LOAN MODIFICATION AGREEMENT
EXHIBIT
1
THIS
LOAN MODIFICATION AGREEMENT (“Modification
Agreement”) by
and
between Xxxxxxxxxx Equity Partners, Ltd. (“Xxxxxxxxxx”)
and
Connected Media Technologies, Inc. (“CMT”)
is
entered into and is effective as of the —
day
of
February, 2007.
WITNESSETH:
WHEREAS,
on January 3 I, 2006, Xxxxxxxxxx and CMT entered into that certain Securities
Purchase Agreement (“SPA”)
which
provided for the issuance of secured convertible debentures to Xxxxxxxxxx in
the
aggregate principal amount of $ __________(a copy of the SPA is attached hereto
as Exhibit
A)
and
WHEREAS,
on January 3 I, 2006, to secure CMT’s obligations to Xxxxxxxxxx, Xxxxxxxxxx and
CMT entered into that certain Amended and Restated Security Agreement
(“Security
Agreement”),
which
provided Xxxxxxxxxx with, among other things, a first position security interest
in CMT’s assets (a copy of the Security Agreement is attached hereto as
Exhibit
B)
and
WHEREAS,
on each of January —,
2006,
_____________,
and
_____________
CMT
issued to Xxxxxxxxxx secured convertible debentures in the principal sums of
___________,
___________, and
___________
respectively
(collectively, the “Secured
Convertible Debentures”)
a copy
of each Secured Convertible Debenture is attached hereto as Exhibit C, D, and
E
respectively); and
WHEREAS,
the parties desire to modify certain provisions of the SPA,
the
Security Agreement, and the Secured Convertible Debentures (collectively, the
“Loan
Documents”),
so as
to extend the maturity dates of the Secured Convertible Debentures and to amend
and restate the terms of redemption for all of the debt owed by CMT to
Xxxxxxxxxx;
NOW,
THEREFORE, in consideration of the mutual promises herein contained and other
good and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, Xxxxxxxxxx and CMT agree as follows:
1.
Recitals.
To the
best knowledge of CMT and Xxxxxxxxxx, the recitals set forth above are agreed
to
be true and correct in all material respects.
2.
Acknowledgment
of Debt.
CMT
acknowledges that, to the best of its knowledge, there are no claims, demands,
offsets or defenses at law or in equity that would defeat or diminish
Xxxxxxxxxx’x right to collect the indebtedness evidenced by the Secured
Convertible Debentures, and to proceed to enforce the rights and remedies
available to Xxxxxxxxxx as provided in the Loan Documents, all in accordance
with the applicable terms.
3.
(RESERVED)
4.
Restated
Maturity Dates.
Notwithstanding anything to the contrary contained in the Loan Documents, the
Maturity Date of each Secured Convertible Promissory Note is hereby changed
to
June30, 2007. Interest shall continue to accrue on the outstanding principal
balance of each Secured Convertible Promissory Note at an annual rate equal
to
fourteen percent (14%), and shall become due and payable together with all
outstanding principal on the Maturity Date.
5.
Restated
Redemption Price.
Notwithstanding anything to the contrary contained in the Loan Documents, for
a
period commencing on the date of this Modification Agreement and continuing
through September_, 2007 (“Redemption
Period.”),
CMT
will have the right to redeem all (or any portion) of the amounts owed to
Xxxxxxxxxx prior to the Maturity Date with a lump-sum payment consisting of:
(a)
a cash payment of One Million Dollars $
i,oO0,0o~
and (b) continuation of the Convertible Promissory note in the amount of six
hundred severity eight thousand dollars ($678,000) (items 5(a) and 5(b) being
collectively referred to as the “Restated
Redemption Price”),
the
foregoing Restated Redemption Price to be adjusted proportionately in the case
of any partial payment. The cash payment of One Million Dollars ($1,000,000)
shall be applied to the notes dated January 31, 2006, July 14, 2006 and August
31, 2006 in the amounts of $400,000, $300,000 and $300,000 respectively. Upon
receipt of the One Million Dollar payment Xxxxxxxxxx shall release any and
all
liens and encumbrances it may hold on any and all assets of CIv1T and the terms
and conditions of the Security Agreement shall be deemed to have been met.
The
remaining Convertible Promissory Note for six hundred seventy eight thousand
dollars ($678,000) shall be unsecured and represents the original amounts loaned
to CMT in April and June 2005 plus fees and interest. Nothing herein shall
be
interpreted to alter CMT’S obligation to make payment of any Redemption Premium,
or other fee payable upon redemption, in connection with the Secured Convertible
Debentures the Secured Convertible Promissory Notes. Notwithstanding the
foregoing, the remaining convertible note for $678,000 shall be subject to
the
following conditions:
a) HOLD
BACK
PERIOD. For a period commencing on the date of the cash payment of $1,000,000
(“Redemption Date”) and continuing for ninety (90) days thereafter, Xxxxxxxxxx
shall not convert
or sell any shares underlying the $678,000 note.
b) CONVERSION
& SELLING PROVISIONS. Commencing at the end of the Hold Back Period (on the
date ninety (90) days from the Redemption Date above), Xxxxxxxxxx may convert
and sell shares underlying the $678,000 note in amounts not to exceed fifty
six
thousand five hundred dollars ($56,500)
per
calendar month, for a period of twelve (12) months thereafter. At the end of
this 12 month period, should any amounts remain under the $678,000 convertible
note, Xxxxxxxxxx shall have the right to convert and sell shares underlying
the
remaining amounts at its discretion and without restriction. Cash payments
will
be allowed to offset the monthly conversion of shares any time the 10
consecutive day VWAP is less than .0125, all Cash payments must comply with
the
Redemption Premium, or other fee payable upon redemption, in connection with
the
Secured Convertible Debentures the Secured Convertible Promissory Notes. All
payments must be made in full on the 1st
of every
month.
6. Release
of Liens and Disbursement of Escrow.
Upon
payment of the full Restated Redemption Price, all of CMT’s obligations to
Xxxxxxxxxx will deemed “paid in full” and Xxxxxxxxxx will: (a) cancel and
deliver to CMT all of the Secured Convertible Notes except for the remaining
unsecured note for $678,000 as stated in paragraph 5 above; (b) release and
discharge all liens and claims against CMT and its affiliates; (c) release
to
CMT the sixty-million (60,000,000) shares of CMT’s common stock currently held
in escrow pursuant to that certain Amended and Restated Pledge and Escrow
Agreement, dated January 31, 2006, by and among Xxxxxxxxxx, CMT, and Xxxxx
Xxxxxxxx, as Escrow Agent; and (d) execute and deliver any other additional
documents reasonably requested by CMT to evidence the complete payment and
discharge of all obligations of CMT to Xxxxxxxxxx.
7. Conversion
Price and Adjustments to Conversion Price.
Upon
execution of this Agreement, the Conversion Price (as that term is defined
in
the Secured Convertible Debentures the Secured Convertible Promissory Notes)
shall be changed to $0.01. This provision shall be applicable to all Secured
Convertible Debentures and Secured Convertible Promissory Notes. The discount
on
the Conversion Price shall change to sixty percent (60%) of the Lowest Bid
Price
of the Common Stock during the ten (10) trading days immediately preceding
the
Conversion Date as quoted by Bloomberg, LP.
8.
Warrants.
Upon
payment of the full Restated Redemption Price, CMT will issue to Xxxxxxxxxx
a
warrant to purchase 10% of the outstanding Secured Convertible Debentures the
Secured Convertible Promissory Notes) on June 3O~’ 2007 in shares of CMT’s
common stock. The warrant will have an exercise price equal to one cent ($0.01).
The warrant will have a seven year maturity date, and demand Registration
Rights.. All outstanding Warrants shall be reset to par .0001 on the date which
this document is signed.
9.
No
other modifications.
Except
as specifically modified herein, the terms of the Loan Documents shall remain
unchanged and in full force and effect; provided, however, the Loan Documents
shall be deemed automatically reformed so as to reflect the changes contained
herein
10,
Ratification
and Reaffirmation.
CMT
hereby ratifies, confirms, and reaffirms all terms and conditions of the Loan
Documents, and confirms the validity of all amounts due and payable to
Xxxxxxxxxx under the Loan Documents, and acknowledges that, as of the date
hereof, it has no defenses against any of its obligations to Xxxxxxxxxx under
the Loan Agreements. Xxxxxxxxxx’x agreement to modify the existing Loan
Documents pursuant to this Loan Modification Agreement shall in no way obligate
it to make any future modifications to the Loan Documents.
11.
Notices.
Any
notices, consents, waivers or other communications required or permitted to
be
given under the terms hereof must be in writing and will be deemed o have been
delivered: (i) upon receipt, when delivered personally; (ii) upon receipt,
when
sent by facsimile (provided confirmation of transmission is mechanically or
electronically generated and kept on file by the sending party); or (iii) one
(I) trading day after deposit with a nationally recognized overnight delivery
service, in each case properly addressed to the party to receive the same.
The
addresses and facsimile numbers for such communications shall be:
If
to the
Company, to: Connected
Media Technologies, Inc.
00
Xxxxxxxxx 0xx Xxxxxx, Xxxxx 0000
Xxxxx,
Xxxxxxx 00000
Attention:
Xxxxxxx X Xxxx, CEO
Telephone:
(000) 000-0000
Facsimile:
(000) 000-0000
With
a
copy to: XxXxxxxxxx
& Xxxxx LLP
000
Xxxxxxx Xxxxxx
Xxx
Xxxx,
Xxx Xxxx 00000
Attention:
Xxxxx X. Xxxx, Esq.
Telephone:
(000) 000-0000
If
to the
Xxxxxxxxxx: Xxxxxxxxxx
Equity Partners, Ltd.
000
Xxxxxx Xxxxxx, Xxxxx 0000
Xxxxxx
Xxxx, Xxx Xxxxxx 00000
Attention:
Xxxx Xxx
Telephone:
(201) _____________
With
a
copy to: Xxxxx
Xxxxxxxx, Esq.
000
Xxxxxx Xxxxxx -
Xxxxx
0000
Xxxxxx
Xxxx, XX 00000
Telephone:
(000) 000-0000
Facsimile:
(000) 000-0000
or
at
such other address and/or facsimile number and/or to the attention of such
other
person as the recipient party has specified by written notice.
11,
Counterparts.
This
Loan Modification Agreement may be executed in army number of counterparts
and
by different parties hereto in separate counterparts, each of which when so
executed and delivered shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
12.
Governing
Law.
This
Loan Modification Agreement shall be governed by and construed in accordance
with the laws of the State of New Jersey, without giving effect to conflicts
of
laws thereof. Bach of the parties consents to the jurisdiction of the Superior
Courts of the State of New Jersey sitting in Xxxxxx County, New Jersey and
the
U.S. District Court for the District of New Jersey sitting in Newark, New Jersey
in connection with any dispute arising under this Loan Modification Agreement
and hereby waives, to the maximum extent permitted by law, any objection,
including any objection based on forum non conveniens to the bringing of any
such proceeding in such jurisdictions.
13.
Entire
Agreement.
This
Loan Modification Agreement, in addition to the Loan Documents, represent the
entire agreement of the parties and supersedes all prior oral and written
communications with respect to the subject matter contained herein, if there
is
any conflict between this Loan Modification Agreement and the Loan Documents,
this Loan Modification Agreement shall prevail. No amendment of this Loan
Modification Agreement shall be valid unless it is in writing and is signed
by
all parties.
14..
Filing:
CMT
shall file its annual report with the SEC for fiscal year 2006 on Form 10-K
no
later than 4:00 pm EST March 31, 2007 or by the first two week extension. CMT
shall comply with all other legal requirements regarding periodic reporting,
including compliance with the due dates for such reports. Failure to so comply
shall constitute an event of default by CMT under the Secured Convertible
Debentures and this Agreement,
15.
Transfer
Agent:
CMT
shall retain a transfer agent recommended by Xxxxxxxxxx within five (5)
business
days of tile execution of this document. Xxxxxxxxxx shall provide its
recommendation to CMT promptly after execution of this Agreement. Failure by
CMT
to retain such transfer agent shall constitute an event of default under the
Secured Convertible Debentures and this Agreement.
16.
Consultant:
Xxxxxxxxxx shall have the right to enlist the services of consultants or
advisors to assist it in analysis and other consideration of the business of
CMT. CMT shall permit such consultants or advisors with such access to Company
premises and information as Xxxxxxxxxx shall reasonably request. Failure to
permit such access by CMT shall constitute an event of default under the Secured
Convertible Debentures and this Agreement.
IN
WITNESS WHEREOF, the
parties hereto have executed this Loan Modification Agreement as of the date
first above written.
XXXXXXXXXX
CAPITAL CONNECTED
MEDIA
PARTNERS,
LTD. TECHNOLOGIES,
INC.
By:
/s/
Xxxx Xxxxxx By:
/s/
Xxxxxxx X. Xxxx
Name: Xxxx
Xxxxxx Name:
Xxxxxxx X. Xxxx
Title: Portfolio
Manager Title:
Chief Executive Officer
[Signature
Page to Loan Extension Agreement]
