June 27, 2008
June 27,
2008
Xx.
Xxxxxx X. Xxxx
Xxxxxx
Technology, LLC
0000
Xxxxxxx Xxxxx
Richmond,
Virginia 23233
Re: Xxxxxx
Technology, LLC ("Xxxxxx") w. Theater Xtreme Entertainment Group,
Inc. ("Theater Xtreme") - March 6, 2007
$2,700,000 Debenture ("Debenture"),
Common Stock Purchase Warrant
("Warrant"), and Securities PurchaseAgreement ("Securities Purchase
Agreement")
Dear Xx.
Xxxx:
To
follow-up from our conversation of May 12, 2008, Theater Xtreme proposes that
Xxxxxx agree to:
(i)
Change the "Maturity Date" under the Debenture and the Securities Purchase
Agreement to September 30, 2011 and waive the requirement outlined in Section
1.(a) (ii) of the Debenture, which states that all principal and accrued
interest under the Debenture shall be due once Theater Xtreme has received net
proceeds, in the aggregate since the issue date of the Debenture from debt
and/or equity financings of at least Six Million Dollars
($6,000,000).
(ii) In
the event that Theater Xtreme shall have received gross proceeds of at least ten
Million Dollars ($10,000,000) from debt and/or equity financings, whether in one
or more transactions, on or before September 30, 2008, then Theater Xtreme shall
have the option in its sole discretion to make the payments provided for in
paragraph 1(b) of the Debenture, in cash, in the form of Theater Xtreme common
stock (which stock will be valued at the average closing trading price during
last 20 trading days), or a combination of both cash and stock. To the extent
any common stock is issued pursuant to this section (ii), such common stock
shall be deemed to be "Registrable Securities" as defined in the Securities
Purchase Agreement. All proceeds raised on or before September 30, 2008 must be
pursuant to completed transactions, and not commitments or other agreements
containing contingencies to closing.
(iii) In
the event Theater Xtreme shall have received gross proceeds of at least Five
Million Dollars ($5,000,000) from debt and/or equity financings, whether in one
or more transactions, on or before September 30, 2008, then on
October
1, 2008,
fifteen percent (15%) of any of the gross proceeds received by Theater Xtreme on
or before September 30, 2008 from any debt and/or equity financings shall be
deposited into a separate escrow account for the benefit of Xxxxxx (the "Escrow
Account"). The Escrow Account shall be (x) segregated from Theater Xtreme's
available funds in a separate interest-bearing bank account; (y) subject to an
escrow agreement in form and substance reasonably satisfactory to Xxxxxx and
including appropriate directions to the escrow agent as to release of the
escrowed funds; and (z) managed by an independent escrow agent acceptable to
Xxxxxx. The costs of establishing and maintaining the Escrow Account shall be
borne by Theater Xtreme. After October 1, 2008, Theater Xtreme will deposit into
the Escrow Account fifteen percent (15%) of any gross proceeds received by
Theater Xtreme from any debt and/or equity financings. All amounts in the Escrow
Account (including interest) will be distributed as follows: (1) if Theater
Xtreme receives additional gross proceeds of at least Five Million Dollars
($5,000,000) from debt and/or equity financings, whether in one or more
transactions, prior to April 30, 2009, then upon the happening of that event all
amounts held in the Escrow Account shall be released to Theater Extreme to be
used by Theater Extreme in its sole discretion; OR (2) in the event the Company
fails to receive additional gross proceeds of at least Five Million Dollars
($5,000,000) from debt and/or equity financings, whether in one or more
transactions, by April 30, 2009, then on April 30, 2009 all amounts held in the
Escrow Account shall be paid towards the principal of the Debenture. All
milestones for receipt of proceeds under this subsection (iii) must be pursuant
to completed transactions, and not commitments or other agreements containing
contingencies to closing.
(iv) In
the event Theater Xtreme fails to obtain at least Five Million Dollars
($5,000,000) in gross proceeds from debt and/or equity financings, whether in
one or more transactions, on or before September 30, 2008, then on October 1,
2008 Theater Xtreme shall pay at least fifteen percent (15%) of any of the gross
proceeds received during the period from June 15, 2008 to September 30, 2008
towards the principal of the Debenture. Additionally, fifteen percent (15%) of
any gross proceeds received by Theater Xtreme after September 30, 2008 from any
debt and/or equity financings shall be paid towards the principal of the
Debenture.
(v) Permit
Theater Xtreme to defer the $275,000 interest payment due on July 1, 2008 (as
previously agreed upon), which represents all regular and deferred interest
payments, to September 30, 2008, without penalty. Further, so long as from May
1, 2008 to September 30, 2008 Theater Xtreme shall have received gross proceeds,
in the aggregate, in one or more transactions during such period, from debt
and/or equity financings of at least Five Million Dollars ($5,000,000), on
September 30, 2008, Theater Xtreme, in its sole discretion, shall have the
option to make the September 30, 2008 interest payment (or any other optional
interest payment), in cash, in the form of
Theater
Xtreme common stock (which stock will be valued at the average closing trading
price during last 20 trading days), or a combination of both cash and stock. To
the extent any common stock is issued pursuant to this section (iv), such common
stock shall be deemed to be "Registrable Securities" as defined in the
Securities Purchase Agreement.
(vi) In
the event that Theater Xtreme raises at least at least Ten Million Dollars
($10,000,000) from debt and/or equity financings, as described in section (ii)
of this letter, Theater Xtreme will amend the "Exercise Price'" under the
Warrant and the Securities Purchase Agreement to: (a) $0.50, its Theater Xtreme
raises equity at a price per share equal to $0.50 or below pursuant to its then
most recent financing; or (b) $0.75, if Theater Xtreme raises equity at a price
per share equal to $0.51 to $0.75 pursuant to its then most recent
financing.
If Xxxxxx
agrees to the above, please countersign below to acknowledge our mutual
agreement and return to me.
Sincerely,
/s/ Xxxxxx Xxxxxxxxx
Xxxxxx
Xxxxxxxxx,
Chief
Executive Officer
Acknowledged
and Agreed:
By: /s/
Xxxxxx X.
Xxxx June
27, 2008
Xxxxxx X.
Xxxx,
Vice
President and Treasurer
Xxxxxx
Technology, LLC
