AMENDMENT
TO
SECURITIES PURCHASE AGREEMENT, WARRANTS,
REGISTRATION RIGHTS AGREEMENT
AND
8% CONVERTIBLE DEBENTURE SERIES 04-03 DUE DECEMBER __, 2005
THIS AMENDMENT TO SECURITIES PURCHASE AGREEMENT, 8% CONVERTIBLE DEBENTURE SERIES
04-03 DUE DECEMBER __, 2005, WARRANTS AND REGISTRATION RIGHTS AGREEMENT is made
by and between Infinium Labs, Inc., a Delaware corporation ("Company"), the
Investors listed on Schedule A hereto (collectively the "Investors" and each
individually an "Investor") and Xxxxxxx X. Xxxxxxx ("Guarantor") and is dated as
of December __, 2004 ("Amendment").
WHEREAS, the Company is currently in discussions with investors regarding
a transaction (or series of related transactions; collectively, the "Qualified
Financing") after the date hereof in which (i) the Company shall issue and sell
shares of its capital stock (but not any debt or other payment obligations) in
exchange for aggregate gross proceeds of at least $30 million, (ii) the first
tranche of such financing (the "Qualified Financing First Tranche") shall
consist of no less than $12 million and (iii) pursuant to which all existing
debt of the Company (other than the debt being issued pursuant to either the
Purchase Agreement or the Securities Purchase Agreement, dated as of December
13, 2004, as amended, between the Company and the Lenders named therein) shall
be converted into equity of the Company or otherwise retired within 10 Trading
Days of the funding of the Qualified Financing First Tranche (the date on which
all such debt is so converted or otherwise retired, the "Debt Elimination
Date"); and
WHEREAS, the parties desire to amend certain terms of the Transaction
Agreements;
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which the parties hereby acknowledge, the parties agree as
follows:
1. Amendment to Purchase Agreement.
(i) Notwithstanding anything to the contrary in the Purchase
Agreement or the other Transaction Agreements, a Qualified Financing in which
the Debt Elimination Date occurs within six (6) months from the Closing Date
shall not be deemed a Lower Price Transaction.
(ii) Additionally, the principal amount of Debentures sold pursuant
to the Purchase Agreement shall be fixed at $1,000,000 and the funds deposited
in escrow by the Investors at the Closing under the Purchase Agreement shall be
released on the first Business Day after delivery to the Escrow Agent of proof
of filing with the Securities and Exchange Commission of the registration
statement on Form SB-2 as required pursuant to the Registration Rights
Agreement.
(iii) The term "Securities" is amended to include the Issued Shares,
as hereinafter defined.
(iv) The term "Shares" is amended to include the shares of Common
Stock representing the Issued Shares.
(v) The term "Transaction Agreements" is amended to include this
Amendment in the list of documents and agreements.
2. Amendment of Warrants: The exercise price of the Warrants is
hereby amended to at all times be $0.10 per share (subject to adjustment from
time to time as provided in Sections 6.1, 6.2 and 6.3 of such Warrant).
3. Additional Shares.
(i) The Company shall issue to each Investor shares ("Issued
Shares") of the Company's Common Stock equal to (x) 500,000 shares, multiplied
by (y) such Investor's Lender's Allocable Share, as set forth in Schedule A
hereto.
(ii) The Company will deliver to the Escrow Agent certificates,
issued by the Transfer Agent in the name of the Investor, representing such
Investor's Issued Shares within 10 Trading Days of the execution and delivery of
this Amendment.
4. Amendment to Debenture and Purchase Agreement.
(i) The defined term "Conversion Price" as contained in the
Purchase Agreement and Section 4.A.(ii) of the Debenture is hereby restated in
its entirety as follows:
(ii) "The term "Conversion Price" means seventy-five percent
(75%; the "Current Percentage") of the lowest Closing Price
during the five (5) Trading Days ending on the Trading Day
immediately before the Conversion Date; provided, however,
that in no event will the Conversion Price be (x) more than
$0.10 (the "Maximum Conversion Price") or (y) until the
earlier of (I) the Scheduled Expiration Date (as defined
below), (II) the date after the Closing Date on which the
company files a registration statement on Form S-8 or (III)
the date on which the Company first issues a Mandatory
Conversion Notice (as defined below), lower than $0.10 (the
"Minimum Conversion Price") (as each such amount may be
adjusted from time to time as provided herein); provided,
however, if the Qualified Financing First Tranche (as defined
below) is consummated prior to the Scheduled Expiration Date
and the Debt Elimination Date (as defined below) occurs before
any of the dates referred to in subclauses (I), (II) or (III)
of clause (y) of this paragraph, then, notwithstanding
anything in the foregoing provisions of this paragraph to the
contrary, the Conversion Price shall thereafter be $0.10
(subject to adjustment from time to time as provided in
Section 2).
2
Company: _____
Investor: _____
(ii) The following provisions are added following Section
4(A)(iii):
(iv) The term "Qualified Financing" means a transaction or
series of related transactions entered into after the Issue
Date in which all of the following conditions are satisfied:
(i) the Company shall issue and sell shares of its capital
stock (but not any debt or other payment obligations) in
exchange for aggregate gross proceeds (before ordinary
commissions, fees and expenses) of at least $30 million, (ii)
the first tranche of such financing (the "Qualified Financing
First Tranche") shall consist of no less than $12 million and
(iii) in connection with or contemporaneous with the funding
of the Qualified Financing First Tranche, all existing debt of
the Company (other than the debt being issued pursuant to
either the Securities Purchase Agreement or the Securities
Purchase Agreement, dated as of December 13, 2004, as amended,
between the Company and the Lenders named therein) shall be
converted into equity of the Company or otherwise retired
within 10 Trading Days of the funding of the Qualified
Financing First Tranche (the date on which all such debt is so
converted or otherwise retired, the "Debt Elimination Date").
(v) The term "Scheduled Expiration Date" means April 16, 2005,
except that, if prior thereto the Company has filed with the
SEC a definitive proxy statement (and such proxy statement is
sent to the Company's shareholders within 10 Trading Days
after such filing), which proxy statement, among other things,
seeks shareholder authorization at a meeting of shareholders
scheduled to be held no later than June 16, 2005 to amend the
Company's certificate of incorporation to increase the
authorized shares of the Company to at least 400 million
shares, it means June 16, 2005.
5. Amendment to Registration Rights Agreement.
(i) Schedule 1 to the Registration Rights Agreement is amended to
read in its entirety as follows:
1. All Registrable Shares contemplated by the Registration
Rights Agreement, dated as of December 13, 2004, as amended
(the "Existing Registration Rights Agreement"), between the
Company and the Initial Investors named therein (the "Original
Investors").
2. The shares referred to in clause (2) of Section 2(a)(i)
of the Existing Registration Rights Agreement, whether issued
to the Finder contemplated thereby or to such Finder's
designees.
3
Company: _____
Investor: _____
3. The shares listed in item A of Schedule 1 to the
Existing Registration Rights Agreement.
4. Any shares issuable on exercise of warrants issued to
the Finder or its designees, to the Escrow Agent or its
designees or to SG Capital or its designees in connection with
the transactions consummated (x) on December 16, 2004, as
amended, or (y) in connection with the transactions
contemplated by the Transaction Agreements, as amended.
(ii) The term "Registrable Securities" is amended to include the
Issued Shares.
(iii) Each of the terms "Initial Number of Shares to Be Registered"
and "Increased Number of Shares to Be Registered" is amended to be equal to the
sum of (x) the shares determined by the terms of such definition as in effect on
the Closing Date, plus (y) the Issued Shares.
(iv) For purposes of determining the Held Shares Value, a Holder
shall be deemed to have sold Issued Shares before selling any Conversion Shares.
6. Reserved.
7. Effective Date.
(i) Each of the Company and each Investor shall deliver an
executed copy of this Amendment to the Escrow Agent.
(ii) This Amendment shall be effective as to each Investor on the
date that it is so executed and delivered by the Investor and by the Company.
(iii) The provisions of Section 11 of the Purchase Agreement are
incorporated herein by reference.
(iv) The Company hereby confirms to each Investor that, as of the
effective date of this Amendment, the representations made in Section 3 of the
Purchase Agreement shall apply also to the Issued Shares.
(v) Upon execution and delivery of this Amendment, the Company
will deliver to the Escrow Agent an opinion of counsel addressed to the
Investors modifying the opinion delivered on the Closing Date to the effect
that, as of such date, (i) this Amendment is deemed to be one of the Transaction
Agreements and the opinions relating to the Transaction Agreements apply thereto
and (ii) upon issuance of the Issued Shares in accordance with the terms of the
Amendment, the Issued Shares will be validly issued, fully paid and
non-assessable, and free from all taxes, liens and charges with respect to the
issue thereof.
8. Limited Effect. Except as specified above, all terms of
Transaction Agreements remain in full force and effect.
* * *
4
Company: _____
Investor: _____
IN WITNESS WHEREOF, the parties have caused this Amendment to be duly
executed by their respective officers thereunto duly authorized as of the day
and year first above written.
INFINIUM LABS, INC.
By:__________________________
Xxxxxxx X. Xxxxxxx
Chief Executive Officer
Date:________________________
[NAME OF INVESTOR]
_____________________________
Date:________________________
Address:_____________________
_____________________________
_____________________________
Guarantor's Acknowledgment
The undersigned, the Guarantor referred to in the Debenture, acknowledges that
the Personal Guarantee issued by the Guarantor to each Investor remains in full
effect with respect to the Debenture, as modified by the above Amendment.
_____________________________
XXXXXXX X. XXXXXXX
SCHEDULE A
PRINCIPAL ISSUED
INVESTOR AMOUNT OF NOTE WARRANTS SHARES
------------------------------------- ------------- --------- ---------
Hazinu Limited $ 225,000.00 1,054,685 112,500
BL Cubed LLC 112,500.00 527,342 56,250
Longview Special Finance Inc. 187,500.00 878,904 93,750
Congregation Mishkan Xxxxxx 75,000.00 351,562 37,500
JM Investors LLC 18,750.00 87,890 9,375
Xxxxx Xxxxxxxx 13,750.00 64,453 6,875
Shalom Torah Centers 13,750.00 64,453 6,875
Xxxxxx Xxxxx 13,750.00 64,453 6,875
Fenmore Holdings LLC 187,500.00 878,904 93,750
West Hastings Limited 32,500.00 152,343 16,250
Xxxxx Xxxxx 11,250.00 52,733 5,625
Xxxx Xxxxxxx 18,750.00 87,890 9,375
Liberty Supplies Corp. 75,000.00 351,562 37,500
Heza Holdings, Inc. 15,000.00 70,311 7,500
------------------------------------- ------------- --------- ---------
Total: $1,000,000.00 4,687,485 500,000
