Exhibit 10.1
FIRST AMENDMENT TO FORBEARANCE AGREEMENT
THIS FIRST AMENDMENT TO FORBEARANCE AGREEMENT (hereinafter, this “Amendment”)
dated as of September 7, 2011 is by and among YA GLOBAL INVESTMENTS, L.P.,
formerly known as Cornell Capital Partners, LP (the “Lender”), a Cayman Islands
exempt limited partnership with an office located at 101 Hudson Street,
Suite 3700, Jersey City, New Jersey 07302, HOMELAND SECURITY CAPITAL
CORPORATION, a Delaware corporation (the “Company”) with its principal office
located at 4601 Fairfax Road, Suite 1200, Arlington, VA 22203, NTG MANAGEMENT
CORP. (formerly known as Nexus Technologies Group, Inc.) a Delaware corporation
(“Nexus”), with its principal office located at 7 West Cross Street, Hawthorne,
NY 10532 and FIDUCIA HOLDINGS LLC, a Delaware limited liability company
(“Fiducia”) with its principal office located at 4601 Fairfax Road, Suite 1200,
Arlington, VA 22203. Unless otherwise defined herein, capitalized terms used
herein shall have the meanings assigned in the Forbearance Agreement (as defined
below).
WITNESSETH
WHEREAS, the Lender, the Company, Homeland Security Advisory Services, Inc.,
(“HSAS”), Celerity Systems, Inc. and Nexus entered into a Forbearance Agreement
dated as of July 29, 2011 (the “Forbearance Agreement”);
WHEREAS, Celerity Systems, Inc. is a former name of the Company and by executing
the Forbearance Agreement as both Homeland Security Capital Corporation and
Celerity Systems, Inc., the Company executed the Forbearance Agreement twice;
WHEREAS, pursuant to that certain Certificate of Cancellation of Homeland
Security Advisory Services, LLC filed with the Secretary of State of the State
of Delaware on August 15, 2011, HSAS has been dissolved;
WHEREAS, as required by the Forbearance Agreement, Fiducia delivered to the
Lender that certain Guaranty Agreement dated as of August 16, 2011 and joined
the Security Agreement pursuant to that certain Joinder Agreement dated as of
August 16, 2011 by Fiducia, Nexus and the Company in favor of the Lender;
WHEREAS, the Existing Defaults have not been remedied on or prior to the
Forbearance Termination Date and are continuing as of the date hereof; and
WHEREAS, the Company has requested that the Lender extend the Forbearance Period
by extending the Termination Date from August 31, 2011 to September 14, 2011,
and the Lender is willing to do so, but only on the terms and conditions set
forth herein.
NOW THEREFORE, in consideration of the premises and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto hereby agree as follows:
Amendment

1.   The definition of “Nexus” shall be amended by deleting the following phrase
in the parenthetical “and, collectively with HSAS and Celerity, the “Guarantors”
and each, a Guarantor.”

 

 

--------------------------------------------------------------------------------

 

2.   Section 1 of the Forbearance Agreement shall be amended by inserting the
following definition in its proper alphabetical order:

“Guarantors” means, collectively, Nexus, HSAS, and Fiducia Holdings LLC, a
Delaware limited liability company.

3.   The definition of “Termination Date” in Section 1 of the Forbearance
Agreement shall be deleted in its entirety and replaced with the following
language:

“Termination Date” means September 14, 2011.”

4.   The last sentence of Section 14 of the Forbearance Agreement shall be
amended by deleting the reference to “Section 13” and inserting in lieu thereof
“Section 14.”

5.   Exhibit A to the Forbearance Agreement shall be amended by adding to the
list of documents, instruments and agreements the following:

  “33.   Guaranty Agreement dated as of August 16, 2011 by Fiducia Holdings LLC
in favor of the Lender.

  34.   Joinder Agreement dated as of August 16, 2011 by and among Fiducia
Holdings LLC, Nexus and the Company.”

Fiducia Joinder

6.   Fiducia hereby makes and undertakes, as the case may be, each covenant,
representation and warranty made by a Guarantor pursuant to the Forbearance
Agreement as of the date hereof (except to the extent any such representation or
warranty relates solely to an earlier date in which case such representation and
warranty shall be true and correct as of such earlier date) and agrees to be
bound by all covenants, agreements and obligations of a Guarantor pursuant to
the Forbearance Agreement.

Effective Date

7.   This Amendment shall become effective as of the date hereof upon receipt by
the Lender of counterparts of the Amendment duly executed and delivered by the
Company, Nexus and Fiducia.

Interpretation

8.   The Lender, the Company, Nexus and Fiducia each hereby acknowledges and
agrees that the Forbearance Agreement and the Financing Documents shall continue
to be and shall remain unchanged and in full force and effect in accordance with
their terms. Any terms or conditions contained in this Amendment shall control
over any inconsistent terms or conditions in the Forbearance Agreement.

 

2

--------------------------------------------------------------------------------

 

9.   Nothing contained in this Amendment shall be construed or interpreted or is
intended as a waiver of any default or Event of Default or of any rights,
powers, privileges or remedies that the Lender has or may have under the
Forbearance Agreement, the Financing Documents and/or applicable law on account
of such default or Event of Default.

10.   For purposes of the Forbearance Agreement, the representations, warranties
and covenants contained in this Amendment shall be deemed to be, and shall be,
representations, warranties and covenants under the Financing Documents. Without
limiting the foregoing sentence, if the Company, Nexus and/or Fiducia breach(es)
any provision contained herein, or should any representation or warranty set
forth herein be untrue, then such event shall, without the necessity of any
further action by any party, automatically constitute an Event of Default and a
Termination Event.

Waiver of Claims

11.   The Company, Nexus and Fiducia each hereby acknowledges and agrees that it
has no offsets, defenses, claims, or counterclaims against the Lender, its
general partner, and its investment manager, and each of their respective
agents, servants, attorneys, advisors, officers, directors, employees,
affiliates, representatives, investors, partners, members, managers,
predecessors, successors, and assigns (collectively, the “Lender Parties”) and
that if the Company, Nexus or Fiducia now has, or ever did have, any offsets,
defenses, claims, or counterclaims against the Lender Parties, or any one of
them, whether known or unknown, at law or in equity, from the beginning of the
world through this date and through the time of execution of this Amendment, all
of them are hereby expressly WAIVED, and the Company, Nexus and Fiducia each
hereby RELEASES the Lender Parties from any liability therefor.

Acknowledgment of Indebtedness

12.   The principal and interest figures set forth in Section 14 of the
Forbearance Agreement are hereby updated as of the date hereof as follows, and
the Company, Nexus and Fiducia each hereby acknowledges and agrees that, in
accordance with the terms and conditions of the Financing Documents, it is
liable to the Lender as follows:

  a.   Due under November 28 Promissory Note as of the date hereof:

         
Principal
  $ 71,345.00  
Interest
  $ 28,166.62  
 
     
Total
  $ 99,511.62  

  b.   Due under the November 26 Promissory Note as of the date hereof:

         
Principal
  $ 178,655.00  
Interest
  $ 70,659.28  
 
     
Total
  $ 249,314.28  

 

3

--------------------------------------------------------------------------------

 

  c.   Due under the First March 2008 Promissory Note as of the date hereof:

         
Principal
  $ 878,923.00  
Interest
  $ 0.00  
 
     
Total
  $ 878,923.00  

  d.   Due under the Second March 2008 Promissory Note as of the date hereof:

         
Principal
  $ 6,750,000.00  
Interest
  $ 1,758,009.54  
 
     
Total
  $ 8,508,009.54  

  e.   Due under the Third March 2008 Promissory Note as of the date hereof:

         
Principal
  $ 6,310,000.00  
Interest
  $ 2,318,021.40  
 
     
Total
  $ 8,628,021.40  

  f.   For all interest accruing upon the principal balances of the Promissory
Notes from and after the date hereof, and for all fees, redemption premiums,
liquidated damages, costs, expenses, and costs of collection (including
attorneys’ fees and expenses) heretofore or hereafter accrued or incurred by the
Lender in connection with the Financing Documents.

Representations, Warranties, and Covenants

13.   The Company, Nexus and Fiducia each hereby represents, warrants, and
covenants to the Lender as follows:

  a.   The execution and delivery of this Amendment by the Company, Nexus and
Fiducia and the performance by the Company, Nexus and Fiducia of its obligations
and agreements under this Amendment, the Forbearance Agreement, and the
Financing Documents are within the authority of the Company, Nexus and Fiducia,
have been duly authorized by all necessary corporate proceedings, if applicable,
on behalf of the Company, Nexus and Fiducia and do not and will not contravene
any provision of law, statute, rule or regulation to which the Company, Nexus or
Fiducia is subject or, if applicable, the Company’s, Nexus’ or Fiducia’s
charter, other organization papers, by-laws or any stock provision or any
amendment thereof or of any agreement or other instrument binding upon the
Company, Nexus and/or Fiducia.

  b.   This Amendment, the Forbearance Agreement and the Financing Documents
constitute legal, valid and binding obligations of the Company, Nexus and
Fiducia, enforceable in accordance with their respective terms, except as
limited by bankruptcy, insolvency, moratorium, fraudulent transfer,
reorganization and other laws of general applicability relating to or affecting
the rights or remedies of creditors and by general equitable principles (whether
considered in a proceeding in equity or at law).

 

4

--------------------------------------------------------------------------------

 

  c.   No approval or consent of, or filing with, any governmental agency or
authority is required to make valid and legally binding the execution, delivery
or performance by the Company, Nexus and/or Fiducia of this Amendment, the
Forbearance Agreement or any of the Financing Documents.

  d.   The Company, Nexus and Fiducia have performed and complied in all
material respects with all terms and conditions herein required to be performed
or complied with by the Company, Nexus and Fiducia prior to or at the time
hereof, and as of the date hereof, and to the best knowledge of the Company,
Nexus and Fiducia, no default and/or Event of Default has occurred and is
continuing under any of the Financing Documents, with the sole exception of the
Existing Defaults.

  e.   The representations and warranties contained in the Financing Documents
were true and correct in all material respects at and as of the date made and
are true and correct as of the date hereof, except to the extent of changes
resulting from transactions specifically contemplated or specifically permitted
by this Amendment, the Forbearance Agreement and the Financing Documents, and
changes occurring in the ordinary course of business that singly or in the
aggregate are not materially adverse to the financial condition of the Company,
Nexus and/or Fiducia and to the extent that such representations and warranties
relate expressly to an earlier date.

  f.   To the best knowledge of the Company, Nexus and Fiducia, the Company,
Nexus and Fiducia currently have no commercial tort claims (as such term is
defined in the Code), and each of the Company, Nexus and Fiducia hereby
covenants and agrees that in the event it shall hereafter hold or acquire a
commercial tort claim, it shall immediately notify the Lender of the particulars
of such claim in writing and shall grant to the Lender a security interest
therein and in the proceeds thereof, upon such terms and documentation as may be
satisfactory to the Lender.

  g.   The Company, Nexus and Fiducia have read and understand each of the terms
and conditions of this Amendment and confirms that it is entering into this
Amendment freely and voluntarily, without duress, after having had an
opportunity for consultation with independent counsel of its own selection, and
not in reliance upon any representations, warranties, or agreements made by the
Lender and not set forth in this Amendment.

Entire Agreement

14.   This Amendment shall be binding upon the Company, Nexus, Fiducia and the
Company’s, Nexus’ and Fiducia’s employees, representatives, successors, and
assigns, and shall inure to the benefit of the Lender and the Lender’s
successors and assigns. The Forbearance Agreement, as amended by the Amendment,
incorporates all of the discussions and negotiations between the Company, Nexus,
Fiducia and the Lender, either expressed or implied, concerning the matters
included herein and in such other documents, instruments and agreements, any
statute, custom, or usage to the contrary notwithstanding. No such discussions
or negotiations shall limit, modify, or otherwise affect the provisions hereof.
No modification, amendment, or waiver of any provision of the Forbearance
Agreement, as amended by this Amendment, or any provision of any other document,
instrument, or agreement between the Company, Nexus and/or Fiducia, on the one
hand, and the Lender, on the other hand, shall be effective unless executed in
writing by the party to be charged with such modification, amendment, or waiver,
and if such party be the Lender, then by a duly authorized officer thereof.

 

5

--------------------------------------------------------------------------------

 

Construction of Amendment

15.   In connection with the interpretation of this Amendment:

  a.   All rights and obligations hereunder and thereunder, including matters of
construction, validity, and performance, shall be governed by and construed in
accordance with the law of the State of New Jersey and are intended to take
effect as sealed instruments.

  b.   The captions of this Amendment are for convenience purposes only, and
shall not be used in construing the intent of the Lender or the Company, Nexus
or Fiducia under this Amendment.

  c.   Except as specifically modified herein, all terms and conditions of the
Forbearance Agreement shall remain in full force and effect.

  d.   The Lender, the Company, Nexus and Fiducia have prepared this Amendment
with the aid and assistance of their respective counsel. Accordingly, all of
them shall be deemed to have been drafted by the Lender , the Company, Nexus or
Fiducia and shall not be construed against the Lender, the Company, Nexus or
Fiducia.

Illegality or Unenforceablility

16.   Any determination that any provision or application of this Amendment is
invalid, illegal, or unenforceable in any respect, or in any instance, shall not
affect the validity, legality, or enforceability of any such provision in any
other instance, or the validity, legality, or enforceability of any other
provision of this Amendment.

Counterparts

17.   This Amendment may be executed in multiple identical counterparts, each of
which when duly executed shall be deemed an original, and all of which shall be
construed together as one agreement.

[Remainder of Page Intentionally Left Blank]

 

6

--------------------------------------------------------------------------------

 

IN WITNESS WHEREOF, this Amendment has been executed as of the date first set
forth above.

            HOMELAND SECURITY CAPITAL CORPORATION
      By:   /s/ C. Thomas McMillen         Name:   C. Thomas McMillen       
Title:   CEO        NTG MANAGEMENT CORP.
      By:   /s/ Michael T. Brigante         Name:   Michael T. Brigante       
Title:   CEO        FIDUCIA HOLDINGS LLC
      By:   /s/ C. Thomas McMillen         Name:   C. Thomas McMillen       
Title:   CEO        YA GLOBAL INVESTMENTS, L.P.
      By:  Yorkville Advisors, LLC       Its:  Investment Manager           
By:   /s/ Gerald Eicke         Name:   Gerald Eicke        Title:   Managing
Member