THIRD ADDITIONAL ISSUANCE AGREEMENT
EXHIBIT
99.6
This
Third Additional Issuance Agreement (this “Agreement”),
dated
November 30, 2006, is made pursuant to that certain Securities Purchase
Agreement, dated as of June 30, 2006, as amended (the “Purchase
Agreement”),
by
and between Arkados Group, Inc. (formerly ▇▇▇▇▇▇.▇▇▇, Inc.) (the “Company”)
and
Bushido Capital Master Fund, LP (“Bushido”
or
the
“New
Purchaser,”),
▇▇▇▇▇▇ Diversified Strategy Master Fund, LLC - Series BUS (“▇▇▇▇▇▇”),
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ (“Typaldos”)
and
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ Family Limited Partnership (“Typaldos
LP”)
for
the purchase of the Company’s 6% Secured Convertible Debenture due December 28,
2008 (the “Debenture”)
and
the Common Stock purchase warrant issued in connection therewith (the
“Warrant”).
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.
For
good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereby agree as follows:
1. Issuance
of New Debenture and New Warrants.
The
Company hereby agrees to issue against payment to the New Purchaser (a) a
debenture of the Company with a principal amount of $400,000 which debenture
shall be in the form of Exhibit
A
attached
hereto (a “New
Debenture”),
(b) a
Warrant to purchase up to 188,236 shares of Common Stock, which warrant shall
be
in the form of Exhibit
B
attached
hereto (the “Long
Term Warrant”)
and
(c) a Warrant to purchase up to 188,236 shares of Common Stock, which warrant
shall be in the form of Exhibit
C
attached
hereto (the “Short
Term Warrant”
and
together with the Long Term Warrant, the “New
Warrants”).
The
total purchase price to the New Purchaser for the purchase of the New Debenture
and the New Warrants is $400,000 (the “New
Subscription Amount”).
The
Company shall promptly deliver to each New Purchaser the New Debenture, the
New
Warrants and opinion of counsel required pursuant to Section 5. The Company
hereby acknowledges its receipt of the New Subscription Amount from each New
Purchaser.
2. Documents.
The
rights and obligations of the New Purchaser and of the Company with respect
to
the New Debenture, the New Warrants and the shares of Common Stock issuable
under the New Debenture and New Warrants (the “New
Underlying Shares”)
shall
be identical in all respects to the rights and obligations of such New Purchaser
and of the Company with respect to the Debentures, the Warrants and the
Underlying Shares issued and issuable pursuant to the Purchase Agreement. Any
rights of a New Purchaser or covenants of the Company which are dependant on
such New Purchaser holding securities of the Company or which are determined
in
magnitude by such New Purchaser’s purchase of securities pursuant to the
Purchase Agreement shall be deemed to include any securities purchased or
issuable hereunder. The Purchase Agreement is hereby amended so that the term
“Debentures” includes the New Debenture issued hereunder and “Underlying Shares”
includes the New Underlying Shares. The Registration Rights Agreement entered
into in connection with the Purchase Agreement is hereby amended so that the
term “Registrable Securities” includes in the calculation thereof the New
Underlying Shares. The Security Agreement is hereby amended so that the term
“Debentures” includes the New Debenture. The Inter-Creditor and
Waiver
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Agreement,
dated as of June 30, 2006, is hereby amended so that the term “New Creditors”
includes the New Purchaser and the term “New Debentures” (as defined in the
Inter-Creditor and Waiver Agreement) includes the New Debenture (as defined
herein).
3. Representations
and Warranties of the Company.
The
Company hereby makes to the New Purchaser the following representations and
warranties:
(a) Authorization;
Enforcement.
The
Company has the requisite corporate power and authority to enter into and to
consummate the transactions contemplated by this Agreement and otherwise to
carry out its obligations hereunder and thereunder. The execution and delivery
of this Agreement by the Company and the consummation by the Company of the
transactions contemplated hereby have been duly authorized by all necessary
action on the part of the Company and no further action is required by the
Company, its board of directors or its stockholders in connection therewith
other than in connection with the Required Approvals. This Agreement has been
duly executed by the Company and, when delivered in accordance with the terms
hereof, will constitute the valid and binding obligation of the Company
enforceable against the Company in accordance with its terms, except (i) as
limited by general equitable principles and applicable bankruptcy, insolvency,
reorganization, moratorium and other laws of general application affecting
enforcement of creditors’ rights generally, (ii) as limited by laws relating to
the availability of specific performance, injunctive relief or other equitable
remedies and (iii) insofar as indemnification and contribution provisions may
be
limited by applicable law.
(b) No
Conflicts.
The
execution, delivery and performance of this Agreement by the Company and the
consummation by the Company of the transactions contemplated hereby do not
and
will not: (i) conflict with or violate any provision of the Company’s
certificate or articles of incorporation, bylaws or other organizational or
charter documents; or (ii) conflict with, or constitute a default (or an event
that with notice or lapse of time or both would become a default) under, result
in the creation of any Lien (except as contemplated by the Security Documents)
upon any of the properties or assets of the Company in connection with, or
give
to others any rights of termination, amendment, acceleration or cancellation
(with or without notice, lapse of time or both) of, any material agreement,
credit facility, debt or other material instrument (evidencing Company debt
or
otherwise) or other material understanding to which such Company is a party
or
by which any property or asset of the Company is bound or affected; or (iii)
subject to the Required Approvals, conflict with or result in a violation of
any
law, rule, regulation, order, judgment, injunction, decree or other restriction
of any court or governmental authority to which the Company is subject
(including federal and state securities laws and regulations), or by which
any
property or asset of the Company is bound or affected, except, in the case
of
each of clauses (ii) and (iii), such as could not have or reasonably be expected
to result in a Material Adverse Effect.
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(c) Issuance
of the New Debenture.
The New
Debenture and New Warrants are duly authorized and, upon the execution of this
Agreement by a New Purchaser, will be duly and validly issued, fully paid and
nonassessable, free and clear of all Liens imposed by the Company other than
restrictions on transfer provided for in the Transaction Documents. The New
Underlying Shares, when issued in accordance with the terms of the New Debenture
and New Warrants, will be validly issued, fully paid and nonassessable, free
and
clear of all Liens imposed by the Company. The Company has reserved from its
duly authorized capital stock a number of shares of Common Stock for issuance
of
the New Underlying Shares at least equal to the Required Minimum on the date
hereof.
(d) Equal
Consideration.
Except
as set forth in this Agreement, no consideration has been offered or paid to
any
person to amend or consent to a waiver, modification, forbearance or otherwise
of any provision of any of the Transaction Documents.
(e) Affirmation
of Prior Representations and Warranties.
The
Company hereby represents and warrants to each New Purchaser that the Company’s
representations and warranties listed in Section 3.1 of the Purchase Agreement
are true and correct as of the date hereof, provided that the Company’s
representation in Section 3.1(h) of the Purchase Agreement is qualified by
the
Company’s late filing of the 2006 Form 10-KSB on October 10, 2006.
4. Representations
and Warranties of the New Purchaser.
The New
Purchaser hereby represents and warrants as of the date hereof to the Company
as
follows:
(a) Authority.
The
execution, delivery and performance by such New Purchaser of the transactions
contemplated by this Agreement have been duly authorized by all necessary
corporate or similar action on the part of such New Purchaser. This Agreement
has been duly executed by such New Purchaser and, when delivered by such
Purchaser in accordance with the terms hereof, will constitute the valid and
legally binding obligation of such New Purchaser, enforceable against it in
accordance with its terms, except (i) as limited by general equitable principles
and applicable bankruptcy, insolvency, reorganization, moratorium and other
laws
of general application affecting enforcement of creditors’ rights generally,
(ii) as limited by laws relating to the availability of specific performance,
injunctive relief or other equitable remedies and (iii) insofar as
indemnification and contribution provisions may be limited by applicable
law.
(b) Own
Account.
Such
New Purchaser (i) understands that the Additional Debenture and New Warrants
are
“restricted securities” and have not been registered under the Securities Act or
any applicable state securities law, (ii) is acquiring the Additional Debenture
and New Warrants as principal for its own account and not with a view to or
for
distributing or reselling such Additional Debenture or New Warrants or any
part
thereof in violation of the Securities Act or any applicable state securities
law, (iii) has no present intention of distributing
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any
of
such Securities in violation of the Securities Act or any applicable state
securities law and (iv) has no arrangement or understanding with any other
persons regarding the distribution of such New Debenture and New Warrants (this
representation and warranty not limiting such New Purchaser’s right to sell the
New Underlying Shares pursuant to the Registration Statement or otherwise in
compliance with applicable federal and state securities laws) in violation
of
the Securities Act or any applicable state securities law. Such New Purchaser
is
acquiring the Additional Debenture and New Warrants hereunder in the ordinary
course of its business. Such New Purchaser does not have any agreement or
understanding, directly or indirectly, with any Person to distribute any of
the
New Debenture, New Warrants or New Underlying Shares.
(c) Purchaser
Status.
Such
New Purchaser is an “accredited investor” as defined in Rule 501(a)(1), (a)(2),
(a)(3), (a)(7) or (a)(8) under the Securities Act. Such New Purchaser is not
required to be registered as a broker-dealer under Section 15 of the Exchange
Act.
(d) General
Solicitation.
Such
New Purchaser is not purchasing the New Debenture or New Warrants as a result
of
any advertisement, article, notice or other communication regarding the New
Debenture or New Warrants published in any newspaper, magazine or similar media
or broadcast over television or radio or presented at any seminar or any other
general solicitation or general advertisement.
(e) Affirmation
of Prior Representations and Warranties.
Such
New Purchaser hereby represents and warrants to the Company that its
representations and warranties listed in Section 3.2 of the Purchase Agreement
are true and correct as of the date hereof.
5. Delivery
of Opinion.
Concurrently herewith, the Company shall deliver to the New Purchasers an
opinion of outside counsel regarding this Agreement and the issuance of the
New
Debentures and New Warrants in form and substance reasonably acceptable to
the
New Purchasers.
6. Public
Disclosure.
The
Company shall, on the Trading Day following the date of payment of the New
Subscription Amounts, issue a Current Report on Form 8-K, reasonably acceptable
to the New Purchaser, disclosing the material terms of the transactions
contemplated hereby and attaching this Agreement as an exhibit thereto. The
Company shall consult with the New Purchaser in issuing any other press releases
with respect to the transactions contemplated hereby.
7. Other
Purchaser Consent.
The
other Purchasers hereby consent to the execution by the Company of this
Agreement and the issuance of the New Debenture and New Warrants to the New
Purchaser.
8. Effect
on Transaction Documents.
Except
as expressly set forth above, all of the terms and conditions of the Transaction
Documents shall continue in full force and
4
effect
after the execution of this Agreement and shall not be in any way changed,
modified or superseded by the terms set forth herein, including, but not limited
to, any other obligations the Company may have to the New Purchaser under the
Transaction Documents.
Notwithstanding the foregoing, this Agreement shall be deemed for all purposes
as an amendment to any Transaction Document as required to serve the purposes
hereof, and in the event of any conflict between the terms and provisions of
the
Debentures, the Registration Rights Agreement or any other Transaction Document,
on the one hand, and the terms and provisions of this Agreement, on the other
hand, the terms and provisions of this Agreement shall prevail.
9.
Expenses.
The
Company agrees to pay to each New Purchaser upon demand any and all reasonable
out-of-pocket costs or expenses (including, without limitation, reasonable
legal
fees and disbursements) incurred or sustained by such New Purchaser, in
connection with the preparation of this Agreement and related
matters.
10. Amendments
and Waivers.
The
provisions of this Agreement, including the provisions of this sentence, may
not
be amended, modified or supplemented, and waivers or consents to departures
from
the provisions hereof may not be given, unless the same shall be in writing
and
signed by the Company and each New Purchaser.
11. Notices.
Any and
all notices or other communications or deliveries required or permitted to
be
provided hereunder shall be delivered as set forth in the Purchase
Agreement.
12. Successors
and Assigns.
This
Agreement shall inure to the benefit of and be binding upon the successors
and
permitted assigns of each of the parties and shall inure to the benefit of
each
Purchaser. The Company may not assign (except by merger) its rights or
obligations hereunder without the prior written consent of all of the New
Purchasers of the then-outstanding Securities. Each New Purchaser may assign
their respective rights hereunder in the manner and to the Persons as permitted
under the Purchase Agreement.
13. Execution
and Counterparts.
This
Agreement may be executed in two or more counterparts, all of which when taken
together shall be considered one and the same agreement and shall become
effective when counterparts have been signed by each party and delivered to
the
other party, it being understood that both parties need not sign the same
counterpart. 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.
14. Governing
Law.
All
questions concerning the construction, validity, enforcement and interpretation
of this Agreement shall be determined in accordance with the provisions of
the
Purchase Agreement.
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15. Severability.
If any
term, provision, covenant or restriction of this Agreement is held by a court
of
competent jurisdiction to be invalid, illegal, void or unenforceable, the
remainder of the terms, provisions, covenants and restrictions set forth herein
shall remain in full force and effect and shall in no way be affected, impaired
or invalidated, and the parties hereto shall use their commercially reasonable
efforts to find and employ an alternative means to achieve the same or
substantially the same result as that contemplated by such term, provision,
covenant or restriction. It is hereby stipulated and declared to be the
intention of the parties that they would have executed the remaining terms,
provisions, covenants and restrictions without including any of such that may
be
hereafter declared invalid, illegal, void or unenforceable.
16. Headings.
The
headings in this Agreement are for convenience only, do not constitute a part
of
the Agreement and shall not be deemed to limit or affect any of the provisions
hereof.
[SIGNATURE
PAGE FOLLOWS]
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Executed
as of November 30, 2006 by the undersigned duly authorized representatives
of
the Company, Bushido, ▇▇▇▇▇▇ and ▇▇▇▇▇▇▇▇ ▇▇ and by Typaldos:
| By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇ | |||
|
Name:
▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title:
Chief
Financial Officer
|
|||
Bushido Capital Master Fund, LP
Signature
of Authorized Signatory of Bushido:
/s/
▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Name
of
Authorized Signatory: ▇▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇
Title
of
Authorized Signatory: Managing
Director, Bushido Capital
Partners
(New
Subscription Amount was paid in full by Bushido to Company on November 29,
2006.)
As
to
Section 1 and Section 7 only:
▇▇▇▇▇▇
Diversified Strategy Master Fund, LLC - Series BUS
Signature
of Authorized Signatory of ▇▇▇▇▇▇:
/s/
▇▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇
Name
of
Authorized Signatory: ▇▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇
Title
of
Authorized Signatory: Attorney-In-Fact
▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇
/s/
▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ Family Limited Partnership
Signature
of Authorized signatory for Typaldos: /s/
▇▇▇▇▇
▇▇▇▇▇▇▇▇
Name
of
Authorized Signatory: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Title
of
Authorized Signatory: Managing Partner
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