SETTLEMENT AGREEMENT
THIS
SETTLEMENT AGREEMENT
is
entered into on February 6, 2008 by and between WEB2
CORP.,
a
Delaware corporation (“WBTO”), and WHWW
FIVE, LLC,
a
Florida limited liability company (“Five”).
RECITALS:
A. Pursuant
to a certain Assignment dated as of January 2, 2008, Five holds certain rights,
claims and causes of action against WBTO. Five has asserted various rights,
claims and causes of action against WBTO.
B. Each
of
the parties desires to resolve the rights, claims and causes of action asserted
by Five against WBTO on the terms set forth in this Settlement Agreement (the
“Agreement”), and believes that it is in its best interests to do
so.
NOW,
THEREFORE,
in
consideration of the Recitals and the respective covenants and agreements of
the
parties set forth herein, each of WBTO and Five agrees as follows:
1. Convertible
Promissory Note.
Simultaneously with the execution and delivery of this Agreement, WBTO is
executing and delivering to Five a Convertible Promissory Note in the form
of
Exhibit A attached hereto (the “Note”).
2. Forbearance.
So long
as WBTO remains in full compliance with the provisions of the Note, Five shall
forbear to bring or pursue any of its rights, claims or causes of action against
WBTO.
3. Tolling.
All
statutes of limitation, repose and the like shall be stayed during the period
that WBTO remains in full compliance with the provisions of the
Note.
4. Certain
Representations and Warranties of Five.
Five
represents and warrants to WBTO, and covenants and agrees with WBTO, as
follows:
(a) Five
acknowledges that the offer, issuance and sale to it of the Note and any shares
of common stock of WBTO into which it may be convertible (collectively, the
“Shares”) are intended to be exempt from the registration requirements of the
Securities Act of 1933, as amended (the “Act”), in reliance on one or more
exemptions for private offerings.
(b) Five
acknowledges that its management is familiar with WBTO’s filings with the
Securities and Exchange Commission and the exhibits attached thereto
(collectively, the “Disclosure Documents”). Five acknowledges that neither this
offering nor the Disclosure Documents have been passed upon or the merits
thereof endorsed or approved by any governmental authority.
(c) Five
represents and warrants to WBTO that Five, by and through its managers, (i)
has
reviewed and understood the Disclosure Documents, and (ii) has had the
opportunity to ask questions of, and to receive answers from, officers and
employees of WBTO concerning WBTO and its business, affairs and operations,
and
the transactions contemplated by this Agreement, and to obtain any additional
information necessary to verify the accuracy of the Disclosure
Documents.
(d) Five
represents and warrants to WBTO that Five, by virtue of the education, training
and experience of its managers, has such knowledge and experience in financial
and business matters that it is capable of understanding the information
provided to it by WBTO and of evaluating the merits and risks of its investment
in the Note and, if and to the extent that the Note is converted, the
Shares.
(e) The
Note
and, if and to the extent that the Note is converted, the Shares are being
acquired solely for the account of Five, and not with a view to, or for resale
in connection with, any “distribution” within the meaning of the
Act.
(f) Five
acknowledges and agrees that neither the Note nor the Shares into which it
may
be converted may be sold, assigned, transferred, conveyed, pledged or otherwise
disposed of unless they are registered under the Act or an exemption from such
registration is available. Five acknowledges and agrees that the Note and the
Shares into which it may be converted constitute “restricted securities,” as
such term is defined in Rule 144 promulgated by the Securities and Exchange
Commission under the Act, and, unless sooner registered for sale under the
Act,
may not be sold for a period of six months from and after the date of this
Agreement. Stop transfer instructions will be placed by WBTO against the Note
and any Shares into which it may be converted, and WBTO shall not permit the
transfer or other disposition of the Note and any Shares into which it may
be
converted, unless and until such transfer or other disposition complies with
all
applicable laws, rules and regulations.
(g) Five
acknowledges that the Note will bear a restrictive legend in substantially
the
following form:
THIS
CONVERTIBLE PROMISSORY NOTE AND THE SHARES OF COMMON STOCK INTO WHICH ALL OR
A
PORTION OF THE PRINCIPAL AMOUNT HEREOF MAY BE CONVERTED MAY NOT BE SOLD,
ASSIGNED, TRANSFERRED, CONVEYED, PLEDGED, HYPOTHECATED, ENCUMBERED, OR OTHERWISE
DISPOSED OF UNLESS (A) THEY ARE COVERED BY A REGISTRATION STATEMENT OR
POST-EFFECTIVE AMENDMENT THERETO, EFFECTIVE UNDER THE SECURITIES ACT OF 1933,
AS
AMENDED, OR (B) SUCH SALE, ASSIGNMENT, TRANSFER, CONVEYANCE, PLEDGE,
HYPOTHECATION, ENCUMBRANCE OR OTHER DISPOSITION IS EXEMPT FROM THE PROVISIONS
OF
SECTION 5 OF THAT ACT AND ANY OTHER APPLICABLE SECURITIES
LAWS.
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(h) Five
acknowledges that any and all certificates representing the Shares into which
the Note may be converted will bear a restrictive legend in substantially the
following form:
THE
SHARES REPRESENTED BY THIS CERTIFICATE MAY NOT BE SOLD, ASSIGNED, TRANSFERRED,
CONVEYED, PLEDGED, HYPOTHECATED, ENCUMBERED OR OTHERWISE DISPOSED OF UNLESS
(A)
THEY ARE COVERED BY A REGISTRATION STATEMENT OR POST-EFFECTIVE AMENDMENT
THERETO, EFFECTIVE UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR (B) SUCH
SALE, ASSIGNMENT, TRANSFER, CONVEYANCE, PLEDGE, HYPOTHECATION, ENCUMBRANCE
OR
OTHER DISPOSITION IS EXEMPT FROM THE PROVISIONS OF SECTION 5 OF THAT ACT AND
ANY
OTHER APPLICABLE SECURITIES LAWS.
5. Registration
of Securities.
Five
shall have the right at any time and from time to time to require WBTO to
register the Note and the Shares issuable upon conversion of all or any portion
of this Note and interest accrued thereon for resale to the public under the
Act
and any applicable state securities or blue sky laws. Any request for such
registration shall be made by delivery of written notice to WBTO. Five shall
promptly furnish to WBTO such information as WBTO shall reasonably request
to
enable it to prepare and file any and all required registration statements
and
amendments thereto. Except as may be required by law, WBTO shall pay all fees
and costs incurred in connection with the preparation and filing of any
registration statement with the Securities and Exchange Commission and any
applicable state securities authorities.
6. Governing
Law.
This
Agreement shall be governed by, and shall be construed and interpreted in
accordance, with the laws of the State of Delaware, without giving effect to
the
principles of the conflict of laws thereof.
7. Entire
Agreement.
This
Agreement, together with the exhibit attached hereto, constitutes the entire
agreement between WBTO and Five with respect to the subject matter hereof and
supersedes all prior agreements, understandings, negotiations and arrangements,
both oral and written, between WBTO and Five with respect to such subject
matter.
8. Amendments.
This
Agreement may not be amended or modified in any manner, except by a written
instrument executed by each of WBTO and Five.
9. Benefits;
Binding Effect.
This
Agreement shall be for the benefit of, and shall be binding upon, each of WBTO
and Five and their respective successors and assigns.
10. Headings.
The
headings contained in this Agreement are for reference purposes only and shall
not affect in any way the meaning or interpretation of any or all of the
provisions hereof.
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11. Counterparts.
This
Agreement may be executed in any number of counterparts and by the separate
parties in separate counterparts, each of which shall be deemed to constitute
an
original and all of which shall be deemed to constitute the one and the same
instrument.
IN
WITNESS WHEREOF,
each of
the parties has executed and delivered this Agreement on the date first set
forth above.
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By
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/s/
Xxxxxxx X. Xxxxxx, Xx.
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Xxxxxxx
X. Xxxxxx, Xx.
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Chairman
and Chief Executive Officer
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WHWW
FIVE, LLC
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By
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/s/
Xxxx X. Xxxxxx
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Xxxx
X. Xxxxxx, Manager
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