EXHIBIT 99.6
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WAIVER AND AMENDMENT
TO SECURITIES PURCHASE AGREEMENT AND DEBENTURE
THIS WAIVER AND AMENDMENT, dated as of September 26, 2006 (the "Waiver"),
to the Securities Purchase Agreement, dated as of December 28, 2005, as amended
(the "Purchase Agreement"), and the 6% Secured Convertible Debenture due
December 28, 2008 (the "Debenture") is by and among Arkados Group, Inc.
(formerly XXXXXX.XXX, Inc.), a Delaware corporation (the "Company"), and the
purchasers signatory hereto (each such purchaser, a "Purchaser" and,
collectively, the "Purchasers"). CAPITALIZED TERMS USED AND NOT OTHERWISE
DEFINED HEREIN THAT ARE DEFINED IN THE PURCHASE AGREEMENT SHALL HAVE THE
MEANINGS GIVEN SUCH TERMS IN THE PURCHASE AGREEMENT.
RECITALS
The Company and certain purchasers are entering into an Additional Issuance
Agreement, dated as of September 26, 2006 (the "Additional Issuance Agreement"),
for the purchase by the New Purchasers of an aggregate of $500,000 of the New
Debentures and New Warrants (as such terms are defined in the Additional
Issuance Agreement) pursuant to the Securities Purchase Agreement, dated as of
June 30, 2006 between the Company and the New Purchasers.
Subject to the terms and conditions of this Waiver, the Company has
requested, and the Purchasers have agreed, to waive compliance with Sections
4.3, 4.13 and 4.14 of the Purchase Agreement and Sections 7(a), 7(b) and 7(e) of
the Debenture; and
Subject to the terms and conditions of this Waiver, the Company has
requested, and the Purchasers have agreed, to amend the definition of Exempt
Issuance contained in Section 1.1 of the Purchase Agreement.
Subject to the terms and conditions of this Waiver, the Company has
requested, and the Purchasers have agreed, to acknowledge that the New
Underlying Shares (as such term is defined in the Additional Issuance Agreement)
shall be included on the Registration Statement registering the Debentures and
Warrants of the Purchasers.
Accordingly, in consideration of the premises and of the mutual covenants
and agreements hereinafter set forth, the parties hereto agree as follows:
1. Waivers.
(a) Each Purchaser hereby waives compliance by the Company with obligations
imposed by Section 4.3 of the Purchase Agreement solely in connection with the
Company's failure to timely file with the Commission a Form 10-KSB for the
fiscal year ended May 31, 2006 (the "2006 Form 10-KSB"), provided that the
Company file the 2006 Form 10-KSB on or before October 10, 2006. If the Company
fails by such date to file the 2006 Form 10-KSB, the waiver described herein
shall expire and the Company acknowledges that it shall be in breach of Section
4.3 of the Purchase Agreement.
(b) Each Purchaser hereby waives compliance by the Company with the
obligations imposed by Section 4.13 of the Purchase Agreement regarding such
Purchaser's right to participate in the purchase of the New Debentures, as well
as any advance made to the Company prior to the Closing that is either repaid
from the proceeds or is given as full or partial consideration by the New
Purchasers under the Additional Issuance Agreement.
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(c) Each Purchaser hereby waives the Company's compliance with the
restrictions imposed by Section 4.14 of the Purchase Agreement with respect to
the issuance of the New Debentures and New Warrants under the Additional
Issuance Agreement and each Purchaser acknowledges that such issuance will not
constitute a transaction which results in an adjustment of the respective
conversion or exercise prices of the Debentures or Warrants.
(d) Each Purchaser hereby waives the Company's compliance with the negative
covenants imposed by Sections 7(a), 7(b) and 7(e) of the Debenture regarding the
Company's agreement not to create indebtedness and liens and to enter into
agreements with respect thereto.
2. Amendment. The Purchasers and the Company hereby agree to amend the
definition of "Exempt Issuance" set forth in Section 1.1 of the Purchase
Agreement by inserting at the end of such definition, after the word "period,"
as follows:
"OR (G) 300,000 OPTIONS WITH AN EXERCISE PRICE OF $0.52 PER SHARE
AND A 7 YEAR TERM ISSUED TO A KEY CONSULTANT PURSUANT TO (A) A
WRITTEN CONSULTING AGREEMENT AND (B) AN OPTION PLAN ADOPTED BY A
MAJORITY OF THE NON-EMPLOYEE MEMBERS OF THE BOARD OF DIRECTORS,
WHICH OPTIONS SHALL VEST ON THE FOLLOWING SCHEDULE: (I) 150,000 ON
FEBRUARY 8, 2007; (II) 50,000 ON SEPTEMBER 8, 2007; (III) 50,000
ON SEPTEMBER 8, 2008; AND (IV) 50,000 ON SEPTEMBER 8, 2009,
PROVIDED THAT THE VESTING OF THE OPTIONS SET FORTH IN CLAUSES
(II), (III) AND (IV) HEREIN SHALL OCCUR ONLY IF THE KEY CONSULTANT
BECOMES THE FULL-TIME VICE PRESIDENT OF STRATEGIC DEVELOPMENT, OR
A COMPARABLE FULL-TIME POSITION, AT THE COMPANY BY FEBRUARY 8,
2007"
3. Acknowledgement. Each Purchaser hereby acknowledges and agrees that, for
purposes of Section 6(b) of the Registration Rights Agreement, dated as of
December 28, 2005, between the Company and the Purchasers signatory thereto (the
"Registration Rights Agreement"), the shares of Common Stock underlying the New
Debentures and New Warrants shall be deemed Registrable Securities which may be
included as securities in the Company's initial Registration Statement, on the
same terms as the Purchasers' Registrable Securities.
4. Miscellaneous.
THIS WAIVER SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS
OF THE STATE OF NEW YORK WITHOUT REGARD TO PRINCIPLES OF CONFLICT OF LAWS.
This Waiver shall constitute a Transaction Document.
Except as expressly waived and/or amended hereby, the Purchase Agreement
and the Debentures shall remain in full force and effect in accordance with the
terms thereof. This Waiver is limited specifically to the matters set forth
above and does not constitute directly or by implication an amendment or waiver
of any other provisions of the Purchase Agreement or Debentures or of any Event
of Default or default which may occur or may have occurred under the Purchase
Agreement or Debentures.
This Waiver may be executed in one or more counterparts, each of which
shall constitute an original, but all of which, when taken together, shall
constitute but one Waiver.
[SIGNATURE PAGE FOLLOWS]
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ARKADOS GROUP, INC. BUSHIDO CAPITAL MASTER FUND, L.P.
By: Bushido Capital Partners, Ltd., its
General Partner
/S/ XXXX XXXXXXXX /S/ LOUIS RABMIN
By:___________________________ By:_______________________________
Xxxx Xxxxxxxx Xxxxx Xxxxxx
Chief Executive Officer President
GAMMA OPPORTUNITY CAPITAL GAMMA OPPORTUNITY CAPITAL
PARTNERS, LP CLASS A PARTNERS, LP CLASS C
By: __________________________ By: __________________________
Xxxxxxxx X. Xxxxxx Xxxxxxxx X. Xxxxxx
President President
CARGO HOLDINGS LLC
By: _________________________
Xxxxx Xxxxxxxx
Member
By: _________________________
Gennaro Vendome
Member
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