AMENDMENT AGREEMENT
THIS
AMENDMENT AGREEMENT (this “Amendment”)
is
entered into as of July 2, 2007 by and among Laurus Master Fund, Ltd.
(“Laurus”),
180
Connect Inc., a Nevada corporation (“180
Connect US”),
and
each party listed on the signature pages thereto other than 180 Connect US,
each
guarantor party and Laurus (together with 180 Connect US, each a “Company”
and
collectively, “Companies”).
BACKGROUND
Companies
and Laurus are parties to that certain (a) Security and Purchase Agreement
dated
as of July 31, 2006 (as amended, restated, modified and/or supplemented from
time to time, the “Security
Agreement”),
(b)
Secured Non-Convertible Term Note (as defined in the Security Agreement) and
(c)
Overadvance Letter dated July 31, 2006 (as amended, restated, modified and/or
supplemented from time to time, the “Overadvance
Letter”).
The
Companies have requested that Laurus amend the Security Agreement, the Secured
Non-Convertible Term Note and the Overadvance Letter and Laurus is willing
to do
so on the terms and conditions hereafter set forth.
NOW,
THEREFORE, in consideration of the agreements set forth herein, and for other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto hereby agree as follows:
1. Definitions.
All
capitalized terms not otherwise defined herein shall have the meanings given
to
them in the Security Agreement.
2. Amendments
to Security Agreement.
Subject
to satisfaction of the conditions precedent set forth in Section 5 below, the
Security Agreement is hereby amended as follows:
(a) A
new
subsection (v) is inserted in Section 5(b) of the Security Agreement immediately
following subsection (iv) thereof to provide as follows:
“(v) On
the
Expiration Date, the Companies shall, jointly and severally, pay to Laurus
a fee
in the amount of $1,400,000 in immediately available funds which fee shall
be
fully earned as of the First Amendment Date and shall not be subject to
reduction, rebate or proration whatsoever.”
(b) The
notice information for Laurus set forth in Section 29 of the Security Agreement
is hereby amended in its entirety to provide as follows:
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“If
to Laurus:
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Laurus
Master Fund, Ltd.
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x/x
Xxxxxx Xxxxxxx Xxxxxxxxxx, X.X.X.
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000
Xxxxxxx Xxxxxx, 00xx Xxxxx
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Xxx
Xxxx, Xxx Xxxx 00000
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Attention:
Portfolio Services.
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Telephone:
(000) 000-0000
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Facsimile:
(000) 000-0000
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With
a copy to:
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Loeb
& Loeb LLP
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000
Xxxx Xxxxxx
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Xxx
Xxxx, Xxx Xxxx 00000
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Attention:
Xxxxx X. Xxxxxxxx, Esq.
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Telephone:
(000) 000-0000
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Facsimile:
(000) 000-0000”
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(c) The
following definitions in Annex
A
to the
Security Agreement are hereby amended in their entirety to provide as
follows:
“Capital
Availability Amount”
means
(a) during the period commencing on the First Amendment Date and ending on
the
Expiration Date, $45,000,000 and (b) at all other times,
$37,000,000.
“Secured
Non-Convertible Revolving Note”
means
that certain Amended and Restated Secured Non-Convertible Revolving Note
effective as of the Closing Date and amended and restated as of the First
Amendment Date made by the Companies in favor of Laurus in the original face
amount of Forty-Five Million Dollars ($45,000,000), as the same may be amended,
supplemented, restated and/or otherwise modified from time to time.
“Total
Investment Amount”
means
the sum of (a) $20,000,000, plus (b) the Capital Availability
Amount.
(d) The
following definitions are hereby added to Annex
A
to the
Security Agreement in their appropriate alphabetical order:
“AVP”
means
Ad.Venture Partners, Inc., a Delaware corporation.
“AVP
Merger”
means
the merger of 180 Connect Inc. (CN) with and into AVP with AVP being the
surviving company thereof which merger shall be in compliance with all
applicable securities laws.
“Capital
Raising Transaction”
means
(a) any issuance of subordinated and/or unsecured debt or equity securities
(including, without limitation, any shares of capital stock, securities
convertible in to or exchangeable for shares of capital stock, or warrants,
options or other rights for the purchase or acquisition of such shares, and
other ownership or profit interests (including, without limitation, partnership,
member or trust interest therein), whether voting or nonvoting) of 180 Connect
Inc. (CN) or any of its Subsidiaries including, without limitation, the
Companies and (b) any exercise of outstanding warrants and/or options of 180
Connect Inc. (CN).
“Expiration
Date”
means
the earlier of (a) the date the AVP Merger is consummated, (b) forty-five (45)
days following the date the shareholders of AVP vote against approving the
AVP
Merger but in no event not later than September 30, 2007, (c) September 30,
2007
if the AVP Merger is not consummated on or before August 31, 2007 and (d) the
date a Capital Raising Transaction is consummated.
“First
Amendment Date”
means
July 2, 2007.
3. Amendment
to Secured Non-Convertible Term Note.
Subject
to satisfaction of the conditions precedent set forth in Section 5 below, the
Secured Non-Convertible Term Note is hereby amended by inserting a new Section
1.4 immediately following Section 1.3 thereof to provide as
follows:
“1.4 Mandatory
Prepayment.
Upon
the consummation of the AVP Merger or a Capital Raising Transaction, the
Companies shall immediately make a principal prepayment of this Note, without
any premium or penalty, in an amount not less than $5,000,000 together with
any
accrued and unpaid interest thereon.”
4. Amendment
to Overadvance Letter.
Subject
to satisfaction of the conditions precedent set forth in Section 5 below, the
Overadvance Letter is hereby amended by amending the first sentence of the
second paragraph thereof in its entirety to provide as follows:
“For
the
period beginning on the date hereof and ending on the Expiration Date (the
“Period”),
in
order to assist the Companies to fund certain working capital obligations,
Laurus is hereby notifying you pursuant to Section 2(a)(iii) of the Security
Agreement that it will, subject to the terms and conditions contained herein,
make Loans to the Companies from time to time in excess of the Formula Amount
(each such Loan, a “Working
Capital Overadvance”)
in a
maximum aggregate principal amount for all such Working Capital Overadvances
not
to exceed Nine Million Dollars ($9,000,000) outstanding at any
time.”
5. Conditions
of Effectiveness.
This
Amendment shall become effective upon satisfaction of the following conditions
precedent: Laurus shall have received (a) a management fee for the benefit
of
Laurus Capital Management, LLC in the amount of $200,000 which fee shall be
charged to the Companies’ account as a Revolving Loan, be fully earned as of the
date hereof and shall not be subject to reduction, rebate or proration
whatsoever, (b) a copy of this Amendment executed by Companies and consented
and
agreed to by each Person guaranteeing the Obligations and (c) all such other
warrants, certificates, instruments, documents, agreements and opinions of
counsel as may be required by Laurus or its counsel, each of which shall be
in
form and substance satisfactory to Laurus and its counsel.
6. Representations
and Warranties of each Company.
Each
Company hereby represents and warrants as follows:
(a) This
Amendment, the Security Agreement and the Ancillary Agreements, as amended
hereby, constitute legal, valid and binding obligations of Companies and are
enforceable against Companies in accordance with their respective
terms.
(b) Upon
the
effectiveness of this Amendment, each Company hereby reaffirms all covenants,
representations and warranties made in the Security Agreement and each Ancillary
Agreement, as applicable, to the extent the same are not amended hereby and
agree that all such covenants, representations and warranties shall be deemed
to
have been remade as of the effective date of this Amendment except for those
representations and warranties that expressly relate to an earlier date, which
representations and warranties were true and correct on and as of such earlier
date.
(c) No
Event
of Default or Default has occurred and is continuing or would exist after giving
effect to this Amendment.
(d) No
Company has any defense, counterclaim or offset with respect to the Security
Agreement or any Ancillary Agreement.
7. Representations
and Warranties of Laurus.
Laurus
hereby reaffirms all covenants, representations and warranties made by Laurus
in
the Security to the extent the same are not amended hereby and agrees that
all
such representations and warranties shall be deemed to have been remade as
of
the effective date of this Amendment except for those representations and
warranties that expressly relate to an earlier date, which representations
and
warranties were true and correct on and as of such earlier date.
8. Effect
on the Security Agreement and the Ancillary Agreements.
(a) Upon
the
effectiveness of this Amendment, each reference in the Security Agreement or
any
Ancillary Agreement to “this Agreement,” “this Note,” “hereunder,” “hereof,”
“herein” or words of like import shall mean and be a reference to the Security
Agreement or such Ancillary Agreement, as applicable, as amended
hereby.
(b) Except
as
specifically amended herein, the Security Agreement and each Ancillary Agreement
shall remain in full force and effect and are hereby ratified and confirmed.
The
execution, delivery and effectiveness of this Amendment shall not operate as
a
waiver of any right, power or remedy of Laurus, nor constitute a waiver of
any
provision of the Security Agreement or any Ancillary Agreement.
9. Governing
Law.
This
Amendment shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and assigns and shall be governed by and
construed in accordance with the laws of the State of New York.
10. Headings.
Section
headings in this Amendment are included herein for convenience of reference
only
and shall not constitute a part of this Amendment for any other
purpose.
11. Counterparts;
Facsimile.
This
Amendment may be executed by the parties hereto in one or more counterparts,
each of which shall be deemed an original and all of which when taken together
shall constitute one and the same agreement. Any signature delivered by a party
by facsimile or electronic transmission shall be deemed to be an original
signature hereto.
[Signature
Pages to Follow]
IN
WITNESS WHEREOF, this Amendment has been duly executed as of the day and year
first written above.
| 180 CONNECT INC., a Nevada corporation | ||
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| By: | /s/ Xxxxx Xxxxxxxxx | |
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Name: Title:
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MOUNTAIN
CENTER, INC.
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| By: | /s/ Xxxxx Xxxxxxxxx | |
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Name: Title:
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JJ&V
COMMUNICATIONS, INC.
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| By: | /s/ Xxxxx Xxxxxxxxx | |
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Name: Title:
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TUMBLEWEED
HS INC.
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| By: | /s/ Xxxxx Xxxxxxxxx | |
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Name: Title:
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PIEDMONT
TELECOMMUNICATIONS, INC.
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| By: | /s/ Xxxxx Xxxxxxxxx | |
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Name: Title:
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180
DIGITAL INTERIORS, INC.
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| By: | /s/ Xxxxx Xxxxxxxxx | |
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Name: Title:
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| HD COMPLETE, INC. | ||
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| By: | /s/ Xxxxx Xxxxxxxxx | |
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Name: Title:
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| IRONWOOD COMMUNICATIONS INC. | ||
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| By: | /s/ Xxxxx Xxxxxxxxx | |
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Name: Title:
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QUEENS
CABLE CONTRACTORS, INC.
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| By: | /s/ Xxxxx Xxxxxxxxx | |
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Name: Title:
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| LAURUS MASTER FUND, LTD. | ||
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| By: | /s/ Xxxxxx Grin | |
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Name: Title:
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| Each of the undersigned hereby (i) acknowledges this Amendment and (ii) confirms and agrees that its obligations under the Guaranty or Canadian Guaranty, as applicable, shall continue without any diminution thereof and shall remain in full force and effect on and after the effectiveness of this Amendment. | |||
| ACKNOWLEDGED, CONSENTED and AGREED to as of the date first written above. | |||
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180
CONNECT INC., a corporation established under the laws of
Canada
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| By: /s/ Xxxxx Xxxxxxxxx | |||
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Name:
Title:
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| WIRECOMM SYSTEMS INC. | |||
| By: /s/ Xxxxx Xxxxxxxxx | |||
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Name:
Title:
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| WIRECOMM AMERICA, INC. | |||
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By:
/s/ Xxxxxx Xxxxxxxx
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Name:
Title:
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