WIRELESS RONIN® TECHNOLOGIES, INC. AMENDMENT NO. 2 TO AMENDED AND RESTATED CONVERTIBLE DEBENTURE AGREEMENT AND DEBENTURE DATED SEPTEMBER 7, 2005
EXHIBIT 10.24
WIRELESS RONIN® TECHNOLOGIES, INC.
AMENDMENT NO. 2
TO
AMENDED AND RESTATED CONVERTIBLE DEBENTURE AGREEMENT
AND
DEBENTURE DATED SEPTEMBER 7, 2005
TO
AMENDED AND RESTATED CONVERTIBLE DEBENTURE AGREEMENT
AND
DEBENTURE DATED SEPTEMBER 7, 2005
July 18, 2006
SPIRIT LAKE TRIBE
Spirit Lake Tribal Council Xxxxxx
X.X. Xxx 000
Xxxx Xxxxxx
Xxxx Xxxxxx, XX 00000
Spirit Lake Tribal Council Xxxxxx
X.X. Xxx 000
Xxxx Xxxxxx
Xxxx Xxxxxx, XX 00000
Ladies and Gentlemen:
Reference is made to that: (i) certain Amended and Restated Convertible Debenture Purchase
Agreement between SPIRIT LAKE TRIBE (the “Purchaser”) and WIRELESS RONIN® TECHNOLOGIES, INC., a
Minnesota corporation (the “Company”), dated September 7, 2005 (the “Original Agreement”), pursuant
to which Purchaser purchased, and the Company has issued, a 10% fixed rate Convertible Debenture
due December 31, 2009 in the principal amount of $3,000,000 (the “Debenture”); and (ii) that
certain Amendment No. 1 to the Original Agreement dated February 27, 2006 (collectively, the
“CDA”). The CDA is hereby further amended and restated as of the date set forth above, to set
forth additional terms and amendments to the CDA and the Debenture. This amendment shall be deemed
to be a supplementary agreement within the meaning of Section 15 of the CDA. All capitalized terms
not otherwise defined herein shall have the meanings described or defined in the CDA. In
consideration of the mutual agreements provided below, the Company and Purchaser agree as follows:
1. The Debenture. The Company and Purchaser agree that the CDA shall be amended as
follows:
(a) Conversion of Debenture. The third paragraph of Section 1 of the CDA is deleted
and the following inserted in substitution therefor:
The Debenture is convertible in whole at any time prior to its payment at the
option of the Purchaser into fully paid and nonassessable shares of Common Stock of
the Company constituting thirty percent (30%) of all classes of the Common Stock of
the Company on a fully diluted basis, as further explained in
Section 10.2 of the CDA. In addition, as further explained in paragraph 3(b)
of the Debenture, the Debenture is convertible in part at any time prior to its
payment at the option of the Purchaser into fully paid and nonassessable shares of
Common Stock of the Company constituting a proportionate percentage of thirty
percent (30%) of all classes of the Common Stock of the Company on a fully diluted
basis in the ratio that the amount of the Debenture being converted bears to the
total amount of the Debenture acquired by the Purchaser. Subject to the following
sentence, under no circumstances shall paragraph 3(b) of the Debenture be read to
entitle the Purchaser to shares of Common Stock of the Company constituting less
than 30% of all classes of the Common Stock of the Company on a fully diluted basis
upon conversion in full of the Debenture. Notwithstanding the provisions of the
third paragraph of the Debenture and Section 3 of the Debenture, and subject to the
following paragraph, this Debenture is convertible at any time prior to payment at
the option of the Holder into fully paid and nonassessable shares of Common Stock of
the Company equal to thirty percent (30%) of the Company’s outstanding Common Stock
on a fully-diluted basis, including the exercise of all convertible debt securities
that are currently outstanding and/or that are issued in lieu of payment of
principal and/or interest payments or penalties upon notes and obligations of the
Company; provided, however, that Common Stock issued or issuable upon conversion of
the Bridge Notes, or Common Stock issuable upon the conversion of up to $6,350,000
aggregate principal amount of the Company’s 12% Convertible Bridge Notes (“Bridge
Notes”) and upon exercise of warrants to purchase up to 1,270,000 shares of Common
Stock (“Bridge Warrants”) shall be excluded from the determination of the Company’s
outstanding Common Stock on a fully diluted basis. In addition, and subject to the
following paragraph, this Debenture is convertible in part at any time prior to its
payment at the option of Holder into fully paid and nonassessable shares of Common
Stock of the Company constituting a proportionate percentage of 30% of all classes
of the Common Stock of the Company on a fully-diluted basis (excluding, however,
Common Stock issued or issuable upon conversion of the Bridge Notes, or Common Stock
issuable upon exercise of Bridge Warrants in the ratio that the amount of the
Convertible Debenture being converted bears to the total amount of the Convertible
Debenture acquired by the Holder.
In addition, if the Company completes an underwritten initial public offering
of its Common Stock on or before November 30, 2006, the entire principal balance of
the Debenture shall, without further action of the Company or the Holder, be
converted into a number of shares of Common Stock of the Company equal to fully paid
and nonassessable shares of Common Stock of the Company constituting 30% of all
classes of the Common Stock of the Company on a fully-diluted basis, as described in
paragraph 3(b) of the Debenture excluding, however, (a) shares of Common Stock
issued or issuable upon conversion of the Bridge Notes or shares issuable upon
exercise of Bridge Warrants; and (b) securities of the Company issued in connection
with such public offering, including shares issuable upon exercise of warrants
issued to
underwriters of such public offering. In such event, Holder shall be paid the
pro rata interest associated with this Debenture to the date of conversion.
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(b) Sections Modified or Deleted. The second paragraph of Section 10.2 is hereby
amended to read as follows:
The Debenture is convertible in whole at any time prior to its payment at the
option of the Purchaser into fully paid and nonassessable shares of Common Stock of
the Company constituting thirty percent (30%) of all classes of Common Stock of the
Company on a fully diluted basis, as further explained in paragraph 3(b) of the
Debenture. In addition, as further explained in paragraph 3(b) of the Debenture,
the Debenture is convertible in part at any time prior to its payment at the option
of the Purchaser into fully paid and nonassessable shares of Common Stock of the
Company constituting a proportionate percentage of thirty percent (30%) of all
classes of the Common Stock of the Company on a fully diluted basis in the ratio
that the amount of the Debenture being converted bears to the total amount of the
Debenture acquired by the Purchaser. Subject to the following sentence, under no
circumstances shall paragraph 3(b) of the Debenture be read to entitle the Purchaser
to shares of Common Stock of the Company constituting less than 30% of all classes
of the Common Stock of the Company on a fully diluted basis upon full conversion of
the Debentures. Notwithstanding the provisions of the third paragraph of the
Debenture and Section 3 of the Debenture, and subject to the following paragraph,
this Debenture is convertible at any time prior to payment at the option of the
Holder into fully paid and nonassessable shares of Common Stock of the Company equal
to thirty percent (30%) of the Company’s outstanding Common Stock on a fully-diluted
basis, including the exercise of all convertible debt securities that are currently
outstanding and/or that are issued in lieu of payment of principal and/or interest
payments or penalties upon notes and obligations of the Company; excluding, however,
Common Stock issued or issuable upon conversion of the Bridge Notes, or Common Stock
issuable upon exercise of Bridge Warrants. In addition, and subject to the
following paragraph, this Debenture is convertible in part at any time prior to its
payment at the option of Holder into fully paid and nonassessable shares of Common
Stock of the Company constituting a proportionate percentage of 30% of all classes
of the Common Stock of the Company on a fully-diluted basis (excluding, however,
Common Stock issued or issuable upon conversion of the Bridge Notes, or Common Stock
issuable upon exercise of Bridge Warrants) in the ratio that the amount of the
Convertible Debenture being converted bears to the total amount of the Convertible
Debenture acquired by the Holder.
In addition, if the Company completes an underwritten initial public offering
of its Common Stock on or before November 30, 2006, the entire principal balance of
the Debenture shall, without further action of the Company or the Holder, be
converted into a number of shares of Common Stock of the Company equal to fully paid
and nonassessable shares of Common Stock of the Company constituting 30% of all
classes of the Common Stock of the Company on a fully-diluted basis, as described in
paragraph 3(b) of the Debenture
excluding, however, (a) shares of Common Stock issued or issuable upon
conversion of the Bridge Notes or shares issuable upon exercise of Bridge Warrants;
and (b) securities of the Company issued in connection with such
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public offering,
including shares issuable upon exercise of warrants issued to underwriters of such
public offering. In such event, Holder shall be paid the pro rata interest
associated with this Debenture to the date of conversion.
2. Disclosure. Purchaser is familiar with the Company’s business and financial
condition and has had an opportunity to obtain, and has received, additional information concerning
the Company and has an opportunity to ask questions of, and receive answers from, the Company, to
the extent deemed necessary by Purchaser in order to make a decision concerning Purchaser’s
agreement to be a party to this Agreement. Purchaser understands that the Company is in an early
stage and that the purchase of its shares involves a high degree of risk, including the risk of
receiving no return on Purchaser’s investment and of the losing of Purchaser’s entire investment in
the Company. Purchaser is able to bear the economic risk of investment in the Debenture and any
shares acquired upon conversion of the Debenture. Purchaser is aware that there is not currently
any market for the Debenture or the Company’s common stock, and there is no assurance that a public
market for the Company’s common stock will develop. Purchaser believes that investment in the
shares acquired upon conversion of the Debenture, and any additional shares received upon
conversion of accrued interest on the Debenture, meets Purchaser’s investment objectives and
financial needs, and Purchaser has adequate means of providing for Purchaser’s current financial
needs and contingencies, and has no need for liquidity of investment with respect to common stock
acquired upon conversion of the Debenture.
3. Confidentiality. The information contained in this Agreement relative to the
Company’s bridge debt financing and public offering are highly confidential. Purchaser agrees that
all discussions with the Company relative to the foregoing financing will be held in the strictest
of confidence and will not be disclosed without the consent of the Company, or as required by law.
Such confidentiality restriction shall continue until the Company advises Purchaser that it no
longer intends to pursue a public offering, or the Company’s public disclosure of the proposed
public offering. Purchaser has been advised that a breach of this disclosure obligation may
jeopardize the Company’s proposed financing. Purchaser may disclose the terms of this Agreement to
any attorney or other advisor of Purchaser who agrees in writing to be bound by these
confidentiality terms.
4. Registration Rights. Section 5.23 is hereby amended to read as follows:
Except as described below, the Company has not agreed to register any of its
authorized or outstanding securities under the Securities Act. In March 2006 the
Company issued $2,750,000 aggregate principal amount of 12% Convertible Bridge Notes
(“March Bridge Notes”), together with warrants to purchase 550,000 shares of the
Company’s common stock (“March Bridge Warrants”); the Company proposes to issue up
to $3,600,000 aggregate principal amount of additional Bridge Notes (“Additional
Bridge Notes”) and additional Bridge Warrants covering up to 720,000 shares of
common stock (“Additional Bridge Warrants”). In connection with the Company’s sale
of the March Bridge Notes
and March Bridge Warrants and with the consent of Purchaser, the Company agreed
to register the shares of common stock issuable pursuant to a conversion of March
Bridge Notes and upon exercise of the March Bridge Warrants within 60
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days following
its completion of in initial public offering (the “Bridge Note Registration”). The
Company shall have the right to enter into one or more or such registration rights
agreements with purchasers of the Additional Bridge Notes and Additional Bridge
Warrants, pursuant to which the shares of Company common stock issuable upon
conversion of the Additional Bridge Notes and upon exercise of the Additional Bridge
Warrants are includable in the Bridge Note Registration. The Company may also enter
into one or more agreements with other holders of the Company’s convertible debt
securities to include their shares in the Bridge Note Registration. The Company
agrees, upon the request of Purchaser, to include all shares of common stock
issuable to Purchaser pursuant to the Debenture in the Bridge Note Registration.
Purchaser will be bound by the terms and conditions of registration rights granted
to the Bridge Note purchasers.
5. Effect of Agreement. Except for the amendments and understandings provided in this
Agreement, the terms and conditions of the CDA not inconsistent with this Agreement shall remain in
full force and effect.
6. Waiver of Covenant Violations. The Company has advised Purchaser that it has
failed to comply with Section 8.8 of the CDA by failing to pay all principal and interest when due
on the Company’s outstanding convertible debt securities. The Company has advised Purchaser that
it intends to enter into one or more note conversion agreements with such holders providing, among
other things, for the automatic conversion of the principal amount of such debt securities into the
Company’s common stock upon the closing of the IPO, and for the deferral of the payment of any
principal or interest due on such securities until the later of the closing of the IPO or November
30, 2006. Based upon such representations, Purchaser agrees to waive the Company’s default under
the provisions of Section 8.8 of the CDA with respect to payment defaults on the Company’s
convertible securities until November 30, 2006.
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If you are in agreement with the foregoing, please sign the form of acceptance on the enclosed
counterpart of this letter and return the same to the undersigned, whereupon this letter shall
become a binding contract between you and the undersigned.
| Very truly yours, WIRELESS RONIN® TECHNOLOGIES, INC. |
||||
| By: | /s/ Xxxxxxx X. Xxxx | |||
| Xxxxxxx X. Xxxx | ||||
| President and CEO | ||||
| By: | /s/ Xxxx Xxxxxx | |||
| Xxxx Xxxxxx | ||||
| Executive Vice President and CFO | ||||
The foregoing Agreement is hereby accepted as
of the date first above written.
of the date first above written.
SPIRIT LAKE SIOUX TRIBE
By:
|
/s/ Xxxx Walking Eagle | |||
Print Name: Xxxx Walking Eagle |
||||
Its: Vice Chairman |
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