EXHIBIT 10.54
EXECUTION COPY
CONDITIONAL WAIVER AND CONSENT
This Conditional Waiver and Consent, dated as of November 9, 2004, is
entered into by and among DKR Soundshore Oasis Holding Fund, LLC ("SOUNDSHORE"),
DKR Soundshore Strategic Holding Fund, LLC ("SOUNDSHORE STRATEGIC" and,
collectively with Soundshore, the "INVESTORS"), Harborview Master Fund, LP
("HARBORVIEW"), Southrigde Partners, LP ("SOUTHRIDGE" and, collectively with
Harborview, the "ADDITIONAL INVESTORS") and Markland Technologies, Inc., a
Florida corporation (the "COMPANY").
WHEREAS, the Investors and the Company are parties that certain
Purchase Agreement, dated as of September 21, 2004 (the "PURCHASE AGREEMENT")
(capitalized terms that are used and not defined herein shall have the
respective meanings set forth in the Purchase Agreement);
WHEREAS, in connection with the Purchase Agreement, the Investors and
the Company entered into a Security Agreement (the "SECURITY AGREEMENT"), and a
Registration Rights Agreement (the "REGISTRATION RIGHTS AGREEMENT"), and the
Investors purchased certain convertible promissory notes (the "NOTES") and
warrants to purchase shares of the common stock, $.0001 par value per share, of
the Company (the "WARRANTS" and collectively with the Notes, the Registration
Rights Agreement, the Security Agreement, and the Purchase Agreement, the
"TRANSACTION DOCUMENTS");
WHEREAS, the Company wishes to raise an additional $1,350,000 (the
"SUBSEQUENT FINANCING") by selling to the Additional Investors secured
convertible promissory notes (the "ADDITIONAL NOTES") and common stock purchase
warrants (the "ADDITIONAL WARRANTS");
Whereas, among other things, the Transaction Documents provide the
Investors with rights of first refusal to provide the financing contemplated by
the Subsequent Financing, and prohibit the Company from creating or suffering to
exist the Debt and Liens that would be created in connection with the Subsequent
Financing; and
WHEREAS, the Company and the Additional Investors have requested that
the Investors waive certain rights under the Transaction Documents in connection
with the Subsequent Financing and, subject to the terms and conditions herein
contained, the Investors are willing to agree to provide such waiver.
NOW, THEREFORE, in consideration of the premises and the other mutual covenants
contained herein, the receipt and sufficiency of which are hereby acknowledged,
the parties hereto hereby agree as follows:
1. CONSENTS AND WAIVERS. Subject to the terms and conditions contained in
this Conditional Waiver and Consent, the Investors hereby (i) waive
their rights under Section 4.3 of the Purchase Agreement to receive a
Subsequent Placement Notice concerning the Subsequent Placement and
elect not to provide the financing therein contemplated, (ii) waive the
application of Section 6.3 and Section 6.4 of the Purchase Agreement to
the Subsequent Placement, and (iii) consent to the inclusion in the
Registration Statement of the shares of Common Stock issuable to
Additional Investors upon conversion of the Additional Notes and
Exercise of the Additional Warrants and waive the application of
Section 6(b) of the Registration Rights Agreement to such inclusion.
The foregoing are limited waivers and the execution and delivery of this
Conditional Consent and Waiver does not constitute (a) a waiver by either of the
Investors of any Default or Event of Default now or hereafter existing or any
other term or provision of the Notes or any other Transaction Document or (b) a
course of conduct or dealing among the parties.
2. CONDITIONS. The waivers and consents herein contained are expressly
subject to satisfaction of the following conditions precedent, each of
which is a material inducement to the willingness of the Investors to
enter into this Conditional Consent and Waiver:
2.1. Except as disclosed in the Disclosure Schedules attached
hereto as EXHIBIT A, the representations and warranties
contained herein and the Transaction Documents shall be true
and correct in all material respects as of the date hereof,
except for such representations and warranties limited by
their terms to a specific date (which need only be true and
correct as of such specified date).
2.2. No Default or Event of Default shall be in existence (as such
terms are used in the Notes).
2.3. The Additional Notes, Additional Warrants and agreements and
instruments entered into with respect thereto (the "SUBSEQUENT
PLACEMENT TRANSACTION DOCUMENTS") will be issued in the forms
attached hereto as EXHIBIT B.
2.4. The Debt and Liens represented by the Additional Notes and the
Subsequent Financing Transaction Documents will be in all
respects subordinate to the Debt and Liens existing under the
Notes and the Transaction Documents, in accordance with a
subordination agreement between the Additional Investor and
the Investors in form and substance acceptable to the
Investors.
2.5. The Company shall have paid all fees, costs and expenses
incurred by the Investors in connection with the negotiation
and preparation of this Conditional Waiver and Consent and the
transactions herein contemplated, such amount not to exceed
$7,500.
2.6. The Subsequent Financing shall close by November 10, 2004.
3. TRANSACTION DOCUMENTS IN FULL FORCE AND EFFECT. Subject to the
conditional waivers herein provided, the Transaction Documents shall
remain in full force and effect. Except as expressly set forth herein,
this Conditional Waiver and Consent shall not be deemed to be a waiver,
amendment or modification of any provisions of any Transaction Document
or of any right, power or remedy of any Investor or the Agent
thereunder, or constitute a waiver of any provision of any Transaction
Document (except to the extent specifically herein set forth in SECTION
1), or any other document, instrument and/or agreement executed or
2
delivered in connection therewith or of any Default or Event of Default
under any of the foregoing, in each case whether arising before or
after the date hereof or as a result of performance hereunder or
thereunder. Except as set forth herein, the Investors reserve all
rights, remedies, powers, or privileges available under the Transaction
Documents, at law or otherwise. This Conditional Waiver and Consent
shall not constitute a novation or satisfaction and accord of any
Transaction Document.
4. REPRESENTATIONS OF THE COMPANY. The Company hereby represents and
warrants to the Investors as follows:
4.1. The execution, delivery and performance by it of this
Conditional Waiver and Consent are within its powers, have
been duly authorized, and do not contravene (i) its articles
of organization, operating agreement, or other organizational
documents, or (ii) any applicable law.
4.2. This Conditional Waiver and Consent has been duly executed and
delivered by it, and constitutes its legal, valid and binding
obligation enforceable against it in accordance with its
terms, except as enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or similar
laws affecting the enforcement of creditors' rights generally
or by general principles of equity.
4.3. After giving effect to this Conditional Waiver and Consent and
the consummation of the subject Subsequent Financing, it is
not in default under the Notes and no Default or Event of
Default exists, has occurred and is continuing or would result
by the execution, delivery or performance of this Conditional
Waiver and Consent or the consummation of the subject
Subsequent Financing.
4.4. Except as disclosed in the Disclosure Schedules attached
hereto as EXHIBIT A, the representations and warranties
contained in the Transaction Documents are true and correct as
of the date hereof as if made on the date hereof, except for
such representations and warranties limited by their terms to
a specific date (which are limited to such specified date).
5. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE ADDITIONAL INVESTOR.
The Additional Investor hereby represents, warrants and covenants to
the Investors as follows:
5.1. From and after the date of this Agreement through the fortieth
(40th) Trading Day following the Effective Date (as such term
is defined in the Investors' Registration Rights Agreement),
plus one additional day for each day the Investors are not
allowed to sell pursuant to the Investors' Registration Rights
Agreement after the Effective Date, the Additional Investor
hereby agrees it will not offer, pledge, sell, contract to
sell, sell any option or contract to purchase, purchase any
option or contract to sell, grant any option, right or warrant
to purchase or otherwise transfer or dispose of, directly or
indirectly (including by way of swap, pledge or other
3
derivative transactions), or announce the offering of, any of
the Additional Notes or the Additional Warrants (including any
that it may gain rights or ownership to after the date of this
Agreement), or any securities issuable upon any conversion,
exchange, reset or otherwise with respect to, such Additional
Notes or Warrants.
5.2. The Additional Investor acknowledges and agrees that this
Conditional Waiver and Consent is entered into for the benefit
of and is enforceable by the Investors and their successors
and assigns. Accordingly, the parties understand and agree
that any Investor shall have the right to seek any one or more
remedies for any act in contravention of this Conditional
Waiver and Consent, including obtaining injunctive relief and
monetary damages against any one or more of the parties
hereto.
6. MISCELLANEOUS.
6.1. This Conditional Waiver and Consent may be executed in any
number of counterparts (including by facsimile), and by the
different parties hereto on the same or separate counterparts,
each of which shall be deemed to be an original instrument but
all of which together shall constitute one and the same
agreement. Each party agrees that it will be bound by its own
facsimile signature and that it accepts the facsimile
signature of each other party. The descriptive headings of the
various sections of this Conditional Waiver and Consent are
inserted for convenience of reference only and shall not be
deemed to affect the meaning or construction of any of the
provisions hereof or thereof.
6.2. This Conditional Waiver and Consent may not be changed,
amended, restated, waived, supplemented, discharged, canceled,
terminated or otherwise modified orally or by any course of
dealing or in any manner other than as provided in the
Purchase Agreement.
6.3. This Conditional Waiver and Consent (including its exhibits)
and the Transaction Documents constitute the final, entire
agreement and understanding between the parties with respect
to the subject matter hereof and thereof and may not be
contradicted by evidence of prior, contemporaneous or
subsequent oral agreements between the parties, and shall be
binding upon and inure to the benefit of the successors and
assigns of the parties hereto and thereto. There are no
unwritten oral agreements between the parties with respect to
the subject matter hereof and thereof.
6.4. THIS CONDITIONAL WAIVER AND CONSENT AND THE RIGHTS AND
OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE GOVERNED BY AND
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH THE CHOICE OF LAW
PROVISIONS SET FORTH IN THE PURCHASE AGREEMENT AND SHALL BE
SUBJECT TO THE WAIVER OF JURY TRIAL AND NOTICE PROVISIONS OF
THE PURCHASE AGREEMENT.
6.5. All representations and warranties made in this Conditional
Waiver and Consent shall survive the execution and delivery of
this Conditional Waiver and Consent and no investigation by
4
the Investor shall affect such representations or warranties
or the right of the Investors to rely upon them.
6.6. THE COMPANY ACKNOWLEDGES AND AGREES THAT TO THE KNOWLEDGE OF
THE COMPANY IT HAS NO CLAIMS, COUNTERCLAIMS, OFFSETS, CREDITS
OR DEFENSES TO ANY TRANSACTION DOCUMENT AND THE PERFORMANCE OF
ITS OBLIGATIONS THEREUNDER OR, TO THE EXTENT THEY EXIST, THE
COMPANY HEREBY WAIVES, RELINQUISHES AND RELEASES ANY SUCH
KNOWN CLAIMS, COUNTERCLAIMS, OFFSETS, CREDITS OR DEFENSES TO
ANY TRANSACTION DOCUMENTS AND/OR ANY TRANSACTION RELATED TO
ANY TRANSACTION DOCUMENT.
[SIGNATURES APPEAR ON FOLLOWING PAGE]
5
IN WITNESS WHEREOF, the undersigned have executed this Conditional
Waiver and Consent as an instrument under seal as of the date first written
above.
MARKLAND TECHNOLOGIES, INC.
By:__________________________________________
Name:
Title:
DKR SOUNDSHORE OASIS HOLDING FUND, LLC
By:__________________________________________
Name:
Title:
DKR SOUNDSHORE STRATEGIC HOLDING FUND, LLC
By:__________________________________________
Name:
Title:
HARBORVIEW MASTER FUND, LP
By:__________________________________________
Name:
Title:
Harborview Master Fund, LP, a BVI corporation
c/o Beacon Fund Advisors, Ltd.
Harbor House, Waterfront Drive
Road Town, Tortola
British Virgin Islands
SOUTHRIDGE PARTNERS, LP
By:__________________________________________
Name:
Title:
6