AMENDMENT
TO
SECURITIES PURCHASE AGREEMENT, WARRANTS,
REGISTRATION RIGHTS AGREEMENT
AND
8% CONVERTIBLE DEBENTURE SERIES 04-02 DUE DECEMBER 16, 2005
THIS AMENDMENT TO SECURITIES PURCHASE AGREEMENT, 8% CONVERTIBLE DEBENTURE
SERIES 04-02 DUE DECEMBER 16, 2005, CLASS A, B AND C WARRANTS AND REGISTRATION
RIGHTS AGREEMENT is made by and between Infinium Labs, Inc., a Delaware
corporation ("Company"), the Investors named on the signature page hereof
(collectively the "Investors" and each individually an "Investor") and Xxxxxxx
X. Xxxxxxx ("Guarantor") and is dated as of December __, 2004 ("Amendment").
WHEREAS, Investors and the Company entered into that certain Securities
Purchase Agreement, dated as of December 13, 2004 ("Purchase Agreement";
capitalized terms not otherwise defined herein shall have the meanings ascribed
to them in the Purchase Agreement) pursuant to which, among other things, the
Company issued the Debentures and the Warrants to the Investors, and the Company
and the Investors entered into the Registration Rights Agreement;
WHEREAS, the Company is currently in discussions with investors regarding
a transaction (or series of related transactions; collectively, the "Qualified
Financing") after the date hereof in which (i) the Company shall issue and sell
shares of its capital stock (but not any debt or other payment obligations) in
exchange for aggregate gross proceeds of at least $30 million, (ii) the first
tranche of such financing (the "Qualified Financing First Tranche") shall
consist of no less than $12 million and (iii) pursuant to which all existing
debt of the Company (other than the debt being issued pursuant to either the
Purchase Agreement or the Specified Permitted Transaction, defined below) shall
be converted into equity of the Company or otherwise retired within 10 Trading
Days of the funding of the Qualified Financing First Tranche (the date on which
all such debt is so converted or otherwise retired, the "Debt Elimination
Date"); and
WHEREAS, in connection therewith, the Company and the Investors desire to
amend certain terms of the Transaction Agreements;
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which the parties hereby acknowledge, the parties agree as
follows:
1. Amendment to Purchase Agreement.
(i) Notwithstanding anything to the contrary in the Purchase Agreement
or the other Transaction Agreements, a Qualified Financing in which the Debt
Elimination Date occurs within six (6) months from the Closing Date shall not be
deemed a Lower Price Transaction.
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Company: _____
Investor: _____
(ii) The term "Securities" is amended to include the Issued Shares, as
hereinafter defined.
(iii) The term "Shares" is amended to include the shares of Common Stock
representing the Issued Shares.
(iv) The term "Transaction Agreements" is amended to include this
Amendment in the list of documents and agreements.
2. Amendment of Class A Warrants: The exercise price of the Class A
Warrants is hereby amended to at all times be $0.10 per share (subject to
adjustment from time to time as provided in Sections 6.1, 6.2 and 6.3 of such
Warrant).
3. Additional Shares:
(i) The Company shall issue to each Investor shares ("Issued Shares") of
the Company's Common Stock equal to (x) 250,000 shares, multiplied by (y) such
Investor's Lender's Allocable Share, as set forth in Schedule A hereto.
(ii) The Company will deliver to the Escrow Agent certificates, issued by
the Transfer Agent in the name of the Investor, representing such Investor's
Issued Shares within 10 Trading Days of the execution and delivery of this
Amendment.
4. Amendment to Debenture. The Debenture is hereby amended as follows:
(i) The defined term "Conversion Price" as contained in the Purchase
Agreement and Section 4(A)(ii) of the Debenture is hereby restated in its
entirety as follows:
(ii) "The term "Conversion Price" means seventy-five percent (75%;
the "Current Percentage") of the lowest Closing Price during the
five (5) Trading Days ending on the Trading Day immediately before
the Conversion Date; provided, however, that in no event will the
Conversion Price be (x) more than $0.10 (the "Maximum Conversion
Price") or (y) until the earlier of (I) the Scheduled Expiration
Date (as defined below), (II) the date after the Closing Date on
which the company files a registration statement on Form S-8 or
(III) the date on which the Company first issues a Mandatory
Conversion Notice (as defined below), lower than $0.10 (the "Minimum
Conversion Price") (as each such amount may be adjusted from time to
time as provided herein); provided, however, if the Qualified
Financing First Tranche (as defined below) is consummated prior to
the Scheduled Expiration Date and the Debt Elimination Date (as
defined below) occurs before any of the dates referred to in
subclauses (I), (II) or (III) of clause (y) of this paragraph, then,
notwithstanding anything in the foregoing provisions of this
paragraph to the contrary, the Conversion Price shall thereafter be
$0.10 (subject to adjustment from time to time as provided in
Section 2).
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Company: _____
Investor: _____
(ii) The following provisions are added following Section 4(A)(iii):
(iv) The term "Qualified Financing" means a transaction or series of
related transactions entered into after the Issue Date in which all
of the following conditions are satisfied: (i) the Company shall
issue and sell shares of its capital stock (but not any debt or
other payment obligations) in exchange for aggregate gross proceeds
(before ordinary commissions, fees and expenses) of at least $30
million, (ii) the first tranche of such financing (the "Qualified
Financing First Tranche") shall consist of no less than $12 million
and (iii) in connection with or contemporaneous with the funding of
the Qualified Financing First Tranche, all existing debt of the
Company (other than the debt being issued pursuant to either the
Securities Purchase Agreement or the Specified Permitted
Transaction, defined in the Amendment, dated as of December ___,
2004, to the Securities Purchase Agreement to which the Company and
the Holder or the Holder's predecessor in interest are parties)
shall be converted into equity of the Company or otherwise retired
within 10 Trading Days of the funding of the Qualified Financing
First Tranche (the date on which all such debt is so converted or
otherwise retired, the "Debt Elimination Date").
(v) The term "Scheduled Expiration Date" means April 16, 2005,
except that, if prior thereto the Company has filed with the SEC a
definitive proxy statement (and such proxy statement is sent to the
Company's shareholders within 10 Trading Days after such filing),
which proxy statement, among other things, seeks shareholder
authorization at a meeting of shareholders scheduled to be held no
later than June 16, 2005 to amend the Company's certificate of
incorporation to increase the authorized shares of the Company to at
least 400 million shares, it means June 16, 2005.
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Company: _____
Investor: _____
5. Amendment to Registration Rights Agreement. The Registration Rights
Agreement is amended as follows:
(i) Schedule 1 to the Registration Rights Agreement is amended to read
in its entirety as follows:
(a) All Registrable Shares contemplated by the Registration Rights
Agreement, dated as of December 13, 2004, as amended (the "Existing
Registration Rights Agreement"), between the Company and the Initial
Investors named therein (the "Original Investors")
(b) The shares referred to in clause (2) of Section 2(a)(i) of the
Existing Registration Rights Agreement, whether issued to the Finder
contemplated thereby or to such Finder's designees.
(c) The shares listed in item A of Schedule 1 to the Existing
Registration Rights Agreement.
(d) Any shares issuable on exercise of warrants issued to the Finder
or its designees, to the Escrow Agent or its designees or to SG
Capital or its designees in connection with the transactions
consummated (x) on December 16, 2004, as amended, (y) on December
___, 2004 or (z) in connection with the transactions contemplated by
the Transaction Agreements, as amended.
(ii) The term "Registrable Securities" is amended to include the Issued
Shares.
(iii) Each of the terms "Initial Number of Shares to Be Registered" and
"Increased Number of Shares to Be Registered" is amended to be equal to
the sum of (x) the shares determined by the terms of such definition as in
effect on the Closing Date, plus (y) the Issued Shares.
(iv) For purposes of determining the Held Shares Value, a Holder shall be
deemed to have sold Issued Shares before selling any Conversion Shares.
6. Consent to Specific Convertible Debenture Transaction.
(i) The Company has advised the Investors that the Company, through the
placement services of the Finder, proposes to entered into a new
transaction on or about December __, 2004 (the "Specified Permitted
Transaction"), on terms similar to the transactions contemplated by the
Transaction Documents, as amended by this Amendment, except that the
Specified Permitted Transaction (i) is for a Total Purchase Price of
$1,000,000, (ii) provides for a Conversion Price equal to the Conversion
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Company: _____
Investor: _____
Price in the Debentures, as amended by this Amendment, and an exercise
price for the Class A Warrants of $.10 (each of which is subject to
adjustment on terms similar to the adjustments in the relevant Transaction
Agreements), (iii) does not provide for Class B and Class C warrants, (iv)
will not include a provision similar to Section 4(h) of the Purchase
Agreement, and (v) provides for 500,000 shares of Common Stock to be
issued to the investors in the Specified Permitted Transaction.
(ii) In connection with the Specified Permitted Transaction, each
Investor hereby consents that
(a) the Specified Permitted Transaction will be deemed a Permitted
Transaction for purposes of part B of Schedule 1 of the Registration
Rights Agreement; and
(b) the Specified Permitted Transaction is not deemed a Lower Price
Transaction.
(iii) Each Investor consents that shares issuable upon the exercise of
warrants issued to the Finder or its designees or to the Escrow Agent or
its designees, in each case whether such warrants were issued in
connection with the transactions consummated on the Closing Date or with
respect to the Specified Permitted Transaction, may be included in the
Registration Statement.
(iv) The Company agrees that, other than the Specified Permitted
Transaction, no transaction shall qualify as a Permitted Transaction.
(v) Each Investor's consent provided hereby is limited to the terms
specified above in this Section 6.
7. Effective Date.
(i) Each of the Company and each Investor shall deliver an executed copy
of this Amendment to the Escrow Agent.
(ii) This Amendment shall be effective as to each Investor on the date
that it is so executed and delivered by the Investor and by the Company.
(iii) The provisions of Section 11 of the Purchase Agreement are
incorporated herein by reference.
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Company: _____
Investor: _____
(iv) The Company hereby confirms to each Investor that, as of the
effective date of this Amendment, the representations made in Section 3 of
the Purchase Agreement shall apply also to the Issued Shares.
(v) Upon execution and delivery of this Amendment, the Company will
deliver to the Escrow Agent an opinion of counsel addressed to the
Investors modifying the opinion delivered on the Closing Date to the
effect that, as of such date, (i) this Amendment is deemed to be one of
the Transaction Agreements and the opinions relating to the Transaction
Agreements apply thereto and (ii) upon issuance of the Issued Shares in
accordance with the terms of the Amendment, the Issued Shares will be
validly issued, fully paid and non-assessable, and free from all taxes,
liens and charges with respect to the issue thereof.
8. Limited Effect. Except as specified above, all terms of Transaction
Agreements remain in full force and effect.
[Balance of page intentionally left blank]
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Company: _____
Investor: _____
IN WITNESS WHEREOF, the parties have caused this Amendment to be duly
executed by their respective officers thereunto duly authorized as of the day
and year first above written.
COMPANY:
INFINIUM LABS, INC.
By:________________________________
Xxxxxxx X. Xxxxxxx
Chief Executive Officer
INVESTORS:
See attached Investors Signature Page
Guarantor's Acknowledgment
The undersigned, the Guarantor referred to in the Debenture, acknowledges that
the Personal Guarantee issued by the Guarantor to each Investor remains in full
effect with respect to the Debenture, as modified by the above Amendment.
_______________________________
XXXXXXX X. XXXXXXX
SCHEDULE A - ISSUED SHARES
Investor Issued Shares
ZENNY TRADING LIMITED
XXXX XXXXXXX
XXXXX XXXXXXXX
JM INVESTORS, LLC
XXXXX XXXXX
VISCOUNT INVESTMENTS, LTD.
MORE INTL INVESTMENTS, INC.
YESHIVA GEDOLAH OF SEAGATE
LIBERTY SUPPLIES CORP.
SHALOM TORAH CENTERS
XXXXXXX XXXXX
XXXXXX XXXXX
WEST XXXXXXXX LIMITED
HEZA HOLDINGS INC.
LONGVIEW SPECIAL FINANCE, INC.
------------------------------ -------
TOTAL: 250,000
INVESTORS SIGNATURE PAGE
INVESTORS
ZENNY TRADING LIMITED YESHIVA GEDOLAH OF SEAGATE
By:____________________ By:____________________
XXXX XXXXXXX LIBERTY SUPPLIES CORP.
By:____________________ By:____________________
XXXXX XXXXXXXX SHALOM TORAH CENTERS
By:____________________ By:____________________
JM INVESTORS, LLC XXXXXXX XXXXX
By:____________________ By:____________________
XXXXX XXXXX XXXXXX XXXXX
By:____________________ By:____________________
VISCOUNT INVESTMENTS, LTD. WEST HASTINGS LIMITED
By:____________________ By:____________________
MORE INTL INVESTMENTS, INC. HEZA HOLDINGS INC.
By:____________________ By: ____________________
LONGVIEW SPECIAL FINANCE, INC.
By:____________________
