1
EXHIBIT 4.3
May 17, 1999
Xxxxxxxx Capital Management, Inc.
00 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxx X. Xxxxx
Dear Sirs:
This letter confirms the understanding between Alydaar Software Corporation
("Alydaar") and Xxxxxxxx Capital Management, Inc. ("Xxxxxxxx") relating to the
amendment of (i) the Securities Purchase Agreement, dated March 5, 1999, between
Alydaar and Xxxxxxxx (the "Securities Purchase Agreement"), (ii) the Debenture
issued pursuant to the Securities Purchase Agreement and currently held by
Xxxxxxxx (the "Debenture"), (iii) the Warrant issued pursuant to the Securities
Purchase Agreement and currently held by Xxxxxxxx (the "Warrant"), and (iv) the
Registration Rights Agreement, dated March 5, 1999, between Alydaar and Xxxxxxxx
(the "Registration Rights Agreement"). Capitalized terms used herein and not
otherwise defined shall have the respective meanings specified in the Securities
Purchase Agreement.
1. Deletion of Tranche B and Tranche C. The Securities Purchase Agreement is
hereby amended so that (i) the obligations of the parties thereunder to purchase
and sell Securities shall apply only to the purchase of the Debenture pursuant
to Tranche A and (ii) Alydaar shall not have the right to exchange the Debenture
and the Warrant for Preferred Shares. Accordingly, all references in the
Securities Purchase Agreement and in the Debenture to "Tranche B", "Tranche C",
"Tranche B Closing", "Tranche C Closing ", "Tranche B Closing Date", "Tranche C
Closing Date ", "Preferred Stock", "Preferred Shares", "Articles of Amendment",
"Exchange" and "Exchange Date" shall be deleted.
2. Amendment to Shareholder Approval Provision. Paragraph 4.12 of the Securities
Purchase Agreement is hereby amended so that (i) the words "no later than April
30, 1999" shall be deleted and replaced with "within thirty (30) days of receipt
of a written notice from the Purchaser (a "Shareholder Meeting Notice")
requesting that the Company hold a meeting of its shareholders" and (ii) the
words "June 30, 1999" shall be deleted and replaced with "the sixtieth (60th)
day following the delivery by the Purchaser of a Shareholder Meeting Notice".
3. Amendment to Conversion Provisions. The Debenture is hereby amended so that
(i) the words "the date that is ninety (90) days following the Tranche A Closing
Date (as defined below)" in paragraph 2(a) shall be deleted and replaced with
"May 10, 1999", (ii) clause (i) of paragraph 2(d) following the words "Fixed
Conversion Price" shall be deleted and replaced with "(i) initially, the Fixed
Conversion Price as calculated in accordance with the immediately succeeding
sentence and" and (iii) the sentence beginning with "Notwithstanding the
foregoing, if during the ninety-day period" in paragraph 2(d) shall be deleted
in its entirety and replaced with "The Fixed Conversion Price shall initially be
equal to the average of the five (5) lowest consecutive Closing Trade Prices for
the Common Stock occurring during the period between the Issue Date and the
ninetieth (90th) day following the Issue Date (or , for any conversion occurring
on a date that is prior to such 90th day, during the period between the Issue
Date and such date) times one hundred and four percent (104%)(subject to
adjustment for the events specified in Section 3 below)" and (iii) the last
sentence of paragraph 2(d) shall be deleted and replaced with the following:
"'Market Conversion Price' shall mean the lower of (i) $3.875 (as adjusted from
time to time for the events specified in Section 3 below) and (ii) the low
Closing Bid Price for the Common Stock during the period of three (3) Trading
Days occurring immediately prior to the Conversion Date (as adjusted from time
to time for the events specified in Section 3 below); it being understood that
in no event shall the Holder (or any person acting at the direction of the
Holder) submit a bid for the Common Stock on any such Trading Day that would
constitute the low Closing Bid Price for the Common Stock on such Trading Day ".
4. Amendment to Cap Amount. In subparagraph 2(h)(A) of the Debenture,
the words "and all prior exercises of the Warrant" shall be added immediately
after the words "all prior conversions of this Debenture" in the first sentence
thereof. In the Warrant, the paragraph under Section 4 thereof shall be numbered
as "(a)" and a
2
new paragraph shall be inserted immediately thereafter as follows: "In no event
shall the Holder be permitted to exercise this Warrant in excess of that amount
upon the exercise of which the number of Warrant Shares to be issued pursuant to
such exercise, when added to the number of shares of Common Stock issued
pursuant to all prior Conversions of the Debenture (as defined in the Securities
Purchase Agreement) and all prior exercises of this Warrant, would exceed 19.99%
of the number of outstanding shares of Common Stock on the Tranche A Closing
Date (subject to equitable adjustment from time to time for the events described
in Section 6 below) (the "Cap Amount"), except that such limitation shall not
apply in the event that (i) the Company obtains the approval of its stockholders
as required by NASD Rule 4460 (or any successor rule or regulation) for
issuances of Common Stock in excess of the Cap Amount or (ii) the Holder obtains
an opinion of counsel reasonably satisfactory to the Company that such approval
is not required. In the event that the Holder shall sell or otherwise transfer
all or any portion of this Warrant, the transferee shall be allocated a pro rata
portion of the Cap Amount. In the event that following a sale or transfer of a
portion of this Warrant, the Holder converts all of the remaining amount of this
Warrant into a number of Warrant Shares which, in the aggregate, is less than
the remaining portion of the Cap Amount, then the difference between such
remaining portion of the Holder's Cap Amount and the number of Warrant Shares
actually issued to the Holder shall be allocated to the respective Cap Amounts
of the remaining transferee or transferees."
5. Registration Rights Agreement. The Registration Rights Agreement is
hereby amended so that all references therein to "Tranche B", "Tranche B
Closing", "Tranche B Closing Date", "Preferred Stock", "Preferred Shares" and
"Articles of Amendment" shall be deleted
6. Remaining Terms Unaffected. Except as specifically amended hereby,
the respective terms of the Securities Purchase Agreement, the Debenture, the
Warrant and the Registration Rights Agreement shall remain in full force and
effect.
7. Further Assurances. The parties agree that they will execute such
documents and do such other things as may be required in order to effectuate the
intent of this letter.
8. Governing Law. This letter shall be governed by and construed in
accordance with the laws of the State of New York (other than the conflict of
laws provisions thereof.
If the foregoing correctly sets forth the understanding between Alydaar
and Xxxxxxxx with respect to the matters described herein, please sign below in
the space indicated, whereupon this letter shall constitute a binding letter
between the parties.
Alydaar Software Corporation
By: /s/Xxxxxx X. Xxxxxx Chief Executive Officer,
---------------------- and Chairman
(Xxxxxx X. Xxxxxx) (Principal Executive Officer)
Accepted and Agreed:
Xxxxxxxx Capital Management, Inc.
By: /s/Xxxxx X. Xxxxx President
----------------------
(Xxxxx X. Xxxxx)
