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(f) The
place of organization and/or citizenship of each Reporting Person is listed in paragraph (a) of this Item 2.
| Item 3. | Source and Amount of Funds or Other Consideration. |
210/CRDS expended an
aggregate of $4,000,000 of cash to acquire 1,492,285 Shares in a privately negotiated transaction at a purchase price of approximately
$2.68 per Share.
| Item 4. | Purpose of Transaction. |
The acquisition of the
Shares by 210/CRDS was for investment purposes.
On August 13, 2017, the
Issuer filed a voluntary petition in the United States Bankruptcy Court for the Western District of Texas (the “Bankruptcy
Court”) seeking relief under Chapter 11 of Title 11 of the United States Code, 11.U.S.C. §§ 101-1532
(the “Chapter 11 Case”). On such date the Issuer filed in the Chapter 11 Case a plan of reorganization
and associated supporting documentation providing for the implementation of the Securities Purchase Agreement (as defined below)
pursuant to a confirmed prepackaged Chapter 11 plan of reorganization (the “Plan”). A Copy of the Plan
is attached as Exhibit 99.2 to this Schedule 13D and is incorporated herein by reference.
On September 18, 2017,
the Bankruptcy Court entered an Order (I) Granting Final Approval of Disclosure Statement and (II) Confirming Prepackaged
Plan of Reorganization for Crossroads Systems, Inc. under Chapter 11 of the United States Bankruptcy Code (the “Confirmation
Order”).
On October 3, 2017 (the
“Effective Date”), pursuant to the Plan, 210/CRDS entered into a Securities Purchase Agreement, by and
between 210/CRDS and the Issuer (the “Securities Purchase Agreement”), pursuant to which 210/CRDS purchased
1,492,285 newly issued shares of common stock of the Issuer at a cash purchase price of $2.68 per share for an aggregate purchase
price of $4,000,000. In connection with the Securities Purchase Agreement, the Issuer and 210/CRDS entered into a Registration
Rights Agreement providing 210/CRDS with certain registration rights under the Securities Act (the “Registration Rights
Agreement”). Pursuant to the Securities Purchase Agreement, 210/CRDS and the Issuer will enter into a Loan Agreement
and Promissory Note within 45 days of the Effective Date, whereby upon Issuer fulfilling certain conditions and at the Issuer’s
option, 210/CRDS would advance one or more loans to the Issuer. Copies of each of the Securities Purchase Agreement and the Registration
Rights Agreement are attached as Exhibits 99.3 and 99.4 to this Schedule 13D and are incorporated herein by reference.
Pursuant to the Plan
and the Securities Purchase Agreement, prior to the Effective Time (as defined below), the Issuer’s board of directors underwent
the following changes: (i) all of the Issuer’s then-existing directors except for two directors (the “Continuing
Directors”) voluntarily resigned from the Issuer’s board of directors; (ii) 210/CRDS designated Messrs.
Alpert and Webb to the board of directors; (iii) Robert Alpert was appointed as Chairman of the Board of the Issuer’s
board of directors; and (iv) the Continuing Directors and Messrs. Alpert and Webb appointed Claire Gogel to serve as an “independent”
director on the Issuer’s board of directors.
Pursuant to the Plan,
at 4:00 p.m., Eastern Time, on the Effective Date (the “Effective Time”), all issued and outstanding
shares of common stock of the Issuer (other than the shares issued pursuant to the Securities Purchase Agreement) were deemed cancelled
pursuant to the terms of the Plan and the Confirmation Order. Immediately thereafter, shares of new common stock were deemed issued
to each of the holders of cancelled shares, such that each cancelled share of common stock was replaced by a share of new common
stock in the reorganized Issuer, on a 1-for-1 basis, in the same names and same amounts as were outstanding immediately prior to
the Effective Time.
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