AMENDMENT NO. 1 TO SECURITY AGREEMENT
AMENDMENT
NO. 1
TO
This Amendment
No. 1 to Security Agreement
(the
“Amendment”)
is
made effective as of October 18, 2006 (the “Amendment
Date”)
and is
entered into by and between Ronco Corporation, a Delaware corporation (the
“Borrower”),
and
Xxxxxxx Xxxxxx Xxxxxx Inc., a Texas corporation, individually and as agent
for
the Lenders (the “Secured
Party”).
Capitalized
terms used in this Amendment that are not otherwise defined herein shall have
the meanings set forth in the Security Agreement dated June 9, 2006 between
the
Borrower and the Secured Party (the “Agreement”).
Whereas,
the
Borrower and the Secured Party are parties to the Agreement;
Whereas, the
Borrower intends to enter into a senior credit agreement (the “Laurus
Loan”)
with
Laurus Master Fund, Ltd (“Laurus”);
Whereas, a
condition to closing on the Laurus Loan is that the Secured Party and Laurus
enter into an intercreditor and subordination agreement pursuant to which the
Secured Party shall subordinate its interest in the Collateral to
Laurus;
Whereas, certain
provisions of the Agreement require amendment to facilitate the Laurus Loan;
and
Whereas,
the
Agreement may be amended by the Secured Party and the Borrower.
Now,
Therefore,
in
consideration of the mutual covenants and obligations set forth herein, and
for
other good and valuable consideration, the receipt and sufficiency of which
is
hereby acknowledged, the Borrower and the Secured Party hereby agree as
follows:
| 1. |
Amendment
of the Agreement.
|
The
parties hereby agree to amend the terms of the Agreement as of the Amendment
Date as provided below.
1.1 Amendment
of Section 1(e). Section
1(e) is hereby amended and restated in its entirety to read as
follows:
“(e)
The
term “Loan
Documents”
means
this Agreement, the Letter Loan Agreement dated as of the date hereof (the
“Loan
Agreement”), among the Borrower and the Lenders and the Note.”
1.2 Amendment
of Section 4(a).
Section
4(a) is hereby amended and restated in its entirety to read as
follows:
“(a) Ownership
and Liens.
Other
than the assignment of the Collateral to Laurus Master Fund, Ltd. (the “New
Insurance Assignment”) as collateral pursuant to terms of the loan (the “Laurus
Loan”) made by Laurus Master Fund, Ltd. to Debtor, Debtor will maintain good and
marketable title to all Collateral free and clear of all Liens, except for
Liens
held by, as applicable, the Secured Party, Xxxxx
Fargo Bank, National Association, Prestige Capital Corporation, Laurus Master
Fund, Ltd., Crossroads Financial, LLC
and the
Permitted Liens. Debtor will cause any financing statement or other security
instrument with respect to the Collateral, other than those held by Laurus
Master Fund, Ltd., Xxxxx Fargo Bank, National Association, Crossroads Financial,
LLC and Prestige Capital Corporation, to be terminated, except as may exist
or
as may have been filed in favor of Secured Party. Debtor will defend at its
reasonable expense Secured Party’s right, title and security interest in and to
the Collateral against the claims of any third party other than Xxxxx Fargo
Bank, National Association, Laurus Master Fund, Ltd., Crossroads Financial,
LLC
and Prestige Capital Corporation.”
1.3 Amendment
of Section 4(b). Section
4(b) is hereby amended and restated in its entirety to read as
follows:
“(b) Further
Assurances.
Debtor
will from time to time at its expense promptly execute and deliver all further
instruments and documents and take all further action that Secured Party may
reasonably request in order (i) to perfect and protect the security interest
created or purported to be created hereby and the priority of such security
interest, (ii) to enable Secured Party to exercise and enforce its rights and
remedies hereunder in respect of the Collateral, and (iii) to otherwise effect
the purposes of this Agreement, including without limitation executing and
filing such financing or continuation statements, or amendments thereto.”
1.4 Amendment
of Section 5(a).
Section
5(a) is hereby amended and restated in its entirety to read as
follows:
“(a) Transfer
or Encumbrance.
Debtor
will not other than pursuant to the New Insurance Assignment and subject to
the
rights of Xxxxx
Fargo Bank, National Association, Laurus Master Fund, Ltd., Prestige Capital
Corporation, Crossroads Financial, LLC
and the
holders of Permitted Liens, (i) sell, assign (by operation of law or otherwise),
transfer, exchange, lease or otherwise dispose of any of the Collateral, (ii)
xxxxx x xxxx or security interest in or execute, file or record any financing
statement or other security instrument with respect to the Collateral to any
party other than Secured Party, or (iii) deliver actual or constructive
possession of any of the Collateral to any party other than Secured
Party.”
1.5 Amendment
of Section 5(b).
Section
5(b) is hereby amended and restated in its entirety to read as
follows:
“(b) Impairment
of Security Interest.
Other
than as contemplated by the terms of the Laurus Loan, Debtor will not take
or
fail to take any action which would in any manner impair the value or
enforceability of Secured Party’s security interest in any
Collateral.”
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1.6 Amendment
of Section 6(d).
Section
6(d) is hereby amended and restated in its entirety to read as
follows:
“(d) Debtor’s
Receipt of Proceeds.
Subject
to the rights of Xxxxx
Fargo Bank, National Association, Laurus Master Fund, Ltd., Crossroads
Financial, LLC, Prestige Capital Corporation
and the
holders of Permitted Liens, all amounts and proceeds (including instruments
and
writings) received by Debtor in respect of the Collateral shall be received
in
trust for the benefit of Secured Party hereunder and, upon request of Secured
Party, shall be segregated from other property of Debtor and shall be forthwith
delivered to Secured Party in the same form as so received (with any necessary
endorsement) and applied to the Indebtedness in such manner as Secured Party
deems appropriate in its sole discretion. Notwithstanding the foregoing, all
amounts and proceeds in respect of the Collateral received by Secured Party
in
excess of the Indebtedness shall be promptly paid to Debtor.”
1.7 Amendment
of Section 7(c).
Section
7(c) is hereby amended and restated in its entirety to read as
follows:
“(c) Abandonment.
Debtor
abandons the Collateral or any portion thereof; provided, however, that an
assignment of the Collateral to Laurus Master Fund, Ltd. pursuant to the New
Insurance Assignment shall not constitute an abandonment of the
Collateral.”
1.8 Amendment
of Section 8(a).
Section
8(a) is hereby amended and restated in its entirety to read as
follows:
“(a) Remedies.
Subject
to the New Insurance Assignment and the rights of Laurus Master Fund, Ltd.,
Secured Party may from time to time at its discretion, without limitation and
without notice except as expressly provided in any of the Loan
Documents:”
2.
Miscellaneous.
2.1 Waiver.
The
Secured Party hereby waives any Event of Default under the Agreement occurring
immediately prior to the Amendment Date.
2.2 No
Other Changes.
All
terms of the Agreement (including, without limitation, the provisions of the
Agreement which apply following termination of the Agreement) shall remain
in
full force and effect as amended hereby.
2.3 Governing
Law. THIS
AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF
THE
STATE OF TEXAS AND APPLICABLE FEDERAL LAWS, EXCEPT TO THE EXTENT PERFECTION
AND
THE EFFECT OF PERFECTION OR NON-PERFECTION OF THE SECURITY INTEREST GRANTED
UNDER THE SECURITY AGREEMENT, IN RESPECT OF ANY PARTICULAR COLLATERAL, ARE
GOVERNED BY THE LAWS OF A JURISDICTION OTHER THAN THE STATE OF
TEXAS.
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2.4 Invalid
Provisions.
If any
provision of this Amendment are held to be illegal, invalid or unenforceable
under present or future laws effective during the term of this Amendment, such
provision shall be fully severable and this Amendment shall be construed and
enforced as if such illegal, invalid or unenforceable provision had never
comprised a part of this Amendment, and the remaining provisions of this
Amendment shall remain in full force and effect and shall not be affected by
the
illegal, invalid or unenforceable provision or by its severance from this
Amendment.
2.5 Counterparts.
This
Amendment may be executed in any number of counterparts and signatures may
be
delivered by facsimile, each of which shall be deemed an original, but both
of
which together shall constitute one and the same instrument.
[Signature
Page Follows]
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In
Witness Whereof,
the
parties have caused this Amendment No. 1 to Security Agreement to be executed
by
their respective authorized officers.
COMPANY:
RONCO
CORPORATION
By:
/s/
Xxxx
Xxxxxxxxx
Name:
Xxxx Xxxxxxxxx
Title:
Interim President and Chief Executive Officer
SECURED
PARTY:
XXXXXXX
XXXXXX XXXXXX, INC.
By:
/s/Xxx
X.
Xxxxxx
Name:
________________________________
Title:
_________________________________
