WAIVER AND AGREEMENT
THIS
WAIVER AND AGREEMENT (the
“Waiver”)
is
made and entered into effective as of July 31, 2006, in connection with
that certain Registration Rights Agreement (the “Agreement”)
dated
July 21, 2005, by and among FUTUREMEDIA
PLC, a
corporation organized and existing under the laws of England and
Wales (the “Company”)
and
MERCATOR
MOMENTUM FUND, L.P., MERCATOR MOMENTUM FUND III, L.P, MONARCH POINTE FUND,
LTD. and M.A.G. CAPITAL, LLC (the
“Investors”).
WHEREAS,
on
or
about July 21, 2005, the Company and the Investors entered into a series of
financing agreements (the “Transaction
Documents”),
including, without limitation a Securities Purchase Agreement, convertible
Notes
issued pursuant thereto (the “Notes”),
and
the Agreement (as defined herein), pursuant to which, among other things, the
Investors advanced the Company the aggregate of Four Million Dollars
($4,000,000);
WHEREAS,
the
Registration Statement, as defined in the Agreement has been filed with the
Securities and Exchange Commission and has become effective;
WHEREAS,
if the
Company fails to file its audited financial statements for its fiscal year
ended
April 30, 2006 (the "2006
Audited Financials")
on or
prior to July 31, 2006, the Investors will not be permitted to sell securities
under the Registration Statement after that date until the Company has cured
the
failure, and the Company anticipates that the 2006 Audited Financials will
not
be available on July 31, 2006, and may not be available until as late as August
31, 2006;
WHEREAS,
the
Company has agreed to use its best efforts to obtain the 2006 Audited Financials
and to file them with the Securities and Exchange Commission (“SEC”)
as
soon as reasonably possible;
WHEREAS,
the
Company has further agreed: (i) to pay liquidated damages to Mercator Momentum
Fund, L.P., Mercator Momentum Fund III, L.P. and Monarch Pointe Fund, Ltd.
in
the amounts of $740.00, $200.00 and $1,727.00, respectively, with respect to
each day that the Registration Statement is not available for sales by the
Investors and to pay the full amount of all such payments relating to any
particular month in full on of before the 30th
day of
the following month; and
WHEREAS,
the
Company has further agreed to pay in cash any principal payments falling due
under the Notes that fall due on a day when the Registration Statement is not
available for sales by the Investors or that fell due prior to August 1, 2006,
and had not been paid on or prior to the date hereof (“Principal
Payments”)
or, if
the Company fails to timely make any such Principal Payment in cash, then
Company has agreed to satisfy such Principal Payment by issuing ordinary shares
or ADSs in accordance with the “Partial Mandatory Conversion” provisions of
Section 4(a)(ii)(B) of the Notes;
WHEREAS,
in the
event that the Company issues shares in satisfaction of any Principal Payment
as
provided above, the Company has further agreed that it shall pay the Investors
a
one-time waiver fee in the aggregate amount of One Hundred Eighty Three Thousand
Five Hundred Dollars ($183,500) (the “Waiver
Fee”)
by
issuing an aggregate number of additional ordinary shares or ADSs equal to
the
quotient of (x) the amount of the Waiver Fee divided by (y) 75% of the
volume weighted average price of the Company’s ADSs for the five trading days
immediately preceding the date hereof;
WHEREAS,
at
the
request of the Company, the Investors have agreed, on the condition that the
Company timely fulfills these commitments, to waive any rights that may arise
in
their favor to declare a default and to exercise remedies under the Transaction
Documents as a result of the unavailability of the Registration Statement for
resales of securities owned by the Investors during the month of August, 2006,
which results from the unavailability of the 2006 Audited Financials; and
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WHEREAS,
all
terms
in the Transaction Documents, except to the extent otherwise provided herein,
shall remain in full force and effect, and all defined terms used but not
otherwise defined herein shall have the meanings provided in the Transaction
Documents.
NOW,
THEREFORE, in
consideration of the premises and the mutual promises, conditions and covenants
contained herein and other good and valuable consideration, receipt of which
is
hereby acknowledged, the parties hereto agree as follows:
| 1. |
The
foregoing recitals are hereby incorporated herein by reference and
acknowledged as true and correct by the parties hereto.
|
| 2. |
The
Company shall use its best efforts to obtain the 2006 Audited Financials
and to file them with the Securities and Exchange Commission as soon
as
reasonably possible.
|
| 3. |
The
Company shall pay liquidated damages to Mercator Momentum Fund, L.P.,
Mercator Momentum Fund III, L.P. and Monarch Pointe Fund, Ltd. in
the
amounts of $740.00, $200.00 and $1,727.00, respectively, with respect
to
each day that the Registration Statement is not available for sales
by the
Investors and to pay the full amount of all such payments relating
to any
particular month in full on of before the 30th
day of the following month.
|
| 4. |
The
Company shall pay in cash any Principal Payments falling due under
the
Notes that fall due on a day when the Registration Statement is not
available for sales by the Investors or that fell due prior to August
1,
2006, and had not been paid on or prior to the date hereof or, if
the
Company fails to timely make any such Principal Payment in cash,
then
Company shall satisfy such Principal Payment by issuing ordinary
shares of
ADSs in accordance with the “Partial Mandatory Conversion” provisions of
Section 4(a)(ii)(B) of the Notes where such number of ordinary shares
or ADSs shall equal the quotient obtained by dividing (x) the amount
of the Principal Payment by (y) 88% of the volume weighted average
price
of the Company’s ADSs for the ten trading days preceding the relevant
payment date.
|
| 5. |
In
the event that shares are issued under Section 4 above in
satisfaction of any Principal Payment, the Company will also pay
to the
Investors the Waiver Fee by issuing an aggregate number of restricted
ordinary shares or ADSs equal to the quotient of (x) the amount of
the Waiver Fee divided by (y) 75% of the volume weighted average
price of the Company’s ADSs for the five trading days immediately
preceding the date hereof (and such restricted shares or ADSs shall
be
issued no later than the due date for the Principal Payment which
triggers
their issuance hereunder).
|
| 6. |
In
the event that restricted shares or ADSs are issued under Section 5
above, if at any time after the date hereof the Company proposes
to file
any registration statement with the SEC, prior to such filing, the
Company
shall give written notice to the Investors of its intention to do
so and,
upon the written request of the Investors (which request shall state
the
intended method of disposition of Restricted Shares), the Company
shall at
the Company’s sole expense cause all restricted shares issued hereunder
(and which the Company has been requested by the Investors to register)
to
be registered under the Securities Act on such registration statement
in
accordance with customary piggy-back registration rights
procedures.
|
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| 7. |
On
the condition that the Company timely fulfills its obligations under
Sections 2, 3, 4, 5 and 6 above, the Investors hereby waive any rights
that may arise in their favor to declare a default and to exercise
remedies under the Transaction Documents as a result of any unavailability
of the Registration Statement for resales of securities owned by
the
Investors during the month of August, 2006, which results from the
unavailability of the 2006 Audited Financials. If the Company should
fail
at any time to fulfill any of those commitments on a timely basis,
this
waiver shall immediately cease to be
effective.
|
| 8. |
Except
to the extent set forth herein, the Transaction Documents remain
in full
force and effect.
|
[Signature
Page to Follow]
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IN
WITNESS WHEREOF,
the
parties have signed and delivered this Amendment Agreement on the date first
set
forth above.
| M.A.G. CAPITAL, LLC | |||
| By: |
/s/
Xxxxxxx Xxxxxx
|
By: | /s/ H. Xxxxx Xxxxxxxxx |
|
Name: Xxxxxxx Xxxxxx Title: CEO
|
Name:
H. Xxxxx Xxxxxxxxx
Title:
Portfolio Manager
|
||
|
Mercator
Momentum Fund LP
By:
M.A.G. Capital, LLC,
Its:
General Partner
|
||
| |
|
|
| By: | /s/ H. Xxxxx Xxxxxxxxx | |
|
Name: H. Xxxxx Xxxxxxxxx Title: Portfolio Manager |
||
| Monarch Pointe Fund, Ltd. | ||
| |
|
|
| By: | /s/ H. Xxxxx Xxxxxxxxx | |
|
Name:
H. Xxxxx Xxxxxxxxx
Title:
Portfolio Manager
|
||
|
Mercator
Momentum Fund III, LP
By:
M.A.G. Capital, LLC,
Its:
General Partner
|
||
| |
|
|
| By: | /s/ H. Xxxxx Xxxxxxxxx | |
|
Name:
H. Xxxxx Xxxxxxxxx
Title:
Portfolio Manager
|
||
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