SECOND MODIFICATION AGREEMENT

 

Exhibit 4.6

 

                          SECOND MODIFICATION AGREEMENT

 

     AGREEMENT ("Agreement") made as of this 7th day of June, 2004 by and among

EDWARD GOODSTEIN ("Goodstein"), TW CABLE, LLC ("TW"), DANIEL MCPHEE ("McPhee")

and DATAWORLD SOLUTIONS, INC. (sometimes hereinafter "DataWorld" or the

"Company").

 

     WHEREAS, by agreement dated December 4, 2002 ("2002 Agreement"), among the

above parties, various rights, obligations, liabilities and securities

pertaining to the Company were restructured and compromised; and

 

     WHEREAS, pursuant to a Modification Agreement dated September 24, 2003

("2003 Agreement") certain of the obligations set forth in the 2002 Agreement

were further modified and compromised; and

 

     WHEREAS, the parties now wish to enter into a further modification of these

rights, obligations, liabilities and securities and to further compromise the

same.

 

     NOW, THEREFORE, in consideration of the mutual covenants and obligations

set forth below, the adequacy and sufficiency of which is hereby acknowledged by

all parties, it is agreed as follows.

 

 

1 All of the recitals set forth above are hereby incorporated into this

Agreement as if fully set forth herein and are specifically made a part of this

Agreement.

 

2 The parties hereby acknowledge that pursuant to and in accordance with the

2002 Agreement and 2003 Agreement, the following has occurred: (a) 500,000

shares of restricted stock of DataWorld were issued to Goodstein in exchange for

return of all preferred stock of the Company previously owned by Goodstein

and/or TW; and (b) the personal liability and guaranty of McPhee as set forth in

the 2002 Agreement of approximately One Hundred Thirty-three Thousand ($133,000)

Dollars has been fully satisfied. In early 2002, TW and/or Goodstein obtained

three separate judgments against DataWorld and/or McPhee for a total in excess

of $1,350,000. In an effort to

 

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satisfy these judgments, the parties entered into the 2002 Agreement. The

Company acknowledges that it has defaulted under the 2002. Accordingly, the

provisions of the 2002 Agreement reducing the debt of the Company to $250,000

owed to TW and $168,000 owed to Goodstein (cumulatively the "2002 Settlement

Amount") is no longer binding on either TW or Goodstein. Notwithstanding the

Company' default, in return for the issuance of 110,000 shares by the Company to

TW and/or Goodstein as provided in Paragraph 4 of this Agreement and the

establishment by McPhee of the escrow for 312,500 shares of the Company's stock

as provided in Paragraph 5.1(c) of this Agreement, TW and Goodstein hereby agree

to eliminate the debt owed by the Company to TW and Goodstein and further agree

to issue a satisfaction of the judgments obtained by TW and Goodstein against

the Company and/or McPhee. The Company hereby agrees to pay the reasonable cost

of legal fees and expenses to TW and/or Goodstein of preparing the Satisfaction

of Judgments and forwarding the same to counsel for DataWorld who will arrange

to file the same in the appropriate court and/or County Clerk's office. In the

event the Company does not issue the 110,000 shares as provided in paragraph 4

of this Agreement and the escrow is not established and funded with 312,500

shares as provided in Paragraph 5.1(c) of this Agreement, all within thirty (30)

business days of the date this Agreement is signed by the last signatory

thereto, then this Agreement shall be null and void.

 

3 Goodstein hereby represents that he has not sold any of the 500,000 shares

referred to in Paragraph 2 above and further acknowledges that the limitations

on sales of the Company stock by Goodstein as set forth in Paragraph 5 of the

2002 Agreement remain in full force and effect, to wit; that Goodstein will

limit his sale of stock in any one day to no more than ten (10%) percent of the

greater of the (a) current or (b) previous day's total trading volume in the

Company's stock, provided that regardless of the daily volume limitation,

Goodstein may sell a minimum of 25,000 shares per calendar month and that if

Goodstein sells less than 25,000 shares in any month, such shortfall may not be

carried over to the following month.

 

 

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4 The Company hereby agrees to issue 110,000 shares of its common stock to TW

and Goodstein, to be divided between them as they shall determine in exchange

for the further compromise and full extinguishment of the 2002 Settlement

Amount. The stock to be issued will be restricted and the stock certificates

shall bear a legend indicating that the securities have not been registered

under the Securities Act of 1933, as amended (the "Act") and may not be sold,

transferred, pledged, hypothecated or otherwise disposed of in the absence of an

effective Registration Statement for such securities under the Act or an opinion

of counsel that such registration is not required. Hereinafter, the Company

shall bear all costs and expenses in the issuance and delivery of said shares to

Goodstein and TW and, when permitted by law, in obtaining any opinion from the

Company's legal counsel needed to remove the legend from any stock certificate

for the 110,000 shares to be issued pursuant to this Paragraph 4.

 

5 McPhee and DataWorld hereby represents that

 

.1   The Class 7 Creditors:

 

.2 (a) Pursuant to a plan of reorganization under Chapter 11 of the US

Bankruptcy Code in the Vertex Computer Cable & Products, Inc. bankruptcy

proceeding, the Class 7 Unsecured Creditors ("Class 7 Creditors") were to

receive certain amounts which were guaranteed by Goodstein; (b) in May 2000, the

Company and the Official Committee of the Class 7 Creditors modified the

Company's obligations (which agreement was subsequently approved by the US

Bankruptcy Court in June, 2000) pursuant to which there is now owed

approximately Two Hundred Seventy-five Thousand ($275,000) Dollars for which

Goodstein is still personal liable under a guaranty to the Class 7 Creditors.

 

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.3 (b) The Company hereby acknowledge that the obligations owed to the Class 7

Creditors is first and foremost an obligation of the Company and not Goodstein.

Accordingly, the Company shall use its best efforts to make the required

payments. In the event the Company has any contact with the Class 7 Creditors or

the Official Committee concerning a compromise of the debt owed to the Class 7

Creditors, a part of such negotiations will be to release Goodstein from his

guaranty.

 

.4 (c) As partial collateral for the Company's obligation to make the above

payment, McPhee hereby agrees to place in escrow with the law firm of Wexler &

Burkhart, P.C. located at 50 Charles Lindbergh Blvd., Mitchel Field, NY 11553, a

sufficient number of the shares of common stock of the Company that McPhee owns

so that the value of such stock (based upon a 30 trading day average of the

quoted value of the Company's stock on the "pink sheets", bulletin board or any

other established securities market on which DataWorld's stock is traded) is at

least equal to One Hundred Twenty-five Thousand ($125,000) Dollars. The parties

agree that as of June 2, 2004, the average value of each share of the Company's

common stock for the past 30 trading days was quoted at 40 cents. Accordingly,

312,500 shares of the Company's stock owned by McPhee will be placed into escrow

pursuant to the terms of a separate escrow agreement, annexed hereto as Exhibit

A. Thereafter, on the first business day of August, November, February and April

of each year while the escrow is still in effect, a similar valuation will be

ascertained and the stock being held in escrow will be revised accordingly. In

addition to the quarter annual valuation, in the event that the price of a share

of the Company's common stock falls below 10 cents per share(based upon a 30

trading day average of the quoted value of the Company's stock as indicated

above), McPhee shall within ten (10) business days thereafter place an

additional number of shares of common stock into the escrow account so that the

value of such stock (also based upon a 30 day average of the quoted value of the

Company's stock as set forth above) remains at least at One Hundred Twenty-five

Thousand ($125,000) Dollars.

 

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.5 (d) McPhee further represents that he currently holds and shall continue to

maintain a minimum of 1,000,000 shares of common stock of the Company. However,

if there shall come a time when McPhee has insufficient shares of the Company

stock to fund the escrow account as provided herein, then DataWorld shall

provide the necessary shares to fund the escrow.

 

.6 (e) In the event there is a default under this Agreement and the shares of

stock in the escrow account are delivered to Goodstein in accordance with the

Escrow Agreement attached hereto as Exhibit "A", the Company shall bear all

costs and expenses in the issuance and delivery of the shares to Goodstein and

in obtaining any opinion from the Company's legal counsel needed to remove the

legend from any stock certificate for the escrowed shares of stock.

 

.7 (f) Goodstein and McPhee hereby agree that once the obligations owed by the

Company to the Class 7 Creditors is reduced to the amount of $200,000,

thereafter, any further percentage reduction in such debt shall also serve to

reduce the stock value that must continue to be held in escrow on a

proportionate basis and when and if the amount due the Class 7 Creditors has

been satisfied, the escrow will terminate.

 

.8 that upon execution of this Agreement the Company shall instruct its current

attorneys to issue a letter (which letter shall be delivered to Goodstein, TW

and their designated brokerage firm within twenty (20) business days after the

date this Agreement has been executed by all parties), with respect to the

following:

 

.9 (a) confirming that the 500,000 shares issued to Goodstein as referenced in

paragraph "2" herein may be sold in accordance with Rule 144 of the Securities

Act of 1933 as soon as DataWorld becomes current in its reporting requirements,

 

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.10 (b) advising of the required holding period pursuant to Rule 144 for the

shares of common stock to be issued to Goodstein in accordance with paragraph

"4_ herein, and

 

.11 (c) identifying the date any required holding period would commence pursuant

to Rule 144 if the shares proposed to be held in escrow in accordance with

paragraph "5" herein are obtained.

 

.12 that within twenty (20) business days after the execution of this Agreement,

the