EXHIBIT 10.7
FIRST AMENDMENT TO MASTER AGREEMENT
AND
FIRST AMENDMENT TO SOFTWARE SECURITY AGREEMENT
This First Amendment to Master Agreement and First Amendment to
Software Security Agreement dated as of April ___, 2002 ("FIRST AMENDMENT"), is
executed by and among the parties set forth on the signature pages hereto.
RECITALS
A. ORIGINAL AGREEMENT. The parties hereto are parties to that certain
Master Subordination, Waiver, Release and Indemnification Agreement (the
"ORIGINAL AGREEMENT"), dated as of March 27, 2002.
B. ORIGINAL SOFTWARE SECURITY AGREEMENT. Xxxxxx has executed that
certain Security Agreement (the "ORIGINAL SOFTWARE SECURITY AGREEMENT") dated as
of March 27, 2002, for the benefit, INTER ALIA, of Xxxxxx.
C. DEFINED TERMS. Each capitalized term that is not otherwise defined
herein shall have the meaning ascribed to such term in the Original Agreement.
D. ADDITIONAL OBLIGATIONS. Xxxxxx has agreed (i) to lend an additional
$200,000 to Xxxxxx, to be evidenced by an increase in the principal balance of,
and an amendment to, the Xxxxxx Note, and (ii) to lease certain equipment to
Xxxxxx or Xxxxxx, Inc., pursuant to a Master Lease Agreement ("LEASE") of even
date herewith.
E. AMENDMENTS. As a condition precedent to (i) advancing such
additional $200,000, and (ii) leasing such equipment, Xxxxxx has required, and
the other parties hereto have agreed, that the Original Agreement and the
Original Software Security Agreement shall be amended as set forth herein, and
that as a result, all of the references in the Transaction Documents shall be
correspondingly amended.
F. MASTER AGREEMENT; SOFTWARE SECURITY AGREEMENT. The Original
Agreement, as amended by this First Amendment, shall be the "MASTER AGREEMENT,"
as such term is used in the Transaction Documents. The Original Software
Security Agreement, as amended by this First Amendment, shall be the "SOFTWARE
SECURITY AGREEMENT," as such term is used in the Transaction Documents.
AGREEMENT
In consideration of the agreements contained herein, the parties hereto
hereby agree as follows:
Section 1. AMENDMENT OF XXXXXX NOTE. The Parties hereto
recognize and agree that, from and after the effective date hereof, the term
"XXXXXX NOTE" as used in any of the Transaction Documents, shall mean and refer
to that certain promissory note, dated as of March 27, 2002, executed by Xxxxxx,
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payable to the order of Xxxxxx, in the original principal amount of $1,600,000,
as such principal amount has been increased to $1,800,000 pursuant to that
certain First Amendment to Promissory Note (Xxxxxx), of even date herewith.
Section 2. AMENDMENT OF SENIOR INDEBTEDNESS AND OBLIGATIONS.
The parties hereto recognize and agree that, from and after the effective date
hereof, (a) the term "SENIOR INDEBTEDNESS," as used in Article III of the Master
Agreement, shall mean and refer to all amounts owing to Xxxxxx under (i) the
Original Xxxxxx Loan, (ii) the Xxxxxx Loan (as modified by the amendment to the
defined term "Xxxxxx Note" effected by this First Amendment) and (iii) the
Lease, and (b) the term "OBLIGATIONS," as used in the Software Security
Agreement, shall include, INTER ALIA, amounts owing to Xxxxxx under (i) the
Xxxxxx Loan (as modified by the amendment to the defined term "Xxxxxx Note"
effected by this First Amendment) and (ii) the Lease.
Section 3. INTENTION OF THE PARTIES CONCERNING PARI PASSU
STATUS OF SENIOR INDEBTEDNESS.
(a) Section 3.06(b) of the Original Agreement is hereby
deleted in its entirety and the following is inserted in lieu thereof:
(b) DMG LOAN AND SENIOR INDEBTEDNESS. Xxxxxx and the
DMG Group agree that, subject to (i) the Software Security
Agreement, (ii) the Intercreditor Agreement, (iii) the Lease,
and (iv) Recital Q above, the Senior Indebtedness and the DMG
Loan shall rank pari passu in priority of payment.
(b) By agreeing that the Senior Indebtedness and the DMG Loan
rank pari passu, subject to certain exceptions, the parties intend that
(i) Xxxxxx is the exclusive owner of the equipment covered by the Lease
and shall have the exclusive right to the proceeds of any sale thereof,
(ii) until all of the obligations secured by the Software Security
Agreement are irrevocably paid in full, all revenues in respect of, and
all proceeds from the sale of, any assets covered by the Software
Security Agreement shall be paid to Xxxxxx to be applied to such
obligations, and (iii) clause (x) of Recital Q of the Original
Agreement shall be deleted and the following shall be substituted in
lieu thereof:
(x) in the case of Xxxxxx, the sum of (i) any
remaining outstanding aggregate balance of the Xxxxxx Loan,
plus (ii) all payments due but unpaid to Xxxxxx by Xxxxxx
under the Lease or . . . .
Section 4. RELEASE. The parties hereto recognize that Graylen,
Inc., a Delaware corporation ("GRAYLEN") is providing consulting services both
to Xxxxxx and to Xxxxxx. The parties hereto consent to Graylen`s provision of
consulting services to both Xxxxxx and Xxxxxx and waives any actual or potential
claim arising out of any actual or alleged conflict of interest resulting from
Graylen`s provision of consulting services to both Xxxxxx and Xxxxxx. The
consents and waivers contained in the preceding sentence are granted by the
parties hereto only after careful consideration of the consequences thereof.
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Section 5. AMENDMENT OF SOFTWARE SECURITY AGREEMENT. The
defined term "Obligations" in the Original Software Security Agreement is hereby
deleted in its entirety, and the following is inserted in lieu thereof:
"OBLIGATIONS": The unpaid principal amount of, and interest on
(including, without limitation, interest accruing after the maturity of
the Loans and interest accruing after the filing of any petition in
bankruptcy, or the commencement of any insolvency, reorganization or
like proceeding, relating to the Borrower, whether or not a claim for
post-filing or post-petition interest is allowed in such proceeding)
the Loans, together with all other obligations and liabilities of the
Borrower or any of the Borrower`s subsidiaries or affiliates to Xxxxxx,
or to any of Xxxxxx`s subsidiaries or affiliates, whether such
obligations or liabilities are direct or indirect, absolute or
contingent, due or to become due, or now existing or hereafter incurred
or acquired, which may arise under, out of, or in connection with (i)
the Master Agreement, (ii) the other Transaction Documents (including
this Security Agreement), or (iii) any other document regardless of
whether originally made, delivered, or given by the Borrower or any of
the Borrower`s subsidiaries or affiliates to Xxxxxx or to any other
Person, and regardless of whether on account of principal, interest,
reimbursement obligations, fees, indemnities, costs, expenses
(including, without limitation, all fees and disbursements of counsel
to the Lenders) or otherwise.
Section 6. TRANSACTION DOCUMENTS. The Lease shall be a
"Transaction Document." Each amendment now or hereafter made to any Transaction
Documents shall, itself, be a "Transaction Document." Each reference to a
Transaction Document in any other Transaction Document shall mean and refer to
such Transaction Document as now or hereafter amended.
Section 7. CONFIRMATION OF AGREEMENTS AND REPRESENTATIONS.
Except as set forth on EXHIBIT A hereto, which exceptions could not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect (as defined in the Xxxxxx Note), each party hereto confirms and
agrees to each of the covenants, representations, and warranties applicable to
such party set forth in Article VIII of the Master Agreement and each of the
other Transaction Documents as of the date hereof.
Section 8. EFFECT OF AMENDMENT. Except as expressly stated
herein or as otherwise expressly agreed by the parties thereto, (a) the
Transaction Documents are and shall be unchanged and remain in full force and
effect, and (b) this First Amendment shall not constitute a waiver of any
Default or Event of Default (as such capitalized terms are defined in the Xxxxxx
Note), or a waiver of the right of Xxxxxx to insist upon compliance with any
term, covenant, condition, or provision of the Transaction Documents, as amended
hereby. Except as specifically stated herein, the execution and delivery of this
First Amendment shall in no way release, harm or diminish, impair, reduce or
otherwise affect, the respective obligations and liabilities of the parties
under the Transaction Documents, all of which shall continue in full force and
effect.
Section 9. MISCELLANEOUS. This First Amendment is a contract
made under and shall be construed in accordance with and governed by the laws of
the state of New York. This First Amendment shall benefit and bind the parties
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hereto and their respective assigns, successors and legal representatives. This
First Amendment may be executed in two or more counterparts, and it shall not be
necessary that the signatures of all parties hereto be contained on any one
counterpart hereof; each counterpart shall be deemed an original, but all of
which together shall constitute one and the same instrument. All titles or
headings to the sections or other divisions of this First Amendment are only for
the convenience of the parties and shall not be construed to have any effect or
meaning with respect to the other content of such sections, subsections or the
divisions, such other content being controlling as to the agreement between the
parties hereto.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the date first above written.
XXXXXX FINANCIAL SERVICES, INC., a
North Carolina corporation
By:
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Name:
-----------------------------------
Title:
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SDS MERCHANT FUND, L.P., a Delaware limited
partnership
By:
----------------------------------------
SDS Capital Partners, LLC, its general
partner
By:
--------------------------------------
Xxxxxx Xxxxx, Managing Member
DMG LEGACY INTERNATIONAL LTD., a
British Virgin Islands corporation
By:
----------------------------------------
Name:
-----------------------------------
Title:
-------------------------------------
DMG LEGACY INSTITUTIONAL FUND,
LLC, a Delaware limited liability company
By:
-----------------------------------
Name:
-----------------------------------
Title:
-----------------------------------
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DMG LEGACY FUND, LLC, a Delaware limited
liability company
By:
-----------------------------------
Name:
----------------------------------
Title:
----------------------------------
X. X. XXXXXX GROUP INC., a
Delaware corporation
By:
------------------------------------------
Name:
------------------------------------------
Title:
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X. X. XXXXXX, INC., a New
York corporation
By:
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Name:
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Title:
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RELATED PARTIES:
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XXXXXX XXXXX
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XXXXXX XXXXX
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XXXXX XXXXX
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XXXX XXXXXXXXX
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XXXX XXXXXXXX
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XXXXXXX X. XXXXXX
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XXXXXXX XXXXXXX
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XXXXXXX XXXXX
MALIN GROUP MEMBERS:
LAN/WAN, INC.
By:
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Xxxxxx Xxxxx, President
ATLANTIC GROUP, INC.
By:
--------------------------------------------
Xxxxxx Xxxxx, President
KETER CORP.
By:
--------------------------------------------
Xxxxx Xxxxx, President
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XXXXXX XXXXX
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XXXXXXX X. XXXXXX
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XXXX XXXXXXXXX
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EXHIBIT A
EXCEPTIONS TO REPRESENTATIONS OCCURRING
SINCE MARCH 27, 2002
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