AMENDMENT AGREEMENT
AMENDMENT
AGREEMENT
This
Amendment Agreement (“Agreement”) dated as of May 5, 2008 is
entered
into by and among Customer Acquisition Network Holdings, Inc., a Delaware
corporation (the “Company”) and Alpha Capital Anstalt
(“Subscriber”).
WHEREAS,
the Company and the Subscriber are parties to a Securities Purchase Agreement
(“Securities Purchase Agreement”) dated November 15, 2007 relating to an
aggregate investment by Subscriber in Promissory Notes of the Company (the
“Notes”); and
WHEREAS,
the Company and Subscriber desire to amend the terms of the Securities Purchase
Agreement.
NOW
THEREFORE, in consideration of the mutual covenants and other agreements
contained in this Agreement, the Company and the Subscriber hereby consent
and
agree as follows:
1. All
the
capitalized terms not otherwise defined herein shall have the meanings
attributed to them in the Securities Purchase Agreement and the documents and
agreements delivered therewith (“Transaction Documents”).
2. Subscriber
shall exchange (the “Exchange”) that certain Promissory Note issued by the
Company to Subscriber on November 30, 2007 in the principal amount of $611,000
for 305,500 shares of the Company’s common stock (the “Shares”). The parties
acknowledge and agree that the Subscriber is not paying any other consideration
to the Company in connection with the Exchange, including cash. The parties
acknowledge and agree that for purposes of the Exchange, the Shares are valued
at $2.00 per share (the “Share Purchase Price”).
3. The
Company acknowledges and agrees that for purposes of Rule 144(b) of the 1933
Act, the holding period of the Shares shall tack back to the issue date of
the
Promissory Note of November 30, 2007.
4. The
Company shall issue and deliver to Subscriber Warrants to purchase 152,750
shares of common stock of the Company. The exercise price to acquire a Warrant
Share upon exercise of a Warrant shall be $2.50 per share (the “Warrant Exercise
Price”). The Warrants shall be exercisable until five (5) years after the issue
date of the Warrants and shall contain a cashless feature as further described
in the Warrant. The Warrant Exercise Price and number of Warrant Shares issuable
upon exercise of the Warrants shall be equitably adjusted to offset the effect
of stock splits, stock dividends, and similar events, and as otherwise described
in the Warrant. Holder of the Warrant is granted the registration rights set
forth in Section 4(u) of the Securities Purchase Agreement in connection with
the Warrant Shares.
5.
(a) Other
than in connection with an Exempted Issuance (as hereinafter defined), until
eighteen (18) months following the date hereof if the Company shall offer,
issue
or agree to issue any common stock or securities convertible into or exercisable
for shares of common stock (or modify any of the foregoing which may be
outstanding) to any person or entity at a price per common share or exercise
price per common share which shall be less than the per Share Purchase Price
in
respect of the Shares, or if less than the Warrant Exercise Price in respect
of
the Warrant Shares, without the consent of Subscriber holding a majority of
the
Shares (including any Warrant Shares but excluding any shares previously sold
by
Subscriber under Rule 144 or under any registration statement) or in the case
of
Warrants, holders of a majority of the Warrants, then the Company shall issue,
for each such occasion, additional shares of Common Stock to each Subscriber
so
that the average per share purchase price of the shares of Common Stock issued
to the Subscriber (of only the Common Stock or Warrant Shares still owned by
the
Subscriber) is equal to such other lower price per share and the Warrant
Exercise Price of the Warrants shall automatically reduced to 125% of such
other
lower price per share. The average Purchase Price of the Shares and average
exercise price in relation to the Warrant Shares shall be calculated separately
for the Shares and Warrant Shares. The delivery to the Subscriber of the
additional shares of Common Stock shall be not later than the closing date
of
the transaction giving rise to the requirement to issue additional shares of
Common Stock. The Subscriber is granted the registration rights described in
Section 4(u) of the Securities Purchase Agreement in relation to such additional
shares of Common Stock. For purposes of the issuance and adjustment described
in
this paragraph, the issuance of any security of the Company carrying the right
to convert such security into shares of Common Stock or of any warrant, right
or
option to purchase Common Stock shall result in the issuance of the additional
shares of Common Stock upon the sooner of the agreement to or actual issuance
of
such convertible security, warrant, right or option and again at any time upon
any subsequent issuances of shares of Common Stock upon exercise of such
conversion or purchase rights if such issuance is at a price lower than the
per
Share Purchase Price or Warrant exercise price in effect upon such issuance.
The
rights of the Subscriber set forth in this Section 5 are in addition to any
other rights the Subscriber has pursuant to this Agreement, any Transaction
Document, and any other agreement referred to or entered into in connection
herewith.
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(b)
For
purposes of this Agreement, an "Exempt Issuance" shall mean the issuance of
(i)
shares of Common Stock or options to employees, officers, directors or
consultants of the Company pursuant to any stock or option plan duly adopted
by
the Board of Directors of the Company, (ii) securities (including shares of
Common Stock) upon the exercise or exchange of or conversion of any securities
issued hereunder and/or other securities exercisable or exchangeable for or
convertible into shares of Common Stock issued and outstanding on the date
of
this Agreement, provided that such securities have not been amended since the
date of this Agreement to increase the number of such securities or to decrease
the exercise, exchange or conversion price of such securities, and (iii)
securities issued pursuant to acquisitions or strategic transactions approved
by
a majority of the disinterested directors of the Company.
6. For
the
benefit of the parties hereto, the Company hereby makes all the representations,
warranties, covenants undertakings and indemnifications contained in the
Transaction Documents, as if such representations were made by the Company
as of
this date. The Subscriber hereby makes all of the representations, warranties,
covenants, indemnifications and undertakings contained in the Transaction
Documents as if such representations were made by the Subscriber as of this
date.
7. Subject
to the modifications and amendments provided herein, the Transaction
Documents shall remain in full force and effect. Except as expressly set forth
herein, this Agreement shall not be deemed to be a waiver, amendment or
modification of any provisions of the Transaction Documents or of any
right, power or remedy of the Subscriber, or constitute a waiver of any
provision of the Transaction Documents (except to the extent herein set
forth), or any other document, instrument and/or agreement executed or delivered
in connection therewith, in each case whether arising before or after the date
hereof or as a result of performance hereunder or thereunder. Except as set
forth herein, the Subscriber reserves all rights, remedies, powers, or
privileges available under the Transaction Documents, at law or otherwise.
This Agreement shall not constitute a novation or satisfaction and accord
of the Transaction Documents or any other document, instrument and/or
agreement executed or delivered in connection therewith. The Subscriber
represents and warrants that it is not aware of any breach of the Transactions
documents as of the date hereof.
8. Each
of
the undersigned states that he has read the foregoing Agreement and understands
and agrees to it.
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9. This
Agreement may be executed in two or more counterparts, all of which when taken
together shall be considered one and the same agreement and shall become
effective when counterparts have been signed by each party and delivered to
any
other party, it being understood that all parties need not sign the same
counterpart. In the event that any signature is delivered by facsimile
transmission, such signature shall create a valid and binding obligation of
the
party executing (or on whose behalf such signature is executed) the same with
the same force and effect as if such facsimile signature were an original
thereof.
| CUSTOMER ACQUISITION NETWORK | ALPHA CAPITAL ANSTALT | ||
| HOLDINGS INC. - the “Company” | “Subscriber” | ||
| By: /s/ Xxxxxxx X. Xxxxxxx | By: /s/ Xxxxxx Xxxxxxxx | ||
|
Name:
Xxxxxxx X. Xxxxxxx
Title:
Chief Executive Officer
|
Name:
Xxxxxx Xxxxxxxx
Title:
Director
|
||
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