AMENDMENT AGREEMENT
EXHIBIT
10.04
This
AMENDMENT AGREEMENT, dated as of June 2, 2006 (this “Agreement”), is entered
into by and among XXX.XXX, INC., a Delaware corporation (the “Company”),
DUNKNIGHT TELECOM PARTNERS LLC, a Delaware limited liability company (“DK”),
KNIGHT VISION FOUNDATION (“KVF;” together with DK, the “Investors”), and
DUNKNIGHT TELECOM PARTNERS LLC, as administrative agent (the “Agent”), under
that certain Agency, Guaranty and Security Agreement dated as of November 2,
2005 (as amended, modified and/or supplemented from time to time, collectively,
the “Security Agreement”). Capitalized terms used herein without definition
shall have the meanings ascribed to such terms in that certain Securities
Purchase Agreement dated as of November 2, 2005 (as amended, modified and/or
supplemented from time to time, the “Purchase Agreement;” together with the
Transaction Documents referred to therein, as amended, collectively, the “2005
Loan Documents”).
WHEREAS,
reference is made to the following Transaction Documents: (i) that
certain Debenture in the original principal amount of $8,000,000 dated November
2, 2005 and that certain Debenture in the original principal amount of
$4,375,000 dated February 1, 2006, each issued by the Company to DK (as
amended, modified and/or supplemented, the “DK
Debentures”);
and
(ii) that
certain Debenture in the original principal amount of $625,000, dated
February 1, 2006, issued by the Company to KVF (as amended, modified and/or
supplemented, the “KVF
Debenture;”
together with the DK Debentures, the “Debentures”);
and
WHEREAS,
the Investors have agreed effective as of the date hereof to extend the Maturity
Date of the Debentures, and, in consideration thereof, the Company has agreed
to
issue to the Investors an aggregate of three million nine hundred thousand
(3,900,000) unregistered, restricted shares of common stock of the Company
(the
“New
Shares”),
allocated between the Investors as set forth on Schedule
1
attached
hereto;
NOW,
THEREFORE, in consideration of the above, and for other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged,
each
of the Company, the Investors and the Agent agree as follows:
1.
Amendment
to Debentures.
Each of
the Debentures is hereby amended by extending the “Maturity Date,” as such term
is defined in each Debenture, from September 4, 2006 to December 4, 2006. For
the avoidance of doubt, the Maturity Date under each of the Debentures is hereby
restated as December 4, 2006.
2.
New
Shares.
Immediately following the execution and delivery of this Agreement by each
of
the Company, the Investors and the Agent, the Company hereby
agrees
to
issue to the Investors the New Shares in the amounts specified on Schedule
1
hereto,
subject to securities laws legends applicable to transactions of this type.
Each
of the Investors, severally, hereby represents, warrants, and acknowledges
to
the Company that (a) the New Shares are being acquired for the account of such
Investor, for purposes of investment, and not with a view to the distribution
thereof, as those terms are used in the Securities Act of 1933, as amended
(the
"Securities
Act"),
and
the rules and regulations promulgated thereunder; (b) such Investor has
sufficient knowledge and experience in financial and business matters so as
to
be capable of evaluating the merits and risks of its investment decision to
acquire the New Shares pursuant to the terms of this Agreement; (c) such
Investor has received copies of such documents and such other information as
it
has deemed necessary in order to make an informed investment decision with
respect to the purchase of the New Shares; (d) such Investor understands, and
has the financial capability of assuming, the economic risk of an investment
in
the New Shares for an indefinite period of time; and (e) no broker, agent,
dealer or finder of any kind has been retained in connection with this Agreement
(and the Company shall not be responsible for, and such Investor shall indemnify
the Company for, any compensation of any kind which might be claimed as owing
to
any of such third parties).
3.
Common
Stock Sale Limitation.
Notwithstanding anything contained herein to the contrary (including, without
limitation, the provisions of Section 8 hereof), the Investors shall not be
entitled to sell any New Shares, in whole or in part, prior to the date that
is
three hundred sixty five (365) days after the date hereof (the “Lock-up
Period”).
Notwithstanding the forgoing, the Lock-up Period shall become null and void
without any notice to the Company upon the occurrence and during the continuance
of an Event of Default (as defined in the 2005 Loan Documents).
4.
Effective
Date.
The
transactions contemplated hereby shall be effective as of the date first above
written (the “Effective
Date”),
when
each of the following conditions has been satisfied: (i) each of the Company,
the Investors and the Agent shall have executed, and the Company shall have
delivered to each of the Investor its respective counterpart to, this Agreement,
(ii) the issuance by the Company to the Investors of the New Shares, and the
receipt by the Investors of the stock certificates evidencing the New Shares,
shall have occurred, and (iii) the transactions contemplated by Section 7,
below, shall have occurred.
5.
Affect
of Amendment.
Except
as specifically set forth in this Agreement, there are no other amendments,
modifications or waivers to the 2005 Loan Documents, and all of the other forms,
terms and provisions of the 2005 Loan Documents remain in full force and effect.
From and after the Effective Date, all references in the 2005 Loan Documents
to
the Debentures shall be deemed to be references to Debentures, as amended
hereby, and all references in the 2005 Loan Documents to the Maturity Date
shall
be deemed to be references to the Maturity Date set forth in Section 1 of this
Agreement.
6.
Representations
by the Company.
The
Company hereby represents and warrants to the Investors that (i) no Event of
Default (as defined in the 2005 Loan
2
Documents)
exists and is continuing on the date hereof, (ii) on the date hereof, all
representations and warranties made by the Company in the 2005 Loan Documents
are in all material respects true, correct and complete as of the date hereof
as
if made as of the date hereof, except for those representations and warranties
which were made as of a date certain, which such representations and warranties
were true, correct and complete as of the respective dates made.
7.
Other
Agreements; Waivers; Consent.
The
Investors and the Agent hereby acknowledge that commensurate with the parties’
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby, the Company will be entering into similar
arrangements with Laurus Master Fund, Ltd (“Laurus”)
to (i)
extend the maturity date of the Company’s outstanding secured notes to Laurus
(the “Laurus
Notes”)
from
August 1, 2006 to November 1, 2006, (ii) increase the interest rate under the
Laurus Notes commencing August 2, 2006 to 10% per annum, and (iii) issue to
Laurus an aggregate of 1,500,000 shares of Company common stock (the
“Laurus
New Shares”)
with
substantially the same rights and restrictions as are set forth herein with
respect to the New Shares (such transactions hereinafter being referred to
as
the “Laurus
Amendment Transactions”).
In
connection with the transactions contemplated by this Agreement and the Laurus
Amendment Transactions, each of the Investors and the Agent hereby consents
to
the Laurus Amendment Transactions.
8.
Piggy-Back
Registration Rights.
The
Company hereby agrees that if at any time before the New Shares may be sold
by
the Investors pursuant to Rule 144(k) promulgated under the Securities Act,
there is not an effective registration statement covering all of the New Shares
and the Company shall determine to prepare and file with the Securities and
Exchange Commission a registration statement relating to an offering for its
own
account or the account of others under the Securities Act, of any of its equity
securities, other than on Form S-4 or Form S-8 (each as promulgated under
the Securities Act) or their then equivalents relating to equity securities
to
be issued solely in connection with any acquisition of any entity or business
or
equity securities issuable in connection with stock option or other employee
benefit plans, then the Company shall send to DK (on behalf of the Investors)
written notice of such determination and, if within fifteen (15) days of DK’s
receipt of such notice, Investors holding an aggregate of in excess of 50%
of
the New Shares so request in writing that their New Shares be included in such
registration statement, the Company shall include in such registration statement
all or any part of such New Shares not otherwise subject to an effective
registration statement and requested by DK on behalf of the Investors to be
included in such registration statement, to the extent the Company may do so
without violating registration rights of others which exist as of the date
of
this Agreement, subject to customary underwriter cutbacks applicable to all
holders of registration rights and subject to the Investors’ delivery to the
Company of all customary representations, waivers and indemnities applicable
to
selling stockholders in a registration statement. For avoidance of doubt, the
registration rights provided to the Investors hereunder will rank pari
passu
with the
registration rights to be provided by the Company to Laurus in respect to the
Laurus New Shares to be issued by the Company as contemplated by Section 7
hereof.
3
9.
Form
8-K.
The
Company hereby agrees to file a Current Report on Form 8-K, completed as
appropriate, with the Securities and Exchange Commission disclosing the terms
and conditions set forth in this Agreement as soon as practicable, but no later
than the fourth (4th)
business day following the date hereof.
10.
Binding
Affect.
This
Agreement shall be binding upon the parties hereto and their respective
successors and permitted assigns and shall inure to the benefit of and be
enforceable by each of the parties hereto and its successors and permitted
assigns. THIS
AGREEMENT SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH AND GOVERNED BY
THE
LAW OF THE STATE OF NEW YORK.
This
Agreement may be executed in any number of counterparts, each of which shall
be
an original, but all of which shall constitute one instrument.
[Intentionally
Left Blank - Signature Page Follows]
4
IN
WITNESS WHEREOF,
each of
the Company, the Investors and the Agent has caused this Agreement to be signed
in its name as of the date first above written.
XXX.XXX,
INC.
By:
/s/
Xxxxx X.
Xxxxxxx
Name:
Xxxxx X. Xxxxxxx
Title:
President & CEO
DUNKNIGHT
TELECOM PARTNERS LLC (individually and as Administrative
Agent)
By:
/s/
Xxxx
Xxxxxxxxxxx
Name:
Xxxx Xxxxxxxxxxx
Title:
Sole Managing Member
KNIGHT
VISION FOUNDATION
By:
/s/
Xxxxx
Xxxxxxxxxxx
Name:
Xxxxx Xxxxxxxxxxx
Title:
President
Agreed
and acknowledged:
Laurus
Master Fund, Ltd,
as
First
Lien Lender, pursuant to the Subordination
Agreement
By:
/s/ Xxxxx
Grin
Name: Xxxxx Grin
Name: Xxxxx Grin
Title:
Director
5
Schedule
1
Allocation
of New Shares
|
Investor:
|
New
Shares Allocation:
|
|
DunKnight
Telecom Partners LLC
|
3,712,500
shares
|
|
Knight
Vision Foundation
|
187,500
shares
|
6
