EXHIBIT 99.5
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SECOND ADDITIONAL ISSUANCE AGREEMENT
This Second Additional Issuance Agreement ("Agreement"), dated February
24, 2006, is made pursuant to that certain Securities Purchase Agreement
("Purchase Agreement") dated as of December 28, 2005 by and between ▇▇▇▇▇▇.▇▇▇,
Inc. (the "Company") and Bushido Capital Master Fund, LP ("Bushido" or
"Purchaser") for the purchase of the Company's 6% Secured Convertible Debenture
(the "Debenture") and the Common Stock Purchase Warrants issued to Bushido 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 Additional Debentures and Warrants; Waiver and
Extension.
(a) Issuance. The Company hereby agrees to issue against
payment to Bushido (a) a debenture of the Company with a principal amount of
$500,000 which debenture shall be in the form of, and on the same terms and
conditions as, the Debentures (the "New Debenture"), (b) a warrant to purchase
up to 235,294 shares of Common Stock, which warrant shall be in the form of, and
on the same terms and conditions as, the Long Term Warrants, and (c) a warrant
to purchase up to 235,294 shares of Common Stock, which warrant shall be in the
form of, and on the same terms and conditions as, the Short Term Warrants of the
Company (the warrants issued in clauses (b) and (c) collectively referred to as
the "New Warrants"). The total purchase price for the purchase of the New
Debenture and the New Warrants is $500,000 (the "New Subscription Amount").
Within 3 Trading Days of the date hereof, the Company shall deliver the New
Debentures, New Warrants and opinion of counsel required pursuant to Section 5
to Bushido and Bushido shall wire the New Subscription Amount to the wire
instructions attached hereto as Annex A.
(b) Waiver. Pursuant to the Registration Rights Agreement, the
Company agreed to file a Registration Statement on or before the 45th day
following the Closing Date or February 11, 2006 (the "Filing Date") and that
such Registration Statement would be effective 120 days after the Closing Date
or April 27, 2006 (the "Effectiveness Date"). By execution of this Agreement,
Bushido and the other purchasers agree to extend the Filing Date and the
Effectiveness Date each by 45 days and to waive any past or present default
arising from the Company's failure to comply with its agreement to file an
initial Registration Statement by the Filing Date of February 11, 2006 (the
"Existing Default")
2. Documents. The rights and obligations of Bushido and of the Company
with respect to the New Debenture, the New Warrants and the shares of Common
Stock issuable under the New Debentures and New Warrants (the "Additional
Underlying Shares") shall be identical in all respects to the rights and
obligations of Bushido and of the Company with respect to the Debentures, the
Warrants and the Underlying Shares
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issued and issuable pursuant to the Purchase Agreement. Any rights of Bushido or
covenants of the Company which are dependant on Bushido holding securities of
the Company or which are determined in magnitude by Bushido'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 Additional Underlying Shares.
Additionally, 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 Additional Underlying
Shares.
3. Representations and Warranties of the Company. Each Company hereby
makes to each Purchaser the following representations and warranties:
(a) Authorization; Enforcement. Each 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 such Company and the consummation by it of the
transactions contemplated hereby have been duly authorized by all
necessary action on the part of such Company and no further action is
required by such 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 such Company and,
when delivered in accordance with the terms hereof will constitute the
valid and binding obligation of such Company enforceable against such
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 such Company and the consummation by such Company of
the transactions contemplated hereby do not and will not: (i) conflict
with or violate any provision of such 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 such Company, 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
such 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
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any court or governmental authority to which such Company is subject
(including federal and state securities laws and regulations), or by
which any property or asset of such 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.
(c) Issuance of the Additional Debentures. The Additional
Debentures and Additional Warrants are duly authorized and, upon the
execution of this Agreement by a 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 Additional Underlying Shares, when
issued in accordance with the terms of the Additional Debentures and
Additional 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 Additional 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) Other Events of Default. As of the date of this Agreement,
to the knowledge of the Company, no Event of Default other than the
Existing Default exists that has not been waived.
(f) Affirmation of Prior Representations and Warranties. The
Company hereby represents and warrants to the Purchasers that its
representations and warranties listed in Section 3.1 of the Purchase
Agreement are true and correct as of the date hereof.
4. Representations and Warranties of the Purchasers. Each Purchaser
hereby, for itself and for no other Purchaser, represents and warrants as of the
date hereof to the Company as follows:
(a) Authority. The execution, delivery and performance by such
Purchaser of the transactions contemplated by this Agreement have been
duly authorized by all necessary corporate or similar action on the
part of such Purchaser. This Agreement has been duly executed by such
Purchaser, and when delivered by such Purchaser in accordance with the
terms hereof, will constitute the valid and legally binding obligation
of such 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
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relief or other equitable remedies and (iii) insofar as indemnification
and contribution provisions may be limited by applicable law.
(b) Own Account. Such Purchaser understands that the
Additional Debentures and Additional Warrants are "restricted
securities" and have not been registered under the Securities Act or
any applicable state securities law and is acquiring the Additional
Debenture and Additional Warrants as principal for its own account and
not with a view to or for distributing or reselling such Additional
Debentures or Additional Warrants or any part thereof in violation of
the Securities Act or any applicable state securities law, has no
present intention of distributing any of such Securities in violation
of the Securities Act or any applicable state securities law and has no
arrangement or understanding with any other persons regarding the
distribution of such Additional Debentures and Additional Warrants
(this representation and warranty not limiting such Purchaser's right
to sell the Additional 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 Purchaser is acquiring the Additional
Debentures and Additional Warrants hereunder in the ordinary course of
its business. Such Purchaser does not have any agreement or
understanding, directly or indirectly, with any Person to distribute
any of the Additional Debentures, Additional Warrants or Additional
Underlying Shares.
(c) Purchaser Status. Such 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 Purchaser is not required to be
registered as a broker-dealer under Section 15 of the Exchange Act.
(d) General Solicitation. Such Purchaser is not purchasing the
Additional Debentures or Additional Warrants as a result of any
advertisement, article, notice or other communication regarding the
Additional Debentures or Additional 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
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 Purchasers an opinion of outside counsel regarding this Agreement
and the issuance of the Additional Debentures and Additional Warrants in form
and substance reasonably acceptable to the Purchasers.
6. Public Disclosure. The Company shall, on the Trading Day following
the date of payment of the New Subscription Amount, issue a Current Report on
Form 8-K,
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reasonably acceptable to the Purchasers, disclosing the material terms of the
transactions contemplated hereby, and shall attach this Agreement thereto. The
Company shall consult with the Purchasers in issuing any other press releases
with respect to the transactions contemplated hereby.
7. Other Purchaser Consent. Each of the Purchasers hereby consents to
the execution by the Company of this Agreement and the issuance of the
Additional Debentures and Additional Warrants to Bushido.
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 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 Purchasers 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 Purchasers upon demand any
and all reasonable out-of-pocket costs or expenses (including, without
limitation, reasonable legal fees and disbursements) incurred or sustained by
Purchasers, 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
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 Purchasers of the then-outstanding Securities.
Each 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
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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.
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.
17. Independent Nature of Holders' Obligations and Rights. The
obligations of each Purchaser hereunder are several and not joint with the
obligations of any other Purchasers hereunder, and no Purchaser shall be
responsible in any way for the performance of the obligations of any other
Purchaser hereunder. Nothing contained herein or in any other agreement or
document delivered at any closing, and no action taken by any Purchaser pursuant
hereto, shall be deemed to constitute the Purchasers as a partnership, an
association, a joint venture or any other kind of entity, or create a
presumption that the Purchasers are in any way acting in concert with respect to
such obligations or the transactions contemplated by this Agreement. Each
Purchaser shall be entitled to protect and enforce its rights, including without
limitation the rights arising out of this Agreement, and it shall not be
necessary for any other Purchaser to be joined as an additional party in any
proceeding for such purpose.
[SIGNATURE PAGE FOLLOWS]
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Executed as of February 24, 2006 by the undersigned duly authorized
representatives of the Company , Bushido and the other Purchasers:
▇▇▇▇▇▇.▇▇▇, INC.
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇
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Name: ▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: CEO
BUSHIDO CAPITAL MASTER FUND, LP
SIGNATURE OF AUTHORIZED SIGNATORY OF BUSHIDO: /s/ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
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Name of Authorized Signatory: ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
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Title of Authorized Signatory: Managing Director
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As to Sections 1(b) and 7 only:
GAMMA OPPORTUNITY CAPITAL PARTNERS, LP CLASS A
AUTHORIZED SIGNATORY FOR GAMMA CLASS A: /s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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Name of Authorized Signatory: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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Title of Authorized Signatory: President
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GAMMA OPPORTUNITY CAPITAL PARTNERS, LP CLASS C
AUTHORIZED SIGNATORY FOR GAMMA CLASS B: /s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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Name of Authorized Signatory: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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Title of Authorized Signatory: President
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ANNEX A
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ACCOUNT NAME: ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇, LLP
ATTORNEY ESCROW ACCOUNT - ▇▇▇▇
BANK: Bank of New York
▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
(▇▇▇) ▇▇▇-▇▇▇▇
ACCOUNT NO.: 6902 089606
ABA NO.: ▇▇▇▇▇▇▇▇▇
PLEASE BE CERTAIN TO IDENTIFY THE TRANSACTION TO WHICH THE FUNDS RELATE AND THE
SENDER IN THE DETAILS OF PAYMENT FIELD.
FOR INTERNATIONAL WIRES, PLEASE USE SWIFT NUMBER ▇▇▇▇▇▇▇▇.
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