EXHIBIT 99.6
------------
THIRD ADDITIONAL ISSUANCE AGREEMENT
This Third Additional Issuance Agreement ("Agreement"), dated March 31,
2006 is made between XXXXXX.XXX, INC., a Delaware corporation (the "Company")
and Cargo Holdings LLC, a New York limited liability company (the "New
Purchaser"), is made pursuant to that certain Securities Purchase Agreement
("Purchase Agreement") dated as of December 28, 2005, as amended, by and between
the Company and each purchaser identified on the signature pages thereto and set
forth on Annex A to this Agreement (each, including its successors and assigns,
a "Purchaser" and collectively, the "Purchasers") for the purchase of the
Company's 6% Secured Convertible Debenture (the "Debenture") and the Common
Stock Purchase Warrants in connection therewith (the "Warrant"). 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.
For good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties hereby agree as follows:
1. Issuance of Additional Debentures and Warrants; Waiver, Extension
and Amendment.
(a) Issuance. The Company hereby agrees to issue against payment to
the New Purchaser (a) a debenture of the Company with a principal amount of
$500,000 which debenture shall be in the form of, and on the same terms and
conditions as, the Debentures in the form attached as Exhibit A (the "New
Debenture"), (b) a warrant to purchase up to 235,294 shares of Common Stock,
which warrant shall be in the form of, and on the same terms and conditions as,
the Long Term Warrants in the form attached as Exhibit B, and (c) a warrant to
purchase up to 235,294 shares of Common Stock, which warrant shall be in the
form of, and on the same terms and conditions as, the Short Term Warrants in the
form attached as Exhibit C (the warrants issued in clauses (b) and (c)
collectively referred to as the "New Warrants"). The total purchase price for
the purchase of the New Debenture and the New Warrants is $500,000 (the "New
Subscription Amount"). Within 3 Trading Days of the date hereof, the Company
shall deliver the New Debentures, New Warrants and opinion of counsel required
pursuant to Section 5 to the New Purchaser and the New Purchaser shall wire the
New Subscription Amount to the wire instructions attached hereto as Annex B.
(b) Waiver and Extension. Pursuant to the Registration Rights
Agreement, as amended, the Company agreed to file a Registration Statement on or
before March 28, 2006 (the "Filing Date") and that such Registration Statement
would be effective June 11, 2006 (the "Effectiveness Date"). By execution of
this Agreement, the New Purchaser agrees to extend the Filing Date to October
15, 2006 and the Effectiveness Date to December 14, 2006 and to waive any past
or present default ore liquidated damages arising from the Company's failure to
comply with its agreement to file an initial Registration Statement by the
Filing Date (the "Existing Default").
1
(c) Amendment. The definition of "Exempt Issuance" set forth in
Section 1.1 of the Purchase Agreement is amended to add the following clause (f)
immediately following the word "securities" and before the last period of clause
(f):
"or (f) the issuance of warrants to Emerging Markets Consulting LLC
pursuant to a consulting agreement, provided that the exercise
price of such warrants equals or exceeds $0.85 and not more than
180,000 such warrants are issued in any consecutive three month
period."
2. Documents. The rights and obligations of the New Purchaser and of
the Company with respect to the New Debenture, the New Warrants and the shares
of Common Stock issuable under the New Debentures and New Warrants (the
"Additional Underlying Shares") shall be identical in all respects to the rights
and obligations of the Purchasers and of the Company with respect to the
Debentures, the Warrants and the Underlying Shares issued and issuable pursuant
to the Purchase Agreement. Any rights of the New Purchaser or covenants of the
Company which are dependant on the New Purchaser holding securities of the
Company or which are determined in magnitude by the New Purchaser's purchase of
securities pursuant to the Purchase Agreement shall be deemed to include any
securities purchased or issuable hereunder. The Purchase Agreement is hereby
amended so that the term "Debentures" includes the New Debenture issued
hereunder and "Underlying Shares" includes the Additional Underlying Shares.
Additionally, the Registration Rights Agreement entered into in connection with
the Purchase Agreement is hereby amended so that the term "Registrable
Securities" includes in the calculation thereof the Additional Underlying
Shares.
3. Condition Precedent to the Closing of the Agreement. It shall be
condition precedent to the closing and effectiveness of the Agreement that the
purchasers identified on the signature pages to the Purchase Agreement and set
forth on Annex A hereto have executed a Letter Agreement with the Company, in
the form of Exhibit D attached hereto, whereby the purchasers consent to this
Agreement and agree to the waiver of the Existing Default, the extension of the
Filing Date and the Effectiveness Date and the amendment of the definition of
"Exempt Issuance" in Section 1.1 of the Purchase Agreement.
4. Representations and Warranties of the Company. The Company hereby
makes to the New Purchaser the following representations and warranties:
(a) Authorization; Enforcement. The Company has the requisite
corporate power and authority to enter into and to consummate the transactions
contemplated by this Agreement and otherwise to carry out its obligations
hereunder and thereunder. The execution and delivery of this Agreement by the
Company and the consummation by it of the transactions contemplated hereby have
been duly authorized by all necessary action on the part of the Company and no
further action is required by the Company, its board of directors or its
stockholders in connection therewith other than in connection with the Required
Approvals. This Agreement has been duly executed by the Company and, when
2
delivered in accordance with the terms hereof will constitute the valid and
binding obligation of the Company enforceable against the Company in accordance
with its terms except (i) as limited by general equitable principles and
applicable bankruptcy, insolvency, reorganization, moratorium and other laws of
general application affecting enforcement of creditors' rights generally, (ii)
as limited by laws relating to the availability of specific performance,
injunctive relief or other equitable remedies and (iii) insofar as
indemnification and contribution provisions may be limited by applicable law.
(b) No Conflicts. The execution, delivery and performance of this
Agreement by the Company and the consummation by the Company of the transactions
contemplated hereby do not and will not: (i) conflict with or violate any
provision of the Company's certificate or articles of incorporation, bylaws or
other organizational or charter documents, or (ii) conflict with, or constitute
a default (or an event that with notice or lapse of time or both would become a
default) under, result in the creation of any Lien (except as contemplated by
the Security Documents) upon any of the properties or assets of the Company, or
give to others any rights of termination, amendment, acceleration or
cancellation (with or without notice, lapse of time or both) of, any material
agreement, credit facility, debt or other material instrument (evidencing
Company debt or otherwise) or other material understanding to which the Company
is a party or by which any property or asset of the Company is bound or
affected, or (iii) subject to the Required Approvals, conflict with or result in
a violation of any law, rule, regulation, order, judgment, injunction, decree or
other restriction of any court or governmental authority to which the Company is
subject (including federal and state securities laws and regulations), or by
which any property or asset of the Company is bound or affected, except that, in
the case of each of clauses (ii) and (iii), such as could not have or reasonably
be expected to result in a Material Adverse Effect.
(c) Issuance of the Additional Debentures. The Additional
Debentures and Additional Warrants are duly authorized and, upon the execution
of this Agreement by the New Purchaser, will be duly and validly issued, fully
paid and nonassessable, free and clear of all Liens imposed by the Company other
than restrictions on transfer provided for in the Transaction Documents. The
Additional Underlying Shares, when issued in accordance with the terms of the
Additional Debentures and Additional Warrants, will be validly issued, fully
paid and nonassessable, free and clear of all Liens imposed by the Company. The
Company has reserved from its duly authorized capital stock a number of shares
of Common Stock for issuance of the Additional Underlying Shares at least equal
to the Required Minimum on the date hereof.
(d) Equal Consideration. Except as set forth in this Agreement, no
consideration has been offered or paid to any person to amend or consent to a
waiver, modification, forbearance or otherwise of any provision of any of the
Transaction Documents.
3
(e) Other Events of Default. As of the date of this Agreement, to
the knowledge of the Company, no Event of Default other than the Existing
Default exists that has not been waived.
(f) Affirmation of Prior Representations and Warranties. The
Company hereby represents and warrants to the New Purchaser that its
representations and warranties listed in Section 3.1 of the Purchase Agreement
are true and correct as of the date hereof, as modified by changes resulting
from the Additional Issuance Agreement and the Second Additional Issuance
Agreement, which changes would not, with notice and the passage of time,
constitute an Event of Default under the Transaction Documents.
5. Representations and Warranties of the New Purchaser. The New
Purchaser hereby represents and warrants as of the date hereof to the Company as
follows:
(a) Authority. The execution, delivery and performance by the New
Purchaser of the transactions contemplated by this Agreement have been duly
authorized by all necessary corporate or similar action on the part of the New
Purchaser. This Agreement has been duly executed by the New Purchaser, and when
delivered by the New Purchaser in accordance with the terms hereof, will
constitute the valid and legally binding obligation of the New Purchaser,
enforceable against it in accordance with its terms, except (i) as limited by
general equitable principles and applicable bankruptcy, insolvency,
reorganization, moratorium and other laws of general application affecting
enforcement of creditors' rights generally, (ii) as limited by laws relating to
the availability of specific performance, injunctive relief or other equitable
remedies and (iii) insofar as indemnification and contribution provisions may be
limited by applicable law.
(b) Own Account. The New Purchaser understands that the New
Debenture and New Warrants are "restricted securities" and have not been
registered under the Securities Act or any applicable state securities law and
is acquiring the New Debenture and New Warrants as principal for its own account
and not with a view to or for distributing or reselling such New Debenture or
New Warrants or any part thereof in violation of the Securities Act or any
applicable state securities law, has no present intention of distributing any of
such Securities in violation of the Securities Act or any applicable state
securities law and has no arrangement or understanding with any other persons
regarding the distribution of such New Debenture and New Warrants (this
representation and warranty not limiting such Purchaser's right to sell the
Additional Underlying Shares pursuant to the Registration Statement or otherwise
in compliance with applicable federal and state securities laws) in violation of
the Securities Act or any applicable state securities law. Such Purchaser is
acquiring the New Debenture and New Warrants hereunder in the ordinary course of
its business. Such Purchaser does not have any agreement or understanding,
directly or indirectly, with any Person to distribute any of the New Debenture,
New Warrants or Additional Underlying Shares.
4
(c) Purchaser Status. The New Purchaser is an "accredited investor"
as defined in Rule 501(a)(1), (a)(2), (a)(3), (a)(7) or (a)(8) under the
Securities Act. Such Purchaser is not required to be registered as a
broker-dealer under Section 15 of the Exchange Act.
(d) General Solicitation. The New Purchaser is not purchasing the
New Debenture or New Warrants as a result of any advertisement, article, notice
or other communication regarding the New Debenture or New Warrants published in
any newspaper, magazine or similar media or broadcast over television or radio
or presented at any seminar or any other general solicitation or general
advertisement.
(e) Affirmation of Prior Representations and Warranties. The New
Purchaser hereby represents and warrants to the Company that the representations
and warranties listed in Section 3.2 of the Purchase Agreement are true and
correct as of the date hereof, as modified by changes resulting from the
Additional Issuance Agreement and the Second Additional Issuance Agreement,
which changes would not, with notice and the passage of time, constitute an
Event of Default under the Transaction Documents.
6. Delivery of Opinion. Concurrently herewith, the Company shall
deliver to the New Purchaser an opinion of outside counsel regarding this
Agreement and the issuance of the New Debentures and New Warrants in form and
substance reasonably acceptable to the New Purchaser.
7. Public Disclosure. The Company shall, on the Trading Day following
the date of payment of the New Subscription Amount, issue a Current Report on
Form 8-K, reasonably acceptable to the New Purchaser, disclosing the material
terms of the transactions contemplated hereby, and shall attach this Agreement
thereto. The Company shall consult with the New Purchaser in issuing any other
press releases with respect to the transactions contemplated hereby.
8. [RESERVED].
9. Effect on Transaction Documents. Except as expressly set forth
above, all of the terms and conditions of the Transaction Documents shall
continue in full force and effect after the execution of this Agreement and
shall not be in any way changed, modified or superseded by the terms set forth
herein, including but not limited to, any other obligations the Company may have
to the Purchasers under the Transaction Documents. Notwithstanding the
foregoing, this Agreement shall be deemed for all purposes as an amendment to
any Transaction Document as required to serve the purposes hereof, and in the
event of any conflict between the terms and provisions of the Debentures, the
Registration Rights Agreement or any other Transaction Document, on the one
hand, and the terms and provisions of this Agreement, on the other hand, the
terms and provisions of this Agreement shall prevail with regard to the rights
and obligations of the New Purchaser.
5
10. Expenses. The Company agrees to pay to Purchasers upon demand any
and all reasonable out-of-pocket costs or expenses (including, without
limitation, reasonable legal fees and disbursements) incurred or sustained by
Purchasers, in connection with the preparation of this Agreement and related
matters.
11. Amendments and Waivers. The provisions of this Agreement, including
the provisions of this sentence, may not be amended, modified or supplemented,
and waivers or consents to departures from the provisions hereof may not be
given, unless the same shall be in writing and signed by the Company and the New
Purchaser.
12. Notices. Any and all notices or other communications or deliveries
required or permitted to be provided hereunder shall be delivered as set forth
in the Purchase Agreement.
13. Successors and Assigns. This Agreement shall inure to the benefit
of and be binding upon the successors and permitted assigns of each of the
parties and shall inure to the benefit of the New Purchaser. The Company may not
assign (except by merger) its rights or obligations hereunder without the prior
written consent of the New Purchaser. The New Purchaser may assign its
respective rights hereunder in the manner and to the Persons as permitted under
the Purchase Agreement.
14. Execution and Counterparts. 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 the other party, it being understood that
both parties need not sign the same counterpart. In the event that any signature
is delivered by facsimile transmission or by e-mail delivery of a ".pdf" format
data file, such signature shall create a valid and binding obligation of the
party executing (or on whose behalf such signature is executed) with the same
force and effect as if such facsimile or ".pdf" signature page were an original
thereof.
15. Governing Law. All questions concerning the construction, validity,
enforcement and interpretation of this Agreement shall be determined in
accordance with the provisions of the Purchase Agreement.
16. Severability. If any term, provision, covenant or restriction of
this Agreement is held by a court of competent jurisdiction to be invalid,
illegal, void or unenforceable, the remainder of the terms, provisions,
covenants and restrictions set forth herein shall remain in full force and
effect and shall in no way be affected, impaired or invalidated, and the parties
hereto shall use their commercially reasonable efforts to find and employ an
alternative means to achieve the same or substantially the same result as that
contemplated by such term, provision, covenant or restriction. It is hereby
stipulated and declared to be the intention of the parties that they would have
executed the remaining terms, provisions, covenants and restrictions without
including any of such that may be hereafter declared invalid, illegal, void or
unenforceable.
6
17. Headings. The headings in this Agreement are for convenience only,
do not constitute a part of the Agreement and shall not be deemed to limit or
affect any of the provisions hereof.
18. [RESERVED].
[SIGNATURE PAGE FOLLOWS]
7
Executed as of March 31, 2006 by the undersigned duly authorized
representatives of the Company , the New Purchaser and the other Purchasers:
XXXXXX.XXX, INC CARGO HOLDINGS LLC
By: /s/ Xxxx Xxxxxxx By: /s/ Xxxxx Xxxxxxxx
-------------------------- --------------------------
Xxxx Xxxxxxx Xxxxx Xxxxxxxx, Member
Chief Financial Officer
By: /s/ Gennaro Vendome
--------------------------
Gennaro Vendome, Member
ADDRESS FOR NOTICE:
c/o Xxxxxx X. Xxxxxxxxxxx
0000 Xxxxxxxx, Xxxxx 0000
Xxx Xxxx, Xxx Xxxx 00000
ADDRESS FOR DELIVERY OF SECURITIES
(IF NOT SAME AS ABOVE):
8
ANNEX A
-------
Short Term Long Term
Purchaser Debenture Warrant Warrant
--------------------------------- -------------- -------------- --------------
Bushido Capital Master Fund, L.P. $ 1,875,884.38 1,118,063 1,118,063
000 Xxxxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxx, XX 00000
Gamma Opportunities Capital Partners, LP Class A 500,000.00 235,294 235,294
0000 Xxxxxxxx - Xxxx Xxxx Xxxx
Xxxxxxxx, XX 00000
Gamma Opportunities Capital Partners, LP Class C 500,000.00 235,294 235,294
0000 Xxxxxxxx - Xxxx Xxxx Xxxx -------------- -------------- --------------
Xxxxxxxx, XX 00000
Total $ 2,875,884.38 1,588,651 1,588,651
============== ============== ==============
9
ANNEX B
-------
ACCOUNT NAME: XXXXXX & XXXXXXXXX, LLP
ATTORNEY ESCROW ACCOUNT - XXXX
BANK: Bank of New York
00 Xxxxxxx Xxxxxxxx
Xxxxxxx, XX 00000
(000) 000-0000
ACCOUNT NO.: 6902 089606
ABA NO.: 000000000
PLEASE BE CERTAIN TO IDENTIFY THE TRANSACTION TO WHICH THE FUNDS RELATE AND THE
SENDER IN THE DETAILS OF PAYMENT FIELD.
FOR INTERNATIONAL WIRES, PLEASE USE SWIFT NUMBER XXXXXX0X.
10
