Exhibit 10.1
WAIVER OF RIGHTS AGREEMENT
This Waiver of Rights Agreement (the "AGREEMENT") is made and entered into
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as of September 13, 2006 (the "EFFECTIVE DATE"), by and between XA, INC., a
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Nevada corporation ("XA") and ALPHA CAPITAL AKTIENGESELLSCHAFT, XXXXXXXXXXX
LIMITED PARTNERSHIP, WHALEHAVEN FUNDS LIMITED, GREENWICH GROWTH FUND LIMITED and
GENESIS MICROCAP INC. (the "PURCHASERS"), each individually a "PARTY" and
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collectively the "PARTIES."
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W I T N E S S E T H:
WHEREAS, pursuant to a Subscription Agreement entered into with the
Purchasers on June 30, 2004 (the "SUBSCRIPTION AGREEMENT"), XA sold the
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Purchasers an aggregate of $2,500,000 in two tranches of Convertible Promissory
Notes (the "NOTES" or the "PURCHASER NOTES"), with an aggregate of $1,250,000
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sold on June 30, 2004, which amount has been paid in full to date (the "FIRST
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TRANCHE") and an aggregate of $1,250,000 sold on September 13, 2004, which has
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since been reduced to $1,012,500 (not including any accrued and unpaid interest,
the "SECOND TRANCHE"), due to the conversion of a portion of the Notes into
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shares of XA's common stock which amount is due and payable on September 13,
2006 as well as 5,000,000 Class A Warrants to purchase shares of XA's common
stock (the "PURCHASER WARRANTS");
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WHEREAS, the Purchasers and XA previously entered into a Waiver of Rights
Agreement on July 17, 2006, effective as of June 30, 2006, and extended via
email on August 3, 2006, to August 9, 2006, to waive XA's default of the
repayment of the First Tranche and certain Reset Provisions which may have come
into effect in connection with the sale of $1,250,000 in 11% Senior Secured
Convertible Promissory Notes and warrants to various third party purchasers,
which funding closed August 8, 2006 (the "PRIOR WAIVER");
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WHEREAS, XA plans to raise additional capital to repay the Second Tranche
(the "FUNDING") subsequent to the Parties entry into this Agreement in the form
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of Senior Secured Promissory Notes (the "FUNDING NOTES") and certain other
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Warrants (the "FUNDING WARRANTS"), pursuant to a Securities Purchase Agreement
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to be entered into between XA and certain third parties on or around September
12, 2006 (the "PURCHASE AGREEMENT," and together with the Funding Warrants,
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Funding Notes and any and all other agreements and documents entered into in
connection with the Funding, the "FUNDING DOCUMENTS"), which XA plans to use to
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repay the amount owed pursuant to the Second Tranche.
NOW, THEREFORE, in consideration for the promises and pledges contained
below and other good and valuable consideration, which consideration XA and the
Purchasers acknowledge receipt of, and the premises and the mutual covenants,
agreements, and considerations herein contained, the Parties hereto agree as
follows:
1. PAYMENT BY XA OF THE SECOND TRANCHE.
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XA agrees to repay the Purchasers $500,000 of the amount due under the
Second Tranche on or before September 22, 2006 (the "PARTIAL PAYMENT" and
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the "PARTIAL PAYMENT DATE") and agrees to pay the Purchasers the full
remaining amount due under the Second Tranche (less the Partial Payment),
including any accrued and unpaid interest on the Second Tranche through
such payment date, on or before October 16, 2006 (the "FINAL PAYMENT
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DATE").
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The Purchasers agree that they will receive valid consideration (not
previously provided to the Purchasers) from XA as a result of XA's
agreement to pay the Purchasers the Partial Payment and the Final Payment.
2. EXTENSION OF THE DUE DATE OF THE SECOND TRANCHE.
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In connection with XA's agreement to pay the Partial Payment and Final
Payment on or before the Partial Payment Date and Final Payment Date,
respectively, the Purchasers agree that the original due date of the Second
Tranche, September 13, 2006, shall be extended to September 22, 2006 in
connection with the payment of the $500,000 Partial Payment and to October
16, 2006 in connection with the payment of the Final Payment (the
"EXTENSION"). The Purchasers further agree that XA shall not be in default
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of the repayment of the Second Tranche as long as XA makes the required
Partial Payment on or before the Partial Payment Date and the Final Payment
on or before the Final Payment Date.
XA agrees that it will receive valid consideration due to the
Extension provided by the Purchasers.
3. PURCHASERS' WAIVER OF THE RESET AND ANTI-DILUTION RIGHTS OF THE NOTES,
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PURCHASER WARRANTS AND SUBSCRIPTION AGREEMENT.
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In connection with XA's entry into the Funding and the Funding
Documents, and the timely making of the Partial Payment on or prior to the
Partial Payment Date and the Final Payment on or prior to the Final Payment
Date (as provided in Section 1, above), the Purchasers agree to:
a) Waive the Favored Nations Provision, Section 12(c) of the
Subscription Agreement; Section 3.4 of the Purchaser Warrants; Section
2.1(c)D of the Purchaser Notes; as well as any other reset,
anti-dilution or re-pricing rights in connection (collectively the
"RESET PROVISIONS") with:
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i) the Funding and the Funding Documents; and
ii) certain other securities issuable by XA included and
detailed in the Funding Documents, including certain warrants
issuable to consultants in connection with finders fees and
consulting fees pursuant to the Funding, including but not
limited to the issuance of up to 250,000 shares of XA common
stock for professional services, and the issuance of 1,000,000
warrants to purchase shares of XA's common stock at an exercise
price of $0.30 per share;
b) Waive the Redemption provisions of the Subscription Agreement
(Section 7.7) and the Purchaser Notes (Section 4.8), and to allow the
prepayment of the outstanding balance of the Second Tranche at any
time prior to September 13, 2006, without penalty; and
c) the Extension provided by Section 2, above.
Collectively a), b) and c) above are referred to as the "FUNDING
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WAIVER."
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PROVIDED, HOWEVER, that in the event that XA fails to make the
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required Payment of the Partial Payment on or prior to Partial Payment Date
and/or fails to make the required Final Payment on or prior to the Final
Payment Date:
a) The Funding Waiver shall be automatically revoked; and
b) All of the Purchasers' rights and remedies under the Subscription
Agreement, the September 2004 Purchaser Notes and Purchaser Warrants
will automatically be restored, other than those rights waived
pursuant to the December 29, 2004, Waiver Agreement between the
Parties.
4. XA'S PAYMENT OF THE FIRST TRANCHE AND INTEREST ON THE SECOND TRANCHE.
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The Purchasers agree that from the original due date of the First
Tranche, June 30, 2006, up to and including the Effective Date of this
Agreement, XA has not been in default of either the Purchaser Notes,
Subscription Agreement or Purchaser Warrants and/or if XA has been deemed
to be in default of such agreements, that such default has previously been
waived by the Purchasers.
Furthermore, the Purchasers agree that XA has Timely made all required
payments of principal under the First Tranche, which current outstanding
balance is $0 as of the date of this Agreement, and has Timely made all
required payments of interest under the Second Tranche of the Purchaser
Notes, which Second Tranche does not have another required payment until
September 13, 2006, which date has been extended by the Extension, and as
such, XA is not in default of any provision of the Subscription Agreement,
Purchaser Notes and Purchaser Warrants as of the date of this Agreement.
For the purposes of this section, the term "TIMELY" shall mean either
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within the time periods specified in the original Subscription Agreement
and/or Purchaser Notes or in the time periods specified in the Prior
Waiver, whichever is later.
5. MISCELLANEOUS.
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(a) Assignment. All of the terms, provisions and conditions of this
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Agreement shall be binding upon and shall inure to the benefit of and
be enforceable by the Parties hereto and their respective successors
and permitted assigns.
(b) Applicable Law. This Agreement shall be construed in accordance
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with and governed by the laws of the State of New York, excluding any
provision of this Agreement which would require the use of the laws of
any other jurisdiction.
(c) Entire Agreement, Amendments and Waivers. This Agreement
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constitutes the entire agreement of the Parties hereto and expressly
supersedes all prior and contemporaneous understandings and
commitments, whether written or oral, with respect to the subject
matter hereof. No variations, modifications, changes or extensions of
this Agreement or any other terms hereof shall be binding upon any
Party hereto unless set forth in a document duly executed by such
Party or an authorized agent or such Party.
(d) Waiver. No failure on the part of any Party to enforce any
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provisions of this Agreement will act as a waiver of the right to
enforce that provision.
(e) Section Headings. Section headings are for convenience only and
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shall not define or limit the provisions of this Agreement.
(f) Effect of Facsimile and Photocopied Signatures. This Agreement
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may be executed in several counterparts, each of which is an original.
It shall not be necessary in making proof of this Agreement or any
counterpart hereof to produce or account for any of the other
counterparts. A copy of this Agreement signed by one Party and faxed
to another Party shall be deemed to have been executed and delivered
by the signing Party as though an original. A photocopy of this
Agreement shall be effective as an original for all purposes.
[Remainder of page left intentionally blank. Signature page follows.]
This Agreement has been executed by the Parties on the date first written
above, with an Effective Date as provided above.
XA, INC.
/s/ Xxxxxx Xxxxxx
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XXXXXX XXXXXX
CHIEF EXECUTIVE OFFICER
PURCHASERS:
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ALPHA CAPITAL AKTIENGESELLSCHAFT XXXXXXXXXXX LIMITED PARTNERSHIP
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BY: /s/ Xxxxxx Xxxxxxxx BY: /s/ Xxxxx Xxxxxxx
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ITS: ITS: Cheif Operating Officer
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PRINTED NAME: Xxxxxx Xxxxxxxx PRINTED NAME: Xxxxx Xxxxxxx
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WHALEHAVEN FUNDS LIMITED GREENWICH GROWTH FUND LIMITED
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BY: /s/ Evan Schemanauer BY: /s/ Xxxxx Xxxx
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ITS: CFO ITS: Director
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PRINTED NAME: Evan Schemanauer PRINTED NAME: Xxxxx Xxxx
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GENESIS MICROCAP INC.
BY: /s/ Xxxxx Xxxxxxx
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ITS:
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PRINTED NAME: Xxxxx Xxxxxxx
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