EX-10.2
AMENDMENT dated as of June 12, 2006 (this "AMENDMENT"),
by and among MIDNIGHT HOLDINGS GROUP, INC., a Delaware
corporation (the "COMPANY"), and AJW QUALIFIED PARTNERS,
LLC (the "HOLDER") to the Notes.
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On April 21, 2004, the Company issued a Callable Secured Convertible
Note in the aggregate principal amount of $101,125 to the Holder. On June 11,
2004, the Company issued a Callable Secured Convertible Note in the aggregate
principal amount of $101,125 to the Holder. On December 31, 2005, the Company
issued a Callable Secured Convertible Note in the aggregate principal amount of
$962,000 to the Holder. On January 31, 2006, the Company issued a Callable
Secured Convertible Note in the aggregate principal amount of $225,600 to the
Holder. On March 6, 2006, the Company issued a Callable Secured Convertible Note
in the aggregate principal amount of $108,000 to the Holder. On April 4, 2006,
the Company issued a Callable Secured Convertible Note in the aggregate
principal amount of $108,000 to the Holder. On May 8, 2006, the Company issued a
Callable Secured Convertible Note in the aggregate principal amount of $97,650
to the Holder. On June 7, 2006, the Company issued a Callable Secured
Convertible Note in the aggregate principal amount of $83,700 to the Holder.
All of the Callable Secured Convertible Notes referred to in the
preceding paragraph shall collectively be referred to herein as the "Notes". The
parties desire to amend the Notes to clarify Section 1.3 of the Notes.
AMENDMENT
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1. Section 1.3 of each of the Notes shall be deleted in its
entirety and replaced as follows:
"1.3 AUTHORIZED SHARES. Subject to the completion of
the Charter Amendment Actions (as defined in the Purchase
Agreement), the Borrower covenants that during the period the
conversion right exists, the Borrower will reserve from its
authorized and unissued Common Stock a sufficient number of shares,
free from preemptive rights, to provide for the issuance of Common
Stock upon the full conversion of this Note and the other Notes
issued pursuant to the Purchase Agreement. The Borrower is required
at all times to have authorized and reserved two times the number of
shares that is actually issuable upon full conversion of the Notes
(based on the Conversion Price of the Notes or the Exercise Price of
the Warrants in effect from time to time) (the "RESERVED AMOUNT").
The Reserved Amount shall be increased from time to time in
accordance with the Borrower's obligations pursuant to Section 4(h)
of the Purchase Agreement. The Borrower represents that upon
issuance, such shares will be duly and validly issued, fully paid
and non-assessable. In addition, if the Borrower shall issue any
securities or make any change to its capital structure which would
change the number of shares of Common Stock into which the Notes
shall be convertible at the then current Conversion Price, the
Borrower shall at the same time make proper provision so that
thereafter there shall be a sufficient number of shares of Common
Stock authorized and reserved, free from
preemptive rights, for conversion of the outstanding Notes. The
Borrower (i) acknowledges that it has irrevocably instructed its
transfer agent to issue certificates for the Common Stock issuable
upon conversion of this Note, and (ii) agrees that its issuance of
this Note shall constitute full authority to its officers and agents
who are charged with the duty of executing stock certificates to
execute and issue the necessary certificates for shares of Common
Stock in accordance with the terms and conditions of this Note.
If, at any time a Holder of this Note submits a Notice
of Conversion, and the Borrower does not have sufficient authorized
but unissued shares of Common Stock available to effect such
conversion in accordance with the provisions of this Article I (a
"CONVERSION DEFAULT"), subject to Section 4.8, the Borrower shall
issue to the Holder all of the shares of Common Stock which are then
available to effect such conversion. The portion of this Note which
the Holder included in its Conversion Notice and which exceeds the
amount which is then convertible into available shares of Common
Stock (the "EXCESS AMOUNT") shall, notwithstanding anything to the
contrary contained herein, not be convertible into Common Stock in
accordance with the terms hereof until (and at the Holder's option
at any time after) the date additional shares of Common Stock are
authorized by the Borrower to permit such conversion, at which time
the Conversion Price in respect thereof shall be the lesser of (i)
the Conversion Price on the Conversion Default Date (as defined
below) and (ii) the Conversion Price on the Conversion Date
thereafter elected by the Holder in respect thereof. In addition,
the Borrower shall pay to the Holder payments ("CONVERSION DEFAULT
PAYMENTS") for a Conversion Default in the amount of (x) the SUM OF
(1) the then outstanding principal amount of this Note PLUS (2)
accrued and unpaid interest on the unpaid principal amount of this
Note through the Authorization Date (as defined below) PLUS (3)
Default Interest, if any, on the amounts referred to in clauses (1)
and/or (2), MULTIPLIED BY (y) .24, MULTIPLIED BY (z) (N/365), where
N = the number of days from the day the holder submits a Notice of
Conversion giving rise to a Conversion Default (the "CONVERSION
DEFAULT DATE") to the date (the "AUTHORIZATION DATE") that the
Borrower authorizes a sufficient number of shares of Common Stock to
effect conversion of the full outstanding principal balance of this
Note. The Borrower shall use its best efforts to authorize a
sufficient number of shares of Common Stock as soon as practicable
following the earlier of (i) such time that the Holder notifies the
Borrower or that the Borrower otherwise becomes aware that there are
or likely will be insufficient authorized and unissued shares to
allow full conversion thereof and (ii) a Conversion Default. The
Borrower shall send notice to the Holder of the authorization of
additional shares of Common Stock, the Authorization Date and the
amount of Holder's accrued Conversion Default Payments. The accrued
Conversion Default Payments for each calendar month shall be paid in
cash or shall be convertible into Common Stock (at such time as
there are sufficient authorized shares of Common Stock) at the
applicable Conversion Price, at the Borrower's option, as follows:
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(a) In the event the Borrower elects to make such
payment in cash, cash payment shall be made to Holder by the fifth
(5th) day of the month following the month in which it has accrued;
and
(b) In the event the Borrower elects to make such
payment in Common Stock, the Holder may convert such payment amount
into Common Stock at the Conversion Price (as in effect at the time
of conversion) at any time after the fifth day of the month
following the month in which it has accrued in accordance with the
terms of this Article I (so long as there is then a sufficient
number of authorized shares of Common Stock).
The Borrower's election shall be made in writing to the
Holder at any time prior to 6:00 p.m., New York, New York time, on
the third day of the month following the month in which Conversion
Default payments have accrued. If no election is made, the Borrower
shall be deemed to have elected to remit Common Stock. Nothing
herein shall limit the Holder's right to pursue actual damages (to
the extent in excess of the Conversion Default Payments) for the
Borrower's failure to maintain a sufficient number of authorized
shares of Common Stock, and each holder shall have the right to
pursue all remedies available at law or in equity (including degree
of specific performance and/or injunctive relief)."
2. Each party agrees to execute such other documents,
instruments, agreements and consents, and take such other actions as may be
reasonably requested by the other parties hereto to effectuate the purposes of
this Amendment.
3. No modification, amendment or waiver of any provision of, or
consent required by, this Amendment, nor any consent to any departure herefrom,
shall be effective unless it is in writing and signed by each of the parties
hereto. Such modification, amendment, waiver or consent shall be effective only
in the specific instance and for the purpose for which given.
4. This Amendment may be executed in one or more counterparts,
each of which shall be deemed an original instrument, but all of which
collectively shall constitute one and the same Amendment.
5. This Amendment shall inure to the benefit of each of the
parties hereto and all their respective successors and permitted assigns.
Nothing in this Amendment is intended or shall be construed to give to any other
person, firm or corporation any legal or equitable right, remedy or claim under
or in respect of this Amendment or any provision herein contained.
6. THIS AMENDMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK (WITHOUT GIVING EFFECT TO ANY
CHOICE OR CONFLICT OF LAWS PROVISIONS).
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7. This Amendment supersedes all prior amendments or
understandings among the parties relating to this Amendment. Except as set forth
above, the provisions of the Notes shall remain in full force and effect as
originally stated therein.
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IN WITNESS WHEREOF, the parties have executed this Amendment as of the
date first above written.
MIDNIGHT HOLDINGS GROUP, INC.
By: /s/ Xxxxxxxx X. Xxxxx
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Name: Xxxxxxxx X. Xxxxx
Title: Chief Executive Officer
AJW QUALIFIED PARTNERS, LLC
By: AJW Manager, LLC
By: /s/ Xxxxx X. Xxxxxxxx
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Name: Xxxxx X. Xxxxxxxx
Title: Manager
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