Exhibit 14
SECOND AMENDMENT OF
CONVERTIBLE PROMISSORY NOTE AND WARRANT PURCHASE AGREEMENT
Second Amendment of Convertible Promissory Note and Warrant Purchase
Agreement (this "Second Amendment"), dated as of January 30, 2002, between
TeraGlobal Communications Corp., a Delaware corporation (the "Company"), and
WallerSutton 2000, L.P., a Delaware limited partnership ("WallerSutton").
WHEREAS, the Company and WallerSutton are, among others, parties to that
certain Convertible Promissory Note and Warrant Purchase Agreement (the
"Purchase Agreement"), dated as of December 10, 2001, as amended by that certain
Waiver of and Amendment to Convertible Promissory Note and Warrant Purchase
Agreement (the "Waiver and Amendment"), dated as of January 22, 2002, pursuant
to which the Company was allowed to sell and issue to the investors named
therein (a) secured convertible promissory notes in the aggregate principal
amount of up to two million dollars ($2,000,000), and (b) warrants to purchase
certain number of shares of the Company's Common Stock, par value $0.001 per
shares ("Common Stock");
WHEREAS, as of December 21, 2001, the Company has sold and issued,
pursuant to the Purchase Agreement, secured convertible promissory notes in the
aggregate principal amount of seven hundred fifty thousand dollars ($750,000)
(the "December Notes") and certain warrants;
WHEREAS, on January 22, 2002, the Company has sold and issued, pursuant to
the Waiver and Amendment, additional secured convertible promissory notes in the
aggregate principal amount of two hundred fifty thousand two hundred eighty six
dollars ($250,286) (the "January Notes") and certain warrants;
WHEREAS, the Company acknowledges that WallerSutton has no further
obligation to purchase convertible promissory notes or warrants under the
Purchase Agreement or the Waiver and Amendment;
WHEREAS, the Company is currently in need for additional capital to
continue its ongoing operations; and
WHEREAS, WallerSutton is willing to purchase additional secured
convertible promissory notes under the Purchase Agreement, as amended, in the
aggregate principal amount of two hundred fifty thousand dollars ($250,000),
provided that the obligations of the Company under such notes are entitled to
the benefits of the Security Agreement (as defined in Section 1.6 below).
NOW, THEREFORE, in consideration of the mutual covenants and agreements
set forth herein and for good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, the parties hereby agree as follows:
1. Purchase and Sale of the Note.
1.1. Sale and Issuance of the Note. Upon the terms and subject to
the conditions of the Purchase Agreement, as amended by the Waiver and Amendment
and by this
Second Amendment, WallerSutton agrees to purchase at the Closing (as defined in
Section 1.2 below), and the Company agrees to sell and issue to WallerSutton at
the Closing, a convertible promissory notes in the form of Exhibit A hereto (the
"Note") in the principal amount of two hundred fifty thousand dollars ($250,000)
(the "Funding Amount"), at a price equal to the Funding Amount.
1.2. Closing. The closing of the purchase and sale of the Note
contemplated by this Second Amendment (the "Closing") shall take place
simultaneously with the execution hereof. The Closing shall take place at the
offices of RubinBaum LLP, ▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇, at 10 a.m.
New York time or such other time and place as the Company and WallerSutton shall
otherwise agree on.
1.3. Deliveries. At the Closing, the Company shall deliver to
WallerSutton the Note against payment therefor by wire transfer or check.
1.4. Conversion of the Note. The Note shall be converted, at any
time while it is outstanding and prior to its maturity date, into any shares of
capital stock of the Company (or any subsidiary thereof which owns all or
substantially all of the assets of the Company) at the final closing of the Next
Qualified Financing. The term "Next Qualified Financing" shall mean the receipt
of gross proceeds of not less than $6,600,000 from the sale of the Company's
debt or equity securities through any financing sources (in any case excluding
amounts received on conversion of the December Notes, the January Notes and the
Notes) which is on terms reasonably acceptable to WallerSutton and is completed
before June 10, 2002.
1.5. Use of Proceeds. The proceeds from the sale of the Note will be
used for general working capital purposes.
1.6. Security. The December Notes, the January Notes and the Notes
shall be secured by a first priority security interest in all of the Company's
assets pursuant to the Security Agreements (as defined in Section 2.2 below).
1.7. Registration Requirements. The shares of the Company's Common
Stock issuable upon conversion of the Note shall be registered with the
Securities and Exchange Commission and listed on the Nasdaq Stock Market or the
then current exchange within one hundred twenty (120) days of the consummation
of the Next Qualified Financing; provided, however, that if the Next Qualified
Financing shall not have been completed by June 10, 2002, then the Company will
register such shares in accordance with the Registration Rights Agreement in the
form of Exhibit E to the Purchase Agreement, as amended pursuant to Section
6.1(b) to the Waiver and Amendment.
2. Representations and Warranties of the Company. The Company hereby
represents and warrants to and for the benefit of WallerSutton, with knowledge
that WallerSutton is relying thereon in entering into this Second Amendment and
purchasing the Note, as follows:
2.1. Representations and Warranties of the Company in the Purchase
Agreement. The representations and warranties set forth in Section 2 of the
Purchase Agreement, as amended by the Waiver and Amendment, are true and correct
on the date hereof as if made on the date hereof and are incorporated herein by
reference in their entirety.
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2.2. Security Agreements. The Company acknowledges that the
obligations of the Company under the Note and hereunder shall be entitled to the
benefits of the Security Agreements entered into pursuant to the Purchase
Agreement (the "Security Agreements") and shall rank pari passu with the
obligations of the Issuer under the December Notes and the January Notes.
3. Representations and Warranties of WallerSutton. WallerSutton hereby
represents and warrants to and for the benefit of the Company, with knowledge
that the Company is relying thereon in entering into this Second Amendment and
issuing (by itself or by a subsidiary thereof) the Note and the securities to
which it may be converted into to WallerSutton, that the representations and
warranties set forth in Section 3 of the Purchase Agreement, as amended by the
Waiver and Amendment, are true and correct on the date hereof as if made on the
date hereof and are incorporated herein by reference in their entirety.
4. California Commissioner of Corporations. The provisions of Section 4 of
the Purchase Agreement are incorporated herein by reference.
5. Covenants of the Company. So long as any of the December Notes, the
January Notes or the Notes remain outstanding, the covenants of the Company, set
forth in Section 5 of the Purchase Agreement, shall remain outstanding and in
effect.
6. General Provisions.
6.1. General Provisions in the Purchase Agreement. The provisions
set forth in Section 7 of the Purchase Agreement, as amended by the Waiver and
Amendment, are incorporated herein by reference.
6.2. Effectiveness. This Second Amendment shall become effective
upon its execution and delivery by the Company and WallerSutton.
6.3. Defined Terms. Capitalized terms used but not otherwise defined
herein shall have their respective meanings as set forth in the Purchase
Agreement.
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IN WITNESS WHEREOF, the undersigned have executed this Second Amendment to
be effective as of the date first written above.
TERAGLOBAL COMMUNICATIONS CORP.
By: _________________________________
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇,
Chief Executive Officer
WALLERSUTTON 2000, L.P.
By: WallerSutton 2000, L.L.C.
By: _________________________________
Name:
Title:
Address:
▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇▇., ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
notices, with a copy to:
RubinBaum LLP
▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
The undersigned, being parties to the Purchase Agreement as amended by the
Waiver and Amendment, hereby acknowledge receipt of this Second Amendment and
consent to the terms hereof.
▇▇▇▇▇▇▇ ▇▇▇▇▇ INVESTMENT PARTNERS LLC
By: _________________________________
Name:
Title:
LINCOLN ASSOCIATES, LLC
By: _________________________________
Name:
Title:
