Exhibit 10.5
AMENDMENT AND WAIVER AGREEMENT
AMENDMENT AND WAIVER AGREEMENT (this "Agreement") is made as of the 3rd
day of July 2007, by and among Narrowstep Inc., a Delaware corporation (the
"Company"), and the holders set forth on the signature pages affixed hereto
(each a "Consenting Holder" and, collectively, the "Consenting Holders").
RECITALS
A. The Company has issued $7,110,000 in aggregate principal amount of its
12% Mandatorily Convertible Notes (the "Notes") and warrants (the "Warrants") to
acquire up to an aggregate of 3,555,000 shares of the Company's common stock,
par value $0.000001 per share (the "Common Stock"). Capitalized terms used
herein have the respective meanings ascribed thereto in the Notes unless
otherwise defined herein.
B. The Notes are mandatorily convertible at a 10% discount into the
securities issued by the Company in a Qualified Financing.
C. Upon consummation of the Qualified Financing, the Company anticipated
that the holders of the Notes (the "Holders") would enter into the Qualified
Financing Documents used to effect the Qualified Financing, which would include
customary registration rights provisions requiring the Company to register for
sale under the Securities Act of 1933, as amended, and applicable state
securities laws, the Common Stock received by the Holders upon the mandatory
conversion of the Notes, the exercise of the Warrants and the exercise or
conversion of any other equity-linked securities received upon conversion of the
Notes (the "Registration Rights").
D. The Company has requested that the Consenting Holders irrevocably waive
their Registration Rights (the "Waiver").
E. In order to induce the Consenting Holders to grant the Waiver, the
Company has agreed to amend the Notes as provided herein.
F. Under the terms of the Notes, the Majority Holders have the right to
waive and/or amend the terms of the Notes on behalf of all the Holders.
G. The Consenting Holders constitute the Majority Holders.
In consideration of the mutual covenants contained herein and other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, and intended to be legally bound, the parties hereto hereby agree
as follows:
1. Each Consenting Holder hereby irrevocably waives its Registration
Rights, such Waiver to be effective only upon the consummation of a Qualified
Financing.
2. Effective as of the consummation of a Qualified Financing, each of the
Notes is hereby amended as follows:
(a) The definition of "Qualified Financing Documents" in Section 1
of the Company Notes is hereby replaced in its entirety with the following:
"Qualified Financing Documents" means the definitive documentation entered
into by the Company and the investors in connection with the Qualified
Financing, excluding any provisions providing registration rights to such
investors.
(b) The second sentence in Section 4(a) of the Company Notes is
hereby replaced in its entirety with the following:
"Upon the occurrence of a Mandatory Conversion Event, all of the principal
amount of this Note and any accrued and unpaid interest due hereon shall
automatically and without any action on the part of the Holder convert on
a dollar-for-dollar basis, less a discount of 10%, into Conversion
Securities; provided, however, that if a Mandatory Conversion Event occurs
on or prior to March 2, 2008, the interest accrued hereon shall be
calculated as if the Mandatory Conversion Event occurred on March 2, 2008
and this Note remained outstanding until such date."
3. Except as expressly provided herein, the Notes shall continue to be in
full force and effect.
4. This Agreement shall be governed by, and construed in accordance with,
the internal laws of the State of New Jersey, without reference to the choice of
law principles thereof.
5. This Agreement may be executed in counterparts, each of which shall be
deemed and original and all of which together has constituted one and the same
instrument.
[THE REMAINDER OF THIS PAGE LEFT BLANK INTENTIONALLY]
- 2 -
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by the undersigned, thereunto authorized, as of the date first set
forth above.
NARROWSTEP INC,
By: /s/ Xxxx Xxx Xxxxxx
--------------------------------
Name: Xxxx Xxx Xxxxxx
Title: Chief Financial Officer
- 3 -
Principal Amount of Notes: $ OMNI CAPITAL, LLC
--------------------------------
(Consenting Holder)
By: /s/ XXXX XXXXXXXXX
--------------------------------
Name: XXXX XXXXXXXXX
Title: MANAGING PARTNER
- 4 -
Principal Amount of Notes: $ W. INVESTMENT PARTNERS V
--------------------------------
(Consenting Holder)
By: /s/ XXXXXXX DATES
--------------------------------
Name: XXXXXXX DATES
Title: MEMBER
- 5 -
Principal Amount of Notes: $ XXXX X. XXXXXXXX
--------------------------------
(Consenting Holder)
By: /s/ XXXX X. XXXXXXXX
--------------------------------
Name: XXXX X. XXXXXXXX
Title:
- 6 -
Principal Amount of Notes: $ XXXXX X. XXXXXXXXXX
--------------------------------
(Consenting Holder)
By: /s/ XXXXX X. XXXXXXXXXX
--------------------------------
Name: XXXXX X. XXXXXXXXXX
Title:
- 7 -
Principal Amount of Notes: $ XXXXX X. XXXXXX, XX.
--------------------------------
(Consenting Holder)
By: /s/ XXXXX X. XXXXXX, XX.
--------------------------------
Name: XXXXX X. XXXXXX, XX.
Title:
- 8 -
Principal Amount of Notes: $ XXXXX X. XXXXXXX
--------------------------------
(Consenting Holder)
By: /s/ XXXXX X. XXXXXXX
--------------------------------
Name: XXXXX X. XXXXXXX
Title: CHAIRMAN & CEO
- 9 -
