Amendment No. 2 to Debenture and Warrant Purchase Agreement
Amendment
No. 2 to Debenture and Warrant Purchase Agreement
This
Amendment No. 2 to Debenture and Warrant Purchase Agreement (the
“Agreement”)
is
effective as of April 15, 2008, by and between Airbee Wireless, Inc., a
Delaware corporation (the “Company”)
and
each of the persons or entities listed on the signature page hereto (each,
an
“Investor”
and
collectively, the “Investors”).
Capitalized terms used herein that are not defined shall have the meaning
ascribed to them in the Purchase Agreement.
RECITALS
1. The
Company and the Investors entered in that certain Debenture and Warrant Purchase
Agreement dated as of January 30, 2008, as amended by Amendment No. 1
to Debenture and Warrant Purchase Agreement effective as of February 8,
2008 (the “Purchase
Agreement”).
2. The
Purchase Agreement provides, amongst other things, that the Investors shall
exercise their Call Option no later than ten (10) calendar days following
the Second Closing.
3. The
Company has issued to BARTFAM, a California limited partnership, and one of
the
Investors named herein, that certain Convertible Debenture dated March 28,
2008 in the principal amount of $50,000.00 (the “March 28th
Debenture”).
4. The
Company and the Investors desire to amend the Purchase Agreement, to:
(i) provide for a credit to the purchase price of the Second Tranche
Debentures and the Second Tranche Warrants in the amount of the March 28th
Debenture, (ii) update the wire instructions set forth on Exhibit
C,
(iii) modify the time period within which such Call Option may be
exercised, and (iv) provide for the reimbursement by the Company of certain
legal fees paid by the Investors on behalf of the Company in connection with
the
negotiation and settlement of claims of the Company’s current creditors and
current employees.
NOW
THEREFORE, the parties hereby agree as follows:
AGREEMENT
1. Section 1.4(b)
of the Purchase Agreement is hereby amended and rested in its entirety to read
as follows:
“(b)
Second
Closing.
The
purchase and sale of the Second Tranche Debentures and issuance of the Second
Tranche Warrants shall take place via exchange of electronic or facsimile
signature pages thereto (with originals to be mailed as soon as practicable
thereafter) on a date to be agreed between the parties, upon the satisfactory
settlement or agreement among the Company and its principal corporate creditors;
provided, however, that either ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ or ▇▇▇▇ ▇. ▇▇▇▇▇▇▇ may waive
the occurrence thereof on behalf of each of the Investors (the “Second
Closing”).
The
Company shall keep the Investors reasonably informed regarding all such
settlement discussions and agreements with any of its principal corporate
creditors. At the Second Closing, the Company shall deliver to the Investors
the
Second Tranche Debentures and the Second Tranche Warrants against payment of
the
purchase price therefor (such purchase price to be reduced by the amount of
the
March 28th Debenture following which the March 28th Debenture shall be
cancelled) by check payable to the Company or by wire transfer to the bank
and
account designated by the Company on Exhibit C
attached
hereto.”
2. Section 1.4(c)
of the Purchase Agreement is hereby amended and restated in its entirety to
read
as follows:
“(c)
Third
Closing.
The
Investors may, at their sole option, lend to the Company up to an additional
Four Hundred and One Thousand One Hundred and Fifty Seven Dollars ($401,157.00)
on the same terms and conditions as the Warrants and Debentures issued at the
Initial Closing and Second Closing (the “Call
Option”),
provided, that the Investors shall notify the Company in writing of their intent
to exercise their Call Option (the “Call
Option Exercise Notice”)
no
later than ten (10) calendar days following (i) the tenth (10th)
calendar day following delivery to the Investors of documentation that
establishes, to the reasonable satisfaction of the Investors, entry into one
or
more license agreements that will generate in the aggregate Three Hundred
Thousand Dollars ($300,000.00) in revenues, or (ii) the sixth month
anniversary of the date of this Agreement, whichever occurs earlier, and stating
the aggregate amount of funds to be lent to the Company. The purchase and sale
of the Third Tranche Debentures and issuance of the Third Tranche Warrants
shall
take place via exchange of electronic or facsimile signature pages thereto
(with
originals to be mailed as soon as practicable thereafter) no later than five
(5) business days following the Company’s receipt of the Call Option
Exercise Notice (the “Third
Closing”).
At
the Third Closing, the Company shall deliver to the Investors the Third Tranche
Debentures and the Third Tranche Warrants against payment of the purchase price
therefor by check payable to the Company or by wire transfer to the bank and
account designated by the Company on Exhibit C
attached
hereto.”
1
3. Section 7.7
of the Purchase Agreement is hereby amended and restated in its entirety to
read
as follows:
“7.7
Fees
and Expenses.
The
Company and Investors shall bear their own expenses in connection with the
transactions contemplated by this Agreement; provided that Company shall (i)
pay
Investors’ legal expenses up to a maximum of $15,000.00 in connection with the
transactions contemplated by this Agreement; and (ii) reimburse the
Investors for all legal fees and expenses incurred in connection with the
negotiation and settlement of certain claims between the Company and its current
creditors and certain current employees within ten (10) calendar days of
payment, which may be made from time to time, by the Investors to Manatt, ▇▇▇▇▇▇
& ▇▇▇▇▇▇▇▇, LLP of such fees and expenses with the Company satisfying its
reimbursement obligation to the Investors by issuing to the Investors Debentures
in the aggregate principal amount of such fees and expenses as well as the
requisite corresponding number of Warrants all on the same terms and conditions
as those issued at the Initial Closing. For example, in the event that the
legal
fees and expenses amounted to $30,000.00, the Company would be required to
issue
to the Investors Debentures with an aggregate face value of $30,000.00
accompanied by Warrants evidencing the right to purchase in the aggregate
800,010 shares of Common Stock, and the purchase price of such Warrant Shares
would be $0.10 per share, $0.20 per share for 266,670 and $0.30 per share for
266,670, of the Warrant Shares.”
4. Second
Closing Wire Instructions.
Exhibit C
to the
Purchase Agreement is hereby amended and restated in its entirety in the form
attached to this Agreement.
5. Investors’
Representatives.
5.1
By
entering into and executing this Agreement, the Investors hereby irrevocably
make, constitute and appoint ▇▇▇▇ ▇. ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, and each
of
them, (an “Investor Representative”) acting individually, and not jointly, as
each Investor’s agent, effective as of the date first written above, and each
Investor appoints each of the Investor Representatives, acting individually,
and
not jointly, as such Investor’s true and lawful attorney in fact and agent, for
such Investor and in such Investor’s name, place and stead and for all purposes
necessary or desirable in order for the Investor Representatives to take all
actions contemplated by this Agreement and the Purchase Agreement, for each
such
Investor’s use and benefit as set forth hereinafter. The death, incapacity,
dissolution, liquidation, insolvency or bankruptcy of any Investor shall not
terminate the authority and agency of the Investor Representatives. The
power-of-attorney granted in this Section is coupled with an interest and is
irrevocable and shall survive any transfer of any Investor’s interest in the
Purchase Agreement, as amended, the Debentures or the Warrants.
5.2
Except as set forth herein, the Investor Representatives are hereby granted
the
authority (i) to act on each Investor’s behalf in connection with the
Purchase Agreement, as amended, the Debentures and the Warrants and (ii) to
sign, acknowledge, and deliver on each Investor’s behalf to the Company, or its
successor in interest, all documents relating to any and all matters, of every
type and nature whatsoever, in connection with the Purchase Agreement, as
amended, the Debentures and the Warrants. Nothing contained herein shall be
deemed to grant to the Investor Representatives any power to exercise any
conversion rights granted to the Investors in the Debentures or any power to
exercise any Warrants.
5.3
Each
Investors Representative may, but is not required to, in his sole and absolute
discretion, insert a legend on the Debentures and Warrants stating, in effect,
that the Debentures and Warrants are subject to this Section.
6. Investor
Anti-Dilution Protection.
If and
when the Company issues shares of Common Stock (or any security or instrument
convertible into or exercisable for shares of Common Stock) to any person in
connection with the settlement or other resolution of an obligation that
existed, or an arrangement or transaction that occurred, prior to the Initial
Closing (each a “Settlement Issuance”), the Company shall be required to
simultaneously issue to the Investors in the aggregate (with each Investor
receiving the percentage of the aggregate Anti-Dilution Issuance (as defined
below) set forth on Appendix 1
attached
hereto), without the payment of any additional consideration by the Investors,
that number of shares of Common Stock necessary to maintain the Investors
percentage ownership of the Common Stock at 36.5% on a fully diluted basis
(each
a “Anti-Dilution Issuance”), which calculation shall be performed as follows:
2
y
=
(.365a + .365b - x)/.635
y
= The
number of shares of Common Stock to be issued in the Anti-Dilution Issuance.
a
= The
total number of shares of Common Stock of the Company issued and outstanding
on
a fully diluted basis immediately prior to the Settlement Issuance.
b
= The
number of shares of Common Stock to be issued in the Settlement Issuance.
x
= The
total number of shares of Common Stock held by the Investors immediately prior
to the Settlement Issuance.
An
example of the manner in which calculations will be made under this
Section 6 is attached hereto as Appendix 2.
7. General
Provisions.
7.1
Applicable
Law.
This
Agreement shall be governed by the internal laws (and not the law of conflicts)
of the State of New York.
7.2
Counterparts.
This
Agreement may be executed in any number of counterparts, each of which shall
be
deemed an original, but all of which together shall constitute one instrument.
7.3
Titles
and Subtitles.
The
titles and subtitles used in this Agreement are used for convenience only and
are not to be considered in construing or interpreting this Agreement.
7.4
Notices.
Unless
otherwise expressly provided, any notice required or permitted under this
Agreement shall be in writing and shall be deemed sufficient upon delivery,
when
delivered personally or by overnight courier or sent by telegram or fax, or
five
(5) days after deposit with the United States Postal Service, by certified
or registered mail, with postage prepaid, addressed to the party to be notified
at such party’s address as set forth below, or on the signature page, or as
subsequently modified by written notice:
The
Company:
▇▇▇▇
▇▇▇
▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention:
▇▇▇▇▇▇ ▇▇▇▇▇▇, President
Facsimile:
(▇▇▇) ▇▇▇-▇▇▇▇
3
with
copies to:
▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇▇
▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention:
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Facsimile:
(▇▇▇) ▇▇▇-▇▇▇▇
and
▇▇▇▇▇
& Associates LLC
▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile:
310 371-7272
Investors:
▇▇▇▇
▇.
▇▇▇▇▇▇▇ and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇▇▇
▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇
▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile:
▇▇▇ ▇▇▇-▇▇▇▇
with
copies to:
▇▇▇▇▇▇
▇.
▇▇▇▇▇▇, Esq.
▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇., ▇▇▇▇▇ ▇▇▇
▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Facsimile:
▇▇▇ ▇▇▇-▇▇▇▇
and
▇▇▇▇▇
& Associates LLC
▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile:
▇▇▇ ▇▇▇-▇▇▇▇
4
7.5
Attorney’s
Fees.
If any
action at law or in equity (including arbitration) is necessary to enforce
or
interpret the terms of the Agreement, the prevailing party shall be entitled
to
reasonable attorney’s fees, costs and necessary disbursements in addition to any
other relief to which such party may be entitled.
7.6
Amendments
and Waivers.
Any
term of this Agreement may be amended or waived and the observance of any term
of this Agreement may be waived (either generally or in a particular instance
and either retroactively or prospectively) only with the written consent of
the
Company and the Investors.
7.7
Entire
Agreement.
This
Agreement, and the documents referred to herein constitute the entire agreement
among the parties hereto pertaining to the subject matter hereof, and no party
shall be liable or bound to any party in any manner by any warranties,
representations, or covenants except as specifically set forth herein.
5
IN
WITNESS WHEREOF, the parties hereto have executed this Amendment No. 2 to
Debenture and Warrant Purchase Agreement on April 15, 2008, and effective
of the date first written above.
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“THE
COMPANY”
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Delaware
corporation
By:
/s/
E. ▇▇▇▇▇▇ ▇▇▇▇▇▇
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Name:
E. ▇▇▇▇▇▇ ▇▇▇▇▇▇
Title:
President
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“INVESTORS”:
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BARTFAM,
a California limited partnership
By:
/s/
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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Name:
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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Title:
General Partner
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▇▇▇▇
▇.
▇▇▇▇▇▇▇
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▇▇▇▇▇▇
▇. ▇▇▇▇▇▇▇, Managing Trustee of The ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ Marital
Trust
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/s/
▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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/s/
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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▇▇▇▇▇
▇. ▇▇▇▇▇▇▇
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▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇▇, Trustee of the ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Trust
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/s/
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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/s/
▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, Trustee
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▇▇▇▇▇▇▇
▇. ▇▇▇▇▇▇▇
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▇▇▇▇▇▇
▇. ▇▇▇▇▇▇, Trustee of the ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ Trust dated April 16,
1996
/s/
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Trustee
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/s/
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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%
of Each Anti-Dilution
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Investor
Name
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Issuance
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BARTFAM,
a California Limited Partnership
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33.33
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%
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The
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ Marital Trust
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16.67
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%
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▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇▇, Trustee of the ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Trust dated
September 26, 200
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1 16.67
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%
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▇▇▇▇
▇. ▇▇▇▇▇▇▇
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10.00
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%
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▇▇▇▇▇
▇. ▇▇▇▇▇▇▇
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6.67
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%
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▇▇▇▇▇▇▇
▇. ▇▇▇▇▇▇▇
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6.67
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%
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▇▇▇▇▇▇
▇. ▇▇▇▇▇▇, Trustee of the ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ Trust dated April 16,
1996
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10.00
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%
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TOTAL
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100.00
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%
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6
APPENDIX
1
APPENDIX
2
EXAMPLE
OF ANTIDILUTION ISSUANCE CALCULATION PURSUANT TO SECTION 6
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Fully
Diluted
Issued
&
Outstanding
Shares
Immediately
Prior
to
Settlement
Issuance
(a)
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Number
of
Settlement
Issuance
Shares
(b)
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Total
Number of
Shares
Held By
Investors
on As
Converted
Basis
Immediately
Prior
to
Settlement
Issuance
(x)
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Investors
% of
Fully
Diluted
Issued
&
Outstanding
Shares
on
As Converted
Basis
Immediately
Prior
to Settlement
Issuance
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189,040,507
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10,000,000
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69,000,000
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36.50
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%
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Effectuating
Settlement Issuance and Anti-Dilution Issuance:
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Fully
Diluted
Issued
&
Outstanding
Shares
Immediately
Subsequent
to
Settlement
Issuance
(a+b)
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Number
of
Anti-Dilution
Issuance
Shares
(y)
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Total
Number of
Shares
Held By
Investors
on As
Converted
Basis
Immediately
Subsequent
to
Anti-Dilution
Issuance
(x+y)
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Investors
% of
Fully
Diluted
Issued
&
Outstanding
Shares
on
As Converted
Basis
Immediately
Subsequent
to
Settlement
&
Anti-Dilution
Issuance
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199,040,507
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5,747,693
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74,747,693
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36.50
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%
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7