AMENDMENT NO. 6 TO SENIOR SECURED CONVERTIBLE PROMISSORY NOTE
AMENDMENT
NO. 6
TO
This Amendment No. 6 (this
“Amendment”), dated as of November 20, 2009, is entered into by and among Zoo
Entertainment, Inc. (the “Company”) and the undersigned holders of the Notes (as
defined below) representing the Requisite Holders (as defined
below).
RECITALS
WHEREAS,
the Company entered into that certain Note Purchase Agreement, dated as of July
7, 2008, as subsequently amended on July 15, 2008, July 31, 2008 and August 12,
2008, pursuant to which the Company consummated a financing (the “First
Financing”) to raise $9,000,000 through the sale of senior secured convertible
promissory notes (the “Notes,” such term to refer to all senior secured
convertible promissory notes described in these Recitals, in the aggregate
principal amount of $11,150,000, as amended to date) to certain investors, and
the issuance to such investors of warrants to purchase an aggregate of 8,181,818
shares of the Company’s common stock, par value $0.001 per share (“Common
Stock”); and
WHEREAS,
on July 7, 2008, Xxxxxx Capital Master Fund, Ltd. (“Xxxxxx”) invested $2,500,000
in the First Financing and received a Note in the principal amount of
$2,500,000; and
WHEREAS,
on July 7, 2008, Back Bay LLC (“Back Bay”) invested $2,000,000 in the First
Financing and received a Note in the principal amount of $2,000,000;
and
WHEREAS, on July 7, 2008, the Company
issued to Xxxxxx Capital Management, LLC, a Note in the principal amount of
$750,000; and
WHEREAS,
on July 10, 2008, Cipher 06 LLC invested $150,000 in the First Financing and
received a Note in the principal amount of $150,000; and
WHEREAS,
on July 24, 2008, each of Soundpost Capital, LP and Soundpost Capital Offshore
Ltd. invested $500,000 in the First Financing and each received a Note in the
principal amount of $500,000; and
WHEREAS,
on August 1, 2008, Xxxxxx invested $1,500,000 in the First Financing and
received a Note in the principal amount of $1,500,000; and
WHEREAS,
on August 12, 2008, Amendment No. 1 to the Senior Secured Convertible Promissory
Notes was executed; and
WHEREAS,
on August 13, 2008, S.A.C. Venture Investments, LLC invested $1,850,000 in the
First Financing and received a Note in the principal amount of $1,850,000;
and
WHEREAS,
on September 26, 2008, the Company entered into that certain Note Purchase
Agreement, pursuant to which the Company consummated a second financing (the
“Second Financing”) to raise $1,400,000 through the sale of Notes to certain
investors, and the issuance to such investors of warrants to purchase an
aggregate of 1,272,727 shares of Common Stock; and
WHEREAS,
on September 26, 2008, Xxxxxx invested $500,000 in the Second Financing and
received a Note in the principal amount of $500,000; and
WHEREAS,
on September 26, 2008, Back Bay invested $500,000 in the Second Financing and
received a Note in the principal amount of $500,000; and
WHEREAS,
on September 26, 2008, Xxxx X. Xxxxx invested $100,000 in the Second Financing
and received a Note in the principal amount of $100,000; and
WHEREAS,
on September 26, 2008, Sandor Capital Master Fund LP invested $300,000 in the
Second Financing and received a Note in the principal amount of $300,000;
and
WHEREAS,
on June 26, 2009, the Requisite Holders executed and delivered Amendment No. 2
to Senior Secured Convertible Promissory Note (“Amendment No. 2”), pursuant to
which the Notes were amended to provide, among other things, that the
outstanding principal plus accrued and unpaid interest under the Notes shall
automatically convert into shares of Common Stock upon the occurrence of both
the effectiveness of the filing of an amendment to the Company’s Certificate of
Incorporation to increase the number of authorized shares of Common Stock to
permit the conversion of the Notes, and the consummation of an Investor Sale (as
defined therein); and
WHEREAS,
on August 31, 2009, the Requisite Holders executed and delivered Amendment No. 3
to Senior Secured Convertible Promissory Note, pursuant to which the Notes were
amended to, among other things, extend the maturity dates of the Notes to
September 30, 2009, and modify the definition of “Investor Sale” set forth
therein to be the consummation of a sale of
shares of Common Stock that results in aggregate gross proceeds to the Company
of at least $4,000,000, at a price per share equal to $0.20 (a “Qualified
Financing”); and
WHEREAS,
on October 6, 2009, the Requisite Holders executed and delivered Amendment No. 4
to Senior Secured Convertible Promissory Note, pursuant to which the Notes were
amended, among other things, to provide that if the Notes do not convert on or
prior to November 2, 2009, the provisions of the Notes, as amended, with respect
to automatic conversion upon the consummation of a Qualified Financing, shall
become null and void and shall be of no further effect; and
WHEREAS,
on November 2, 2009, the Requisite Holders executed and delivered Amendment No.
5 to Senior Secured Convertible Promissory Note, pursuant which the maturity
dates of the Notes was extended to February 2, 2010, and to provide that if the
Notes do not convert on or prior to February 2, 2010, the provisions of the
Notes, as amended, with respect to automatic conversion upon the consummation of
a Qualified Financing, shall become null and void and shall be of no further
effect; and
WHEREAS,
a schedule of the Notes and the current holders thereof is attached as Schedule A;
and
WHEREAS,
pursuant to Section 8 of the Notes, the Notes may be amended with the consent of
the Company and the holders of Notes representing at least seventy-five percent
(75%) of the aggregate principal amount then outstanding under all Notes (the
“Requisite Holders”); and
WHEREAS,
the undersigned holders constitute the Requisite Holders and desire to further
amend certain provisions of all of the Notes.
NOW, THEREFORE, in consideration of the
foregoing and for other good and valuable consideration, the receipt of which is
hereby acknowledged by the parties hereto, the undersigned parties do hereby
agree as follows:
AGREEMENT
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1.
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Amendment to Section 2
of the Notes. Effective immediately on the date hereof
(the “Effective Date”), Section 2
of each of the Notes shall be deleted in its entirety and replaced with
the following:
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“2. Conversion.
(a) General. Upon
the occurrence of an Investor Sale, the outstanding principal balance and all
accrued and unpaid interest under this Note (collectively, the “Note
Value”) shall automatically be converted, in whole, into shares of the
Company’s Series B Convertible Preferred Stock, par value $0.001 per share
(“Series
B Preferred
Stock”), at a rate of one (1) share of Series B Preferred Stock for each
$10.00 (the “Conversion
Price”) of the Note Value on the Mandatory Conversion Date (as defined
below). The “Mandatory Conversion
Date” means the closing of an Investor Sale. On the Mandatory
Conversion Date, this Note shall be deemed converted automatically and without
any further action by the Holder and whether or not this Note is surrendered to
the Company or the transfer agent for this Note; provided, however, that the
Company shall not be obligated to issue a certificate or certificates evidencing
the shares into which this Note is convertible unless this Note is delivered to
the Company, or the holder notifies the Company that the Note has been lost,
stolen, or destroyed and executes and delivers an agreement satisfactory to the
Company to indemnify the Company from any loss incurred by it in connection
therewith and, if the Company so elects, provides an appropriate
indemnity.
(b) Issuance
of Conversion Shares. Upon conversion of this Note pursuant to
Section 2(a), the Holder shall be deemed to be the holder of record of Series B
Preferred Stock issuable upon such conversion (the “Conversion
Shares”), notwithstanding that the transfer books of the Company shall
then be closed or certificates representing such Conversion Shares shall not
then have been actually delivered to the Holder. If required by the
Company, the Note surrendered shall be endorsed or accompanied by a written
instrument or instruments of surrender, in form satisfactory to the Company,
duly executed by the registered holder or his or its attorney duly authorized in
writing. Subject to compliance with the provisions of Section 2(a),
the Company shall, as soon as practicable after such surrender, issue and
deliver to such holder of this Note, or to his or its nominees, a certificate or
certificates for the Conversion Shares to which such holder shall be
entitled.
(c) Termination
of Rights Under this Note. Immediately upon the Mandatory
Conversion Date, this Note shall no longer be deemed to be outstanding and all
rights with respect to this Note shall immediately cease and terminate on the
Mandatory Conversion Date, except only the right of the Holder to receive the
shares to which it is entitled as a result of the conversion on the Mandatory
Conversion Date under the terms, and subject to conditions, of this
Note.
(d) Taxes or
other Issuance Charges. The issuance of any
Conversion Shares upon conversion of this Note, and the delivery of certificates
or other instruments representing the same, shall be made without charge to the
Holder for any tax or other charge in respect of such
issuance. The Company shall not, however, be required to pay
any tax which may be payable in respect of any transfer involved in the issue
and delivery of any certificate or instrument in a name other than that of the
Holder, and the Company shall not be required to issue or deliver any such
certificate or instrument unless and until the person or persons requesting the
issue thereof shall have paid to the Company the amount of such tax or shall
have established to the satisfaction of the Company that such tax has been
paid.
(e) Holder
Not a Stockholder. The Holder shall
not have, solely on account of such status as a holder of this Note, any rights
of a stockholder of the Company, either at law or in equity, or any right to any
notice of meetings of stockholders or of any other proceedings of the Company
until such time as this Note has been converted pursuant to Section 2(a), at
which time the Holder shall be deemed to be the holder of record of the
Conversion Shares, as applicable, notwithstanding that the transfer books of the
Company shall then be closed or certificates representing such Conversion Shares
shall not then have been actually delivered to the Holder.
(f) Fractional
Shares. No fractional shares of Series B Preferred Stock shall
be issued upon conversion of this Note. In lieu thereof, the shares
of Series B Preferred Stock otherwise issuable shall be rounded up or down to
the nearest whole share of Series B Preferred Stock.
(g) Securities
Act of 1933. Upon conversion of this
Note, the Holder may be required to execute and deliver to the Company an
instrument, in form satisfactory to the Company, representing that the shares of
Series B Preferred Stock issuable upon conversion hereof are being acquired for
investment only and not with a view to distribution within the meaning of the
Securities Act of 1933, as amended.
(h) The
“Investor Sale”
shall mean the closing of the sale of shares of the Company’s Series A
Convertible Preferred Stock, par value $0.001 per share, on substantially the
terms set forth in the Certificate of Designation, Preferences and Rights of
Series A Convertible Preferred Stock, in the form attached hereto as Exhibit A (the
“Series A Certificate of Designation”), so long as (A) such sale results in
aggregate gross cash proceeds to the Company of at least Four Million Dollars
($4,000,000) and (B) each share of Series A Convertible Preferred Stock is
initially convertible into 1,000 shares of the Company’s Common Stock, par value
$0.001 per share.”
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2.
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Termination of Side
Letter, dated June 26, 2009. The undersigned hereby
agree that the side letter, dated as of June 26, 2009 (the “Letter
Agreement”), pursuant to which the Company granted to the Holders certain
registration rights with respect to the shares of common stock issuable
upon conversion of the Notes pursuant to Amendment No. 2 is hereby
terminated in its entirety, effective immediately, and shall have no
further force and effect as of such date. Any and all rights
and obligations of the Company granted pursuant to and as set forth in the
Letter Agreement are hereby terminated and shall cease to exist as of the
date hereof.
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3.
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Representations and
Warranties. The Company hereby makes the following
representations and warranties to each
Holder:
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(a) Capitalization. The
capitalization of the Company following the consummation of the transactions
contemplated by this Amendment and the Investor Sale (as defined in the Notes,
as amended by this Amendment) will be as set forth on Schedule 3 attached
hereto.
(b) Organization and
Qualification. Each of the Company and each of its
subsidiaries (each, a “Subsidiary”) is an entity duly incorporated or otherwise
organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation or organization (as applicable), with the
requisite power and authority to own and use its properties and assets and to
carry on its business as currently conducted. Neither the Company nor
any Subsidiary is in violation of any of the provisions of its respective
certificate or articles of incorporation, bylaws or other organizational or
charter documents. Each of the Company and each Subsidiary is duly
qualified to conduct business and is in good standing as a foreign corporation
or other entity in each jurisdiction in which the nature of the business
conducted or property owned by it makes such qualification necessary, except
where the failure to be so qualified or in good standing, as the case may be,
could not, individually or in the aggregate, have or reasonably be expected to
result in (i) an adverse effect on the legality, validity or enforceability of
this Amendment, the Certificate of Designation, Rights and Preferences of Series
B Convertible Preferred Stock, attached hereto as Exhibit B and/or the
aforementioned Series A Certificate of Designation (the “Transaction
Documents”), (ii) a material and adverse effect on the results of operations,
assets, prospects, business or condition (financial or otherwise) of the Company
and the Subsidiaries, taken as a whole, or (iii) an adverse impairment to the
Company's ability to perform on a timely basis its obligations under any
Transaction Document (any of (i), (ii) or (iii), a "Material Adverse Effect")
and no Proceeding has been instituted in any such jurisdiction revoking,
limiting or curtailing or seeking to revoke, limit or curtail such power and
authority or qualification.
(c) Authorization;
Enforcement. The Company has the requisite corporate power and
authority to enter into and to consummate the transactions contemplated by each
of the Transaction Documents and otherwise to carry out its obligations
thereunder. Except for the need to obtain stockholder approval with
respect to the filing of an amendment to the Company’s certificate of
incorporation authorizing a sufficient number of shares of Common Stock to
permit the conversion of the Series A Preferred Stock and Series B Preferred
Stock (as defined in the Notes, as amended by this Amendment) into shares of
Common Stock, the execution and delivery of each of the Transaction Documents by
the Company and the consummation by it of the transactions contemplated thereby
have been duly authorized by all necessary action on the part of the Company and
no further action is required by the Company in connection
therewith. Each Transaction Document has been (or upon delivery will
have been) duly executed by the Company and, when delivered in accordance with
the terms hereof, will constitute the valid and binding obligation of the
Company enforceable against the Company in accordance with its
terms.
(d) No
Conflicts. Except for the need to obtain approval of this
Amendment by the Requisite Holders and the need to obtain stockholder approval
with respect to the filing of an amendment to the Company’s certificate of
incorporation authorizing a sufficient number of shares of Common Stock to
permit the conversion of the Series A Preferred Stock and Series B Preferred
Stock into shares of Common Stock, the execution, delivery and performance of
the Transaction Documents by the Company and the consummation by the Company of
the transactions contemplated thereby do not and will not (i) conflict with or
violate any provision of the Company's or any Subsidiary's certificate or
articles of incorporation, bylaws or other organizational or charter documents,
or (ii) conflict with, or constitute a default (or an event that with notice or
lapse of time or both would become a default) under, or give to others any
rights of termination, amendment, acceleration or cancellation (with or without
notice, lapse of time or both) of, any agreement, credit facility, debt or other
instrument (evidencing a Company or Subsidiary debt or otherwise) or other
understanding to which the Company or any Subsidiary is a party or by which any
property or asset of the Company or any Subsidiary is bound or affected, or
(iii) result in a violation of any law, rule, regulation, order, judgment,
injunction, decree or other restriction of any court or governmental authority
to which the Company or a Subsidiary is subject (including federal and state
securities laws and regulations), or by which any property or asset of the
Company or a Subsidiary is bound or affected; except in the case of each of
clauses (ii) and (iii), such as could not, individually or in the aggregate,
have or reasonably be expected to result in a Material Adverse
Effect.
(e) Filings, Consents and
Approvals. The Company is not required to obtain any consent,
waiver, authorization or order of, give any notice to, or make any filing or
registration with, any court or other federal, state, local or other
governmental authority or other Person in connection with the execution,
delivery and performance by the Company of the Transaction Documents or the
issuance of the Series A Preferred Stock, Series B Preferred Stock or shares of
Common Stock upon conversion of the Series A Preferred Stock and Series B
Preferred Stock, other than (i) the need to obtain approval of this Amendment by
the Requisite Holders, (ii) filings required by state securities laws or the
Commission, which the Company will promptly make (at the sole expense of the
Company), (iii) the filing of an amendment to the Company’s certificate of
incorporation authorizing a sufficient number of shares of Common Stock to
permit the conversion of the Series A Preferred Stock and Series B Preferred
Stock into shares of Common Stock and (iv) filings that have been made or
obtained prior to the date of this Agreement.
(f) Issuance of the
Securities. Except for the need to obtain stockholder approval
in order to increase the amount of authorized Common Stock, the issuance, sale
and delivery of the Series B Preferred Stock in accordance with this Amendment,
and the issuance and delivery of the shares of Common Stock issuable upon
conversion of the Series B Preferred Stock, have been duly authorized by all
necessary corporate action on the part of the Company, and all such shares have
been, or will be, duly reserved for issuance. Such securities when so
issued, sold and delivered against payment therefor in accordance with the
provisions of this Agreement, will be duly and validly issued, fully paid and
non-assessable.
(g) The
representations and warranties contained in Section 3.1 of the Securities
Purchase Agreement, dated as of the date hereof, relating to the Investor Sale,
are incorporated herein by reference.
4. Except
as otherwise set forth herein, the Notes shall remain in full force and effect
without change or modification. This Amendment, the Notes, as
amended, and other agreements related to the Notes constitute the entire
understanding of the parties with respect to the subject matter hereof and
thereof and supersede all prior and current understandings and agreements,
including the Letter Agreement, whether written or oral, with respect to such
subject matter. The invalidity or unenforceability of any provision
hereof shall not affect the validity or enforceability of any other term or
provision hereof. The headings in this Amendment are for convenience
of reference only and shall not alter, limit or otherwise affect the meaning
hereof. This Amendment may be executed in any number of counterparts,
which together shall constitute one instrument, and shall bind and inure to the
benefit of the parties and their respective successors and assigns.
[REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK]
IN
WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly
executed on their behalf as of the date first written above. Each holder of
Notes below represents that it is the record and beneficial owner of its Note(s)
and has full power and authority to execute and deliver this
Amendment.
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COMPANY:
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By:
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/s/ Xxxxx Xxxxxx | |
| Name: Xxxxx Xxxxxx | |||
| Title: Chief Financial Officer | |||
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PURCHASERS:
XXXXXX
CAPITAL MASTER FUND, LTD.
(with
respect to approximately $1,902,118 of principal plus accrued interest
underlying the Notes held by Xxxxxx Capital Master Fund,
Ltd.)
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By:
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/s/ Xxxxxx Xxxxx | |
| Name: Xxxxxx Xxxxx | |||
| Title: | |||
| BACK BAY LLC | |||
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By:
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/s/ Xxxxxx Xxxxx | |
| Name: Xxxxxx Xxxxx | |||
| Title: CEO, Roxbury LLC, Manager | |||
| CIPHER 06 LLC | |||
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By:
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| Name: | |||
| Title: | |||
| SOUNDPOST CAPITAL, LP | |||
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By:
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/s/ Xxxxx Xxxxxx | |
| Name: Xxxxx Xxxxxx | |||
| Title: Managing Member | |||
| SOUNDPOST CAPITAL OFFSHORE LTD. | |||
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By:
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/s/ Xxxxx Xxxxxx | |
| Name: Xxxxx Xxxxxx | |||
| Title: Managing Member | |||
[Additional
Signature Pages Follows]
| XXXXXX MANAGEMENT, LLC | |||
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By:
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/s/ Xxxxxx Xxxxx | |
| Name: Xxxxxx Xxxxx | |||
| Title: | |||
| S.A.C. VENTURE INVESTMENTS, LLC | |||
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By:
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/s/ Xxxxx X. Xxxxxxxx | |
| Name: Xxxxx X. Xxxxxxxx | |||
| Title: Authorized Signatory | |||
| SANDOR CAPITAL MASTER FUND LP | |||
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By:
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| Name: | |||
| Title: | |||
| XXXX X. XXXXX | |||
| COAST SIGMA FUND, LLC | |||
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By:
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/s/ Xxxxx X. Xxxxx | |
| Name: Xxxxx X. Xxxxx | |||
| Title: | |||
| XXXX XXXXX | |||
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By:
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/s/ Xxxxx X. Xxxxx | |
| Name: Xxxxx X. Xxxxx | |||
| Title: | |||
| XXXXX X. XXXXX | |||
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By:
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/s/ Xxxxx X. Xxxxx | |
| Name: Xxxxx X. Xxxxx | |||
| Title: | |||
| XXXXXX ADVISORS | |||
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By:
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/s/ Xxxxxx Xxxxx | |
| Name: Xxxxxx Xxxxx | |||
| Title: | |||
| XXXXXX ADVISORS GP | |||
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By:
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/s/ Xxxxxx Xxxxx | |
| Name: Xxxxxx Xxxxx | |||
| Title: | |||
[Additional
Signature Page Follows]
| XXXXXX ADVISORS II GP | |||
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By:
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/s/ Xxxxxx Xxxxx | |
| Name: Xxxxxx Xxxxx | |||
| Title: | |||
| XXXXXX XXXXX | |||
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By:
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/s/ Xxxxxx Xxxxx | |
| Name: Xxxxxx Xxxxx | |||
| XXX X. XXXX | |||
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By:
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/s/ Xxx Xxxx | |
| Name: Xxx Xxxx | |||
| XXXX XXXXXXXXX GIFT TRUST | |||
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By:
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/s/ Xxxxx Xxxx | |
| Name: Xxxxx Xxxx | |||
| Title: Investment Advisor | |||
| XXXXX XXXXXX | |||
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By:
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/s/ Xxxxx Xxxxxx | |
| Name: Xxxxx Xxxxxx | |||
| XXXXX XXXXXX FOUNDATION | |||
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By:
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/s/ Xxxxx Xxxxxx | |
| Name: Xxxxx Xxxxxx | |||
| Title: | |||
| XXXXX X. XXXXXXXXXX | |||
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By:
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/s/ Xxxxx X. Xxxxxxxxxx | |
| Name: Xxxxx X. Xxxxxxxxxx | |||
| XXXXX XXXX | |||
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By:
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/s/ Xxxxx Xxxx | |
| Name: Xxxxx Xxxx | |||
| XXXXXX XXXX | |||
| XXXXXX X. XXXXXX | |||
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By:
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/s/ Xxxxxx Xxxxxx | |
| Name: Xxxxxx Xxxxxx | |||
| LYRICAL MULTI-MANAGER FUND L.P. | |||
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By:
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/s/ Xxxxxxx Xxxxx | |
| Name: Xxxxxxx Xxxxx | |||
| Title: Chief Operating Office of General Partner | |||
[Additional
Signature Page Follows]
| XXXX XXXX | |||
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By:
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/s/ Xxxx Xxxx | |
| Name: Xxxx Xxxx | |||
| XXXXX X. XXXX TTEE | |||
| PINE STREET INSTITUTIONAL PARTNERS | |||
| SHADOW CAPITAL | |||
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By:
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/s/ B. Xxxx Xxxxxxxxxxxx | |
| Name: B. Xxxx Xxxxxxxxxxxx | |||
| Title: Manager | |||
| XXXXX XXXXXXX | |||
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By:
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/s/ Xxxxx Xxxxxxx | |
| Name: Xxxxx Xxxxxxx | |||
| XXXX XXXXXX | |||
| CITCO GLOBAL CUSTODY NV. KBC | |||
| CREDIT SUISSE | |||
