SMART ONLINE, INC. AMENDMENT NO. 1 TO STOCK PURCHASE WARRANT AND AGREEMENT
Exhibit
10.6
SMART
ONLINE, INC.
AMENDMENT
NO.
1 TO STOCK PURCHASE WARRANT AND AGREEMENT
THIS
AMENDMENT NO. 1 TO STOCK PURCHASE WARRANT AND AGREEMENT (this “Amendment”),
effective
as of February 20, 2008, is made and entered into by and between Smart Online,
Inc., a Delaware corporation (the “Company”),
and
Atlas Capital SA, a Swiss business organization (“Holder”).
W
I T N E
S S E T H:
WHEREAS,
on
November 13, 2006, the Holder issued an irrevocable standby letter of credit
(the “Wachovia
Letter of Credit”)
to
secure a revolving credit arrangement (the “Wachovia
Line of Credit”)
for
the Company with Wachovia Bank, NA (“Wachovia”)
in the
amount of $1.3 million.
WHEREAS,
on
January 24, 2007, the Company increased the amount of the Wachovia Line of
Credit by $1.2 million and Wachovia required a corresponding $1.2 million
increase in the Holder’s Wachovia Letter of Credit (the “Wachovia
Letter of Credit Increase”).
WHEREAS,
as
consideration for the Holder’s agreement to the Wachovia Letter of Credit
Increase, the Holder and the Company agreed to enter into a Stock Purchase
Warrant and Agreement dated January 15, 2007 (the “Warrant
Agreement”),
which
represents the issuance of a stock purchase warrant (the “Warrant”)
to the
Holder convertible into common stock of the Company at a price of $2.70 (the
“Exercise
Price”).
WHEREAS, the
Company has paid off the Wachovia Line of Credit and entered into a new
revolving credit arrangement (the “Paragon
Line of Credit”)
with
Paragon Commercial Bank on February 20, 2008.
WHEREAS,
the
Wachovia Letter of Credit has been released from securing the Wachovia Line
of
Credit, and the Holder has issued a new irrevocable standby letter of credit
to
secure the Paragon Line of Credit (the “Paragon
Letter of Credit”).
WHEREAS,
the
Warrant Agreement currently provides that the Warrant shall be exercisable
at
the Holder’s option: (a) at any time the Company is in default under the
Wachovia Line of Credit or (b) within thirty (30) business days of the
termination of the Wachovia Line of Credit; and that if the Warrant is not
exercised within thirty (30) business days of the termination of the Wachovia
Line of Credit, all rights and obligations of the parties under the Warrant
Agreement and the Warrant shall terminate.
WHEREAS,
in
consideration of the Holder issuing the Paragon Letter of Credit, the Company
has agreed to amend the Warrant Agreement to change the term of the Warrant
such
that it shall be exercisable (a) at any time the Company is in default under
the
Paragon Letter of Credit or (b) within thirty (30) business days of the
termination of the Paragon Line of Credit.
NOW,
THEREFORE,
in
consideration of the mutual covenants and agreements set forth below, and other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Company and the Holder agree that the Warrant Agreement shall
be amended as follows:
1.
|
All
references in Section 1.2 of the Warrant Agreement to the “Line of Credit”
shall mean the Paragon Line of
Credit.
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2.
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Except
as specifically amended above, the Warrant Agreement shall continue
to be
in full force and effect and is hereby in all respects ratified and
confirmed.
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3.
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This
Amendment has been executed, delivered and accepted at, and shall
be
deemed to have been made in, the State of Delaware and shall be
interpreted in accordance with the internal laws (as opposed to conflicts
of laws provisions) of the State of Delaware, without regard to principles
of conflicts of laws.
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4.
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This
Amendment may be executed in several counterparts, each of which
shall be
an original and all of which together shall constitute but one and
the
same.
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[Remainder
of the page intentionally left blank.]
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[Signature
Page to Amendment No. 1 to
Stock
Purchase Warrant Agreement]
IN
WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly
executed and delivered as of the date first above written.
By:
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/s/
Xxxxx X. Xxxxxxx
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Name:
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Xxxxx
X. Xxxxxxx
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Title:
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President
and Chief Executive Officer
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ATLAS
CAPITAL, S.A.
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By:
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/s/
Avy Xxxxxxx
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Avy
Xxxxxxx
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Title:
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Member
of the Management
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