AMENDMENT AGREEMENT
EXHIBIT
99.1
THIS
AMENDMENT AGREEMENT (this
“Amendment”) is entered into as of December 6, 2007 by and among Arkados
Group, Inc. (formerly ▇▇▇▇▇▇.▇▇▇, Inc., a Delaware corporation the
“Company”) and each of the other parties set forth on the signature page
herein (each a “Holder” and collectively, the
“Holders”).
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 and
March 31, 2006, whereby the Company issued and sold to the Holders, in the
aggregate, the Company’s 6% Secured Convertible Debentures due December 28, 2008
(the “First Debentures”) as follows:
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(a)
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$2,000,000
principal amount of First Debentures on December 28,
2005,
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(b)
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$375,884.38
principal amount of First Debentures on February 1,
2006,
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(c)
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$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”), 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 and May 31, 2007 whereby the Company issued and sold to the
Holders, in the aggregate, the Company’s 6% Secured Convertible Debentures due
December 28, 2008 (the “Second Debentures”) as follows:
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(a)
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$1,773,470.83
principal amount of Second Debentures on June 30,
2006,
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(b)
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$500,000
principal amount of Second Debentures on September 26,
2006,
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(c)
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$500,000
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 January 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
and
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(j)
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$484,105.71
principal amount of Second Debentures on May 31,
2007,
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for
an
aggregate principal amount of all Second Debentures issued equal to
$5,052,576.54.
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, in order
to
facilitate the Company raising capital by means of a sale of shares of common
stock and warrants (the “Equity Offering”).
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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 the First and Second Purchase Agreements and the
other
agreements entered into in connection therewith. The First Debentures
and Second Debentures are referred to in this Agreement collectively as the
“Debentures”.
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:
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;
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;
c.) each
Holder
agrees not to demand registration under the Registration Rights Agreement until
April 15, 2008;
d.) each
Holder waives a payment default resulting solely from the Company’s failure to
pay interest on January 1, 2008 until the earlier of (i) the effective date
of
the amendments to the Debentures set forth in Section 3, below or (ii) March
5,
2008 and
e.) each
Holder agrees, subject to receipt of appropriate documentation, to execute
and
deliver an Additional Issuance Agreement and Waiver to the Company issuing
Debentures and Warrants in satisfaction of cash advances made to the Company
from affiliates.
3. Amendments
to the Debentures.
a.) Subject
to the Equity Financing being completed in a gross amount not less than $1.5
million on or before December 31, 2007 and effective on the date the Company
receives the proceeds of such financing, the Debentures are hereby amended
by:
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i)
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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; and
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ii)
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removing
the phrase “January 1, 2007 (provided that interest due on January 1, 2007
and July 1, 2007 upon principal outstanding on such date shall be
added to
the principal outstanding and shall thereafter bear interest at the
rate
set forth herein) in the first sentence of Section 2(a), as
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2
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previously
amended, and replacing it with “January 1, 2007, (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)”.
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b.) Subject
to the Equity Financing being completed in a gross aggregate amount of not
less
than $2.0 million on or before March 3, 2008, and effective on the date the
Company receives the proceeds of such financing, the Debentures are
hereby amended by:
i)
changing
all occurrences of “December 28, 2008” to “December 28, 2009”, thereby extending
the maturity date of the Debentures by one year to December 28, 2009;
and
ii)
removing
the phrase “January 1, 2007 (provided that interest due on January 1, 2007 and
July 1, 2007 upon principal outstanding on such date shall be added to the
principal outstanding and shall thereafter bear interest at the rate set forth
herein)” in the first sentence of Section 2(a), as previously
amended, and replacing it with “January 1, 2007 (provided that beginning January
1, 2007 and on each Interest Payment Date thereafter interest due on upon
principal outstanding on such date shall be added to the principal outstanding
and shall thereafter bear interest at the rate set forth herein)”.
4. Amendment
to Warrants. The “Termination Date” of all common stock purchase
warrants held by each Holder (whether Short Term, Long Term or
otherwise) (collectively, the “Warrants”) shall be extended to
the later of the date set forth therein as the “Termination Date” and December
28, 2012 and the Warrants shall be exercisable
immediately. Additionally, the Warrants are hereby amended such that
they are exercisable via “cashless exercise” at any time notwithstanding whether
or not there then exists and effective registration statement.
5. Amended
and Restated Debentures. Any holder may request from the Company,
and the Company shall deliver to the Holder within 5 Trading Days, an amended
and restated Debenture or Warrant reflecting the terms of this
Amendment.
5. 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 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.
6. 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 the First Purchase Agreement and Second Purchase
Agreement. The address for notice of the Company is currently ▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇,
▇▇ ▇▇▇▇▇.
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7. Full
Force and Effect of Purchase Agreements. Except as expressly set
forth herein, all of the terms and conditions of the First and Second Purchase
Agreement, the Debentures, the Registration Rights Agreement and the Warrants
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 First and Second
Purchase Agreement, including but not limited to, any adjustments under the
anti-dilution provisions of any of the securities held by a Holder on account
of
the Equity Offering.
8. 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. For reasons of administrative convenience only, Holders
and their respective counsel have chosen to communicate with the Company through
FW. 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.
REMAINDER
INTENTIONALLY LEFT BLANK
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IN
WITNESS WHEREOF, each party has
executed this Amendment as of the date first written above.
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By:
/s/
▇▇▇▇▇▇▇ ▇▇▇▇-▇▇▇▇▇
Name: ▇▇▇▇▇▇▇
▇▇▇▇-▇▇▇▇▇
Title Chief
Financial Officer
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Bushido
Capital Master Fund, LP
Signature
of Authorized Signatory of Bushido: /s/ ▇▇▇▇▇▇ ▇.
▇▇▇▇▇
Name
of Authorized Signatory: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title
of Authorized Signatory: Partner, Bushido Capital Partners,
Ltd., its General Partner
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Gamma
Opportunity Capital Partners, LP Class A
Signature
of Authorized Signatory of Gamma Class A: /s/ ▇▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇
Name
of Authorized Signatory: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title
of Authorized Signatory: President
Crucian
Transition, Inc.
Signature
of Authorized signatory for Crucian: /s/ ▇▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇
Name
of Authorized Signatory: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title
of Authorized Signatory: President
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▇▇▇▇▇▇
Diversified Strategy Master Fund, LLC – Series BUS
Signature
of Authorized Signatory of ▇▇▇▇▇▇:
Name
of Authorized Signatory: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Title
of Authorized Signatory: Attorney-In-Fact
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▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ Family Limited Partnership
Signature
of Authorized signatory for Typaldos LP: /s/ ▇▇▇▇▇
▇▇▇▇▇▇▇▇
Name
of Authorized Signatory: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Title
of Authorized Signatory: Managing Partner
▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇:
/s/
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇:
/s/
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Cargo
Holdings, LLC
Signature
of Authorized Signatory of Cargo: /s/ ReneeTypaldos
Name
of Authorized Signatory: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Title
of Authorized Signatory: Member
Signature
of Authorized Signatory of Cargo: /s/Gennaro
Vendome
Name
of Authorized Signatory: Gennaro Vendome
Title
of Authorized Signatory: Member
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/s/
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▇. ▇▇▇▇▇▇▇▇▇:
/s/
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