Exhibit 2.06
BLUEPHOENIX SOLUTIONS LTD.
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February 18, 2005
To: Omicron Master Trust
Cranshire Capital LP
Iroquois Capital L.P
Smithfield Fiduciary LLC
Ladies and Gentlemen:
In connection with the purchase by the purchasers ("you" or the
"Investors") of 2% Convertible Debentures Due November 30, 2004, issued on March
30, 2004, as amended by the Letter Amendment, dated as of May 13, 2004 (the
"Debentures"), of BluePhoenix Solutions Ltd., an Israeli company (the
"Company"), and warrants to purchase ordinary shares, par value NIS 0.01 per
share, of the Company, dated March 30, 2004 (the "Warrants"), pursuant to the
terms of the Securities Purchase Agreement, dated as of March 30, 2004, between
the Company and each of you (the "Purchase Agreement"), and in connection with a
related Registration Rights Agreement, dated as of March 30, 2004, between the
Company and each of you (the "Registration Rights Agreement", and together with
the Purchase Agreement, the Debentures and the Warrants, the "Transaction
Documents"), you and the Company hereby agree as follows:
1. Amendments to the Transaction Documents.
(a) Purchase Agreement. The Purchase Agreement shall be amended in the
following manner:
(i) The definition of Debentures in Section 1.1 of the
Purchase Agreement which reads "the 2% Convertible Debentures due
thirty-two months from their date of issuance" is hereby deleted and
replaced with "the Convertible Debentures due forty-four months from
their date of issuance".
(ii) The first portion of the first sentence in Section
4.16(a) of the Purchase Agreement which reads "From the date hereof
until 180 days after the Effective Date" is hereby deleted and
replaced with "From the date hereof until 360 days after the
Effective Date".
(iii) The Set Price of the Debentures purchased pursuant to
the Investor's additional investment right referenced in Section
4.16(a)(i)(A) of the Purchase Agreement is hereby amended by
deleting "$5.70" and replacing it with "$4.50".
(iv) Subsections (ii) and (iii) of Section 4.16(a) are hereby
deleted and replaced with "(ii) the Filing Date shall be 45 days
after all Purchasers have exercised their right to purchase
additional debentures and warrants
hereunder and completed such purchase, (iii) the Effectiveness Date
shall be 90 days after the Filing Date (120 days in the event of a
review by the Commission)". The parties hereby agree that the 15-day
grace period set forth in Section 2(b)of the Registration Rights
Agreement applies to any additional Registration Statements filed to
register ordinary shares underlying debentures and warrants
purchased pursuant to the additional purchase right in Section
4.16(a) of the Purchase Agreement.
(v) The first portion of the first sentence in Section 4.16(b)
of the Purchase Agreement which reads "From the date hereof until
180 days after the Effective Date" is hereby deleted and replaced
with "From the date hereof until 360 days after the Effective Date".
(b) Debentures. The Debentures shall be amended in the following
manner:
(i) The Original Conversion Price of the Debentures set forth
on the cover page is hereby amended by deleting "$5.70" and
replacing it with "$5.25".
(ii) Any reference in the Debentures, including the Schedule
and Annex thereto, describing the Debentures as the "2% Convertible
Debenture Due November 30, 2006" is hereby deleted and replaced with
"Convertible Debenture Due November 30, 2007".
(iii) The date in the definition of "Maturity Date" in the
first sentence of the second paragraph of the Debentures which reads
"November 30, 2006" is hereby deleted and replaced with "November
30, 2007".
(iv) The portion of the first sentence of the second paragraph
which reads "at the rate of 2% per annum" is hereby deleted and
replaced with "at the rate of interest equal to the LIBOR (the
London Interbank Offered Rate) offered rates for deposits in U.S.
dollars having a maturity of six months commencing on the fifth
London business day immediately prior to such Interest Payment Date
(as defined below)".
(v) The definition of Set Price in Section 4(c)(i) of the
Debentures is hereby amended by deleting "$5.70" and replacing it
with "$5.25".
(c) Warrants. The Warrants shall be amended in the following manner:
(i) Any reference in the Warrants to the number of shares
underlying the Warrants shall be deleted and replaced with the
respective number set forth in the respective row in the table
below:
Investor Deleted Number Amended Number
-------- -------------- --------------
Omicron Master Trust 241,228 157,143
Smithfield Fiduciary LLC 87,719 57,143
Iroquois Capital L.P. 65,789 42,857
Cranshire Capital L.P. 43,860 28,571
(ii) The portion of the first sentence of Section 3(d) of the
Warrants which reads "If at any time after one year from the date of
issuance of this Warrant" is hereby deleted and replaced with "If at
any time after ▇▇▇▇▇ ▇▇, ▇▇▇▇".
(▇) Registration Rights Agreement. The definition of "Effectiveness
Date" in Section 1 of the Registration Rights Agreement is hereby amended by
deleting it in its entirety and replacing it with the following: "`Effectiveness
Date' shall mean March 18, 2005."
2. Waiver. Each of you hereby irrevocably waives and releases the Company
from any claims whatsoever of every kind and nature, known or unknown, at law or
in equity, and whether or not discoverable, which it has or may have in
connection with any matter arising out of or relating to the requirements of the
Company relating to the filing and effectiveness date of the Registration
Statement (as defined in the Registration Rights Agreement) set forth in Section
3 of the Registration Rights Agreement and Section 3(a) of the Debentures,
including, without limitation, any claims for damages under Section 2(b) of the
Registration Rights Agreement or any rights or remedies that the Investors may
otherwise have as a result of the occurrence of an Event of Default (as defined
in Section 3(a) of the Debentures, under clause (ix) or (xi) of such section)
and any such breach of the obligations under the Registration Rights Agreement
or Event of Default under the Debentures is hereby waived.
3. Accredited Investor. At the time such Investor was offered the
Debentures, Warrants and the ordinary shares underlying each of them at the
terms described in this letter agreement (collectively, the "Securities"), it
was, and at the date hereof it is, and on each date on which it exercises any
Warrants or converts any Debentures it will be, an "accredited investor" as
defined in Rule 501(a) under the Securities Act of 1933, as amended (the
"Securities Act"). Such Investor has not been formed solely for the purpose of
acquiring the Securities. Such Investor is not a registered broker-dealer under
Section 15 of the Securities Exchange Act of 1934, as amended.
Such Investor is acquiring the Securities as principal for its own account
and not with a view to or for distributing or reselling such Securities or any
part thereof, without prejudice, however, to such Investor's right, subject to
the provisions of this letter agreement and the Transaction Documents, at all
times to sell or otherwise dispose of all or any part of such Securities
pursuant to an effective registration statement under the Securities Act, or
under an exemption from such registration and in compliance with applicable
federal and state securities laws. Nothing contained herein shall be deemed a
representation or warranty by such Investor to hold Securities for any period of
time or limit such Investor's right to sell the Securities pursuant
to the Registration Statement or otherwise in compliance with applicable federal
and state securities laws. Such Investor is acquiring the Securities hereunder
in the ordinary course of its business. Such Investor does not have any
agreement or understanding, directly or indirectly, with any person or entity to
distribute any of the Securities.
4. Miscellaneous.
(a) The Company hereby agrees that upon its receipt from each of you of
the original Debenture and Warrant, it shall promptly issue and send to you an
amended and restated Debenture and Warrant reflecting the revisions made herein.
(b) Except as specifically amended by the terms of this letter
agreement, the Transaction Documents shall remain unmodified and in full force
and effect, and shall not be in any way changed, modified or superseded by the
terms set forth herein. Capitalized terms used herein but not defined shall have
their meanings ascribed to them in the respective Transaction Document.
(c) This letter agreement may be executed in any number of
counterparts, all of which taken together shall constitute one and the same
instrument and shall become effective when counterparts have been signed by each
party and delivered to the other parties hereto, it being understood that all
parties need not sign the same counterpart. Execution of this letter agreement
may be made by delivery by facsimile.
(d) The Company acknowledges and agrees that no consideration other
than the consideration set forth herein has been or shall be offered or paid to
any other person to obtain your agreement to enter into this letter agreement.
The first sentence of this paragraph and the simultaneous distribution of this
letter agreement to you is intended to treat for the Company the Investors as a
class and shall not in any way be construed as the Investors acting in concert
or as a group with respect to the purchase, disposition or voting of the
Company's securities or otherwise. For clarification purposes, the Company
agrees and acknowledges that each Investor's agreement to the terms hereunder
constitutes a separate and independent decision by such Investor.
(e) This letter agreement shall be governed by and construed in
accordance with the internal laws of the State of New York without regard to its
choice of law principles.
[Signature Page Follows]
Very truly yours,
BluePhoenix Solutions Ltd.
By: _________________________
Name:
Title:
Accepted and agreed to as of the date first written above:
Omicron Master Trust
By: _________________________
Name:
Title:
Cranshire Capital LP
By: _________________________
Name:
Title:
Iroquois Capital L.P
By: _________________________
Name:
Title:
Smithfield Fiduciary LLC
By: _________________________
Name:
Title: