EXHIBIT 1
WAIVER AGREEMENT
This Waiver Agreement (this "Agreement"), dated September 15, 2005,
is by and among The Gallery of History, Inc., a Nevada corporation (the
"Company"), Xxxx Xxxxxxx ("T Xxxxxxx") and Xxxxxx Xxxxxxx ("P Xxxxxxx") with
reference to the following facts:
Facts
A. Since July 2001 T Xxxxxxx, the Chief Executive Officer of the
Company, and P Xxxxxxx, a Vice President of the Company, have permitted the
Company to preserve cash by accruing cash compensation otherwise payable to
them. As of September 7, 2005 the Company owed $564,000 to each of T Xxxxxxx
and P Xxxxxxx for accrued and unpaid compensation.
B. On August 18, 2005 The Nasdaq Stock Market notified the
Company that the Company did not meet the requirements for continued listing
on the SmallCap Market because it did not have at least (i) $2,500,000 of
stockholders equity, (ii) $35,000,000 market value of listed securities or
(iii) $500,000 of net income from continuing operations for the two most
recent fiscal years. In fact, as of the quarter ended June 30, 2005 the
Company's stockholders equity was $2,361,681, the market value of the
Company's common stock was approximately $9,675,000 as of August 1, 2005, and
the Company reported net losses from operations for each of the fiscal years
ended September 30, 2004, 2003, and 2002.
C. On September 7, 2005 the Company submitted a plan (the
"Compliance Plan") to The Nasdaq Stock Market which describes the manner by
which the Company will attain compliance with the continued listing
requirements of the SmallCap Market. The Compliance Plan provides for the
exchange of certain outstanding indebtedness for a new series of preferred
stock. The issuance of such preferred stock will require approval by the
Company's stockholders.
D. Subject to the terms hereof, T Xxxxxxx and P Xxxxxxx desire
to waive amounts owed to them by the Company for accrued compensation in
order to immediately increase the Company's stockholder's equity to an amount
in excess of $2,500,000. The Company, T Xxxxxxx and P Xxxxxxx do not believe
that The Nasdaq Stock Market will accept the Company's Compliance Plan in the
absence of the waivers of accrued compensation described herein.
E. T Xxxxxxx and P Xxxxxxx collectively own approximately 76% of
the outstanding stock of the Company and will receive a material benefit if
the Company's common stock continues to be traded on the SmallCap Market.
Agreement
NOW, THEREFORE, in consideration of the foregoing and other good and
valuable consideration, the receipt and adequacy of which is hereby
acknowledged, the parties hereto hereby agree as follows:
1. T Xxxxxxx hereby waives all right and interest in and to $564,000
owing to him for accrued compensation through September 1, 2005.
Such waiver shall be automatically effective upon receipt by the
Company of notice from The Nasdaq Stock Market of the acceptance
of the Company's Compliance Plan.
2. P Xxxxxxx hereby waives all right and interest in and to $140,000
owing to her for accrued compensation through April 30, 2002.
Such waiver shall be automatically effective upon receipt by the
Company of notice from The Nasdaq Stock Market of the acceptance
of the Company's Compliance Plan. In addition, if The Nasdaq
Stock Market approves the Compliance Plan and the Company does
not hold a special meeting of stockholders prior to February 28,
2006 to consider and vote upon the exchange of debt for a new
series of preferred stock, then P Xxxxxxx will waive all right
and interest in and to an additional $70,000 of accrued
compensation. Such waiver shall not require any further action
on the part of the Company or P Xxxxxxx.
3. T Xxxxxxx and P Xxxxxxx each hereby severally, and not jointly,
represents and warrants as follows:
a. They have the power and authority to enter into this
Agreement and waive the accrued compensation owing to
them as provided herein.
b. They have not transferred or assigned any of their rights
to receive the accrued compensation waived herein.
c. The execution and delivery of this Agreement and the
waiver of their rights to receive accrued compensation
as provided herein will not violate or breach any
agreement to which they are a party or to which their
assets are subject.
4. The Company hereby represents and warrants as follows:
a. It has the power and authority to enter into this Agreement.
b. The execution and delivery of this Agreement does not
violate or breach any agreement to which the Company
is a party or to which its assets are subject.
5. This Agreement shall be binding upon the successors and assigns of
the parties hereto.
6. This Agreement may be executed in one or more counterparts which
together shall constitute a single agreement. In addition the
parties may deliver executed counterparts of this agreement by
facsimile or other electronic means.
7. Any dispute hereunder shall be resolved by binding arbitration in
accordance with the commercial rules of the American Arbitration
Association. The parties acknowledge that by agreeing to submit
disputes to arbitration they are waiving a right to a jury trial.
Any arbitration award may be filed as a final judgment in any court
of competent jurisdiction. The prevailing party in any such dispute
shall be entitled to receive, in addition to any other relief that
may be awarded by the arbitrator, reasonable attorneys' fees and
expenses.
IN WITNESS WHEREOF, the undersigned have caused this Agreement to be
executed as of the date first above written.
Gallery of History, Inc., a
Nevada corporation
/s/ Xxx Xxxxx
________________________
Xxx Xxxxx
Treasurer
/s/ Xxxx Xxxxxxx
________________________
Xxxx Xxxxxxx
/s/ Xxxxxx Xxxxxxx
________________________
Xxxxxx Xxxxxxx
