LOAN RESTRUCTURE AGREEMENT
EXHIBIT
10.39
This
LOAN RESTRUCTURE AGREEMENT (this “Agreement”) is made and
entered into this 7th day of
August, 2006 by and between Network Installation Corp., a Nevada corporation (the “Company”), and
Preston Capital Partners, LLC (“Preston”).
RECITALS
A. The Company and Preston have entered into numerous loan, debenture and other agreements, a
list of which is attached hereto as Exhibit 1. The Company and Preston intend that this Agreement
govern all agreements between the Company and Preston and affiliates whether or not such agreements
are listed in Exhibit 1. The agreements listed in Exhibit 1 and any other agreements between the
Company and Preston are hereinafter referred to as the “Loan Documents.”
B. Pursuant to the Loan Documents, from and after 2003, the Company has borrowed from Preston
approximately $375,000. The Loan Documents provide for certain prepayment premiums and other
penalties, some of which may have heretofore accrued.
C. Certain of the Loan Documents provide that Preston is entitled to convert some or all of
the debt owed to it by the Company into common stock of the Company.
D. The Company and Preston wish to restructure the Company’s obligations to Preston under the
Loan Documents upon the terms and conditions contained herein. In particular, the Company and
Preston wish to provide for the elimination of all obligations of the Company to issue stock to
Preston or any other entity.
E. The Company and Preston intend that the restructuring provided for in this Agreement shall
be effective as of June 30, 2006. Preston takes no position with respect to the Company’s tax and
accounting treatment of the restructuring under this Agreement.
COVENANTS
1. New Promissory Note. At or before the execution of this Agreement, the Company
shall execute and deliver to Preston a signed promissory note (the “New Note”), in the form
attached hereto as Exhibit 2, in the face amount of $375,000, payable as provided therein with
interest at the rate of 7% per annum. The New Note shall not provide for any prepayment penalty or
premium. The New Note shall supercede all prior evidences of indebtedness of the Company to
Preston, including all of the convertible debentures listed in the Loan Documents, except in the
event of default as set forth in section 5, below. The Company’s satisfaction of the terms of the
New Note shall constitute a full and complete accord and satisfaction of all of the debts of the
Company to Preston.
2. Cancellation of Convertible Debentures. All convertible debentures and any other
agreements between the Company and Preston pursuant to which Preston may be entitled to acquire
stock of the Company, are hereby cancelled and shall be surrendered to the Company.
3. Preston Waivers. Preston hereby waives:
| 3.1 | Any default under the Loan Documents that occurred prior to the date of this Agreement. | ||
| 3.2 | Any penalty or premium that has accrued under the Loan Documents prior to the date of this Agreement. | ||
| 3.3 | Any obligation to register any securities of the Company imposed under the Loan Documents that arose prior to the date of this Agreement. |
4. Enforceability of Loan Documents. Except as modified or supplanted by this
Agreement, the Loan Documents shall remain in force and effect.
5. Default. In the event of the occurrence of a default or of an event of default,
under this Agreement or the New Note, Preston has the right to (1) declare the full unpaid balance
of the New Note to be immediately due and owing, and (2) enforce each of its remedies and rights of
collection under the Loan Documents, including conversion, without regard to provisions in this
Agreement and the New Note which would otherwise limit Preston’s rights under the Loan Documents.
All other rights, representations and warranties shall survive and be governed as agreed pursuant
to the Loan Documents. In the event of a default, the Company shall be obligated to issue to
Preston stock of the Company pursuant to the terms and conditions of the Loan Documents without
regard to any provisions in this Agreement or the New Note which would otherwise limit Preston’s
rights. After notice of default, the Company shall have a period to cure the default consisting of
the later of (i) 10 business days, or (ii) the cure period prescribed in the New Note and the Loan
Documents
6. Notices. All communications required or permitted under this Agreement shall be in
writing and any communication or delivery hereunder shall be deemed to have been duly made if and
when actually delivered, or if mailed by registered or certified mail, postage prepaid, addressed
as set forth below, shall be deemed to have been duly made on the date mailed. Either party may,
by written notice so delivered to the other, change the address to which delivery shall thereafter
be made.
(a) Notices to the Company:
Xxxxxxx Xxxxxxx
Network Installation Corp.
0000 X. Xxxxxxx, Xxxxx X
Xxx Xxxxx, Xxxxxx 00000-0000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Network Installation Corp.
0000 X. Xxxxxxx, Xxxxx X
Xxx Xxxxx, Xxxxxx 00000-0000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
With copy to:
Xxxx Xxxxxxx, Esq.
McAfee & Xxxx A Professional Corporation
00xx Xxxxx, Xxx Xxxxxxxxxx Xxxxxx
Xxxxxxxx Xxxx, XX 00000
Telephone: (000) 000-0000
Facsimile: (000)000-0000
McAfee & Xxxx A Professional Corporation
00xx Xxxxx, Xxx Xxxxxxxxxx Xxxxxx
Xxxxxxxx Xxxx, XX 00000
Telephone: (000) 000-0000
Facsimile: (000)000-0000
(b) Notices to Preston:
Telephone:
Facsimile:
Facsimile:
With copy to:
7. Choice of Law: This Agreement shall be governed by and construed in accordance
with the internal laws of the state of Nevada, without respect to any choice of law provisions of
that state.
8. Binding Effect. This Agreement shall be binding upon and inure to the benefit of
the parties hereto and their respective successors and assigns. No assignment by either party to
this Agreement, or their successors or assigns, shall relieve either party (or any successor or
assign) of any of its obligations under this Agreement.
9. Counterparts. This Agreement may be executed in any number of counterparts, which
taken together shall constitute one and the same instrument and each of which shall be considered
an original for all purposes.
10. Expenses. Except as otherwise provided in this Agreement, each party hereto will
bear and pay its own expenses of negotiating and consummating the transactions contemplated by this
Agreement
11. Section Headings. The section headings contained in this Agreement are for
convenient reference only and shall not in any way affect the meaning or interpretation of this
Agreement.
12. Superseding Effect. This Agreement supersedes any prior agreement and
understanding between the parties with respect to the subject matter of this Agreement.
13. Time of the Essence. Time is of the essence of each and every provision of this
Agreement.
14. Effective Date. This Agreement shall be effective as of June 30, 2006. Preston
takes no position with respect to the Company’s tax and accounting treatment of the restructuring
under this Agreement.
| NETWORK INSTALLATION CORP. | ||||
| /s/ Xxxxxxx X. Xxxxxxx | ||||
| PRESTON CAPITAL PARTNERS, LLC | ||||
| /s/ Xxxx X. Xxxxxx | ||||
EXHIBIT 1
LOAN DOCUMENTS
| 1. | Debenture between the Company and Preston Capital Partners, LLC, dated February 3, 2005 | |
| 2. | Debenture between the Company and Preston Capital Partners, LLC, dated February 10, 2005 | |
| 3. | Debenture between the Company and Preston Capital Partners, dated May 26, 2005 | |
| 4. | Debenture between the Company and Preston Capital Partners, dated June 20, 2005 | |
| 5. | Debenture between the Company and Preston Capital Partners, dated July 20, 2005 | |
| 6. | Debenture between the Company and Preston Capital Partners, dated August 17, 2005 | |
| 7. | Investment Agreement between the Company and Preston Capital Partners, LLC, dated January 21, 2004 | |
| 8. | Registration Rights Agreement between the Company and Preston Capital Partners, LLC, dated January 21, 2004 | |
| 9. | Attached is a spreadsheet indicating the dates that debentures were issued by the Company to Preston. All agreements related to the issuance of debentures on those dates are hereby incorporated by reference to the extent not otherwise listed in this exhibit. |
EXHIBIT 1 — Continued
| Date Issued | Price | |||||||
Preston Capital Partners |
2003 | $ | 25,000 | |||||
| 2/3/2005 | $ | 50,000 | ||||||
| 2/10/2005 | $ | 25,000 | ||||||
| 5/26/2005 | $ | 30,000 | ||||||
| 06/20/05 | $ | 50,000 | ||||||
| 07/20/05 | $ | 50,000 | ||||||
| 08/17/05 | $ | 100,000 | ||||||
| 10/13/05 | $ | 45,000 | ||||||
| Total | $ | 375,000 | ||||||
EXHIBIT 2
PROMISSORY NOTE
$375,000
|
August 7, 2006 |
FOR VALUE RECEIVED, the undersigned, Network Installation Corp. (the “Maker”), promises to pay
to the order of Preston Capital Partners (the “Holder”),
c/o Xxxx X. Xxxxxx, or at such
other place as the Holder hereof may from time to time designate in writing, the principal amount
of $375,000, together with interest thereon from the date hereof at the rate of seven percent (7%)
per annum. Maker shall make payments in accordance with the amortization schedule attached as
Exhibit A.
This note may be prepaid in whole or in part at any time without premium or penalty. Partial
prepayments shall be applied in the manner designated by Maker at the time such payment is made or,
in the absence of such designation, in the discretion of the Holder.
This Note is given pursuant to and is subject to the terms and provisions of that certain Loan
Restructure Agreement of even date herewith.
Any amount not paid when due hereunder shall bear interest at a rate equal to the lesser of
(i) 10% per annum, or (ii) the maximum amount that may be collected under law, until paid. During
the existence of any default hereunder, the Holder of this note may apply payments received on any
amount due hereunder, or any other instrument now or hereafter evidencing or securing the
indebtedness evidenced hereby, as the Holder, in their sole discretion, may determine.
The entire principal indebtedness evidenced by the Note and all accrued interest thereon shall
become and be immediately due and payable, at the option of the Holder hereof, upon the occurrence
of any of the following events of default: (i) the Maker’s failure to timely make payment of any
amount due hereunder or under the Loan Restructure Agreement that is not cured within 10 business
days after notice in writing to the Company, or (ii) the Maker’s failure to comply with any other
provisions or conditions of the Note, the Loan Restructure Agreement, or any other instrument,
including, the surviving provisions of the Loan Documents referred to in the Loan Restructure
Agreement, now or hereafter evidencing or securing the indebtedness evidenced hereby as modified by
the Loan Restructure Agreement that is not cured within the later of (a) 10 business days or (b)
the cure period prescribed in the instrument pursuant to which the default occurred, after notice
in writing of any such default.
The failure of the Holder hereof to exercise any of the remedies or options set forth in this
note, the Loan Restructure Agreement, or in any instrument now or hereafter evidencing or securing
the indebtedness evidenced hereby (as modified by the Loan Restructure Agreement) upon the
occurrence of one or more events of default shall not constitute a waiver of the right to exercise
any such remedy or option or any other remedy or option at any subsequent time in respect to the
same or any other event of default. The acceptance by the Holder hereof of any payment which is
less
than the total amount due and payable at the time of such payment shall not constitute a waiver of
the right to exercise any of the foregoing remedies or options at that time or at any subsequent
time or nullify any prior exercise of any such remedy or option.
As often as this note is placed in the hands of an attorney for collection or to defend or
enforce any of the Holder’s rights hereunder, the Maker will pay to the Holder hereof its
reasonable attorneys’ fees, together with all court costs and other expenses incurred in connection
therewith.
The Maker, endorsers, sureties, guarantors, and all other persons who are or may become liable
for all or any part of the indebtedness evidenced hereby waive presentment, protest, and notice of
dishonor.
Notwithstanding any provisions herein or in the Loan Restructure Agreement to the contrary,
the total liability for payments in the nature of interest shall not exceed the limits imposed by
laws of the State of Nevada relating to maximum charges of interest, and Holder shall not be
entitled to receive, collect, or apply, as interest on the indebtedness evidenced hereby, any
amount in excess of the maximum legal rate of interest permitted to be charged by applicable law.
If the Holder ever receives, collects, or applies, as interest, any such excess, the amount that
would be excessive interest shall be applied to reduce the unpaid principal balance of the
indebtedness evidenced hereby, and if the unpaid principal balance of such indebtedness is paid in
full, any remaining excess shall be immediately paid to the Maker.
IN WITNESS WHEREOF, the Maker has executed this note the day and year first written above.
| Network Installation Corp. | ||||
| /s/ Xxxxxxx X. Xxxxxxx | ||||
EXHIBIT A to Promissory Note
| Interest | ||||||||||||
| Rate | Principal | |||||||||||
| Date/Payment Number | Payment | 7.00% | Balance | |||||||||
| 375,000.00 | ||||||||||||
| August 3, 2006 - 1 | $ | 2,000.00 | $ | 2,187.50 | 375,187.50 | |||||||
| September 1, 2006 -2 | 2,000.00 | 2,188.59 | 375,376.09 | |||||||||
| October 1, 2006 - 3 | 2,000.00 | 2,189.69 | 375,565.79 | |||||||||
| November 1, 2006 - 4 | 2,000.00 | 2,190.80 | 375,756.59 | |||||||||
| December 1, 2006 - 5 | 2,000.00 | 2,191.91 | 375,948.50 | |||||||||
| January 1, 2007 - 6 | 2,000.00 | 2,193.03 | 376,141.53 | |||||||||
| February 1, 2007 - 7 | 2,000.00 | 2,194.16 | 376,335.69 | |||||||||
| March 1, 2007 - 8 | 2,000.00 | 2,195.29 | 376,530.98 | |||||||||
| April 1, 2007 - 9 | 2,000.00 | 2,196.43 | 376,727.42 | |||||||||
| May 1, 2007 - 10 | 2,000.00 | 2,197.58 | 376,924.99 | |||||||||
| June 1, 2007 - 11 | 2,000.00 | 2,198.73 | 377,123.72 | |||||||||
| July 1, 2007- 12 | 2,000.00 | 2,199.89 | 377,323.61 | |||||||||
| August 1, 2007 - 13 | 2,000.00 | 2,201.05 | 377,524.66 | |||||||||
| September 1, 2007 - 14 | 2,000.00 | 2,202.23 | 377,726.89 | |||||||||
| October 1, 2007 - 15 | 2,000.00 | 2,203.41 | 377,930.30 | |||||||||
| November 1, 2007 - 16 | 2,000.00 | 2,204.59 | 378,134.89 | |||||||||
| December 1, 2007 - 17 | 2,000.00 | 2,205.79 | 378,340.68 | |||||||||
| January 1, 2008 - 18 | 2,000.00 | 2,206.99 | 378,547.67 | |||||||||
| February 1, 2008 -19 | 8,000.00 | 2,208.19 | 372,755.86 | |||||||||
| March 1, 2008 -20 | 8,000.00 | 2,174.41 | 366,930.27 | |||||||||
| April 1, 2008 -21 | 8,000.00 | 2,140.43 | 361,070.70 | |||||||||
| May 1, 2008 - 22 | 8,000.00 | 2,106.25 | 355,176.94 | |||||||||
| June 1, 2008 - 23 | 8,000.00 | 2,071.87 | 349,248.81 | |||||||||
| July 1, 2008- 24 | 8,000.00 | 2,037.28 | 343,286.09 | |||||||||
| August 1, 2008 - 25 | 8,000.00 | 2,002.50 | 337,288.59 | |||||||||
| September 1, 2008 - 26 | 8,000.00 | 1,967.52 | 331,256.11 | |||||||||
| October 1, 2008 - 27 | 8,000.00 | 1,932.33 | 325,188.44 | |||||||||
| November 1, 2008 - 28 | 8,000.00 | 1,896.93 | 319,085.37 | |||||||||
| December 1, 2008 - 29 | 8,000.00 | 1,861.33 | 312,946.70 | |||||||||
| January 1, 2009 - 30 | 8,000.00 | 1,825.52 | 306,772.22 | |||||||||
| February 1, 2009 - 31 | 8,000.00 | 1,789.50 | 300,561.73 | |||||||||
| March 1, 2009 - 32 | 8,000.00 | 1,753.28 | 294,315.01 | |||||||||
| April 1, 2009 - 33 | 8,000.00 | 1,716.84 | 288,031.84 | |||||||||
| May 1, 2009 - 34 | 8,000.00 | 1,680.19 | 281,712.03 | |||||||||
| June 1, 2009 - 35 | 8,000.00 | 1,643.32 | 275,355.35 | |||||||||
| July 1, 2009 - 36 | 8,000.00 | 1,606.24 | 268,961.59 | |||||||||
| August 1, 2009 - 37 | 8,000.00 | 1,568.94 | 262,530.53 | |||||||||
| September 1, 2009 - 38 | 8,000.00 | 1,531.43 | 256,061.96 | |||||||||
| October 1, 2009 - 39 | 8,000.00 | 1,493.69 | 249,555.65 | |||||||||
| Interest | ||||||||||||||||||||
| Rate | Principal | |||||||||||||||||||
| Date/Payment Number | Payment | 7.00% | Balance | |||||||||||||||||
| November 1, 2009 - 40 | 8,000.00 | 1,455.74 | 243,011.40 | |||||||||||||||||
| December 1, 2009 - 41 | 8,000.00 | 1,417.57 | 236,428.96 | |||||||||||||||||
| January 1, 2010 - 42 | 8,000.00 | 1,379.17 | 229,808.13 | |||||||||||||||||
| February 1, 2010 - 43 | 8,000.00 | 1,340.55 | 223,148.68 | |||||||||||||||||
| March 1, 2010 - 44 | 8,000.00 | 1,301.70 | 216,450.38 | |||||||||||||||||
| April 1, 2010 - 45 | 8,000.00 | 1,262.63 | 209,713.01 | |||||||||||||||||
| May 1, 2010 - 46 | 8,000.00 | 1,223.33 | 202,936.33 | |||||||||||||||||
| June 1, 2010 - 47 | 8,000.00 | 1,183.80 | 196,120.13 | |||||||||||||||||
| July 1, 2010 - 48 | 8,000.00 | 1,144.03 | 189,264.16 | |||||||||||||||||
| August 1, 2010 - 49 | 8,000.00 | 1,104.04 | 182,368.20 | |||||||||||||||||
| September 1, 2010 - 50 | 8,000.00 | 1,063.81 | 175,432.02 | |||||||||||||||||
| October 1, 2010 - 51 | 8,000.00 | 1,023.35 | 168,455.37 | |||||||||||||||||
| November 1, 2010 - 52 | 8,000.00 | 982.66 | 161,438.03 | |||||||||||||||||
| December 1, 2010 - 53 | 8,000.00 | 941.72 | 154,379.75 | |||||||||||||||||
| January 1, 2011 - 54 | 8,000.00 | 900.55 | 147,280.30 | |||||||||||||||||
| February 1, 2011 - 55 | 8,000.00 | 859.14 | 140,139.43 | |||||||||||||||||
| March 1, 2011 - 56 | 8,000.00 | 817.48 | 132,956.91 | |||||||||||||||||
| April 1, 2011 - 57 | 8,000.00 | 775.58 | 125,732.49 | |||||||||||||||||
| May 1, 2011 - 58 | 8,000.00 | 733.44 | 118,465.93 | |||||||||||||||||
| June 1, 2011 - 59 | 8,000.00 | 691.05 | 111,156.99 | |||||||||||||||||
| July 1, 2011 - 60 | 111,805.41 | 648.42 | (0.01 | ) | ||||||||||||||||
| 475,805.41 | 100,805.40 | |||||||||||||||||||
| Total Payments Made in 2006 | 10,000.00 | |||||||||||||||||||
| Total Payments Made in 2007 | 24,000.00 | |||||||||||||||||||
| Total Payments Made in 2008 | 90,000.00 | |||||||||||||||||||
| Total Payments Made in 2009 | 96,000.00 | |||||||||||||||||||
| Total Payments Made in 2010 | 96,000.00 | |||||||||||||||||||
| Total Payments Made in 2011 | 159,805.41 | |||||||||||||||||||
| Total | 475,805.41 | |||||||||||||||||||
