SATISFACTION AND RELEASE AGREEMENT
Exhibit
10.1
This
Satisfaction and Release Agreement (this “Agreement”)
is
entered into as of May 10, 2007 by and between Xxxxx Networks, Inc., a Nevada
corporation (the “Borrower”)
and
AJW Partners LLC, AJW Offshore Ltd, AJW Qualified Partners LLC, & New
Millennium Capital Partners LLC (collectively, the “Lender”).
WHEREAS,
the Borrower is indebted to the Lender pursuant to the loan agreements and
debt
instruments set forth on Schedule
I
hereto
(together with all other loan or collateral agreements related thereto, the
“Loan
Documents;”
and
all indebtedness and liabilities, including without limitation all principle,
interest, fees, expenses and penalties, under such Loan Documents being referred
to herein as the “Indebtedness”);
WHEREAS,
in connection with the issuance of the Indebtedness or otherwise the Lender
has
been issued certain warrants, as set forth on Schedule
II
hereto,
which
are
exercisable or convertible into shares of the Borrower’s capital stock (the
“Equity
Instruments”).
WHEREAS,
the Borrower intends to raise a new round of equity financing (the “Equity
Financing”);
and
WHEREAS,
the Borrower has been advised that in order to raise necessary funds in the
Equity Financing, Borrower must (i) obtain a satisfaction statement with respect
to the Indebtedness, (ii) terminate the Equity Instruments, and (iii) obtain
a
full release of claims from Lender.
NOW,
THEREFORE, in consideration of the premises and of the mutual agreements and
covenants set forth herein and for other good and valuable consideration, the
receipt and adequacy of which are hereby acknowledged, and intending to be
legally bound hereby, the parties hereto agree as follows:
1. The
Lender and the Borrower have agreed that the Lender shall accept $1,992,592.00
(the
“Pay-Off
Payment”),
as
settlement in satisfaction of the Indebtedness. In addition, the Borrower agrees
to honor and the Lender agrees to limit the exercise of the Lender’s right of
conversion under the Loan Documents to a number of shares which when combined
with all shares obtained upon conversion of the Loan Documents by all of its
affiliates (including any past conversions by Lender or its affiliates) will
not
exceed 4.99% of the total issued and outstanding shares of the Borrower as
of
April 17, 2007. The Lender further agrees that upon receipt of the Pay-Off
Payment by way of wire transfer in immediately available funds, (a) the Borrower
will not be indebted to the Lender for any reason under the Loan Documents,
including without limitation indebtedness relating to principle, interest,
fees,
expenses or penalties, and the Lender’s commitment to extend further credit to
Borrower under the Loan Documents will terminate, (b) the Loan Documents and
all
of the Lender’s security interests in, security titles to and other liens on all
real and personal property of the Borrower will be automatically and without
any
further action by any party terminated and released, (c) all guarantors of
the
Indebtedness will be automatically and without any further action by any party
released from their obligations to the Lender, (d) the Lender will deliver
each
promissory note or other instrument evidencing such Indebtedness to the Borrower
for cancellation and (e) the Lender will, and hereby does, authorize the
Borrower to prepare and file, and to the extent the Lender’s signature is
required, the Lender will execute within three (3) business days of receipt
of
such document, any and all Uniform Commercial Code financing statement
terminations, mortgage releases and other such lien release documents as the
Borrower may request in order to evidence or otherwise give public notice of
such lien terminations and releases (provided, however, that any and all such
termination statements, mortgage releases and other such documents shall be
prepared and recorded at Borrower’s expense). The Lender further acknowledges
that it will rely on this letter and the acknowledgments, certifications,
confirmations and agreements of the Lender contained herein in connection with
raising the Equity Financing.
2. Upon
the
signing of this Agreement, the Lender hereby agrees to waive any past, existing
and future defaults under the Loan Documents for a period of 180 days from
the
date of this Agreement. In addition, the Lender further agrees that for a period
of 180 days from the date of this Agreement the Lender will not exercise its
right of conversion under the Loan Documents except as per Section 1 above.
The
Borrower agrees to pay the Lender 15% of the $1,992,592.00
within
30
days of signing this Agreement. In addition, the Borrower shall issue the Lender
the full number of shares described in the second sentence of Section 1 above
and shall cause its legal counsel to provide a legal opinion covering the sale
of a number of shares equal to 1% of the current number of shares outstanding
under Rule 144.
3. The
Lender hereby represents and warrants to the Borrower that (i) Schedule
I
sets
forth all of the documents, instruments, promissory notes, contracts or other
agreements (whether written or oral) pursuant to which the Borrower has any
obligation or liability to Lender for or in respect of borrowed money
(including, without limitation, any guarantee of the indebtedness or other
obligation of any other party); (ii) all of the indebtedness of Borrower to
Lender for borrowed money is set forth on Schedule
I and
Borrower has no obligation or liability to Lender except as set forth on
Schedule
I;
(iii)
all of the warrants, options, convertible securities or other contracts,
instruments or other agreements exercisable for, exchangeable for or convertible
into (x) any equity security issued or issuable by Borrower or (y) any document,
instrument or agreement exercisable for, exchangeable for or convertible into
any equity security issued or issuable by the Borrower are identified on
Schedule II; (iv) Lender agrees that Schedule II shall be modified to include
any additional issuance of such instruments as noted in subsection (iii) above
after the date of this agreement to the date of the receipt of the Pay-Off
Payment by the Lender; and (v) except as set forth on Schedule
II,
Lender
does not have any right to acquire any equity security issued or issuable by
Borrower to Lender.
4. The
Lender hereby agrees and certifies to the Borrower that effective immediately
the receipt of the Pay-Off Payment by the Lender that any and all Equity
Instruments held by the Lender will without any further action by any party
terminate and will be of no further force or effect, and the Lender will deliver
each such Equity Instrument to the Borrower for cancellation and will thereafter
execute any and all further documents as the Borrower may request in order
to
evidence such termination.
5. Lender
hereby agrees not to transfer or assign any of the Loan Documents or related
warrants unless such transferee or assignee agrees in writing to be bound by
and
subject to the terms and conditions of this Agreement, including, without
limitation, the provisions of Section 2 above.
6. Upon
receipt of the Pay-Off Payment, each party (for itself and on behalf of its
successors and assigns) hereby releases and forever discharges the other party
(and all predecessors, successors and assigns of the other party, and the
respective directors, officers, employees, owners, agents and representatives
of
the other party and its predecessors, successors and assigns) of and from any
and all actions, causes of action, suits, claims, demands, agreements, debts,
liabilities and obligations of any nature, fixed or contingent, known or
unknown, whether at law or in equity, by reason of any event, occurrence,
circumstances or matter of any nature arising out of the Loan Documents that
occurred or existed at any time on or before the date of this
Agreement.
7. The
terms
of this Agreement are contractual in nature and not mere recitals. This
Agreement contains the entire understanding of the parties with respect to
the
subject matter hereof, and there are no representations, warranties, covenants
or undertakings, oral or otherwise, that are not expressly set forth herein.
No
modification of this Agreement is valid and enforceable unless executed in
writing with the same formality as this present Agreement and by the same
parties. This Agreement shall be construed and governed in accordance with
the
laws of the State of New York. If any court shall subsequently deem any portion
of this Agreement to be invalid, such designation shall not affect the remaining
provisions of this Agreement, which will continue in full force and effect.
This
Agreement is binding upon the parties hereto, their respective xxxxxx, xxxxx,
xxxxxxx, legal representatives, attorneys, successors and assigns. Each party
shall pay his or its fees and expenses in connection with the preparation and
execution of this Agreement.
8. The
parties to this Agreement hereby state that they have read the foregoing
Agreement, that they have the requisite authority to enter into this Agreement,
that they understand the contents hereof, that their execution of this Agreement
is voluntary and that they have relied upon or have had the opportunity to
seek
the legal advice of the attorneys of their own choice prior to executing this
Agreement.
IN
WITNESS WHEREOF, the parties hereto have executed this Satisfaction and Release
Agreement as of the date first set forth above.
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BORROWER:
|
|
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Xxxxx
Networks, Inc.
|
|
|
By:
/s/ Xxxxxx X. Xxxxx
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|
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Xxxxxx
X. Xxxxx
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|
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Chief
Executive Officer
|
|
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LENDER:
|
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AJW
PARTNERS, LLC
|
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By:
SMS Group, LLC
|
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/s/
Xxxxx X. Xxxxxxxx
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Xxxxx
X. Xxxxxxxx
|
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Manager
|
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AJW
OFFSHORE, LTD.
|
|
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By:
First Street Manager II, LLC
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/s/
Xxxxx X. Xxxxxxxx
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Xxxxx
X. Xxxxxxxx
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Manager
|
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AJW
QUALIFIED PARTNERS, LLC
|
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By:
AJW Manager, LLC
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/s/
Xxxxx X. Xxxxxxxx
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Xxxxx
X. Xxxxxxxx
|
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Manager
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NEW
MILLENNIUM CAPITAL PARTNERS II, LLC
|
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By:
First Street Manager II, LLP
|
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/s/
Xxxxx X. Xxxxxxxx
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Xxxxx
X. Xxxxxxxx
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| Manager |
Schedule
I (NIR GROUP)
Loan
Documents
(All
Documents issued on November 17, 2005 and December 21, 2005 to following
entities related to Convertible Debenture Financing)
|
NOTEHOLDER
|
ISSUED
|
PRINCIPAL
AMOUNT
|
|
AJW
Partners LLC
AJW
Offshore Ltd
AJW
Qualified Partnrs LLC
New
Millinnium Capital Partners II LLC
Total
(NIR Group)
|
$237,111.00
$1,076,000.00
$649,555.00
$29,926.00
$1,992,592.00
|
Lender
Wire Instructions
Schedule
II
Equity
Instruments
|
HOLDERS
OF SECURITIES
|
Warrants
|
|
AJW
Partners LLC
AJW
Offshore Ltd
AJW
Qualified Partnrs LLC
New
Millinnium Capital Partners II LLC
|
119,000
540,000
326,000
15,000
|
|
HOLDERS
OF SECURITIES
|
Warrants
|
|
AJW
Partners LLC
AJW
Offshore Ltd
AJW
Qualified Partnrs LLC
New
Millinnium Capital Partners II LLC
|
1,220,000
5,960,000
2,700,000
120,000
|
