SETTLEMENT AGREEMENT
Exhibit
10.1
This
Settlement Agreement (the “Agreement”) is dated February 15, 2007 and is made by
and between Fellows Energy Ltd., a Nevada Corporation (“Fellows”) and JGB
Capital L.P., a Delaware corporation (“JGB”).
WHEREAS,
on or
about June 17, 2005, Fellows and JGB entered into a Securities Purchase
Agreement (the “SPA”) pursuant to which Fellows issued a convertible debenture
(the “Debenture”) in the face amount of $1,000,000; and
WHEREAS,
as
of
February 15, 2007, the outstanding face amount of the Debenture is $333,333.33
and
WHEREAS,
simultaneously with the execution of this Agreement, the following transactions
are also taking place: a) JGB is entering into a assignment agreement and
addendum to assignment agreement with Crescent International Ltd. (“Crescent”)
for the assignment of the Debenture to Crescent; b) Fellows is entering into
amendment and waiver agreements with Crescent and Palisades Master Fund Ltd.
(“Palisades”) for the amendment of the convertible debentures issued pursuant to
the securities purchase agreements dated June 21, 2005 and September 17, 2005;
and c) Fellows and Palisades are entering into a securities purchase agreement
for the purchase of $714,500 in secured convertible debentures; and
WHEREAS,
on
account of dilutive issuances of equity by Fellows, the conversion price of
the
Debentures and the exercise prices of the common stock purchase warrants
(collectively, the “Warrants”) issued in connection with the Debentures have
been reduced to equal $0.1357, subject to adjustment therein, with proportional
increases in the number of shares of common stock issuable upon exercise of
such
Warrants, as set forth therein; and
WHEREAS,
certain
events of default have occurred pursuant to the Debentures and are continuing
to
occur related to the Debentures and as a result of such defaults (“Existing
Defaults”), JGB is entitled, among other things, to enforce its rights and
remedies against Fellows, including without limitation, acceleration and
immediately demand payment in full of all obligations under the Debentures;
and
WHEREAS,
JGB
has
agreed to accept $250,000 from Crescent (the “Assignment Amount”) for the
assignment of the Debenture to Crescent and $83,333.33 from Fellows (the
“Settlement Amount”) for the final settlement of the Debentures;
and
WHEREAS,
subject
to the terms hereunder, Fellows and JGB have reached a full and final settlement
for the assignment of the Debentures;
NOW,
THEREFORE,
in
consideration of the mutual conditions and covenants contained in this
Agreement, and for other good and valuable consideration, the sufficiency and
receipt of which is hereby acknowledged, it is hereby stipulated, consented
to
and agreed by and between Fellows and JGB as follows:
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1. The
preliminary statements set forth above by this reference hereto are hereby
incorporated into this Agreement.
2. On
or
before February 16, 2007, Fellows shall pay JGB the sum of Eighty-Three
Thousand, Eight Hundred Thirty-Three Dollars and Thirty-Three Cents
($83,333.33).
3. On
or
before February 16, 0000, XXX agrees to accept, in the aggregate, the sum of
Two
Hundred Fifty Thousand Dollars and no Cents ($250,000) (the “Settlement
Payment”) from Crescent.
4. Simultaneously
with the transfer of the Settlement Payment, JGB shall execute and deliver
to
Crescent the Addendum to Assignment, and all attachments to such Addendum,
all
of which are attached hereto as Exhibit A.
5. The
Warrants shall be amended to remove Sections 2(f) and 3(b) of the Warrants,
which provided for a call provision on the warrants and an adjustment of the
Warrant exercise price upon a dilutive issuance, respectively.
6. The
Transaction Documents (as defined in the SPAs) shall be amended to remove any
requirement that Fellows register the shares of common stock issuable upon
exercise of the Warrants or reserve a sufficient number of shares underlying
the
Warrants until such time as Fellows obtains Stockholder Approval (as defined
below).
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7. JGB
shall
not exercise the Warrants until such time as Fellows has obtained Stockholder
Approval and has filed a Certificate of Amendment to its Articles of
Incorporation increasing its authorized shares of Common Stock to at least
250,000,000 shares, and hereby releases any shares previously reserved for
the
Warrants under the SPAs to be utilized for issuance to Palisades, which both
JGB
and Fellows agree is a third party beneficiary of the covenants set forth in
this paragraph 9, entitled to enforce such covenants as if they were parties
to
this Agreement. For purposes of this Agreement, Stockholder Approval shall
mean
the effective date of a Certificate of Amendment to Fellows’ Articles of
Incorporation increasing the number of authorized shares of common stock to
at
least 250 million, which Certificate of Amendment shall be filed as soon as
possible after Fellows’ obtains approval from the holders of a majority of the
then current shares of common stock and Fellows’ complies with the filing and
disclosure requirements of Section 14 under the 1934 Act in connection with
the
Stockholder Approval. Fellows shall use its best efforts to obtain, on or before
May 15, 2007 the Stockholder Approval. Upon obtaining the Stockholder Approval,
Fellows shall issue JGB 500,000 shares of restricted common stock.
8. In
the
event that the Settlement Payment is not delivered to JGB on or before February
16, 2007 (a “Settlement Default”), the Debentures shall remain in full force and
effect as they were as of February 15, 2007.
9. Upon
the
receipt of the Settlement Payment and as it relates solely to the Debentures
(and specifically not to any rights or obligations under the Warrants as set
forth in Section 7 of this Agreement), JGB releases and discharges Fellows,
Fellow’s heirs, executors, administrators, parent company, holding company,
subsidiaries, successors, predecessors, officers, directors, principals, control
persons, past and present employees, insurers, agents, attorneys, and assigns
(the “Fellows Releasees”) from all actions, cause 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 whatsoever, in law,
admiralty or equity, against the Fellows Releasees, that JGB or its heirs,
executors, administrators, successors and assigns ever had, now have or
hereafter can, shall or may, have for, upon, or by reason of any matter, cause
or thing whatsoever, whether or not known or unknown, from the beginning of
the
world to the day of the date of this Release.
10. Upon
the
payment of the Settlement Payment and as it relates solely to the Debentures
(and specifically not to any rights or obligations under the Warrants as set
forth in Section 7 of this Agreement), Fellows releases and discharges JGB,
JGB’s heirs, executors, administrators, parent company, holding company,
subsidiaries, successors, predecessors, officers, directors, principals, control
persons, past and present employees, insurers, agents and assigns from all
actions, cause 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 whatsoever, in law, admiralty or equity, against
JGB, that Fellows or its heirs, executors, administrators, successors and
assigns ever had, now have or hereafter can, shall or may, have for, upon,
or by
reason of any matter, cause or thing whatsoever, whether or not known or
unknown, from the beginning of the world to the day of the date of this
Release.
11. Fellows
and JGB each warrant and represent that no other person or entity has any
interest in the matters released herein, and that they have not assigned or
transferred, or purported to assign or transfer, to any person or entity all
or
any portion of the matters released herein.
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12. Each
party shall be responsible for their own attorneys’ fees and costs.
13. All
parties acknowledge and represent that: (a) they have read the Agreement; (b)
they clearly understand the Agreement and each of its terms; (c) they fully
and
unconditionally consent to the terms of this Agreement; (d) they have had the
benefit and advice of counsel of their own selection; (e) they have executed
this Agreement, freely, with knowledge, and without influence or duress; (f)
they have not relied upon any other representations, either written or oral,
express or implied, made to them by any person; and (g) the consideration
received by them has been actual and adequate.
14. This
Agreement contains the entire agreement and understanding concerning the subject
matter hereof between the parties and supersedes and replaces all prior
negotiations, proposed agreement and agreements, written or oral. Each of the
parties hereto acknowledges that neither any of the parties hereto, nor agents
or counsel of any other party whomsoever, has made any promise, representation
or warranty whatsoever, express or implied, not contained herein concerning
the
subject hereto, to induce it to execute this Agreement and acknowledges and
warrants that it is not executing this Agreement in reliance on any promise,
representation or warranty not contained herein.
15. This
Agreement may not be modified or amended in any manner except by an instrument
in writing specifically stating that it is a supplement, modification or
amendment to the Agreement and signed by each of the parties
hereto.
16. Should
any provision of this Agreement be declared or be determined by any court or
tribunal to be illegal or invalid, the validity of the remaining parts, terms
or
provisions shall not be affected thereby and said illegal or invalid part,
term
or provision shall be severed and deemed not to be part of this
Agreement.
17. Any
dispute arising out of this agreement shall be adjudicated under the laws and
in
the courts of the State of New York.
18. This
Agreement may be executed in facsimile counterparts, each of which, when all
parties have executed at least one such counterpart, shall be deemed an
original, with the same force and effect as if all signatures were appended
to
one instrument, but all of which together shall constitute one and the same
Agreement.
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IN
WITNESS WHEREOF,
the
parties have duly executed this Agreement as of the date first indicated
above.
| /s/ XXXXXX X. XXXXX | /s/ XXXXX XXXXX | ||
|
Xxxxxx Xxxxx, CEO |
Xxxx Xxxxx |
||
| Fellows Energy Ltd. | JGB Capital L.P. |
