Document:

EXHIBIT 10.6

     

    Exhibit
      10.6

    AMENDMENT
      TO SECURED CONVERTIBLE

     

    PROMISSORY
      NOTES

     

    

    THIS
      AMENDMENT TO SECURED CONVERTIBLE PROMISSORY NOTES (the
      “Amendment”)
      is
      entered into as of September 15, 2005, by and among Equitex,
      Inc.,
      a
      Delaware corporation (the “Company”),
      Pandora
      Select Partners L.P.,
      a
      British Virgin Islands limited partnership (“Pandora”)
      and
Whitebox
      Hedged High Yield Partners L.P.,
      a
      British Virgin Islands limited partnership (“WHHY”).

     

    WHEREAS,
      the
      Company, Pandora and WHHY
      are
      parties to a Purchase Agreement dated March 8, 2004 (the "Original
      Purchase Agreement"),
      pursuant to which the Investors each purchased a convertible promissory note
      (each, an “Original
      Note”
and
      together, the “Original
      Notes”)
      and a
      warrant to purchase shares of the Company’s Common Stock from the Company in
      consideration of a collective $5,000,000 loan.

     

    WHEREAS,
      the
      parties desire to amend certain provisions of the Original Notes.

     

    NOW,
      THEREFORE,
      in
      consideration of the mutual promises and covenants contained herein, and for
      other good and valuable consideration, the receipt and sufficiency of which
      are
      hereby acknowledged, the parties, intending to be legally bound, hereby agree
      as
      follows:

     

    SECTION
      1. Amendment
      to Original Notes.
      Each of
      the Original Notes is amended as follows:

     

    (a) The
      first
      sentence of Section 5(a) is amended to read in its entirety:

     

    "At
      any
      time while any portion of the principal or interest of this Note is outstanding
      (including during the notice period prior to any optional cash prepayment by
      the
      Maker), the Payee may give the Maker written notice of its intention to convert
      all or any portion of the outstanding principal and/or accrued but unpaid
      interest on this Note into shares of the Maker's Common Stock based on $5.50
      per
      share (the “Conversion
      Rate”),
      subject to adjustment as described herein."

     

     

    [Signature
      page follows.]

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

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

     

    
       

      
        
          	 	 	 
	 	EQUITEX,
                  INC.
	 
 	 
 	 
 
	 	By:  	/s/ Henry
                  Fong 
	 	
                  

                  Henry
                    Fong

                  President

                

        

        
          	 	 	 
	 	PANDORA
                  SELECT PARTNERS L.P.
	 
 	 
 	 
 
	 	By:  	/s/ Jonathan
                  Wood
	 	
                  

                  
                    Jonathan
                      Wood

                    Managing
                      Director

                  

                

        

        
          	 	 	 
	 	WHITEBOX
                  HEDGED HIGH YIELD PARTNERS L.P.
	 
 	 
 	 
 
	 	By:  	/s/ Jonathan
                  Wood
	 	
                  

                  
                    Jonathan
                      Wood

                    Managing
                      Director

                  

                

        

      
        
          
          

        

        2EXHIBIT 10.7

     

    Exhibit
      10.7
      AMENDED
        SECURITY AGREEMENT

       

      

      THIS
        AMENDED SECURITY AGREEMENT
        (this
“Agreement”)
        is
        made as of September 15, 2005, by and among Equitex, Inc., a Delaware
        corporation (“Company”),
        Pandora Select Partners, L.P., a British Virgin Islands limited partnership
        (“Pandora”),
        and
        Whitebox Hedged High Yield Partners, L.P., a British Virgin Islands limited
        partnership (“WHHY").
        Pandora
        and WHHY are referred to herein individually as a "Secured
        Party"
        and
        together as the "Secured
        Parties."

       

      RECITALS

       

      A. The
        Company, Pandora and WHHY
        entered
        into a Purchase Agreement dated March 8, 2004 (the “Original
        Purchase Agreement”),
        pursuant to which Pandora and WHHY each purchased a secured convertible
        promissory note (each, an “Original
        Note”
        and
        together, the “Original
        Notes”)
        and a
        warrant to purchase shares of the Company's Common Stock ( each, an “Original
        Warrant” and
        together, the "Original
        Warrants")
        in
        consideration of a collective $5,000,000 loan (the “Original
        Loan”).
        

       

      B. As
        a
        condition to making the Original Loan, the Company pledged to the Secured
        Parties all of the Company's assets pursuant to the terms of a Security
        Agreement dated March 8, 2004 (the “Original Security
        Agreement”).
        

       

      C. The
        Company, Pandora and WHHY have entered into a second Purchase Agreement dated
        as
        of this date (the "Second
        Purchase Agreement"),
        pursuant to which Pandora and WHHY are each purchasing an additional secured
        convertible promissory note (each, a "New
        Note"
        and
        together, the "New
        Notes")
        and an
        additional warrant to purchase the Company's Common Stock (each, a "New
        Warrant"
        and
        together, the "New
        Warrants")
        in
        consideration of a collective $1,500,000 new loan (the "New
        Loan").

       

      D. The
        Secured Parties desire to enter into this Agreement to supercede and replace
        the
        Original Security Agreement.

       

      NOW,
        THEREFORE,
        in
        consideration of the agreements herein and in reliance upon the representations
        and warranties set forth herein and therein, the parties agree as
        follows:

       

      ARTICLE
        1.

      DEFINED
        TERMS

       

      1.1  DEFINITIONS.
        Unless
        otherwise defined herein or unless the context otherwise requires, terms
        used in
        this Agreement, including its preamble and recitals, have the meanings provided
        in the Uniform Commercial Code in effect in the State of Delaware (the
“UCC”).
        In
        addition, the following terms when used in this Agreement, including its
        preamble and recitals, shall have the following meanings:

       

      “Loan
        Documents”
means
        this Agreement, the Second Purchase Agreement, the Stock Pledge Agreement
        of
        this date among the Company and the Secured Parties (the “Stock
        Pledge Agreement”),
        the
        Registration Rights Agreement of this date among the Company and the Secured
        Parties (the "Registration
        Rights Agreement"),
        the
        Notes and the Warrants.

       

      
        
          
          

        

        
          A-1

          
            

          

        

        
          
          

        

      

      “Notes”
means
        the each of the Original Notes and the New Notes.

       

      “Obligations”
means
        the payment and other performance obligations under the Loan Documents, whether
        now existing or hereafter created.

       

      "Warrants"
        means
        each of the Original Warrants and the New Warrants.

       

      ARTICLE
        2.

      SECURITY
        INTEREST

       

      2.1  GRANT
        OF SECURITY INTEREST.
        

       

      (a)  To
        secure
        the timely payment and performance in full of the Obligations, the Company
        does
        hereby assign, grant and pledge to each Secured Party, all of the estate,
        right,
        title and interest of the Company in and to the collateral
        as more
        fully described on Exhibit
        A
        hereto,
        whether now owned or later acquired or created, and including all proceeds
        of
        the collateral, whether cash or non-cash (the “Collateral”).

       

      2.2  FINANCING
        STATEMENTS.

       

      (a)  The
        Company hereby authorizes each Secured Party to file all financing statements,
        continuation statements, assignments, certificates, and other documents and
        instruments with respect to the Collateral pursuant to the UCC and otherwise
        as
        may be necessary or reasonably requested by such Secured Party to perfect
        or
        from time to time to publish notice of, or continue or renew the security
        interests granted hereby (including, such financing statements, continuation
        statements, certificates, and other documents as may be necessary or reasonably
        requested to perfect a security interest in any additional property rights
        hereafter acquired by the Company or in any replacements, products or proceeds
        thereof), in each case in form and substance satisfactory to such Secured
        Party.

       

      (b)  Each
        Secured Party will pay its respective cost of filing the same in all public
        offices where filing is necessary or reasonably requested by such Secured
        Party
        and will pay any and all recording, transfer or filing taxes that may due
        in
        connection with any such filing. The Company grants each Secured Party the
        right, at any time and at such Secured Party’s option, to file any or all such
        financing statements, continuation statements, and other documents pursuant
        to
        the UCC and otherwise as Secured Party reasonably may deem necessary or
        desirable.

       

      (c)  The
        Company hereby authorizes the filing of any financing statements or continuation
        statements, and amendments to financing statements, or any similar document
        in
        any jurisdictions and with any filing offices as each Secured Party may
        reasonably determine is necessary or advisable to perfect its respective
        security interest granted to such Secured Party. Such financing statements
        may
        describe the Collateral in the same manner as described herein or may contain
        an
        indication or description of collateral that describes such property in any
        other manner as Secured Party may reasonably determine is necessary, advisable
        or prudent to ensure the perfection of its security interest in the Collateral
        granted to such Secured Party herein.

       

      
        
          
          

        

        
          A-2

          
            

          

        

        
          
          

        

      

      2.3  DEBTOR
        REMAINS LIABLE.

       

      (a)  Anything
        herein contained to the contrary notwithstanding, the Company shall remain
        liable under any contracts, agreements and other documents included in the
        Collateral, to perform all of the obligations undertaken by it thereunder,
        all
        in accordance with and pursuant to the terms and provisions thereof, and
        Secured
        Parties shall have no obligations or liabilities (jointly or severally) under
        any such contracts, agreements and other documents by reason of or arising
        out
        of this Agreement, nor shall Secured Parties be required or obligated in
        any
        manner to perform or fulfill any obligations of the Company thereunder or
        to
        make any payment, or to make any inquiry as to the nature or sufficiency
        of any
        payment received by such Secured Party or present or file any claim, or take
        any
        action to collect or enforce the payment of any amounts which may have been
        assigned to such Secured Party or to which such Secured Party may be entitled
        at
        any time or times.

       

      (b)  If
        any
        default by the Company under any of the contracts, agreements or other documents
        included in the Collateral shall occur, each Secured Party shall, at its
        option,
        be permitted (but shall not be obligated) to remedy any such default by giving
        written notice of such intent to the Company and to the parties to such
        contract, agreement or other document. Any cure by Secured Party of the
        Company’s default under any such contract, agreement or other document shall not
        be construed as an assumption by such Secured Party of any obligations,
        covenants or agreements of the Company contained in such contract, agreement
        or
        other document, and Secured Party shall not incur any liability to the Company
        or any other person as a result of any actions undertaken by such Secured
        Party
        in curing or attempting to cure any such default. This Agreement shall not
        be
        deemed to release or to affect in any way the obligations of the Company
        under
        any of such contracts, agreements or other documents.

       

      ARTICLE
        3.

      REPRESENTATIONS
        AND WARRANTIES OF DEBTOR

       

      The
        Company makes the following representations and warranties to and in favor
        of
        each Secured Party as of the date hereof. All of these representations and
        warranties shall survive the execution and delivery of this
        Agreement:

       

      3.1 ORGANIZATION.
        The
        Company:

       

      (a) is
        a
        corporation duly incorporated and validly existing and in good standing under
        the laws of the State of Delaware;

       

      (b) is
        duly
        qualified, authorized to do business as a foreign corporation in each
        jurisdiction where the character of its properties or the nature of its
        activities makes such qualification necessary; and

       

      
        
          
          

        

        
          A-3

          
            

          

        

        
          
          

        

      

      (c) has
        the
        corporate power (A) to enter into the Loan Documents and to perform its
        obligations thereunder and to consummate the transactions contemplated thereby,
        (B) to carry on its business as now being conducted and as proposed to be
        conducted by it, (C) to execute, deliver and perform this Agreement, (D) to
        take all action as may be necessary to consummate the transactions contemplated
        hereunder, and (E) to grant the liens and security interests provided for
        in this Agreement.

       

      3.2  OFFICES,
        LOCATION OF COLLATERAL.
        The
        chief executive office or chief place of business of the Company is located
        at
        7315 Peakview Avenue, Englewood, Colorado 80111.

       

      3.3  TITLE
        AND LIENS.
        The
        Company has good, valid, and marketable title to the Collateral, free from
        all
        liens and encumbrances of any kind, except for the security interests granted
        pursuant to the Original Security Agreement.
        As a
        result of this Agreement, Secured Parties will, together, have a first priority
        security interest in the Collateral, subordinate to no other secured
        rights.

       

      3.4  AUTHORIZATION;
        NO CONFLICT.
        The
        Company has duly authorized, executed and delivered this Agreement, and the
        Company’s execution and delivery hereof and its consummation of the transactions
        contemplated hereby and the compliance with the terms thereof:

       

      (a)  does
        not
        or will not contravene any legal requirements applicable to or binding on
        the
        Company which could reasonably be expected to have a material adverse effect
        upon the Collateral or Secured Party’s respective rights therein; 

       

      (b)  does
        not
        or will not contravene or result in any breach of or constitute any default,
        or
        result in or require the creation of any lien upon any of the Company’s
        property, under any agreement or instrument to which the Company is a party
        or
        by which it or any of its properties may be bound or affected; and

       

      (c)  does
        not
        or will not require the consent or approval of any third party which has
        not
        already been obtained.

       

      3.5  ENFORCEABILITY.
        This
        Agreement is a legal, valid and binding obligation of the Company, enforceable
        against the Company in accordance with its terms, except to the extent that
        enforceability may be limited by applicable bankruptcy, insolvency, moratorium,
        reorganization or other similar laws affecting the enforcement of creditors’
rights or by the effect of general equitable principles.

       

      ARTICLE
        4.

      COVENANTS
        OF DEBTOR

       

      The
        Company covenants to and in favor of each Secured Party as follows:

       

      
        
          
          

        

        
          A-4

          
            

          

        

        
          
          

        

      

      4.1  COMPLIANCE
        WITH OBLIGATIONS.
        The
        Company shall perform and comply in all material respects with all obligations
        and conditions on its part to be performed with respect to the
        Collateral.

       

      4.2  INFORMATION
        CONCERNING COLLATERAL.
        The
        Company shall, promptly upon request, provide to Secured Party all information
        and evidence that it reasonably requests concerning the Collateral to enable
        such Secured Party to enforce the provisions of this Agreement.

       

      4.3  DEFENSE
        OF COLLATERAL.
        The
        Company shall defend its title to the Collateral and the respective interest
        of
        each Secured Party in the Collateral pledged hereunder against the claims
        and
        demands of all third parties whomsoever. 

       

      4.4  MAINTENANCE
        OF COLLATERAL.
        The
        Company shall not (i)  fail to deliver to Secured Party a copy of each
        demand or notice received or given by it relating to any contract or agreement
        of the Company or to any other Collateral which could reasonably be expected
        to
        have a material adverse effect upon the Collateral or Secured Party’s respective
        rights therein, or (ii) sell, contract to sell, assign, transfer or dispose
        of any of the Collateral, except in the ordinary course of business, or with
        the
        consent of each Secured Party, which consent will not be unreasonably
        withheld. 

       

      4.5  PRESERVATION
        OF VALUE; LIMITATION OF LIENS.
        The
        Company shall not take any action in connection with the Collateral which
        would
        impair in any material respect the respective interests or rights of each
        Secured Party therein or with respect thereto, except as expressly permitted
        hereby; provided,
        however, that
        nothing in this Agreement shall prevent the Company, prior to the exercise
        by
        Secured Party of any of its respective rights pursuant to the terms hereof,
        from
        undertaking the Company’s operations in the ordinary course of business. The
        Company shall not directly or indirectly create, incur, assume or suffer
        to
        exist any liens on or with respect to all or any part of the Collateral (other
        than the lien created by this Agreement). The Company shall at its own cost
        and
        expense promptly take such action as may be necessary to discharge any such
        liens.

       

      4.6  NO
        OTHER FILINGS.
        The
        Company shall not file or authorize to be filed in any jurisdiction any
        financing statements under the UCC or any like statement relating to the
        Collateral.

       

      4.7  MAINTENANCE
        OF RECORDS.
        The
        Company shall, at all times, keep accurate and complete records of the
        Collateral. The Company shall permit representatives of each Secured Party,
        upon
        reasonable prior notice, at any time during normal business hours of the
        Company
        to inspect and make abstracts from the Company’s books and records pertaining to
        the Collateral. Upon the occurrence and during the continuation of any Event
        of
        Default, at Secured Party’s request, the Company shall promptly deliver copies
        of any and all such records to such
        Secured Party.

       

      4.8  PAYMENT
        OF TAXES.
        The
        Company shall pay or cause to be paid, before any fine, penalty, interest
        or
        cost attaches thereto, all taxes, assessments and other governmental or
        non-governmental charges or levies (other than those taxes that it is contesting
        in good faith and by appropriate proceedings, and in respect of which it
        has
        established adequate reserves for such taxes) now or hereafter assessed or
        levied against the Collateral pledged by them hereunder and shall retain
        copies
        of, and, upon request, permit each Secured Party to examine receipts showing
        payment of any of the foregoing.

       

      
        
          
          

        

        
          A-5

          
            

          

        

        
          
          

        

      

      4.9  NAME;
        JURISDICTION OF ORGANIZATION.
        The
        Company shall give Secured Parties at least 30 days prior written notice
        before
        the Company changes its name, jurisdiction of organization or entity type
        and
        shall at the expense of the Company execute and deliver such instruments
        and
        documents as may be required by Secured Parties or applicable legal requirements
        to maintain their perfected security interests in the Collateral.

       

      4.10  PROCEEDS
        OF COLLATERAL.
        The
        Company shall, at all times, keep pledged to each Secured Party pursuant
        hereto
        all Collateral and all dividends, distributions, interest, principal and
        other
        proceeds received by the Company with respect thereto, and all other Collateral
        and other securities, instruments, proceeds and rights from time to time
        received by or distributable to the Company in respect of any Collateral,
        and
        shall not permit any issuer of such Collateral to issue any shares of stock
        or
        other equity interests which shall not have been immediately duly pledged
        to
        each Secured Party hereunder.

       

      ARTICLE
        5.

      RIGHTS
        AND REMEDIES

       

      5.1  EVENT
        OF DEFAULT DEFINED.
        Any
        failure to materially comply with any covenant, agreement, term or provision
        contained in this Agreement, the Stock Pledge Agreement, the Second Purchase
        Agreement or the Registration Rights Agreement (provided such failure continues
        through twenty days after the Secured party gives to the Company written
        notice
        thereof) or any event of default under any of the Notes (including events
        of
        non-compliance with this Agreement, as described in the Notes) shall constitute
        an “Event
        of Default”
        hereunder.
        Without
        limiting the foregoing, it is intended that any event of default under the
        New
        Notes will constitute an event of default under each of the Original
        Notes.

       

      5.2  REMEDIES
        UPON EVENT OF DEFAULT.

       

      (a)  During
        any period during which an Event of Default shall have occurred and be
        continuing, each Secured Party may (but shall be under no obligation to),
        directly or by using agent or broker: 

       

      (i)  proceed
        to protect and enforce the respective rights vested in it by this Agreement
        and
        under the UCC;

       

      (ii)  cause
        all
        moneys and other property pledged as security to Secured Party to be paid
        and/or
        delivered directly to such Secured Party, and demand, sue for, collect and
        receive any such moneys and property;

       

      (iii)  cause
        any
        action at law or suit in equity or other proceeding to be instituted and
        prosecuted to collect or enforce any Obligations of the Company or rights
        included in the Collateral, or for specific enforcement of any covenant or
        agreement contained herein, or in aid of the exercise of any power therein
        or
        herein granted, or for any foreclosure hereunder and sale under a judgment
        or
        decree in any judicial proceeding, or to enforce any other legal or equitable
        right vested in it by this Agreement or by law;

       

      
        
          
          

        

        
          A-6

          
            

          

        

        
          
          

        

      

      (iv)  foreclose
        or enforce any other agreement or other instrument by or under or pursuant
        to
        which the Obligations of the Company are issued or secured;

       

      (v)  subject
        to Section
        5.2(b),
        sell,
        lease or otherwise dispose of any or all of the Collateral, in one or more
        transactions, at such prices as such Secured Party may deem best, and for
        cash
        or on credit or for future delivery, without assumption of any credit risk,
        at
        any broker’s board or at public or private sale, without demand of performance
        or notice of intention to sell, lease or otherwise dispose of, or of time
        or
        place of disposition (except such notice as is required by applicable statute
        and cannot be waived), it being agreed that Secured Party may be a purchaser
        or
        lessee on its own behalf at any such sale and that Secured Party or anyone
        else
        who may be the purchaser, lessee or recipient for value of any or all of
        the
        Collateral so disposed of shall, upon such disposition, acquire all of The
        Company’s rights therein. Secured Party may adjourn any public or private sale
        or cause the same to be adjourned from time to time by announcement at the
        time
        and place fixed for the same, and such sale may, without further notice or
        publication, be made at any time or place to which the same may be so adjourned.
        If Secured Party sells any of the Collateral upon credit, after reasonable
        inquiry as to the credit worthiness of the purchaser, The Company will be
        credited only with payments actually made by the purchaser, received by Secured
        Party and applied to the indebtedness of the purchaser. In the event the
        purchaser fails to pay for the Collateral, Secured Party may resell the
        Collateral and the Company shall be credited with the proceeds of the
        sale;

       

      (vi)  incur
        expenses, including reasonable attorneys’ fees, consultants’ fees, and other
        costs appropriate to the exercise of any of its rights or powers under this
        Agreement;

       

      (vii)  perform
        any obligation of the Company hereunder and make payments, purchase, contest
        or
        compromise any encumbrance, charge, or lien, and pay taxes and
        expenses;

       

      (viii)  make
        any
        reasonable compromise or settlement deemed desirable with respect to any
        or all
        of the Collateral and extend the time of payment, arrange for payment
        installments, or otherwise modify the terms of, any or all of the
        Collateral;

       

      (ix)  secure
        the appointment of a receiver of any or all of the Collateral;

       

      (x)  exercise
        any other or additional rights or remedies granted to such Secured Party
        under
        any other provision of this Agreement or exercisable by a secured party under
        the UCC, whether or not the UCC applies to the affected Collateral, or under
        any
        other applicable law and take any other action which Secured Party deems
        necessary or desirable to protect or realize upon its respective security
        interest in the Collateral or any part thereof; and/or 

       

      
        
          
          

        

        
          A-7

          
            

          

        

        
          
          

        

      

      (xi)  appoint
        a
        third party (who may be an employee, officer or other representative of Secured
        Party) to do any of the foregoing, or take any other action permitted hereunder,
        on behalf of such Secured Party.

       

      (b)  If,
        pursuant to any law, prior notice of any action described in Section 5.2(a)
        is
        required to be given to the Company, the Company hereby acknowledges that
        the
        minimum time required by such law, or if no minimum is specified, ten days,
        shall be deemed a reasonable notice period.

       

      (c)  Any
        action or proceeding to enforce this Agreement may be taken by Secured Party
        either in the Company’s name or in Secured Party’s name, as each such Secured
        Party may deem necessary.

       

      (d)  All
        rights of marshalling of assets of the Company, including any such right
        with
        respect to the Collateral, are hereby waived by the Company.

       

      (e)  Secured
        Party shall incur no liability as a result of the sale of any or all of the
        Collateral at any private sale pursuant to Section 5.2(a)
        conducted in a commercially reasonable manner. The Company hereby waives
        any
        claims against Secured Party arising by reason of the fact that the price
        at
        which any or all of the Collateral may have been sold at such a private sale
        was
        less than the price that might have obtained at a public sale or was less
        than
        the aggregate amount of the Obligations, even if Secured Party accepts the
        first
        offer received and does not offer the Collateral to more than one
        offeree.

       

      5.3  ATTORNEYS-IN-FACT.
        Upon
        the
        occurrence and during the continuation of an Event of Default, the Company
        hereby irrevocably constitutes and appoints each Secured Party as its true
        and
        lawful attorneys-in-fact to enforce all rights of the Company with respect
        to
        the Collateral, including the right to give appropriate receipts, releases
        and
        satisfactions for and on behalf of and in the name of the Company or, at
        the
        option of such Secured Party, in the name of such Secured Party, with the
        same
        force and effect as the Company could do if this Agreement had not been made.
        If
        Secured Party shall so elect after the occurrence and during the continuation
        of
        an Event of Default hereunder, Secured Party shall have the right at all
        times
        to settle, compromise, adjust, or liquidate all claims or disputes directly
        with
        the Company or any obligor of the Company upon such terms and conditions
        as each
        Secured Party may determine in its sole discretion, and to charge all costs
        and
        expenses thereof (including reasonable attorneys’ fees and charges) to the
        Company’s account and to add them to the Obligations whereupon such costs and
        expenses shall be and become part of the Obligations. This power of attorney
        is
        a power coupled with an interest and shall be irrevocable.

       

      5.4  EXPENSES;
        INTEREST.
        All
        costs
        and expenses (including reasonable attorneys’ fees and expenses) incurred by
        each Secured Party in connection with exercising any actions taken under
        Article
        5, together with interest thereon (to the extent permitted by law) computed
        at a
        rate of 10% per annum (or
        if
        less, the maximum rate permitted by law) from the date on which such costs
        or
        expenses are invoiced to and become payable by the Company, to the date of
        payment thereof, shall constitute part of the Obligations secured by this
        Agreement and shall be paid by the Company to each such Secured Party within
        10
        days after written demand.

       

      
        
          
          

        

        
          A-8

          
            

          

        

        
          
          

        

      

      5.5  NO
        IMPAIRMENT OF REMEDIES.
        If,
        under
        applicable law, Secured Party proceeds by either judicial foreclosure or
        by
        non-judicial sale or enforcement, such Secured Party may, at its sole option,
        determine which of its remedies or rights to pursue without affecting any
        of its
        rights and remedies under this Agreement. If, by exercising any right and
        remedy, Secured Party forfeits any of its other rights or remedies, including
        any right to enter a deficiency judgment against the Company or any third
        party
        (whether because of any applicable law pertaining to “election of remedies” or
        the like), the Company nevertheless hereby consents to such action by Secured
        Party. To the extent permitted by applicable law, The Company also waives
        any
        claim based upon such action, even if such action by Secured Party results
        in a
        full or partial loss of any rights of subrogation, indemnification or
        reimbursement which The Company might otherwise have had but for such action
        by
        Secured Party or the terms herein. Any election of remedies which results
        in the
        denial or impairment of the right of Secured Party to seek a deficiency judgment
        against any third party shall not, to the extent permitted by applicable
        law,
        impair the Company’s obligations hereunder. If Secured Party bids at any
        foreclosure or trustee’s sale or at any private sale permitted by law or this
        Agreement, Secured Party may bid all or less than the amount of the Obligations.
        To the extent permitted by applicable law, the amount of the successful bid
        at
        any such sale, whether Secured Party or any other party is the successful
        bidder, shall be conclusively deemed to be the fair market value of the
        Collateral and the difference between such bid amount and the remaining balance
        of the Obligations shall be conclusively deemed to be the amount of the
        Obligations.

       

      ARTICLE
        6.

      CERTAIN
        WAIVERS

       

      6.1  MODIFICATION
        OF OBLIGATIONS.
        The
        Company’s liability hereunder shall not be reduced, limited, impaired,
        discharged or terminated if Secured Parties at any time with the Company’s
        consent (or, to the extent permissible by the terms of the Loan Documents
        and
        law, without notice to or demand of the Company): 

       

      (a)  renew,
        extend, accelerate, increase the rate of interest on, or otherwise change
        the
        time, place, manner or terms, or otherwise modifies any of the Obligations
        (including any payment terms); 

       

      (b)  extend
        or
        waive the time for the Company’s performance of, or compliance with, any term,
        covenant or agreement on their part to be performed or observed under the
        Loan
        Documents, or waive such performance or compliance or consent to a failure
        of,
        or departure from, such performance or compliance;

       

      (c)  settle,
        compromise, release or discharge, or accept or refuse any offer of performance
        with respect to, or substitutions for, any of the Obligations or any agreement
        relating thereto and/or subordinate the payment of the same to the payment
        of
        any other obligations; 

       

      
        
          
          

        

        
          A-9

          
            

          

        

        
          
          

        

      

      (d)  request
        and accept other guaranties of any of the Obligations and take and hold security
        for the payment hereof or any of the Obligations; 

       

      (e)  release,
        surrender, exchange, substitute, compromise, settle, rescind, waive, alter,
        subordinate or modify, with or without consideration, any security for payment
        of any of the Obligations, any other guaranties of any of the Obligations,
        or
        any other obligation of any third party with respect to any of the
        Obligations;

       

      (f)  to
        the
        extent permitted by law, enforce and apply any security, if any, now or
        hereafter held by or for the benefit of each Secured Party in respect hereof
        or
        any of the Obligations and direct the order or manner of sale thereof, or
        exercise any other right or remedy that each Secured Party may have against
        any
        such security, in each case as each Secured Party in its discretion may
        determine, including foreclosure on any collateral pursuant to one or more
        judicial or nonjudicial sales, whether or not every aspect of any such sale
        is
        commercially reasonable; or

       

      (g)  exercise
        any other rights available to them under any of the Loan Documents, at law
        or in
        equity.

       

      6.2  SECURITY
        INTERESTS ABSOLUTE.
        All
        rights of Secured Parties and the security interests hereunder, and all
        obligations of the Company hereunder, shall be absolute and unconditional
        irrespective of:

       

      (a)  any
        failure or omission to assert or enforce or agreement or election not to
        assert
        or enforce, or the stay or enjoining, by order of court, by operation of
        law or
        otherwise, of the exercise or enforcement of, any claim or demand or any
        right,
        power or remedy (whether arising under any of the Loan Documents, at law,
        in
        equity or otherwise) with respect to any of the Obligations or any agreement
        relating thereto, or with respect to any other guaranty of or security for
        the
        payment of any of the Obligations; 

       

      (b)  any
        rescission, waiver, amendment or modification of, or any consent to departure
        from, any of the terms or provisions (including provisions relating to events
        of
        default) hereof, in any of the other Loan Documents or any agreement or
        instrument executed pursuant thereto, or of any other guaranty or security
        for
        any of the Obligations, in each case, whether or not in accordance with the
        terms hereof or any of the other Loan Documents or any agreement relating
        to
        such other guaranty or security; 

       

      (c)  the
        application of payments received from any source (other than payments received
        from the proceeds of any security for any of the Obligations, except to the
        extent such security also serves as collateral for indebtedness other than
        the
        Obligations) to the payment of indebtedness of the Company to Secured Party
        other than the Obligations, even though Secured Party might have elected
        to
        apply such payment to any part or all of the Obligations; 

       

      (d)  Secured
        Party’s consent to the change, reorganization or termination of the corporate
        structure or existence of the Company and to any corresponding restructuring
        of
        any of the Obligations;

       

      
        
          
          

        

        
          A-10

          
            

          

        

        
          
          

        

      

      (e)  any
        other
        act or thing or omission, or delay to do any other act or thing, which may
        or
        might in any manner or to any extent vary the risk of the Company as an obligor
        in respect of any of the Obligations;

       

      (f)  any
        Obligations or any agreement relating thereto, at any time being found to
        be
        illegal, invalid or unenforceable in any respect; and

       

      (g)  any
        defenses, set-offs or counterclaims which the Company may allege or assert
        against Secured Party in respect of the Obligations.

       

      6.3  CERTAIN
        WAIVERS.
        Except
        as provided in Section 7.16, the Company hereby waives any and all defenses
        afforded to a surety, including promptness, diligence, notice of acceptance
        and
        any other notice with respect to any of the Obligations and this Agreement
        and
        any requirement that Secured Parties protect, secure, perfect or insure any
        security interest or lien, or any property subject thereto, or exhaust any
        right
        or take any action against the Company or any other third party or entity
        or any
        collateral securing any of the Obligations, as the case may be. 

       

      6.4  POSTPONEMENT
        OF SUBROGATION.
        The
        Company agrees that it will not exercise any rights which it may acquire
        by way
        of rights of subrogation under this Agreement, by any payment made hereunder
        or
        otherwise, while this Agreement is in effect, unless such action is required
        to
        stay or prevent the running of any applicable statute of limitations. Any
        amount
        paid to the Company on account of any such subrogation rights prior to such
        time
        shall be held in trust for Secured Parties and shall immediately be paid
        to
        Secured Parties and credited and applied against the Obligations. Any time
        after
        this Agreement has terminated and if the Company has made payment to Secured
        Parties of all of the Obligations, or if an action is required to stay or
        prevent the running of any applicable statute of limitations, then, at the
        Company’s request, Secured Parties will execute and deliver to the Company
        appropriate documents (without recourse and without representation or warranty)
        necessary to evidence the transfer by subrogation to the Company of an interest
        in the Obligations resulting from such payment by the Company.

       

      ARTICLE
        7.

      MISCELLANEOUS

       

      7.1  NOTICES.
        Any
        communications, including notices and instructions, between the parties hereto
        or notices provided herein to be given may be given to the following
        addresses:

      

      (a)  
if
        to the
        Company, at:

       

      Equitex,
        Inc.

      7315
        Peakview Avenue

      Englewood,
        Colorado 80111

      Attention: Henry
        Fong, President 

      Facsimile:
        (561) 624-0886

      Email:
        hfong@equitex.net

      

      
        
          
          

        

        
          A-11

          
            

          

        

        
          
          

        

      

      with
        a
        copy to:

      

      Maslon
        Edelman Borman & Brand, LLP

      3300
        Wells Fargo Center, 90 South 7th
        Street

      Minneapolis,
        Minnesota 55402

      Attention:
        William M. Mower, Esq.

      Facsimile:
        (612) 642-8358

      

      (b) 
 if
        to
        Secured Parties, in care of:

       

      Whitebox
        Advisors, LLC

      3033
        Excelsior Boulevard, Suite 300

      Minneapolis,
        MN 55416

      Attention:
        Jonathan Wood, Chief Financial Officer

      Facsimile:
        (612) 253-6151

      Email:
        jwood@whiteboxadvisors.com

      

      with
        a
        copy to:

      

      Messerli
        & Kramer P.A.

      150
        South
        Fifth Street, Suite 1800

      Minneapolis,
        MN 55402

      Attention:
        Jeffrey C. Robbins, Esq.

      Facsimile:
        (612) 672-3777

      

      All
        notices or other communications required or permitted to be given hereunder
        shall be in writing and shall be considered given (a) when made if
        personally delivered by hand (with written confirmation of receipt), (b) on
        the date received if sent by national overnight delivery service (receipt
        requested) or (c) when receipt is acknowledged by the receiving party if
        delivered by facsimile or electronic email. Any party shall have the right
        to
        change its address for notice hereunder to any other location within the
        continental United States by giving of notice to the other parties in the
        manner
        set forth hereinabove.

       

      7.2  DELAY
        AND WAIVER; REMEDIES CUMULATIVE.
        No
        failure or delay by Secured Party in exercising any of its rights or powers
        hereunder shall operate as a waiver thereof, nor shall any single or partial
        exercise of any such rights or powers, or any abandonment or discontinuance
        of
        steps to enforce such a right or power, preclude any other or further exercise
        thereof or the exercise
        of any other right or power. Any waiver, permit, consent or approval of any
        kind
        or character on the part of Secured Party of any breach or default under
        the
        Agreement or any waiver on the part of Secured Party of any provision or
        condition of this Agreement must be in writing and shall be effective only
        to
        the extent in such writing specifically set forth. No right, power or remedy
        herein conferred upon or reserved to Secured Party hereunder is intended
        to be
        exclusive of any other right, power or remedy, and every such right, power
        and
        remedy shall, to the extent permitted by law, be cumulative and in addition
        to
        every other right, power and remedy given hereunder or now or hereafter existing
        at law or in equity or otherwise. The assertion or employment of any right
        or
        remedy hereunder, or otherwise, shall not prevent the concurrent assertion
        or
        employment of any other appropriate right or remedy. Resort to any or all
        security now or hereafter held by each Secured Party may be taken concurrently
        or successively and in one or several consolidated or independent judicial
        actions or lawfully taken nonjudicial proceedings, or both.

       

      
        
          
          

        

        
          A-12

          
            

          

        

        
          
          

        

      

      7.3  ENTIRE
        AGREEMENT; SUPERSEDES ORIGINAL SECURITY AGREEMENT.
        This
        Agreement and any agreement, document or instrument referred to herein integrate
        all the terms and conditions mentioned herein or incidental hereto and supersede
        all oral negotiations and prior writings in respect of the subject matter
        hereof.
        This
        Agreement supersedes and replaces the Original Security Agreement. 

       

      7.4  GOVERNING
        LAW.
        This
        Agreement shall be governed by and construed in accordance with the laws
        of the
        State of Minnesota, exclusive of its conflict of laws rules.

       

      7.5  SEVERABILITY.
        In
        case
        any one or more of the provisions contained in this Agreement should be invalid,
        illegal or unenforceable in any respect, the validity, legality and
        enforceability of the remaining provisions shall not in any way be affected
        or
        impaired thereby.

       

      7.6  HEADINGS.
        Paragraph
        headings have been inserted in this Agreement as a matter of convenience
        for
        reference only and it is agreed that such paragraph headings are not a part
        of
        this Agreement and shall not be used in the interpretation of any provision
        of
        this Agreement.

       

      7.7  WAIVER
        OF JURY TRIAL.
        THE
        COMPANY
        HEREBY
        KNOWINGLY, VOLUNTARILY, AND INTENTIONALLY WAIVES ANY RIGHTS IT MAY HAVE TO
        A
        TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED HEREON, OR ARISING OUT OF,
        UNDER, OR IN CONNECTION WITH, THIS AGREEMENT OR ANY COURSE OF CONDUCT, COURSE
        OF
        DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN), OR ACTIONS OF SECURED PARTIES.
        THIS PROVISION IS A MATERIAL INDUCEMENT FOR EACH SECURED PARTY TO MAKE THE
        LOAN.

       

      7.8  CONSENT
        TO JURISDICTION.
        Each
        party hereto agrees that any legal action or proceeding with respect to or
        arising out of this Agreement may be brought in or removed to the federal
        or
        state courts located in Hennepin County, Minnesota, as Secured Party may
        elect.
        By execution and delivery of this Agreement, each party hereto accepts, for
        themselves and in respect of their property, generally and unconditionally,
        the
        jurisdiction of the aforesaid courts. Each of the parties hereto irrevocably
        consents to the service of
        process out of any of the aforementioned courts in any manner permitted by
        law.
        Nothing herein shall affect the right of each Secured Party to bring legal
        action or proceedings in any other competent jurisdiction. Each party hereto
        hereby waives any right to stay or dismiss any action or proceeding under
        or in
        connection with this Agreement brought before the foregoing courts on the
        basis
        of forum
        non-conveniens.

       

      7.9  SUCCESSORS
        AND ASSIGNS.
        This
        Agreement shall be binding upon and inure to the benefit of the parties hereto
        and their respective successors and permitted assigns. 

       

      
        
          
          

        

        
          A-13

          
            

          

        

        
          
          

        

      

      7.10  COUNTERPARTS.
        This
        Agreement may be executed in one or more duplicate counterparts and when
        signed
        by all of the parties listed below, shall constitute a single binding agreement.
        Delivery of an executed signature page of this Agreement by facsimile
        transmission shall be as effective as delivery of a manually executed
        counterpart thereof.

       

      7.11  BENEFIT
        OF AGREEMENT.
        Nothing
        in this Agreement, express or implied, shall give or be construed to give,
        any
        person other than the parties hereto and their respective permitted successors,
        transferees and assigns any legal or equitable right, remedy or claim under
        this
        Agreement, or under any covenants and provisions of this Agreement, each
        such
        covenant and provision being for the sole benefit of the parties hereto and
        their respective permitted successors, transferees and assigns.

       

      7.12  AMENDMENTS
        AND WAIVERS.
        No
        amendment, modification, termination or waiver of any provision of this
        Agreement or consent to any departure therefrom shall be effective unless
        the
        same shall be in writing and signed by each of the parties hereto. Each
        amendment, modification, termination or waiver shall be effective only in
        the
        specific instance and for the specific purpose for which it was
        given.

       

      7.13  SURVIVAL
        OF AGREEMENTS.
        The
        provisions regarding the payment of expenses and indemnification obligations
        shall survive and remain in full force and effect regardless of the termination
        of this Agreement pursuant to Section
        7.14.

       

      7.14  RELEASE
        AND SATISFACTION.
        Upon
        the
        indefeasible payment (whether in cash and/or other consideration which is
        satisfactory to each Secured Party in its sole discretion) and performance
        in
        full of the Obligations, (i) this Agreement and the security interests
        created hereby shall terminate and Secured Parties will return the Collateral,
        including all documentation evidencing or affecting the Collateral, and
        (ii) upon written request of the Company, Secured Parties shall execute and
        deliver to the Company, at the Company’s expense and without representation or
        warranty by or recourse to Secured Parties, releases and satisfactions of
        all
        financing statements, mortgages, notices of assignment and other registrations
        of security.

       

      7.15  REINSTATEMENT.
        This
        Agreement shall continue to be effective or be automatically reinstated,
        as the
        case may be, if at any time any payment pursuant to this Agreement is rescinded
        or must otherwise be restored or returned upon the insolvency, bankruptcy,
        reorganization, liquidation of the Company or upon the dissolution of, or
        appointment of any intervenor or conservator of, or trustee or similar official
        for, the Company or any substantial
        part of the Company’s assets, or otherwise, all as though such payments had not
        been made.

       

      7.16  LIMITATION
        ON DUTY OF SECURED PARTY WITH RESPECT TO THE COLLATERAL.
        The
        powers conferred on each Secured Party hereunder are solely to protect its
        respective interests in the Collateral and shall not impose any duty on such
        Secured Party or any of its designated agents to exercise any such powers.
        Except for the safe custody of any Collateral in their possession and the
        accounting for monies actually received by them hereunder, Secured Parties
        shall
        have no duty with respect to any Collateral and no implied duties or obligations
        shall be read into this Agreement against Secured Parties. Each Secured Party
        shall be deemed to have exercised reasonable care in the custody and
        preservation of the Collateral in its possession if the Collateral is accorded
        treatment that is substantially equivalent to that which such Secured Party
        accords its own respective property, it being expressly agreed, to the maximum
        extent permitted by applicable law, that each Secured Party shall have no
        responsibility for (a) taking any necessary steps to preserve rights
        against any parties with respect to any Collateral or (b) taking any action
        to protect against any diminution in value of the Collateral, but, in each
        case,
        each Secured Party may do so and all expenses reasonably incurred in connection
        therewith shall be part of the Obligations.

       

      
        
          
          

        

        
          A-14

          
            

          

        

        
          
          

        

      

      7.17  COLLECTION
        AGENT.
        The
        following shall relate to the enforcement of this Agreement:

       

      (a) The
        Secured Parties hereby appoint Whitebox Advisors, LLC as the initial collection
        agent and attorney-in-fact for the Secured Parties under this Agreement (in
        such
        capacity, the “Collection
        Agent”)
        to
        serve from the date hereof until the termination hereof, or until the Collection
        Agent’s successor is duly appointed by agreement among the Secured Parties and
        their successors in interest and the Secured Parties and their successors
        in
        interest notify the Company in writing of the newly appointed successor
        Collection Agent. Each Secured Party hereby authorizes the Collection Agent
        to
        act as exclusive agent of and for all Secured Parties for purposes of taking
        any
        action to enforce rights and foreclose and dispose of any Collateral under
        this
        Agreement and the Stock Pledge Agreement (together, the “Security
        Agreements”).
        Each
        Secured Party agrees that it shall not take any action against the Company
        to
        enforce rights under the Security Agreements and foreclose and dispose of
        any
        Collateral, except through and as directed by the Collection Agent.

      

      (b) Each
        Secured Party hereby irrevocably authorizes the Collection Agent to take
        such
        action and to exercise such powers hereunder as provided herein or as requested
        in writing by any of the Secured Parties. The Collection Agent may rely upon
        advice of counsel concerning legal matters, advice of certified public
        accountants with respect to accounting matters and advice of other experts
        as to
        any other mattes which it reasonably believes to be genuine or to have been
        presented by an appropriate person under the circumstances. The Collection
        Agent
        may execute any of its duties hereunder by or through agents or employees
        and
        shall be entitled to request and act in reliance upon the advice of counsel
        concerning all matters pertaining to its duties hereunder and shall not be
        liable for any action taken or omitted to be taken by it in good faith in
        accordance therewith. The Collection Agent may take any and all actions that
        the
        Collection Agent deems necessary or appropriate, in its reasonable discretion,
        in exercising its powers hereunder, including, but not limited to, initiating
        any action in the name of the Secured Parties against the Company, foreclosing
        on the Collateral or exercising any other rights available to the Collection
        Agent on behalf of the Secured Parties at law or in equity.

      

      (c) The
        Company may rely on all orders and directions of the Collection Agent appointed
        under subsection (a) above as acting on behalf, and with the authority, of
        the
        Secured Parties, or any of them, without liability to any Secured Party or
        its
        successors in interest.

       

      [Signature
        Page Follows]

       

      
        
          
          

        

        
          A-15

          
            

          

        

        
          
          

        

      

      IN
        WITNESS WHEREOF,
        the
        parties hereto have executed this Amended Security Agreement as of the date
        first written above.

       

       

      
        	The
                Company:	Secured
                Parties:
	 	 
	Equitex, Inc.	Pandora Select Partners,
                L.P.
	 	 	 	 
	By	/s/ Henry
                Fong	By	/s/ Jonathan
                Wood
	 	
                
Henry
                Fong, President 	 	
                

              
	 	 	Its	Managing Director
	 	 	 	
                
 
	 	 	Whitebox Hedged High Yield
                Partners, L.P.
	 	 	 	 
	 	 	By	Jonathan Wood
	 	 	 	
                
 
	 	 	Its	Managing Director
	 	 	 	
                
 

      

        

      
        
          
          

        

        A-16

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