OBLIGATION EXCHANGE AGREEMENT AND RELEASE
EXHIBIT 10.2
THIS
OBLIGATION EXCHANGE AGREEMENT AND RELEASE (this “Agreement”)
is made and entered into effective as of the 25th day of April, 2008, by and
between Xxxxxxx Technologies Corporation, a Delaware corporation (the “Company”),
and Biscay Enterprises, LLC, an Iowa limited liability company (“Biscay”). The
Company and Biscay are sometimes hereinafter referred to individually as a
“Party” and
collectively as the “Parties”.
WHEREAS,
the Company has an outstanding Promissory Note dated July 13, 2006 in the
principal amount of $600,000 payable to the order of Biscay with a total
principal and accrued interest due of $440,000 (collectively, the “Note”) as
of the date of this Agreement; and
WHEREAS,
Biscay desires to exchange the Note for stock equivalent units of the Company
(“Units”)
and the Company is willing to do so provided that such exchange settles and
releases all outstanding obligations, debts, and liabilities with respect to the
Note pursuant to the terms of this Agreement.
NOW,
THEREFORE, for good and valuable consideration, the receipt and adequacy of
which are hereby acknowledged and confessed, the Parties agree as
follows:
1. CONSIDERATION. Upon
the execution and delivery of this Agreement by Biscay to the Company and the
cancellation and delivery of the Note pursuant to Section 2 below, the Company
shall issue 1,100,000 Units to Biscay and, concurrent therewith, the Parties
shall enter into a Stock Equivalent Unit Participation Agreement in the form of
Exhibit A
attached hereto (the “Participation
Agreement”). The Units shall not be certificated, will be
governed by this Agreement and the Participation Agreement, and will be
represented solely by an account to be maintained by the Company as set forth in
the Participation Agreement.
2. DELIVERY AND CANCELLATION OF
NOTE. Concurrent with the execution of the Agreement, Biscay
shall deliver to the Company the Note which shall be marked “cancelled” by the
Company. With such delivery and cancellation, Biscay agrees that all
obligations of the Company in respect to the Note are satisfied or
waived and released as herein provided.
3. BISCAY REPRESENTATIONS AND
WARRANTIES. As of the date hereof, Biscay represents and
warrants the following:
(a) It has not
assigned, pledged, or transferred in any manner to any person or entity any
right, title, or interest to the Note or any of the Biscay Claims (defined in
Section 5 below);
(b) It is free to
enter into this Agreement and to perform each of its terms and
covenants;
(c) It is not
restricted or prohibited, contractually or otherwise, from entering into and
performing this Agreement;
(d) Its execution
and performance of this Agreement is not a violation or breach of any other
agreement between Biscay and any other person or entity;
(e) This
Agreement is a legal, valid and binding agreement of Biscay, enforceable in
accordance with its terms;
(f) It recognizes
that acquiring the Units involves a high degree of risk and is suitable only for
persons of adequate financial means who have no need for liquidity of the
Units;
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(g) It (i) is
competent to understand and does understand the nature of the Units, and (ii) is
able to bear the economic risk of the Units;
(h) It is an
accredited investor as defined in Rule 501 of Regulation D promulgated by the
Securities and Exchange Commission under the Securities Act of 1933, as amended
(the “Act”);
(i) It has
significant prior investment experience, including investment in nonlisted and
nonregistered securities, and recognizes the highly speculative nature of the
Units, and is able to bear the economic risk hereby assumed;
(j) All
information regarding the Company which was requested or desired by it has been
furnished, all other documents which could be reasonably provided have been made
available for inspection and review, and it believes that such information is
sufficient to make an informed decision with respect to its acquiring the
Units;
(k) It is
acquiring the Units for its own account, for investment, and not for
distribution or resale to others; and
(l) It may not
assign or transfer the Units except by will, by the laws of descent and
distribution, or pursuant to a qualified domestic relations order as defined in
the Internal Revenue Code of 1986, as amended.
4. COMPANY REPRESENTATIONS AND
WARRANTIES. As of the date hereof, the Company represents and
warrants the following:
(a) It is free to
enter into this Agreement and to perform each of its terms and
covenants;
(b) It is not
restricted or prohibited, contractually or otherwise, from entering into and
performing this Agreement;
(c) Its execution
and performance of this Agreement is not a violation or breach of any other
agreement between the Company and any other person or entity; and
(d) This
Agreement is a legal, valid and binding agreement of the Company, enforceable in
accordance with its terms.
5. RELEASE BY
BISCAY. Biscay, on behalf of itself, its predecessors,
successors, assigns, partners, members, managers, affiliates, subsidiaries,
officers, employees, attorneys, and agents, past, present and future, hereby
fully, finally and completely RELEASE AND FOREVER DISCHARGE the Company and its
predecessors, successors, assigns, partners, affiliates, subsidiaries, officers,
shareholders, directors, employees, attorneys, and agents, past, present and
future (the “Company Released
Parties”), of and from any and all actions, causes of action, suits,
debts, disputes, damages, claims, obligations, liabilities, and demands of any
kind whatsoever, at law or in equity, whether matured or unmatured, liquidated
or unliquidated, vested or contingent, known or unknown, with respect to matters
arising in connection with the Note (including principal, any interest thereon
or other fees or obligations related thereto) that Biscay had, now has, or
hereafter may have against the Company Released Parties or any of them (the
“Biscay
Claims”). Biscay hereby agrees that it will not assert, and
that it is estopped from asserting, against any and all of the Company Released
Parties, any Biscay Claims that are released in this Agreement.
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6. INDEMNIFICATION. Biscay
agrees to hold the Company, its subsidiaries, officers, directors, employees and
agents and their respective heirs, representatives, successors, and assigns
harmless and to indemnify them against all liabilities, costs, and expenses
(including reasonable attorneys’ fees) incurred by them in connection with the
transaction contemplated in this Agreement or as a result of any sale or
distribution of the Units by Biscay in violation of this Agreement, the
Participation Agreement, or any applicable securities laws or any
misrepresentation by Biscay herein, including without limitation any claims made
by any third persons in respect of any right to the Note or the indebtedness
represented thereby.
7. ENTIRE
AGREEMENT. This Agreement and the Participation Agreement
constitute the entire agreement between the Parties as to the subject matter
hereof. There are no verbal understandings, agreements,
representations or warranties that are not expressly set forth
herein. This Agreement shall not be changed orally, but only in
writing signed by the Parties.
8. SEVERABILITY. Any
provision of this Agreement which is for any reason prohibited or found or held
invalid or unenforceable by any court or governmental agency shall be
ineffective to the extent of such prohibition or invalidity or unenforceability,
without invalidating the remaining provisions hereof in such jurisdiction or
affecting the validity or enforceability of such provision in any other
jurisdiction.
9. BINDING
EFFECT. This Agreement shall be binding upon and inure to the
benefits of the Parties, their respective successors and assigns.
10. GOVERNING
LAW. This Agreement shall be governed by and construed,
enforced and interpreted in accordance with the laws of the State of Nebraska
(without regard to principles of conflicts of laws). The Parties
consent to the sole and exclusive jurisdiction of the state courts and U.S.
federal courts having jurisdiction in Xxxxxxx County, Nebraska for any dispute
arising out of this Agreement.
11. COUNTERPARTS; ELECTRONIC
DELIVERY. This Agreement may be executed in any number of
original counterparts, each of which having been so executed and delivered shall
be deemed an original and all of which, collectively, shall constitute one
agreement; it being understood and agreed that the signature pages may be
detached from one or more such counterparts and combined with the signature
pages from any other counterparts in order that one or more fully executed
originals may be assembled. A copy of an executed counterpart
signature page signed by a Party may be delivered by facsimile or other
electronic transmission and, upon such delivery, a print out of the transmitted
signature of such Party will have the same effect as if a counterpart of this
Agreement bearing an original signature of that Party had been delivered to the
other Party.
[signature
page follows]
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IN
WITNESS WHEREOF, the Parties hereto have executed and delivered this Agreement
in Omaha, Nebraska effective as of the day and year first above
written.
| BISCAY ENTERPRISES, LLC | |||
|
|
By:
|
/s/ Xxxxx Xxxxx | |
| Name: Xxxxx Xxxxx | |||
| Title: | |||
| XXXXXXX TECHNOLOGIES CORPORATION | |||
|
|
By:
|
/s/ Xxxxxx Xxxxxx | |
| Name: XXXXXX XXXXXX | |||
| Title: President | |||
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EXHIBIT
A
FORM
OF STOCK EQUIVALENT UNIT PARTICIPATION AGREEMENT
5
XXXXXXX
TECHNOLOGIES CORPORATION
STOCK
EQUIVALENT UNIT
PARTICIPATION
AGREEMENT
STOCK EQUIVALENT UNIT PARTICIPATION
AGREEMENT (this “Agreement”) entered
into this 25th day of April, 2008 (the “Effective Date”),
between XXXXXXX TECHNOLOGIES
CORPORATION, a Delaware corporation (the “Corporation”),
and BISCAY ENTERPRISES, LLC,
a South Dakota limited liability company (the “Holder”).
WHEREAS, the Corporation has
an outstanding Promissory Note dated July 13, 2006 in the principal amount of
$600,000 payable to the order of Biscay with a total principal and accrued
interest due of $440,000 (the “Obligation”), and has
agreed to exchange the Obligation for 1,100,000 Units (as defined below) under
that certain Obligation Exchange Agreement and Release between the Corporation
and the Holder, dated as of April 25th, 2008 (the “Obligation Exchange
Agreement”); and
WHEREAS, the Corporation and
the Holder desire to memorialize and set out their respective rights and
obligations with respect to the Units.
NOW, THEREFORE, in
consideration of the mutual premises and undertakings set forth herein and other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
1. Definitions. The
following words have the following meanings for purposes of this
Agreement.
(a) “Change of Control”
means the earliest date upon which one of the following events
occurs:
(i) Acquisition
by any individual, entity, or group (within the meaning of Section 13(d)(3) or
14(d)(2) of the Securities Exchange Act of 1934, as amended (the
“Exchange Act”)
(a “Person”) of
beneficial ownership (within the meaning of Rule 13d-3 promulgated under the
Exchange Act) of 35% or more of either (A) the Shares (as defined below) or (B)
the combined voting power of the then-outstanding voting securities of the
Corporation entitled to vote generally in the election of directors of the
Corporation; provided, however, that for purposes of this Subsection (i), the
following acquisitions shall not constitute a Change of Control: (A) any
acquisition directly from the Corporation, (B) any acquisition by the
Corporation, (C) any acquisition by any employee benefit plan (or
related trust) sponsored or maintained by the Corporation or any affiliated
company, or (D) any acquisition by any corporation pursuant to a transaction
that complies with clauses (A), (B), or (C) of Subsection (ii)
below);
(ii) Consummation
of a reorganization, merger, consolidation or sale or other disposition of all
or a significant part of the assets (other than in the ordinary course of
business) of the Corporation or of any of the Corporation’s wholly or partly
owned subsidiary companies, including without limitation Trace Technologies,
LLC, a Nebraska limited liability company (a “Business
Combination”), in each case, unless, following
such Business Combination, (A) all or substantially all of the individuals and
entities that were the beneficial holders of the Shares (as defined below)
immediately prior to such Business Combination beneficially own, directly or
indirectly, more than 60%
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of the
then-outstanding shares of common stock and the combined voting power of the
then-outstanding voting securities entitled to vote generally in the election of
directors, as the case may be, of the corporation resulting from such Business
Combination (including, without limitation, a corporation that, as a result of
such Business Combination, owns the Corporation or all or substantially all of
the Corporation‘s assets either directly or through one or more subsidiaries) in
substantially the same proportions as their ownership of the Shares immediately
prior to such Business Combination, (B) no Person (excluding any corporation
resulting from such Business Combination or any employee benefit plan (or
related trust) of the Corporation or such corporation resulting from such
Business Combination) beneficially owns, directly or indirectly, 35% or more of,
respectively, the then-outstanding shares of common stock of the corporation
resulting from such Business Combination or the combined voting power of the
then-outstanding voting securities of such corporation, except to the extent
that such ownership existed prior to the Business Combination, and (C) at least
a majority of the members of the board of directors of the corporation resulting
from such Business Combination were members of the Corporation’s Board at the
time of the execution of the initial agreement or of the action of the Board
providing for such Business Combination; or
(iii) Approval by
the stockholders of the Corporation of a complete liquidation or dissolution of
the Corporation.
(b) “Dividend Distribution
Date” means the date on which the Corporation pays a cash dividend to the
holder of a Share.
(c) “Settlement Date”
means the date upon which the Stockholders of the Corporation receive proceeds
resulting from a Change of Control.
(d) “Share” means one
share and “Shares” means more
than one share of the Corporation’s issued and outstanding common stock, $0.001
par value, as the same is constituted from time to time.
(e) “Stockholder” means a
holder of Shares.
(f) “Unit” means a
contractual right of the Holder to receive a certain amount or value of property
from the Corporation equal to a certain amount or value of property received by
a Stockholder with respect to a Share, in accordance with the terms and
conditions of this Agreement.
2. Acknowledgement of Receipt
of Units and Cancellation of Obligation.
(a) The Holder
hereby acknowledges receipt of 1,100,000 Units from the Corporation under the
Obligation Exchange Agreement and agrees that such Units shall be subject to the
terms and conditions of this Agreement. Holder further acknowledges
and agrees that such Units were received in exchange for the cancellation of the
Corporation’s Obligation, as described in the Obligation Exchange
Agreement.
(b) The
Corporation hereby acknowledges the issuance of 1,100,000 Units to the
Holder under the
Obligation Exchange Agreement and agrees that such Units shall be subject to the
terms and conditions of this Agreement. The Corporation further
acknowledges and agrees that such Units were issued in exchange for the
cancellation of the Corporation’s Obligation, as described in the Obligation
Exchange Agreement.
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3. Rights of
Holders of Units. In accordance with the terms of this
Agreement, on the Settlement Date and each Dividend Distribution Date, if any,
the Holder of a Unit, with respect to each Unit held, shall be entitled to
receive an amount equal to the value of the amount paid or distributed to each
Stockholder with respect to each Share, in the form of cash or, at the election
of the Corporation, other property with a value equal to the property otherwise
distributable or payable under the terms of this Agreement. Any such
amount or distribution to which a Holder becomes entitled shall be paid or made
by the Corporation to such Holder within five (5) Business Days (as defined
below) of such Settlement Date or Dividend Distribution Date. By way
of illustration of the amounts or distributions to which a Holder may become
entitled, if on the Settlement Date, a Stockholder of the Corporation receives
$1.00 for each Share held by such Stockholder, then Holder will receive a cash
payment equal to $1.00 times the number of Units held by
Holder. Similarly, if on the Settlement Date, each Stockholder of the
Corporation receives 5 shares of common stock of the acquiring company, with a
value of $2.00, for each Share held by such Stockholder, then Holder will
receive, at the Corporation’s election, either (a) a cash payment equal to $2.00
times the number of Units held by Holder, or (b) 5 shares of common stock of the
acquiring company for each Unit held by Holder. Likewise, if on the
Dividend Distribution Date, each Stockholder of the Corporation receives a
Dividend Distribution Payment of $0.25 per Share in cash, then Holder will
receive a cash payment equal to $0.25 times the number of Units held by the
Holder. The Corporation shall have the right to deduct, from any
payment or distribution hereunder, any taxes required by law to be withheld from
the Holder with respect to such payment or distribution and, in furtherance
thereof, Holder shall provide any documentation or completed form as may be
requested by Corporation related to or in connection with the determination of
any such withholding. For the avoidance of doubt, amounts will only
be payable or distributable under this Agreement upon the occurrence of an event
specifically described herein and, further, no amount shall be payable or
distributable to a Holder upon the mere change in value of a Share in the
absence of such occurrence.
4. No Rights
as a Stockholder. The Holder, in
its capacity as a Holder of Units, shall have no rights as a Stockholder of the
Corporation. No Shares or other equity interest in the Corporation
shall be issued pursuant to this Agreement.
5. Adjustments to Units; No
Limitation on Corporation Action.
(a) In the event
of a change in the number of Shares by reason of the Corporation implementing
any stock dividend or split, recapitalization, merger, consolidation, spin-off,
reorganization, combination or exchange of shares or other similar corporate
change, so long as such change does not result in a Change of Control, the
Corporation shall adjust the number of Units issued to Holder in the Holder’s
Account (as defined in Section 7) as is necessary and appropriate and, further,
any such adjustment made shall be conclusive and binding on the parties
hereto.
(b) Notwithstanding the
foregoing, the issuance by the Corporation of shares of its capital stock of any
class, or securities convertible into shares of capital stock of any class,
either in connection with a direct sale or upon the exercise of rights or
warrants to subscribe therefor, or upon conversion of shares or obligations of
the Corporation convertible into such shares or other securities, shall not
affect, and no adjustment by reason thereof shall be made with respect to, the
number of Units covered by this Agreement.
(c) For the
avoidance of doubt and without limiting the generality of the foregoing, the
existence of the Units shall not affect in any manner the right or power of the
Corporation to make, authorize or consummate (i) any or all adjustments,
recapitalizations, reorganizations or other changes in the Corporation’s capital
structure or its business; (ii) any merger or consolidation of the Corporation;
(iii) the dissolution or liquidation of the Corporation; (iv) any sale, transfer
or assignment of all or any part of the assets or business of the Corporation;
or (v) any other corporate act or proceeding, whether of a similar character or
otherwise.
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6. Representations
and Warranties of Holders of Units. As of the
Effective Date and the date of execution of the Obligation Exchange Agreement,
the Holder represents and warrants that:
(a) The Holder
has had access to all information regarding the Corporation and its present and
prospective business, assets, liabilities and financial condition that the
Holder reasonably considers important in connection with the Units, this
Agreement, and the Obligation Exchange Agreement, and the Holder has had ample
opportunity to ask questions of the Corporation’s representatives (and any such
questions have been answered to Holder’s satisfaction) concerning such
matters.
(b) The Holder is
fully aware of: (i) the highly speculative nature of the future potential
financial returns on or from the Units, (ii) the financial risks and hazards
involved in the future potential financial returns on or from the Units, and
(iii) the tax consequences of executing and participating in this Agreement and
the Obligation Exchange Agreement.
(c) The
Corporation has made no representations or warranties to the Holder with respect
to the tax consequences (including, without limitation, the federal, state and
local income tax consequences) related to or that could arise from executing and
participating in this Agreement and the Obligation Exchange Agreement, and the
Holder is in no manner relying on the Corporation or its representatives for an
assessment of such tax consequences.
(d) The Holder
has been advised that Holder should consult with his own attorney, accountant,
and/or tax advisor regarding the decision to enter into and participate in this
Agreement and the Obligation Exchange Agreement and the tax, financial, and/or
other consequences thereof, and, further, the Corporation has no responsibility
to take or refrain from taking any action or actions in order to achieve a
certain tax or financial result for the Holder.
7. Stock
Equivalent Unit Account. Each Unit shall
be evidenced by an entry on the books of the Corporation (an “Account”). Each
Account shall be the record of Units issued to Holder pursuant to the Obligation
Exchange Agreement and this Agreement and shall be solely for accounting
purposes. Amounts payable or distributable hereunder shall be paid or
distributed exclusively from the general assets of the Corporation, and no
Holder entitled to payment or distribution hereunder shall have any claim,
right, security interest, or other interest in any fund, trust, account,
insurance contract, or asset of the Corporation from which a payment or
distribution may be made. The rights of a Holder of a Unit hereunder
shall be solely those of an unsecured creditor of the
Corporation. The Corporation’s liability for payments or
distributions hereunder, if any, shall be evidenced only by this
Agreement.
8. Restriction
on Transfer. The Units may not
be assigned or transferred except by will, by the laws of descent and
distribution, or pursuant to a qualified domestic relations order as defined in
the Internal Revenue Code of 1986, as amended. If the Holder dies,
the Units shall transfer to a person who acquired the right to the Units by
bequest or inheritance. The Units shall not be subject to execution, attachment
or similar process. Any attempted assignment or transfer of the Units
contrary to the provisions hereof, and the levy of any execution, attachment or
similar process upon the Units, shall be null and void and without
effect.
9. Notices. All notices or
other communications which are required or permitted hereunder shall be in
writing and sufficient if (i) personally delivered, (ii) sent by
nationally-recognized overnight courier or (iii) sent by registered or certified
mail, postage prepaid, return receipt requested, addressed as
follows:
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if to the
Holder, to the address set forth on the signature page hereto; and
if to the
Corporation, to:
Xxxxxxx
Technologies Corporation
Attention:
Xxxxxx Xxxxxx
0000 X.
000xx
Xxxxxx
Xxxxx,
XX 00000
or to
such other address as the party to whom notice is to be given may have furnished
to each other party in writing in accordance herewith. Any such
communication shall be deemed to have been given (i) when delivered, if
personally delivered, (ii) on the first Business Day (as hereinafter defined)
after dispatch, if sent by nationally-recognized overnight courier and (iii) on
the third Business Day following the date on which the piece of mail containing
such communication is posted, if sent by mail. As used herein, “Business Day” means a
day that is not a Saturday, Sunday or a day on which banking institutions in the
city to which the notice or communication is to be sent are not required to be
open.
10. No
Waiver. No waiver of any
breach or condition of this Agreement shall be deemed to be a waiver of any
other or subsequent breach or condition, whether of like or different
nature.
11. Holder
Undertaking / Indemnification. The Holder hereby
agrees to take whatever additional actions and execute whatever additional
documents the Corporation or its counsel may in their reasonable judgment deem
necessary or advisable in order to carry out or effect one or more of the
obligations or restrictions imposed on the Holder pursuant to the express
provisions of this Agreement. Holder agrees to hold the Corporation,
its subsidiary companies, officers, directors, employees and agents and their
respective heirs, representatives, successors, and assigns harmless and to
indemnify them against all liabilities, costs, and expenses (including
reasonable attorneys’ fees) incurred by them as a result of any
misrepresentation made by Holder herein or any other breach or violation by
Holder of this Agreement or the Obligation Exchange Agreement.
12. Governing
Law. This Agreement
shall be governed by and construed, enforced and interpreted in accordance with
the laws of the State of Nebraska (without regard to principles of conflicts of
laws). The Parties consent to the sole and exclusive jurisdiction of
the state courts and U.S. federal courts having jurisdiction in Xxxxxxx County,
Nebraska for any dispute arising out of this Agreement.
13. Counterparts. This Agreement
may be executed in one or more counterparts, each of which shall be deemed to be
an original, but all of which together shall constitute one and the same
instrument.
14. Entire
Agreement. This Agreement,
with the Obligation Exchange Agreement, constitutes the entire agreement between
the parties with respect to the subject matter hereof, and supersedes all prior
written or oral negotiations, commitments, representations and agreements with
respect thereto.
[remainder
of page intentionally left blank -- signature page follows]
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IN
WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date
set forth above.
| XXXXXXX TECHNOLOGIES CORPORATION | |||
|
|
By:
|
/s/ Xxxxxx Xxxxxx | |
| Name: Xxxxxx Xxxxxx | |||
| Title: President | |||
| HOLDER: | |||
|
|
By:
|
/s/ Xxxxx Xxxxx | |
| Name: Xxxxx Xxxxx | |||
| Address: 000 Xxxxxxxxx, Xxxxxx, Xx | |||
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