Victory Park Management, LLC
Exhibit
99.3
Victory
Park Management, LLC
000 X.
Xxxxxx Xxxxxx
Xxxxx
0000
Xxxxxxx,
XX 00000
June __,
2008
QSGI
Inc., and the other Companies
under the
Securities Purchase Agreement
000 Xxxxx
Xxxx Xxx, Xxxxx 000
Xxxx
Xxxxx, Xxxxxxx 00000
Attention: Xxxx
Xxxxxxx
Ladies
and Gentlemen:
We refer
to the Securities Purchase Agreement, dated as of June __, 2008 (the “Securities Purchase
Agreement”) among QSGI Inc., a Delaware corporation (“Parent”), QualTech
International Corporation, a Delaware corporation (“International”), QualTech
Services Group, Inc., a Delaware corporation (“Services”), QSGI-DPV Inc., a
Delaware corporation (“DPV”), QSGI-CCSI, INC., a
Delaware corporation (“QSGI-CCSI”), (each of the foregoing
companies, together with Parent, a “Company” and collectively, the
“Companies”), Victory
Park Management, LLC, as administrative agent and collateral agent (“Agent”), and the buyers listed
on the Schedule of
Buyers attached thereto (each individually, a “Buyer” and collectively, the
“Buyers”). Capitalized
terms used and not defined herein have the meanings given to such terms in the
Securities Purchase Agreement.
Section
4.1 of the Securities Purchase Agreement sets forth the conditions precedent to
the obligation of the Buyers to purchase the Notes at the First
Closing. Notwithstanding the terms of Section 4.1, the parties
acknowledge that the conditions precedent identified in Schedule 1 attached
hereto will not be satisfied on or prior to the first Closing Date
(collectively, the “Post-Closing
Conditions”). The Buyers agree to waive the satisfaction of
the Post-Closing Conditions as conditions precedent to the purchase of Notes at
the First Closing, and in consideration thereof, the Companies agree to complete
or cause to complete, as applicable, the actions required thereby on or before
the applicable completion deadline identified in Schedule
1. The Companies agree that the failure to fully complete such
actions on or before the applicable completion deadline identified in Schedule 1 shall (i)
constitute an Event of Default (to which any grace periods set forth in the
Transaction Documents shall not be applicable), and (ii) automatically cause the
interest rate to be calculated at the Default Rate until such time as all
Post-Closing Conditions have been performed, satisfied, waived by all the
Buyers, or otherwise fulfilled as determined in the sole discretion of the
Buyers; provided,
however, in each case, such failure shall not in any way impair the
effectiveness of the Transaction Documents; provided, further, (x) if
the Companies have not complied with
1
paragraph
4 of Schedule 1
on or before the completion deadline for such paragraph, commencing on the
11th
day following the First Closing Date the interest rate applicable to Notes shall
be 15% per annum until the earlier of the satisfaction the requirements of
paragraph 4 of Schedule 1 or July 5, 2008, and (y) if the Companies have not
complied with paragraph 4 of Schedule 1 within 30
days of the First Closing Date, on the 31st day
following the Closing Date Parent shall issue Buyers an additional 1,750,000
shares of Common Stock for no additional purchase price and Parent shall cause
its transfer agent to deliver a certificate evidencing such Common Stock to
Buyer within five (5) Business Days of such date, and (z) if the Companies have
not complied with paragraph 4 of Schedule 1 prior to
August 5, 2008, on August 5, 2008 the interest rate applicable to all Notes (now
or hereafter outstanding) shall permanently remain and be 15% per annum (subject
to the institution of the Default Rate for other Events of Default) and the
Parent shall issue Buyers an additional 1,750,000 shares of Common Stock for no
additional purchase price and Parent shall cause its transfer agent to deliver a
certificate evidencing such Common Stock to Buyer within five (5) Business Days
of such date. Notwithstanding the other provisions of this letter
agreement, the rights set forth in the second proviso to the immediately
preceding sentence are the only rights that Agent, Buyers and Holders shall have
with respect a failure of Companies to comply with paragraph 4 of Schedule 1; provided, any failure of
Buyer to comply with the terms of such second proviso shall constitute a
separate Event of Default (to which any grace periods set forth in the
Transaction Documents shall not be applicable) with respect to which Agent, Buyers and
Holders shall have all rights provided in the Transaction Documents for Events
of Default.
Except as
provided above, the Transaction Documents remain unmodified and in full force
and effect. The execution and delivery of this letter agreement by
the Agent the Buyers is a one time accommodation and shall not be deemed to
create a course of dealing or otherwise create any express or implied duty by
the Agent or the Buyers. The Agent and Buyers reserve all rights and
remedies available to them under the Transaction Documents. The
agreements contained herein shall be governed by, and construed in accordance
with, the law of the State of Illinois. This letter agreement may be
executed in any number of counterparts and by different parties hereto in
separate counterparts, each of which when so executed shall be deemed to be an
original and all of which taken together shall constitute but one and the same
agreement. This letter agreement is a Transaction
Document.
[Signature Pages
Following]
2
Very
truly yours,
BUYERS:
VICTORY
PARK MANAGEMENT, LLC
By:____________________________
Name:
Xxxxxxx Xxx
Title:
BUYERS:
VICTORY
PARK CAPITAL, L.P.
By: Victory
Park Capital Advisors, LLC
Its: Investment
Manager
By:____________________________
Name:
Xxxxxxx Xxx
Title: Principal
3
Agreed and Accepted as of
the date first written above:
COMPANIES:
By:
Name: Xxxx
Xxxxxxx
Title: Chief
Executive Officer
QUALTECH
INTERNATIONAL CORPORATION
By:
Name: Xxxx
Xxxxxxx
Title: Chief
Executive Officer
QUALTECH
SERVICES GROUP, INC.
By:
Name: Xxxx
Xxxxxxx
Title: Chief
Executive Officer
QSGI-DPV INC.
By:
Name: Xxxx
Xxxxxxx
Title: Chief
Executive Officer
QSGI-CCSI, INC.
By:
Name: Xxxx
Xxxxxxx
Title: Chief
Executive Officer
4
Schedule
1
Post-Closing
Conditions
|
Description
|
Completion Deadline
|
|
|
1.
|
Deliver
to Agent fully an executed control agreement, in form and substance
satisfactory to Agent, with respect to Account #: 2000011346308
maintained at Wachovia Bank
|
Ten
(10) Business Days following the First Closing Date.
|
|
2
|
Deliver
to Agent fully executed control agreements, in form and substance
satisfactory to Agent, with respect to new accounts to be maintained by
each Company at Citibank, N.A..
|
Five
(5) Business Days following the First Closing Date
|
|
3.
|
Deliver
to Agent fully executed landlord’s agreements, in form and substance
satisfactory to Agent, with respect to each Company’s chief executive
office and each location leased by any Company where Inventory is
located
|
Thirty
(30) days following the First Closing Date.
|
|
4.
|
Cause
(a) the CCSI Acquisition to close (i) in accordance with the CCSI
Acquisition Documents in the form provided to Agent prior to the First
Closing Date and (ii) in compliance with Section 8.28 of the Agreement,
and (b) cause Xxxx Xxxxxxx to execute and deliver (i) a subordination
agreement in the form agreed to prior to the closing date, and (ii) a
collateral assignment of acquisition documents in form and substance
satisfactory to Agent.
|
Ten
(10) days following the First Closing Date.
|
|
5.
|
Cause
Parent’s transfer agent to deliver a certificate evidencing the Common
Stock required to be issued under Section 3.1 of the Securities Purchase
Agreement and a letter certifying as to the outstanding common stock of
Parent
|
Five
(5) Business Days following the First Closing Date
|
|
6.
|
An
authorization for Agent to terminate UCC filing 738468 that is on file
with the New York Secretary of State and which names DPV, Inc., as debtor,
and IBM Credit LLC, as secured party, or evidence satisfactory to
Agent
|
Ten
(10) Business Days following the First Closing
Date
|
