EXHIBIT 10.1
SETTLEMENT AGREEMENT
Agreement made the 3rd day of October 2003, by and among Amaranth
Trading L.L.C., having an office at Xxx Xxxxxxxx Xxxx, Xxxxxxxxx, Xxxxxxxxxxx
00000 ("Amaranth"), and EVCI Career Colleges Incorporated, having an office at
00 Xxxx Xxxxxx Xxxxxx Xxxx, Xxxxxxx, Xxx Xxxx 00000 ("EVCI").
Reference is made to the Series B Stock Purchase Agreement, dated as
of September 22, 2000, between Paloma Strategic Fund L.P. ("Paloma") and EVCI,
then known as Educational Video Conferencing, Inc., and to the Certificate of
Designations dated September 22, 2000, as amended and corrected (the
"Certificate of Designations"). References below to the "Purchase Agreement"
mean such Stock Purchase Agreement and all other agreements, documents and
instruments referred to therein and/or executed simultaneously therewith,
including any subsequent amendments and the Certificate of Designations, unless
the context requires otherwise.
On October 1, 2000, Paloma transferred to Amaranth 100,000 Series B
Preferred Shares (the "B Shares") and Warrants to purchase 555,556 shares of
EVCI's common stock ("Common Stock"), and Amaranth succeeded to Paloma's rights
under the Purchase Agreement. Such Warrants expired unexercised on September 22,
2003.
Also on September 22, 2003, pursuant to the Certificate of
Designations the B Shares were automatically converted into shares of Common
Stock. Disputes have arisen between EVCI and Amaranth as to the number of shares
of Common Stock Amaranth has the right to receive and EVCI has the obligation to
issue now or in the future and as to Amaranth's right to receive and EVCI's
obligation to pay dividends on the B Shares.
EVCI and Amaranth desire to fully and finally settle all such disputes
pursuant to this Agreement.
Accordingly, in consideration of the mutual promises contained herein,
and for other good and valuable consideration, the receipt and sufficiency of
which is hereby acknowledged, the parties agree as follows:
1. The closing (the "Closing") shall be held on October 10, 2003,
commencing at 12:00 noon at the offices of Xxxxxxxxx Xxxxxxx Xxxxxx Xxxxxxx, 000
Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000 (facsimile No. 212-644-7485). If the
Closing does not occur on or prior to 1:00 p.m. on such date, this Agreement
shall become null and void AB INITIO. At the Closing, the following shall occur:
(a) EVCI shall deliver to Amaranth a certificate or certificates
for a total of 950,000 shares of Common Stock (the "950,000 Shares") registered
in the name(s) designated by Amaranth, such shares having been issued in respect
of the conversion of certain B Shares held by Amaranth pursuant to the
Certificate of Designations. Such certificates shall be unlegended, and the
950,000 Shares shall not be subject to any restrictions on transfer. On the date
hereof, outside legal counsel to Amaranth has provided EVCI with an opinion
acceptable to EVCI that Amaranth can sell all of the 950,000 Shares pursuant to
Rule 144(k) under the Securities Act of 1933, as amended (the "Act").
(b) EVCI shall pay Amaranth $999,600 by wire transfer to an
account designated in writing by Amaranth prior to the Closing. Upon Amaranth's
receipt of such payment and of the 950,000 Shares, EVCI shall be deemed to have
paid and fully satisfied all claims Amaranth may have relating to dividends on
the B Shares (the "Dividend Claim") and all other claims Amaranth may have
relating to 32,062.5 of the B Shares.
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(c) Amaranth shall transfer to EVCI and/or EVCI's designees
(each, a "Designee" and, collectively, the "Designees") all of Amaranth's right,
title and interest in and to all claims it may have to demand and receive shares
of Common Stock (but not any dividends on the B Shares) upon or in connection
with the automatic conversion of 39,337.50 of the B Shares (the "Share Claim").
Amaranth's transfer of the Share Claim shall be made by executing in blank the
number of Transfer Instruments, requested in writing by EVCI prior to the
Closing, in the form(s) of Exhibit A attached to this Agreement (each, a
"Transfer Instrument"). Simultaneously therewith, EVCI shall cause to be wire
transferred to an account designated in writing by Amaranth prior to the Closing
the sum of $2,500,000 and shall deliver to Amaranth signed counterpart Transfer
Instruments from each transferee, including EVCI if it is a transferee. Upon
completion of the transactions contemplated above in this Section 1(c), EVCI
shall be deemed to have paid and fully satisfied all claims Amaranth may have
with respect to the Share Claim. In the event a counterpart has been delivered
to EVCI by facsimile, EVCI will use reasonable efforts to obtain and deliver to
Amaranth an original signed copy promptly following the Closing.
(d) EVCI, on the one hand, and Amaranth and Amaranth Fund L.P.,
formerly known as Paloma Strategic Fund, L.P. ("Amaranth Fund"), on the other
hand, shall each deliver to the other a general release releasing the other and
their predecessors and affiliates (as defined in Section 2(d) hereof) and their
and such predecessors' and such affiliates' respective officers, directors,
employees, agents, members and partners, through the date of the Closing. Such
releases shall be in the respective forms of Exhibit B-1 and B-2 attached to
this Agreement. Amaranth shall cause Amaranth Fund to deliver such general
release.
(e) Notwithstanding anything to the contrary in this Section 1,
all of the transactions contemplated by this Section 1 shall be deemed to have
occurred simultaneously, and if any of such transactions does not occur, all of
such transactions shall be null and void.
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2. Amaranth represents and warrants to EVCI as follows, which
representations and warranties shall be true and correct on the date of the
Closing and, which, other than Section 2(d) below, shall inure to the benefit of
each Designee (but not any subsequent transferee or any other person or entity):
(a) Amaranth is a limited liability company duly organized,
validly existing and in good standing under the laws of Delaware.
(b) Amaranth has full power and authority to enter into this
Agreement and to carry out the transactions contemplated hereby. The execution,
delivery and consummation of this Agreement have been duly and validly
authorized by all necessary action on the part of Amaranth. This Agreement is a
valid and binding agreement of Amaranth enforceable in accordance with its terms
except that (i) such enforcement may be subject to bankruptcy, insolvency,
reorganization, moratorium or other similar laws now or hereafter in effect
relating to creditors' rights; and (ii) the remedy of specific performance and
injunctive and other forms of equitable relief may be subject to equitable
defenses and to the discretion of the court before which any proceeding therefor
may be brought.
(c) Amaranth has the complete and unrestricted power to enter
into this Agreement and to consummate the transactions contemplated hereby,
including accepting and acknowledging full satisfaction of the Dividend Claim
and transferring and delivering the Share Claim to EVCI and/or the Designees in
accordance with this Agreement. The Share Claim will be transferred pursuant to
the Transfer Instrument(s) free and clear of any and all liens, charges, claims,
pledges and encumbrances of any kind whatsoever specifically binding upon or
relating to the assets or properties of Amaranth or its affiliates. No such
affiliate has any right, claim, cause of action or remedy of any kind against
EVCI or any of its affiliates.
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(d) The issuance of the 950,000 Shares to Amaranth will not
result in Amaranth and its "affiliates," as defined in Rule 144 of the Act,
being deemed the owner of more than 9.99% of the outstanding shares of Common
Stock of EVCI, assuming that there are at least 9,709,710 shares of Common Stock
outstanding immediately after giving effect to such issuance.
3. EVCI represents and warrants to Amaranth as follows, which
representations and warranties shall be true and correct on the date of the
Closing:
(a) EVCI is duly organized, validly existing and in good standing
under the laws of Delaware.
(b) EVCI has full power and authority to enter into this
Agreement and to carry out the transactions contemplated hereby. The execution,
delivery and consummation of this Agreement have been duly and validly
authorized by all necessary action on the part of EVCI. This Agreement is a
valid and binding agreement of EVCI enforceable in accordance with its terms
except that (i) such enforcement may be subject to bankruptcy, insolvency,
reorganization, moratorium or other similar laws now or hereafter in effect
relating to creditors' rights and (ii) the remedy of specific performance and
injunctive and other forms of equitable relief may be subject to equitable
defenses and to the discretion of the court before which any proceeding therefor
may be brought. No affiliate of EVCI has any right claim, cause of action or
remedy of any kind against Amaranth or any of its affiliates.
(c) Upon issuance, the 950,000 Shares will be fully paid,
non-assessable and free of any statutory or contractual preemptive or similar
rights.
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(d) To the extent applicable, any offers and sales of the Share
Claim and any securities issued in connection with the settlement thereof have
been made in compliance with the Act, and applicable state securities laws, and
EVCI has made such inquiries as it deemed appropriate in its reasonable
discretion in connection with the foregoing determination.
(e) Each Designee has represented to EVCI, which representations
and warranties shall be true and correct on the date of the Closing, that:
(i) It is an "accredited investor," as that term is defined
in Regulation D under the Act, and that it is able to fend for itself, can bear
the economic risk of its investment, and has such knowledge and experience in
financial or business matters that it is capable of evaluating the merits and
risks of an investment in the Share Claim and any securities of EVCI that it
receives in connection with the settlement thereof.
(ii) Any securities to be issued by EVCI in satisfaction of
the Share Claim are being acquired by it solely for its own account and not for
resale, assignment, distribution, subdivision or fractionalization thereof
except as permitted by applicable securities laws.
(iii) It has received from EVCI all information that it
considers necessary or appropriate for deciding whether to purchase the Share
Claim and any securities issued by EVCI in satisfaction of the Share Claim and,
that, other than as expressly set forth in Section 2 hereof, it has not relied
on Amaranth or any of its affiliates or any of their respective directors,
officers, employees, members or partners (collectively, "Amaranth Persons") for
any information whatsoever.
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(iv) IT AGREES AND ACKNOWLEDGES THAT THE SHARE CLAIM IS
BEING SOLD WITHOUT ANY REPRESENTATION OR WARRANTY WHATSOEVER (EXPRESS OR
IMPLIED), EXCEPT AS SPECIFICALLY SET FORTH IN SECTION 2 HEREOF, AND THAT, EXCEPT
FOR SUCH REPRESENTATIONS AND WARRANTIES, THE SALE OF THE SHARE CLAIM IS BEING
MADE BY AMARANTH ON AN "AS IS, WHERE IS" BASIS, WITH ALL DEFECTS AND IMPAIRMENTS
OF ANY KIND OR NATURE, WHETHER KNOWN OR UNKNOWN, MATURE OR LATENT, WHICH MAY
AFFECT THE VALUE, AMOUNT, PRIORITY, VALIDITY, ENFORCEABILITY, ALLOWABILITY OR
RECOVERY OR ANY OTHER RIGHT OR REMEDY IN RESPECT OF THE SHARE CLAIM, AND EACH
DESIGNEE ASSUMES ALL RISKS RELATING THERETO, AND EXPRESSLY AGREES THAT IT SHALL
HAVE NO RIGHT, CLAIM, CAUSE OF ACTION OR REMEDY AGAINST ANY AMARANTH PERSON IN
RESPECT THEREOF
4. In the event this Agreement becomes null and void, neither this
Agreement nor any of the communications or negotiations relating to this
Agreement shall be used by either Amaranth or EVCI for any purpose in any
litigation.
5. This Agreement (and any Transfer Instrument) shall be governed by
and interpreted in accordance with the laws of the State of New York without
regard to the principles of conflict of laws.
6. This Agreement may be executed in two or more identical
counterparts, all of which 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.
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7. This Agreement supercedes all other prior oral or written
agreements among the parties, their affiliates and persons acting on their
behalf with respect to the matters discussed herein, and this Agreement and the
documents referenced herein contain the entire understanding of the parties with
respect to the matters covered herein and therein. No provisions of this
Agreement may be waived or amended other than by an instrument in writing signed
by the party to be charged with enforcement.
8. This Agreement (and any Transfer Instrument) shall be binding upon
and inure to the benefit of the parties and their respective successors and
assigns, including each Designee.
9. Each party (including any Designee) shall do and perform, or cause
to be done and performed, all such further acts and things, and shall execute
and deliver all such other agreements, certificates, instruments and documents,
as the other party may reasonably request in order to carry out the intent and
accomplish the purposes of this Agreement (including without limitation the
second sentence of Section 1(a)) and the consummation of the transactions
contemplated hereby.
10. The parties hereto (including any Designee) expressly submit
themselves to the exclusive jurisdiction of the state and federal courts of New
York in any action or proceeding relating to this Agreement or any of the other
documents contemplated hereby or any of the transactions contemplated hereby or
thereby. Each party hereby irrevocably waives, to the fullest extent permitted
by law, any objection that it may now or hereafter have to the laying of venue
of any such action, suit or proceeding brought in such a court and any claim
that any such action, suit or proceeding brought in such a court has been
brought in an inconvenient forum.
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11. The language used in this Agreement will be deemed to be the
language chosen by the parties to express their mutual intent, and no rules of
strict construction will be applied against any party.
12. EVCI shall not make any written statement concerning this
Agreement, the settlement or any other transaction contemplated hereby
(including, without limitation, in any filing under the Securities Act or the
Securities Exchange Act of 1934, as amended) without the prior written approval
of Amaranth, which approval Amaranth shall not unreasonably withhold or delay;
provided, that, Amaranth consents to (i) EVCI's references to this Agreement and
the provisions of Section 3(e) hereof in its communications and agreements with
Designees, (ii) the inclusion in its entirety of the language attached hereto as
Exhibit C in a press release or in any public filing of EVCI made pursuant to
the federal securities laws as and for the description of the Settlement
Agreement and the transactions consummated thereunder; PROVIDED, HOWEVER, EVCI
may include additional disclosure of transactions with the Designees, in its
discretion, so long as any such disclosure concerning a Designee does not refer
to Amaranth or any other holder of B Shares (by name or generically), any
dispute between any such persons and EVCI or this settlement agreement and (iii)
references (consistent with clause (ii) above) to, and filing of, the Settlement
Agreement as an exhibit to EVCI's filings under the Securities Act and
Securities Exchange Act of 1934, as amended. EVCI and Amaranth agree not to
disparage the other in any future statements regarding their relationship prior
to or in connection with the Settlement Agreement.
[ COUNTERPART SIGNATURE PAGES FOLLOW. ]
9
SETTLEMENT AGREEMENT
COUNTERPART SIGNATURE PAGE
AMARANTH TRADING L.L.C.
By: Amaranth Advisors L.L.C.
(Managing Member)
By: /s/ Xxxxxxxx X. Xxxxxxx
------------------------------------
Xxxxxxxx X. Xxxxxxx
Managing Member
EVCI CAREER COLLEGES INCORPORATED
By: /s/ Xx. Xxxx X. XxXxxxx
------------------------------------
Xx. Xxxx X. XxXxxxx
Chief Executive Officer and President
Exhibit A
TRANSFER INSTRUMENT
Pursuant to a Settlement Agreement (the "Settlement Agreement") dated
the ____ day of October, 2003, between Amaranth Trading L.L.C. ("Amaranth") and
EVCI Career Colleges Incorporated ("EVCI"), Amaranth does hereby transfer to
______________________ ________________________________________________________
(the "Transferee") all of Amaranth's right, title and interest in and to the
portion of the Share Claim, as defined in the Settlement Agreement, relating to
_________________________ shares of EVCI's common stock (the "Transfer"). To the
extent the Transferee is not EVCI, the Transferee agrees and acknowledges that
it is a "Designee" within the meaning of the Settlement Agreement.
The Transfer is being made free and clear of any and all liens,
charges, claims, pledges and encumbrances of any kind whatsoever specifically
binding upon or relating to the assets or properties of Amaranth or its
affiliates.
By accepting the Transfer, the Transferee is acknowledging that it has
made an independent investigation of EVCI and has not relied upon Amaranth for
any purpose in connection with its decision to acquire a portion of the Share
Claim or any securities that may be issued by EVCI in connection with the
settlement of the Share Claim, except for the Transferee's reliance on this
instrument and as beneficiary of Amaranth's representations and warranties that
are expressly stated in the Settlement Agreement. Except as expressly
contemplated in the Settlement Agreement, no representations and warranties are
made by Amaranth to or for the benefit of the Transferee. Without limiting the
foregoing, the Transferee agrees and acknowledges that it is acquiring the Share
Claim subject to the limitations set forth in clause (e)(iv) of Section 3 of the
Settlement Agreement.
Furthermore, the Transferee hereby makes to Amaranth all of the
representations and warranties set forth in clauses (e)(i) through (iii) of
Section 3 of the Settlement Agreement.
Dated: ___________________________
AMARANTH TRADING L.L.C.
By: Amaranth Advisors L.L.C.
(Managing Member)
By:
---------------------------------
Xxxxxxxx X. Xxxxxxx
Managing Member
AGREED AND ACKNOWLEDGED:
IF AN ENTITY: Name of Entity:
By:
-------------------------------
Name:
Title:
IF AN INDIVIDUAL*:
Signature:
------------------------
Name:
-----------------------------
(print)
__________________________
*If joint tenants or tenants in common, each must complete and sign
this Signature Page.
Exhibit B-1
GENERAL RELEASE
In consideration of the mutual agreements of EVCI Career Colleges
Incorporated ("EVCI") and Amaranth Trading L.L.C. ("Amaranth") set forth in the
Settlement Agreement dated October __, 2003 (the "Settlement Agreement") and for
other good and valuable consideration, the receipt and sufficiency of which is
hereby acknowledged, EVCI, and its heirs, executors, administrators, successors
and assigns (collectively, the "RELEASORS"), do hereby release and discharge
Amaranth, Amaranth Fund L.P., formerly known as Paloma Strategic Fund L.P.
("Amaranth Fund"), and their respective affiliates (as that term is defined in
Rule 144 under the Securities Act of 1933, as amended) and all of their
respective officers, directors, employees, agents, members and partners
(Amaranth, Amaranth Fund, such affiliates, officers, directors, employees,
agents, members and partners being collectively referred to as "RELEASEES") and
each such Releasee's heirs, executors, administrators, successors and assigns
from all actions, causes of action, suits, debts, dues, sums of money, accounts,
reckonings, bonds, bills, specialties, covenants, contracts, controversies,
liabilities, agreements, promises, variances, trespasses, damages, judgments,
extents, executions, claims, and demands whatsoever, whether known or unknown,
in law, admiralty or equity (including, without limitation, with respect to the
Purchase Agreement, as that term is defined in the Settlement Agreement), which
against Releasees and Releasees' heirs, executors, administrators, successors
and assigns Releasors ever had, now have or hereafter can, shall or may have,
for, upon, or by reason of any matter, cause or thing whatsoever from the
beginning of the world to the day of the date of this General Release; PROVIDED,
HOWEVER, that there are excluded from this General Release any claims relating
to or arising out of the Settlement Agreement or the following portions of the
Amended and Restated Registration Rights Agreement dated September 27, 2000, to
which EVCI and the purchasers of EVCI's Series B 7% Convertible Preferred Stock
are parties: Sections 3 and 4, the portion of the first sentence of Section 7(a)
that ends after "hereto" and before the parenthesis and Sections 7(b), 7(c),
7(d), except for the reference to the Purchase Agreement, and 7(g).
This General Release may not be changed orally.
IN WITNESS WHEREOF, the Releasors have caused this General Release to
be executed by a duly authorized signatory as of October ___, 2003.
EVCI CAREER COLLEGES INCORPORATED
By:
---------------------------------------
Dr. Xxxx XxXxxxx
President and Chief Executive Officer
State of )
ss:
County of )
On this ______ day of _____________, 2003, the undersigned
___________________________ personally appeared before me, known to me or proved
to me on the basis of satisfactory evidence to be the individual(s) whose
name(s) is (are) subscribed to the within instrument and acknowledged to me that
he/she/they executed the same in his/her/their capacity(ies), and that by
his/her/their signature(s) on the instrument, the individual(s), or the entity
upon behalf of which the individual(s) acted, executed the instrument.
------------------------------------
(signature and capacity of individual
taking acknowledgment)
Exhibit B-2
GENERAL RELEASE
In consideration of the mutual agreements of EVCI Career Colleges
Incorporated ("EVCI") and Amaranth Trading L.L.C. ("Amaranth") set forth in the
Settlement Agreement dated October ___, 2003 (the "Settlement Agreement") and
for other good and valuable consideration, the receipt and sufficiency of which
is hereby acknowledged, Amaranth and Amaranth Fund L.P., formerly known as
Paloma Strategic Fund L.P. and their respective heirs, executors,
administrators, successors and assigns (collectively, "RELEASORS"), do hereby
release and discharge EVCI and its predecessors and affiliates (as that term is
defined in Rule 144 under the Securities Act of 1933, as amended) and its and
such predecessors' and affiliates' respective officers, directors, employees,
agents, members and partners (EVCI and such predecessors and affiliates and
their respective officers, directors, employees, agents, members and partners
being collectively referred to as "RELEASEES") and each such Releasee's heirs,
executors, administrators, successors and assigns from all actions, causes of
action, suits, debts, dues, sums of money, accounts, reckonings, bonds, bills,
specialties, covenants, contracts, controversies, liabilities, agreements,
promises, variances, trespasses, damages, judgments, extents, executions,
claims, and demands whatsoever, whether known or unknown, in law, admiralty or
equity (including, without limitation, with respect to the Purchase Agreement,
as that term is defined in the Settlement Agreement), which against Releasees
and Releasees', heirs, executors, administrators, successors and assigns and
Releasors ever had, now have or hereafter can, shall or may have, for, upon, or
by reason of any matter, cause or thing whatsoever from the beginning of the
world to the day of the date of this General Release; PROVIDED, HOWEVER, that
there are excluded from this General Release any claims relating to or arising
out of the Settlement Agreement or the following portions of the Amended and
Restated Registration Rights Agreement dated September 27, 2000, to which EVCI
and the purchasers of EVCI's Series B 7% Convertible Preferred Stock are
parties: Sections 3 and 4, the portion of the first sentence of Section 7(a)
that ends after "hereto" and before the parenthesis and Sections 7(b), 7(c),
7(d), except for the reference to the Purchase Agreement, and 7(g).
This General Release may not be changed orally.
IN WITNESS WHEREOF, the Releasors have caused this General Release to
be executed by duly authorized signatories as of October ___, 2003.
AMARANTH TRADING L.L.C.
By: Amaranth Advisors L.L.C.
(Managing Member)
By:
-------------------------------------
Xxxxxxxx X. Xxxxxxx
Managing Member
AMARANTH FUND L.P.
By: Amaranth Advisors L.L.C.
(Attorney-in-Fact)
By:
--------------------------------------
Name:
Title:
State of )
ss:
County of )
On this ______ day of _____________, 2003, the undersigned
___________________________ personally appeared before me, known to me or proved
to me on the basis of satisfactory evidence to be the individual(s) whose
name(s) is (are) subscribed to the within instrument and acknowledged to me that
he/she/they executed the same in his/her/their capacity(ies), and that by
his/her/their signature(s) on the instrument, the individual(s), or the entity
upon behalf of which the individual(s) acted, executed the instrument.
------------------------------------
(signature and capacity of individual
taking acknowledgment)
State of )
ss:
County of )
On this ______ day of _____________, 2003, the undersigned
___________________________ personally appeared before me, known to me or proved
to me on the basis of satisfactory evidence to be the individual(s) whose
name(s) is (are) subscribed to the within instrument and acknowledged to me that
he/she/they executed the same in his/her/their capacity(ies), and that by
his/her/their signature(s) on the instrument, the individual(s), or the entity
upon behalf of which the individual(s) acted, executed the instrument.
------------------------------------
(signature and capacity of individual
taking acknowledgment)
EXHIBIT C
See Exhibit 99 of the Form 8-K.
