Exhibit 10.2

 

FOURTH AMENDMENT AGREEMENT

 

This Fourth Amendment Agreement (the “Agreement”), dated as of August 20, 2008
and effective as of July 18, 2008 (the “Effective Date”), is by and among
Ceragenix Pharmaceuticals, Inc., a Delaware corporation (the “Company”) and the
investors signatory hereto (each, a “Purchaser” and collectively, the
“Purchasers”).  Capitalized terms not defined in this Agreement shall have the
meanings ascribed to such terms in the Purchase Agreement (as defined below).

 

WHEREAS, pursuant to a Securities Purchase Agreement, dated December 5, 2006, as
amended, among the Company and the Purchasers (the “Purchase Agreement”), the
Purchasers were issued convertible debentures with an original aggregate
principal amount of $5,000,000 and warrants to purchase shares of Common Stock;
and

 

WHEREAS, on each of June 30, 2007, November 30, 2007 and July 1, 2008, the
parties entered into an Amendment Agreement pursuant to which the parties agreed
to amend and restate certain terms of the Purchase Agreement and the Transaction
Documents; and

 

WHEREAS, the parties wish to further amend certain terms of the Transaction
Documents.

 

NOW, THEREFORE, IN CONSIDERATION of the mutual covenants contained in this
Agreement, and for good and valuable consideration the receipt and adequacy of
which are hereby acknowledged, the Purchasers and the Company agree as follows:

 

1.             Amendment to Maturity Date. The Maturity Date of the Debentures
is hereby amended to be December 31, 2011.

 

2.             Adjustments to Conversion Price of Debentures.  Section 4(b) of
the Debentures is hereby deleted in its entirety and replaced with the
following:

 

“Conversion Price.  The conversion price in effect on any Conversion Date shall
be equal to $0.80, subject to adjustment herein (the “Conversion Price”);
provided, however, if the Company shall fail to pay the cumulative Quarterly
Redemption Amounts during any of the 12-month periods ending June 30, 2010 and
June 30, 2011 (each such date, the “Triggering Date”), then the Conversion Price
shall be reduced on, as applicable, each of July 1, 2010 and July 1, 2011,
respectively, to equal the lesser of (i) the then Conversion Price and (ii) the
average of the ten (10) lowest VWAPs for the 60 consecutive Trading Day period
immediately prior to the respective Triggering Date, subject to adjustment
herein.”

 

3.             Adjustment to Interest Rate. The interest rate of the Debentures
shall be increased to 12% per annum and all references to such non-default
interest rate shall be replaced with 12%.

 

4.             Option to Defer Interest Payments. The following shall be added
to Section 2(a) of the Debentures:

 

1

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“Upon each interest payment pursuant to this Section 2(a), if the Company fails
to pay interest on any Interest Payment Date, as to the unpaid balance, the
Holder shall have the option to either (i) receive such interest payment in
shares of Common Stock pursuant to this Section 2(a) or (ii) as to such interest
payment hereunder, in lieu of receiving shares of Common Stock and upon prior
notice to the Company, the Holder may accrete such interest payment to the
outstanding principal amount of this Debenture which shall be recorded on the
Debenture Register and, upon the request of the Holder, a certificate of this
Debenture, as amended, representing such interest payments.”

 

5.             Interest Conversion Rate.  The definition of “Interest Conversion
Rate” set forth in Section 1 of the Debenture is hereby amended and restated in
its entirety as follows:

 

““Interest Conversion Rate” means 85% of the average of the 5 lowest VWAPs
during any 30 consecutive Trading Day period during the 365 day period
immediately prior to the applicable Interest Payment Date.”

 

6.             Amendment to Monthly Redemption.

 

a)             The definition of “Monthly Redemption Date” set forth in
Section 1 of the Debentures is hereby amended and restated in its entirety as
follows:

 

““Quarterly Redemption Date” means June 30, 2009, and each September 30,
December 31, March 31, and June 30 thereafter, and terminating upon the full
redemption of this Debenture. The first such Quarterly Redemption Date shall be
herein referred to as the “First Quarterly Redemption Date” and each such date
thereafter, each a “Quarterly Redemption Date”.”

 

b)            All instances of “Monthly Redemption Date” in the Debentures are
hereby replaced in their entirety with “Quarterly Redemption Date”.

 

c)             The definition of “Monthly Redemption Amount” set forth in
Section 1 of the Debentures is hereby amended and restated in its entirety as
follows:

 

“Quarterly Redemption Amount” means, with respect to each Quarterly Redemption
Date, the amounts specified for each Quarterly Redemption Date on Schedule 2 to
this Agreement plus accrued but unpaid interest, liquidated damages and any
other amounts then owing to such Holder in respect of this Debenture.

 

d)            The first sentence of Section 6(a) of the Debentures is hereby
amended and restated in its entirety as follows: “On each Quarterly Redemption
Date, the Company shall redeem the applicable Quarterly Redemption Amount (the
“Quarterly Redemption”).”

 

e)             The Debentures are hereby amended by addition of Schedule 2
attached to this Agreement as Schedule 2 to the Debentures.

 

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f)             All instances of “Monthly Redemption Amount” in the Debentures
are hereby replaced in their entirety with “Quarterly Redemption Amount”.

 

g)            All instances of “Monthly Conversion Period” in the Debentures are
hereby replaced in their entirety with “Quarterly Conversion Period”.

 

h)            All instances of “Monthly Conversion Price” in the Debentures are
hereby replaced in their entirety with “Quarterly Conversion Price”.

 

i)              All instances of “Monthly Redemption” in the Debentures are
hereby replaced in their entirety with “Quarterly Redemption”.

 

j)              All instances of “Monthly Redemption Notice” in the Debentures
are hereby replaced in their entirety with “Quarterly Redemption Notice”.

 

k)             All instances of “Monthly Redemption Share Amount” in the
Debentures are hereby replaced in their entirety with “Quarterly Redemption
Share Amount”.

 

7.             Adjustment to Exercise Price of Warrants.  Section 2(b) of the
Warrants is hereby deleted in its entirety and replaced with the following:

 

“Exercise Price.  The exercise price per share of the Common Stock under this
Warrant shall be $0.80, subject to adjustment hereunder (the “Exercise Price”).”

 

8.             Issuance of New Warrants.  As partial consideration hereunder,
each Purchaser shall be issued new five-year warrants (the “New Warrants”), to
purchase up to a number of shares of Common Stock equal to 25% of the number of
Warrant Shares issuable to such Purchaser immediately following the date of this
Agreement, as set forth on Schedule 8 attached hereto, with an Initial Exercise
Date (as defined therein) of August 20, 2008, a Termination Date (as defined
therein) of August 20, 2013, and an initial Exercise Price (as defined therein)
of $0.80, subject to adjustment therein, which New Warrants shall otherwise be
in the form of the Warrants issued pursuant to the Purchase Agreement, as
amended. The New Warrants shall be included in the definition of “Warrants”
hereunder and in the Transaction Documents.  The shares of Common Stock
underlying such New Warrants shall be included in the definition of “Warrant
Shares” hereunder and in the Transaction Documents.

 

9.             Mandatory Redemption of Debentures.  The Company hereby agrees to
use certain expected revenues for the cash redemption of the Debentures and the
notes issued pursuant to that certain Subscription Agreement among the Company
and the subscribers thereto dated November 28, 2005, as amended (the “Notes”),
as follows; provided, that such revenues shall be further subject to
apportionment among each of the holders of the Debentures and the Notes
according to the percentages set forth on Schedule 9 attached hereto:

 

(a)           100% of any net revenues received by or payable to the Company,
including, but not limited to, all milestone payments, all partnership payments,
all royalty payments and any other payments, and excluding any direct costs,
direct fees, or direct royalties (such payments, the “Net Revenue”) derived,
directly or indirectly, from the

 

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Distribution and Supply Agreement between Dr. Reddy’s Laboratories, Inc.
(“Dr. Reddy’s”), the Company and Ceragenix Corporation, dated November 16, 2007
(the “DRL Agreement”), except for any milestone payments, net sales royalties
and product cost reimbursements paid or owed to the Company prior to April 1,
2009. By way of example, Net Revenue shall not include such direct costs, direct
fees or direct royalties such as, but not limited to, the 5% royalty for
EpiCeram pursuant to the Exclusive License Agreement by and among the Company
and The Regents of the University of California, dated June 28, 2000;

 

(b)           100% of the Net Revenue derived, directly or indirectly, from any
other EpiCeram commercialization arrangements;

 

(c)           50% of the Net Revenue derived, directly or indirectly, from the
sale of NeoCeram;

 

(d)           33% of any Net Revenue derived, directly or indirectly, from the
sales of Ceragenins Partnerships; and

 

(e)           33% of any Net Revenue not reference above and received by the
Company in excess of, in the aggregate until the Debentures are no longer
outstanding, $ 250,000, excluding any capital raised by the Company through
investment from the Purchasers or any other equity investment in or issuance of
debt by the Company.

 

Upon receipt of any of the Net Revenues described above, the Company shall
immediately place such funds in a segregated account for the benefit of the
Purchasers and notify the Purchasers in writing of the receipt of such funds. 
Upon notice to the Company that a Purchaser wishes to have its Debenture
redeemed, the Company shall immediately wire such Purchaser its pro-rata share
of such funds (based on the original principal amount purchased by such
Purchaser) and record the reduction in principal in the Debenture register.  In
the event that a Purchaser declines to receive a redemption payment or does not
respond to the Company within ten (10) Trading Days, the Company shall notify
all other Purchasers of such excess amount and any Purchasers that wish to have
their Debentures further redeemed by such additional amount shall receive their
pro-rata share of such remaining funds.

 

10.           Additional Covenants. The following covenants shall be added to
Section 4 of the Purchase Agreement.

 

a)             As of the date of this Agreement and until the earlier of
(i) June 30, 2010 and (ii) the date that 50% of the initial aggregate principal
amount of the Debentures is no longer outstanding and has been redeemed by the
Company pursuant to the terms of such Debentures and this Agreement (such
earlier date, the “Accrual Termination Date”), the Company shall (i) not pay
cash retainers or make any other cash payments to the Board of Directors except
meeting fees for up to four (4) meetings of the Board of Directors per year and
meeting fees for any meetings of the Audit Committee of the Board of Directors
(the “Board Payments”) and the Company shall revise the payment schedule and
methods

 

4

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of payment for all Board Payments and (ii) use commercially reasonable efforts
to minimize the cost of holding meetings of the Board of Director, including
providing for telephonic meetings of the Board of Directors rather than
in-person quarterly meetings of the Board of Directors. All Board Payments shall
accrue until the Accrual Termination Date.

 

b)            No later than September 30, 2008, the Company shall terminate its
consulting agreement with Armada Medical Marketing.

 

c)             Immediately upon execution of this Agreement, the Company hereby
agrees that it shall not renew its consulting agreement with CEOcast.

 

d)            The Company shall use best efforts to renegotiate its obligation
to Osmotics Corporation for the purchase of Triceram from a 12-month note to a
24-month note no later than the 30th day following the date of this Agreement,
and such renegotiation shall not result in the Company paying to Osmotics
Corporation more than $20,000 per month.

 

e)             The Company shall use best efforts to renegotiate the payment
terms for EpiCeram under the DRL Agreement pursuant to which Dr. Reddy’s shall
prepay 50% of each EpiCeram purchase order placed by Dr. Reddy’s.

 

f)             The Company shall use best efforts to monetize or securitize the
EpiCeram and NeoCeram royalties on or prior to the one year anniversary of the
date of this Agreement.

 

11.           Effect on Purchase Agreement.  The foregoing amendments are given
solely in respect of the transactions described herein. Except as expressly set
forth herein, all of the terms and conditions of the Transaction Documents, as
amended, 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.  The Warrants and Warrant Shares issued and issuable
pursuant to Section 8 hereof shall be deemed “Warrants” and Warrant Shares”
under the Transaction Documents.  This Agreement shall not constitute a novation
or satisfaction and accord of any Transaction Document.

 

12.           Filing of Form 8-K.  Within two (2) Trading Days of the date of
execution of this Agreement, the Company shall issue a Current Report on
Form 8-K, reasonably acceptable to each Purchaser disclosing the material terms
of the transactions contemplated hereby, which shall include this Agreement as
an attachment thereto. In addition, within two (2) Trading Days of the date of
execution of this Agreement, the Company shall file a prospectus supplement
under Rule 424 under the Securities Act to registration statement number
333-139627, disclosing the terms of the transactions hereunder.

 

13.           Representations and Warranties of the Company.  The Company hereby
makes the representations and warranties set forth below to the Purchasers that
as of the date of its execution of this Agreement:

 

5

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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 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.  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 upon any of the properties or
assets of the 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
the Company is a party or by which any property or asset of the Company is bound
or affected, or (iii) 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.

 

c)             Issuance of Warrants.  The Warrants are duly authorized and 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 Warrant Shares, when issued in accordance with the
terms of the 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 Warrant Shares and additional shares issuable pursuant to the
Warrants under this Agreement.

 

14.           Representation and Warranty of the Purchasers.  The Purchasers
severally and not jointly hereby make the representation and warranty set forth
below to the Company that as of the date of its execution of this Agreement,
such Purchaser represents and warrants that (a) the execution and delivery of
this Agreement by it and the consummation by it of the transactions

 

6

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contemplated hereby have been duly authorized by all necessary action on its
behalf and (b) this Agreement has been duly executed and delivered by such
Purchaser and constitutes the valid and 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 relief or other equitable
remedies and (iii) insofar as indemnification and contribution provisions may be
limited by applicable law.

 

15.           Notices.  Any and all notices or other communications or
deliveries required or permitted to be provided hereunder shall be made in
accordance with the provisions of the Purchase Agreement.

 

16.           Survival. All warranties and representations (as of the date such
warranties and representations were made) made herein or in any certificate or
other instrument delivered by it or on its behalf under this Agreement shall be
considered to have been relied upon by the parties hereto and shall survive the
issuance of the Debentures. This Agreement shall inure to the benefit of and be
binding upon the successors and permitted assigns of each of the parties;
provided, however, that no party may assign this Agreement or the obligations
and rights of such party hereunder without the prior written consent of the
other parties hereto.

 

17.           Execution.  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, 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 signature
page were an original thereof.

 

18.           Severability.  If any provision of this Agreement is held to be
invalid or unenforceable in any respect, the validity and enforceability of the
remaining terms and provisions of this Agreement shall not in any way be
affected or impaired thereby and the parties will attempt to agree upon a valid
and enforceable provision that is a reasonable substitute therefor, and upon so
agreeing, shall incorporate such substitute provision in this Agreement.

 

19.           Governing Law.  All questions concerning the construction,
validity, enforcement and interpretation of this Agreement shall be determined
pursuant to the Governing Law provision of the Purchase Agreement.

 

20.           Entire Agreement.  The Agreement, together with the exhibits and
schedules thereto, contain the entire understanding of the parties with respect
to the subject matter hereof and supersede all prior agreements and
understandings, oral or written, with respect to such matters, which the parties
acknowledge have been merged into such documents, exhibits and schedules.

 

7

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21.           Construction.  The headings herein are for convenience only, do
not constitute a part of this Agreement and shall not be deemed to limit or
affect any of the provisions hereof.  The language used in this Agreement will
be deemed to be the language chosen by the parties to express their mutual
intent, and no rules of strict construction will be applied against any party.

 

22.           Independent Nature of Purchasers’ 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.

 

23.           Fees and Expenses.  Each party shall pay the fees and expenses of
its advisers, counsel, accountants and other experts, if any, and all other
expenses incurred by such party incident to the negotiation, preparation,
execution, delivery and performance of this Agreement.

 

***********************

 

8

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IN WITNESS WHEREOF, the parties hereto have caused this Fourth Amendment
Agreement to be duly executed by their respective authorized signatories as of
the date first indicated above.

 

 

 

CERAGENIX PHARMACEUTICALS, INC.

 

 

 

 

 

By:

 

 

 

Name:

 

 

Title:

 

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[PURCHASER SIGNATURE PAGES TO CGXP FOURTH AMENDMENT AGREEMENT]

 

IN WITNESS WHEREOF, the undersigned have caused this Agreement to be duly
executed by their respective authorized signatories as of the date first
indicated above.

 

 

Name of Purchaser: BCMF Trustees, LLC

Signature of Authorized Signatory of Purchaser:

 

Name of Authorized Signatory:

 

Title of Authorized Signatory:

 

Email Address of Purchaser:

 

 

Address for Notice of Purchaser:

BCMF Trustees, LLC

c/o Bushido Capital

145 East 57th Street, 11th Floor

New York, NY 10022

Attn: Ronald S. Dagar

 

Address for Delivery of Securities for Purchaser (if not same as above):

 

 

New Principal Amount: $

New Warrant Shares:

 

10

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[PURCHASER SIGNATURE PAGES TO CGXP FOURTH AMENDMENT AGREEMENT]

 

IN WITNESS WHEREOF, the undersigned have caused this Agreement to be duly
executed by their respective authorized signatories as of the date first
indicated above.

 

 

Name of Purchaser: ACM SPV, LLC

Signature of Authorized Signatory of Purchaser:

 

Name of Authorized Signatory:

 

Title of Authorized Signatory:

 

Email Address of Purchaser:

 

 

Address for Notice of Purchaser:

ACM SPV, LLC

c/o ARIS Capital Management, LLC

152 West 57th Street, 19th Floor

New York, NY 10019

Attn: Apostolos Peristeris

 

 

Address for Delivery of Securities for Purchaser (if not same as above):

 

 

New Principal Amount: $

New Warrant Shares:

 

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[PURCHASER SIGNATURE PAGES TO CGXP FOURTH AMENDMENT AGREEMENT]

 

IN WITNESS WHEREOF, the undersigned have caused this Agreement to be duly
executed by their respective authorized signatories as of the date first
indicated above.

 

 

Name of Purchaser: Ralph Rabman

Signature of Authorized Signatory of Purchaser:

 

Name of Authorized Signatory: Ralph Rabman

Title of Authorized Signatory:

 

Email Address of Purchaser: rrabman@yahoo.com

 

Address for Notice of Purchaser:

313 Nicolson Street

Brooklyn 0181

Gauteng North

South Africa

 

 

Address for Delivery of Securities for Purchaser (if not same as above):

 

 

New Principal Amount: $

New Warrant Shares:

 

12

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[PURCHASER SIGNATURE PAGES TO CGXP FOURTH AMENDMENT AGREEMENT]

 

IN WITNESS WHEREOF, the undersigned have caused this Agreement to be duly
executed by their respective authorized signatories as of the date first
indicated above.

 

 

Name of Purchaser: CFRR Holdings, LLC

Signature of Authorized Signatory of Purchaser:

 

Name of Authorized Signatory:

 

Title of Authorized Signatory:

 

Email Address of Purchaser:

 

 

Address for Notice of Purchaser:

CFRR Holdings, LLC

424 Madison Avenue, Suite 800

New York, NY 10017

Attn: Edward Cullen

 

 

Address for Delivery of Securities for Purchaser (if not same as above):

 

 

New Principal Amount: $

New Warrant Shares:

 

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[PURCHASER SIGNATURE PAGES TO CGXP FOURTH AMENDMENT AGREEMENT]

 

IN WITNESS WHEREOF, the undersigned have caused this Agreement to be duly
executed by their respective authorized signatories as of the date first
indicated above.

 

 

Name of Purchaser: Bushido Capital Master Fund, LP

Signature of Authorized Signatory of Purchaser:

 

Name of Authorized Signatory:

 

Title of Authorized Signatory:

 

Email Address of Purchaser:

 

 

Address for Notice of Purchaser:

Bushido Capital Master Fund, LP

145 East 57th Street, 11th Floor

New York, NY 10022

Attn: Ronald S. Dagar

 

 

Address for Delivery of Securities for Purchaser (if not same as above):

 

 

New Principal Amount: $

New Warrant Shares:

 

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[PURCHASER SIGNATURE PAGES TO CGXP FOURTH AMENDMENT AGREEMENT]

 

IN WITNESS WHEREOF, the undersigned have caused this Agreement to be duly
executed by their respective authorized signatories as of the date first
indicated above.

 

 

Name of Purchaser: Pierce Diversified Strategy Master Fund, LLC - Series BUS

Signature of Authorized Signatory of Purchaser:

 

Name of Authorized Signatory:

 

Title of Authorized Signatory:

 

Email Address of Purchaser:

 

 

Address for Notice of Purchaser:

Pierce Diversified Strategy Master Fund, LLC - Series BUS

c/o Bushido Capital

145 East 57th Street, 11th Floor

New York, NY 10022

 

 

Address for Delivery of Securities for Purchaser (if not same as above):

 

 

New Principal Amount: $

New Warrant Shares:

 

15

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[PURCHASER SIGNATURE PAGES TO CGXP FOURTH AMENDMENT AGREEMENT]

 

IN WITNESS WHEREOF, the undersigned have caused this Agreement to be duly
executed by their respective authorized signatories as of the date first
indicated above.

 

 

Name of Purchaser: MIDSUMMER INVESTMENT, LTD.

Signature of Authorized Signatory of Purchaser:

 

Name of Authorized Signatory:

 

Title of Authorized Signatory:

 

Email Address of Purchaser:

 

 

Address for Notice of Purchaser:

MIDSUMMER INVESTMENT, LTD.

c/o Midsummer Capital

295 Madison Avenue, 38th Floor

New York, NY 10017

Attn: Scott D. Kaufman

 

 

Address for Delivery of Securities for Purchaser (if not same as above):

 

 

New Principal Amount: $

New Warrant Shares:

 

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Schedule 2

 

Midsummer

 

 

 

Beginning

 

 

 

 

 

Quarterly
Redemption

 

Ending

 

Date

 

Balance

 

Rate

 

Interest

 

Amount

 

Balance

 

9/30/2008

 

3,300,000.00

 

12

%

99,000.00

 

—

 

3,399,000.00

 

12/31/2008

 

3,399,000.00

 

12

%

101,970.00

 

—

 

3,500,970.00

 

3/31/2009

 

3,500,970.00

 

12

%

105,029.10

 

—

 

3,605,999.10

 

6/30/2009

 

3,605,999.10

 

12

%

108,179.97

 

(38,362.33

)

3,675,816.74

 

9/30/2009

 

3,675,816.74

 

12

%

110,274.50

 

(163,039.90

)

3,623,051.35

 

12/31/2009

 

3,623,051.35

 

12

%

108,691.54

 

(86,315.24

)

3,645,427.65

 

3/31/2010

 

3,645,427.65

 

12

%

109,362.83

 

(145,776.85

)

3,609,013.63

 

6/30/2010

 

3,609,013.63

 

12

%

108,270.41

 

(195,647.88

)

3,521,636.17

 

9/30/2010

 

3,521,636.17

 

12

%

105,649.09

 

(232,092.09

)

3,395,193.17

 

12/31/2010

 

3,395,193.17

 

12

%

101,855.79

 

(276,976.01

)

3,220,072.95

 

3/31/2011

 

3,220,072.95

 

12

%

96,602.19

 

(934,122.70

)

2,382,552.44

 

6/30/2011

 

2,382,552.44

 

12

%

71,476.57

 

(546,663.18

)

1,907,365.83

 

9/30/2011

 

1,907,365.83

 

12

%

57,220.97

 

(498,710.27

)

1,465,876.54

 

12/31/2011

 

1,465,876.54

 

12

%

43,976.30

 

(1,509,852.83

)

—

 

 

Bushido Capital Master Fund

 

 

 

Beginning

 

 

 

 

 

Quarterly
Redemption

 

Ending

 

Date

 

Balance

 

Rate

 

Interest

 

Amount

 

Balance

 

9/30/2008

 

550,916.00

 

12

%

16,527.48

 

—

 

567,443.48

 

12/31/2008

 

567,443.48

 

12

%

17,023.30

 

—

 

584,466.78

 

3/31/2009

 

584,466.78

 

12

%

17,534.00

 

—

 

602,000.79

 

6/30/2009

 

602,000.79

 

12

%

18,060.02

 

(6,404.37

)

613,656.44

 

9/30/2009

 

613,656.44

 

12

%

18,409.69

 

(27,218.57

)

604,847.56

 

12/31/2009

 

604,847.56

 

12

%

18,145.43

 

(14,409.83

)

608,583.16

 

3/31/2010

 

608,583.16

 

12

%

18,257.49

 

(24,336.61

)

602,504.05

 

6/30/2010

 

602,504.05

 

12

%

18,075.12

 

(32,662.29

)

587,916.88

 

9/30/2010

 

587,916.88

 

12

%

17,637.51

 

(38,746.44

)

566,807.95

 

12/31/2010

 

566,807.95

 

12

%

17,004.24

 

(46,239.55

)

537,572.64

 

3/31/2011

 

537,572.64

 

12

%

16,127.18

 

(155,946.41

)

397,753.41

 

6/30/2011

 

397,753.41

 

12

%

11,932.60

 

(91,262.27

)

318,423.74

 

9/30/2011

 

318,423.74

 

12

%

9,552.71

 

(83,256.81

)

244,719.65

 

12/31/2011

 

244,719.65

 

12

%

7,341.59

 

(252,061.24

)

—

 

 

Pierce Diversified Fund

 

 

 

Beginning

 

 

 

 

 

Quarterly
Redemption

 

Ending

 

Date

 

Balance

 

Rate

 

Interest

 

Amount

 

Balance

 

9/30/2008

 

550,000.00

 

12

%

16,500.00

 

—

 

566,500.00

 

12/31/2008

 

566,500.00

 

12

%

16,995.00

 

—

 

583,495.00

 

3/31/2009

 

583,495.00

 

12

%

17,504.85

 

—

 

600,999.85

 

6/30/2009

 

600,999.85

 

12

%

18,030.00

 

(6,393.72

)

612,636.12

 

9/30/2009

 

612,636.12

 

12

%

18,379.08

 

(27,173.32

)

603,841.89

 

12/31/2009

 

603,841.89

 

12

%

18,115.26

 

(14,385.87

)

607,571.28

 

3/31/2010

 

607,571.28

 

12

%

18,227.14

 

(24,296.14

)

601,502.27

 

6/30/2010

 

601,502.27

 

12

%

18,045.07

 

(32,607.98

)

586,939.36

 

9/30/2010

 

586,939.36

 

12

%

17,608.18

 

(38,682.01

)

565,865.53

 

12/31/2010

 

565,865.53

 

12

%

16,975.97

 

(46,162.67

)

536,678.82

 

3/31/2011

 

536,678.82

 

12

%

16,100.36

 

(155,687.12

)

397,092.07

 

6/30/2011

 

397,092.07

 

12

%

11,912.76

 

(91,110.53

)

317,894.31

 

9/30/2011

 

317,894.31

 

12

%

9,536.83

 

(83,118.38

)

244,312.76

 

12/31/2011

 

244,312.76

 

12

%

7,329.38

 

(251,642.14

)

—

 

 

1

--------------------------------------------------------------------------------

 

ACM SPV

 

 

 

Beginning

 

 

 

 

 

Quarterly
Redemption

 

Ending

 

Date

 

Balance

 

Rate

 

Interest

 

Amount

 

Balance

 

9/30/2008

 

179,865.00

 

12

%

5,395.95

 

—

 

185,260.95

 

12/31/2008

 

185,260.95

 

12

%

5,557.83

 

—

 

190,818.78

 

3/31/2009

 

190,818.78

 

12

%

5,724.56

 

—

 

196,543.34

 

6/30/2009

 

196,543.34

 

12

%

5,896.30

 

(2,090.92

)

200,348.72

 

9/30/2009

 

200,348.72

 

12

%

6,010.46

 

(8,886.42

)

197,472.77

 

12/31/2009

 

197,472.77

 

12

%

5,924.18

 

(4,704.57

)

198,692.38

 

3/31/2010

 

198,692.38

 

12

%

5,960.77

 

(7,945.50

)

196,707.65

 

6/30/2010

 

196,707.65

 

12

%

5,901.23

 

(10,663.70

)

191,945.18

 

9/30/2010

 

191,945.18

 

12

%

5,758.36

 

(12,650.07

)

185,053.46

 

12/31/2010

 

185,053.46

 

12

%

5,551.60

 

(15,096.45

)

175,508.61

 

3/31/2011

 

175,508.61

 

12

%

5,265.26

 

(50,913.93

)

129,859.94

 

6/30/2011

 

129,859.94

 

12

%

3,895.80

 

(29,795.63

)

103,960.11

 

9/30/2011

 

103,960.11

 

12

%

3,118.80

 

(27,181.98

)

79,896.93

 

12/31/2011

 

79,896.93

 

12

%

2,396.91

 

(82,293.84

)

—

 

 

BCMF Trustees

 

 

 

Beginning

 

 

 

 

 

Quarterly
Redemption

 

Ending

 

Date

 

Balance

 

Rate

 

Interest

 

Amount

 

Balance

 

9/30/2008

 

895,656.00

 

12

%

26,869.68

 

—

 

922,525.68

 

12/31/2008

 

922,525.68

 

12

%

27,675.77

 

—

 

950,201.45

 

3/31/2009

 

950,201.45

 

12

%

28,506.04

 

—

 

978,707.49

 

6/30/2009

 

978,707.49

 

12

%

29,361.22

 

(10,411.95

)

997,656.76

 

9/30/2009

 

997,656.76

 

12

%

29,929.70

 

(44,250.81

)

983,335.66

 

12/31/2009

 

983,335.66

 

12

%

29,500.07

 

(23,426.90

)

989,408.83

 

3/31/2010

 

989,408.83

 

12

%

29,682.26

 

(39,565.43

)

979,525.67

 

6/30/2010

 

979,525.67

 

12

%

29,385.77

 

(53,100.97

)

955,810.47

 

9/30/2010

 

955,810.47

 

12

%

28,674.31

 

(62,992.32

)

921,492.46

 

12/31/2010

 

921,492.46

 

12

%

27,644.77

 

(75,174.31

)

873,962.93

 

3/31/2011

 

873,962.93

 

12

%

26,218.89

 

(253,531.09

)

646,650.72

 

6/30/2011

 

646,650.72

 

12

%

19,399.52

 

(148,370.35

)

517,679.89

 

9/30/2011

 

517,679.89

 

12

%

15,530.40

 

(135,355.41

)

397,854.88

 

12/31/2011

 

397,854.88

 

12

%

11,935.65

 

(409,790.53

)

—

 

 

Ralph Rabman

 

 

 

Beginning

 

 

 

 

 

Quarterly
Redemption

 

Ending

 

Date

 

Balance

 

Rate

 

Interest

 

Amount

 

Balance

 

9/30/2008

 

9,923.00

 

12

%

297.69

 

—

 

10,220.69

 

12/31/2008

 

10,220.69

 

12

%

306.62

 

—

 

10,527.31

 

3/31/2009

 

10,527.31

 

12

%

315.82

 

—

 

10,843.13

 

6/30/2009

 

10,843.13

 

12

%

325.29

 

(115.35

)

11,053.07

 

9/30/2009

 

11,053.07

 

12

%

331.59

 

(490.26

)

10,894.41

 

12/31/2009

 

10,894.41

 

12

%

326.83

 

(259.55

)

10,961.69

 

3/31/2010

 

10,961.69

 

12

%

328.85

 

(438.35

)

10,852.19

 

6/30/2010

 

10,852.19

 

12

%

325.57

 

(588.31

)

10,589.45

 

9/30/2010

 

10,589.45

 

12

%

317.68

 

(697.89

)

10,209.24

 

12/31/2010

 

10,209.24

 

12

%

306.28

 

(832.86

)

9,682.66

 

3/31/2011

 

9,682.66

 

12

%

290.48

 

(2,808.88

)

7,164.26

 

6/30/2011

 

7,164.26

 

12

%

214.93

 

(1,643.80

)

5,735.39

 

9/30/2011

 

5,735.39

 

12

%

172.06

 

(1,499.61

)

4,407.85

 

12/31/2011

 

4,407.85

 

12

%

132.24

 

(4,540.08

)

—

 

 

2

--------------------------------------------------------------------------------

 

CFRR Holdings

 

 

 

Beginning

 

 

 

 

 

Quarterly
Redemption

 

Ending

 

Date

 

Balance

 

Rate

 

Interest

 

Amount

 

Balance

 

9/30/2008

 

13,640.00

 

12

%

409.20

 

—

 

14,049.20

 

12/31/2008

 

14,049.20

 

12

%

421.48

 

—

 

14,470.68

 

3/31/2009

 

14,470.68

 

12

%

434.12

 

—

 

14,904.80

 

6/30/2009

 

14,904.80

 

12

%

447.14

 

(158.56

)

15,193.38

 

9/30/2009

 

15,193.38

 

12

%

455.80

 

(673.90

)

14,975.28

 

12/31/2009

 

14,975.28

 

12

%

449.26

 

(356.77

)

15,067.77

 

3/31/2010

 

15,067.77

 

12

%

452.03

 

(602.54

)

14,917.26

 

6/30/2010

 

14,917.26

 

12

%

447.52

 

(808.68

)

14,556.10

 

9/30/2010

 

14,556.10

 

12

%

436.68

 

(959.31

)

14,033.47

 

12/31/2010

 

14,033.47

 

12

%

421.00

 

(1,144.83

)

13,309.63

 

3/31/2011

 

13,309.63

 

12

%

399.29

 

(3,861.04

)

9,847.88

 

6/30/2011

 

9,847.88

 

12

%

295.44

 

(2,259.54

)

7,883.78

 

9/30/2011

 

7,883.78

 

12

%

236.51

 

(2,061.34

)

6,058.96

 

12/31/2011

 

6,058.96

 

12

%

181.77

 

(6,240.73

)

—

 

 

3

--------------------------------------------------------------------------------

 

Schedule 8 – New Warrant Shares

 

 

 

 

 

25%

 

 

 

 

 

 

 

Warrants as of

 

additional

 

 

 

Total Warrants

 

Additional Warrants Debentures

 

6/30/2008

 

warrants

 

Ratchet warrants

 

After Amendment

 

 

 

 

 

 

 

 

 

 

 

Midsummer

 

2,284,026

 

1,031,250

 

456,805

 

3,772,081

 

Bushido Capital Master Fund

 

381,306

 

172,161

 

76,261

 

629,728

 

Pierce Diversified Fund

 

380,671

 

171,875

 

76,134

 

628,680

 

ACM SPV

 

124,491

 

56,208

 

24,898

 

205,597

 

BCFM Trustees

 

619,911

 

279,893

 

123,982

 

1,023,786

 

Ralph Rabman

 

6,867

 

3,101

 

1,373

 

11,341

 

CFRR Holdings

 

9,438

 

4,263

 

1,888

 

15,588

 

 

 

3,806,710

 

1,718,750

 

761,342

 

6,286,802

 

 

1

--------------------------------------------------------------------------------

 

Schedule 9 – Net Revenues Apportionment

 

 

 

Debt

 

Cash Receipt

 

 

 

6/30/2008

 

Application

 

 

 

 

 

 

 

Longview Fund

 

2,057,189

 

23.91

%

Longview Equity Fund

 

550,000

 

6.39

%

Alpha Capital

 

495,000

 

5.75

%

Midsummer

 

3,300,000

 

38.36

%

Bushido Capital Master Fund

 

550,916

 

6.40

%

Pierce Diversified Fund

 

550,000

 

6.39

%

ACM SPV

 

179,865

 

2.09

%

BCFM Trustees

 

895,656

 

10.41

%

Ralph Rabman

 

9,923

 

0.12

%

CFRR Holdings

 

13,640

 

0.16

%

 

 

8,602,189

 

100.00

%

 

1

--------------------------------------------------------------------------------