WAIVER AND AMENDMENT TO SECURITIES PURCHASE AGREEMENT AND DEBENTURE
EXHIBIT
99.11
WAIVER
AND AMENDMENT
THIS
WAIVER AND AMENDMENT, dated as of January 8, 2007 (the
“Waiver”), to the Securities Purchase Agreement, dated as of December
28,
2005, as amended (the “Purchase Agreement”), and the 6% Secured
Convertible Debenture due December 28, 2008 (the “Debenture”) is by and
among Arkados Group, Inc. (formerly XXXXXX.XXX, Inc.), a Delaware corporation
(the “Company”), and the purchasers signatory hereto (each such
purchaser, a “Purchaser” and, collectively, the
“Purchasers”). Capitalized terms used and not
otherwise defined herein that are defined in the Purchase Agreement shall have
the meanings given such terms in the Purchase Agreement.
RECITALS
The
Company and Xxxxxxx Xxxxxxxx Family Limited Partnership (“Typaldos”) are
entering into a Fourth Additional Issuance Agreement, dated as of January 8,
2007 (the “Additional Issuance Agreement”), for the purchase by the New
Purchaser of an aggregate of up to $600,000 of the New Debentures and New
Warrants (as such terms are defined in the Fourth Additional Issuance Agreement)
pursuant to the Purchase Agreement, between the Company and the New
Purchasers.
Subject
to the terms and conditions of this Waiver, the Company has requested, and
the
Purchasers have agreed, to waive compliance with Sections 4.13 and 4.14 of
the
Purchase Agreement and Sections 7(a), 7(b) and 7(e) of the Debenture;
and
Subject
to the terms and conditions of this Waiver, the Company has requested, and
the
Purchasers have agreed, to acknowledge that the New Underlying Shares (as such
term is defined in the Additional Issuance Agreement) shall be included on
the
Registration Statement registering the Debentures and Warrants of the
Purchasers.
Accordingly,
in consideration of the premises and of the mutual covenants and agreements
hereinafter set forth, the parties hereto agree as follows:
1. Waivers
and Amendment.
(a) Each
Purchaser hereby waives compliance by the Company with the obligations imposed
by Section 4.13 of the Purchase Agreement regarding such Purchaser’s right to
participate in the purchase of the New Debentures, as well as any advance made
to the Company prior to the Closing that is either repaid from the proceeds
or
is given as full or partial consideration by the New Purchasers under the
Additional Issuance Agreement. This Waiver shall not
effect the rights set forth in Section 4.13 with respect to future financing
after the issuance of up to $600,000 Additional Debentures on or before January
31, 2007
(b) Each
Purchaser hereby waives the Company’s compliance with the restrictions imposed
by Section 4.14 of the Purchase Agreement with respect to the issuance of the
New Debentures and New Warrants under the Additional Issuance Agreement, (ii)
issuances, for the purposes of financing the Company’s operations of Common
Stock, Warrants and Convertible Securities, provided such securities are not
Variable Rate Securities and (iii) an issuances of debentures and
warrants on the same terms and
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conditions
as the issuance of Debentures and Warrants under the Additional Issuance
Agreement. Each Purchaser acknowledges that issuances of additional Debentures
and Warrants will not constitute transactions which result in an adjustment
of
the respective conversion or exercise prices of the Debentures or
Warrants.
(d) Each
Purchaser hereby waives the Company’s compliance with the negative covenants
imposed by Sections 7(a), 7(b) and 7(e) of the Debenture regarding the Company’s
agreement not to create indebtedness and liens and to enter into agreements
with
respect thereto, provided such waiver shall not diminish the Company’s
obligation to refrain from granting security interests superior to or pari
passu
to the security interest granted to the holders of the Debentures, except for
additional Debentures.
(e)
The
Debentures are hereby amended by removing the phrase “January 1,
2007, upon a redemption event pursuant to Section 6(a)” in the first sentence of
Section 2(a) and replacing such phrase with “January 1, 2007
(provided that interest due on January 1, 2007 and July 1, 2007 upon principal
outstanding on such date shall be added to the principal outstanding and shall
thereafter bear interest at the rate set forth herein), upon a redemption event
pursuant to Section 6(a)”.
2. Acknowledgement. Each
Purchaser hereby acknowledges and agrees that, for purposes of Section 6(b)
of
the Registration Rights Agreement, dated as of December 28, 2005, between the
Company and the Purchasers signatory thereto, as amended (the “Registration
Rights Agreement”), the shares of Common Stock underlying the New Debenture
and New Warrants shall be deemed Registrable Securities which may be included
as
securities in the Company’s initial Registration Statement, on the same terms as
the Purchasers’ Registrable Securities.
3. Miscellaneous.
THIS
WAIVER SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF NEW YORK WITHOUT REGARD TO PRINCIPLES OF CONFLICT OF
LAWS.
This
Waiver shall constitute a Transaction Document.
Except
as
expressly waived and/or amended hereby, the Purchase Agreement and the
Debentures shall remain in full force and effect in accordance with the terms
thereof. This Waiver is limited specifically to the matters set forth above
and
does not constitute directly or by implication an amendment or waiver of any
other provisions of the Purchase Agreement or Debentures or of any Event of
Default or default which may occur or may have occurred under the Purchase
Agreement or Debentures.
This
Waiver may be executed in one or more counterparts, each of which shall
constitute an original, but all of which, when taken together, shall constitute
but one Waiver.
[SIGNATURE
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SIGNATURE
PAGE TO WAIVER AND AMENDMENT
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BUSHIDO
CAPITAL MASTER FUND, L.P.
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By: Bushido
Capital Partners, Ltd., its General Partner
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By:
/s/ Xxxx Xxxxxxxx
Xxxx
Xxxxxxxx
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By:
/s/ Xxxxx Xxxxxx
Xxxxx
Xxxxxx
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Chief
Executive Officer
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President
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GAMMA
OPPORTUNITY CAPITAL PARTNERS, LP CLASS
A
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GAMMA
OPPORTUNITY CAPITAL PARTNERS, LP CLASS
C
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By: /s/
Xxxxxxxx X. Xxxxxx
Xxxxxxxx
X. Xxxxxx
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By:
/s/ Xxxxxxxx X. Xxxxxx
Xxxxxxxx
X. Xxxxxx
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President
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President
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CARGO
HOLDINGS LLC
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By:
/s/ Xxxxx Xxxxxxxx
Xxxxx
Xxxxxxxx
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Member
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By:
Gennaro
Vendome
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Member
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