Attached files
Exhibit
10.2
AMENDMENT
NO. 3 TO
SECURITIES
PURCHASE AGREEMENT
This
Amendment No. 3 (this “Amendment”) to Securities Purchase
Agreement dated as of September 9, 2016 (as amended, the
“Agreement”) is
made and entered into effective as of March 24, 2017 (the
“Effective
Date”), by and among root9B Holdings, Inc. (f/k/a
root9B Technologies, Inc.), a Delaware corporation (the
“Company”) and
the purchasers listed on Exhibit A of the Agreement (the
“Purchasers”).
Capitalized terms used but not otherwise defined herein shall have
the same meanings as set forth in the Agreement.
WHEREAS, the
Company previously sold secured convertible promissory notes (the
“Notes”) and
common stock purchase warrants (the “Warrants”) pursuant to the
Agreement.
WHEREAS, certain of
the Purchasers and new investors have agreed to purchase additional
Notes in the aggregate principal amount of $1,500,000 and Warrants
provided that the Agreement, the Notes and the Warrants are amended
to provide, among other things, (i) a conversion price and exercise
price of $10 per share (as previously adjusted for the
Company’s one-for-fifteen reverse stock split on December 1,
2016), (ii) Events of Default (as defined in the Notes) relating to
the Company’s ability to make payroll and maintain adequate
working capital levels, (iii) a new remedy allowing the Majority
Note Holders to nominate two (2) directors to the Company’s
Board of Directors upon the first occurrence of any Event of
Default, and (iv) a right of first refusal regarding any financing
or change in control transaction that arises after an Event of
Default (until cured).
WHEREAS, the
Company previously sold and issued securities, including certain
warrants (the “March
Warrants”) pursuant to that certain Amended and
Restated Securities Purchase Agreement, dated March 10, 2016 (the
“March
Agreement”) providing the holders with certain rights
upon the issuance of Additional Stock (as defined in the March
Agreement).
WHEREAS, the
Qualified Holders (as defined in the March Agreement) and the
Registered Holders (as defined in the March Warrant) under each
March Warrant, previously acknowledged and agreed that the Notes
and Warrants issued pursuant to the Agreement, any Shares issued
upon conversion of the Notes, any Shares issued upon exercise of
the Warrants, and any Interest Shares shall be excluded from the
definition of, and shall not constitute, Additional Stock (as that
term is defined in the March Agreement and the March Warrants)
under the March Agreement and the March Warrants, and waived any
rights that would arise in the event that any of the foregoing
securities constituted Additional Stock under the March Agreement
and/or the March Warrants.
WHEREAS,
concurrently herewith, the Qualified Holders and the Registered
Holders under each March Warrant will deliver to the Company a
waiver acknowledging and agreeing that the amendments to the Notes
and Warrants proposed by this Amendment, as well as the issuance of
the amended Notes and Warrants pursuant to the Agreement, any
Shares issued upon conversion of the Notes, any Shares issued upon
exercise of the Warrants, and any Interest Shares shall be excluded
from the definition of, and shall not constitute, Additional Stock
under the March Agreement and the March Warrants, and waiving any
rights that would arise in the event that any of the foregoing
securities constituted Additional Stock under the March Agreement
and/or the March Warrants (the “Waiver”).
WHEREAS,
Section 9(g) of the Agreement provides that any term of the
Agreement may be amended, waived or modified with the written
consent of the Company and the Purchasers holding a majority of the
aggregate principal amount of the Notes then outstanding, provided
that such amendment does not impose any additional liability or
financial obligations on the Purchasers.
WHEREAS, the Notes
and Warrants provide that any term of a Note or Warrant may be
amended, waived or modified with the written consent of the Company
and each holder of such Note and/or Warrant (the
“Holders”).
WHEREAS, the
Company, the Purchasers and each of the Holders each desire to
amend the Agreement, and hereby agree that it is in the best
interest of the Company to amend the Agreement, the Notes and the
Warrants, each as set forth herein.
NOW,
THEREFORE, in consideration of the mutual covenants and conditions
contained herein, the parties hereby agree as follows:
1. Purchase
of Additional Notes and Warrants.
a. Subject
to the terms and conditions of this Amendment, the parties
identified as New Purchasers on the signature page attached hereto
(the “New
Purchasers”), agree to purchase and the Company agrees
to sell and issue Notes with an aggregated principal amount of at
least $125,000. The purchase price of each Note shall be equal to
100% of the principal amount of such Note.
b. Subject
to the terms and conditions of this Amendment and in connection
with the purchase of the Notes set forth in Section 1(a), the Company shall
sell and issue to each New Purchaser, and each New Purchaser agrees
to purchase, a Warrant to purchase that number of shares of the
Company’s Common Stock equal to 50% of the total principal
amount of Notes purchased by such New Purchaser, divided by $10.00,
rounded down to the nearest whole number, with an exercise price
equal to the Warrant Exercise Price (as defined in the Warrant).
The Company and the New Purchasers as a result of arm’s
length bargaining, agree that: (i) none of the New Purchasers nor
any of their affiliates have rendered or have agreed to render any
services to the Company in connection with this Agreement or the
issuance of the Note or any Warrant to such New Purchaser; and (ii)
the Warrant is not being issued to any New Purchaser as
compensation.
c. Prior
to the sale and issuance of the Notes and Warrants pursuant to this
Section 1, the
Company shall have received the Waiver.
2. Amendment
of Recital of the Agreement. The Recital of the Agreement is
hereby amended, restated and replaced in its entirety with the
following:
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“The Company
desires to issue and sell and the Purchasers, severally and not
jointly, desire to purchase (i) secured convertible promissory
notes in substantially the form attached hereto as Exhibit B (the
“First
Form of Note”), the form attached hereto as
Exhibit E (the
“Second
Form of Note”) and/or the form attached hereto as
Exhibit F (the
“Third
Form of Note,” each First Form of Note, Second Form of
Note and Third Form of Note, a “Note” and
collectively, the “Notes”) and
(ii) warrants to purchase shares of the Company’s common
stock in substantially the form attached hereto as Exhibit C (the
“First
Form of Warrant”) and/or the form attached to this
Agreement as Exhibit
G (the “Second Form of
Warrant,” each First Form of Warrant and Second Form
of Warrant, a “Warrant” and
collectively, the “Warrants”).
The Notes will rank senior to all outstanding and future
indebtedness of the Company and will be secured by a first priority
perfected security interest in all of the existing and future
assets of the Company (other than the assets relating to IPSA (as
defined in the Security Agreement) and its direct and indirect
Subsidiaries as evidenced by a security agreement in the form
attached hereto as Exhibit
D (the “Security
Agreement”). The Notes, the shares of common stock
issued upon conversion thereof (the “Note Shares”),
the Warrants and the shares of common stock issuable upon
conversion thereof (the “Warrant
Shares” and, together with the Note Shares, the
“Underlying
Shares”) are collectively referred to herein as the
“Securities.”
3. Amendment
of Section 3. Section 3 of the Agreement is hereby amended
to insert Sections 3(z) through 3(hh)as follows:
“(z) Capitalization.
The capitalization of the Company as of the date hereof is as set
forth on Schedule 3(z). All of the outstanding shares of capital
stock of the Company are duly authorized, validly issued, fully
paid and non-assessable, have been issued in compliance in all
material respects with all applicable federal and state securities
laws, and none of such outstanding shares was issued in violation
of any preemptive rights or similar rights to subscribe for or
purchase any capital stock of the Company. Except as set forth in
the SEC Reports: (i) no shares of the Company’s outstanding
capital stock are subject to preemptive rights or any other similar
rights; (ii) there are no outstanding options, warrants, scrip,
rights to subscribe to, calls or commitments of any character
whatsoever relating to, or securities or rights convertible into,
or exercisable or exchangeable for, any shares of capital stock of
the Company, or contracts, commitments, understandings or
arrangements by which the Company is or may become bound to issue
additional shares of capital stock of the Company or options,
warrants, scrip, rights to subscribe to, calls or commitments of
any character whatsoever relating to, or securities or rights
convertible into, or exercisable or exchangeable for, any shares of
capital stock of the Company, that are not included as exhibits to
the SEC Reports; (iii) there are no material outstanding debt
securities, notes, credit agreements, credit facilities or other
agreements, documents or instruments evidencing indebtedness of the
Company or by which the Company is bound; (iv) except as set forth
in the SEC Reports, there are no agreements or arrangements under
which the Company is obligated to register the sale of any of their
securities under the Securities Act; (v) there are no outstanding
securities or instruments of the Company that contain any
redemption or similar provisions, and there are no contracts,
commitments, understandings or arrangements by which the Company is
or may become bound to redeem a security of the Company; (vi) the
Company does not have any stock appreciation rights or
“phantom stock” plans or agreements or any similar plan
or agreement; and (vii) the Company has no liabilities or
obligations other than those disclosed in the SEC Reports or those
which, individually or in the aggregate, will not have or could not
reasonably be expected to have a Material Adverse Effect. There are
no securities or instruments containing anti-dilution or similar
provisions that will be triggered by the issuance of the
Securities.
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(aa) No
Integrated Offering. Assuming the accuracy of the
Purchasers’ representations and warranties set forth in
Section 4, none of the Company, its Subsidiaries nor, to the
Company’s Knowledge, any of its Affiliates or any Person
acting on its behalf has, directly or indirectly, at any time
within the past six months, made any offers or sales of any Company
security or solicited any offers to buy any security under
circumstances that would (i) eliminate the availability of the
exemption from registration under Regulation D under the Securities
Act being relied upon in connection with the offer and sale by the
Company of the Securities or (ii) cause the offering of the
Securities pursuant to the Transaction Documents to be integrated
with prior offerings by the Company for purposes of any applicable
law, regulation or stockholder approval provisions, including,
without limitation, under the rules and regulations of any Trading
Market on which any of the securities of the Company are listed or
designated.
(bb) Listing
and Maintenance Requirements. The Company has not, in the 12
months preceding the date hereof, received written notice from any
Trading Market on which the Common Stock is listed or quoted to the
effect that the Company is not in compliance with the listing or
maintenance requirements of such Trading Market. The Company is,
and has no reason to believe that it will not in the foreseeable
future continue to be, in compliance in all material respects with
the listing and maintenance requirements for continued trading of
the Common Stock on the Principal Trading Market.
(cc) OFAC.
Neither the Company nor any Subsidiary nor, to the Company’s
Knowledge, any director, officer, agent, employee, Affiliate or
Person acting on behalf of the Company or any Subsidiary is
currently subject to any U.S. sanctions administered by the Office
of Foreign Assets Control of the U.S. Treasury Department
(“OFAC”); and
the Company will not knowingly directly or indirectly use the
proceeds of the sale of the Securities, or lend, contribute or
otherwise make available such proceeds to any Subsidiary, joint
venture partner or other Person or entity, towards any sales or
operations in Iran, Syria, Sudan, Myanmar or any other country
sanctioned by OFAC or for the purpose of financing the activities
of any Person currently subject to any U.S. sanctions administered
by OFAC.
(dd) Money
Laundering Laws. The operations of each of the Company and
any Subsidiary are and have been conducted at all times in
compliance with the money laundering statutes of applicable
jurisdictions, the rules and regulations thereunder and any related
or similar rules, regulations or guidelines, issued, administered
or enforced by any applicable governmental agency (collectively,
the “Money Laundering
Laws”) and to the Company’s Knowledge, no
action, suit or proceeding by or before any court or governmental
agency, authority or body or any arbitrator involving the Company
and/or any Subsidiary with respect to the Money Laundering Laws is
pending or, to the Company’s Knowledge,
threatened.
(ee) Transactions
With Affiliates and Employees. Except as set forth in the
SEC Reports and the grant of stock options or other equity awards
that are not individually or in the aggregate material in amount,
none of the officers or directors of the Company and, to the
Company’s Knowledge, none of the employees of the Company, is
presently a party to any transaction with the Company or to a
presently contemplated transaction (other than for services as
employees, officers and directors) that would be required to be
disclosed pursuant to Item 404 of Regulation S-K promulgated under
the Securities Act.
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(ff) Off
Balance Sheet Arrangements. There is no transaction,
arrangement, or other relationship between the Company (or any
Subsidiary) and an unconsolidated or other off balance sheet entity
that is required to be disclosed by the Company in its Exchange Act
filings and is not so disclosed and would have or reasonably be
expected to have a Material Adverse Effect.
(gg)
ERISA. The
Company is in compliance in all material respects with all
presently applicable provisions of ERISA; no “reportable
event” (as defined in ERISA) has occurred with respect to any
“pension plan” (as defined in ERISA) for which the
Company would have any liability; the Company has not incurred and
does not expect to incur liability under (i) Title IV of ERISA with
respect to termination of, or withdrawal from, any “pension
plan”; or (ii) Sections 412 or 4971 of the Code; and each
“Pension Plan” for which the Company would have
liability that is intended to be qualified under Section 401(a) of
the Code is so qualified in all material respects and nothing has
occurred, whether by action or by failure to act, which would cause
the loss of such qualification.
(hh)
Disclosure.
The Company confirms that neither it nor any of its officers or
directors nor any other Person acting on its or their behalf has
provided the Purchaser or its respective agents or counsel with any
information that it believes constitutes or could reasonably be
expected to constitute material, non-public information except
insofar as the existence, provisions and terms of the Transaction
Documents and the proposed transactions hereunder may constitute
such information, all of which will be disclosed by the Company as
contemplated by Section 7(g) hereof. The Company understands and
confirms that the Purchaser will rely on the foregoing
representations in effecting transactions in securities of the
Company. No event or circumstance has occurred or information
exists with respect to the Company or any of its Subsidiaries or
its or their business, properties, operations or financial
conditions, which, under applicable law, rule or regulation,
requires public disclosure or announcement by the Company but which
has not been so publicly announced or disclosed, except for the
announcement of this Agreement and related transactions and as may
be disclosed pursuant to Section 7(g).”
4. Amendment
of Section 5(a). Section 5(a) of the Agreement is hereby
amended and restated in its entirety as follows:
“(a)
Representations and
Warranties. The
representations and warranties of the Company contained in
Section 3 shall be true and correct on and as of the
applicable Closing with the same effect as though such
representations and warranties had been made on and as of the date
of the applicable Closing, except for those representations and
warranties which address matters only as of a particular date
(which will remain true and correct as of such date).
5. Amendment
of Section 8. Section 8 of the Agreement is hereby amended
and restated in its entirety as follows:
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“8.
Registration
Rights.
(a)
At any time on or prior to June 30, 2017, the Company shall file a
Registration Statement covering the resale of the Warrants and the
Underlying Shares by the holders thereof and the securities not
otherwise eligible for resale in a single transaction pursuant to
Rule 144 without regard to the volume or manner-of-sale
restrictions pursuant to Rule 144 and without the requirement for
the Company to be in compliance with the current public information
requirement under Rule 144 issued pursuant to that certain Amended
and Restated Securities Purchase Agreement, dated March 10, 2016.
The Company shall use its commercially reasonable efforts to cause
the Registration Statement to be declared effective by the
Commission as promptly as possible after the filing thereof and
shall use commercially reasonable efforts to keep the Registration
Statement continuously effective under the Securities Act until the
earlier of (i) the date that all Registrable Securities covered by
such Registration Statement have been sold or may be sold without
volume or manner-of-sale restrictions pursuant to Rule 144 and
without the requirement for the Company to be in compliance with
the current public information requirement under Rule 144 or (ii)
the date that is five (5) years following the Closing Date (the
“Effectiveness
Period”). The Company shall notify the Purchasers in
writing promptly (and in any event within two Trading Days) after
receiving notification from the Commission that the Registration
Statement has been declared effective.
(b)
Notwithstanding anything in this Agreement to the contrary, the
Company may, by written notice to the Purchasers, suspend sales
under the Registration Statement after the Effective Date thereof
and/or require that the Purchasers immediately cease the sale of
shares of Common Stock pursuant thereto and/or defer the filing of
the Registration Statement if the Company is engaged in a material
merger, acquisition or sale or any other pending development that
the Company believes may be material, and the Board of Directors
determines in good faith, by appropriate resolutions, that, as a
result of such activity, (A) it would be materially detrimental to
the Company (other than as relating solely to the price of the
Common Stock) to maintain the Registration Statement at such time
or (B) it is in the best interests of the Company to suspend sales
under such registration at such time. Upon receipt of such notice,
each Purchaser agrees to immediately discontinue any sales of
Registrable Securities pursuant to the Registration Statement until
such Purchaser is advised in writing by the Company that the
current Prospectus or amended Prospectus, as applicable, may be
used. In no event, however, shall this right be exercised to
suspend sales beyond the period during which (in the good faith
determination of the Board of Directors) the failure to require
such suspension would be materially detrimental to the Company. The
Company’s rights under this Section 8(ii) may be exercised
for a period of no more than 20 Trading Days at a time with a
subsequent permitted trading window of at least 90 Trading Days,
and not more than two times in any twelve-month period. Immediately
after the end of any suspension period under this Section 8(ii),
the Company shall take all necessary actions (including filing any
required supplemental prospectus) to restore the effectiveness of
the Registration Statement and the ability of the Purchasers to
publicly resell their Registrable Securities pursuant to the
effective Registration Statement.
(c)
All expenses, other than underwriting discounts and commissions
relating to Registrable Securities and the fees and disbursements
of any counsel for the Purchasers, incurred in connection with
registrations, filings or qualifications pursuant to Section 8 for
each Purchaser, including (without limitation) all registration,
filing and qualification fees, printers’ and accounting fees,
fees and disbursements of counsel for the Company shall be borne by
the Company.
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6. Amendment
of Section 9(g). Section 9(g) of the Agreement is hereby amended
and restated in its entirety as follows:
“(g) Amendments
and Waivers. Any term of this Agreement may be amended or
waived only with the written consent of the Company and the holders
of a majority in interest of the aggregate principal amount of the
then-outstanding Notes (the “Majority Note
Holders”), provided that such amendment does not
impose any additional liability or financial obligations on the
Purchasers, provided
further that Section 3 and Section 8 may not be amended
without the prior written consent of each holder of Notes who
together with its affiliates holds Notes with an aggregate
principal amount of at least $1,000,000. Any amendment or waiver
effected in accordance with this Section 9(g) shall be binding upon
the Purchasers and each transferee of the Securities, each future
holder of all such Securities, and the Company.”
7. Amendment
of List of Exhibits to the Agreement. The List of Exhibits
of the Agreement is hereby amended, restated and replaced in its
entirety with the following:
“Exhibit A
- Schedule of Purchasers
Exhibit
B - First Form of Note
Exhibit
C - First Form of Common Stock Purchase
Warrant
Exhibit
D - Form of Security Agreement
Exhibit
E - Second Form of Note
Exhibit
F - Third Form of Note
Exhibit
G - Second Form of Common Stock Purchase
Warrant”
8. Addition
of Exhibit F to the Agreement. The Third Form of Secured
Convertible Promissory Note in the form attached hereto as
Exhibit A shall be
attached and added to the Agreement as Exhibit F.
9. Addition
of Exhibit G to the Agreement. The Second Form of
Subordinated Convertible Promissory Note in the form attached
hereto as Exhibit B
shall be attached and added to the Agreement as Exhibit G.
10.
Amendment to Notes.
By their signatures below, the undersigned parties hereby approve
Amendment No. 2 to Secured Convertible Promissory Note in the form
attached hereto as Exhibit
C.
11.
Amendment to
Warrants. By their signatures below, the undersigned parties
hereby approve Amendment No. 1 to Common Stock Purchase Warrant in
the form attached hereto as Exhibit D.
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12. Securities
Laws Disclosure. The Company shall, by 9:30 a.m. (New York
City time) on the Trading Day following the date hereof, file a
Current Report on Form 8-K disclosing the material terms of the
transactions contemplated hereby. From and after the filing of such
8-K, the Company represents to the Purchaser that it shall have
publicly disclosed all material, non-public information delivered
to any of the Purchasers by the Company or any of its subsidiaries,
or any of their respective officers, directors, affiliates,
employees or agents in connection with the transactions
contemplated by this Amendment.
13. Approval
of this Amendment. By their signatures below, the
undersigned parties hereby adopt this Amendment and acknowledges
and agrees to the matters set forth herein, including the
amendments to the Agreement, the Notes and the
Warrants.
14. Joinder.
Upon execution of this Amendment, each Purchaser not currently a
party to the Agreement (each, an “Additional Purchaser”) shall
hereby become a party to the Agreement and shall thereafter be
deemed a Purchaser thereunder. Without limiting the foregoing, each
Additional Purchaser agrees to be bound by all of the obligations
as a Purchaser thereunder. The Company and the undersigned
Purchasers hereby consent to such joinder to the Agreement by each
Additional Purchaser and agree that no further action or consent by
the Company or the Purchasers shall be required.
15. Further
Assurances. Each party hereto agrees to execute and deliver
all such other and additional instruments and documents and do all
such other acts and things as may be necessary to more fully
effectuate this Amendment.
16. Governing
Law. This Amendment and all acts and transactions pursuant
hereto and the rights and obligations of the parties hereto shall
be governed, construed and interpreted in accordance with the laws
of the State of Delaware, without giving effect to principles of
conflicts of law.
17. Continued
Validity. Except as otherwise expressly provided herein, the
Agreement shall remain in full force and effect.
18. Independent
Counsel. Each of the Purchasers and the Company represents
that it has had the opportunity to consult with independent counsel
concerning entry into this Amendment, including, but not limited
to, any potential reporting requirements and trading restrictions
under the Securities Exchange Act of 1934, as amended (the
“Exchange Act”),
arising from of in connection with the transactions contemplated by
this Amendment and the Agreement (including Sections 10, 13 and 16
of the Exchange Act).
19. Counterparts;
Electronic Delivery. This Amendment may be executed in
counterparts, each of which shall be deemed an original and all of
which together shall constitute one instrument, and such
counterparts may be executed and delivered
electronically.
[Signature Page
Follows]
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IN
WITNESS WHEREOF, the undersigned has executed this Amendment
effective as of the Effective Date.
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ROOT9B
HOLDINGS, INC.
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By:
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/s/
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Name:
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Dan
Wachtler
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Title: |
President &
Chief Operating Officer
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Signature Page to
Amendment No. 3 to Securities Purchase
Agreement]
IN
WITNESS WHEREOF, the undersigned has executed this Amendment
effective as of the Effective Date.
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PURCHASERS:
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By:
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/s/
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Name: |
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Title: |
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Signature Page to
Amendment No. 3 to Securities Purchase
Agreement]
Exhibit A
Third
Form of Note
Exhibit B
Second
Form of Common Stock Purchase Warrant
Exhibit C
Amendment No. 2 to
Secured Convertible Promissory Note
Exhibit D
Amendment No. 1 to
Common Stock Purchase Warrant