ADDENDUM
ADDENDUM
This
Addendum (“Addendum”), to the Debenture Number November 2007 101 dated November
13, 2007 (the "November Debenture") between Dutchess Private Equities Fund, Ltd
("Dutchess") and Somerset International, Inc. and all of its subsidiaries (the
"Company"), and to the Debenture Number June 2007 101 dated June 12, 2007 (the
“June Debenture”) between the Company and Dutchess, by and between the Company
and Dutchess, is made this 8th day of September, 2008.
WHEREAS, it is in the best
interest of both parties to facilitate (the "Facilitation") the amendments in
connection with the November Debenture and the June Debenture (collectively the
“Debenture”).
NOW, THEREFORE, in
consideration of the premises and mutual covenants and agreements set forth
herein and in reliance upon the representations and warranties contained herein,
the parties hereto covenant and agree as follows:
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1.
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Amendment to the June
Debenture.
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a.
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The
Debenture is hereby amended to DELETE in its entirety the Article 1 (a)
and contemporaneously the Debenture is hereby amended to INSERT the
following paragraph as the amended Article 1
(a):
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Article
1 Interest.
(a) The
Company shall pay interest (“Interest”) at the
rate of fourteen percent (14%) per annum, compounded daily, on the unpaid Face
Amount of this Debenture at such times and in such amounts as outlined in this
Article
1. The Company shall make mandatory monthly payments of
interest (the “Interest Payments”),
in an amount equal to twelve percent (12%) of the interest accrued on the
principal balance of the Debenture from the last Interest Payment until such
time as the current Interest Payment is due and payable, the remaining two
percent (2%) of the interest shall accrue and be due and payable upon the
Holder’s request or upon the Maturity Date. The Interest Payments
shall commence on August 29, 2007 and shall continue each month while there is
an outstanding balance on the Face Amount of the Debenture. The
Interest Payments shall be paid the last day of each such month. The
Holder shall retain the right, but not the obligation, to convert any Interest
due and payable under this Debenture on terms outlined in Section 3 of this
Debenture.
(b) Any
monies paid to the Holder in excess of the Interest due when paid shall be
credited toward the redemption of the Face Amount of this
Debenture.
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b.
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The
Debenture is hereby amended to DELETE in its entirety the Section 2.1 (a)
of Article 2 and contemporaneously the Debenture is hereby amended to
INSERT the following paragraph as the amended Section 2.1
(a):
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(a) Commencing
on December 30, 2007, the Company shall make monthly amortizing payments to the
Holder (the “Amortizing Payments”)
on the Interest outlined in Article 1 hereof, and
the Face Amount and the Redemption Amount (as defined in Article 14 hereof),
with such Amortizing Payments to be paid on the last business day of each month
for so long as there is an outstanding balance on this Debenture, in the amount
as outlined below (the “Amortizing Payment
Amount”).
(i) December
30, 2007 through and including May 31, 2008 – Fifteen thousand dollars ($15,000)
per month;
(ii) June
30, 2008 through and including June 30, 2008 – Thirty-five thousand dollars
($35,000) per month;
(iii) July 31, 2008 – Fifteen thousand
dollars ($15,000)
(iv)
August 31, 2008 – December 30, 2008 – Two thousand dollars ($2,000) per
month.
(v)
January 31, 2009 through and including May 31, 2009 – Forty-five thousand
dollars ($45,000) per month;
(vi) June
30, 2009 and each month thereafter until the Face Amount is paid in full –
Seventy-five thousand dollars ($75,000) per month;
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Upon
the Maturity Date, all amounts due under this Debenture shall become
immediately due and payable to the
Holder.
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c.
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The
Debenture is hereby amended to DELETE in its entirety the Section 6.4 of
Article 6 and contemporaneously the Debenture is hereby amended to INSERT
the following paragraph as the amended Section
6.4:
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Section 6.4 -
Seniority. The Company warrants
that no indebtedness of the Company is senior to this Debenture in right of
payment, whether with respect to interest, damages or upon liquidation or
dissolution or otherwise. The Company warrants that it has taken all
necessary steps to subordinate its other obligations to the rights of the Holder
hereunder. In the event the Company makes payment to any other debt
currently existing or hereinafter financed, whether by the Company or any of its
current or future subsidiaries, the Debenture shall be in default under Article
6, and the Holder shall be entitled to any and all remedies under Article
6.
The
Company acknowledges that breaching this section shall cause the Holder to
suffer irreparable harm, and that damages will be difficult to
ascertain. Accordingly, the parties agree that the provision for
liquidated damages in this Article represents the parties’ good faith effort to
quantify such damages and, as such, agree that the form and amount of such
liquidated damages are reasonable and will not constitute a
penalty.
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2.
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Amendment to the
November Debenture.
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a.
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The
Debenture is hereby amended to DELETE in its entirety the Article 1 (a)
and contemporaneously the Debenture is hereby amended to INSERT the
following paragraph as the amended Article 1
(a):
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Article
1 Interest.
(a) The
Company shall pay interest (“Interest”) at the
rate of fourteen percent (14%) per annum, compounded daily, on the unpaid Face
Amount of this Debenture at such times and in such amounts as outlined in this
Article
1. The Company shall make mandatory monthly payments of
interest (the “Interest Payments”),
in an amount equal to twelve percent (12%) of the interest accrued on the
principal balance of the Debenture from the last Interest Payment until such
time as the current Interest Payment is due and payable, the remaining two
percent (2%) of the interest shall accrue and be due an payable upon the
Holder’s request or upon the Maturity Date. The Interest Payments
shall commence on August 29, 2007 and shall continue each month while there is
an outstanding balance on the Face Amount of the Debenture. The
Interest Payments shall be paid the last day of each such month. The
Holder shall retain the right, but not the obligation, to convert any Interest
due and payable under this Debenture on terms outlined in Section 3 of this
Debenture.
(b) Any
monies paid to the Holder in excess of the Interest due when paid shall be
credited toward the redemption of the Face Amount of this Debenture
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b.
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The
Debenture is hereby amended to DELETE in its entirety the Section 2.1 (a)
of Article 2 and contemporaneously the Debenture is hereby amended to
INSERT the following paragraph as the amended Section 2.1
(a):
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(c) Commencing
on December 30, 2007, the Company shall make monthly amortizing payments to the
Holder (the “Amortizing Payments”)
on the Interest outlined in Article 1 hereof, and
the Face Amount and the Redemption Amount (as defined in Article 14 hereof),
with such Amortizing Payments to be paid on the last business day of each month
for so long as there is an outstanding balance on this Debenture, in the amount
as outlined below (the “Amortizing Payment
Amount”).
January
31, 2008 through and including July 31, 2008 – Eight thousand dollars ($8,000)
per month;
August
31, 2008 through and including January 31, 2009 – Three thousand ($3,000) per
month;
February
28, 2009 through and including July 31, 2009 – twenty thousand dollars ($20,000)
per month;
August
31, 2009 through and including April 30, 2010 – thirty thousand dollars
($30,000) per month;
(iv) May
31, 2010 and each month thereafter until the Face Amount is paid in full – forty
dollars ($40,000) per month;
Upon the
Maturity Date, all amounts due under this Debenture shall become immediately due
and payable to the Holder.
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c.
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The
Debenture is hereby amended to DELETE in its entirety the Section 6.4 of
Article 6 and contemporaneously the Debenture is hereby amended to INSERT
the following paragraph as the amended Section
6.4:
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Section 6.4
Seniority. The Company warrants
that no indebtedness of the Company is senior to this Debenture in right of
payment, whether with respect to interest, damages or upon liquidation or
dissolution or otherwise. The Company warrants that it has taken all
necessary steps to subordinate its other obligations to the rights of the Holder
hereunder. In the event the Company makes payment to any other debt
currently existing or hereinafter financed, whether by the Company or any of its
current or future subsidiaries, the Debenture shall be in default under Article
6, and the Holder shall be entitled to any and all remedies under Article
6. The Company acknowledges that breaching this section shall cause
the Holder to suffer irreparable harm, and that damages will be difficult to
ascertain. Accordingly, the parties agree that the provision for
liquidated damages in this Article represents the parties’ good faith effort to
quantify such damages and, as such, agree that the form and amount of such
liquidated damages are reasonable and will not constitute a
penalty.
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3.
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As
additional consideration for the Holder entering into this Addendum, the
Company hereby agrees to immediately issue a Warrant to purchase up to
nine hundred thousand shares of the Company’s Common Stock at an exercise
price equal to par value. The Warrant is hereby attached as
Exhibit A.
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4.
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No
other terms, rights or provisions of the Transaction Documents are or
should be considered to have been modified by the terms of this Addendum
and each party retains all other rights, obligations, privileges and
duties contained in the Debentures and the Transaction Documents that
correspond respectively to the
Agreements.
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5.
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In
the event the Company does not perform the duties and obligations as
outlined in this Addendum, Dutchess shall have full right to claim an
Event of Default as outlined in Article 6, and shall have full rights to
all remedies, including charging liquidated damages and/or penalties as
described in the Debentures.
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Agreed
and Accepted, and duly authorized to sign, on this 8th day of September,
2008
By
Dutchess: ___________________________________________________
Xxxxxxx
X. Xxxxxxxx, Managing Director
By
Company: ___________________________________________________
Xxxx
X. Xxxxxxxx, Chief Executive Officer,
Somerset International Group,
Inc.
___________________________________________________
Xxxx
X. Xxxxxxxx, Chief Executive Officer, Secure System, Inc.
___________________________________________________
Xxxx
X. Xxxxxxxx, Chief Executive Officer, Xxxxxxx Electronics, Inc.
___________________________________________________
Xxxx
X. Xxxxxxxx, Chief Executive Officer,
Fire Control Systems,
Inc.
___________________________________________________
Xxxx
X. Xxxxxxxx, Chief Executive Officer,
Meadowlands
Fire, Security, and Electronics Supply, Inc.
