AMENDMENT TO DEBENTURE AND WARRANTS
AMENDMENT
TO
DEBENTURE
AND WARRANTS
This
Amendment (the “Amendment”), dated as
of July 7, 2010, is made to the 8% Secured Convertible Debenture (the
“Debenture”), and the Class B Common Stock purchase warrants (the “Warrants”)
issued pursuant to the Securities Purchase Agreement dated as of December 29,
2009 (the “Purchase
Agreement”), between InferX Corporation, Inc., a Delaware corporation
(the “Company”)
and the purchasers identified on the signatures pages thereto (the “Purchasers”).
WHEREAS, pursuant to Section 2(a) of
the Debenture, the entire principal amount, together with all accrued and unpaid
interest, is due and payable on June 30, 2010 (the “Maturity
Date”);
WHEREAS,
Section 16 of the Debenture provides that no provision of the Debenture may be
amended, waived, modified or discharged without written consent of the holders
of the Debenture;
WHEREAS, the Exercise Price for the
Warrants is $0.50 per share;
WHEREAS,
Section 18 of the Warrants provides that no provision of the Warrants may be
amended unless by written consent of the warrant holders holding, in the
aggregate, Warrants exercisable for shares of Warrant Stock greater than 67% of
all shares of Warrant Stock available for exercise;
WHEREAS,
the Company and the Holders signatory hereto (the “Signatory Holders”),
which Signatory Holders (a) hold all of the outstanding Debentures wish to amend
the Debenture to extend the Maturity Date until August 31, 2010 (the “Extension”) and (b)
hold Warrants exercisable for shares of Warrant Stock greater than 67% of all
shares of Warrant Stock available for exercise currently outstanding wish to
amend the Warrants in order to reduce the respective Exercise Prices to
$0.20;
WHEREAS,
as partial consideration for the Extension, the Company wishes to issue to the
Signatory Holders 200,000 shares of Common Stock pursuant to Section 4(2) of the
Securities Act and Rule 506 promulgated thereunder.
NOW,
THEREFORE, in consideration of the terms and conditions contained in this
Amendment, and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties, intending to be
legally bound hereby, agree as follows:
1. Definitions. Terms
used as defined terms herein and not otherwise defined shall have the meanings
provided therefore in the Purchase Agreement, the Debenture and the
Warrants.
(a) “Commission” means the
United States Securities and Exchange Commission.
(b) “Legend Removal Date”
shall have the meaning ascribed to such term in Section 6(c).
(c) “Liens” means a lien,
charge pledge, security interest, encumbrance, right of first refusal,
preemptive right or other restriction.
(d) “Public Information
Failure” shall have the meaning ascribed to such term in Section
7.
(e) “Public Information Failure
Payments” shall have the meaning ascribed to such term in Section
7.
(f) “Rule 144” means Rule
144 promulgated by the Commission pursuant to the Securities Act, as such Rule
may be amended or interpreted from time to time, or any similar rule or
regulation hereafter adopted by the Commission having substantially the same
purpose and effect as such Rule.
(g) “VWAP” means, for any
date, the price determined by the first of the following clauses that applies:
(a) if the Common Stock is then listed or quoted on a Trading Market, the daily
volume weighted average price of the Common Stock for such date (or the nearest
preceding date) on the Trading Market on which the Common Stock is then listed
or quoted as reported by Bloomberg L.P. (based on a Trading Day from 9:30 a.m.
(New York City time) to 4:02 p.m. (New York City time)), (b) if the OTC
Bulletin Board is not a Trading Market, the volume weighted average price of the
Common Stock for such date (or the nearest preceding date) on the OTC Bulletin
Board, (c) if the Common Stock is not then listed or quoted for trading on the
OTC Bulletin Board and if prices for the Common Stock are then reported in the
“Pink Sheets” published by Pink OTC Markets, Inc. (or a similar organization or
agency succeeding to its functions of reporting prices), the most recent bid
price per share of the Common Stock so reported, or (d) in all other cases,
the fair market value of a share of Common Stock as determined by an independent
appraiser selected in good faith by the Signatory Holders of a majority in
interest of the Shares then outstanding and reasonably acceptable to the
Company, the fees and expenses of which shall be paid by the
Company.
2. Amendment to Maturity Date
of the Debenture. The maturity date of the Debenture shall be
extended until August 31, 2010. As such, Section 2(a) of the
Debenture shall be amended and restated in its entirety to read as
follows:
“The
entire principal amount of this Debenture, together with all accrued interest
and unpaid interest, shall be due and payable on August 31, 2010 (the “Maturity
Date”).”
3. Amendments to Warrant
Exercise Prices.
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(a)
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Series B
Warrant. The Exercise Price of the Series B Warrant
shall be reduced to $0.20 per share from $0.50 per share. As
such, Section 1.2 of the Series B Warrant shall be amended and restated in
its entirety to read as follows:
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““Exercise Price” means $0.20
per share, subject to adjustment as provided herein.”
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(b)
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References to the
Exercise Prices in the Transaction Documents. Any and
all references to the Exercise Price of $0.50 for the Warrants in the
Transaction Documents shall be
disregarded.
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4. Issuance of
Shares. On the date hereof, as partial consideration for the
amendments hereunder, the Company shall issue to the Signatory Holders, in the
aggregate, 200,000 shares of Common Stock (the “Shares”).
5. Representations and
Warranties of the Company. The Company hereby makes the
representations and warranties set forth below to the Signatory Holders as of
the date of this Amendment:
(a) Authorization;
Enforcement. The Company has the requisite corporate power and
authority to enter into this Amendment and otherwise to carry out its
obligations hereunder. The execution and delivery of this Amendment
by the Company and the consummation by it of the transactions contemplated
hereby have been duly authorized by all necessary action on the part of the
Company and no further action is required by the Company, the Board of Directors
or the Company's stockholders in connection therewith. This Amendment
has been duly executed by the Company and, when delivered in accordance with the
terms hereof, will constitute the valid and binding obligation of the Company
enforceable against the Company in accordance with its terms except (i) as
limited by general equitable principles and applicable bankruptcy, insolvency,
reorganization, moratorium and other laws of general application affecting
enforcement of creditors' rights generally, (ii) as limited by laws relating to
the availability of specific performance, injunctive relief or other equitable
remedies and (iii) insofar as indemnification and contribution provisions may be
limited by applicable law.
(b) No
Conflicts. The execution, delivery and performance of this
Amendment by the Company and the consummation by the Company of the transactions
contemplated hereby do not and will not: (i) conflict with or violate any
provision of the Company’s certificate or articles of incorporation, bylaws or
other organizational or charter documents, or (ii) conflict with, or constitute
a default (or an event that with notice or lapse of time or both would become a
default) under, result in the creation of any lien upon any of the properties or
assets of the Company, or give to others any rights of termination, amendment,
acceleration or cancellation (with or without notice, lapse of time or both) of,
any material agreement, credit facility, debt or other material instrument
(evidencing Company debt or otherwise) or other material understanding to which
the Company is a party or by which any property or asset of the Company is bound
or affected, or (iii) conflict with or result in a violation of any law, rule,
regulation, order, judgment, injunction, decree or other restriction of any
court or governmental authority to which the Company is subject (including
federal and state securities laws and regulations), or by which any property or
asset of the Company is bound or affected.
(c) Issuance of the
Shares. The Shares are duly authorized and, when issued and
paid for in accordance with this Amendment, will be duly and validly issued,
fully paid and nonassessable, free and clear of all Liens imposed by the Company
other than restrictions on transfer provided for in the Transaction
Documents. The Company has reserved from its duly authorized capital
stock the maximum number of shares of Common Stock issuable pursuant to this
Amendment.
(d) Bring
Down. The Company expressly reaffirms that each of the
representations and warranties set forth in the Purchase Agreement (as
supplemented or qualified by the disclosures in any disclosure schedule to
Purchase Agreement), continues to be true, accurate and complete in all material
respects as of the date hereof, and except for any representation and warranty
made as of a certain date, in which case such representation and warranty shall
be true, accurate and complete as of such date, and the Company hereby remakes
and incorporates herein by reference each such representation and warranty as
though made on the date of this Amendment.
6. Transfer
Restrictions.
(a) The
Shares may only be disposed of in compliance with state and federal securities
laws. In connection with any transfer of Shares other than pursuant
to an effective registration statement or Rule 144, to the Company or to an
Affiliate of a Signatory Holder or in connection with a pledge as contemplated
in Section 6(b), the Company may require the transferor thereof to provide to
the Company an opinion of counsel selected by the transferor and reasonably
acceptable to the Company, the form and substance of which opinion shall be
reasonably satisfactory to the Company, to the effect that such transfer does
not require registration of such transferred Securities under the Securities
Act. As a condition of transfer, any such transferee shall agree in
writing to be bound by the terms of this Amendment and shall have the rights and
obligations of a Signatory Holder under this Amendment.
(b) The
Signatory Holders agree to the imprinting, so long as is required by this
Section 6, of a legend on any of the Securities in the following
form:
THIS
SECURITY HAS NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE
COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN
EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
“SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT
TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO
AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH
APPLICABLE STATE SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO
THE TRANSFEROR TO SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY
ACCEPTABLE TO THE COMPANY. THIS SECURITY MAY BE PLEDGED IN CONNECTION
WITH A BONA FIDE MARGIN ACCOUNT WITH A REGISTERED BROKER-DEALER OR OTHER LOAN
WITH A FINANCIAL INSTITUTION THAT IS AN “ACCREDITED INVESTOR” AS DEFINED IN RULE
501(a) UNDER THE SECURITIES ACT OR OTHER LOAN SECURED BY SUCH
SECURITIES.
The
Company acknowledges and agrees that a Signatory Holder may from time to time
pledge pursuant to a bona fide margin agreement with a registered broker-dealer
or grant a security interest in some or all of the Shares to a financial
institution that is an “accredited investor” as defined in Rule 501(a) under the
Securities Act and who agrees to be bound by the provisions of this Amendment
and, if required under the terms of such arrangement, such Signatory Holder may
transfer pledged or secured Shares to the pledgees or secured
parties. Such a pledge or transfer would not be subject to approval
of the Company and no legal opinion of legal counsel of the pledgee, secured
party or pledgor shall be required in connection therewith. Further,
no notice shall be required of such pledge. At the appropriate
Signatory Holder’s expense, the Company will execute and deliver such reasonable
documentation as a pledgee or secured party of Shares may reasonably request in
connection with a pledge or transfer of the Shares.
(c) Certificates
evidencing the Shares shall not contain any legend (including the legend set
forth in this Section 6), (i) while a registration statement covering the resale
of such security is effective under the Securities Act, (ii) following any sale
of such Shares pursuant to Rule 144, (iii) if such Shares are eligible for sale
under Rule 144 or (iv) if such legend is not required under applicable
requirements of the Securities Act (including judicial interpretations and
pronouncements issued by the staff of the Commission). The Company
shall cause its counsel to issue a legal opinion to the Transfer Agent promptly
after any event in (i)-(iv) herein if required by the Transfer Agent to effect
the removal of the legend hereunder. The Company agrees that following such time
as such legend is no longer required under this Section 6(c), it will, no later
than three Trading Days following the delivery by a Signatory Holder to the
Company or the Transfer Agent of a certificate representing Shares, as the case
may be, issued with a restrictive legend (such third Trading Day, the “Legend Removal
Date”), deliver or cause to be delivered to such Signatory Holder a
certificate representing such shares that is free from all restrictive and other
legends. The Company may not make any notation on its records or give
instructions to the Transfer Agent that enlarge the restrictions on transfer set
forth in this Section 6. Certificates for Shares subject to legend
removal hereunder shall be transmitted by the Transfer Agent to the Signatory
Holder by crediting the account of the Signatory Holder’s prime broker with the
Depository Trust Company System as directed by such Signatory
Holder.
(d) In
addition to such Signatory Holder’s other available remedies, the Company shall
pay to a Signatory Holder, in cash, as partial liquidated damages and not as a
penalty, for each $1,000 of Shares (based on the VWAP of the Common Stock on the
date such Shares are submitted to the Transfer Agent) delivered for removal of
the restrictive legend and subject to Section 6(c), $10 per Trading Day
(increasing to $20 per Trading Day five (5) Trading Days after such damages have
begun to accrue) for each Trading Day after the Legend Removal Date until such
certificate is delivered without a legend. Nothing herein shall limit such
Signatory Holder’s right to pursue actual damages for the Company’s failure to
deliver certificates representing any Shares as required by this Amendment, and
such Signatory Holder shall have the right to pursue all remedies available to
it at law or in equity including, without limitation, a decree of specific
performance and/or injunctive relief.
(e) Each
Signatory Holder, severally and not jointly with the other Signatory Holders,
agrees with the Company that such Signatory Holder will sell any Shares pursuant
to either the registration requirements of the Securities Act, including any
applicable prospectus delivery requirements, or an exemption therefrom, and that
if Shares are sold pursuant to a registration statement, they will be sold in
compliance with the plan of distribution set forth therein, and acknowledges
that the removal of the restrictive legend from certificates representing Shares
as set forth in this Section 6 is predicated upon the Company’s reliance upon
this understanding.
7. Public
Information. At any time during the period commencing from the
six (6) month anniversary of the date hereof and ending at such time that all of
the Shares may be sold without the requirement for the Company to be in
compliance with Rule 144(c)(1) and otherwise without restriction or limitation
pursuant to Rule 144, if the Company shall fail for any reason to satisfy the
current public information requirement under Rule 144(c) (a “Public Information
Failure”) then, in addition to such Signatory Holder’s other available
remedies, the Company shall pay to a Signatory Holder, in cash, as partial
liquidated damages and not as a penalty, by reason of any such delay in or
reduction of its ability to sell the Shares, an amount in cash equal to $20 per
$1,000 of Shares (based on the VWAP of the Common Stock on the Trading Day
immediately prior to the date hereof) on the day of a Public Information Failure
and on every thirtieth (30th) day
(pro rated for periods totaling less than thirty days) thereafter until the
earlier of (a) the date such Public Information Failure is cured and (b) such
time that such public information is no longer required for the Signatory
Holders to transfer the Shares pursuant to Rule 144. The payments to which
a Signatory Holder shall be entitled pursuant to this Section 7(b) are referred
to herein as “Public
Information Failure Payments.” Public Information Failure Payments shall be paid
on the earlier of (i) the last day of the calendar month during which such
Public Information Failure Payments are incurred
and (ii) the third (3rd)
Business Day after the event or failure giving rise to the Public Information
Failure Payments is
cured. In the event the Company fails to make Public Information
Failure Payments in
a timely manner, such Public Information Failure Payments shall bear
interest at the rate of 1.5% per month (prorated for partial months) until paid
in full. Nothing herein shall limit such Signatory Holder’s right to pursue
actual damages for the Public Information Failure, and such Signatory Holder
shall have the right to pursue all remedies available to it at law or in equity
including, without limitation, a decree of specific performance and/or
injunctive relief.
8. Public
Disclosure. On or before 9:30 am (New York City time) on the
first Trading Day immediately following the date hereof, the Company shall file
a Current Report on Form 8-K, reasonably acceptable to the Signatory Holders
disclosing the material terms of the transactions contemplated hereby and
attaching this Amendment as an exhibit thereto.
9. Reference to the Debentures
and Warrants. On and after the date hereof, each reference to
“this Debenture,” “Warrant,” “hereunder,” “hereof,” “herein,” or words of like
import shall mean and be a reference to the Debenture and Warrants as amended
hereby. No reference to this Amendment need be made in any instrument
or document at any time referring to the Debenture or Warrants, a reference to
the Debenture or Warrants in any such instrument or document to be deemed to be
a reference to the Debenture or Warrants as amended hereby.
10. Effect on Transaction
Documents. Except as expressly set
forth above, all of the terms and conditions of the Debenture, Warrants and the
Transaction Documents shall continue in full force and effect after the
execution of this Amendment and shall not be in any way changed, modified or
superseded by the terms set forth herein. Notwithstanding the foregoing,
this Amendment shall be deemed for all purposes as an amendment to the Debenture
and Warrants as required to serve the purposes hereof, and in the event of any
conflict between the terms and provisions of the Debenture and Warrants, on the
one hand, and the terms and provisions of this Amendment, on the other hand, the
terms and provisions of this Amendment shall prevail.
11. Amendments and
Waivers. The provisions of this Amendment can be amended or waived in the
manner permitted under the Debenture and Warrants.
12. Execution. This
Amendment may be executed in two or more counterparts, all of which when taken
together shall be considered one and the same agreement and shall become
effective when counterparts have been signed by each party and delivered to the
other party, it being understood that both parties need not sign the same
counterpart. In the event that any signature is delivered by
facsimile transmission or by e-mail delivery of a “.pdf” format data file, such
signature shall create a valid and binding obligation of the party executing (or
on whose behalf such signature is executed) with the same force and effect as if
such facsimile or “.pdf” signature page were an original thereof.
13. Governing
Law. All questions concerning the construction, validity,
enforcement and interpretation of this Amendment shall be determined pursuant to
the Governing Law provision of the Purchase Agreement.
14. Entire
Agreement. This Amendment contains the entire understanding of
the parties with respect to the subject matter hereof and supersedes all prior
agreements and understandings, oral or written, with respect to such matters,
which the parties acknowledge have been merged into this Amendment.
[SIGNATURE
PAGE FOLLOWS]
IN
WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly
executed by their respective authorized signatories as of the date first
indicated above.
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INFERX
CORPORATION, INC.
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By:
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/s/
Xxxxx Xxxx
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Name:
Xxxxx
Xxxx,
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Title: President
and
CEO
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[SIGNATURE
PAGE OF HOLDERS FOLLOWS]
[SIGNATURE
PAGE OF HOLDERS TO NRFX AMENDMENT]
Name of
Holder: __________________________
Signature of Authorized Signatory of
Holder: __________________________
Name of
Authorized Signatory: _________________________
Title of
Authorized Signatory: __________________________
[SIGNATURE
PAGES CONTINUE]
