Exhibit 10.31
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TERMINATION AND MUTUAL RELEASE
THIS TERMINATION AND MUTUAL RELEASE (this "Agreement") is
executed this 23rd day of September 2003 by and between Eagle
Supply Group, Inc., a Delaware corporation (the "Company"), and
Seaway Holdings, Ltd. ("Seaway"). Xxxxxxx Xxxxxx, P.A., a
Florida professional corporation ("Escrow Agent"), is executing
this Agreement solely for purposes of serving as escrow agent
under Section 8 of this Agreement.
WHEREAS, Seaway, Alpha Capital AG, Bristol Investment Fund,
Ltd., Xxxxxxxxxxx XX, and HAA, Inc. (collectively, the
"Investors") and the Company entered into a Securities Purchase
Agreement, dated as of May 15, 2003 (the "Purchase Agreement"),
pursuant to which the Company agreed to sell, and the Investors
agreed to buy, in a private placement transaction (the "Private
Placement"), 1,090,909 shares of the Company's common stock,
$0.0001 par value per share (the "Common Stock"), and warrants
exercisable for the purchase of up to 109,091 shares of Common
Stock (the "Warrants");
WHEREAS, the Common Stock and the Warrants were to be
purchased in two equal and separate tranches;
WHEREAS, in connection with the Private Placement, the
Company and the Investors entered into a Registration Rights
Agreement, dated as of May 15, 2002 (the "Registration Rights
Agreement"), pursuant to which the Company agreed to register for
resale under the Securities Act of 1933, as amended (the
"Securities Act"), all of the shares of Common Stock issued in
the Private Placement, as well as the shares of Common Stock
issuable upon exercise of the Warrants;
WHEREAS, the first tranche of the Private Placement closed
on May 15, 2003, and under the terms of the Purchase Agreement,
the second tranche was required to close no later than September
11, 2002;
WHEREAS, the Investors advised the Company on September 12,
2002 that the Investors would not be purchasing the securities
they were required to purchase in the second tranche of the
Private Placement;
WHEREAS, Seaway wishes to transfer 181,718 of the shares of
Common Stock it acquired in the first tranche of the Private
Placement (the "Shares") without registration under the
Securities Act pursuant to the exemption provided by Section 4(1)
of the Securities Act and the safe harbor provisions of Rule 144
promulgated under the Securities Act (the "Transfer"); and
WHEREAS, the Company and Seaway desire to terminate their
rights and obligations under the Purchase Agreement and
Registration Rights Agreement and provide the releases to each
other as are set forth below;
NOW, THEREFORE, in consideration of the foregoing recitals
and for other good and valuable consideration set forth below,
the receipt and sufficiency of which are hereby acknowledged, the
Company and Seaway, intending to be legally bound, hereby agree
as follows:
1. Payment of Settlement Amount. Prior to the execution of
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this Agreement by the Company, Seaway shall have paid to Escrow
Agent the amount of Fifty Thousand Dollars ($50,000) (the
"Settlement Amount"), by wire transfer of immediately available
funds, to be held, administered and distributed by Escrow Agent
under the terms of Section 8 of this Agreement.
2. Delivery of Documents. Seaway shall not exercise its
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respective Warrant (the "Seaway Warrant"). Prior to the
execution of this Agreement by the Company, Seaway shall deliver
to Escrow Agent the Seaway Warrant, the Rule 144 Shareholder
Certificate, in the form attached to this Agreement as Attachment
A (the "Rule 144 Certificate"), fully executed by Seaway, and the
Broker's Certificate Regarding Rule 144(g), in the form attached
to this Agreement as Attachment B (the "Broker's Certificate"),
fully executed by the broker who executed the Transfer, each of
such documents to be held, administered, and distributed by
Escrow Agent under the terms of Section 8 of this Agreement. On
the date of this Agreement, the Company shall direct Xxxxxxx
Xxxxxx, P.A. to place its legal opinion relating to the Transfer
(the "Legal Opinion") into escrow to be held, administered, and
distributed by Xxxxxxx Xxxxxx, P.A. in its capacity as escrow
agent under the terms of Section 8 of this Agreement.
3. Effect of Releases from Escrow. Upon payment and release of
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the escrow by Escrow Agent in accordance with Section 8(b) of
this AgreementUpon receipt by the Company of confirmation that
the Shares have been sold to the Purchaser, the Purchase
Agreement, Registration Rights Agreement, and Seaway Warrant
shall be deemed automatically terminated and cancelled, null and
void, and of no further force or effect. Upon payment and
release of the escrow by Escrow Agent in accordance with Section
8(c) of this Agreement, this Agreement shall be deemed terminated
and the releases under Section 4(a) and Section 4(b) of this
Agreement shall be null and void ab initio and of no force or
effect; provided, however, that neither party shall be excused,
by virtue of such termination, from any breach by it under this
Agreement.
4. Mutual Release.
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(a) Effective upon the payment and release of the escrow under
Section 8(b) of this Agreement, Seaway on behalf of itself and
its affiliates hereby fully and unconditionally releases, acquits
and forever discharges the Company and its affiliates, directors,
officers, employees, and representatives from any and all
actions, manner of actions, causes of action, claims,
obligations, demands, damages, costs, expenses, compensation or
other relief, which Seaway now has, has ever had, or which it may
hereafter have, whether known or unknown, whether in law or
equity, arising out of or relating to the Private Placement
including, but not limited to, the breach or default by the
Company of any provision, covenant, representation, warranty, or
obligation contained in the Purchase Agreement or Registration
Rights Agreement or the violation by the Company of any law,
rule, or other governmental regulation, including, but not
limited to, federal and state securities laws and state corporate
laws which may apply to the Private Placement, the Purchase
Agreement, the Registration Rights Agreement or any of the
transactions contemplated thereunder.
(b) Effective upon the payment and release of the escrow under
Section 8(b) of this Agreement, the Company on behalf of itself
and its affiliates hereby fully and
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unconditionally releases, acquits and forever discharges Seaway
and its affiliates from any and all actions, manner of actions,
causes of action, claims, obligations, demands, damages, costs,
expenses, compensation or other relief, which the Company now has,
has ever had, or which it may hereafter have, whether known or
unknown, whether in law or equity, under the Purchase Agreement
or Registration Rights Agreement, including, but not limited to,
the breach or default by Seaway of any provision, covenant,
representation, warranty, or obligation contained in the Purchase
Agreement or Registration Rights Agreement or the violation by
Seaway of any law, rule, or other governmental regulation,
including, but not limited to, federal and state securities laws
and state corporate laws which may apply to the Private Placement,
the Purchase Agreement, the Registration Rights Agreement or any
of the transactions contemplated thereunder; provided, however,
that the release, acquittal and discharge in this Section 4(b)
shall not apply with respect to, or be deemed to release, acquit
or discharge Seaway or its affiliates from, any of the
representations, warranties, covenants or agreements of Seaway
under the Rule 144 Certificate.
(c) With regard to those matters which it has released as
described in Section 4(a) or 4(b) above, neither the Company nor
Seaway shall institute a lawsuit or administrative proceeding, or
assert any claim of any nature against any person or entity
thereby released with regard to any such matters which have been
released.
5. Representations and Warranties. Each party to this
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Agreement hereby represents and warrants to the other that (a) it
has the requisite corporate and other authority to enter into,
deliver and fulfill its obligations under this Agreement and each
other document delivered by it in connection herewith, and (b)
that this Agreement and each other document related to the
Transfer or this Agreement to which it is a party that is
delivered to another party hereto has been duly authorized and
executed by such party and, when delivered to the other party,
will be its legal and binding obligation, enforceable against it
in accordance with its terms.
6. Admissions. This Agreement and any documents delivered
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pursuant to this Agreement are not an admission or concession by
either the Company or Seaway of any liability, fault, wrongdoing,
or illegal acts or omissions.
7. Press Releases. Seaway will not issue a press release or
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make any other public announcement relating to this Agreement
unless the Company has agreed in writing to the timing and
content of such release or announcement.
8. Escrow.
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(a) The Company and Seaway hereby appoint Escrow Agent to act as
the escrow agent, and Escrow Agent hereby accepts such
appointment, under the terms of this Section 8. Escrow Agent
agrees to hold the Settlement Amount, Seaway Warrant, and
original execution copies of the Rule 144 Certificate, Broker's
Certificate, and this Agreement until released in accordance with
Section 8(b) or Section 8(c) of this Agreement.
(b) At such time that Escrow Agent shall have received each of
the Settlement Amount, the Seaway Warrant, the Rule 144
Certificate and Broker's Certificate executed as required by
Section 2, and an original execution copy of this Agreement
executed by
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the parties hereto, Escrow Agent shall (i) pay the Settlement
Amount to the Company by wire transfer of immediately
available funds, (ii) deliver the Seaway Warrant and an executed
copy of this Agreement to the Company, (iii) deliver an executed
copy of this Agreement to Seaway, and (iv) release the Legal
Opinion to the Company's transfer agent, and Escrow Agent shall
have no further duties under this Agreement.
(c) If, on or before September 23, 2003, Escrow Agent shall not
have received the Settlement Amount, the Seaway Warrant, the Rule
144 Certificate and Broker's Certificate executed as required by
Section 2, and an original execution copy of this Agreement
executed by the parties hereto, Escrow Agent shall (i) pay the
Settlement Amount to Seaway by wire transfer of immediately
available funds, and (ii) deliver the Seaway Warrant to Seaway,
and Escrow Agent shall have no further duties under this
Agreement.
(d) Escrow Agent shall have no liability to the parties hereto
or any other person or entity with respect to its services as
escrow agent under this Agreement except for any liability to the
parties to this Agreement to the extent directly caused by the
gross negligence or willful misconduct of Escrow Agent. The
Company and Seaway, jointly and severally, agree to indemnify
Escrow Agent from, and hold it harmless against, any loss,
liability, or expense arising out of or in connection with its
entering into this Agreement and carrying out its duties
hereunder, including the costs and expenses (including, without
limitation, reasonable counsel fees and expenses) of defending
itself against any claim or liability except to the extent of
Escrow Agent's liability, if any, under the terms of the
immediately preceding sentence.
9. Waiver of Conflict of Interest; and Consent. Seaway
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acknowledges that Escrow Agent is acting as the Company's legal
counsel with respect to this Agreement and Seaway agrees that
such representation does not disqualify Escrow Agent from serving
as escrow agent under this Agreement or as counsel to Company in
any matter, including, but not limited to, the transaction
covered by this Agreement. In the event of any dispute under or
related in any way to this Agreement or the Transfer, Seaway
agrees that Escrow Agent can represent the Company against Seaway
with respect to such dispute.
10. General Provisions.
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(a) For purposes of this Agreement, an "affiliate" of a specific
entity is an individual or entity that directly or indirectly
through one or more intermediaries, controls, or is controlled
by, or is under common control with, the specific entity. The
term "control" (including the terms "controlled by" and "under
common control with") means the possession, direct or indirect,
of the power to direct or cause the direction of the management
and policies of an entity, whether through the ownership of
voting shares, by contract, or otherwise.
(b) The provisions of this Agreement may not be amended,
modified, supplemented, or waived, except in a writing executed
by Seaway and the Company.
(c) All notices or other communications or deliveries under this
Agreement shall be in writing, addressed to a party in accordance
with the information set forth by such party on its signature
page to the Purchase Agreement, or such other address as such
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party may hereafter indicate in a writing to the other party,
given in accordance with this Section 10(c). All notices and
other communications shall be deemed given and effective on the
earliest of (i) the date of transmission, if such notice or
communication is delivered via facsimile on a business day, (ii)
the business day after the date of transmission, if such notice
or communication is delivered via facsimile on a day that is not
a business day, (iii) the business day following the date on
which the notice is sent by nationally recognized overnight
delivery service, or (iv) upon actual receipt by the party to
whom such notice is given if given by hand delivery or mail.
(d) Seaway may not delegate any of its duties or obligations
under this Agreement. This Agreement is intended for the benefit
of and may be enforced only by Seaway and the Company and their
respective successors and assigns and is not for the benefit of
any other person or entity, nor may any other person or entity
enforce any provision.
(e) This Agreement may be executed in any number of
counterparts, each of which when so executed shall be deemed to
be an original and, all of which taken together, shall constitute
one and the same document. In the event that any signature is
delivered by facsimile transmission, such signature shall create
a valid, binding and enforceable obligation of the party
executing the same with the same force and effect as if such
facsimile signature were the original thereof.
(f) This Agreement shall be governed by and interpreted in
accordance with the laws of the State of Delaware for contracts
to be wholly performed in such state and without giving effect to
the principles thereof regarding the conflict of laws that would
result in the application of the laws of any other jurisdiction.
The non-prevailing party shall reimburse the prevailing party for
any reasonable legal fees and disbursements incurred by the
prevailing party in enforcement of or protection of any of its
rights or defense of any of its actions under this Agreement.
(g) EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST
EXTENT PERMITTED BY APPLICABLE LAW, ANY AND ALL RIGHT TO TRIAL BY
JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS
RELEASE OR THE OTHER DOCUMENTS DELIVERED IN CONNECTION HEREWITH.
(h) The headings herein are for convenience only, do not
constitute a part of this Agreement and shall not be deemed to
limit or affect any of the provisions hereof. 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 either party.
(i) Whenever possible, each provision of this Agreement shall be
interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to
be prohibited by or invalid under applicable law, such provision
will be ineffective only to the extent of such prohibition or
invalidity, without invalidating the remainder of this Agreement.
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(j) No party or any of its affiliates, successors or assigns
shall challenge or seek to have determined invalid, void or
unenforceable any provision of this Agreement or the Agreement
itself. Each party understands that this Agreement contains the
relinquishment of legal rights and it has, as it has deemed
appropriate, sought the advice of legal counsel, which the other
party has encouraged it to seek. Each of the Company and Seaway
declares and understands that no promises, inducements, or
agreements not expressly contained in this Agreement have been
made to it by the other party.
(k) This Agreement contains the entire understanding of the
parties with respect to the subject matter hereof and supersedes
all prior agreements and understandings, oral or written, with
respect to such matters, which the parties acknowledge have been
merged into this Agreement.
[Rest of Page Intentionally Left Blank. Signatures on Following Page.]
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IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of this 23rd day of September 2003.
Executed and delivered in EAGLE SUPPLY GROUP, INC.
the presence of:
/s/Xxxxxxx Xxxxxx-Xxxxxx By: /s/ Xxxxxxx X. Xxxxxx
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Print Name: Xxxxxxx Xxxxxx-Xxxxxx Name: Xxxxxxx X. Xxxxxx
Title: Chief Executive Officer
SEAWAY HOLDINGS, LTD.
/s/ Xxxxxx X. Xxxxxxxx By: [illegible]
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Print Name: Xxxxxx X. Xxxxxxxx Name: International First
Secretarial Group, Ltd.
Title: Secretary
XXXXXXX XXXXXX, P.A., solely for
purposes of Section 8
By: /s/ Xxxxxxxxx X. Xxxxxxx
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Name: Xxxxxxxxx X. Xxxxxxx
Title: Shareholder
Attachment A
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RULE 144 SHAREHOLDER CERTIFICATE
The undersigned does hereby certify and acknowledge as to
the following:
1. The undersigned was the beneficial owner of 181,818
shares of common stock ("Common Stock") of Eagle Supply Group,
Inc., a Delaware corporation (the "Company"), as evidenced by
share certificate number ES0076. The undersigned sold 181,718 of
these shares ("Shares") on August 18, 2003 (the "Sale").
2. The undersigned acquired these Shares in a transaction
not involving a public offering pursuant to a Securities Purchase
Agreement dated May 15, 2002 ("Purchase Agreement"). The
purchase price for the Shares was paid in full on May 15, 2002.
3. The undersigned is not affiliated with any of the other
investors who purchased shares from the Company pursuant to the
Purchase Agreement.
4. Neither the undersigned, its officers and directors,
nor any of the following: (a) relative or spouse of the
foregoing, or any relative of such spouse, who has the same home
as such person; (b) trust or estate in which the foregoing or any
of the persons specified in Section 4(a) above collectively own
10 percent or more of the total beneficial interest or of which
any of such persons serve as trustee, executor or in any similar
capacity; or (c) any corporation or other organization (other
than the Company) in which the foregoing or any of the persons
specified in Section 4(a) above are beneficial owners
collectively of 10 percent or more of any class of equity
securities or 10 percent or more of the equity interests (each of
4(a), 4(b), and 4(c) individually, a "Related Person" and
collectively, "Related Persons") was a Director, Executive
Officer, or Beneficial Owner of 10% or more of the voting shares
of the Company for the three (3) months preceding the Sale.
5. Neither the undersigned, its officers and directors,
nor any Related Person knows or has any reason to believe that
the Company has not complied with the reporting requirements
under Section 13 of the Securities Exchange Act of 1934, as
amended.
6. During the three months preceding the Sale, neither the
undersigned, its officers and directors, nor any Related Person,
sold or placed orders to sell shares of the Common Stock except
for the sale of 100 shares of Common Stock on May 20, 2003.
7. Neither the undersigned, its officers and directors,
nor any Related Person had sold, whether a long or short position
in, or had any put or other option to dispose of, any of the
Common Stock or any securities convertible into the Common Stock
within the three months preceding the Sale.
8. The undersigned did not and does not have any
agreements, understandings, arrangements, or undertakings, either
oral or written, to act in concert with any other person for the
purpose of selling, distributing, transferring, or otherwise
disposing of the Shares.
9. The undersigned sold the Shares in a "brokers'
transactions" within the meaning of Rule 144(f) promulgated under
the Securities Act of 1933, as amended. Neither the undersigned,
its officers and directors, nor any Related Person (a) solicited
or arranged for the solicitation of orders to buy the Common
Stock in anticipation of or in connection with the Sale, (b)
made, or will make, any payment in connection with the Sale to
any person other than the usual and customary broker's fees
or commissions, or (c) had buy or sell orders open in any
security of the Company with any other broker, dealer, or bank
or placed any such order prior to the completion of the Sale.
10. The attached Form 144 is an accurate and complete copy
of the Form 144 which was filed with the Securities and Exchange
Commission on May 20, 2003 and transmitted to (a) the Boston
Stock Exchange and (b) the Nasdaq Stock Market.
11. The attached confirmation is an accurate and complete
copy of the confirmation of the Sale and the undersigned confirms
that it has not and will not cancel, revoke, reverse, or
otherwise terminate such Sale.
12. It was the bona fide intention of the undersigned to
sell the Shares within a reasonable time after the filing of the
Form 144 with the Securities and Exchange Commission.
13. Neither the undersigned, its officers and directors,
nor any Related Persons knew or possessed any material, nonpublic
information regarding the Company or its prospects, prior to the
Sale.
14. The undersigned has read and understands the provisions
of Rule 144 and has and will comply with its requirements.
15. The Company and Xxxxxxx Xxxxxx, P.A. may rely on the
information contained herein and in the Form 144. The
undersigned will promptly notify the Company and Xxxxxxx Xxxxxx,
P.A. if the undersigned finds any of the information contained
herein is no longer accurate or complete.
[Signatures on Next Page.]
IN WITNESS WHEREOF, the undersigned has executed this
Certificate this __ day of September, 2003.
Seaway Holdings Ltd.
Witnessed By:_______________________ By:________________________
Print Name: ________________________ Name:
Title:
Attachment B
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BROKER'S CERTIFICATE REGARDING RULE 144(g)
In connection with the sale by Seaway Holdings Ltd. (the
"Seller") on August 18, 2003 of 181,718 shares (the "Shares") of
common stock, $0.0001 par value per share ("Common Stock"), of
Eagle Supply Group, Inc., a Delaware corporation (the "Company"),
the undersigned hereby attests to the following:
1. We did no more than execute the order or orders to sell the
Shares as agent for the Seller, and we received no more than
the usual and customary broker's commission in connection
with such sale.
2. We did not solicit or arrange for the solicitation of
customer's orders to buy the Shares in anticipation of or in
connection with the sale of the Shares, except to the extent
that we:
(a) made inquiries of other brokers or dealers who
indicated an interest in the Common Stock within the
sixty days preceding the sale of the Shares;
(b) made inquiries of customers who in the ten business
days preceding the sale of Shares indicated without any
solicitation a bona fide interest in the Common Stock;
or
(c) published bid and ask quotations for the Common Stock
in an inter-dealer quotation system provided that such
quotations were incident to the maintenance of a bona
fide inter-dealer market for the Common Stock for our
own account and that we published bona fide bid and ask
quotations for the Common Stock in an inter-dealer
quotation system on each of at least twelve days within
the thirty calendar days preceding the sale of the
Shares with no more than four business days in
succession without such two-way quotations.
3. We made reasonable inquiry and we were not aware of any
circumstances indicating that (a) the Seller was an
underwriter with respect to, or was participating in a
distribution of, the Shares, or (b) the sale of the Shares
by the Seller was part of a distribution of securities of
the Company.
[Signatures on Next Page]
IN WITNESS WHEREOF, the undersigned has executed this
Certificate on this __ day of September, 2003.
_______________________________
By:____________________________
Name:__________________________
Title:_________________________
