AMENDMENT NO. 2 TO SENIOR SECURED CONVERTIBLE PROMISSORY NOTE
AMENDMENT
NO. 2
TO
This Amendment No. 2 (this
“Amendment”), dated as of June 26, 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
notes (the “Notes”) 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,
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 represent the Requisite Holders and desire to 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 1
of the Notes Issued in the First Financing. Section 1 of
each of the Notes issued in the First Financing is hereby amended by
deleting the date “July 7, 2009” and inserting the following in place
thereof: “August 31, 2009, or, if the Company receives comments from the
Securities and Exchange Commission with respect to that certain
Information Statement Pursuant to Section 14(c) that the Company is
contemplating filing in connection with an amendment to the Company’s
certificate of incorporation authorizing a sufficient number of shares of
Common Stock to permit the conversion of the Notes, September 15,
2009”.
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2.
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Amendment to Section 2
of the Notes. Effective immediately on the date (the
“Effective Date”)
by which the following two events have occurred, regardless of the order
in which they occur: (1) the effectiveness of the filing with the
Secretary of State of the State of Delaware of the Certificate of
Amendment to the Company’s Certificate of Incorporation, in accordance
with Section 103 of the Delaware General Corporation Law, in the form
attached hereto as Exhibit A (the
“Certificate of
Amendment”), and (2) the consummation of an Investor Sale (as
defined below in Section 3 of this Amendment), 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. On
the Mandatory Conversion Date, 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 Common Stock, par value $0.001 per share (“Common
Stock”), at a rate of one (1) share of Common Stock for each $0.20 (the
“Conversion
Price”) of the Note Value on the Mandatory Conversion Date (as defined
below). The “Mandatory Conversion
Date” means the Effective Date (as defined in that certain Amendment No.
2 to Senior Secured Convertible Promissory Notes, dated as of June 26, 2009, by
and among the Company and the Holders identified therein). 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 Common
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 Common Stock shall be issued
upon conversion of this Note. In lieu thereof, the shares of Common
Stock otherwise issuable shall be rounded up or down to the nearest whole share
of Common Stock.
(h) 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
Common 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.”
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3.
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For
purposes of this Amendment, the “Investor Sale” shall
mean the sale of shares of the Company’s Series A Preferred Stock, par
value $.001 per share (the “Series A Preferred
Stock”), on substantially the terms set forth in the Certificate of
Designations, Preferences, and Rights of Series A Convertible Preferred
Stock of Zoo Entertainment, Inc., attached hereto as Exhibit B, at
closings for which (A) such sale results in aggregate gross proceeds to
the Company of at least Four Million Dollars ($4,000,000), (B) the Series
A Preferred Stock is sold at $10.00 per share, and (C) each share of
Series A Preferred Stock is initially convertible into 50 shares of the
Company’s Common Stock, par value $0.001 per
share.
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4.
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The
Company shall cause notice of the Effective Date to be mailed to the
registered holders of the Notes, at each such holder’s address appearing
in the records of the Company, within five (5) days after the Effective
Date.
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5.
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If
the amendment to the Notes set forth in Section 2 of this Amendment does
not become effective as provided in Section 2 above on or prior to August
31, 2009, or, if the Company receives comments from the Securities and
Exchange Commission with respect to that certain Information Statement
Pursuant to Section 14(c) that the Company is contemplating filing in
connection with the Certificate of Amendment, on or prior to September 15,
2009, the provisions of Section 2 above shall become null and void and
shall be of no further effect.
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6.
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Except
as otherwise set forth herein, the Notes shall remain in full force and
effect without change or modification. This Amendment, the
Notes 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,
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.
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[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.
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By: /s/
Xxxxx
Xxxxxx
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Name:
Xxxxx
Xxxxxx
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Title:
Chief Financial
Officer
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PURCHASERS:
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XXXXXX
CAPITAL MASTER FUND, LTD.
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By:
/s/ Xxxxxx X.
Xxxxx
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Name:
Xxxxxx X.
Xxxxx
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Title: Managing Director
of
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Xxxxxx Management, LLC, its
Manager
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BACK
BAY LLC
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By:
/s/ Xxxxxx
Xxxxxxxx
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Name:
Xxxxxx
Xxxxxxxx
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Title: Chief Financial
Officer
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CIPHER
06 LLC
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By:
________________________________
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Name:
________________________________
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Title: ________________________________
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SOUNDPOST
CAPITAL, LP
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By:
________________________________
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Name:
________________________________
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Title: ________________________________
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SOUNDPOST
CAPITAL OFFSHORE LTD.
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By:
________________________________
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Name:
________________________________
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Title: ________________________________
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| [Additional Signature Page Follows] | ||
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XXXXXX
MANAGEMENT, LLC
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By:
/s/ Xxxxxx X.
Xxxxx
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Name:
Xxxxxx X.
Xxxxx
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Title: Managing
Director
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S.A.C.
VENTURE INVESTMENTS, LLC
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By:
/s/ Xxxxx X
Xxxxxxxx
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Name:
Xxxxx X.
Xxxxxxxx
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Title: Authorized
Signatory
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SANDOR
CAPITAL MASTER FUND LP
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By:
/s/ Xxxx X. Xxxxx
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Name:
Xxxx X. Xxxxx
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Title: Xxxx
X. Xxxxx
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/s/ Xxxx X.
Xxxxx
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Xxxx
X.
Xxxxx
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