Published on September 19, 2008
LOAN
CONSOLIDATION AND
AMENDMENT
TO SECURITY AGREEMENT
THIS
LOAN CONSOLIDATION AND AMENDMENT TO SECURITY AGREEMENT (the
“Agreement”) is made as of this 10th
day of
September, 2008 by and among DIGICORP, INC., a Delaware corporation (the
“Debtor”), REBEL HOLDINGS, LLC, a California limited liability company (“Rebel
Holdings”), and JAY RIFKIN, an individual (“Rifkin”) (Rebel Holdings and Rifkin
together referred to herein as the “Lenders”).
WITNESSETH:
WHEREAS,
the
Debtor is indebted to the Lenders for certain loans (the “Loans”) made by the
Lenders to the Debtor and other amounts incurred by or due to Rifkin, in each
case through June 30, 2008, which, together with interest accrued on the Loans
through June 30, 2008, total $2,078,047.00 as described on Exhibit
A
annexed
hereto and made a part hereof;
WHEREAS,
certain
of the Loans are evidenced by promissory notes (the “Existing Notes”) issued by
the Debtor as indicated on Exhibit
A;
WHEREAS,
the
obligations under certain of the Existing Notes are secured by a certain
Security Agreement (the “Security Agreement”), dated December 29, 2005, by and
between Digicorp, a Utah corporation and the predecessor to the Debtor, and
Rebel Holdings;
WHEREAS,
the
Debtor and the Lenders have agreed in the manner hereinafter set forth to
combine and consolidate (i) the Existing Notes and the respective indebtedness
evidenced thereby, and (ii) the other indebtedness described in Exhibit
A,
into
one secured convertible consolidated promissory note in the principal amount
of
$2,078,047.00;
WHEREAS,
the
Debtor and the Lenders have also agreed in the manner hereinafter set forth
to
amend the terms of the Security Agreement and provide certain registration
rights to Rebel Holdings with respect to the shares of Common Stock issuable
upon conversion of the Consolidated Note (as hereinafter defined).
NOW,
THEREFORE, and
in
consideration of the foregoing premises and for other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged,
the
parties agree as follows:
1. The
Existing Notes and the respective indebtednesses evidenced thereby, and the
other indebtedness described in Exhibit
A (together,
the “Total Consolidated Indebtedness”) are hereby combined and consolidated into
one convertible consolidated promissory note in the principal amount of
$2,078,047.00 (the “Consolidated Note”), being delivered by the Debtor to Rebel
Holdings simultaneously herewith in the form annexed hereto as Exhibit
B.
2. The
parties hereto certify that the Consolidated Note evidences the Total
Consolidated Indebtedness and evidences no further or other indebtedness or
obligation. In this regard, the parties specifically acknowledge that any
additional loans made by either of the Lenders to the Debtor subsequent to
June
30, 2008 as well as other reimbursable expenses incurred by Rifkin subsequent
to
June 30, 2008 are not included within the Consolidated Note and shall remain
separate and apart therefrom. The Consolidated Note constitutes a renewal,
extension and modification of the terms of repayment of the Total Consolidated
Indebtedness, including but not limited to the indebtedness evidenced by the
Existing Notes. Simultaneously with the execution hereof, the Lenders are
returning the Existing Notes to the Debtor which Existing Notes are terminated
and cancelled.
3. The
obligations of the Debtor under the Consolidated Note shall be secured by the
Security Agreement, as amended hereby.
4. Section
1(b) of the Security Agreement is hereby amended by deleting the definition
of
the word “Obligations” therefrom and substituting the following definition in
its place:
“Obligations”
means
all of the Company’s obligations under this Agreement and the Note, and all
other indebtedness, obligations, and liabilities of any kind of the Company
to
the Secured Party, in each case, whether now or hereafter existing, voluntary
or
involuntary, direct or indirect, absolute or contingent, liquidated or
unliquidated, whether or not jointly owed with others, and whether or not from
time to time increased, decreased or extinguished and later increased,
decreased, created or incurred, and all or any portion of such obligations
or
liabilities that are paid, to the extent all or any part of such payment is
avoided or recovered directly or indirectly from the Secured Party as a
preference, fraudulent transfer or otherwise as such obligations may be amended,
supplemented, converted, extended or modified from time to time.”
5. On
and
after the date hereof, each reference in the Security Agreement to the “Note”
shall mean and be a reference to the Consolidated Note.
6. As
amended hereby, the Security Agreement remains in full force and effect and
is
hereby ratified and confirmed.
7. Registration
Rights.
(a) As
promptly as possible, the Debtor shall prepare and file with the Securities
and
Exchange Commission (“SEC”) a registration statement (the “Registration
Statement”) on Form S-1 (or other applicable form) covering the resale of the
Common Stock issuable upon conversion of the Consolidated Note (the “Registrable
Securities”). The Debtor shall use its best efforts to cause the Registration
Statement to be declared effective by the SEC as promptly as possible after
the
filing thereof and shall use its best efforts to keep the Registration Statement
continuously effective under the Securities Act of 1933, as amended (the
“Securities Act”), until the earlier of: (i) the date when all Registrable
Securities covered by such Registration Statement have been sold publicly;
or
(ii) the date when all Registrable Securities may be sold pursuant to Rule
144
(the “Effectiveness Period”).
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(b) In
connection with the Debtor’s registration obligations hereunder, the Debtor
shall: (i) prepare and file with the SEC such amendments, including
post-effective amendments, to the Registration Statement and the prospectus
used
in connection therewith as may be necessary to keep the Registration Statement
continuously effective as to the applicable Registrable Securities for the
Effectiveness Period; (ii) cause the related prospectus to be amended or
supplemented by any required prospectus supplement, and as so supplemented
or
amended to be filed pursuant to Rule 424 promulgated under the Securities Act;
(iii) respond as promptly as reasonably possible to any comments received from
the SEC with respect to the Registration Statement or any amendment thereto;
and
(iv) comply in all material respects with the provisions of the Securities
Act
and the Securities Exchange Act of 1934, as amended, with respect to the
disposition of all Registrable Securities covered by the Registration Statement
during the applicable period in accordance with the intended methods of
disposition by Rebel Holdings set
forth
in the Registration Statement as so amended or in such prospectus as so
supplemented.
(c) The
Debtor shall promptly deliver to Rebel Holdings,
without
charge, as many copies of the final prospectus or final prospectuses and each
amendment or supplement thereto as Rebel Holdings may reasonably
request.
(d) The
Debtor shall cooperate with Rebel Holdings to facilitate the timely preparation
and delivery of certificates representing Registrable Securities to be delivered
to a transferee pursuant to a Registration Statement, which certificates shall
be free, to the extent permitted by law, of all restrictive legends, and to
enable such Registrable Securities to be in such denominations and registered
in
such names as Rebel Holdings may request.
(e) The
Debtor shall pay all fees and expenses incident to the performance of or
compliance with this Section 7,
including: (i) all registration and filing fees and expenses, including without
limitation those related to filings with the SEC and in connection with
applicable state securities or “blue sky” laws; and (ii) printing expenses
(including without limitation expenses of printing certificates for Registrable
Securities and of printing prospectuses requested by Rebel Holdings).
(f) Subject
to the last sentence of this Section 7(f), if at any time prior to the
expiration of the Effectiveness Period the Debtor shall determine to file with
the SEC a registration statement relating to an offering for its own account
or
the account of others under the Securities Act of any of its equity securities
(other than on Form S-4 or Form S-8 or their then equivalents relating to equity
securities to be issued solely in connection with an acquisition of any entity
or business or equity securities issuable in connection with employee benefit
plans), the Debtor shall send to Rebel Holdings written notice of such
determination and, if within fifteen (15) days after the effective date of
such
notice, Rebel Holdings shall so request in writing, the Debtor shall include
in
such registration statement all or any part of the Registrable Securities Rebel
Holdings requests to be registered. No right to registration of Registrable
Securities under this Section 7(f) shall be construed to limit any registration
required under Section 7(a) hereof. Notwithstanding anything to the contrary
set
forth herein, the registration rights of Rebel Holdings pursuant to this Section
7(f) shall only be available in the event the Debtor fails to timely file,
obtain effectiveness or maintain effectiveness of any Registration Statement
to
be filed pursuant to Section 7(a) in accordance with the terms of this
Agreement.
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8. This
Agreement shall be construed and interpreted in accordance with the laws of
the
State of California without giving effect to the conflict of laws rules thereof
or the actual domiciles of the parties.
9. Notwithstanding
anything herein to the contrary, the parties hereto agree that this Agreement
and any and all rights and obligations hereunder shall be deemed effective
as of
July 1, 2008.
10. Each
of
Rebel Holdings and Rifkin agrees that Kaye Cooper Fiore Kay & Rosenberg,
LLP, the draftsperson of this Agreement, has prepared this Agreement on behalf
of the Debtor and is not representing Rebel Holdings and/or Rifkin in an
individual capacity in the negotiation and consummation of the transactions
hereunder. Each of Rebel Holdings and Rifkin further agrees that he each has
participated in the preparation of this Agreement and has read and fully
understands this Agreement and has been advised and has had the opportunity
to
retain independent counsel of its own choosing and has done so to the extent
it
has deemed necessary.
11. This
Agreement may be executed in one or more counterparts, each of which shall
be
deemed an original and all of which taken together shall constitute one and
the
same Agreement.
IN
WITNESS WHEREOF,
the
parties hereto have executed this Agreement as of the date first above
written.
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by:
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/s/
Jay Rifkin
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Name:
Jay Rifkin
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Title:
President
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REBEL
HOLDINGS, LLC
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by:
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/s/
Jay Rifkin
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Name:
Jay Rifkin
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Title: Managing
Member
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JAY
RIFKIN
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