CONSENT
Exhibit
10.31
The
undersigned is the holder of a 6% Secured Convertible Note due September 27,
2010 and/or 6% Secured Convertible Note due December 20, 2010 (each. a
“Note”)
issued
by Xxxxxx Products Corp., a Delaware corporation
(the
“Company”).
This
Consent (“Consent”)
relates to the Notes and the Subscription Agreement dated as of September 2007
(the “Subscription
Agreement”)
by and
among the Company
and the
investors parties thereto and is entered into as of March 24, 2008. Each of
the
Company and the undersigned may be referred to herein as a “Party”
and
collectively as the “Parties”.
WHEREAS,
the Subscription Agreement allows the Company to incur senior indebtedness
in
the form of a line of credit through Greenbridge in the principal amount of
$3,000,000, as reflected on Schedule 9(p) to the Subscription Agreement (the
“Existing
Senior Indebtedness”);
and
WHEREAS,
the Parties desire, among other things, to modify the terms of the Existing
Senior Indebtedness such that the Company be permitted to incur senior
indebtedness in the form of a promissory note financing in an aggregate
principal amount of $5.0 million pursuant to which Axiom Capital shall serve
as
placement agent (replacing Greenbridge as placement agent), which financing
may
consist of promissory notes convertible into shares of the Company’s common
stock (the “New
Senior Indebtedness”).
NOW,
THEREFORE, in consideration of the covenants and mutual promises contained
herein and other good and valuable consideration, including, without limitation,
the Additional Consideration (as defined below), the receipt and legal
sufficiency of which are hereby acknowledged and intending to be legally bound
hereby, the Parties agree as follows:
1.
Item 1
of Schedule 9(p) of the Subscription Agreement which states:
“Greenbridge
Line of Credit in the principal amount of $3,000,000* .”
is
hereby
amended, deleted and replaced with the following:
“Promissory
note financing in the aggregate principal amount of $5.0 million pursuant to
which Axiom Capital shall serve as placement agent, which financing may consist
of promissory notes convertible into shares of the Company’s Common Stock. Said
financing is a lien senior to the liens disclosed on this Schedule 9(p), and
senior to the qualified financing and related transactions, to which these
disclosure schedules relate.”
*
The
Greenbridge Line of Credit is a lien senior to the liens disclosed on this
Schedule 9(p), and senior to the qualified financing and related transactions,
to which these disclosure schedules relate.
Pursuant
to Section 3(b) and (c) of each of the Collateral Agent Agreements dated as
of
September 28, 2007 and December 20, 2007, respectively, among the Company,
Axiom
Capital Management, Inc., as Collateral Agent and the other parties thereto,
the
undersigned hereby authorizes Axiom Capital Management, Inc., as Collateral
Agent, to subordinate any Collateral (as defined in the Collateral Agent
Agreement) to the proposed security interest with respect to the New Senior
Indebtedness and to enter into any agreement or take any action on behalf of
the
undersigned to effectuate the foregoing and the New Senior
Indebtedness.
2. Subject
to the terms and conditions hereunder and notwithstanding anything to the
contrary in the Subscription Agreement, the Notes or any agreement or instrument
relating thereto, for each of the interest payments (“Interest
Payments”)
due
under the Notes on each of the last business day of each of March, June,
September and December, beginning on March 2008, and ending June 2009
(collectively, the “Interest
Payments Dates”),
the
undersigned hereby agrees that, in lieu of making the Interest Payments in
cash
on the Interest Payment Dates, all such interest payments shall be payable
by
the Company’s delivery of a Note in the principal amount of such interest
payment (“Interest
Note”),
which
Interest Notes shall be identical to the Notes, including the maturity date,
except that the initial Conversion Price per share on such Interest Note shall
be $0.11. The Company and the undersigned hereby acknowledge and agree that
this
Consent shall apply to all future Interest Payments. In addition, subject to
the
terms and conditions hereunder, the undersigned waives any additional provision
under any other any agreement or instrument that would prohibit the Company
from
paying the Interest Payments as set forth in this section 2, or cause the
payment of the Interest Payments as set forth in this section 2 to constitute
or
give rise to an event of default under, violate any term of, or impose any
penalty or restriction under, any agreement or instrument.
3. As
additional consideration for the consents provided by the undersigned hereunder
(the “Additional
Consideration”),
the
Company agrees to issue to the undersigned warrants exercisable for shares
of
common stock as is equal to the quotient determined by dividing the Warrant
Amount (as defined below) by the initial exercise price of $0.11 per share
(the
“Warrants”).
The
term “Warrant Amount” shall mean an amount equal to ten percent (10%) of the
principal amount of the Notes issued by the Company to the undersigned that
is
currently outstanding. Notwithstanding the foregoing, the Company shall not
be
required to issue the Warrants until (i) holders of at least 51% of the
Company’s shares of common stock issued and issuable upon conversion of all
outstanding Notes become parties to this Consent, (ii) closing of the New Senior
Indebtedness (in an aggregate principal amount of at least $3 million) and
(iii)
such time as the Company has sufficient shares of common stock authorized to
facilitate the exercise of the Warrants.
4.
This
Consent may be executed in one or more counterparts (including via PDF and/or
facsimile), each of which shall be deemed an original but all of which together
will constitute one and the same instrument.
IN
WITNESS WHEREOF, this Consent has been executed by each of the Parties hereto
on
the date first above written.
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COMPANY:
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XXXXXX
PRODUCTS CORP.
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By:
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Name:
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Title:
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[INVESTOR
SIGNATURE PAGES TO FOLLOW]
INVESTOR
SIGNATURE PAGE
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(Print
Name)
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By:
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Name:
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Title:
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