Contract
EXHIBIT 99.1
AMENDMENT
AGREEMENT
THIS AMENDMENT
AGREEMENT (this “Amendment”) by and among
Arkados Group, Inc. (formerly XXXXXX.XXX, Inc., a Delaware corporation, the
“Company”) and each
of the other parties set forth on the signature pages herein (each a “Holder” and collectively,
the “Holders”) is
entered into and effective as of date it is executed by the
Company.
WHEREAS, the
Company previously entered into a Securities Purchase Agreement dated, December
28, 2005 (the “First
Purchase Agreement”), as amended on February 1, 2006, February 24, 2006,
March 31, 2006, September 26, 2006, October 28, 2006, November 30, 2006, June 8,
2007, February 28, 2007, March 6, 2007, May 2, 2007, May 30, 2007, May 31, 2007,
December 6. 2007 and December 28, 2007 whereby the Company issued and sold to
certain Holders the Company’s 6% Secured Convertible Debentures due December 28,
2008 (the “First
Debentures”) as follows:
(a) $2,000,000
principal amount of First Debentures on December 28, 2005,
(b) $375,884.38
principal amount of First Debentures on February 1, 2006,
(c) $500,000
principal amount of First Debentures on February 24, 2006 and
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(d)
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$500,000
principal amount of First Debentures on March 31,
2006,
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for
an aggregate principal amount of all First Debentures issued equal to
$3,375,884.38.
WHEREAS, the
Company previously entered into a Securities Purchase Agreement dated, June 30,
2005 (the “Second Purchase
Agreement” and together with the First Purchase Agreement, the “Purchase Agreements”), as
amended on September 26, 2006, October 28, 2006, November 30, 2006, June 8,
2007, February 28, 2007, March 6, 2007, May 2, 2007, May 30, 2007, May 31, 2007,
December 6, 2007 and December 28, 2007 whereby the Company issued and sold to
certain Holders the Company’s 6% Secured Convertible Debentures due December 28,
2008 (the “Second
Debentures” and together with the First Debentures, the “Debentures”) as
follows:
(a) $1,773,470.83
principal amount of Second Debentures on June 30, 2006,
(b) $250,000
principal amount of Second Debentures on September 26, 2006,
(c) $250,000
principal amount of Second Debentures on October 28, 2006,
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(d)
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$400,000
principal amount of Second Debentures on November 30,
2006,
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(e)
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$288,000
principal amount of Second Debentures on June 8,
2007,
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(f)
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$327,000
principal amount of Second Debentures on February 28,
2007,
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(g)
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$20,000
principal amount of Second Debentures on March 6,
2007,
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(h)
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$150,000
principal amount of Second Debentures on May 7,
2007,
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(i)
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$610,000
principal amount of Second Debentures on May 30,
2007,
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(j)
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$500,000
principal amount of Second Debentures on May 31,
2007,
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(k)
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$855,000
principal amount of Second Debentures on December 15, 2007,
and
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(l)
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$1,004,700.84
principal amount of Second Debentures on April 8, 2008 as an inducement
for the Holders to enter into an Amendment Agreement at that time, for an
aggregate principal amount of all Second Debentures issued equal to
$6,239,171.67.
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WHEREAS,
the Company has proposed certain waivers and amendments to the First Purchase
Agreements, the Second Purchase Agreements, the First Debentures and the Second
Debentures, and the Warrants issued in connection with the Debentures in order
to facilitate the Company raising capital by means of a sale of shares of common
stock and warrants, substantially on the terms set forth on the term sheet
provided to the Holders under separate cover (the “Equity
Offering”).
WHEREAS,
the Company has relied on the informal approval and waiver of the Holders to the
conversion (the “Trident
Conversion”) of $306,618.15 of principal and interest (representing 25%
of such principal and interest due as of June 30, 2008) in exchange for the
issuance of approximately 876,100 shares of the Company’s Common Stock to the
holders of the Company’s outstanding 6% Convertible Subordinated Notes due June
30, 2008 (the “Trident
Notes”), and the simultaneous amendment of the Trident Notes to extend
the due date one year, from June 30, 2008 to June 30, 2009 and proposes to
document such waivers.
NOW THEREFORE,
for and in consideration of the above recitals, the parties to this Amendment
hereby agree as follows:
1. Definitions. All
initially capitalized, undefined terms used herein shall have the meanings
ascribed to such terms in each of the respective Purchase Agreements or the
respective Debentures and the other agreements entered into in connection
therewith.
2. Waiver of Certain Provisions
by Holders. Each Holder, severally and not jointly with
the other Holders, acknowledges and agrees that it is hereby waiving the
following rights it may have under the First and Second Purchase Agreement
solely with respect to the Equity Financing, to the extent that such financing
is consummated in whole or in part on or before October 31, 2008, and the
Trident Conversion:
a) each
Holder hereby waives the Company’s compliance with the restrictions imposed by
Sections 4.13 and 4.14 of the First Purchase Agreement solely as it relates to
the Equity Financing; and
b) each
Holder hereby waives the Company’s compliance with the restrictions imposed by
Sections 4.13 and 4.14 of the Second Purchase Agreement solely as it relates to
the Equity Financing and Trident Conversion;
c) each
Holder agrees not to demand registration under the Registration Rights Agreement
until December 15, 2008.
3. Amendments to the
Debentures.
a)
The
following text is hereby deleted from Section 2(a) of each of the
Debentures:
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“(provided
that interest due on January 1, 2007, July 1, 2007 and January 1, 2008 upon
principal outstanding on such date shall be added to the principal outstanding
and shall thereafter bear interest at the rate set forth herein)”;
b) The
first sentence of Section 2(a) of each of the Debentures is hereby amended to
add:
“(provided
that interest due on January 1, 2007, July 1, 2007, January 1, 2008, July 1,
2008 and each date on which an interest payment upon principal outstanding is
due hereunder shall be added to the principal outstanding and shall thereafter
bear interest at the rate set forth herein)”.
c)
Subject
to the Equity Financing being completed in a gross aggregate amount of not less
than $750,000, and effective on the date the Company receives the proceeds of
such financing, the Debentures are hereby amended by changing all occurrences of
“December 28, 2008” to “June 28, 2009”, thereby extending the maturity date of
the Debentures by six months to June 28, 2009.
d)
Subject
to the Company completing equity financing upon any terms in no less than the
gross aggregate amount of $2,000,000 (including the Equity Financing) prior to
the maturity date of the Debentures, and effective on the date the Company
receives the proceeds of financing which has equaled or exceeds such amount, the
Debentures are hereby further amended by changing all occurrences of “June 28,
2009” to “December 28, 2009”, thereby extending the maturity date of the
Debentures by an additional six months to December 28, 2009.
4. Amendment to the Definition
of Exempt Issuance. The Purchasers hereby agree to
amend and restate the definition of “Exempt Issuance” set forth in Section 1.1
of the Purchase Agreement (which relates to transactions to which certain
investor protections set forth in the Purchase Agreements, Debentures and
Warrants do not apply) to read as follows in its entirety (marked to show
changes from the definition as previously amended):
“‘Exempt Issuance’ means the
issuance of (a) shares of Common Stock or options to employees, officers,
directors or bona fide consultants of the Company (including shares of Common
Stock issued pursuant to the exercise of such options) pursuant to any stock or
option plan duly adopted by a majority of the non-employee members of the Board
of Directors of the Company or a majority of the members of a committee of
non-employee directors established for such purpose, (b) securities upon the
exercise or exchange of or conversion of any Securities issued hereunder and/or
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 any such securities, (c) securities issued in lieu of cash
payments for engineering or design services, materials, production management or
similar services, provided that such securities are not and will not be
registered on a registration statement, or (d) securities issued
pursuant to
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acquisitions
or strategic transactions approved by a majority of the disinterested directors,
provided any such issuance shall only be to a Person which is, itself or through
its subsidiaries, an operating company in a business synergistic with the
business of the Company and in which the Company receives benefits in addition
to the investment of funds, but shall not include a transaction in which the
Company is issuing securities primarily for the purpose of raising capital or to
an entity whose primary business is investing in securities, (e) the issuance on or before
October 31, 2008 of up to 12,000,000 shares of Common Stock together with up to
6,000,000 warrants to buy shares of Common Stock, exercisable at no less than
$0.25 per share, expiring on or before the fifth anniversary of the last closing
of such sale, for gross aggregate consideration (consisting of funds paid or
conversion of funds previously advanced on or after April 15, 2008) of not less
than $0.50 for each two shares of Common Stock and one Warrant (the “May 2008
Equity Offering”),
(f) up to $2,845,815.25 principal amount of new debentures
having a conversion price of $0.25, subject to adjustment, in exchange for the
cancellation of and equal principal amount of Debentures outstanding as of July
31, 2008, (g) the issuance of 2,332,131 warrants,
exercisable at $0.25 per share (in cash only on or before December 1, 2008),
subject to adjustment, until December 28, 2012 in exchange for the same number
of warrants outstanding exercisable at $0.85 and (h) securities issuable upon
the exercise or conversion of: (i) the Warrants issued in the Equity Offering,
(ii) the New Debentures described if subparagraph (f) above, (iii) and the
Warrants described in subparagraph (g), above.”
5. Exchange of
Securities. In consideration of the waivers and amendments set
forth herein, the Company hereby offers and each Holder (provided the gross
proceeds of the Equity Offering equal or exceeds $750,000) hereby agrees to
exchange:
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a)
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25%
of the principal amount of the Debentures held by them for an equal amount
of new debentures substantially in the form annexed hereto as Exhibit A
(the “New
Debentures”) having identical rights and terms as the Debentures
being exchanged, except that the New Debentures shall have a Conversions
Price of $0.25;
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b)
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25%
of the warrants exercisable for $0.85 per share until December 28, 2012
for an equal amount of new warrants substantially in the form annexed
hereto as Exhibit B (the “New Warrants”)
having identical rights and terms as the warrants being exchanged, except
that the New Warrants have a Exercise Price of $0.25 and are not
exercisable for consideration other than cash on or before December 1,
2008; and
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c)
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The
Holders, each for themselves and for no other Holder, reaffirm the
representations set forth in Section 3.2 of the Purchase Agreements as if
such representation were made on the date of this
Amendment. Further, the Company will deliver such shares of
Common Stock against delivery of duly endorsed original
Debentures.
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6. Counterparts. This
Amendment may be executed in any number of counterparts with the same effect as
if all of the parties had signed the same document. All counterparts
shall be
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construed
together and shall constitute one and the same instrument. 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.
7. Construction and
Notices. This Amendment and the rights and obligations
of the parties hereunder shall be construed in accordance with and governed
pursuant to the terms of each of the Purchase Agreements.
8. Full Force and Effect of
Purchase Agreements. Except as expressly set forth
herein, all of the terms and conditions of the Purchase Agreements and the
Debentures shall continue in full force and effect after the execution of this
Amendment, and shall not be in any way changed, modified or superseded by the
terms set forth herein and the provisions of this Amendment, if not expressly
set forth herein, shall otherwise be subject to the provisions of the Purchase
Agreements.
9. Obligations
Several. The obligations of each Holder under this
Amendment are several and not joint with the obligations of any other Holder,
and no Holder shall be responsible in any way for the performance of the
obligations of any other Holder under this Amendment. Nothing
contained herein or in this Amendment, and no action taken by any Holder
pursuant thereto, shall be deemed to constitute the Holders as a partnership, an
association, a joint venture or any other kind of entity, or create a
presumption that the Holders are in any way acting in concert or as a group with
respect to such obligations or the transactions contemplated by this
Amendment. Each Holder shall be entitled to independently protect and
enforce its rights, including without limitation the rights arising out of this
Amendment, and it shall not be necessary for any other Holder to be joined as an
additional party in any proceeding for such purpose. Each Holder has
been represented by its own separate legal counsel in their review and
negotiation of this Amendment. The Company has elected to provide all
Holders with the same terms under this Amendment for the convenience of the
Company and not because it was required or requested to do so by the
Holders.
IN
WITNESS WHEREOF, each party has executed this Amendment as of the date first
written above.
| ARKADOS GROUP, INC. | |||
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By:
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/s/ Xxxxxxx Xxxx-Xxxxx | Dated: August 7, 2008 | |
| Name: Xxxxxxx Xxxx-Xxxxx | |||
| Title: Chief Financial Officer | |||
[SIGNATURE
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Bushido
Capital Master Fund, LP
Signature of
Authorized Signatory of Bushido: /s/
Name
of Authorized Signatory: Xxxxxx X.
Xxxxx
Title
of Authorized Signatory: Partner, Bushido Capital
Partners, Ltd., its General Partner
[SIGNATURE
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Gamma
Opportunity Capital Partners, LP Class A
Signature of
Authorized Signatory of Gamma Class A: /s/
Name
of Authorized Signatory: Xxxxxxxx X.
Xxxxxx
Title
of Authorized Signatory: President
Gamma
Opportunity Capital Partners, LP Class C
Signature of
Authorized Signatory of Gamma Class C: /s/
Name
of Authorized Signatory: Xxxxxxxx X.
Xxxxxx
Title
of Authorized Signatory: President
Crucian
Transition, Inc.
Signature of
Authorized signatory for Crucian: /s/
Name
of Authorized Signatory: Xxxxxxxx X.
Xxxxxx
Title
of Authorized Signatory: President
[SIGNATURE
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Xxxxxx
Diversified Strategy Master Fund, LLC – Series BUS
Signature of
Authorized Signatory of Xxxxxx: /s/
Name
of Authorized Signatory: Xxxxxx
Xxxxxxxx
Title
of Authorized Signatory: Attorney-In-Fact
[SIGNATURE
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Xxxxxxx
Xxxxxxxx Family Limited Partnership
Signature of
Authorized signatory for Typaldos LP: /s/ Xxxxx
Xxxxxxxx
Name
of Authorized Signatory: Xxxxx
Xxxxxxxx
Title
of Authorized Signatory: Managing
Partner
Xxxxxxx
Xxxxxxxx:
/s/
Xxxxxxx
Xxxxxxxx:
/s/
Cargo
Holdings, LLC
Signature of
Authorized Signatory of Cargo: /s/
Name
of Authorized Signatory: Xxxxx
Xxxxxxxx
Title
of Authorized Signatory: Member
Signature of
Authorized Signatory of Cargo: /s/
Name
of Authorized Signatory: Gennaro
Vendome
Title
of Authorized Signatory: Member
[SIGNATURE
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Xxxxxxx
X. Xxxxxx:
/s/
Xxxx
X. Xxxxxxxxx:
/s/
Gennaro
Vendome:
/s/
Xxxxxxx
X. Xxxxxx:
/s/
[SIGNATURE
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TRANSFEREE
HOLDERS:
BCMF
Trustees, LLC
Signature of
Authorized Signatory of BCMF Trustees, LLC: /c/
Name
of Authorized Signatory:
Title
of Authorized Signatory:
ACM
SPV LLC
Signature of
Authorized Signatory of ACM SPV LLC:
Name
of Authorized Signatory: Xxxxxxx
Xxxx
Title
of Authorized Signatory: Managing Member of ACM SPV
Management LLC, its Investment
Manager
CFRR
Holdings, LLC
Signature of
Authorized Signatory of CFRR Holdings, LLC: /s/
Name
of Authorized Signatory:
Title
of Authorized Signatory
:
XXXXX
XXXXXX:
/s/
Xxxxx
Xxxxxx, individually
[LAST
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EXHIBIT
A
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