MODIFICATION AGREEMENT
EXHIBIT
10.27
This Modification Agreement (this
“Agreement”) is
made and entered into this 20th day of
April, 2010 (the “Effective Date”), by
and among SSGI, Inc, a Florida corporation (hereinafter referred to as the
“Company”),
Surge Solutions Group, Inc., a Florida corporation and wholly-owned subsidiary
of the Company (“Surge”), and Xxxx
Xxxxxx, an individual resident of the State of Florida (hereinafter referred to
as “Executive”).
WHEREAS, Executive is currently the
Chairman of the Board, Chief Executive Officer and President of the Company, a
significant shareholder of the Company, and an employee and officer of Surge;
and
WHEREAS, Executive and the Company have
agreed to (i) terminate Executive’s employment with Surge, (ii) terminate
Executive’s officer positions with the Company and Surge, (iii) modify
Executive’s positions on Boards of Directors of both Surge and the Company, and
(iv) modify Executive’s equity and debt interests in the Company.
NOW, THEREFORE, in consideration of the
mutual covenants contained herein, the parties agree as follows:
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1.
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EMPLOYMENT AND
MANAGEMENT MATTERS
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1.1
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Employment and Officer
Positions. Effective as of the Effective Date, Executive
hereby resigns as an employee of Surge, and hereby resigns all of his
officer positions with Surge and with the Company, including, without
limitation, his positions as the Chief Executive Officer and President of
the Company.
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1.2
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Director
Positions. Executive hereby resigns as a director of Surge.
Effective as of the Effective Date, Executive hereby resigns his position
as Chairman of the Board of Directors of the Company. Executive shall
remain a director of the Company for the 2010/2011
term.
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1.3
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Consulting
Agreement. Effective as of the Effective Date, Executive
and the Company shall execute and enter into a Consulting Agreement in the
form attached hereto as Exhibit
A.
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1.4
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Termination of
Employment Agreements. Effective as of the Effective
Date, the parties hereby agree that any and all agreements relating to
employment between Executive, on the one hand, and Surge, the Company or
any other affiliate of the Company, on the other hand (including, without
limitation, that certain Employment Agreement dated April 1, 2007, by and
between Executive and Surge, as amended) are hereby terminated and of no
further force or effect, and no party shall have any further rights,
duties or obligations under any such agreements relating to
employment.
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1
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2.
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EQUITY
INTERESTS
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2.1
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Forfeiture of Shares
of Common Stock. Executive agrees that, on the Effective
Date, he shall surrender to the Company for cancellation stock
certificates representing that number of shares of common stock, par value
$0.001 per share, of the Company (the “Common Stock”)
equal to (a) the total number of shares of Common Stock owned by Executive
on the Effective Date, minus (b)
4,000,000. Such number of shares of Common Stock to be
forfeited by Executive are hereinafter referred to as the “Forfeited
Shares”. Executive represents and warrants that he
owns the Forfeited Shares free and clear of liens or other encumbrances
other than those imposed under applicable state and federal securities
laws. Immediately after giving effect the transactions
contemplated by this Section 2.1, the parties acknowledge and agree that
Executive shall own 4,000,000 shares of Common
Stock.
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2.2
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Issuance of
Warrant. On the Effective Date, the Company shall grant
and issue to Executive a warrant to purchase 500,000 shares of Common
Stock pursuant to a Warrant in the form attached hereto as Exhibit
B.
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3.
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COMPANY
LOANS
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3.1
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Loan
Forgiveness. Executive hereby agrees to forgive all but
$125,000 of the remaining balance of principal and interest due by the
Company or any of its subsidiaries (including Surge) to Executive in
connection with previous loans made by Executive to the Company or any of
its subsidiaries (including Surge). The $125,000 not forgiven
by Executive pursuant to the first sentence of this Section 3.1 shall be
evidenced by, and payable by the Company in accordance with, the form of
Promissory Note attached hereto as Exhibit C (the
“Promissory
Note”).
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3.2
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No Other Indebtedness
Owed to Executive. Immediately after giving effect to
the transactions contemplated by Section 3.1, the parties acknowledge and
agree that neither the Company nor any of its subsidiaries (including
Surge) owes any indebtedness to Executive, other than (a) indebtedness
evidenced by the Promissory Note, and (b) indebtedness for reasonable
travel advances or similar advances for expenses incurred by Executive on
behalf of and in the ordinary course of business of the Company or any of
its subsidiaries for which Executive is entitled to reimbursement by the
Company or such subsidiary in accordance with the Company’s or such
subsidiary’s normal policies and
procedures.
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2
4.
REPRESENTATIONS
AND WARRANTIES
Each
party hereto hereby represents and warrants to other party, as of the Effective
Date, as follows:
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4.1
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Power and
Authority. Such party has the full power and authority
to enter into this Agreement and to perform his or its obligations under
this Agreement in accordance with the provisions of this Agreement. This
Agreement has been duly authorized, executed and delivered by such party
and constitutes a legal, valid and binding obligation of such party,
enforceable in accordance with its terms, except as enforceability may be
limited by applicable bankruptcy, moratorium or other similar laws
affecting creditors' rights generally and by general equitable
principles.
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4.2
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No
Conflicts. The execution and delivery of this Agreement
by such party does not, and, the performance of, and compliance with, the
terms of this Agreement by such party, will not, (a) conflict with or
violate any provision of any law, statute, judgment, injunction, decree,
ruling or resolution to which such party is subject, (b) violate its
organizational documents, if applicable, or (c) conflict with or
constitute a default (or an event which, with notice or lapse of time, or
both, would constitute a default) under, or result in the breach of, any
material agreement or other instrument to which he or it is a party or
that is applicable to such party or any of his or its assets, or any order
or decree applicable to such party.
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4.3
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Consents. No
permit, authorization, consent or approval of or by, or any notification
of or registration, declaration or filing with, any person (governmental
or private) is required to be obtained or made by such party in connection
with the execution, delivery and performance by him or it of this
Agreement or the consummation by such party of the transactions
contemplated hereby
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5.
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COVENANTS OF THE
COMPANY
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5.1
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B&M
Transaction. The Company shall use its commercially
reasonable best efforts to consummate the acquisition of B & M
Construction Co., Inc., a Florida corporation.
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5.2
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Uncompleted Work
Contracts. The Company shall use its commercially
reasonable best efforts to timely complete all uncompleted work contracts
to which it or any of its subsidiaries (including Surge) is a party as of
the Effective Date.
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3
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5.3
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Repayment of
Guaranteed Indebtedness. The Company shall use its
commercially reasonable best efforts to repay all outstanding indebtedness
or other obligations of the Company or any of its subsidiaries, the
payment or performance of which was personally guaranteed by Executive
(including, without limitation, the Company’s outstanding indebtedness to
Wachovia Bank and to Alpina Lending, LP) (the “Guaranteed
Indebtedness”). In addition, the Company shall promptly
pay off or retire all indebtedness (in the approximate amount of $50,000)
under Executive’s Visa credit card (last four digits 6931), which
indebtedness was incurred for the sole benefit of the Company and/or one
or more of its subsidiaries.
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5.4
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Transfer of
Vehicle. On the Effective Date, the Company or Surge
shall transfer to Executive, in exchange for $10.00, title to the
following vehicle currently being driven by Executive: 2008
Ford F150 Quad cab (black). Upon such transfer, Executive
shall be solely responsible for the payment of all loans on such vehicle,
as well as all costs and expenses relating to the ownership, operation and
maintenance of such vehicle.
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5.5
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Indemnification. The
Company shall indemnify Executive and his heirs, personal representatives,
successors and assigns (collectively, the “Executive
Parties”) and save and hold each of them harmless against and pay
on behalf of or reimburse such Executive Parties as and when incurred, for
any loss, liability, demand, claim, action, cause of action, cost, damage,
deficiency, tax, penalty, fine or expense, whether or not arising out of
third party claims (including interest, penalties, reasonable attorneys’
fees and expenses and all amounts paid in investigation, defense or
settlement of any of the foregoing and enforcement of Executive’s rights
hereunder) which any such Executive Party may suffer, sustain or become
subject to, as a result of, in connection with, relating or incidental to
or by virtue of, the Guaranteed Indebtedness, including but not limited to
any costs, fees or obligations in any manner associated with the debts and
obligations listed in Section 5.3
above.
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6.
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COVENANTS OF
EXECUTIVE
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6.1
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Licenses. Until
the first (1st)
anniversary of the Effective Date, or until the termination of the
Consulting Agreement, whichever period is longer, Executive shall (a) keep
active, and in good standing and in full force and effect, all licenses,
certificates and permits held by Executive that relate or are beneficial
to the business of the Company or any of its subsidiaries (including
Surge), (b) comply in all material respects with the terms and conditions
of all such licenses, certificates and permits, and (c) not violate or
cause any violation of any such licenses, certificates or permits or the
laws or rules governing the issuance or continued validity
thereof. The Company shall pay directly (or reimburse Executive
for) all costs and expenses incurred in connection with keeping all such
licenses, certificates and permits active and in good standing and in full
force and effect during such time
period.
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7.
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GENERAL
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7.1
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Successors and
Assigns. Neither the rights nor the obligations of any party
under this Agreement may be assigned without the prior written consent of
the other parties hereto (except that the Company may assign its rights
and obligations to any affiliate thereof or to a successor in interest
(whether by merger, acquisition or otherwise) without the prior written
consent of Executive; provided, however, that
any such assignment shall not relieve the Company from its obligations
hereunder). Any assignment in violation of the foregoing shall
be null and void. Subject to the preceding sentences of this
Section 7.1, the provisions of this Agreement (and, unless otherwise
expressly provided therein, of any document delivered pursuant to this
Agreement) shall be binding upon and inure to the benefit of the parties
hereto and their respective heirs, legal representatives, successors and
assigns.
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7.2
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Notices. All
notices (including other communications required or permitted) under this
Agreement must be in writing and must be delivered (a) in person,
(b) by registered or certified mail, postage prepaid, return receipt
requested, (c) by a generally recognized courier or messenger service
that provides written acknowledgement of receipt by the addressee, or
(d) by facsimile or other generally accepted means of electronic
transmission with a verification of delivery. Notices are
deemed delivered when actually delivered to the address for notices as
follows:
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To the
Company or Surge:
0000
Xxxxxxxxx Xxxx, Xxxxx 0
Xxxx Xxxx
Xxxxx, Xxxxxxx 00000
Attn: President
Facsimile: (000)
000-0000
With a
copy to:
Block
& Garden, LLP
0000
Xxxxxx Xxxx, Xxxxx 000
Xxxxxx,
Xxxxx 00000
Attn: Xxxxxx
X. Garden, Esq.
Facsimile: (000)
000-0000
To
Executive:
Xxxx
Xxxxxx
0000 X.X.
Xxxxxxxx Xxx
Xxxx
Xxxx, Xxxxxxx 00000
Facsimile: (000)
000-0000
5
With a
copy to:
Ford
& Xxxxxxxx LLP
000 X.
Xxxxxxx Xxxxxxxxx, Xxxxx 000
Xxxxx,
Xxxxxxx 00000
Attn: Xxxxxx
X. Xxxxxxx, Esq.
Facsimile: (000)
000-0000
Any party
may by written notice as set forth herein change the address or fax number to
which notices or other communications to him or it are to be delivered or
mailed.
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7.3
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Entire Agreement;
Amendments. This Agreement and all other agreements
referred to herein or delivered in connection herewith shall constitute
the entire agreement among the parties relating to the subject matter
hereof, shall supersede all prior agreements, commitment letters, and
understandings among the parties hereto relating to the subject matter
hereof, and shall not be modified, amended or terminated, nor shall any
provision hereof be waived, except in a writing signed by all parties
affected.
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7.4
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Governing Law;
Jurisdiction and Venue. THIS AGREEMENT SHALL BE DEEMED
TO BE A CONTRACT MADE UNDER THE LAWS OF THE STATE OF FLORIDA AND FOR ALL
PURPOSES SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF SAID STATE
APPLICABLE TO CONTRACTS MADE AND TO BE PERFORMED WITHIN SAID
STATE. Each party (a) hereby irrevocably submits to the
exclusive jurisdiction of the United States District Court for the
Southern District of Florida and the courts of the State of Florida
located in Palm Beach County, Florida, for the purposes of any suit,
action or proceeding arising out of or relating to this Agreement, and (b)
hereby waives, and agrees not to assert in any such suit, action or
proceeding, any claim that he or it is not personally subject to the
jurisdiction of any such court, that the suit, action or proceeding is
brought in an inconvenient forum or that the venue of the suit, action or
proceeding is improper.
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7.5
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Survival. All
representations, warranties and covenants made by any party under this
Agreement shall be considered to have been relied upon by the other
parties and shall survive the Effective Date
indefinitely.
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7.6
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Specific
Performance. The parties recognize that if any party
refuses to perform under the provisions of this Agreement, monetary
damages alone will not be adequate to compensate any other party for his
or its injury. Each party shall therefore be entitled, in
addition to any other remedies that may be available, to obtain specific
performance of the terms of this Agreement. If any action is
brought by any party to enforce this Agreement, the other parties shall
waive the defense that there is an adequate remedy at law. In
the event of a default by any party that results in the filing of a
lawsuit for damages, specific performance, or other remedies, the
non-defaulting parties shall be entitled to reimbursement by the
defaulting party of reasonable legal fees and expenses incurred by the
non-defaulting parties.
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7.7
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Counterparts. This
Agreement may be signed in any number of counterparts, each of which shall
be deemed an original, with the same effect as if the signatures thereto
and hereto were upon the same
instrument.
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7.8
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Counsel. Each
party hereto represents and warrants that he or it has received the advice
and counsel of an attorney in connection with the negotiation, preparation
and execution of this Agreement. Executive acknowledges that
Block & Garden, LLP has acted as counsel for the Company and Surge and
not as counsel for Executive.
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7.9
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Executive Counsel
Fees. The Company agrees to reimburse Executive for fees
associated with retaining his own counsel, Ford & Xxxxxxxx LLP, to
review and negotiate this Agreement and other agreements contemplated
hereby, to a maximum reimbursement of $2,000.00, payable within 20 days of
Executive submitting his counsel’s invoice for such services to the
Company.
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[SIGNATURE
PAGE FOLLOWS]
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IN WITNESS WHEREOF the parties have
executed this Agreement effective as of the Effective Date.
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The
Company:
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By:
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/s/
Xxxxxxx X. Xxxxxxxxx
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Xxxxxxx
X. Xxxxxxxxx, Director
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Surge:
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SURGE
SOLUTIONS GROUP, INC.
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By:
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/s/ Xxxxxxx
X. Xxxxxxxxx
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Xxxxxxx
X. Xxxxxxxxx,
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Authorized
Agent
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Executive:
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/s/
Xxxx Xxxxxx
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Xxxx
Xxxxxx, individually
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8
EXHIBIT
A
Form of
Consulting Agreement
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EXHIBIT
B
Form of
Warrant
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EXHIBIT
C
Form of
Promissory Note
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