Exhibit 10.4
FIRST AMENDMENT
TO
SECURED CONVERTIBLE DEBENTURE PURCHASE AGREEMENT
AMONG
DIGITAL DESCRIPTOR SYSTEMS, INC.
AND
THE INVESTORS SIGNATORY HERETO
Dated as of March 5, 2001
FIRST AMENDMENT TO SECURED DEBENTURE PURCHASE AGREEMENT ("First
Amendment") dated as of March 5, 2001, among Digital Descriptor Systems, Inc., a
Delaware corporation (the "Company"), and the investors signatory hereto (each
such investor is a "Purchaser" and all such investors are, collectively, the
"Purchasers").
WITNESSETH:
WHEREAS, as of December 28, 2000, the Company and Purchasers
entered into a Secured Convertible Debenture Purchase Agreement (the "Original
Agreement"), which, among other things, provides that, subject to the terms and
conditions set forth in the Original Agreement and in accordance with ss.4(2)
under the Securities Act and Rule 506 promulgated thereunder, the Company would
issue and sell to Purchasers and the Purchasers, severally and not jointly,
would purchase the Debentures and Warrants from the Company; and
WHEREAS, pursuant to the terms of the Original Agreement, as
of December 28, 2000, the Company and the Purchasers delivered the following:
(A) the Company executed and delivered a (i) Debenture in the principal amount
of $100,000 to each Purchaser (each, an "Original Debenture" and collectively,
the "Original Debentures"), (ii) Warrant to purchase 200,000 shares of Common
Stock to each Purchaser, (iii) direction letter to the Company's transfer agent
(the "Original Direction Letter"); and (B) the Company and Purchasers executed
and delivered a (i) registration rights agreement (the "Original Registration
Rights Agreement"), and (ii) a security agreement (the "Original Security
Agreement"); and (C) each Purchaser paid $100,000 to the Company; and
WHEREAS, subject to the terms and conditions set forth in this
First Amendment and in accordance with ss.4(2) of the Securities Act and Rule
506 promulgated thereunder, the Company and Purchasers desire to (A) amend the
(i) Original Agreement to increase the aggregate purchase price for the
Debentures to $800,000 (the "New Aggregate Purchase Price") and to provide that,
subject to the amendments set forth herein, the First Additional Funding Date
will be the date hereof, (ii) Original Registration Rights Agreement to reflect
new time periods and the New Aggregate Purchase Price, (iii) Original Security
Agreement and Original Direction Letter to reflect the New Aggregate Purchase
Price; and (B) issue allonges to the Original Debentures to reflect the New
Aggregate Purchase Price.
NOW, THEREFORE, IN CONSIDERATION of the mutual covenants
contained in the First Amendment, and for other good and valuable consideration
the receipted adequacy of which are hereby acknowledged, the Company and
Purchasers agree as follows:
A. Defined Terms. All defined terms used in this First
Amendment, including the defined terms used in the preliminary clauses hereto,
which are not otherwise defined herein shall have the meanings ascribed to them
in the Original Agreement.
B. Amendments to Original Agreement. The Company and
Purchasers hereby agree that the Original Agreement is amended as follows:
1. Section 1.1(a) of the Original Agreement is hereby
amended as follows:
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(i) the reference in subsection (i) to"$600,000" is
hereby changed to "$800,000."
(ii) subsection (iii) is hereby deleted in its entirety
and substituted therefore is the following:
"(iii) If each of the conditions set forth in
Section 1.1(b), other than the condition in
Sections 1.1(b)(iii) and 1.1(b)(viii), have been
either satisfied by the Company or waived by each
Purchaser, then on the date of this First Amendment
("First Additional Funding Date"), as contemplated
in Section 1.1(b) (A) the Company will, against
delivery of the amounts set forth in clause (B) in
this paragraph, deliver to each Purchaser,
Debentures in the aggregate principal amount of
25.0% of the purchase price indicated below such
Purchaser's name on the signature page to this
Agreement (the "First Additional Debentures"), and
(B) each Purchaser will deliver to the Company,
25.0% of the purchase price indicated below such
Purchaser's name on the signature page to this
Agreement in United States Dollars in immediately
available funds by wire transfer to an account
designated in writing by the Company for such
purpose."
(iii) Subsection (iv) is hereby amended by adding "other
than the condition in Section 1.1 (b) (x) ," after the
reference to "Section 1.1 (b),".
2. Section 1.1(b) of the Original Agreement is hereby
amended as follows:
(i) Subsection (iii) is hereby amended by deleting the
words "the 90th day following the Closing Date" and by
substituting therefore the words "June 11, 2001".
(ii) A new subsection "(x)" shall be added as follows:
"(x) Additional Documents in Connection with First
Additional Funding Date. Concurrently with the
First Additional Funding Date, the parties shall
cause to be delivered the following: (A) the
Company shall deliver to each Purchaser the
following, all of which shall be dated as of March
5, 2001; (1) Debentures registered in the name of
such Purchaser in the aggregate principal amount of
25.0% of the purchase price indicated below such
Purchaser's name on the signature page to this
Agreement, (2) Warrants registered in the name of
such Purchaser, pursuant to which such Purchaser
shall have the right to acquire, for every one
Dollar ($1) of the principal amount of the
Debentures acquired by it hereunder, two shares of
Common Stock, upon the terms and conditions set
forth therein, (3) the legal opinion of Xxxx X.
Xxxxxxxxx, Esq., outside counsel to the Company,
(4) an executed First Amendment to Registration
Rights Agreement, (5) an executed Transfer Agent
Instructions, delivered to and acknowledged in
writing by Company's transfer agent, (6) an
executed First Amendment to Security Agreement, (7)
executed Allonges to each of the Debentures that
were issued as of December 28, 2000 (8) executed
originals of this First Amendment, and (9) executed
UCC-1 financing statements; and (B) each Purchaser
will deliver to the Company: (1) 25.0% of the
purchase price indicated below such Purchaser's
name on the signature page to this Agreement in
United States dollars in immediately available
funds by wire transfer to an account designated in
writing by the Company for such purpose, and (2)
executed originals of this First Amendment, the
First Amendment to Registration Rights Agreement
and the First Amendment to Security Agreement.
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3. Section 2.1 (a) (x) of the Original Agreement is hereby
amended to insert ", as any of such documents shall be amended from time to time
" immediately after the word "Warrants".
4. All references to the Debentures in the Original
Agreement shall be deemed references to the Debentures, as amended from time to
time.
5. The "Purchase Price for Debentures" as set forth after
the signature on the signature page to the Original Agreement of each Purchaser
is hereby changed to "$400,000" from "$300,000."
C. Representation of Company. To induce Purchasers to enter
into this First Amendment and to consummate the funding on the First Additional
Funding Date, the Company hereby represents and warrants to the Purchasers that
no event has occurred or failed to occur which by itself or with the giving of
notice or the passage of time, or both, would constitute a default or event of
default under the Original Agreement, the Debentures or any of the Transaction
Documents.
D. Fees. In connection with the preparation of this First
Amendment and the related documentation, the Company shall pay Xxxxxxxx
Xxxxxxxxx $5,000.
E. No Other Changes. Except as expressly set forth in this
First Amendment, the terms and conditions of the Original Agreement remain in
full force and effect, unmodified and unchanged.
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IN WITNESS WHEREOF, the parties hereto have caused this First
Amendment to be duly executed by their respective signatory as of the date first
indicated above.
DIGITAL DESCRIPTOR SYSTEMS, INC.
By:__________________________
Xxxxxxx X. Xxxxxxxxxx, Chief Financial Officer
PURCHASERS:
AJW Partners, LLC
By: SMS Group, LLC, Manager
By:__________________________
Xxxxx X. Xxxxxxxx
New Millennium Capital Partners II, LLC
By: First Street Manager II, LLC, Manager
By:__________________________
Xxxxx X. Xxxxxxxxx
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