Document:

Modification of Construction Trust Deed

    EXHIBIT
      10.3.5

    

    RECORDATION
      REQUESTED BY:

    Cathay
      Bank

    Real
      Estate Department

    250
      S.
      Atlantic Blvd., 2nd Floor

    Monterey
      Park, CA 91754

    

    

    WHEN
      RECORDED MAIL TO:

    Cathay
      Bank

    Real
      Estate Department

    250
      S.
      Atlantic Blvd., 2nd Floor

    Monterey
      Park, CA 91754

    Attn:
      Angela Hui

    Re: 
      Loan No.
      RE-610050161

    

    SPACE
      ABOVE THIS LINE IS FOR RECORDER’S USE ONLY

    ________________________________________________________________________________________________________________

    

    MODIFICATION
      OF CONSTRUCTION TRUST DEED

    

    THIS
      MODIFICATION OF CONSTRUCTION TRUST DEED IS DATED AS OF April 5, 2006,
between
      DICON FIBEROPTICS, INC., a California corporation, whose address is 1689 Regatta
      Blvd., Richmond, CA 94804 (referred to below as “Trustor”), and CATHAY BANK, a
      California banking corporation, whose address is 777 North Broadway, Los
      Angeles, CA 90012 (referred to below as “Lender”). The purpose of this
      Modification is to reflect the extension of the term of the loan secured by
      the
      Deed of Trust (as defined below), a decrease in the interest rate to be applied
      to the unpaid principal balance of the Note (as defined below), and an agreement
      between Trustor and Lender with respect to the conditions under which Lender
      will release and reconvey a portion of the Real Property (as defined
      below).

    

    Deed
      of Trust. Trustor
      executed in favor of Lender as beneficiary a Construction Trust Deed dated
      August 24, 2000 that was recorded in the Official Records of the County of
      Contra Costa, California (the “Official Records”), on August 25, 2000 as
      Document Number 2000-0182834-00, as modified by a Modification of Construction
      Trust Deed dated November 20, 2001 and recorded in the Official Records on
      November 27, 2001 as Document Number 2001-0361073-00 and a Modification of
      Construction Trust Deed dated June 28, 2004 and recorded in the Official Records
      on September 3, 2004 as Document No. 2004-0342993-00 (such Construction Trust
      Deed as so modified, the “Deed of Trust”), covering that certain real property
      located in the City of Richmond, County of Contra Costa, State of California,
      as
      more particularly described on Exhibit “A” attached
      hereto (the “Real Property”). Capitalized terms used but not defined herein
      shall have the respective meanings assigned to them in the Deed of
      Trust.

    

    Modifications.
      Trustor
      and Lender hereby modify and amend the Deed of Trust as follows:

    

    1. Agreement
      for Partial Release. Notwithstanding
      anything to the contrary in the Deed of Trust or in the Term Loan Agreement
      between Trustor and Lender dated November 20, 2001, as amended by that certain
      Loan Modification and Extension Agreement and Amendment to Promissory Note
      between the parties dated June 28, 2004 and that certain Loan Modification
      and
      Extension Agreement and Amendment to Promissory Note dated as of even date
      herewith (such Term Loan Agreement as so amended, the “Term Loan Agreement”),
      simultaneously with the execution and delivery of this Modification Lender
      will
      grant partial reconveyance from the lien or charge of the Deed of Trust for
      the
      approximately 5.88 acres of vacant land described on Exhibit
“B” attached hereto, together with all appurtances thereto.
      Trustor shall
      pay all costs of executing and recording the partial reconveyance.

    

    2. Definition
      of Note.
      The
      definition of the term “Note” is modified to read in its entirety as follows:
      The word “Note” means the promissory note dated November 20, 2001, in the
      principal amount of $27,000,000.00 from Trustor to Lender, which note is an
      extension and renewal of the Construction Loan Promissory Note dated August
      24,
      2000, as such promissory note is amended and extended by that certain Loan
      Modification and Extension Agreement and Amendment to Promissory Note dated
      June
      28, 2004 and that certain Loan Modification and Extension Agreement and
      Amendment to Promissory Note dated as of even date herewith; together with
      all
      renewals, extensions, modifications, refinancings, and substitutions for such
      promissory note as so amended and extended. NOTICE
      TO TRUSTOR: THE PROMISSORY NOTE CONTAINS A VARIABLE INTEREST
      RATE.

    

    3. Securing
      Clause. The
      “securing” clause of the Deed of Trust is modified to include the obligations of
      the Note and the Term Loan Agreement as defined in paragraph 1 above among
      the
      obligations secured by the Deed of Trust.

    

    4. Continuing
      Validity. Except
      as
      expressly modified above, the terms of the Deed of Trust shall remain unchanged
      and in full force and effect. Consent by Lender to this Modification does not
      waive Lender’s right to require strict performance of the Deed of Trust as
      modified above nor obligate Lender to make any future modifications. Nothing
      herein shall constitute a satisfaction of the promissory note or loan agreement
      secured by the Deed of Trust.

    

    TRUSTOR
      ACKNOWLEDGES HAVING READ ALL OF THE PROVISIONS OF THIS MODIFICATION OF
      CONSTRUCTION TRUST DEED AND AGREES TO ITS TERMS. This
      Modification is dated as of the date first set forth above.

    

    

    TRUSTOR:

    DICON
      FIBEROPTICS, INC.,

    a
      California corporation

    

    

    

    By:
      /s/
      Ho-Shang Lee 

    Name:
      Ho-Shang Lee

    Title:
      President

    

    
      
        
        

      

      
        1

        
          

        

      

      
        
        

      

    

    

    

    __________________________________________________________________________

    CERTIFICATE
      OF ACKNOWLEDGEMENT

    

    STATE
      OF
      CALIFORNIA  )

    )
      ss.

    COUNTY
      OF
      _______________) 

     

    

    On
      this
      _____ day of ________, 2006, before me, ____________________, the undersigned
      Notary Public, personally appeared Ho-Shang Lee, personally known to me or
      proved to me on the basis of satisfactory evidence to be the person whose name
      is subscribed to the within instrument and acknowledged to me that he executed
      the same in his authorized capacity, and that by his signature on the instrument
      the person, or the entity upon behalf of which the person acted, executed the
      instrument.

     

    WITNESS
      my hand and official seal.

    

    

    

    __________________________

    Notary
      Public

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

    

       

      EXHIBIT
        “A” 

       

      (Legal
        Description of the Real Property) 

       

       

      PARCEL
        ONE 

       

      Lot
        1 and
        2, of Parcel Map MS 753-04 Filed December 14, 2005, Book 195 of Maps, page
        26
        Contra Costa Records. 

       

      PARCEL
        TWO 

       

      A
        Non-Exclusive Easement For Irrigation Water Lines And Fire Lines, Appurtenant
        To
        Parcel One Hereinabove Described Over Undefined Portions of Lot 3 of Said
        Parcel
        Map And As Said Easement Is More Particularly Defined In The Owner’s Statement
        on Said Parcel Map 

       

      PARCEL
        THREE 

       

      A
        Non-Exclusive Easement For Telecommunication Facilities, Appurtenant To Parcel
        One Hereinabove Described Over That Portion of Lot 3 of Said Parcel Map
        Designated As “15’ Private Utility Easement” on Said Parcel Map MS 753-04

       

      PARCEL
        FOUR 

       

      A
        Non-Exclusive Easement For Private Sanitary Sewers, Appurtenant To Parcel
        One
        Hereinabove Described Over That Portion of Lot 3 of Said Parcel Map Designated
        As “10’ P.S.S.E.” on Said Parcel Map MS 753-04 

       

       

      
      

       

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    EXHIBIT
      “B” 

     

    (Legal
      Description of the Release Property) 

     

    PARCEL
      ONE 

     

    Lot
      1, of
      Parcel Map MS 753-04 Filed December 14, 2005, Book 195 of Maps, page 26 Contra
      Costa Records. 

     

    PARCEL
      TWO 

     

    A
      Non-Exclusive Easement For Irrigation Water Lines And Fire Lines, Appurtenant
      To
      Parcel One Hereinabove Described Over Undefined Portions of Lot 3 of Said Parcel
      Map And As Said Easement Is More Particularly Defined In The Owner’s Statement
      on Said Parcel Map 

     

    PARCEL
      THREE 

     

    A
      Non-Exclusive Easement For Telecommunication Facilities, Appurtenant To Parcel
      One Hereinabove Described Over That Portion of Lot 3 of Said Parcel Map
      Designated As “15’ Private Utility Easement” on Said Parcel Map MS 753-04

     

    PARCEL
      FOUR 

     

    A
      Non-Exclusive Easement For Private Sanitary Sewers, Appurtenant To Parcel One
      Hereinabove Described Over That Portion of Lot 3 of Said Parcel Map Designated
      As “10’ P.S.S.E.” on Said Parcel Map MS 753-042/6/06

                             AGREEMENT OF SETTLEMENT

      This Agreement of Settlement (the "Agreement") is entered into this 6th
day of February 2006 (the "Closing Date"), by and among Stronghold Technologies,
Inc. (the "Company") and Christopher Carey ("Carey").

                                   WITNESSETH:

      WHEREAS, the Company is currently in debt to Carey relating to accrued
salary in the amount of $931,369 (the "Debt");
      WHEREAS, Carey, in exchange for the representations, warranties and
covenants of the Company as set forth herein, has agreed to forgive the Debt,
release the Company from all obligation of payment of the Debt
      WHEREAS, Carey agrees to convert (i) $150,000 of such Debt (the "Primary
Debt") into 21,428,571 shares of common stock of the Company (the "Shares") and
(ii) $781,369 (the "Secondary Debt") into 10,000 shares of Series C Preferred
Stock (the "Preferred Shares"), the terms of which are set forth in the
Certificate of Designation of the Preferred Shares attached hereto as Exhibit B;
and
      NOW, THEREFORE, in consideration of the mutual covenants, payments, and
agreements set forth in this Agreement, the Company and Carey intending to be
legally bound thereby, and hereby warranting that they each have the capacity
and authority to execute this Agreement, it is agreed by and among the
undersigned parties, that all of the claims asserted (or which could have been
asserted) by Carey with respect to the Debt are hereby settled and compromised
on the following terms and conditions, to wit:
      1. COMPROMISE. In consideration for entering into the release as set forth
in Section 2 to this Agreement, the Company and Carey as follows:
            (i)   Carey shall waive all rights and claims relating to the Debt;
                  and
            (ii)  Carey and the Company agree to convert the Primary Debt into
                  Common Shares and the Secondary Debt into Preferred Shares.
      2. RELEASE. Carey shall execute a general release in respect of the Debt
in favor of the Company in the form annexed hereto as Exhibit A.
      3. BINDING AGREEMENT. The terms of this Agreement are binding upon and
inure to the benefit of each of the parties hereto, their respective successors,
assigns, dependents, and all other related persons, affiliates or associates.

                                       1
<PAGE>

      4. HEADINGS. The captions of the paragraphs and sections of this Agreement
are provided solely for convenience, and are not intended to, and in fact, shall
not affect the substance or meaning of this Agreement.
      5. REPRESENTATION. Each of the parties hereto represents that each has
read and fully understands each of the provisions as contained herein, and has
been afforded the opportunity to review same with his attorney of choice; and
further that each of the parties hereto represents that each and every one of
the provisions contained in this Agreement is fair and not unconscionable to
either party.
      6. COUNTERPARTS/EXECUTION. This Agreement may be executed in any number of
counterparts and by the different signatories hereto on separate counterparts,
each of which, when so executed, shall be deemed an original, but all such
counterparts shall constitute but one and the same instrument. This Agreement
may be executed by facsimile signature and delivered by facsimile transmission.
      7. ENTIRE AGREEMENT; ASSIGNMENT. This Agreement and other documents
delivered in connection herewith represent the entire agreement between the
parties hereto with respect to the subject matter hereof and may be amended only
by a writing executed by all parties. Neither the Company nor Carey have relied
on any representations not contained or referred to in this Agreement and the
documents delivered herewith. No right or obligation of either party shall be
assigned by that party without prior notice to and the written consent of the
other party, which will not be unreasonably withheld.
      8. LAW GOVERNING THIS AGREEMENT. This Agreement shall be governed by and
construed in accordance with the laws of the State of New Jersey without regard
to principles of conflicts of laws. Any action brought by either party against
the other concerning the transactions contemplated by this Agreement shall be
brought only in the state courts of New Jersey or in the federal courts located
in the state of New Jersey. The parties and the individuals executing this
Agreement and other agreements referred to herein or delivered in connection
herewith on behalf of the Company agree to submit to the jurisdiction of such
courts and waive trial by jury. The prevailing party shall be entitled to
recover from the other party its reasonable attorney's fees and costs. In the
event that any provision of this Agreement or any other agreement delivered in
connection herewith is invalid or unenforceable under any applicable statute or
rule of law, then such provision shall be deemed inoperative to the extent that
it may conflict therewith and shall be deemed modified to conform with such
statute or rule of law. Any such provision which may prove invalid or
unenforceable under any law shall not affect the validity or enforceability of
any other provision of any agreement.

                                       2
<PAGE>

      9. IN WITNESS WHEREOF, the parties have read and executed this Agreement
as of the date and year first above written.

STRONGHOLD TECHNOLOGIES, INC.

By: /s/Christopher Carey                             /s/Christopher Carey
Name: Christopher Carey                              Christopher Carey
Title:  CEO

                                       3
<PAGE>

                                    EXHIBIT A

         TO ALL TO WHOM THESE PRESENT SHALL COME OR MAY CONCERN, KNOW THAT

         Christopher Carey                                          as RELEASOR,

for good and valuable consideration, the sufficiency and receipt of which is
hereby acknowledged

         Stronghold Technologies, Inc.                              as RELEASEE,

receipt whereof is hereby acknowledged, releases and discharges

         Stronghold Technologies, Inc.

      Upon the receipt of the securities described in the "Agreement of
Settlement" to which this Exhibit A is attached and as otherwise provided
therein, the RELEASOR, releases the RELEASEE, RELEASEE'S directors, officers,
partners, past and present employees, agents, administrators, holding company,
parent company, subsidiaries, successors, insurers, assigns, principals and past
and present control persons, from all actions, cause of action, suits, debts,
dues, sums of money, accounts, reckonings, bonds, bills, specialties, covenants,
contracts, controversies, agreements, promises, variances, trespasses, damages,
judgments, extents, executions, claims, and demands whatsoever, in law,
admiralty or equity, in respect of or related to the Debt (as defined in the
Agreement of Settlement) which against the RELEASEE(S), the RELEASOR, RELEASOR'S
directors, officers, partners, past and present employees, agents,
administrators, holding company, parent company, subsidiaries, successors,
insurers, assigns, principals and past and present control persons ever had, now
have or hereafter can, shall or may, have for, upon, or by reason of any matter,
cause or thing that has or may have arisen from the Debt from the beginning of
the world to the day of the date of this RELEASE, save for a cause of action
relating to a breach of this Release or the Agreement of Settlement to which
this release is attached.

      The words RELEASOR and RELEASEE include all releasors and all releasees
under this RELEASE.

      This RELEASE may not be changed orally.

      IN WITNESS WHEREOF, the RELEASOR has hereunto set RELEASOR'S hand and seal
on the 6th day of February, 2006

                                                     /s/Christopher Carey
                                                     Christopher Carey

                                       4

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00101-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00101-of-00352.parquet"}]]