Exhibit 10.17
 

 
FIRST AMENDMENT TO SECURITY AGREEMENT

THIS FIRST AMENDMENT TO SECURITY AGREEMENT (“Amendment”), dated as of April 8,
2014, is by and among NUVEL HOLDINGS, INC., a corporation organized under the
laws of Florida (the “Company”), ALPHA CAPITAL ANSTALT, as collateral agent (in
such capacity, together with its successors in such capacity, the “Agent”) for
the Investors (as defined below) .
 
RECITALS:

A.           The Company issued and sold to certain investors (each an
“Investor” and collectively, the “Investors”) the Company’s Secured Convertible
Promissory Notes (each a “Secured Note” and collectively, the “Secured Notes”)
originally issued in connection with the Company’s offering of up to $1,000,000
in Secured Notes, together with warrants granting the holders thereof the right
to purchase a number of shares of the Company’s common stock in November 2012.
 
B.           To secure the Company’s obligations under and with respect to the
Secured Notes, the Company, the Agent and the Investors signatory thereto
entered into that certain Security Agreement dated on or about the date of the
first Secured Note issued by the Company (as amended, restated, supplemented or
otherwise modified from time to time, the “Security Agreement”).
 
C.           Pursuant to Section 19(c) of the Security Agreement, the Company
and the Investor holding a majority interest of the outstanding Secured Notes
require that the Security Agreement be amended in certain respects.
 
NOW, THEREFORE, for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto hereby agree as
follows:
 
ARTICLE 1
 
Definitions
 
Section 1.1 Definitions.  Capitalized terms used and not otherwise defined in
this Amendment shall have the respective meanings ascribed to them in the
Security Agreement.
 
ARTICLE 2
 
Amendments
 
Section 2.1 Amendments to Schedule B (Permitted Liens).  Effective as of the
First Amendment Effective Date, Schedule B to the Security Agreement is hereby
amended to add the following:
 
“Permitted Liens” shall include the following:
 
 (a) Liens upon the Company’s intellectual property in connection with a
license, development, manufacturing or distribution transaction or other
partnering arrangement; (b) Liens imposed by law for taxes that are not yet due
or are being contested in good faith and for which adequate reserves have been
established in accordance with GAAP; (c) carriers’, warehousemen’s, mechanic’s,
material men’s, repairmen’s and other like Liens imposed by law, arising in the
ordinary course of business and securing obligations that are not overdue by
more than 30 days or that are being contested in good faith and by appropriate
proceedings; (d) pledges and deposits made in the ordinary course of business in
compliance with workers’ compensation, unemployment insurance and other social
security laws or regulations; (e) deposits to secure the performance of bids,
trade contracts, leases, statutory obligations, surety and appeal bonds,
performance bonds and other obligations of a like nature, in each case in the
ordinary course of business; (f) Liens created with respect to the financing of
the purchase of new property in the ordinary course of the Company’s business up
to the amount of the purchase price of such property; (g) easements, zoning
restrictions, rights-of-way and similar encumbrances on real property imposed by
law or arising in the ordinary course of business that do not secure any
monetary obligations and do not materially detract from the value of the
affected property; (h) Liens created before the date hereof as disclosed in the
Reports; (i) Liens created or would be created to secure the repayment of the
debt securities to be offered in the New Bridge Financing; and (j) Liens created
or would be created to secure the repayment of the debt securities to be offered
in the Qualified Financing.
 
 
 
 

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Section 2.2 Amendments to Section 1 (Definitions).  Effective as of the First
Amendment Effective Date, Section 1 of the Security Agreement is hereby amended
by adding the following definitions, each in appropriate alphabetical position:
 
“First Amendment Effective Date” means April 8, 2014.
 
“New Bridge Financing” means the offering of the Company’s secured convertible
promissory notes issued or to be issued, together with certain warrants, to
certain accredited investors on or before June 30, 2014 for aggregate gross
proceeds of up to $1,000,000.
 
“Other Senior Liens” means, collectively: (i) Liens created or would be created
to secure the repayment of the debt securities to be offered in the New Bridge
Financing; and (iii) Liens created or would be created to secure the repayment
of the debt securities to be offered in the Qualified Financing.
 
“Qualified Financing” means the offering of the Company’s secured convertible
promissory notes to be issued, together with certain warrants, to certain
accredited investors on or before September 30, 2014 for aggregate gross
proceeds of at least $2,000,000.
 
Section 2.3 Amendments to Section 2 (Grant of Security Interest in Collateral).
Effective as of the First Amendment Effective Date, Section 2 of the Security
Agreement is hereby amended as follows:
 
As an inducement for the Secured Parties to extend the loans as evidenced by the
Notes and to secure the complete and timely payment, performance and discharge
in full, as the case may be, of all of the Obligations, each Debtor hereby
unconditionally and irrevocably pledges, grants and hypothecates to the Secured
Parties a first priority security interest in and to, a lien upon and a right of
set-off against all of their respective right, title and interest of whatsoever
kind and nature in and to, the Collateral (a “Security Interest” and,
collectively, the “Security Interests”), which shall be pari passu to the Other
Senior Liens but senior to all other indebtedness of the Debtors except for the
Permitted Liens.
 
Section 2.4 Amendment to Section 9 (Application of Proceeds).  Effective as of
the First Amendment Effective Date, Section 9 of the Security Agreement is
hereby amended to read in its entirety as follows:
 
As provided herein, all of the Collateral shall secure the Notes and the debt
securities issued or to be issued in the New Bridge Financing and Qualified
Financing on an equal and ratable basis, in accordance with the respective
amounts in respect thereof then due and owing to the holders thereof. Therefore,
the proceeds of any such sale, lease or other disposition of the Collateral
hereunder or from payments made on account of any insurance policy insuring any
portion of the Collateral shall be applied first, to the expenses of retaking,
holding, storing, processing and preparing for sale, selling, and the like
(including, without limitation, any taxes, fees and other costs incurred in
connection therewith) of the Collateral, if any, to the reasonable attorneys’
fees and expenses incurred by the Collateral Agent in enforcing the Secured
Parties’ rights hereunder and in connection with collecting, storing and
disposing of the Collateral, and then to satisfaction of the Obligations and the
obligations that are or will be secured by the Other Senior Liens in each case
equally and proportionally among the holders of the Notes and the notes issued
or to be issued in the New Bridge Financing and the Qualified Financing in
accordance with the respective amounts thereof then due and owing to each of
such holders, and then to the payment of any other amounts required by
applicable law, after which the Secured Parties shall pay to the applicable
Debtor any surplus proceeds. If, upon the sale, license or other disposition of
the Collateral, the proceeds thereof are insufficient to pay all amounts to
which the Secured Parties are legally entitled, the Debtors will be liable for
the deficiency, together with interest thereon, at the rate of 18% per annum or
the lesser amount permitted by applicable law (the “Default Rate”), and the
reasonable fees of any attorneys employed by the Secured Parties to collect such
deficiency. To the extent permitted by applicable law, each Debtor waives all
claims, damages and demands against the Secured Parties arising out of the
repossession, removal, retention or sale of the Collateral, unless due solely to
the gross negligence or willful misconduct of the Secured Parties as determined
by a final judgment (not subject to further appeal) of a court of competent
jurisdiction.
 
 
 
 

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ARTICLE 3
 
Miscellaneous
 
Section 3.1 Ratifications.  The terms and provisions of this Amendment shall
modify and supersede all inconsistent terms and provisions set forth in the
Security Agreement, and except as expressly modified and superseded by this
Amendment, the terms and provisions of the Security Agreement are ratified and
confirmed and shall continue in full force and effect after giving effect to
this Amendment.  The Company and the Agent agree that the Security Agreement, as
amended hereby, shall continue to be legal, valid, binding, and enforceable in
accordance with its terms.  The Company agrees that any and all liens and
security interests granted under the Security Agreement continue to secure all
of the Secured Obligations, including without limitation the obligations,
indebtedness and liabilities of the Company under the Secured Notes, as amended.
 
Section 3.2 Waiver of Defaults and Default Interest Rate.  Agent, on behalf of
the Investors, hereby agrees: (i) to waive any Events of Default that have
occurred under the terms of the Security Agreement as of the date hereof (the
“Defaults”); (ii) to waive any rights or remedies with respect to the Event of
Defaults available under the Security Agreement.
 
Section 3.3 Representations and Warranties. The Company hereby represents and
warrants to the Agent and the Investors that, as of the date of and after giving
effect to this Amendment, the execution, delivery, and performance of this
Amendment and any and all other documents executed and/or delivered in
connection herewith have been authorized by all requisite action on the part of
the Company and will not violate the Company’s organizational or constituent
documents.
 
Section 3.4 Reference to Security Agreement.  The Security Agreement and any and
all other agreements, documents, or instruments now or hereafter executed and
delivered pursuant to the terms hereof or pursuant to the terms of the Security
Agreement, as amended hereby, are hereby amended so that any reference to the
Security Agreement in such agreements, documents, and instruments, whether
direct or indirect, shall be a reference to the Security Agreement as amended
hereby
 
Section 3.5 Severability.  Any provision of this Amendment held by a court of
competent jurisdiction to be invalid or unenforceable shall not impair or
invalidate the remainder of this Amendment and the effect thereof shall be
confined to the provision so held to be invalid or unenforceable.
 
Section 3.6 Applicable Law.  ALL ISSUES AND QUESTIONS CONCERNING THE
CONSTRUCTION, VALIDITY, ENFORCEMENT AND INTERPRETATION OF THIS AMENDMENT SHALL
BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW
YORK, WITHOUT GIVING EFFECT TO ANY CHOICE OF LAW OR CONFLICT OF LAW RULES OR
PROVISIONS (WHETHER OF THE STATE OF NEW YORK OR ANY OTHER JURISDICTION) THAT
WOULD CAUSE THE APPLICATION OF THE LAWS OF ANY JURISDICTION OTHER THAN THE STATE
OF NEW YORK.
 
Section 3.7 Successors and Assigns.  This Amendment is binding upon and shall
inure to the benefit of the Company and the Agent and their respective
successors and assigns, except that the Company shall not assign or transfer any
of its rights or obligations hereunder without the prior written consent of the
Agent and the holders of a majority of the then outstanding principal amount of
the Secured Notes.
 
Section 3.8 Counterparts.  This Amendment may be executed in one or more
counterparts, and on telecopied or other electronically transmitted
counterparts, each of which when so executed shall be deemed to be an original,
but all of which when taken together shall constitute one and the same
agreement.
 
 
 
 
 

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Section 3.9 Headings.  The headings, captions, and arrangements used in this
Amendment are for convenience only and shall not affect the interpretation of
this Amendment. A telecopy or other electronic transmission of any executed
counterpart shall be deemed valid as an original.
 
Section 3.10 Entire Agreement.  This Amendment, the Secured Notes (as amended to
date) and all other instruments, documents, and agreements executed and
delivered in connection herewith and therewith embody the final, entire
agreement among the Company, the Agent and the holders of the Secured Notes, and
supersede any and all prior commitments, agreements, representations, and
understandings, whether written or oral, relating hereto or thereto, and may not
be contradicted or varied by evidence of prior, contemporaneous, or subsequent
oral agreements or discussions of the parties.  There are no unwritten oral
agreements among the parties.
 

 
 
 
 
 
 
 
[Remainder of page intentionally blank.  Signature page follows.]
 
 
 
 
 

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IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly
executed as of the date first above written.
 
COMPANY:

NUVEL HOLDINGS, INC.

By: /s/   Jay Elliot                                                
Name:    Jay Elliot
Title:      Chairman
 
AGENT:
 
ALPHA CAPITAL ANSTALT.

By:  /s/   ____________________________
Name:     ____________________________
Title:       ____________________________

 

 
 

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