Exhibit 10.1
FIRST AMENDMENT
TO SECURITY, PLEDGE AND GUARANTY AGREEMENT
This First Amendment to Security, Pledge and Guaranty Agreement (the "First
Amendment") is entered into as of April 5, 2007, by and among by and among PHS
Group Inc., a Pennsylvania corporation (the "Borrower"), and Synergy Brands
Inc., (the "Parent Company"), and SYBR.Com Inc., a New Jersey corporation, Gran
Reserve Corporation, a Florida corporation, Dealbynet.com Inc., a New York
corporation, Quality Food Brands, Inc., a Nevada corporation, NYCE North America
Inc., a New Jersey corporation, Net Cigar.Com Inc., a Florida corporation, (each
of the foregoing a "Subsidiary" and collectively referred to herein as the
"Subsidiaries") and Lloyd I. Miller, III and Milfam I L.P. (collectively
referred to herein as the "Purchasers"). Together the Borrower, the Parent
Company and the Subsidiaries are referred to herein as the "Debtors".
WHEREAS, the Debtors and the Purchasers entered into that certain Security,
Pledge and Guaranty Agreement (as amended, supplemented or otherwise modified
prior to giving effect to the amendments contemplated herein) (the "Security
Agreement"), dated as of January 19, 2007, as security for the payment and
performance of all obligations of the Debtors to the Purchasers and to guarantee
certain obligations owed by the Debtors to the Purchasers;
WHEREAS, the Borrower issued and sold to the Purchasers secured promissory
notes (the "Initial Secured Notes"), pursuant to that certain Securities
Purchase Agreement, dated as of January 19, 2007, by and among, the Borrower,
the Parent Company and the Purchasers, in an initial aggregate principal amount
of $6,500,000;
WHEREAS, the Borrower is authorized and wishes to have the Purchasers make
an additional loan, as of the date hereof, to the Borrower in an initial
aggregate principal amount of $1,500,000;
WHEREAS, the Purchasers shall surrender the Initial Secured Notes to the
Borrower and in exchange therefore the Borrower shall issue to the Purchasers
new secured promissory notes (the "New Secured Notes") in the initial aggregate
principal amount of (a) the unpaid aggregate principal amount of the Initial
Secured Notes so surrendered plus (b) $1,500,000; and
WHEREAS, in connection with the foregoing transaction the Debtors and
Purchasers wish to amend certain terms and provisions of the Security Agreement
and for the Security Agreement to otherwise continue in full force and effect.
NOW, THEREFORE, in consideration of the mutual covenants and obligations
set forth herein, the Debtors and Purchaser hereby agree as follows:
1. Amendments. Pursuant to Section 11.2 of the Security Agreement, the
Purchasers and the Debtors hereby agree to the following:
(a) The first recital of the Security Agreement defining the "Securities
Purchase Agreement" is hereby amended to read in its entirety as follows:
"WHEREAS, the Borrower, the Parent Company and the Purchasers are parties
to that certain Securities Purchase Agreement, originally dated as of January
19, 2007, amended as of April 5, 2007, as same may hereafter be further amended,
supplemented or otherwise modified from to time (the "Securities Purchase
Agreement")."
2. Representations and Warranties. The Debtors represent and warrant that
(a) except for the representations and warranties which are made only as of a
prior date, the representations and warranties set forth in the Security
Agreement are true and correct in all respects as of the Effective Date as if
made on and as of such date; (b) the execution, delivery and performance of this
First Amendment are within the corporate power and authority of the Debtors and
have been duly authorized by appropriate corporate action and proceedings; (c)
this First Amendment constitutes a legal, valid, and binding obligation of the
Debtors enforceable in accordance with its terms, except as limited by
applicable bankruptcy, insolvency, reorganization, moratorium, or similar laws
affecting the rights of creditors generally and general principles of equity;
(d) there are no governmental or other third party consents, licenses and
approvals required in connection with the execution, delivery, performance,
validity and enforceability of this First Amendment; (e) no Default has occurred
and is continuing, and (f) no proceedings are pending against the Debtors and
the Debtors do not have any knowledge or awareness of any claim, action,
impairment or proceeding that will adversely affect any of the Purchasers'
rights under the Security Agreement.
3. Conditions Precedent. This First Amendment shall become effective and
enforceable against the parties hereto and the Security Agreement shall be
amended as provided herein upon the occurrence of the following conditions: (i)
the Borrower shall have issued the New Secured Notes to the Purchasers and (ii)
the parties shall have received this First Amendment duly and validly delivered
and executed on behalf of the Debtors and the Purchasers.
4. Effect on Security Agreement. Other than as expressly set forth in this
First Amendment:
(i) The Purchasers hereby expressly reserve all of their rights, remedies,
and claims under the Security Agreement;
(ii) Nothing in this First Amendment shall constitute a waiver or
relinquishment of (A) any Default under the Security Agreement, (B) any of the
agreements, terms or conditions contained in the Security Agreement, (C) any
rights or remedies of the Purchasers with respect to the Security Agreement, or
(D) the rights of the Purchasers to collect the full amounts owing to them under
the Secured Notes; and
(iii) The Debtors acknowledges and agrees that their respective liabilities
and obligations under the Security Agreement are not limited or impaired in any
respect by this Agreement.
5. Continuing Security Interest. The Debtors hereby represent, warrant,
acknowledge and agree that the Security Interest secures and shall continue to
secure the payment and performance of the Obligations, including, without
limitation, the New Secured Notes.
6. No Additional Changes. Except as otherwise set forth in this First
Amendment, the terms and conditions of the Security Agreement shall remain in
full force and effect.
7. Ratification. This First Amendment shall be construed in connection with
and as part of the Security Agreement, and all terms, conditions,
representations, warranties, covenants and agreements set forth in the Security
Agreement and each other instrument, exhibit or agreement referred to in the
Security Agreement, except as herein expressly amended, are hereby ratified and
confirmed and shall remain in full force and effect.
8. Miscellaneous.
(a) No provision of this First Amendment may be modified, waived or
discharged unless such waiver, modification or discharge is agreed to in writing
and signed by the Debtors and the Purchasers.
(b) This First Amendment shall be governed by the laws of the State of New
York (without regard to conflicts of laws).
(c) This First Amendment may be executed in counterparts, which together
shall constitute one First Amendment.
(d) By their signatures below, the parties acknowledge that they have had
sufficient opportunity to read and consider, and that they have carefully read
and considered, each provision of this First Amendment and that they are
voluntarily signing this First Amendment.
(e) Each term defined in the Security Agreement and used herein without
definition shall have the meaning assigned to such term in the Security
Agreement, unless expressly provided to the contrary.
[Signature Page Follows]
Signature page
IN WITNESS WHEREOF, the parties hereto have caused this First Amendment to
be executed and delivered by their duly authorized officers as of the date first
above written.
DEBTORS:
SYNERGY BRANDS INC.
By:
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Name:
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Title:
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SYBR.COM INC.
By:
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Name:
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Title:
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GRAN RESERVE CORPORATION
By:
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Name:
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Title:
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DEALBYNET.COM INC.
By:
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Name:
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Title:
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QUALITY FOOD BRANDS, INC.
By:
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Name:
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Title:
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NYCE NORTH AMERICA INC.
By:
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Name:
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Title:
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NET CIGAR.COM INC.
By:
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Name:
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Title:
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Signature page
PURCHASERS:
MILFAM I L.P.
By: Milfam LLC
Its: General Partner
By:
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Name: Lloyd I. Miller, III
Title: Manager
LLOYD I. MILLER, III
By:
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Name: Lloyd I. Miller, III