Exhibit 10.1
DEBT RESTRUCTURING AGREEMENT
THIS DEBT RESTRUCTURING AGREEMENT ("Agreement") is entered
into this 4th day of June, 2002 by and among Xxxxxxxx Technologies, Inc. (f/k/a
Quest Net Corp.) ("Technologies" or "Borrower"), Vidikron of America, Inc.
("Vidikron") and Market LLC ("Lender").
W I T N E S S E T H:
WHEREAS, pursuant to (a) Loan and Security Agreement dated
August 5, 1999, as amended from time-to-time thereafter (the "Loan Agreement"),
(b) Amendment and Assignment and Assumption Agreement dated September 21, 2001
(the "Amendment") and (c) Secured Convertible Revolving Credit Note dated
September 21, 2001 (the "Note"), Technologies is indebted to Lender; and
WHEREAS, pursuant to the Loan Agreement, between August 5,
1999 and the date hereof, Lender had advanced to Vidikron the principal amount
of $3,455,254 and Vidikron had secured such indebtedness by, among other things,
granting Lender a security interest in, inter alia, current and after acquired
goods, furniture, fixtures and equipment, accounts, instruments, monies,
investment securities, general intangibles (including but not limited to its
rights in and to the trademark "Vidikron"), substitutions, replacements,
attachments, accessions and products and proceeds of the foregoing (the
"Vidikron Collateral"); and
WHEREAS, by and through the Amendment, among other things, (a)
Lender agreed to increase the amount of funding it would make available under
the Loan Agreement, (b) Technologies assumed Vidikron's obligations under Loan
Agreement, (c) Technologies executed the Note, a new promissory note in favor of
Lender, (d) Technologies secured its indebtedness to Lender by granting Lender a
security interest in, inter alia, current and after acquired goods, furniture,
fixtures and equipment, accounts, instruments, monies, investment securities,
general intangibles, substitutions, replacements, attachments, accessions and
products and proceeds of the foregoing (the "Technologies Collateral") and a
junior lien covering all of the issued and outstanding shares of Vidikron owned
by Technologies (the "Vidikron Shares"; the Vidikron Collateral, the
Technologies Collateral and the Vidikron Shares are sometimes hereinafter
collectively referred to as the "Collateral"), and (e) the Vidikron Collateral
was to remain as collateral securing the obligations under the Note, the Loan
Agreement and the Amendment; and
WHEREAS, by virtue of the foregoing, Technologies is indebted
to Lender in the principal amount of $3,455,254 plus interest in the amount of
$758,046 accrued through June 4, 2002 for an aggregate indebtedness of
$4,213,300 as of June 4, 2002 (the "Indebtedness"); and
WHEREAS, there have been a number of material events of
default by Technologies under the Note, the Loan Agreement and the Amendment
(collectively, the "Loan Documents") and, as a result, Lender has declared the
Indebtedness in default demanded full payment of the Indebtedness, and advised
Borrower of its intent to exercise its rights as a secured lender pursuant to
the Loan Documents; and
WHEREAS, the Lender has notified Technologies of its intent to
foreclose on the Collateral securing the Notes.
NOW, THEREFORE, in consideration of the mutual covenants set
forth herein and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto hereby agree as
follows:
1. Acknowledgement of Indebtedness.
(a) Borrower hereby reaffirms that as of June 4, 2002, Borrower is indebted
to Lender pursuant to the Loan Documents in the amount of
$4,213,300 which includes (i) $3,455,254 Principal and (ii) $758,046
in past accrued interest.
(b) As used in this Agreement, Borrower's "Indebtedness" to the Lender
shall mean the sums referred to above in Section 1(a) hereof as such
amounts shall continue to accrue, plus Lender's reasonable costs and
expenses incurred in collection of any and all of the Indebtedness
from the Borrower and the reasonable costs incurred in the
negotiation of this Agreement and the ancillary agreements, documents
and enforcement devices provided for herein, including, but not
limited to, costs of collection thereof.
(c) All payments hereunder for application to the Indebtedness shall be
made, without setoff, counterclaim or withholdings of any kind
whatsoever.
(d) Borrower acknowledges that it is in default under, inter alia
(collectively, the "Events of Default"):
(i) Sections 4 of the Note;
(ii)Section 6.3 of the Loan Agreement; and
(iii)Section 7.1(g) of the Loan Agreement.
2. Foreclosure on Collateral; Agreements of Lender.
(a) By reason of the occurrence and continuation of the Events of Default,
the Lender has notified the Borrower (the "Foreclosure Notice") of the
Lender's intention to exercise its rights as a secured creditor and
foreclose on some or all of the Collateral (the "Foreclosure").
(b) The Borrower and Lender have engaged in negotiations with respect to
the intended Foreclosure and Borrower has agreed to deliver, and
Lender has agreed to accept legal title to the Vidikron Shares in
partial satisfaction of the Indebtedness, subject to consummation of
the other agreements and transactions contemplated by this Agreement.
The Borrower covenants and agrees to deliver to the Lender legal and
beneficial title and interest in and to the Vidikron Shares. Delivery
of such legal and beneficial title in and to the Vidikron Shares shall
be in partial satisfaction of $50,000.00 of the aggregate Indebtedness
owed to the Lender (the "Debt Reduction"). Borrower hereby waives its
right to notice of default, acceleration and Lender's intent to
foreclose on the Vidikron Shares and the disposition thereof, whether
pursuant to the Uniform Commercial Code or otherwise, and consents
thereto.
(c) The parties hereto acknowledge that the Debt Reduction has been
calculated based on the facts that Vidikron is insolvent and perceived
to be of no value.
(d) Lender agrees to defer the Foreclosure on the remaining Collateral, to
wit, Xxxxxxxx Collateral and the Vidikron Collateral.
3. Restructure of Lender's Indebtedness Balance.
The balance of the Indebtedness to the Lender will be evidenced by
Borrower's execution of an amended secured convertible revolving credit
note of up to $4.5 million in the form annexed hereto (the "Amended Note").
The initial indebtedness outstanding on the Amended Note shall be credited
to the extent of the Debt Reduction for an initial net outstanding balance
of $4,163,300 (the "Indebtedness Balance"). The Amended Note shall provide,
inter alia, as follows:
(a) the annual interest rate accruing on the Amended Note from and
after the Foreclosure Date shall be reduced to six (6%)percent per
annum;
(b) the maturity date of the Amended Note shall be extended to December 31,
2002;
(c) Lender shall retain its liens on the Technologies Collateral and
the Vidikron Collateral to secure payment of the Indebtedness
Balance represented by the Amended Note; and
(d) Lender shall have conversion rights with respect to the common stock of
Borrower based on a conversion rate of 80% of the closing bid price for
Borrower's common stock on the average of five (5) trading days
immediately preceding conversion.
4. Additional Agreements and Acknowledgements.
(a) By execution and delivery of this Agreement, Borrower hereby
acknowledges, confirms and reaffirms that the full amount of the
Indebtedness and its obligations in respect thereof are currently due and
payable and Borrower has no claim, defense, setoff or counterclaim against
the Lender or any of its officers, directors, employees, affiliates, agents
or attorneys with respect to such amounts. In addition, Borrower hereby
acknowledges that the Loan Documents are in full force and effect and there
are no oral agreements or understandings that modify or alter the terms
thereof. Nothing contained in this Agreement shall constitute a waiver of,
or affect the enforceability of, any other Document. Borrower hereby
expressly waives any right to notice of sale or any right to a public sale
under the Uniform Commercial Code, as in effect in New York.
(b) Lender reserves any and all rights and remedies it may have against the
Borrower and any and all Collateral provided by the Loan Documents or
hereby. Nothing contained in this Agreement shall constitute a limitation
upon or waiver of such rights and remedies available to Lender under the
terms of the Loan Documents nor shall anything contained herein absolve the
Borrower from any liability arising pursuant to the terms of the Loan
Documents and the Note, as amended pursuant to this Agreement and the
Amended Note from and after the Foreclosure date.
(c)Borrower agrees to pay on demand all reasonable fees and expenses
incurred by Lender (including, without limitation, the fees and
disbursements of counsel) in connection with the Indebtedness, the
preparation, execution, delivery, enforcement, maintenance, and amendment
of this Agreement and the documents and instruments referred to herein,
including, without limitation, the fees and expenses incurred by Lender
(including, without limitation, the reasonable fees and disbursements of
counsel) in connection with any waiver or consent to the Loan Documents,
and in connection with any restructuring of the Loan Documents, and
enforcement thereof and collection and credit administration thereunder.
5. Representations and Warranties.
(a)In order to induce Lender to enter into this Agreement, Borrower hereby
represents that (i) it is a corporation legally existing and in good
standing under the laws of the State of Florida and is qualified to
transact business as a foreign corporation in all states where it is
required to be so qualified and where the failure to be so qualified would
have a Material Adverse Effect; (ii) it has adequate corporate power and
authority to execute, deliver and perform this Agreement, and the
transactions contemplated hereby; (iii) this Agreement, constitutes a valid
and binding obligation of it, enforceable in accordance with its terms
except to the extent that enforcement may be limited by applicable
bankruptcy, insolvency, reorganization, or other similar laws affecting
creditors' rights generally and by equitable principles (regardless of
whether enforcement is sought in equity or at law); (iv) the execution,
delivery and performance by it of this Agreement and the transactions
contemplated hereby have all been duly authorized by all corporate action
and will not violate the provisions of Borrower's Certificate of
Incorporation or By-laws or any applicable law or the order of any court or
other agency of government and will not result in any breach of the terms
of any agreement or, except to the extent expressly provided for hereunder,
give rise to any lien on the assets of Borrower; (v) all authorizations,
approvals, registrations or filings from or with any governmental or public
regulatory body or authority of the United States or of any state thereof
required for the execution, delivery and performance by it of this
Agreement or the transactions contemplated hereby have been duly obtained
or made and are in full force and effect; and (vi) as at the Foreclosure
Date, Vidikron will not have any intercompany obligations or indebtedness
owed to Technologies or its other affiliates.
(b)Lender hereby represents that (i) it legally exists and is in good standing
under the laws of the jurisdiction under which it exists; (ii) it has
authority to execute, deliver and perform this Agreement and the
transactions contemplated hereby; (iii) this Agreement, constitutes a valid
and binding obligation of it, enforceable in accordance with its terms
except to the extent that enforcement may be limited by applicable
bankruptcy, insolvency, reorganization, or other similar laws affecting
creditors' rights generally and by equitable principles (regardless of
whether enforcement is sought in equity or at law); (iv) the execution,
delivery and performance by it of this Agreement and the transactions
contemplated hereby have all been duly authorized and will not violate the
provisions of Lender's Articles of Organization or By-laws or any
applicable law or the order of any court or other agency of government; and
(v) there is no action, suit or proceeding pending, or to its knowledge
threatened, at law or in equity or by or before any arbitrator or
arbitration panel or governmental instrumentality or other agency or any
investigation of its affairs, or any of its properties or rights which, if
adversely determined, would materially affect its ability to perform its
obligations under this Agreement or to consummate the transactions
contemplated hereby.
6. Release and Waiver of Claims.
(a)For and in consideration of the mutual covenants and obligations set forth
in this Agreement and other good and valuable consideration, the receipt of
which is hereby acknowledged, Borrower and Vidikron (each, a "Releasor")
hereby releases and forever discharges, and by these presents does for its
subsidiaries, if any (direct or indirect), and itself and its predecessors,
successors, affiliates and assigns, remise, release and forever discharge
and hold harmless Lender and each of its predecessors, affiliates,
subsidiaries (direct or indirect), shareholders, officers, directors,
employees, agents, advisor or attorneys, successors and assigns, of and
from and against all manner of action and actions, cause and causes of
action (whether individual, derivative or representative), suits, debts,
dues, sums of money, accounts, fees, reckonings, bonds, bills, specialties,
covenants, contracts, controversies, agreements, promises, damages, costs,
expenses, claims and demands whatsoever, in law or in equity which the
Releasor ever had, now has, or which hereinafter can, shall or may have by
reason of any matter, claim or cause of action of any kind whatsoever, from
the beginning of the world to the date of this Agreement, whether known or
unknown, including, without limitation, those relating in any way to: (i)
this Agreement, the Loan Documents and any and all other Documents, (ii)
any claims (including without limitation for contribution or
indemnification) which have or could have arisen out of any of the
transactions contemplated or any other proceedings that have been brought
or may be brought by any party hereto or to any Document or any third party
relating to this Agreement, the Loan Documents, or the transactions
contemplated hereby or thereby, (iii) any acts, transactions, or events
that are the subject matter of this Agreement, the Loan Documents, or
agreements related thereto, (iv) the communications and business dealings
between Lender and the Releasor from the beginning of communications and
business dealings between Collateral Agent and Lender on the one hand and
the Releasor on the other, related in any way to this Agreement, the Loan
Documents, the Forbearance Agreement, or the transactions contemplated
hereby or thereby, or (v) the prosecution of any claim, defense, setoff,
counterclaim or any settlement negotiations which the Releasor ever had,
now has or which they, their affiliates (direct or indirect), or their
successors or assigns hereafter can, shall or may have against Lender,
provided, however, that nothing herein shall be construed or deemed to
release any covenants or agreements contained in this Agreement.
(b)Upon satisfaction of its obligations and payment in full of the
Indebtedness Balance, as same may change from time to time, in accordance
with the terms hereof and the terms of the Amended Note, for and in
consideration of the mutual covenants and obligations set forth in this
Agreement and other good and valuable consideration, the receipt of which
is hereby acknowledged, Lender hereby releases and forever discharges, and
by these presents does for its subsidiaries, if any (direct or indirect),
and itself and its predecessors, successors, affiliates and assigns,
remise, release and forever discharge and hold harmless each of
Technologies and Vidikron of and from and against all manner of action and
actions, cause and causes of action (whether individual, derivative or
representative), suits, debts, dues, sums of money, accounts, fees,
reckonings, bonds, bills, specialties, covenants, contracts, controversies,
agreements, promises, damages, costs, expenses, claims and demands
whatsoever, in law or in equity which the Lender ever had, now have, or
which hereinafter can, shall or may have by reason of any matter, claim or
cause of action of any kind whatsoever, from the beginning of the world to
the date of this Agreement, whether known or unknown, including, without
limitation, those relating in any way to: (i) this Agreement, the Loan
Documents, and any and all other Documents, (ii) any claims (including
without limitation for contribution or indemnification) which have or could
have arisen out of any of the transactions contemplated or any other
proceedings that have been brought or may be brought by any party hereto or
to any Document or any third party relating to this Agreement, the Loan
Documents, or the transactions contemplated hereby or thereby, (iii) any
acts, transactions, or events that are the subject matter of this
Agreement, the Loan Documents, or agreements related thereto, (iv) the
communications and business dealings between Lender on the one hand, and
Borrower and/or Vidikron on the other hand, from the beginning of
communications and business dealings between Lender on the one hand, and
the Borrower and/or Vidikron on the other hand, related in any way to this
Agreement, the Loan Documents, or the transactions contemplated hereby or
thereby, or (v) the prosecution of any claim, defense, setoff, counterclaim
or any settlement negotiations which the Lender ever had, now has or which
they, their affiliates (direct or indirect), or their successors or assigns
hereafter can, shall or may have against Borrower and/or Vidikron,
provided, however, that nothing herein shall be construed or deemed to
release any covenants or agreements contained in this Agreement. The
provisions of this subparagraph 6(b) shall be of no force and effect unless
and until the entirety of the Indebtedness Balance, as same may change from
time to time, shall have been paid in full in accordance with the terms of
this Agreement and the Amended Note.
(c)Each party hereto represents, acknowledges and agrees that (i) it did not
enter into this Agreement under any form of duress, and did so voluntarily
and of its own free will, and (ii) it has received and will receive benefit
from and as a result of its execution of and performance under this
Agreement.
7. Indemnity. Borrower hereby agrees to indemnify Lender from and against all
losses, costs, expenses, demands and damages whatsoever which Lender may
suffer or incur in respect of any claims which have or may be brought by
any third party relating to this Agreement or the transactions contemplated
hereby; provided, however, that to the extent such claims shall be the
result of Lender having failed to act in a commercially reasonable manner,
then Borrower shall be under no obligation to indemnify Lender. This
indemnity shall continue in full force and effect notwithstanding
completion of the other matters referred to in this Agreement.
8. Miscellaneous.
(a)Writings Required. No amendment or waiver of any provision of this
Agreement nor consent to any departure by Borrower or any Obligor
therefrom, shall in any event be effective unless the same shall be in
writing and signed by Lender, and then such waiver or consent shall be,
effective only in the specific instance and for the specific purpose given.
(b)Relief from Automatic Stay in Bankruptcy. Borrower and Vidikron knowingly,
voluntarily, intentionally agree with Lender that notwithstanding anything
to the contrary contained in this Agreement or the Loan Documents, in the
event an order for relief under any chapter of title 11 of the United
States Code, 11 U.S.C. ss. 101, et. Seq. (the "Bankruptcy Code") is entered
with respect to Borrower or Vidikron (it being understood that this
Agreement is not intended to preclude such a filing), the following
provisions shall be applicable:
(i)Lender shall be entitled to the immediate termination of the automatic stay
provisions of 11 U.S.C. ss. 362 (and any other relevant provisions of the
Bankruptcy Code), and granted unconditional relief from the automatic stay
and allowed to pursue any and all rights, remedies and recourses available
to Lender under this Agreement and the Loan Documents and pursuant to any
provisions of applicable law. Lender only shall be required to file a
motion for relief from the automatic stay provisions of 11 U.S.C. ss. 362
and Borrower and Vidikron hereby consent to an emergency hearing thereon.
Borrower and Vidikron hereby waive the right to oppose the motion or assert
any defense to the relief requested by Lender. Lender is authorized to
submit an affidavit with the motion (a) in identifying the existing
defaults and any Events of Default hereunder or under the other Loan
Documents, (b) stating the amount of the Obligations and (c) advising the
bankruptcy court of Borrower's and Vidikron's consent to unconditional
relief from the automatic stay.
(ii)Borrower and Vidikron shall not without Lender's written consent, seek to
obtain financing under 11 U.S.C. ss. 364 that will result in the granting
of liens and security interests in the Pledged Collateral and Collateral
with priority over Lender's liens and security interests.
(iii)Lender's entitlement as aforesaid to the lifting of the automatic stay
hereunder by the appropriate bankruptcy court shall be deemed "for cause"
pursuant to ss. 362(d)(1) of the Bankruptcy Code as amended from time to
time.
(c)UCC Waivers.
(i)Borrower and Vidikron will not, directly or indirectly, do any act or fail
to do any act, which would impair or affect Lender's security interest in
any collateral heretofore provided to Lender, nor will Borrower or
Vidikron, upon any default or Event of Default under this Agreement or the
other Loan Documents, contest Lender's right to obtain judgment against
Borrower or to foreclose upon any collateral pledged to Lender, nor will
Borrower move to vacate or enjoin such judgment or foreclosure.
(ii)Borrower and Vidikron each waives and renounces all rights which are
waivable under Article 9 of the UCC, whether such rights are waivable
before or after default, including, without limitation, those rights with
respect to compulsory disposition of collateral, any right of redemption,
and any right to notice relating to disposition of collateral.
(d) No Waiver.
No failure on the part of Lender to exercise, and no delay in
exercising, any right hereunder shall preclude any other or
further exercise thereof or the exercise of any other right.
The remedies herein provided are cumulative and not exclusive
of any provided by law.
(e) Governing Law.
The Agreement shall be governed by and construed in accordance
with the laws of the State of New York.
(f) Counterparts.
This Agreement may be executed in any number of counterparts,
each of which counterparts, when so executed and delivered
shall be deemed to be an original and all of which
counterparts, taken together, shall constitute but one and the
same Agreement.
(g) Binding Effect.
This Agreement shall be binding upon, and shall inure to the
benefit of, Borrower and Lender and their respective
successors and assigns except that Borrower may not assign or
transfer its rights or obligations hereunder.
(h) Notices.
Notices shall be given to Lender and Borrower by certified mail or
telecopier addressed to:
Lender: Market LLC
x/x Xxxxxxxxx Xxxxxxxxxx
Xxxxxxx Xxxxx
0xx Xxxxx
Xxxxxxxxxx Drive
P.O. Box 972
Road Town
Tortola, British Virgin Islands
Telephone:
Facsimile: (000) 000-0000
Borrower or
Vidikron: Xxxxxxxx Technologies, Inc.
c/o 00 Xxxxxxxxx Xxxxxx
Xxxx X
Xxxxx Xxxxx, XX 00000
Attn: Xx. Xxxxx Xxxxxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
with a copy to:
Blank Rome Xxxxxx Xxxxxxxxxx LLP
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxx X. Xxxxxxxx, Esq.
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
or, as to each party, at such other address as shall be designated by such party
in a written notice to the other party. All such notices shall be effective when
deposited in the mails or sent by telecopier, respectively, except that notices
to Lender shall not be effective until received by Lender.
(i) Consent to Jurisdiction; Waiver of Jury Trial.
(A)Borrower, Vidikron and Lender irrevocably submit to the jurisdiction of any
New York State or Federal court sitting in the City of New York over any
suit, action, or proceeding arising out of or relating to this Agreement or
the transactions contemplated hereby and Borrower, Vidikron and Lender
hereby irrevocably agree that all claims in respect of such action or
proceeding may be heard and determined in such New York State court, or to
the extent permitted by law, in such Federal court. Borrower and Vidikron
irrevocably waives, to the fullest extent permitted by law, any objection
which it may now or hereafter have to the laying of the venue of any such
suit, action, or proceeding brought in such a court and any Claim that any
such suit, action or proceeding has been brought in an inconvenient forum.
(B)BORROWER, VIDIKRON AND LENDER HEREBY KNOWINGLY, VOLUNTARILY AND
INTENTIONALLY WAIVE THEIR RIGHT TO A TRIAL BY JURY IN RESPECT TO ANY
LITIGATION BASED ON THIS AGREEMENT OR THE FACILITY LOAN DOCUMENTS OR
ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT OR THE FACILITY
LOAN DOCUMENTS OR ANY AGREEMENT CONTEMPLATED TO BE EXECUTED IN CONJUNCTION
THEREWITH, OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER
VERBAL OR WRITTEN), OR ACTIONS OF ANY OF THE PARTIES, INCLUDING LENDER'S
OFFICERS, DIRECTORS, EMPLOYEES, AGENTS OR ATTORNEYS. THIS PROVISION IS A
MATERIAL INDUCEMENT FOR LENDER TO ENTER INTO THIS AGREEMENT.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed as of the day and year first above written.
XXXXXXXX TECHNOLOGIES, INC.
By: _________________
Name: Xxxxx Xxxxxxxx
Title: President
VIDIKRON OF AMERICA, INC.
By: _________________
Name: Xxxx Xx, CPA
Title: Acting C.F.O
MARKET LLC
By:
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Name:
Title:
