ASSIGNMENT AND AMENDMENT NO. 1 TO NOTE AGREEMENT
This Assignment and Amendment No. 1 to Note Agreement (the "Assignment"),
dated as of January 22, 2007, among FTS Group, Inc., a Nevada corporation (the
"Company" and/or "Payor"), Xxxxxxx X. Xxxxxx (the "Assignor"), and the parties
identified on Schedule A hereto (each a "Assignee", and collectively "Assignees"
and/or "Payees").
WHEREAS, in connection with a Stock Purchase Agreement between Assignor
and the Company dated January 3, 2006, the Company issued to Assignor a
self-liquidating Promissory Note in the principal amount of $3,500,000 ("Note")
secured by 10,000 common shares of See World Satellites Inc., pursuant to the
terms of a Stock Escrow Agreement dated January 3, 2006 and subject to Section
2.1(D) below ("SWE Shares"); and
WHEREAS, the Assignor desires to assign $1,000,000 worth of his ownership
interest in the Note to Assignees, and the Assignees desire to purchase
$1,000,000 worth of ownership interest in the Note from the Assignor on the
terms set forth in this Agreement.
NOW, THEREFORE, IN CONSIDERATION of the mutual covenants contained in this
Agreement, and for other good and valuable consideration the receipt and
adequacy of which are hereby acknowledged, the parties agree as follows:
ARTICLE I
PURCHASE AND SALE
1.1 The Closing. Subject to the terms and conditions set forth in this
Agreement, Assignor shall sell to Assignees its ownership interest in $1,000,000
principal amount of the Note and the Assignees shall purchase from the Assignor
the $1,000,000 ownership interest in the Note for a purchase price of $1,000,000
("Purchase Price"). Payment may be made by wire transfer. The closing of the
Assignment (the "Closing") shall take place at the offices of Grushko & Xxxxxxx,
P.C., immediately following the execution hereof or such later date as the
parties shall agree pursuant to the terms of an Escrow Agreement to be executed
by the parties. The date of the Closing is hereinafter referred to as the
"Closing Date."
ARTICLE II
AMENDMENT OF TERMS OF ASSIGNED PORTION OF PURCHASED NOTE
2.1 The terms of the assigned portion of the Note shall be amended as
follows:
(A) Article I - Payment Terms; Term of the Loan. Commencing on the
third (3rd) day of May, 2007 (the "First Payment Date") and continuing monthly
thereafter, a total of six (6) equal payments each in the sum of Eighty-Three
Thousand Dollars ($83,000) and monthly thereafter a total of six (6) equal
payments each in the sum of One Hundred and Sixteen Thousand Five Hundred
Dollars ($116,500) (the "Installments").
(B) Article II - Interest, shall be amended and restated in its
entirety as follows: "The Note shall bear interest at a rate of twenty percent
(20%) or Two Hundred Thousand Dollars ($200,000) which shall be paid in the form
of an original issue discount to the Note."
(C) Article VII, shall be amended and restated in its entirety as
follows: "This Note evidences the amount payable by Payor hereunder. This Note
is secured by and entitled to the benefits of its pro-rata portion of 10,000
common shares of See World Satellites Inc. deposited with the escrow agent
pursuant to the terms of the Escrow Agreement.
(D) Upon full satisfaction and payment of an aggregate of $600,000
of the Note principal, the SWE Shares will be released from escrow and returned
to the Company.
(E) In the event the Company does not make a payment within three
business days after the payment due date, the Holder will have the option at any
time, to convert any portion or the entire missed payment amount into shares of
common stock at a 15% discount to market calculated as 85% of the closing bid
price on the day Holder notifies the Company of its intent to convert the
payment in shares of the Company's Common Stock ("Shares") pursuant to this
Section 2.1(E). Holder will notify the Company in writing of their intent to
convert pursuant to this clause. The Company will be obligated to deliver the
shares as directed in writing by the Holder within three business days. The
shares issued pursuant to this clause shall not have registration rights.
2.2 All other terms of the Note shall remain in full force and effect.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
3.1 Representations, Covenants and Warranties of Assignor. Assignor hereby
makes the following representations and warranties to the Assignee:
(A) Authorization; Enforcement. Assignor has the requisite power and
authority to enter into and to consummate the transactions contemplated by this
transaction and otherwise to carry out its obligations thereunder. The execution
and delivery of each of the documents by such Assignor and the consummation by
them of the transactions contemplated thereby have been duly authorized by all
necessary action on the part of the company and no further action is required by
the company. Each of the documents contemplated by this transaction has been
duly executed by Assignor and, when delivered in accordance with the terms
hereof, will constitute the valid and binding obligation of Assignor enforceable
against Assignor in accordance with its terms.
(B) Ownership. Assignor own and is conveying to Assignees all of its
rights, title and interests to the assigned portion of the Note, free and clear
of all liens, mortgages, pledges, security interests, encumbrances or charges of
any kind or description and upon consummation of the transaction contemplated
herein good title in the $1,000,000 transferred portion of the Note shall vest
in Assignees free of all liens and other charges.
(C) No Consents, Approvals, Violations or Breaches. Neither the
execution and delivery of this Agreement by the Assignor, nor the consummation
by Assignor of the transactions contemplated hereby, will (i) require any
consent, approval, authorization or permit of, or filing, registration or
qualification with or prior notification to, any governmental or regulatory
authority under any law of the United States, any state or any political
subdivision thereof applicable to Assignor, (ii) violate any statute, law,
ordinance, rule or regulation of the United States, any state or any political
subdivision thereof, or any judgment, order, writ, decree or injunction
applicable to Assignor or any of Assignor's properties or assets, the violation
of which would have a material adverse effect upon Assignor, or (iii) violate,
conflict with, or result in a breach of any provisions of, or constitute a
default (or any event which, with or without due notice or lapse of time, or
both, would constitute a default) under, or result in the termination of, or
accelerate the performance required by, any of the terms, conditions or
provisions of any note, bond, mortgage, indenture, deed of trust, license,
lease, agreement or other instrument or obligation to which Assignor is a party
or by which Assignor or any of Assignor's properties or assets may be bound
which would have a material adverse effect upon Assignor.
(D) In connection with Section 2.1(E) above, Company shall provide a
legal opinion from its counsel representing that the holding period of Assignees
shall tack to the holding period of Assignor and that as of January 3, 2006, the
Shares will have fully aged for one year for purposes of Rule 144(d)(1).
3.2 Representations and Warranties of Assignees. Each Assignee represents
and warrants to Assignor as follows:
(A) Due Diligence. Each Assignee acknowledges that upon execution of
this Agreement, it has completed its own investigation and undertaken any and
all due diligence.
(B) No Consents, Approvals, Violations or Breaches. Neither the
execution and delivery of this Agreement by each of the Assignee, nor the
consummation by each of the Assignee of the transactions contemplated hereby,
will (i) require any consent, approval, authorization or permit of, or filing,
registration or qualification with or prior notification to, any governmental or
regulatory authority under any law of the United States, any state or any
political subdivision thereof applicable to each of the Assignee, (ii) violate
any statute, law, ordinance, rule or regulation of the United States any state
or any political subdivision thereof, or any judgment, order, writ, decree or
injunction applicable to each of the Assignee or any of his properties or
assets, the violation of which would have a material adverse effect upon each of
the Assignee, or (iii) violate, conflict with, or result in a breach of any
provisions of, or constitute a default (or any event which, with or without due
notice or lapse of time or both would constitute a default) under, or result in
the termination of, or accelerate the performance required by, any of the terms,
conditions or provisions of any note, bond, mortgage, indenture, deed of trust,
license, lease, agreement or other instrument or obligation to which each of the
Assignee is a party or by which each of the Assignee or any of his respective
properties or assets may be bound which would have a material adverse effect
upon each of the Assignee.
(D) The Assignee (i) is an "accredited investor," as that term is
defined in Regulation D under the Securities Act; (ii) has such knowledge, skill
and experience in business and financial matters, based on actual participation,
that the Assignee is capable of evaluating the merits and risks of an investment
in the Company and the suitability thereof as an investment for Assignee; (iii)
has received such documents and information as it has requested and has had an
opportunity to ask questions of representatives of the Company concerning the
terms and conditions of the investment proposed herein, and such questions were
answered to the satisfaction of Assignee; and (iv) is in a financial position to
hold the Note for an indefinite time and is able to bear the economic risk and
withstand a complete loss of its investment in the Company.
(E) The Assignee is acquiring the Note for investment for the
Assignee's own account and not with a view to, or for resale in connection with,
any distribution thereof.
(F) The Assignee understands that the Restricted Shares have not
been registered under applicable state or federal securities laws, and is
purchasing the Note and Restricted Shares pursuant to an exemption from the
registration requirements of the Securities Act.
3.3 Representations and Warranties of the Company. The Company represents
and warrants to the parties as follows:
(A) Neither the issuance of the Restricted Shares and Shares nor the
performance of the Company's obligations under this Assignment and all other
agreements entered into by the Company relating thereto by the Company will (i)
violate, conflict with, result in a breach of, or constitute a default (or an
event which with the giving of notice or the lapse of time or both would be
reasonably likely to constitute a default) under (A) the articles or certificate
of incorporation, charter or bylaws of the Company, (B) to the Company's
knowledge, any decree, judgment, order, law, treaty, rule, regulation or
determination applicable to the Company of any court, governmental agency or
body, or arbitrator having jurisdiction over the Company or over the properties
or assets of the Company or any of its Affiliates, (C) the terms of any bond,
debenture, note or any other evidence of indebtedness, or any agreement, stock
option or other similar plan, indenture, lease, mortgage, deed of trust or other
instrument to which the Company or any of its Affiliates is a party, by which
the Company or any of its Affiliates is bound, or to which any of the properties
of the Company or any of its Affiliates is subject, or (D) the terms of any
"lock-up" or similar provision of any underwriting or similar agreement to which
the Company, or any of its Affiliates is a party except the violation, conflict,
breach, or default of which would not have a material adverse effect; (ii)
result in the creation or imposition of any lien, charge or encumbrance upon the
securities or any of the assets of the Company or any of its Affiliates except
as described herein; or (iii) result in the activation of any anti-dilution
rights or a reset or repricing of any debt or security instrument of any other
creditor or equity holder of the Company, nor (iv) result in the acceleration of
the due date of any obligation of the Company..
(B) The Restricted Shares and Shares issuable pursuant to Section
2.1(E) herein , upon issuance (i) are, or will be, free and clear of any
security interests, liens, claims or other encumbrances, subject to restrictions
upon transfer under the 1933 Act and any applicable state securities laws; (ii)
have been, or will be, duly and validly authorized and on the date of issuance
of the Shares, the Shares will be duly and validly issued, fully paid and
nonassessable or if registered pursuant to the 1933 Act, and resold pursuant to
an effective registration statement will be free trading and unrestricted);
(iii) will not have been issued or sold in violation of any preemptive or other
similar rights of the holders of any securities of the Company; (iv) will not
subject the holders thereof to personal liability by reason of being such
holders; and (v) will not result in a violation of Section 5 under the 1933 Act.
ARTICLE IV
RESTRICTED SHARES
4.1 Restricted Shares. As further consideration, the Company shall deliver
to Assignees, an aggregate of 15,000,000 $0.001 par value common stock of the
Company ("Restricted Shares") in the amounts identified on Schedule A hereto. In
the event the issuance of the Restricted Shares will result in the invalidation
of any provision of Section 3.3 of this Assignment, then this issuance of such
Restricted Shares is cancelled nunc pro tunc and the Company will issue in lieu
thereof a promissory note in an amount to be determined based on a per share
value of the highest closing price of the Company's common stock between the
date it becomes necessary to issue the promissory note and the actual issue date
of the promissory note. If, at any time prior to January 19, 2008, the Company
proposes to file a registration statement under the Securities Act of 1933, as
amended, with respect to an offering of any class of its equity securities,
other than on Form S-8 or Form S-4, then the Company shall give written notice
of such proposed filing to the Holder, as soon as practicable, but no later than
20 business days, before the anticipated filing date. Such notice shall offer
the Holder the opportunity to register such number of shares of Restricted Stock
as the Holder may request. Should the Holder desire to have Restricted Shares
included in such registration statement, he shall so advise the Company in
writing, setting forth the number of shares of Restricted Stock for which
registration is requested. If the Holder elects to include less than the full
amount of Restricted Stock, then the registration rights will continue to apply
to any remaining amounts of Restricted Stock. This grant of registration rights
is conditioned upon Holder providing such information as is reasonably required
in order to cause such registration statement to become effective.
ARTICLE V
MISCELLANEOUS
5.1 Entire Agreement; Amendments. The 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
such documents, exhibits and schedules.
5.2 Notices. Any and all notices or other communications or deliveries
required or permitted to be provided 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 Section prior to 6:30 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 6:30 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 U.S. nationally
recognized overnight courier service, or (iv) upon actual receipt by the party
to whom such notice is required to be given.
5.3 Governing Law. All questions concerning the construction, validity,
enforcement and interpretation of this Agreement shall be governed by and
construed and enforced in accordance with the internal laws of the State of New
York, without regard to the principles of conflicts of law thereof. Each party
hereby irrevocably submits to the exclusive jurisdiction of the state and
federal courts sitting in New York County, New York for the adjudication of any
dispute hereunder or in connection herewith or with any transaction contemplated
hereby or discussed herein, 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 via registered or certified mail or
overnight delivery (with evidence of delivery). Nothing contained herein shall
be deemed to limit in any way any right to serve process in any manner permitted
by law. Each party 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 Agreement or the transactions contemplated
hereby. If either party shall commence an action or proceeding to enforce any
provisions of the documents contemplated herein, then the prevailing party in
such action or proceeding shall be reimbursed by the other party for its
attorney's fees and other costs and expenses incurred with the investigation,
preparation and prosecution of such action or proceeding.
5.4 Survival. The representations, warranties, agreements and covenants
contained herein shall survive the Closing.
5.5 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.
5.6 No Waiver. The waiver by any party of the breach of any of the terms
and conditions of, or any right under, this Agreement shall not be deemed to
constitute the waiver of any other breach of the same or any other term or
condition or of any similar right. No such waiver shall be binding or effective
unless expressed in writing and signed by the party giving such waiver.
5.7 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original and all of which
together shall constitute one and the same instrument.
5.8 Construction. The article and section headings contained in this
agreement are inserted for reference purposes only and shall not affect the
meaning or interpretation of this Agreement.
5.9 Legal Fees. In connection with this transaction, legal fees of $10,000
shall be payable by the Company to Grushko & Xxxxxxx, P.C.
5.10 Due Diligence Fees. A Due Diligence Fee of $25,000 shall be payable
to the parties identified on Schedule A hereto.
5.11 Capitalized Terms. Unless otherwise defined, all capitalized terms
used herein shall have the meanings as defined in the Promissory Note, Stock
Purchase Agreement and Stock Escrow Agreement.
5.12 Further Assurances. Each party will execute and deliver such further
agreements, documents and instruments and take such further action as may be
reasonably requested by the other party to carry out the provisions and purposes
of this Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Assignment and
Amendment No. 1 to Note Agreement to be duly executed by their respective
authorized signatories as of the date first indicated above.
ASSIGNOR: XXXXXXX X. XXXXXX
________________________________________
ASSIGNEES:
____________________________________ ________________________________________
ALPHA CAPITAL ANSTALT PLATINUM LONG TERM GROWTH V
____________________________________ ________________________________________
XXXXX INTERNATIONAL LTD. WHALEHAVEN CAPITAL FUND LIMITED
ACKNOWLEDGEMENT
FTS Group, Inc., a Nevada corporation (the "Company") acknowledges the
foregoing Assignment and Amendment No. 1 to Note Agreement dated January ___,
2007 and consents to the assignment and sale of the Note by Xxxxxxx X. Xxxxxx
("Assignor") to the parties identified on Schedule A to the Assignment
(collectively, "Assignees"). The Company hereby agrees to reasonably cooperate
with Assignor and Assignees to fulfill the objective of the Assignment and
further recognizes that, following written notice from the Escrow Agent of the
full performance by the parties under the terms of that certain Funds Escrow
Agreement dated as of the date hereto, Assignees shall be deemed as successors
to the Assignor as to all rights pertinent to the $1,000,000 assigned portion of
the Note and 10,000 SWE Shares pursuant to the terms of that certain Stock
Purchase Agreement and Stock Escrow Agreement dated January 3, 2006. The Company
hereby represents and warrants that to its knowledge there are no defenses to
the payment of the Note principal or any other sum that has or may accrue or be
payable pursuant to the Note or the documents delivered together therewith or
related thereto.
FTS GROUP, INC.
By: ____________________________________
Xxxxx Xxxxxxxxx, President and CEO
SCHEDULE A
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ASSIGNEES PURCHASE PRICE PRINCIPAL AMOUNT SHARES
OF NOTE
-----------------------------------------------------------------------------------------
ALPHA CAPITAL ANSTALT $ 325,000.00 $ 390,000.00 4,875,000
Xxxxxxxxx 0
0000 Xxxxxxxxxxx
Xxxxx, Lichtenstein
Fax: 000-00-00000000
-----------------------------------------------------------------------------------------
PLATINUM LONG TERM GROWTH V $ 325,000.00 $ 390,000.00 4,875,000
000 Xxxx 00xx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Fax: (212)
-----------------------------------------------------------------------------------------
XXXXX INTERNATIONAL LTD $ 150,000.00 $ 180,000.00 2,250,000
00xx Xxxxxx Xxxxxxxxxxxx Xxxxxxx
Xxxxx Xxxxx, 00xx Xxxxx, Xxxxxx
Xxxxxxxx of Panama
Fax: (000) 000-0000
-----------------------------------------------------------------------------------------
WHALEHAVEN CAPITAL FUND LIMITED $ 200,000.00 $ 240,000.00 3,000,000
c/o FWS Capital Ltd.
0xx Xxxxx, 00 Xxx-Xxxxxxx Xxxx
Xxxxxxxx, Xxxxxxx XX00
Fax: (000) 000-0000
-----------------------------------------------------------------------------------------
TOTAL $1,000,000.00 $1,200,000.00 15,000,000
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