EXHIBIT 2.6
AMENDMENT NO. 1 TO SUBSCRIPTION AGREEMENT
-----------------------------------------
WHEREAS on June 29, 1998 each of the investors identified on Schedule A
hereto ("Investor" or "Investors") had entered into a subscription agreement
with The Recovery Network, Inc. (the "Company") relating to the investment by
the Investors in securities of the Company (the "Subscription Agreement"); and
WHEREAS, each of the Investors has purchased the securities
for the Purchase Price identified on Schedule A hereto; and
WHEREAS, the Company and Investors are desirous of amending the
Subscription Agreements.
NOW THEREFORE, for the mutual promises contained herein and other good
and valuable mutual consideration, receipt of which is acknowledged, the parties
agree as follows:
1. Capitalized terms employed in this Amendment No. 1 (the "Amendment")
shall have the same meanings as attributed to them in the Subscription
Agreement.
2. Except as modified herein, the Subscription Agreement and documents
referred to therein, and all its terms and conditions remain in full force and
effect. Unless otherwise indicated, the amendments set forth herein shall be
deemed effective as of the date of the Subscription Agreement and the date
hereof.
3. Concurrently with the execution of this Amendment, the Company shall
deliver to the Investors the amount of Company Stock ("Additional Company
Shares") and Class B, C, and D common stock purchase warrants ("New B, C, or D
Warrants" or "New Warrants") set forth on Schedule B hereto. The New Warrants
are exercisable for the designated amounts of Company Stock until December 21,
2001 at per common share prices of $4.00, $5.00, or $6.00, respectively. The
Additional Company Shares and New Warrants are granted all the rights and
benefits accorded the Company Shares and Warrants, respectively, including but
not limited to the reissuance of the Securities without restrictive legend as
described in Section 4 of the Subscription Agreement, and the registration
rights described in Section 10 of the Subscription Agreement. The Purchase Price
set forth in Schedule A hereto shall be deemed the Purchase Price for all the
Company Shares set forth on Schedule A and the Additional Company Shares (i.e.
$2.00 per Company Share).
4. The Investors agree not to sell the Company Shares and Additional
Company Shares until after December 21, 1998, except for 900,000 common shares
which may be proportionately sold by the Investors to Xxxxxx Xxxxxxx, or his
assigns ("Optionee") as the holder of the option to purchase all but not less
than all such 900,000 common shares at $3.00 per common share (the "Option").
However, upon exercise of the Option, each Investor shall have the right to
restrict the exercise of the Option in relation to up to half of the Company
Shares owned by the Investor which are deposited in Escrow and subject to the
Option. A lock-up shall not apply to any of the shares subject to the Option
which the Investor has withheld from being sold to the Optionee pursuant to the
previous sentence. The terms of the Option are memorialized in an Option Escrow
Agreement dated on or about the date of this Amendment.
5. In the event the Option is exercised pursuant to the terms of the
Option Escrow Agreement, then (i) the Investors agree to extend the lock-up
period described in the previous paragraph until February 16, 1999; and (ii) the
Reset rights of the Investors described in Section 9.1 of the Subscription
Agreement will, on such date, be eliminated entirely. In the event the Closing
Bid Price of the Company's Common Stock as reported by the NASDAQ SmallCap
Market or such other principal market upon which the Common Stock is listed for
trading is $5.00 or more for three consecutive trading days, then the Company
Shares and Additional Company Shares will not be subject to any lock-up after
such date.
6. In the event the Option is not exercised pursuant to the terms of
the Option Escrow Agreement then the Investors will be entitled to all Reset
rights described in the Subscription Agreement and as amended herein. If the
Registration Statement described in Section 10.1(iv) of the Subscription
Agreement relating to all the Registrable Securities is declared effective on or
before December 31, 1998, then the Trigger Date shall be January 2, 1999. Reset
Dates shall be every thirtieth day after the Trigger Date until the Investor has
Reset the entire Purchase Price. If any such date is not a trading day on the
NASDAQ SmallCap Market or such other principal market where the Common Stock is
listed for trading, then that Reset Date shall be the first trading day
thereafter. Designated Portions to be determined by each Investor shall be not
less than 5% nor more than 25% of the Purchase Price.
2
7. In the event the Option is not exercised, then regardless of whether
the Registration Statement described in Section 10.1(iv) of the Subscription
Agreement was declared effective or not declared effective, Liquidated Damages
in accordance with Section 10.2(j) of the Subscription Agreement for a
Non-Registration Event will be assessed against the Company, and be immediately
payable by the Company to the Investors as if such Registration Statement had
not been declared effective as of December 21, 1998, (i.e. damages will accrue
for a period of not less than October 27, 1998 through December 21, 1998).
8. In the event the Option is exercised then the Investors waive
damages with respect to the Non-Registration Event described in Paragraph "7"
above.
9. In the event a Registration Statement relating to all the
Registrable Securities (which includes the Additional Company Shares and New B,
C, and D Warrants) (i) is not filed with the Securities and Exchange Commission
on or before October 30, 1998; or (ii) if not reviewed and commented upon in
writing by the Securities and Exchange Commission and not declared effective on
or before November 4, 1998; or (iii) if reviewed and commented upon in writing
by the Securities and Exchange Commission and not declared effective on or
before December 15, 1998, then the lock-up and Option described in Paragraph "4"
of this Amendment shall be void.
10. The Company shall deliver to Grushko & Xxxxxxx (the "Escrow
Agent"), upon the execution hereof 1,000,000 shares of Common Stock of the
Company (the "Escrowed Shares") in the names of the Investors in the
denominations set forth on Schedule A to be held in escrow. While held in
escrow, the Escrowed Shares shall not be deemed issued and outstanding for any
purpose nor shall any Investor have any voting or dispositive rights thereto.
The certificate representing the Escrowed Shares shall be imprinted with the
legend described in Section 1(e) of the Subscription Agreement which is subject
to removal pursuant to Section 4 of the Subscription Agreement. Any restrictive
legend imprinted on the Escrowed Shares will be removed immediately upon
effectiveness of a Registration Statement relating to such Escrowed Shares. The
terms and conditions of escrow shall be set forth in an escrow agreement in the
form annexed as Exhibit 1 hereto (the "Escrow Agreement"). The Company shall
deliver to the Escrow Agent, from time to time, at the request of the Investor,
within seven (7) business days after notice to the Company of such request, such
additional Company Shares as would be necessary to offset any dilutive events as
described in Section 11.2(g) of the Subscription Agreement affecting the
Escrowed Shares. The Escrowed Shares are to be employed to satisfy the Company's
obligation to deliver shares to the Investors upon Reset and to satisfy any
outstanding
3
monetary obligations of the Company pursuant to Sections 9.1(f), 9.3 and 10.2(j)
of the Subscription Agreement. The Investor may elect to satisfy any outstanding
Company obligation arising under Section 9.1(f), 9.3, or Section 10.2(j) of the
Subscription Agreement and Paragraph 7 of this Amendment by demanding the
release from escrow of Company Shares at a per share value equivalent to 75% of
the lowest bid price of the Company's Common Stock on NASDAQ SmallCap or on any
exchange or other securities market on which the Common Stock is then being
traded, for the five trading days prior to the date notice of such election is
given to the Company. Upon execution of this Amendment, the Company shall pay
the Escrow Agent a fee of $15,000 as compensation for the services of the Escrow
Agent.
11. The Company will remove Put Shares from the pending registration
statement and not register any common shares issuable upon exercise of the Put
in any registration statement filed prior to December 22, 1998. Nevertheless,
the Company will register the same amount of Common Stock required to be
registered pursuant to Section 10.1(iv) of the Subscription Agreement and one
share of Common Stock for each Additional Company Share and each share of Common
Stock issuable upon exercise of the New Warrants.
12. The Company will provide an updated legal opinion acceptable to the
Investors relating to the Additional Company Shares, New Class B, C, and D
Warrants and this Amendment in substantially similar form to the legal opinion
previously provided pursuant to Section 3 of the Subscription Agreement.
[THIS SPACE INTENTIONALLY LEFT BLANK]
4
13. This Amendment may be executed in multiple counterparts, and by
facsimile signature and may be delivered via telecopier.
THE RECOVERY NETWORK, INC.
By:_________________________________
AUSTOST ANSTALT XXXXXX
By:_________________________________
BALMORE FUNDS S.A.
By:_________________________________
5
13. This Amendment may be executed in multiple counterparts, and by
facsimile signature and may be delivered via telecopier.
THE RECOVERY NETWORK, INC.
By:_________________________________
ZAKENI LTD.
By:_________________________________
BL SQUARED FOUNDATION
By:_________________________________
THE SARGON FUND, L.P.
By:_________________________________
TLG REALTY
By:_________________________________
------------------------------------
XXXXXX XXXXX
6
AMENDMENT NO. 1 SCHEDULE A
--------------------------
INVESTORS PURCHASE COMPANY SHARES ALLOCATION OF
PRICE PREVIOUSLY ESCROWED
RECEIVED SHARES
AUSTOST ANSTALT XXXXXX 750,000.00 333,333 300,000
7440 Fuerstentum
Xxxxxxxxxxx
Xxxxxxxxxxx 000
Fax: 000-000-000000000
BALMORE FUNDS S.A. 750,000.00 333,333 300,000
X.X. Xxx 0000
Xxxxxx, Xxxxxxxxxxx
Fax: 000-000-000-0000
ZAKENI LTD. 500,000.00 222,222 200,000
c/o Betuvo AG
Xxxxxx Xxxxxxx
00 Xxxxxxxx 0000
0000 XXX, Xxxxxxxxxxx
Fax: 000-000-0000
BL SQUARED FOUNDATION 200,000.00 88,889 80,000
000 Xxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attn: Xxx Xxxxxxxxx
Fax: 000-000-0000
THE SARGON FUND, L.P. 150,000.00 66,667 60,000
00 Xxxxx Xxxx
Xxxxxxxxxx, XX 00000
Fax: 000-000-0000
TLG REALTY 50,000.00 22,222 20,000
c/o Melo
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, XX 00000
Attn: Xxx Xxxxxxxxx
Fax: 000-000-0000
XXXXXX XXXXX 100,000.00 44,444 40,000
0000 Xxxx 00xx Xxxxxx
Xxxxxxxx, XX 00000
Fax: 000-000-0000
TOTALS 2,500,000 1,111,110 1,000,000
7
AMENDMENT NO. 1 SCHEDULE B
INVESTORS ADDITIONAL B WARRANTS C WARRANTS D WARRANTS
COMPANY
SHARES
AUSTOST ANSTALT XXXXXX 41,667 60,000 30,000 30,000
7440 Fuerstentum
Xxxxxxxxxxx
Xxxxxxxxxxx 000
Fax: 000-000-000000000
BALMORE FUNDS S.A. 41,667 60,000 30,000 30,000
X.X. Xxx 0000
Xxxxxx, Xxxxxxxxxxx
Fax: 000-000-000-0000
ZAKENI LTD. 27,778 40,000 20,000 20,000
c/o Betuvo AG
Xxxxxx Xxxxxxx
00 Xxxxxxxx 0000
0000 XXX, Xxxxxxxxxxx
Fax: 000-000-0000
BL SQUARED FOUNDATION 11,111 16,000 8,000 8,000
000 Xxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attn: Xxx Xxxxxxxxx
Fax: 000-000-0000
THE SARGON FUND, L.P. 8,333 12,000 6,000 6,000
00 Xxxxx Xxxx
Xxxxxxxxxx, XX 00000
Attn: Xxxxxxxx Xxxxxxx
Fax: 000-000-0000
TLG REALTY 2,778 4,000 2,000 2,000
c/o Melo
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, XX 00000
Attn: Xxx Xxxxxxxxx
Fax: 000-000-0000
XXXXXX XXXXX 5,556 8,000 4,000 4,000
0000 Xxxx 00xx Xxxxxx
Xxxxxxxx, XX 00000
Fax: 000-000-0000
TOTALS 138,890 200,000 100,000 100,000
8
