Subsidiary any such case or proceeding that is not dismissed within 60 days after commencement; (c) the Company or any Subsidiary is adjudicated by a court of competent jurisdiction insolvent or bankrupt or any order of relief or other order approving any such case or proceeding is entered; (d) the Company or any Subsidiary suffers any appointment of any custodian or the like for it or any substantial part of its property that is not discharged or stayed within 60 days; (e) under applicable law the Company or any Subsidiary makes a general assignment for the benefit of creditors; (f) the Company or any Subsidiary fails to pay, or states that it is unable to pay or is unable to pay, its debts generally as they become due; (g) the Company or any Subsidiary calls a meeting of its creditors with a view to arranging a composition, adjustment or restructuring of its debts; or (h) the Company or any Subsidiary, by any act or failure to act, expressly indicates its consent to, approval of or acquiescence in any of the foregoing or takes any corporate or other action for the purpose of effecting any of the foregoing.

 

  

 

  

 

“Business Day” means any day except Saturday, Sunday and any day that is a federal legal holiday or a day on which banking institutions in the State of New York or State of Florida are authorized or required by law or other governmental action to close.

 

“Code” means the Internal Revenue Code of 1986, as amended.

 

“Commission” means the Securities and Exchange Commission.

 

“Common Stock” means the common stock of the Company, $0.0001 par value per share, and any securities into which such common stock may hereafter be reclassified.

 

“Common Stock Equivalents” means any securities of the Company or any Subsidiary which entitle the holder thereof to acquire Common Stock at any time, including without limitation, any debt, preferred stock, rights, options, warrants or other instrument that is at any time convertible into or exchangeable for, or otherwise entitles the holder thereof to receive, Common Stock or other securities that entitle the holder to receive, directly or indirectly, Common Stock.

 

“Disclosure Materials” has the meaning set forth in Section 3.1(h).

 

“Exchange Act” means the Securities Exchange Act of 1934, as amended.

 

“First Closing” means the closing of the purchase and sale of the Note and Warrant contemplated by Section 2.1.

 

“First Closing Date” means the Business Day immediately following the date on which all of the conditions set forth in Section 2.1(d) and 2.1(e) have been satisfied, or such other date as the parties may agree.

 

“GAAP” means U.S. generally accepted accounting principles.

 

“Intellectual Property Rights” has the meaning set forth in Section 3.1(l).

 

“Investor Deliverables” has the meaning set forth in Section 2.1(c).

 

  

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“Lien” means any lien, charge, encumbrance, security interest, right of first refusal or other restrictions of any kind.

 

“Material Adverse Effect” means any of (i) a material and adverse effect on the legality, validity or enforceability of any Transaction Document, (ii) a material and adverse effect on the results of operations, assets, prospects, business or condition (financial or otherwise) of the Company and the Subsidiaries or (iii) an adverse impairment to the Company's ability to timely perform its obligations under any Transaction Document.

 

“New York Courts” means the state and federal courts sitting in the City of New York, Borough of Manhattan.

 

“Notes” means the convertible promissory notes issuable by the Company to the Investor at each of the First Closing and Second Closing in the Form of Exhibit A, due on the six month anniversary of each of the First Closing Date and Second Closing Date, as applicable.

 

“Person” means an individual or corporation, partnership, trust, incorporated or unincorporated association, joint venture, limited liability company, joint stock company, government (or an agency or subdivision thereof) or other entity of any kind.

 

“Rule 144” means Rule 144 promulgated by the Commission pursuant to the Securities Act, as such Rule 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.

 

“Second Closing” means the closing of the purchase and sale of the Note and Warrant contemplated by Section 2.2.

 

“Second Closing Date” means the Business Day immediately following the date on which all of the conditions set forth in Section 2.2(d) and 2.2(e) have been satisfied, or such other date as the parties may agree.

 

“SEC Reports” has the meaning set forth in Section 3.1(h).

 

“Securities” means the Notes, the Warrants, the Underlying Shares and the Warrant Shares.

 

“Securities Act” means the Securities Act of 1933, as amended.

 

“Short Sales” include, without limitation, all “short sales” as defined in Rule 200 promulgated under Regulation SHO under the Exchange Act and all types of direct and indirect stock pledges, forward sale contracts, options, puts, calls, swaps and similar arrangements (including on a total return basis), and sales and other transactions through non-US broker dealers or foreign regulated brokers.

 

  

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“Subsidiary” means any subsidiary of the Company included in the SEC Reports.

 

“Trading Day” means (i) a day on which the Common Stock is traded on a Trading Market, or (ii) if the Common Stock is not listed on a Trading Market, a day on which the Common Stock is traded in the over-the-counter market, as reported by the OTC Bulletin Board or the Pink Sheets LLC, or (iii) if the Common Stock is not quoted on the OTC Bulletin Board, a day on which the Common Stock is quoted in the over-the-counter market as reported by the Pink Sheets LLC (or any similar organization or agency succeeding to its functions of reporting prices); provided, that in the event that the Common Stock is not listed or quoted as set forth in (i), (ii) and (iii) hereof, then Trading Day shall mean a Business Day.

 

"Trading Market" means whichever of the New York Stock Exchange, the NYSE AMEX, the NASDAQ Capital Market, the NASDAQ Global Market, the NASDAQ Global Select Market, or OTC Bulletin Board on which the Common Stock is listed or quoted for trading on the date in question.

 

“Transaction Documents” means this Agreement, the Notes, the Warrants, and any other documents or agreements executed in connection with the transactions contemplated hereunder.

 

“Underlying Shares” means the shares of Common Stock issuable upon conversion of the Notes and payment of interest thereunder.

 

“Warrants” means the Common Stock purchase warrants, in the form of Exhibit B, issuable to Investor at each of the First Closing and Second Closing.

 

“Warrant Shares” means the shares of Common Stock issuable upon exercise of the Warrants.

 

ARTICLE II.

PURCHASE AND SALE

 

2.1           First Closing.

 

(a)           Subject to the terms and conditions set forth in this Agreement, at the First Closing the Company shall issue and sell to Investor, and Investor shall purchase from the Company, a Note and a Warrant.  The First Closing shall take place at the offices of Pryor Cashman LLP, 7 Times Square, New York, NY 10036 at 10:30 a.m. (New York City time) on the First Closing Date or at such other location or time as the parties may agree.

 

  

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(b)           At the First Closing, the Company shall deliver or cause to be delivered to Investor the following (the “Company Deliverables”):

 

(i)           Note in the aggregate principal amount of $862,500, minus the up-front interest charge of $112,500, resulting in a net principal amount of $750,000, registered in the name of Investor; and

 

(ii)          Warrant, registered in the name of Investor, pursuant to which Investor shall have the right to acquire the number of shares of Common Stock equal to 50% of the Underlying Shares issuable upon an assumed conversion of the Note issuable to Investor in accordance with Section 2.1(b)(i) (without regard to any conversion restrictions contained thereunder), at the price of the Company’s next registered offering, provided, however, that if no such offering closes by the six month anniversary of the First Closing Date, then the Warrant Shares of the Warrant shall be equal to 50% of the Underlying Shares issuable upon an assumed conversion of the Note issuable to Investor in accordance with Section 2.1(b)(i) at the closing price of the Common Stock on the six month anniversary of the First Closing Date.  If the six month anniversary of the First Closing Date occurs on a day in which the shares are not being traded, then the Warrant Shares will be determined using the closing price of the Common Stock on the next Trading Day.

 

(c)           At the First Closing, Investor shall deliver or cause to be delivered to the Company $750,000, in United States dollars and in immediately available funds, by wire transfer to an account designated in writing by the Company for such purpose (the “Investor Deliverables”).

 

(d)           Conditions Precedent to the Obligations of Investor to Purchase Note and Warrant.  The obligation of Investor to acquire the Note and Warrant and make a loan at the First Closing is subject to the satisfaction or waiver by Investor, at or before the First Closing, of each of the following conditions:

 

(i)           Representations and Warranties.  The representations and warranties of the Company contained in the Transaction Documents shall be true and correct as of the date when made and as of the First Closing Date as though made on and as of such date;

 

(ii)          Performance.  The Company shall have performed, satisfied and complied with all covenants, agreements and conditions required by the Transaction Documents to be performed, satisfied or complied with by it at or prior to the First Closing;

 

(iii)         No Injunction.  No statute, rule, regulation, executive order, decree, ruling or injunction shall have been enacted, entered, promulgated or endorsed by any court or governmental authority of competent jurisdiction that prohibits the consummation of any of the transactions contemplated by the Transaction Documents;

 

(iv)         No Suspensions of Trading in Common Stock; Listing.  Trading in the Common Stock shall not have been suspended by the Commission or any Trading Market (except for any suspensions of trading of not more than one Trading Day solely to permit dissemination of material information regarding the Company) at any time since the date of execution of this Agreement, and the Common Stock shall have been at all times since such date listed for trading on a Trading Market; and

 

  

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(v)          Company Deliverables.  The Company shall have delivered the Company Deliverables in accordance with Section 2.1(b).

 

(e)           Conditions Precedent to the Obligations of the Company to sell Note and Warrant.  The obligation of the Company to sell the Note and Warrant at the First Closing is subject to the satisfaction or waiver by the Company, at or before the First Closing, of each of the following conditions:

 

(i)           Representations and Warranties.  The representations and warranties of the Investor contained herein shall be true and correct as of the date when made and as of the First Closing Date as though made on and as of such date;

 

(ii)          Performance.  Investor shall have performed, satisfied and complied in all material respects with all covenants, agreements and conditions required by the Transaction Documents to be performed, satisfied or complied with by Investor at or prior to the First Closing;

 

(iii)         No Injunction.  No statute, rule, regulation, executive order, decree, ruling or injunction shall have been enacted, entered, promulgated or endorsed by any court or governmental authority of competent jurisdiction that prohibits the consummation of any of the transactions contemplated by the Transaction Documents; and

 

(iv)         Investors Deliverables.  Investor shall have delivered its Investor Deliverables in accordance with Section 2.1(c).

 

2.2           Second Closing.

 

(a)           Subject to the terms and conditions set forth in this Agreement, at the Second Closing the Company shall issue and sell to Investor, and Investor shall purchase from the Company, a Note and a Warrant.  The Second Closing shall take place at the offices of Pryor Cashman LLP, 7 Times Square, New York, NY 10036 at 10:30 a.m. (New York City time) on the Second Closing Date or at such other location or time as the parties may agree.

 

(b)           At the Second Closing, the Company shall deliver or cause to be delivered to Investor the following (the “Company Deliverables”):

 

(i)           Note in the aggregate principal amount of $862,500, minus the up-front interest charge of $112,500, resulting in a net principal amount of $750,000, registered in the name of Investor; and

 

(ii)          Warrant, registered in the name of Investor, pursuant to which Investor shall have the right to acquire the number of shares of Common Stock equal to 50% of the Underlying Shares issuable upon an assumed conversion of the Note issuable to Investor in accordance with Section 2.2(b)(i) (without regard to any conversion restrictions contained thereunder), at the price of the Company’s next registered offering, provided, however, that if no such offering closes by the six month anniversary of the Second Closing Date, then the Warrant Shares of the Warrant shall be equal to 50% of the Underlying Shares issuable upon an assumed conversion of the Note issuable to Investor in accordance with Section 2.2(b)(i) at the closing price of the Common Stock on the six month anniversary of the Second Closing Date.  If the six month anniversary of the Second Closing Date occurs on a day in which the shares are not being traded, then the Warrant Shares will be determined using the closing price of the Common Stock on the next Trading Day.

 

  

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(c)           At the Second Closing, Investor shall deliver or cause to be delivered to the Company $750,000, in United States dollars and in immediately available funds, by wire transfer to an account designated in writing by the Company for such purpose (the “Investor Deliverables”).

 

(d)           Conditions Precedent to the Obligations of Investor to Purchase Note and Warrant.  The obligation of Investor to acquire the Note and Warrant and make a loan at the Second Closing is subject to the satisfaction or waiver by Investor, at or before the Second Closing, of each of the following conditions:

 

(i)           Representations and Warranties.  The representations and warranties of the Company contained in the Transaction Documents shall be true and correct as of the date when made and as of the Second Closing Date as though made on and as of such date;

 

(ii)          Performance.  The Company shall have performed, satisfied and complied with all covenants, agreements and conditions required by the Transaction Documents to be performed, satisfied or complied with by it at or prior to the Second Closing;

 

(iii)         No Injunction.  No statute, rule, regulation, executive order, decree, ruling or injunction shall have been enacted, entered, promulgated or endorsed by any court or governmental authority of competent jurisdiction that prohibits the consummation of any of the transactions contemplated by the Transaction Documents;

 

(iv)         No Suspensions of Trading in Common Stock; Listing.  Trading in the Common Stock shall not have been suspended by the Commission or any Trading Market (except for any suspensions of trading of not more than one Trading Day solely to permit dissemination of material information regarding the Company) at any time since the date of execution of this Agreement, and the Common Stock shall have been at all times since such date listed for trading on a Trading Market; and

 

(v)          Company Deliverables.  The Company shall have delivered the Company Deliverables in accordance with Section 2.2(b).

 

  

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(e)           Conditions Precedent to the Obligations of the Company to sell Note and Warrant.  The obligation of the Company to sell the Note and Warrant at the Second Closing is subject to the satisfaction or waiver by the Company, at or before the Second Closing, of each of the following conditions:

 

(i)           Representations and Warranties.  The representations and warranties of the Investor contained herein shall be true and correct as of the date when made and as of the Second Closing Date as though made on and as of such date;

 

(ii)           Performance.  Investor shall have performed, satisfied and complied in all material respects with all covenants, agreements and conditions required by the Transaction Documents to be performed, satisfied or complied with by Investor at or prior to the Second Closing;

 

(iii)          No Injunction.  No statute, rule, regulation, executive order, decree, ruling or injunction shall have been enacted, entered, promulgated or endorsed by any court or governmental authority of competent jurisdiction that prohibits the consummation of any of the transactions contemplated by the Transaction Documents; and

 

(iv)          Investors Deliverables.  Investor shall have delivered its Investor Deliverables in accordance with Section 2.2(c).

 

ARTICLE III.

REPRESENTATIONS AND WARRANTIES

 

3.1           Representations and Warranties of the Company.  The Company hereby makes the following representations and warranties to each Investor:

 

(a)           Subsidiaries.  The Company has no direct or indirect Subsidiaries other than as specified in the SEC Reports.  Except as disclosed in the SEC Reports, the Company owns, directly or indirectly, all of the capital stock of each Subsidiary free and clear of any and all Liens, and all the issued and outstanding shares of capital stock of each Subsidiary are validly issued and are fully paid, non-assessable and free of preemptive and similar rights.

 

(b)           Organization and Qualification.  The Company and each Subsidiary are duly incorporated or otherwise organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation or organization (as applicable), with the requisite power and authority to own and use its properties and assets and to carry on its business as currently conducted.  Neither the Company nor any Subsidiary is in violation of any of the provisions of its respective certificate or articles of incorporation, bylaws or other organizational or charter documents.  The Company and each Subsidiary are duly qualified to conduct its respective businesses and are in good standing as a foreign corporation or other entity in each jurisdiction in which the nature of the business conducted or property owned by it makes such qualification necessary, except where the failure to be so qualified or in good standing, as the case may be, could not, individually or in the aggregate, have or reasonably be expected to result in a Material Adverse Effect.

 

  

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(c)           Authorization; Enforcement.  The Company has the requisite corporate power and authority to enter into and to consummate the transactions contemplated by each of the Transaction Documents and otherwise to carry out its obligations thereunder.  The execution and delivery of each of the Transaction Documents by the Company and the consummation by it of the transactions contemplated thereby have been duly authorized by all necessary action on the part of the Company and no further action is required by the Company in connection therewith.  Each Transaction Document has 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 as such enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium, liquidation or similar laws relating to, or affecting generally the enforcement of, creditors’ rights and remedies or by other equitable principles of general application.

 

(d)           No Conflicts.  The execution, delivery and performance of the Transaction Documents by the Company and the consummation by the Company of the transactions contemplated thereby do not and will not (i) conflict with or violate any provision of the Company's or any Subsidiary's certificate or articles of incorporation, bylaws or other organizational or charter documents, or (ii) conflict with, or constitute a default (or an event that 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 (with or without notice, lapse of time or both) of, any agreement, credit facility, debt or other instrument (evidencing a Company or Subsidiary debt or otherwise) or other understanding to which the Company or any Subsidiary is a party or by which any property or asset of the Company or any Subsidiary is bound or affected, or (iii) result in a violation of any law, rule, regulation, order, judgment, injunction, decree or other restriction of any court or governmental authority to which the Company or a Subsidiary is subject (including federal and state securities laws and regulations), or by which any property or asset of the Company or a Subsidiary is bound or affected; except in the case of each of clauses (ii) and (iii), such as could not, individually or in the aggregate, have or reasonably be expected to result in a Material Adverse Effect.

 

(e)           Filings, Consents and Approvals.  The Company is not required to obtain any consent, waiver, authorization or order of, give any notice to, or make any filing or registration with, any court or other federal, state, local or other governmental authority or other Person in connection with the execution, delivery and performance by the Company of the Transaction Documents, other than (i) any filings required by federal or state securities laws, (ii) the filing of a Notice of Sale of Securities on Form D with the Commission under Regulation D of the Securities Act, and (iii) those that have been made or obtained prior to the date of this Agreement.

 

  

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(f)           Issuance of the Securities.  The Securities have been duly authorized and, when issued and paid for in accordance with the Transaction Documents, will be duly and validly issued, fully paid and nonassessable, free and clear of all Liens.  The Company has reserved from its duly authorized capital stock a number of shares of Common Stock issuable upon conversion of the Note and upon exercise of the Warrant.  All securities previously issued by the Company were duly and validly issued, fully paid and nonassessable when issued, either pursuant to a valid registration statement or private placement transaction.

 

(g)           Capitalization.  The number of shares and type of all authorized, issued and outstanding capital stock of the Company, and all shares of Common Stock reserved for issuance under the Company’s various option and incentive plans, is specified in the SEC Reports.  Except as specified in the SEC Reports, no securities of the Company are entitled to preemptive or similar rights, and no Person has any right of first refusal, preemptive right, right of participation, or any similar right to participate in the transactions contemplated by the Transaction Documents.  Except as specified in the SEC Reports, there are no outstanding options, warrants, scrip rights to subscribe to, calls or commitments of any character whatsoever relating to, or securities, rights or obligations convertible into or exchangeable for, or giving any Person any right to subscribe for or acquire, any shares of Common Stock, or contracts, commitments, understandings or arrangements by which the Company or any Subsidiary is or may become bound to issue additional shares of Common Stock, or securities or rights convertible or exchangeable into shares of Common Stock.  The issue and sale of the Securities will not, immediately or with the passage of time, obligate the Company to issue shares of Common Stock or other securities to any Person and will not result in a right of any holder of Company securities to adjust the exercise, conversion, exchange or reset price under such securities.

 

(h)           SEC Reports; Financial Statements.  The Company has filed all reports, forms or other information required to be filed by it under the Securities Act and the Exchange Act, including pursuant to Section 13(a) or 15(d) thereof, for the twelve months preceding the date hereof (or such shorter period as the Company was required by law to file such reports) (the foregoing materials being collectively referred to herein as the “SEC Reports” and, together with the Schedules to this Agreement (if any), the “Disclosure Materials”) on a timely basis or has timely filed a valid extension of such time of filing and has filed any such SEC Reports prior to the expiration of any such extension.  As of their respective dates, the SEC Reports complied in all material respects with the requirements of the Securities Act and the Exchange Act and the rules and regulations of the Commission promulgated thereunder, and none of the SEC Reports, when filed, contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading.  The financial statements of the Company included in the SEC Reports comply in all material respects with applicable accounting requirements and the rules and regulations of the Commission with respect thereto as in effect at the time of filing.  Such financial statements have been prepared in accordance with GAAP applied on a consistent basis during the periods involved, except as may be otherwise specified in such financial statements or the notes thereto, and fairly present in all material respects the financial position of the Company and its consolidated Subsidiaries as of and for the dates thereof and the results of operations and cash flows for the periods then ended, subject, in the case of unaudited statements, to normal, immaterial, year-end audit adjustments.  For purposes of this Agreement, any reports, forms or other information provided to the Commission whether by filing, furnishing or otherwise providing, is included in the term “filed” (or any derivations thereof).

 

  

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(i)           Litigation.  There is no Action which (i) adversely affects or challenges the legality, validity or enforceability of any of the Transaction Documents or the Securities or (ii) except as specifically disclosed in the SEC Reports, would, if there were an unfavorable decision, individually or in the aggregate, have or reasonably be expected to result in a Material Adverse Effect.  Neither the Company nor any Subsidiary, nor any director or officer thereof (in his or her capacity as such), is or has been the subject of any Action involving a claim of violation of or liability under federal or state securities laws or a claim of breach of fiduciary duty, except as specifically disclosed in the SEC Reports.  Except as specifically disclosed in the SEC Reports, there has not been, and to the knowledge of the Company, there is not pending any investigation by the Commission involving the Company or any current or former director or officer or agent of the Company (in his or her capacity as such).  The Commission has not issued any stop order or other order suspending the effectiveness of any registration statement filed by the Company or any Subsidiary under the Exchange Act or the Securities Act, nor has the Commission called into question the validity of any shares previously issued by the Company.

 

(j)           Compliance.  Neither the Company nor any Subsidiary (i) is in default under or in violation of (and no event has occurred that has not been waived that, with notice or lapse of time or both, would result in a default by the Company or any Subsidiary under), nor has the Company or any Subsidiary received notice of a claim that it is in default under or that it is in violation of, any indenture, loan or credit agreement or any other agreement or instrument to which it is a party or by which it or any of its properties is bound (whether or not such default or violation has been waived), (ii) is in violation of any order of any court, arbitrator or governmental body, or (iii) is or has been in violation of any statute, rule or regulation of any governmental authority, including, without limitation, all foreign, federal, state and local laws relating to taxes, environmental protection, occupational health and safety, product quality and safety and employment and labor matters, except in each case as could not, individually or in the aggregate, have or reasonably be expected to result in a Material Adverse Effect.  The Company is in compliance with all effective requirements of the Sarbanes-Oxley Act of 2002, as amended, and the rules and regulations thereunder, that are applicable to it, except where such noncompliance could not have or reasonably be expected to result in a Material Adverse Effect.

 

(k)           Regulatory Permits.  The Company and the Subsidiaries possess all certificates, authorizations and permits issued by the appropriate federal, state, local or foreign regulatory authorities necessary to conduct their respective businesses as described in the SEC Reports, except where the failure to possess such permits could not, individually or in the aggregate, have or reasonably be expected to result in a Material Adverse Effect, and neither the Company nor any Subsidiary has received any notice of proceedings relating to the revocation or modification of any such permits.

 

  

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(l)           Patents and Trademarks.  The Company and the Subsidiaries have, or have rights to use, all patents, patent applications, trademarks, trademark applications, service marks, trade names, copyrights, licenses and other similar rights that are necessary or material for use in connection with their respective businesses as described in the SEC Reports and which the failure to so have could, individually or in the aggregate, have or reasonably be expected to result in a Material Adverse Effect (collectively, the “Intellectual Property Rights”).  Neither the Company nor any Subsidiary has received a written notice that the Intellectual Property Rights used by the Company or any Subsidiary violates or infringes upon the rights of any Person.  Except as set forth in the SEC Reports, to the knowledge of the Company, all such Intellectual Property Rights are enforceable and there is no existing infringement by another Person of any of the Intellectual Property Rights.

 

(m)           Certain Registration Matters. Assuming the accuracy of the Investor’s representations and warranties set forth in Section 3.2, no registration under the Securities Act is required for the offer and sale of the Securities by the Company to Investor under the Transaction Documents.

 

(n)           Investment Company.  The Company is not, and is not an Affiliate of, and immediately following each of the First Closing and Second Closing will not have become, an “investment company” within the meaning of the Investment Company Act of 1940, as amended.

 

(o)           Application of Takeover Protections.  The Company has taken all necessary action, if any, in order to render inapplicable any control share acquisition, business combination, poison pill (including any distribution under a rights agreement) or other similar anti-takeover provision under the Company's Certificate of Incorporation (or similar charter documents) or the laws of its state of incorporation that is or could become applicable to the Investor or shareholders of the Company prior to the First Closing Date or Second Closing Date as a result of the Investor and the Company fulfilling their obligations or exercising their rights under the Transaction Documents, including, without limitation, the Company's issuance of the Securities and the Investor's ownership of the Securities.

 

(p)           Taxes.  All United States federal, state, county, municipality local or foreign income tax returns and all other material tax returns (including foreign tax returns) which are required to be filed by or on behalf of the Company and each Subsidiary have been filed and all material taxes due pursuant to such returns or pursuant to any assessment received by the Company and each Subsidiary have been paid except those being disputed in good faith and for which adequate reserves have been established. The charges, accruals and reserves on the books of the Company and each Subsidiary in respect of taxes or other governmental charges have been established in accordance with GAAP.

 

  

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3.2           Representations and Warranties of Investor.  Investor hereby represents and warrants to the Company as follows:

 

(a)           Organization; Authority.  Investor is an entity duly organized, validly existing and in good standing under the laws of the jurisdiction of its organization with the requisite corporate or partnership power and authority to enter into and to consummate the transactions contemplated by the applicable Transaction Documents and otherwise to carry out its obligations thereunder. The execution, delivery and performance by Investor of the transactions contemplated by this Agreement have been duly authorized by all necessary corporate action on the part of Investor.  This Agreement has been duly executed by Investor, and when delivered by Investor in accordance with terms hereof, will constitute the valid and legally binding obligation of Investor, enforceable against it in accordance with its terms, except as such enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium, liquidation or similar laws relating to, or affecting generally the enforcement of, creditors’ rights and remedies or by other equitable principles of general application.

 

(b)           Investment Intent.  Investor is acquiring the Securities as principal for its own account for investment purposes only and not with a view to or for distributing or reselling such Securities or any part thereof, without prejudice, however, to Investor's right at all times to sell or otherwise dispose of all or any part of such Securities in compliance with applicable federal and state securities laws.  Subject to the immediately preceding sentence, nothing contained herein shall be deemed a representation or warranty by Investor to hold the Securities for any period of time.  Investor is acquiring the Securities hereunder in the ordinary course of its business. Investor does not have any agreement or understanding, directly or indirectly, with any Person to distribute any of the Securities.

 

(c)           Investor Status.  At the time Investor was offered the Securities, it was, and at the date hereof it is, an “accredited investor” as defined in Rule 501(a) under the Securities Act.  Investor is not a registered broker-dealer under Section 15 of the Exchange Act.

 

(d)           General Solicitation.  Investor is not purchasing the Securities as a result of any advertisement, article, notice or other communication regarding the Securities published in any newspaper, magazine or similar media or broadcast over television or radio or presented at any seminar or any other general solicitation or general advertisement.

 

(e)           Access to Information.  Investor acknowledges that it has reviewed the Disclosure Materials and has been afforded (i) the opportunity to ask such questions as it has deemed necessary of, and to receive answers from, representatives of the Company concerning the terms and conditions of the offering of the Securities and the merits and risks of investing in the Securities; (ii) access to information about the Company and the Subsidiaries and their respective financial condition, results of operations, business, properties, management and prospects sufficient to enable it to evaluate its investment; and (iii) the opportunity to obtain such additional information that the Company possesses or can acquire without unreasonable effort or expense that is necessary to make an informed investment decision with respect to the investment.  Neither such inquiries nor any other investigation conducted by or on behalf of such Investor or its representatives or counsel shall modify, amend or affect such Investor's right to rely on the truth, accuracy and completeness of the Disclosure Materials and the Company's representations and warranties contained in the Transaction Documents.

 

  

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(f)           Certain Trading Activities.  Investor has not directly or indirectly, nor has any Person acting on behalf of or pursuant to any understanding with Investor, engaged in any transactions in the securities of the Company (including, without limitation, any Short Sales involving the Company’s securities) since the earlier to occur of (1) the time that Investor was first contacted by the Company or placement agent engaged by the Company regarding an investment in the Company and (2) the 20th day prior to the time that the transactions contemplated by this Agreement are publicly disclosed by the Company.  Investor covenants that neither it nor any Person acting on its behalf or pursuant to any understanding with it will engage in any transactions in the securities of the Company (including Short Sales) prior to the time that the transactions contemplated by this Agreement are publicly disclosed.

 

(g)           Independent Investment Decision.  Investor has independently evaluated the merits of its decision to purchase Securities pursuant to this Agreement, and such Investor confirms that it has not relied on the advice of the Company’s business and/or legal counsel in making such decision.

 

ARTICLE IV.

OTHER AGREEMENTS OF THE PARTIES

 

4.1           (a)           The Securities may only be disposed of in compliance with state and federal securities laws.  In connection with any transfer of the Securities other than pursuant to an effective registration statement, to the Company, to an Affiliate of Investor or in connection with a pledge as contemplated in Section 4.1(b), the Company may require the transferor thereof to provide to the Company an opinion of counsel selected by the transferor, the form and substance of which opinion shall be reasonably satisfactory to the Company, to the effect that such transfer does not require registration of such transferred Securities under the Securities Act.

 

(b)           Certificates evidencing the Securities will contain the following legend, until such time as they are not required under Section 4.1(c):

 

[NEITHER THESE SECURITIES NOR THE SECURITIES ISSUABLE UPON CONVERSION OR EXERCISE OF THESE SECURITIES HAVE BEEN REGISTERED] WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE COMPANY.  [THESE SECURITIES AND THE SECURITIES ISSUABLE UPON CONVERSION OR EXERCISE OF THESE SECURITIES] MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT SECURED BY SUCH SECURITIES.

 

  

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The Company acknowledges and agrees that Investor may from time to time pledge, and/or grant a security interest in some or all of the Securities pursuant to a bona fide margin agreement in connection with a bona fide margin account and, if required under the terms of such agreement or account, Investor may transfer pledged or secured Securities to the pledgees or secured parties.  Such a pledge or transfer would not be subject to approval or consent of the Company and no legal opinion of legal counsel to the pledgee, secured party or pledgor shall be required in connection with the pledge, but such legal opinion may be required in connection with a subsequent transfer following default by the Investor transferee of the pledge.  No notice shall be required of such pledge.  At the Investor’s expense, the Company will execute and deliver such reasonable documentation as a pledgee or secured party of Securities may reasonably request in connection with a pledge or transfer of the Securities including the preparation and filing of any required prospectus supplement under Rule 424(b)(3) of the Securities Act or other applicable provision of the Securities Act to appropriately amend the list of selling stockholders thereunder.

 

4.2           Furnishing of Information.  Until the one year anniversary of the Second Closing Date, the Company covenants to timely file (or obtain extensions in respect thereof and file within the applicable grace period) all reports required to be filed by the Company after the date hereof pursuant to the Exchange Act.  As long as Investor owns Securities, if the Company is not required to file reports pursuant to such laws, it will prepare and furnish to Investor and make publicly available in accordance with Rule 144(c) such information as is required for Investor to sell the Underlying Shares and Warrant Shares under Rule 144.  The Company further covenants that it will take such further action as any holder of Securities may reasonably request, all to the extent required from time to time to enable such Person to sell the Underlying Shares and Warrant Shares without registration under the Securities Act within the limitation of the exemptions provided by Rule 144.

 

4.3           Listing of Securities.  The Company agrees, (i) if the Company applies to have the Common Stock traded on any other Trading Market, it will include in such application the Underlying Shares and Warrant Shares, and will take such other action as is necessary or desirable to cause the Underlying Shares and Warrant Shares to be listed on such other Trading Market as promptly as possible, and (ii) it will take all action reasonably necessary to continue the listing and trading of its Common Stock on a Trading Market and will comply in all material respects with the Company’s reporting, filing and other obligations under the bylaws or rules of the Trading Market.

 

  

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4.4           Integration.  The Company shall not, and shall use its best efforts to ensure that no Affiliate of the Company shall, sell, offer for sale or solicit offers to buy or otherwise negotiate in respect of any security (as defined in Section 2 of the Securities Act) that would be integrated with the offer or sale of the Securities in a manner that would require the registration under the Securities Act of the sale of the Securities to Investor, or that would be integrated with the offer or sale of the Securities for purposes of the rules and regulations of any Trading Market in a manner that would require stockholder approval of the sale of the Securities to Investor.

 

4.5           Reservation of Shares.  The Company shall maintain a reserve from its duly authorized shares of Common Stock equal to the number of shares of Common Stock required to comply with its conversion obligations under the Note and exercise obligations under the Warrant.

 

4.6           Conversion Procedures.  The form of Conversion Notice included in and as defined in the Note sets forth the totality of the procedures required by the Investor in order to convert the Note.  The Company shall honor conversions of the Note and shall deliver Underlying Shares in accordance with the terms, conditions and time periods set forth in the Transaction Documents.

 

4.7           Non-Public Information.  The Company covenants and agrees that neither it nor any other Person acting on its behalf will provide Investor or its agents or counsel with any information that the Company believes constitutes material non-public information, unless prior thereto Investor shall have executed a written agreement regarding the confidentiality and use of such information.

 

4.8           Use of Proceeds.  The Company will use the net proceeds from the sale of the Securities hereunder for a potential acquisition and for general working capital purposes.

 

4.9           Existence; Conduct of Business.  The Company will, and will cause each of the Subsidiaries to, do or cause to be done all things necessary to preserve, renew and keep in full force and effect its legal existence and the rights, licenses, permits, privileges and franchises material to the conduct of its business, provided, that the foregoing shall not prohibit (a) any sale, lease, transfer or other disposition permitted by this Agreement, or (b) any merger of (i) any domestic Subsidiary with any other domestic Subsidiary, (ii) any domestic Subsidiary with and into the Company, or (iii) any foreign Subsidiary with any other foreign Subsidiary.

 

  

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ARTICLE V.

MISCELLANEOUS

 

5.1           Fees and Expenses.  Each party shall pay the fees and expenses of its advisers, counsel, accountants and other experts, if any, and all other expenses incurred by such party incident to the negotiation, preparation, execution, delivery and performance of the Transaction Documents.  The Company shall pay all stamp and other taxes and duties levied in connection with the sale of the Notes.

 

5.2           Entire Agreement.  The Transaction Documents, together with the Exhibits and Schedules thereto, contain the entire understanding of the parties with respect to the subject matter hereof and supersede all prior agreements, understandings, discussions and representations, oral or written, with respect to such matters, which the parties acknowledge have been merged into such documents, exhibits and schedules.

 

5.3           Notices.  Any and all notices or other communications or deliveries required or permitted to be provided hereunder shall be in writing and shall be deemed given and effective on the earliest of (a) the date of transmission, if such notice or communication is delivered via facsimile (provided the sender receives a machine-generated confirmation of successful transmission) at the facsimile number specified in this Section prior to 5:30 p.m. (New York City time) on a Trading Day, (b) the next Trading Day after the date of transmission, if such notice or communication is delivered via facsimile at the facsimile number specified in this Section on a day that is not a Trading Day or later than 5:30 p.m. (New York City time) on any Trading Day, (c) the Trading Day following the date of mailing, if sent by U.S. nationally recognized overnight courier service, or (d) upon actual receipt by the party to whom such notice is required to be given.  The address for such notices and communications shall be as follows:

 

	
  

	
If to the Company:

	
InterCloud Systems, Inc.

2500 N. Military Trail, Suite 275

Boca Raton, Florida 33431

Facsimile:  (561) 988-2370

Attention:  Lawrence Sands

	
  

	
With a copy to:

	
Pryor Cashman LLP

7 Times Square

New York, New York 10036

Facsimile:  (212) 798-6319

Attention:  M. Ali Panjwani, Esq.

	
  

	 

	
  

	
If to Investor:

	
To the address set forth under Investor's name

on the signature pages hereof;

 

or such other address as may be designated in writing hereafter, in the same manner, by such Person.

 

5.4           Amendments; Waivers.  No provision of this Agreement may be waived or amended except in a written instrument signed by the Company and the Investor.  No waiver of any default with respect to any provision, condition or requirement of this Agreement shall be deemed to be a continuing waiver in the future or a waiver of any subsequent default or a waiver of any other provision, condition or requirement hereof, nor shall any delay or omission of either party to exercise any right hereunder in any manner impair the exercise of any such right.

 

  

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5.5           Construction.  The headings herein are for convenience only, do not constitute a part of this Agreement and shall not be deemed to limit or affect any of the provisions hereof.  The language used in this Agreement will be deemed to be the language chosen by the parties to express their mutual intent, and no rules of strict construction will be applied against any party.  This Agreement shall be construed as if drafted jointly by the parties, and no presumption or burden of proof shall arise favoring or disfavoring any party by virtue of the authorship of any provisions of this Agreement or any of the Transaction Documents.

 

5.6           Successors and Assigns.  This Agreement shall be binding upon and inure to the benefit of the parties and their successors and permitted assigns.  The Company may not assign this Agreement or any rights or obligations hereunder without the prior written consent of the Investor.  Investor may assign any or all of its rights under this Agreement to any Person to whom Investor assigns or transfers the Note, provided such transferee agrees in writing to be bound, with respect to the transferred Securities, by the provisions hereof that apply to the “Investor.”

 

5.7           No Third-Party Beneficiaries.  This Agreement is intended for the benefit of the parties hereto and their respective successors and permitted assigns and is not for the benefit of, nor may any provision hereof be enforced by, any other Person.

 

5.8           Governing Law.  All questions concerning the construction, validity, enforcement and interpretation of this Agreement shall be governed by and construed and enforced in accordance with the internal laws of the State of New York, without regard to the principles of conflicts of law thereof.  Each party agrees that all Actions concerning the interpretations, enforcement and defense of the transactions contemplated by this Agreement and any other Transaction Documents (whether brought against a party hereto or its respective Affiliates, employees or agents) shall be commenced exclusively in the New York Courts.  Each party hereto hereby irrevocably submits to the exclusive jurisdiction of the New York Courts for the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein (including with respect to the enforcement of the any of the Transaction Documents), and hereby irrevocably waives, and agrees not to assert in any Action, any claim that it is not personally subject to the jurisdiction of any such New York Court, or that such Action has been commenced in an improper or inconvenient forum.  Each party hereto hereby irrevocably waives personal service of process and consents to process being served in any such Action by mailing a copy thereof via registered or certified mail or overnight delivery (with evidence of delivery) to such party at the address in effect for notices to it under this Agreement and agrees that such service shall constitute good and sufficient service of process and notice thereof.  Nothing contained herein shall be deemed to limit in any way any right to serve process in any manner permitted by law.  Each party hereto hereby irrevocably waives, to the fullest extent permitted by applicable law, any and all right to trial by jury in any legal proceeding arising out of or relating to this Agreement or the transactions contemplated hereby.  If either party shall commence an Action to enforce any provisions of a Transaction Document, then the prevailing party in such Action shall be reimbursed by the other party for its reasonable attorneys’ fees and other costs and expenses incurred with the investigation, preparation and prosecution of such Action.

 

  

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5.9           Survival.  The representations, warranties, agreements and covenants contained herein shall survive the First Closing and Second Closing and the delivery of the Securities.

 

5.10         Execution.  This Agreement may be executed in two or more counterparts, all of which when taken together 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, it being understood that both parties need not sign the same counterpart.  In the event that any signature is delivered by facsimile transmission, such signature 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 signature page were an original thereof.

 

5.11         Severability.  If any provision of this Agreement is held to be invalid or unenforceable in any respect, the validity and enforceability of the remaining terms and provisions of this Agreement shall not in any way be affected or impaired thereby and the parties will attempt to agree upon a valid and enforceable provision that is a reasonable substitute therefor, and upon so agreeing, shall incorporate such substitute provision in this Agreement.

 

5.12         Remedies.  In addition to being entitled to exercise all rights provided herein or granted by law, including recovery of damages, each of the Investor and the Company will be entitled to specific performance under the Transaction Documents.  The parties agree that monetary damages may not be adequate compensation for any loss incurred by reason of any breach of obligations described in the foregoing sentence and hereby agrees to waive in any action for specific performance of any such obligation the defense that a remedy at law would be adequate.

 

5.13         Payment Set Aside.  To the extent that the Company makes a payment or payments to Investor pursuant to any Transaction Document or Investor enforces or exercises its rights thereunder, and such payment or payments or the proceeds of such enforcement or exercise or any part thereof are subsequently invalidated, declared to be fraudulent or preferential, set aside, recovered from, disgorged by or are required to be refunded, repaid or otherwise restored to the Company, a trustee, receiver or any other person under any law (including, without limitation, any bankruptcy law, state or federal law, common law or equitable cause of action), then to the extent of any such restoration the obligation or part thereof originally intended to be satisfied shall be revived and continued in full force and effect as if such payment had not been made or such enforcement or setoff had not occurred.

 

  

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IN WITNESS WHEREOF, the parties hereto have caused this Purchase Agreement to be duly executed by their respective authorized signatories as of the date first indicated above.

 

	 	
INTERCLOUD SYSTEMS, INC.

	 	 	 
	 	
By:

	
/s/ Lawrence M. Sands

	 	 	
Name: Lawrence M. Sands

	 	
  

	
Title: Senior Vice President

	 	 	 
	 	
ICG USA, LLC

	 	 	 
	 	
By:

	
/s/ Brian Nord

	 	 	
Name: Brian Nord

	 	 	
Title: Chief Executive Officer

 

	 	
Tax ID No.:

	  

 

	 	
ADDRESS FOR NOTICE

	 	  	  
	 	
c/o:

	  
	 	  	  
	 	
Street:

	  

 

	 	
City/State/Zip:

	  

 

	 	
Attention:

	  

 

	 	
Tel:

	  
	 	  	  
	 	
Fax:

	  

 

	 	
DELIVERY INSTRUCTIONS

	 	
(if different from above)

	 	  	  
	 	
c/o:

	  
	 	
Street:

	  

	 	
City/State/Zip:

	  

	 	
Attention:

	  

	 	
Tel:

	  

 

 

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