WAIVER AND AMENDMENT TO SECURITIES PURCHASE AGREEMENT AND DEBENTURE
EXHIBIT
99.12
WAIVER
AND AMENDMENT
THIS
WAIVER AND AMENDMENT, dated as of February 28, 2007 (the
“Waiver”), to the Securities Purchase Agreement, dated as of December
28,
2005, as amended (the “Purchase Agreement”), and the 6% Secured
Convertible Debenture due December 28, 2008 (the “Debenture”) is by and
among Arkados Group, Inc. (formerly ▇▇▇▇▇▇.▇▇▇, Inc.), a Delaware corporation
(the “Company”), and the purchasers signatory hereto (each such
purchaser, a “Purchaser” and, collectively, the
“Purchasers”). Capitalized terms used and not
otherwise defined herein that are defined in the Purchase Agreement shall have
the meanings given such terms in the Purchase Agreement.
RECITALS
The
Company, Bushido Capital Master Fund, L.P. (“Bushido”) and ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Family Limited Partnership (“Typaldos,” and together with Bushido, the
“New Purchasers”) are entering into a Fifth Additional Issuance
Agreement, dated as of February 28, 2007 (the “Additional Issuance
Agreement”), for the purchase by the New Purchasers of an aggregate of
$327,000 of the New Debentures and New Warrants (as such terms are defined
in
the Fifth Additional Issuance Agreement) pursuant to the Purchase Agreement,
between the Company and the New Purchasers.
Subject
to the terms and conditions of this Waiver, the Company has requested, and
the
Purchasers have agreed, to waive compliance with Sections 4.13 and 4.14 of
the
Purchase Agreement.
Subject
to the terms and conditions of this Waiver, the Company has requested, and
the
Purchasers have agreed, to acknowledge that the New Underlying Shares (as such
term is defined in the Additional Issuance Agreement) shall be included on
the
Registration Statement registering the Debentures and Warrants of the
Purchasers.
Accordingly,
in consideration of the premises and of the mutual covenants and agreements
hereinafter set forth, the parties hereto agree as follows:
1. Waivers
and Amendment.
(a) Each
Purchaser hereby waives compliance by the Company with the obligations imposed
by Section 4.13 of the Purchase Agreement regarding such Purchaser’s right to
participate in the purchase of the New Debentures, as well as any advance made
to the Company prior to the Closing that is either repaid from the proceeds
or
is given as full or partial consideration by the New Purchasers under the
Additional Issuance Agreement. This Waiver shall not
effect the rights set forth in Section 4.13 with respect to future financing
after the issuance of the Additional Debentures and related
Warrants.
(b) Each
Purchaser hereby waives the Company’s compliance with the restrictions imposed
by Section 4.14 of the Purchase Agreement with respect to (i) the issuance
of
the New Debentures and New Warrants under the Additional Issuance Agreement,
(ii) the issuance of 240,000 options under the Company’s 2004 Stock Option Plan
(“Plan Options”) to ▇▇▇▇▇ ▇▇▇▇▇, principal of a consulting firm, exercisable for
four years at $0.40 per share which vest 40,000 on the first of each month
commencing March 1, 2007; and (iii) 300,000 Plan Options to ▇▇▇▇▇ ▇▇▇▇▇▇▇
exercisable for seven years at an exercise price of $0.405. Each
Purchaser acknowledges that issuances of additional Debentures, Warrants and
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the
Plan
Options will not constitute transactions which result in an adjustment of the
respective conversion or exercise prices of the Debentures or
Warrants.
(c) The
Purchasers hereby agree to amend and restate the definition of “Exempt Issuance”
set forth in Section 1.1 of the Purchase Agreement to read as follows in its
entirety:
“
‘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 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.”
2. Acknowledgement. Each
Purchaser hereby acknowledges and agrees that, for purposes of Section 6(b)
of
the Registration Rights Agreement, dated as of December 28, 2005, between the
Company and the Purchasers signatory thereto, as amended (the “Registration
Rights Agreement”), the shares of Common Stock underlying the New Debenture
and New Warrants shall be deemed Registrable Securities which may be included
as
securities in the Company’s initial Registration Statement, on the same terms as
the Purchasers’ Registrable Securities.
3. Miscellaneous.
THIS
WAIVER SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF NEW YORK WITHOUT REGARD TO PRINCIPLES OF CONFLICT OF
LAWS.
This
Waiver shall constitute a Transaction Document.
Except
as
expressly waived and/or amended hereby, the Purchase Agreement and the
Debentures shall remain in full force and effect in accordance with the terms
thereof. This Waiver is limited specifically to the matters set forth above
and
does not constitute directly or by implication an amendment or waiver of any
other provisions of the Purchase Agreement or Debentures or of any Event of
Default or default which may occur or may have occurred under the Purchase
Agreement or Debentures.
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This
Waiver may be executed in one or more counterparts, each of which shall
constitute an original, but all of which, when taken together, shall constitute
but one Waiver.
[SIGNATURE
PAGE FOLLOWS]
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SIGNATURE
PAGE TO WAIVER AND AMENDMENT
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BUSHIDO
CAPITAL MASTER FUND, L.P.
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By: Bushido
Capital Partners, Ltd., its General Partner
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By:
/s/ ▇▇▇▇▇▇▇
▇▇▇▇-▇▇▇▇▇
▇▇▇▇▇▇▇
▇▇▇▇-▇▇▇▇▇
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By:
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇ |
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VP
Finance and Controller
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Partner
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GAMMA
OPPORTUNITY CAPITAL PARTNERS, LP CLASS
A
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GAMMA
OPPORTUNITY CAPITAL PARTNERS, LP CLASS
C
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By: /s/
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇
▇. ▇▇▇▇▇▇
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By:
/s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇
▇. ▇▇▇▇▇▇
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President
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President
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CARGO
HOLDINGS LLC
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By:
/s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇
▇▇▇▇▇▇▇▇
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Member
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By:
/s/ Gennaro
Vendome
Gennaro
Vendome
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Member
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