EXHIBIT 10.10
AMENDMENT NO. 1 TO REGISTRATION RIGHTS AGREEMENT
AND CONVERTIBLE NOTES
This Amendment No. 1, dated as of October 9, 2004, to the Registration
Rights Agreement (as defined below) by and among SYSTEMS EVOLUTION, INC., an
Idaho corporation (the "Corporation") and the Noteholders listed on Schedule I
hereto (the "Noteholders"), and to the Notes (as defined below) issued by the
Corporation to the Noteholders.
W I T N E S S E T H :
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WHEREAS, the Corporation and the Noteholders are parties to a Note and
Warrant Purchase Agreement, dated as of August 31, 2004 (the "Purchase
Agreement"), pursuant to which the Corporation issued to the Noteholders
$1,825,000 aggregate principal amount of 8% convertible promissory notes (the
"Notes") and warrants (the "Warrants") to purchase an aggregate of 36,500,000
shares of the Corporation's common stock, no par value; and
WHEREAS, the Corporation and the Noteholders are parties to a
Registration Rights Agreement, dated as of August 31, 2004 (the "Registration
Rights Agreement"), pursuant to which the Corporation agreed to file the
Registration Statement (as defined in the Registration Rights Agreement) by the
Filing Date (defined in the Registration Rights Agreement), as the thirtieth
(30th) day following September 9, 2004, the date of the initial closing (the
"Closing Date", as defined in the Registration Rights Agreement) of the purchase
and sale of the Notes and Warrants pursuant to the Purchase Agreement; and
WHEREAS, it is an Event of Default under the Notes (i) if the
Registration Statement is not declared effective by the Securities and Exchange
Commission on or prior to the date which is one hundred fifty (150) days after
the Closing Date or (ii) if default shall be made in the performance or
observance of any material covenant, condition or agreement contained in the
Registration Rights Agreement; and
WHEREAS, the Corporation will file its quarterly report on Form 10-QSB
for its fiscal quarter ended August 31, 2004 (the "First Quarter 10-QSB") on or
shortly prior to October 15, 2004; and
WHEREAS, the Corporation and the Noteholders believe it advisable and
agree to amend the definition of Filing Date in the Registration Rights
Agreement so as to permit filing the Registration Statement at a later date so
that the financial statements included in the First Quarter 10-QSB may be
included in the Registration Statement; and
WHEREAS, the Corporation and the Noteholders further believe it
advisable and agree to amend the Registration Rights Agreement to provide that
liquidated damages will be paid if the Registration Statement is not declared
effective by the Securities and Exchange Commission on or prior to the date
which is one hundred eighty (180) days after the Closing Date; and
WHEREAS, the Corporation and the Noteholders further believe it
advisable and agree to amend the Notes to provide that it is an Event of Default
under the Notes only if the Registration Statement is not declared effective by
the Securities and Exchange Commission on or prior to the date which is one
hundred eighty (180) days after the Closing Date; and
WHEREAS, pursuant to Section 7(f) of the Registration Rights Agreement
and Section 4.7 of each of the Notes, the Corporation and the Noteholders are
willing to enter into this Agreement for purposes of amending the Registration
Rights Agreement and the Notes.
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants contained herein, the parties agree as follows:
Section 1. Amendments to Registration Rights Agreement.
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1.1 By their respective execution of this Agreement, the Corporation
and the Noteholders, constituting the requisite parties in interest, agree that
the definition of Filing Date in Section 1 of the Registration Rights Agreement
is hereby amended to read in its entirety as follows:
""Filing Date" means the sixtieth (60th) day following the Closing
Date."
1.2 By their respective execution of this Agreement, the Corporation
and the Noteholders, constituting the requisite parties in interest, agree that
Section 7(e)(B) of the Registration Rights Agreement is hereby amended to read
in its entirety as follows:
"the Registration Statement is not declared effective by the Commission
on or prior to the one hundred eightieth (180th) day following the Closing Date
(or in the event an additional Registration Statement is filed because the
actual number of shares of Common Stock into which the Notes are convertible and
the Warrants are exercisable exceeds the number of shares of Common Stock
initially registered is not filed and declared effective with the time periods
set forth in Section 2), or"
1.3 By their respective execution of this Agreement, the Corporation
and the Noteholders, constituting the requisite parties in interest, agree that
the proviso in Section 7(e) of the Registration Rights Agreement is hereby
amended to read in its entirety as follows:
"(provided that, with respect to the Event described in clause (B), the
"first calendar month" shall be deemed to commence on the ninetieth (90th) day
prior to the applicable Event Date)"
Section 2. Amendment to Notes.
2.1 By their respective execution of this Agreement, the Corporation
and the Noteholders, constituting the requisite parties in interest, agree that
Article II, Section 2.1 (c), shall be amended to read in its entirety as
follows:
"(c) the failure of the Registration Statement (when used herein such
term shall have the meaning set forth in the Registration Rights Agreement) to
be declared effective by the Securities and Exchange Commission on or prior to
the date which is one hundred eighty (180) days after the Closing Date, unless
as provided in Section 7(e) of the Registration Rights Agreement where the Maker
has exercised its rights under Section 3(n) of such Agreement; or"
Section 3. Miscellaneous.
3.1 Limited Effect. Except as expressly amended and modified by this
Amendment No. 1, all of the terms and provisions of the Registration Rights
Agreement and Notes are and shall continue to remain in full force and effect in
accordance with the terms thereof.
3.2 Fees and Expenses. The Corporation shall pay all actual attorneys'
fees and expenses (including disbursements and out-of-pocket expenses) incurred
by the Noteholders in connection with this Amendment No. 1.
3.3 Counterparts. This Amendment No. 1 may be executed by one or more
of the parties hereto in any number of separate counterparts, and all of said
counterparts taken together shall be deemed to constitute one and the same
instrument.
3.4 Entire Agreement. This Amendment No. 1, the Registration Rights
Agreement and Notes (including the schedules referenced therein) constitute the
entire agreement of the parties with respect to the subject matter hereof and
supersede in their entirety all prior undertakings and agreements of the
Corporation and the Noteholders with respect to the subject matter hereof.
3.5 Governing Law. This Amendment No. 1 shall be governed by and
construed in accordance with the internal laws of the State of New York, without
giving effect to any of the conflicts of law principles which would result in
the application of the substantive law of another jurisdiction. This Amendment
No. 1 shall not be interpreted or construed with any presumption against the
party causing this Amendment No. 1 to be drafted.
[SIGNATURE PAGE FOLLOWS]
IN WITNESS WHEREOF, the parties hereto have caused this Amendment No. 1
to the Registration Rights Agreement and Notes to be duly executed and delivered
by their respective authorized officers as of the date first above written.
SYSTEMS EVOLUTION, INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇
Title: Chief Executive Officer
NOTEHOLDERS:
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