InterCloud Systems, Inc. (OTCMKTS:ICLD) Files An 8-K Entry into a Material Definitive Agreement
Item 1.01. Entry into a Material Definitive Agreement.
InterCloud Systems, Inc., a Delaware corporation (the Company,
we, us, or our) has embarked upon a plan to realign its business
strategy and reduce the convertible debt on its balance sheet. In
that regard, the Company has sold a non-core business division of
one of its wholly-owned subsidiaries, ADEX Corporation (ADEX),
and has used the proceeds to eliminate $3,625,000 of secured
convertible debt from its balance sheet.
Asset Purchase Agreement
On February 28, 2017, we entered into an Asset Purchase Agreement
(the APA) with ADEX and HWN, Inc., a Delaware corporation (HWN),
to which HWN purchased from ADEX and the Company ADEXs High Wire
Networks division, in consideration of a $4 million cash payment
(the Purchase Price) to the Company, with an expected additional
$900,000 cash payment in respect of a working capital adjustment
to the Purchase Price to be paid to the Company in August 2017,
all in accordance with the terms and conditions of the APA.
Reduction of Debt Obligations to Holder and Holder
Affiliate
Consent
In connection with the execution of the APA, we executed a
Consent, dated as of February 28, 2017 (the Consent), with the
Holders (as defined below), in order to, among other things, (i)
obtain the Holders consent to the Companys execution of the APA;
(ii) amend that certain Debenture, dated December 29, 2015 (as
subsequently amended and restated, the Debenture), issued by the
Company to the Holder party thereto (the Holder), to modify the
conversion price at which the Debenture converts into Common
Stock of the Company (Common Stock) from the lowest of (a)
$0.2043 per share, (b) 80% of the average VWAPs (as defined in
the Debenture) for each of the five consecutive trading days
immediately prior to the applicable conversion, and (c) 85% of
the VWAP (as defined in the Debenture) for the trading day
immediately preceding the applicable conversion ((a)-(c), the Old
Conversion Prices), to the lower of (a) $0.04 per share and (b)
80% of the lowest daily VWAP (as defined in the Debenture) for
the thirty consecutive trading days immediately prior to the
applicable conversion (the New Conversion Prices); (iii) amend
that certain Convertible Note, dated February 18, 2016 (as
subsequently amended and restated, the Convertible Note), issued
by the Company and VaultLogix, LLC, a Delaware limited liability
company (VaultLogix) to an affiliate of the Holder (the Holder
Affiliate, and together with the Holder, the Holders), to modify
the conversion price at which the Convertible Note converts into
Common Stock from the Old Conversion Prices to the New Conversion
Prices; (iv) amend that certain Senior Secured Note, dated May
17, 2016 (as subsequently amended and restated, the 2.7 Note),
issued by the Company to the Holder, to modify the conversion
price at which the 2.7 Note converts into Common Stock from the
Old Conversion Prices to the New Conversion Prices; and (v) apply
$3,625,000 of the Purchase Price received in connection with the
APA to payments to the Holder in respect of the Convertible Note,
as more particularly set forth in the Consent.
Exchange Agreement
We also executed a Securities Exchange Agreement, dated as of
February 28, 2017 (the Exchange Agreement), with the Holder, to
which the Holder agreed to exchange its additional investment
rights under Section 4.13 of that certain Securities Purchase
Agreement, effective as of December 29, 2015, by and between the
Company and the Holder, in consideration of the Companys
execution and delivery to the Holder of a warrant (the Warrant)
to purchase from the Company up to a number of shares of Common
Stock that would result in the Company receiving aggregate
proceeds from the exercise of the Warrant of $1 million. The
Warrant expires on November 28, 2018 and contains a cashless
exercise feature. If the Warrant is exercised prior to May 29,
2017, the exercise price per share is $0.04. If the Warrant is
exercised on or after May 29, 2017, the exercise price per share
is equal to the lower of: (a) $0.04 and (b) 80% of the lowest
daily VWAP (as defined in the Warrant) of the Common Stock for
the thirty (30) consecutive trading day period immediately
preceding the applicable exercise date.
The foregoing description of the APA, Consent, Exchange
Agreement, and Warrant does not purport to be complete and is
subject to, and qualified in its entirety by reference to, the
full text of the APA, Consent, Exchange Agreement, and Warrant,
copies of which are filed herewith as Exhibits 10.1, 10.2, and
10.3, and 10.4 respectively, and are incorporated by reference
herein. The provisions of the APA, Consent, Exchange Agreement,
and Warrant, including the representations and warranties
contained therein, are not for the benefit of any party other
than the parties to such agreements and are not intended as
documents for investors and the public to obtain factual
information about our current state of affairs. Rather, investors
and the public should look to other disclosures contained in our
filings with the SEC.
Item 2.01. Completion or Acquisition or Disposition of
Assets
The information set forth in Item 1.01 in this Current Report on
Form 8-K is incorporated herein by reference.
Item 3.02. Unregistered Sales of Equity
Securities.
The information set forth in Item 1.01 of this Current Report on
Form 8-K is incorporated herein by reference. The Warrant and the
shares of Common Stock issuable to the Holder upon exercise of
the Warrant, was issued without registration under the Securities
Act of 1933, as amended (the Securities Act), based on the
exemption from registration afforded by Section 3(a)(9) of the
Securities Act thereunder.
Item 8.01. Other Events
On February 28, 2017, the Company issued a press release
announcing the execution of the APA. A copy of the press release
is attached hereto as Exhibit 99.1 and is incorporated herein by
reference.
Neither the filing of the press release as an exhibit to this
Current Report on Form 8-K nor the inclusion in the press release
of a reference to the Companys internet address shall, under any
circumstances, be deemed to incorporate the information available
at its internet address into this Current Report on Form 8-K. The
information available at the Companys internet address is not
part of this Current report on Form 8-K or any other report filed
by the Company with the SEC.
Item 9.01. Financial Statements and Exhibits
(d) Exhibits
| Exhibit No. | Description | |
| 10.1 |
Asset Purchase Agreement, dated as of February 28, 2017, by and among the Company, ADEX Corporation, and HWN, Inc. |
|
| 10.2 |
Consent, dated as of February 28, 2017, by and among the Company and the Holders party thereto. |
|
| 10.3 |
Securities Exchange Agreement, dated as of February 28, 2017, by and between the Company and the Holder party thereto. |
|
| 10.4 |
Common Stock Purchase Warrant, dated February 28, 2017, executed by the Company in favor of the Holder party thereto. |
|
| 10.5 |
10% Original Issue Discount Senior Secured Convertible Debenture, dated December 29, 2015, executed by the Company in favor of the Holder party thereto. (1) |
|
| 10.6 |
8.25% Senior Secured Convertible Note, dated February 18, 2016, executed by the Company and VaultLogix, LLC in favor of the Holder party thereto. (2) |
|
| 10.7 |
0.67% Senior Secured Note, dated May 17, 2016, executed by the Company in favor of the Holder party thereto. (3) |
|
| 10.8 |
Securities Purchase Agreement, dated as of December 29, 2015, between the Company and the Purchasers party thereto. (4) |
|
| 99.1 | Press Release, dated March 1, 2017. | |
| (1) |
Filed as an exhibit to the Companys Current Report on Form 8-K filed with the SEC on December 30, 2015 and incorporated herein by reference. |
|
| (2) |
Filed as an exhibit to the Companys Current Report on Form 8-K filed with the SEC on February 19, 2016 and incorporated herein by reference. |
|
| (3) |
Filed as an exhibit to the Companys Current Report on Form 8-K filed with the SEC on May 23, 2016 and incorporated herein by reference. |
|
| (4) |
Filed as an exhibit to the Companys Current Report on Form 8-K filed with the SEC on December 30, 2015 and incorporated herein by reference. |
Cautionary Statement Regarding Forward-Looking
Statements
The statements contained in this Current Report on Form 8-K that
are not historical facts are forward-looking statements (within
the meaning of Section21E of the Securities Exchange Act of 1934,
as amended) that involve risks and uncertainties. Such
forward-looking statements may be identified by, among other
things, the use of forward-looking terminology such as believe,
expect, may, could, would, plan, intend, estimate, predict,
potential, continue, should or anticipate or the negative thereof
or other variations thereon or comparable terminology, or by
discussions of strategy that involve risks and uncertainties.
Such statements involve risks, uncertainties and assumptions. If
such risks or uncertainties materialize or such assumptions prove
incorrect, the results of the Company and its subsidiaries could
differ materially from those expressed or implied by such
forward-looking statements and assumptions. All statements other
than statements of historical fact are statements that could be
deemed forward-looking statements, including any statements of
the plans, strategies and objectives of the Company for future
operations, other statements of expectation or belief, and any
statements or assumptions underlying any of the foregoing. Risks,
uncertainties and assumptions include the possibility that
expected benefits may not materialize as expected, including with
respect to the additional $900,000 cash payment to be made to the
Company in connection with the APA. The Company assumes no
obligation and does not intend to update these forward-looking
statements.
About InterCloud Systems, Inc. (OTCMKTS:ICLD)
InterCloud Systems, Inc. is a provider of cloud networking orchestration and automation for software-defined networking (SDN) and network function virtualization (NFV) cloud environments. The Company operates through four segments: applications and infrastructure, professional services, managed services and cloud services. The applications and infrastructure segment provides engineering and professional consulting services, and voice, data and optical solutions. The professional services segment provides outsourced services to the wireless and wireline industry and information technology industry. The cloud services segment provides cloud computing and storage services to customers. The managed services segment provides hardware and software products to customers, and provides maintenance and support for those products. It offers its solutions to the telecommunications service provider (carrier) and corporate enterprise markets through cloud solutions and professional services. InterCloud Systems, Inc. (OTCMKTS:ICLD) Recent Trading Information
InterCloud Systems, Inc. (OTCMKTS:ICLD) closed its last trading session up +0.0052 at 0.0155 with 115,143,069 shares trading hands.