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 reduce costs
as well as significantly reduce the debt on its balance sheet. In that regard, and as a first step, the Company announced that
it has eliminated more than $14.1 million of debt from its balance sheet in the last week, as well as all derivative liabilities
associated with that debt.
Debt Obligations to Holder and Holder Affiliate
Debt Obligations to Holder
As of September 1, 2016,
the Company reduced debt obligations to a certain investor party (the “Holder”) and an affiliate of that Holder (the
“Holder Affiliate”) by approximately $14.1 Million in accordance with the terms of the Amendment Agreement described
below.
As previously disclosed in
a Current Report on Form 8-K filed with the Securities and Exchange Commission (the “SEC”) on December 30, 2015, we
previously entered into a Securities Purchase Agreement, effective as of December 29, 2015, with the Holder, pursuant to which
we issued to the Holder a 10% senior secured convertible debenture (as subsequently amended and restated, the “Debenture”),
dated December 29, 2015.
As previously disclosed
in a Current Report on Form 8-K filed with the SEC on May 23, 2016, we previously executed and issued a 0.67% senior secured note
(the “2.7 Note”), dated May 17, 2016, in the aggregate principal amount of $2,745,000, to the Holder.
Debt Obligations to Holder
Affiliate
As previously disclosed in
a Current Report on Form 8-K filed with the SEC on February 19, 2016, we previously entered into a Securities Exchange Agreement,
effective as of February 17, 2016, with VaultLogix, LLC, a Delaware limited liability company (“VaultLogix”) and the
Holder Affiliate, pursuant to which we and VaultLogix issued to the Holder Affiliate an 8.25% senior secured convertible note (as
subsequently amended and restated, the “Convertible Note”), dated February 18, 2016.
As previously disclosed in
a Current Report on Form 8-K filed with the SEC on May 23, 2016, we previously executed and issued a 0.67% senior secured note
(the “5.2 Note”), dated May 17, 2016, in the aggregate principal amount of $5,220,475, to the Holder Affiliate.
As set forth below, these
obligations have either been satisfied in whole or in part or amended pursuant to the Amendment Agreement (defined below).
Amendment Agreement
On September 1, 2016 we
entered into an Amendment Agreement with the Holder, the Holder Affiliate, VaultLogix, and the Guarantors thereto (the “Amendment
Agreement”), pursuant to which, among other things, the parties agreed that (i) the Holder and the Holder Affiliate waive
certain covenant violations and defaults, (referred to as
“Specified Defaults” in the Amendment Agreement), (ii) the Holder and the Holder Affiliate agreed to a specified application
of the Cash Collateral (as defined in the Amendment Agreement) in partial satisfaction of the obligations owed under the Debenture,
the 2.7 Note, and the Convertible Note, and in full satisfaction of the 5.2 Note, and (iii) certain provisions of the Debenture,
the 2.7 Note, and the Convertible Note be amended, and we also agreed to (i) issue warrants, with an expiration date of December
31, 2017, to purchase 1,000,000 shares of our common stock, par value $0.0001 per share (“Common Stock”) at an exercise
price of $0.01 per share, (ii) issue warrants, with an expiration date of December 31, 2017, to purchase 3,500,000 shares of Common
Stock at an exercise price of $0.10 per share ((i) and (ii), the “Warrants”).
The Amendment Agreement serves
to reduce the outstanding liabilities of the Company, as well as corresponding debt service and derivative liabilities associated
therewith.
Amended and Restated
Debt Obligations
In connection with the execution
of the Amendment Agreement, we executed the Third Amended and Restated Senior Secured Convertible Debenture (the “Amended
and Restated Debenture”), in order to, among other things, amend the Debenture to (i) provide that the Company may prepay
the Amended and Restated Debenture upon prior notice at a 10% premium, (ii) modify the conversion price at which the Amended and
Restated Debenture converts into Common Stock from a fixed price of $0.80 to the lowest of (a) $0.2043 per share, (b) 80% of the
average VWAPs (as defined in the Amended and Restated 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 Amended and Restated Debenture) for the trading day immediately
preceding the applicable conversion (the “Conversion Price”), and (iii) eliminate three additional 7.5% payments due
to the Holder in 2017, 2018, and 2019, as per the Debenture. Further, in connection with the execution of the Amendment Agreement,
we executed the Amended and Restated Senior Secured Note (the “Amended and Restated 2.7 Note”), in order to, among
other things, amend the 2.7 Note to provide that the Holder may convert its interest in the Amended and Restated 2.7 Note into
shares of Common Stock at the applicable Conversion Price at any time and from time to time. Further, in connection with the execution
of the Amendment Agreement, we and VaultLogix executed the Second Amended and Restated Senior Secured Convertible Note (the “Amended
and Restated Convertible Note”), in order to, among other things, amend the Convertible Note to (i) increase the interest
rate payable thereon from 0.67% to 4.67%, (ii) provide that the Company may prepay the Amended and Restated Convertible Note upon
prior notice at a 10% premium, (iii) provide that the Holder Affiliate may convert its interest in the Amended and Restated Convertible
Note into shares of Common Stock at the applicable Conversion Price, and (iv) eliminate three additional 7.5% payments due to the
Holder Affiliate in 2017, 2018, and 2019, as per the Convertible Note.
The foregoing description
of the Amended and Restated Debenture, the Amended and Restated 2.7 Note, the Amended and Restated Convertible Note, and the Amendment
Agreement does not purport to be complete and is subject to, and qualified in its entirety by reference to, the full text of the
Amended and Restated Debenture, the Amended and Restated 2.7 Note, the Amended and Restated Convertible Note, and the Amendment
Agreement, 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 Amended and Restated Debenture, the Amended and Restated 2.7 Note, the Amended and Restated
Convertible Note, and the Amendment Agreement, 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.