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EXHIBIT 10.79
REDEMPTION AGREEMENT
REDEMPTION AGREEMENT, dated as of September 8, 2000, entered into between
Fidelity Holdings, Inc., a Nevada corporation (the "Company") and Augusta Street
LLC ("Investor").
RECITALS
WHEREAS, the Investor, Strong River Investments, Inc. ("Strong River") and
Montrose Investments Ltd. ("Montrose") severally have acquired and are the
holders of certain warrants to purchase shares of the Common Stock, $.01 par
value per share (the "Common Stock"), of the Company, designated as "Adjustable
Warrants" pursuant to (i) that certain Securities Purchase Agreement, dated as
of December 8, 1999, between the Company, the Investor, Strong River and
Montrose (the "December 1999 Agreement") and (ii) that certain Securities
Purchase Agreement, dated as of February 8, 2000, between the Company, the
Investor, Strong River and Montrose (the "February 2000 Agreement" and together
with the December 1999 Agreement, the "Securities Purchase Agreements");
WHEREAS, Strong River, Montrose and the Company have entered into a
Redemption Agreement, dated as of even date herewith, pursuant to which the
Company is redeeming all of the Adjustable Warrants held by Strong River and
Montrose for certain specified consideration; and
WHEREAS, the Company and the Investor desire that the Company redeem all
of the Adjustable Warrants held by the Investor on the terms and conditions set
forth herein.
NOW, THEREFORE, in consideration of the mutual promises and covenants set
forth herein, the Company and the Investor hereby agree as follows:
1. Redemption of Warrants. (a) Effective upon the execution and delivery
of this Agreement, the Investor and the Company agree that, subject to payment
of the consideration in the amounts and at the times specified in Section 2 and
in the Note referred to in Section 2, the Company shall redeem the Adjustable
Warrants held by Investor in accordance with the following schedule:
(i) one-third (1/3) of the Adjustable Warrants shall be redeemed on
the date of the execution and delivery of this Agreement (the "Initial
Redemption Date");
(ii) one-third (1/3) of the Adjustable Warrants shall be redeemed
upon the date that is thirty (30) calendar days after the Initial Redemption
Date (the "Second Redemption Date"); and
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(iii) one-third (1/3) of the Adjustable Warrants shall be redeemed
upon the date that is sixty (60) calendar days after the Initial Redemption Date
(the "Final Redemption Date").
(b) On or prior to the Initial Redemption Date, the Investor shall
deliver or cause to be delivered to Xxxxxxxx Xxxxxxxxx Xxxxxx Xxxxxxxx & Xxxxxx
LLP ("RSPAB"), legal counsel to the Investor, all the Adjustable Warrants held
by the Investor. Upon receipt by the Investor of all amounts due and payable
pursuant to paragraph 2 hereof and under the Note, the Investor shall provide
written instructions to RSPAB to deliver the Adjustable Warrants to the Company.
2. Consideration for Redemption. As consideration for the redemption of
the Adjustable Warrants, upon the Initial Redemption Date the Company shall (i)
pay to the Investor the sum of $833,333.33 by wire transfer of immediately
available funds to an account designated in writing by the Investor, (ii)
execute and deliver a promissory note (a "Note") to the Investor for up to an
additional $1,166,666.67 in the form attached hereto as Exhibit A, and (iii)
deliver or cause to be delivered to the Investor a stock certificate, with
restrictive legend, subject to removal subject to resale with a prospectus
representing 131,196 shares of Common Stock, which shares shall be registered in
the name of such Investor and shall be freely tradeable.
3. Effect of Redemption. (a) Upon the Initial Redemption Date, (i)
one-third of the Adjustable Warrants held by the Investor on the date hereof
shall be canceled by the Company on its books and (ii) the Investor shall have
no further rights as a holder with respect to such one-third share of the
Adjustable Warrants under the Securities Purchase Agreements, each Registration
Rights Agreement executed in connection with the execution of each Securities
Purchase Agreement, or otherwise.
(b) Upon the Second Redemption Date, (i) an additional one-third of the
Adjustable Warrants held by the Investor on the date hereof shall be canceled by
the Company on its books and (ii) the Investor shall have no further rights as a
holder with respect to such one-third share of the Adjustable Warrants under the
Securities Purchase Agreements, each Registration Rights Agreement executed in
connection with the execution of each Securities Purchase Agreement, or
otherwise.
(b) Upon the Final Redemption Date, (i) the final one-third of the
Adjustable Warrants held by the Investor on the date hereof shall be canceled by
the Company on its books, (ii) the Investor shall have no further rights as a
holder with respect to such one-third share of the Adjustable Warrants under the
Securities Purchase Agreements, each Registration Rights Agreement executed in
connection with the execution of each Securities Purchase Agreement, or
otherwise, and (iii) insofar as they relate to the Investor, Sections 3.10 and
3.13 of each Securities Purchase Agreement shall be deleted in their entirety,
rendered null and void, and the Investor shall have no rights and obligations
thereunder; provided, however, that all other sections of the Securities
Purchase Agreements, and all other transaction documents executed in connection
with the execution of any of the Securities Purchase Agreements, shall continue
in full force and effect and shall not be impaired by the terms of this
Agreement.
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4. Representations and Warranties of the Company. The Company hereby makes
the following representations and warranties to the Investor:
(a) The Company has the requisite corporate power and authority to
enter into and to consummate the transactions contemplated by this Agreement and
the Note (together, the "Transaction Documents") and otherwise to carry out its
obligations thereunder. The execution and delivery of each of the Transaction
Documents by the Company and the consummation by it of the transactions
contemplated thereby have been duly authorized by all necessary corporate action
on the part of the Company and no further corporate action is required by the
Company. Each of the Transaction Documents has been duly executed by the Company
and, when delivered in accordance with the terms hereof, will constitute the
valid and binding obligation of the Company enforceable against the Company in
accordance with its terms.
(b) The execution, delivery and performance of the Transaction
Documents by the Company and the consummation by the Company of the transactions
contemplated thereby do not and will not (i) conflict with or violate any
provision of the Company's articles of incorporation, bylaws or other charter
documents (each as amended through the date hereof), or (ii) conflict with, or
constitute a default (or an event which with notice or lapse of time or both
would become a default) under, or give to others any rights of termination,
amendment, acceleration or cancellation (with or without notice, lapse of time
or both) of, any agreement, credit facility, indenture or instrument (evidencing
a Company debt or otherwise) to which the Company is a party or by which any
property or asset of the Company is bound or affected, or (iii) result in a
violation of any law, rule, regulation, order, judgment, injunction, decree or
other restriction of any court or governmental authority to which the Company is
subject (including federal and state securities laws and regulations), or by
which any property or asset of the Company is bound or affected.
(c) The shares of Common Stock to be issued to the Investor pursuant to
paragraph 2 hereof are duly authorized and, when issued in accordance with the
terms hereof, shall have been duly and validly issued, fully paid and
nonassessable, free and clear of all liens, encumbrances and rights of first
refusal of any kind.
5. Representations and Warranties of the Investor. The Investor represents
and warrants to the Company that (i) the Investor has the requisite power and
authority to enter into and to consummate the transactions contemplated by this
Agreement and otherwise to carry out its obligations hereunder, (ii) the
execution and delivery of this Agreement by the Investor and the consummation by
it of the transactions contemplated hereby have been duly authorized by all
necessary action on the part of the Investor, (iii) this Agreement has been duly
executed by the Investor and, when delivered in accordance with the terms
hereof, will constitute the valid and binding obligation of the Investor
enforceable against the Investor in accordance with its terms and (iv) the
Investor is acquiring the shares of Common Stock for its own account for
investment purposes only and not with a view to or for distributing or reselling
such shares or any part thereof or interest therein.
6. Releases. (a) Upon the consummation of the transactions described in
this
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Agreement and in the Note, and for good and valuable consideration to be given
in accordance with the provisions of the Agreement, the Investor covenants not
to xxx and releases and discharges Fidelity Holdings, Inc., its subsidiaries,
officers, directors and employees, successors, affiliates and assigns from all
actions, causes of action, suits, debts, dues, sums of money, accounts,
reckonings, bonds, bills, specialties, covenants, contracts, controversies,
agreements, promises, variances, trespasses, damages, judgments, extents,
executions, claims and demands in law, admiralty or equity, which the Investor
or its heirs, executors, administrators, successors and assigns ever had, now
have, or hereafter can, shall or may have from the beginning of the world to the
date of this Agreement, with respect to any rights and obligations that may
arise out of any ownership of the Adjustable Warrants, except with respect to
any rights or obligations under this Agreement. Additionally, the Investor
covenants that it has not filed and has not joined in any filing, and covenants
not to initiate or cause to be initiated on its behalf, any complaint, charge,
claim or proceeding (each, a "Proceeding") against the Company based on the
Investor's ownership of Adjustable Warrants before any local, state or Federal
agency, court or other body, other than with respect to the obligations of the
Company to the Investor under this Agreement, and agrees not to voluntarily
participate or join in any Proceeding.
(b) Upon the consummation of the transactions described in this
Agreement and in the Note, and for good and valuable consideration to be given
in accordance with the provisions of the Agreement, the Company covenants not to
xxx and releases and discharges the Investor, its subsidiaries, officers,
directors and employees, successors, affiliates and assigns from all actions,
causes of action, suits, debts, dues, sums of money, accounts, reckonings,
bonds, bills, specialties, covenants, contracts, controversies, agreements,
promises, variances, trespasses, damages, judgments, extents, executions, claims
and demands in law, admiralty or equity, which the Investor or its heirs,
executors, administrators, successors and assigns ever had, now have, or
hereafter can, shall or may have from the beginning of the world to the date of
this Agreement, with respect to any rights and obligations that may arise out of
the Investor's ownership of the Adjustable Warrants, except with respect to any
rights or obligations under this Agreement. Additionally, the Company covenants
that it has not filed and has not joined in any filing, and covenants not to
initiate or cause to be initiated on its behalf, any Proceeding against the
Investor based on the Investor's ownership of Adjustable Warrants before any
local, state or Federal agency, court or other body, other than with respect to
the obligations of the Investor to the Company under this Agreement, and agrees
not to voluntarily participate or join in any Proceeding.
7. Governing Law. This Agreement shall be governed in all respects by the
laws of the State of New York, as applied to agreements among New York residents
entered into and to be performed entirely within New York. Each party hereby
irrevocably submits to the exclusive jurisdiction of the state and federal
courts sitting in the City of New York, borough of Manhattan, for the
adjudication of any dispute hereunder or in connection herewith or with any
transaction contemplated hereby or discussed herein (including with respect to
the enforcement of any of the Transaction Documents), and hereby irrevocably
waives, and agrees not to assert in any suit, action or proceeding, any claim
that it is not personally subject to the jurisdiction of any such court, that
such suit, action or proceeding is improper. Each party hereby irrevocably
waives personal service of process and consents to process being served in any
such suit, action or proceeding by mailing a copy thereof to such party at the
address in effect for notices to it
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under this Agreement and agrees that such service shall constitute good and
sufficient service of process and notice thereof. Nothing contained herein shall
be deemed to limit in any way any right to serve process in any manner permitted
by law.
8. Successors and Assigns. Except as otherwise expressly provided herein,
the provisions hereof shall inure to the benefit of, and be binding upon, the
successors, assigns, heirs, executors and administrators of the parties hereto.
9. Entire Agreement; Amendments. This Agreement (including the Exhibit
hereto) constitutes the full and entire understanding and agreement between the
parties with regard to the subject matter hereof. Neither this Agreement nor any
term hereof may be amended, waived, discharged or terminated, except by a
written instrument signed by all parties hereto.
10. Notices. All notices and other communications required or permitted
hereunder shall be in writing and shall be deemed given and effective on the
earliest of (i) the date of transmission, if such notice or communication is
delivered via facsimile at the facsimile telephone number specified in this
paragraph prior to 8:00 p.m. (New York City time) on a business day, (ii) the
business day after the date of transmission, if such notice or communication is
delivered via facsimile at the facsimile telephone number specified in this
Agreement later than 8:00 p.m. (New York City time) on any date and earlier than
11:59 p.m. (New York City time) on such date, (iii) the business day following
the date of mailing, if sent by nationally recognized overnight courier service,
or (iv) upon actual receipt by the party to whom such notice is required to be
given. The address for such notices and communications shall be as follows:
If to the Company: Fidelity Holdings, Inc.
00-00 Xxx Xxxxxxx Xxxx, Xxxxx 0000
Xxx Xxxxxxx, Xxx Xxxx 00000
Facsimile No.: (000) 000-0000
Attn: Xxxxx Xxxxxxx, Chairman
With copies to: Xxxxxxx Xxxxxx Xxxx & Ball P.C.
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Attn: Xxxxxxxx X. Xxxxxxx, Esq.
Facsimile No.: (000) 000-0000
If to the Investor: Augusta Street LLC
x/x Xxxxx Xxxxxxxx (Xxxxxx) Limited
Commercial Center
P.O. Box 31106 SMB
Grand Cayman
Cayman Islands
British West Indies
Facsimile No.: (000) 000-0000
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With copies to:
Xxxxxxx & Xxxxxx, Esqs.
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
Facsimile No.: (000) 000-0000
Attn: Xxxxxx X. Xxxxxxx, Esq.
and
Xxxxxxxx Xxxxxxxxx Xxxxxx Xxxxxxxx & Xxxxxx LLP
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, XX 00000
Facsimile No.: (000) 000-0000
Attn: Xxxx X. Xxxxx. Esq. and
Xxxxxxx X. Xxxxxxxxx, Esq.
Southbridge Capital Management LLC
Executive Pavilion
00 Xxxxx Xxxxxx
Xxxxxxxxxx, XX 00000
Facsimile No.: (000) 000-0000
Attn: Xxxxx Xxxxxxx, Esq.
11. Severability. In case any provision of the Agreement shall be invalid,
illegal or unenforceable, the validity, legality and enforceability of the
remaining provisions shall not in any way be affected or impaired thereby.
12. Survival. The representations, warranties and agreements herein shall
survive the consummation of the transactions described herein.
13. Execution. This Agreement may be executed in two or more counterparts,
all of which when taken together shall be considered one and the same agreement
and shall become effective when counterparts have been signed by each party and
delivered to the other party, it being understood that both parties need not
sign the same counterpart. In the event that any signature is delivered by
facsimile transmission, such signature shall create a valid and binding
obligation of the party executing (or on whose behalf such signature is
executed) the same with the same force and effect as if such facsimile signature
page were an original thereof.
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IN WITNESS WHEREOF, the parties hereto have executed this Redemption
Agreement effective as of the day and year first above written.
FIDELITY HOLDINGS, INC.
By:
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Name:
Title:
AUGUSTA STREET LLC
By:
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Name:
Title:
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EXHIBIT A
PROMISSORY NOTE
$1,166,666.67 September 8, 0000
Xxx Xxxx, Xxx Xxxx
FOR VALUE RECEIVED, FIDELITY HOLDINGS, INC., a Nevada corporation
("Payor"), having an address at 00-00 Xxx Xxxxxxx Xxxx, Xxxxx 0000, Xxx Xxxxxxx,
Xxx Xxxx 00000, hereby promises to pay to the order of AUGUSTA STREET LLC
("Payee") at x/x Xxxxx Xxxxxxxx (Xxxxxx) Limited, Commercial Centre, P.O. Box
31106 SMB, Grand Cayman, Cayman Islands, British West Indies, or at such other
address as may be designated from time to time hereafter by Payee, in lawful
money of the United States of America and in immediately available funds, the
principal sum of up to ONE MILLION ONE HUNDRED SIXTY-SIX THOUSAND SIX HUNDRED
SIXTY-SIX DOLLARS AND SIXTY-SEVEN CENTS ($1,166,666.67) (the "Principal Amount")
in accordance with the payment schedule set forth herein. This Note is the
promissory note issued pursuant to a certain Redemption Agreement, dated as of
even date herewith, between Payor and Payee (the "Redemption Agreement"). This
Note is one of three promissory notes issued by Payor on the date hereof to
Payee, Strong River Investments, Inc. and Montrose Investments Ltd.,
respectively (the three notes being referred to herein as the "Investor Notes").
1. Payment Schedule. (a) $750,000.00 shall be paid on the date that is 30
calendar days following the date hereof.
(b) The remaining $416,666.67 shall be paid on the date that is 60
calendar days following date hereof.
2. Interest on Late Payments. If any amount due hereunder is not paid when
due, such amount until paid shall bear interest at a per annum rate equal to
fifteen percent (15%) or, if less, the maximum rate permitted by applicable law.
3. Acceleration of Payment. This Note shall automatically become due, and
the outstanding Principal Amount and any accrued but unpaid interest thereon
become payable without any action on the part of Payee, in the event (i) Payor
becomes subject, as debtor, to any voluntary or involuntary bankruptcy or
insolvency proceeding, (ii) Payor makes an assignment for the benefit of its
creditors, (iii) a receiver or trustee is appointed with respect to Payor or any
of its properties, assets or business, (iv) Payor fails to make any payment
hereunder within ten days after the same becomes due and payable, or (v) Payor
fails to make any payment under any other Investor Note within ten days after
the same becomes due and payable.
4. Affirmative Waivers; Costs of Collection. Payor (a) hereby waives
presentment, demand, protest, notice of protest and/or dishonor, and all other
demands or notices of any sort whatsoever with respect to this Note and (b)
agrees to pay all costs and expenses, including reasonable attorneys' fees,
which may be incurred in the collection of this Note.
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5. Amendments, Etc. No amendment or waiver of any provision of this Note,
nor consent to any departure by Payor herefrom, shall in any event be effective
unless the same shall be in writing and signed by Payee, and then such waiver or
consent shall be effective only in the specific instance and for the specific
purpose for which given; provided, however, that the obligations of Payor
hereunder shall terminate upon the payment in full of any and all monies due and
owing by Payor to Payee.
6. No Waiver; Remedies. No failure on the part of Payee to exercise, and
no delay in exercising, any right hereunder shall operate as a waiver thereof,
nor shall any single or partial exercise of any right hereunder preclude any
other or further exercise thereof or the exercise of any other right. The
remedies herein provided are cumulative and not exclusive of any remedies
provided by law.
7. Partial Invalidity. If any provision hereof is, for any reason and to
any extent, determined by a court of competent jurisdiction to be invalid or
unenforceable with respect to any person, entity or circumstance, then neither
the remainder of this Note, nor the application of the provision to other
persons, entities, or circumstances, shall be affected thereby, but instead
shall be enforceable to the maximum extent permitted by law.
8. Binding Effect. This Note shall be binding upon Payor and its
successors and shall inure to the benefit of Payee and its successors and
assigns. The term "Payee," as used herein, shall also include any endorsee,
assignee or other payee of this Note.
9. Governing Law. This Note and the rights and obligations of Payor and
Payee hereunder shall be governed by and construed in accordance with the laws
of the State of New York without giving effect to the conflicts of law
principles thereof. Payor hereby agrees that any proceeding arising out of or in
connection with this Note may, if a Payee so elects, be brought and enforced in
any state court or, or any United States District Court situate in, the State of
New York, and Payor hereby irrevocably submits to the non-exclusive jurisdiction
of such courts and waives any objection to jurisdiction or venue in any such
proceeding commenced in such court. Payor hereby irrevocably waives personal
service of process and consents to process being served in any such suit, action
or proceeding by mailing a copy thereof to Payor at its address set forth on
page 1 hereof and agrees that such service shall constitute good and sufficient
service of process and notice thereof. Nothing contained herein shall be deemed
to limit in any way any right to serve process in any manner permitted by law.
10. Waiver of Jury Trial. PAYOR KNOWINGLY, IRREVOCABLY, VOLUNTARILY AND
INTENTIONALLY WAIVES ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY
ACTION, PROCEEDING OR COUNTERCLAIM BASED ON THIS NOTE, OR ARISING OUT OF, UNDER
OR IN CONNECTION WITH THIS NOTE, OR ANY COURSE OF CONDUCT, COURSE OF DEALING,
STATEMENT (WHETHER VERBAL OR WRITTEN) OR ACTIONS OF ANY PARTY THERETO. THIS
PROVISION IS A MATERIAL INDUCEMENT FOR PAYEE TO ENTER INTO THE LOAN TRANSACTION
EVIDENCED BY THIS NOTE.
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11. Lost or Stolen Promissory Note. If this Note is lost, stolen,
mutilated or otherwise destroyed, Payor shall execute and deliver to Payee a new
promissory note containing the same terms, and in the same form, as this Note.
In such event, Payor may require Payee to deliver to Payor an affidavit of lost
instrument and customary indemnity in respect thereof as a condition to the
delivery of any such new promissory note.
12. Due Authorization. This Note has been duly authorized, executed and
delivered by Payor and is the legal obligation of Payor, enforceable against
Payor in accordance with its terms.
13. Indemnity. Payor shall indemnify and hold Payee harmless from and
against any and all losses, liabilities, claims, damages or expenses arising out
of the making or holding of the loan represented by this Note, including,
without limitation, the fees and expenses of counsel.
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IN WITNESS WHEREOF, Payor has caused this Note to be duly executed and
delivered as of the date first set forth above.
FIDELITY HOLDINGS, INC.
By:
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Name:
Title:
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