EXCHANGE AGREEMENT
EXHIBIT
4(d)
THIS
EXCHANGE AGREEMENT (this
“Agreement”),
dated
as
of June 5, 2007, by and among Knobias, Inc., a Delaware corporation (the
“Company”); CAMOFI Master LDC (“CAMOFI”); Gamma Opportunity Capital Partners LP
(“Gamma”); Bushido Capital Partners, Ltd. (“Bushido”); and Bridges & PIPES,
LLC (“B & P” and, collectively with CAMOFI, Gamma and Bushido, the
“Noteholders”).
WHEREAS,
the
Company is indebted to CAMOFI in the aggregate principal amount of $1,050,000
pursuant to the Company’s (i) 8% Notes due November 1, 2006 (the “8% Notes”) and
(ii) 12% Senior Subordinated Secured Note, dated as of March 15, 2005 (the
“12%
Note”); and
WHEREAS,
the
Company is indebted to Gamma in the principal amount of $250,000 pursuant to
the
8% Notes; and
WHEREAS,
the
Company is indebted to Bushido in the aggregate principal amount of $2,490,000,
pursuant to the (iii) 8% Notes and (ii) 8% Convertible Promissory Notes issued
to Bushido by the Company at various times between April 2006 and January 2007
(the “Bushido Notes”); and
WHEREAS,
the
Company is indebted to B & P in the principal amount of $75,000, pursuant to
the Convertible Promissory Note, dated as of April 22, 2005 (the “B & P
Note”); and
WHEREAS,
as of
the date hereof, the aggregate amount of principal, accrued interest and
penalties owed by the Company to the Noteholders pursuant to the 8% Notes,
the
12% Note, the Bushido Notes and the B & P Note is approximately $5,015,200;
and
WHEREAS,
the
Company, the Noteholders, certain stockholders of the Company and certain other
parties have entered into a Letter of Intent (the “Letter of Intent”) regarding
a proposed restructuring of the debt and equity capitalization, and the
amendment of certain outstanding agreements, of the Company (the
“Restructuring”), which includes, among other things: (i) the amendment of the
Certificate of Designation of the Company’s Series A Preferred Stock in order to
eliminate certain rights, preferences and privileges of the Series A Preferred
Stock; (ii) an offer by the Company to certain stockholders to convert their
Series A Preferred Stock into shares of Common Stock of the Company; and (iii)
the exchange of the aggregate amount of principal, accrued interest and
penalties owed by the Company to the Noteholders (except as set forth herein)
into shares of Series B Senior Convertible Preferred Stock, par value $0.01
per
share (the “Series B Preferred Stock”) of the Company; and
WHEREAS,
the
Company believes the Restructuring to be in the best interests of the Company
and its stockholders; and
WHEREAS,
the
Company has entered into a Securities Purchase Agreement dated as June 5, 2007
(the “Securities Purchase Agreement”), pursuant to which the Company will issue
Senior Secured Promissory Notes due May 31, 2010 (the “New Senior Notes”); and
Exhibit
4(d) - Page 1
WHEREAS,
the
execution and delivery of this Agreement and the execution and filing of the
Certificate of Designation of the Rights, Preferences and Privileges of Series
B
Preferred Stock, in the form attached hereto as Exhibit A (the “Certificate of
Designation”) are conditions to the issuance of the New Senior Notes pursuant to
the Securities Purchase Agreement.
NOW,
THEREFORE,
in
consideration of the premises set forth above, the proposed Restructuring and
for other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the undersigned hereby agree as follows:
1. Consent
of Noteholders.
Each
Noteholder, severally and not jointly with the other Noteholders, hereby
consents to (i) the Certificate of Designation and the rights, preferences
and
privileges of the Series B Preferred Stock which are effected thereby and (ii)
the execution and filing of the Certificate of Designation by or on behalf
of
the Company with the Secretary of State of the State of Delaware.
2. Exchange
for Series B Preferred Stock.
Each
Noteholder, by the execution and delivery of this Agreement, severally and
not
jointly with the other Noteholders, hereby (i) acknowledges and agrees that
the
aggregate amount of principal, accrued interest and penalties owed by the
Company to such Noteholder (the “Indebtedness”) is accurately set forth on
Exhibit B attached hereto and incorporated herein by reference and (ii) elects
to exchange such Indebtedness into, and exchange such Indebtedness for and
in
consideration of, the number of shares of Series B Preferred Stock set forth
opposite such Noteholder’s name on Exhibit B. Each Noteholder hereby waives any
and all rights with respect to the Indebtedness exchanged hereby, including,
without limitation, any existing or past defaults and their consequences in
respect of such Indebtedness, and releases and discharges the Company from
any
and all claims that the Noteholder may have, now or in the future, arising
out
of or related to the Indebtedness exchanged hereby. The Company acknowledges,
agrees, represents and warrants that the holding period of the shares underlying
the Series B Preferred Stock held by each of the Noteholders shall tack back
to
the issuance date of the applicable Indebtedness and therefore such shares
shall
be eligible for resale by each of the Noteholders to the public without
registration under the Act pursuant to Rule 144 commencing on the first
anniversary of the issuance of the Indebtedness, subject to the current
information, volume and manner restrictions of Rule 144. The Company further
covenants that it will take such further action as any Noteholder may reasonably
request, including but not limited to, providing a legal opinion to the
Company’s transfer agent or accepting a legal opinion from any reputable legal
counsel selected by such Noteholder (including but not limited to, Xxxxxxx
Xxxxxxxxx & Xxxxx LLP)(provided that if such Noteholder provides such legal
opinion, the Company shall reimburse any reasonable legal fees and expenses
paid
by such Noteholder in connection therewith), to the extent required from time
to
time to enable such Noteholder to sell the shares underlying the Series B
Preferred Stock without registration under the Securities Act within the
requirements of the exemption provided by Rule 144. Additionally, the
obligations of the Company and the rights of a holder of the Series B Preferred
Stock with respect to the shares of Common Stock underlying the Series B
Preferred Stock shall be identical to the rights and obligations of a holder
of
the Company’s shares of Common Stock underlying the Senior Secured Convertible
Notes pursuant to that certain Securities Purchase Agreement, dated May 31,
2007
by and among the Company and the purchasers signatory thereto which rights
and
obligations are hereby incorporated by reference into this Agreement.
Additionally, Bushido shall have the right, upon written demand to the Company,
to receive any monitoring reports prepared by any holder (or its affiliates)
of
the Company’s Senior Secured Convertible Notes or any other consultants to the
Company and provided to the Company.
Exhibit
4(d) - Page 2
3.
Repayment
of 8% Note to Gamma.
Notwithstanding the provisions of Section 2 hereof, the Company hereby agrees
to
repay and retire a portion of the 8% Note owed to Gamma in the principal amount
of $200,000 (the “Cash Payment”), and Gamma hereby agrees to accept the Cash
Payment in complete satisfaction for such principal amount and all accrued
interest and penalties owed thereunder. Each of the Noteholders consents and
agrees to the Cash Payment, such amount to be paid by or on behalf of the
Company, simultaneously with the closing of the transactions contemplated
hereby, by wire transfer of such Cash Payment to an account designated by Gamma.
4. Termination
of Registration Rights Agreements.
The
Registration Rights Agreements by and among the Company and the various
Noteholders, dated as of (i) November 15, 2004 and (ii) March 15, 2005, shall
be
and the same hereby are terminated and the Noteholders shall have no further
rights thereunder.
5.
Representations
and Warranties.
Each
Noteholder, severally and not jointly, hereby represents and warrants to the
Company, and agrees with the Company that:
(a) It
is the
beneficial owner of, or a duly authorized representative of one or more
beneficial owners of, the Indebtedness exchanged hereby, and it has full power
and authority to execute this Agreement;
(b) The
Indebtedness exchanged hereby is owned as of the date hereof, free and clear
of
any liens, charges, claims, encumbrances, interests and restrictions of any
kind;
(c) In
making
its decision whether to execute and deliver this Agreement and to acquire the
shares of Series B Preferred Stock, the undersigned has made its own independent
appraisal of the Company and it is not relying on any statement, representation
or warranty, express or implied, made to such holder by the Company or any
other
person, other than those contained in written communications from the Company
or
its duly authorized representatives, as amended or supplemented through the
date
hereof;
(d)
The
Noteholder understands that the shares of Series B Preferred Stock have not
been
registered under federal or any state securities laws, and could not be sold
or
offered for resale unless they were subsequently so registered or an exemption
from such registration is available. The Noteholder hereby acknowledges that
the
Series B Preferred Stock will not be sold, pledged, transferred or otherwise
disposed of unless (a) registered under the Securities Act of 1933 and other
applicable state securities laws, or (b) an exemption from such registration
is
available. The Noteholder understands that the Company is issuing the Series
B
Preferred Stock to the Noteholder pursuant to an exemption from registration
in
reliance on the representations made by the Noteholder herein.
Exhibit
4(d) - Page 3
(e)
The
Noteholder has knowledge and experience in financial and business matters,
is
capable of evaluating the merits and risks of an investment in the Company
and
its proposed activities, has carefully considered the suitability of an
investment in the Company for the Noteholder’s particular financial and tax
situation, and has determined that the shares of Series B Preferred Stock are
a
suitable investment. The Noteholder has adequate means of providing for its
current needs and possible contingencies, and the Noteholder has no present
intention or need, and anticipates no need in the foreseeable future, to sell
the shares of Series B Preferred Stock. The Noteholder is an “accredited
investor” within the meaning of Regulation D promulgated by the Securities and
Exchange Commission and a “qualified purchaser” within the meaning of Section 2
of the Investment Company Act of 1940.
(f)
The
Noteholder has the full legal authority, capacity and power to enter into this
Agreement, and Noteholder is not precluded by law, contract or otherwise from
acquiring the shares of Series B Preferred Stock.
(g) The
execution and delivery of this Agreement shall constitute an undertaking by
the
Noteholder to execute any further documents and give any further assurances
that
may be required in connection with any of the foregoing, in each case on and
subject to the terms and conditions hereof.
6. Binding
Effect.
This
Agreement shall be binding upon the heirs, executors, administrators, successors
and assigns of the parties hereto..
7. Governing
Law.
This
Agreement shall be governed by and construed in accordance with the law of
the
State of New York.
8. Amendment.
This
Agreement may be amended only by an agreement in writing signed by all of the
parties hereto.
9. Severability.
If any
provision of this Agreement is declared invalid or unenforceable by a court
of
competent jurisdiction, such invalidity or unenforceability shall not affect
the
remainder of this Agreement which shall remain in full force and
effect.
10. Counterparts.
This
Agreement may be executed in several counterparts and all so executed shall
constitute one Agreement, binding on all the parties hereto even though all
the
parties are not signatories to the original or the same counterpart. Execution
and delivery of this Agreement by exchange of facsimile copies bearing the
facsimile signature of a party hereto shall constitute a valid and binding
execution and delivery of this Agreement by such party. Such facsimile copies
shall constitute enforceable original documents.
11. Payment
of Legal Fees of Bushido.
Concurrently with the execution of this Agreement the Company shall reimburse
Bushido for its non-accountable legal fees and expenses in the amount of
$5,000.
Exhibit
4(d) - Page 4
12. Independent
Nature of Noteholders’ Obligations and Rights.
The
obligations of each Noteholder under this Agreement are several and not joint
with the obligations of any other Noteholder, and no Noteholder shall be
responsible in any way for the performance or non-performance of the obligations
of any other Noteholder under this Agreement. Nothing contained herein shall
be
deemed to constitute the Noteholders as a partnership, an association, a joint
venture or any other kind of entity, or create a presumption that the
Noteholders are in any way acting in concert or as a group with respect to
such
obligations or the transactions contemplated by this Agreement. Each Noteholder
shall be entitled to independently protect and enforce its rights, including
without limitation, the rights arising out of this Agreement, and it shall
not
be necessary for any other Noteholder to be joined as an additional party in
any
proceeding for such purpose. Each Noteholder has been represented by its own
separate legal counsel in their review and negotiation of this Agreement. The
Company has elected to provide all Noteholders with the same terms for the
convenience of the Company and not because it was required or requested to
do so
by the Noteholders.
[Signature
pages follow]
Exhibit
4(d) - Page 5
IN
WITNESS WHEREOF,
the
undersigned have caused this Agreement to be duly executed by their respective
authorized signatories as of the date first indicated above.
| KNOBIAS, INC. | ||
| |
|
|
| By: | ||
|
Name:
|
||
| Title: | ||
Exhibit
4(d) - Page 6
[NOTEHOLDER
SIGNATURE PAGE TO EXCHANGE AGREEMENT ]
IN
WITNESS WHEREOF,
the
undersigned have caused this Agreement to be duly executed by their respective
authorized signatories as of the date first indicated above.
Name
of
Noteholder:
________________________________________________________
Signature
of Authorized Signatory of Noteholder:
__________________________________
Name
of
Authorized Signatory:
_________________________________________________
Title
of
Authorized Signatory:
__________________________________________________
Email
Address of Authorized
Signatory:__________________________________________
Address
for Notice of Noteholder:
__________________________________________
__________________________________________
__________________________________________
If
the
stock certificates evidencing shares of Series B Preferred Stock are to be
issued in the name of a person other than as indicated above, please fill in
the
space below.
ISSUE
TO:
Name:
__________________________________
Address:
__________________________________
__________________________________
Taxpayer
I.D. Number: __________________________________
If
stock
certificates evidencing shares of Series B Preferred Stock are to be mailed
to
an address other than as indicated above, please fill in the space
below.
MAIL
TO:
Name: __________________________________
Address:
__________________________________
__________________________________
Exhibit
4(d) - Page 7
Exhibit
A
Certificate
of Designation of the Rights,
Preferences
and Privileges of Series B Preferred Stock
d)
- Page
8
Exhibit
B
|
Name
of Noteholder
|
Aggregate
Amount of Indebtedness
|
Shares
of Series B Preferred Stock
|
|
CAMOFI
Master LDC
|
||
|
Gamma
Opportunity Capital Partners LP
|
||
|
Bushido
Capital Partners, Ltd.
|
||
|
Bridges
& PIPES, LLC
|
Exhibit
4(d) - Page 9
