4.3 XXXXXXXX X. XXXXX RESTRUCTURING AGREEMENT
RESTRUCTURING AGREEMENT
This RESTRUCTURING AGREEMENT (this "Agreement") is dated as of February 1,
2001 by and between xxxxxxxx.xxx, a Nevada Corporation (the "Company") and
Xxxxxxxx X. Xxxxx and the X.X. Xxxxx Family Limited Partnership (individually
and collectively "LTS" as the context may require).
WHEREAS:
1. Xxxxxxxx X. Xxxxx, an individual, resides at Xxx 000,
Xxxxxxx-xx-Xxxxxxxx, Xxxxxxxxxxxx 00000.
2. Xxxxxxxx X. Xxxxx is empowered to execute this Agreement on behalf of
the X.X. Xxxxx Family Limited Partnership (the "FLP").
3. Xxxxxxxx X. Xxxxx is a stockholder, individually and through the FLP,
of the Company, as well as Chairman and a director of the Company.
4. LTS is the holder of the following convertible notes issued by the
Company totaling $730,000 in aggregate face value wherein each note is
convertible into common stock of the Company at a value, among other
alternatives, at one-half of the trailing ten day closing stock price on the
date of conversion notice (collectively, the "Conversion Notes"):
Dated Amount
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February 8, 2000 $100,000
August 18, 2000 $ 30,000
September 28, 2000 $100,000
November 6, 2000 $100,000
December 7, 2000 $100,000
December 18, 2000 $100,000
January 5, 2001 $ 50,000
January 8, 2001 $ 50,000
January 12, 2001 $ 50,000
January 12, 2001 $ 50,000
5. LTS has been issued warrants to purchase the Company's shares in the
following amounts:
Issue Date Number Exercise Price
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December 31, 2000 2,000,000 $ 0.25 per share
May 1, 2000 166,667 $ 4.00 per share
December 31, 2000 617,026 $ 0.125 per share
January 5, 2001 71,747 $ 0.125 per share
January 8, 2001 71,747 $ 0.125 per share
January 12, 2001 71,747 $ 0.125 per share
January 12, 2001 71,747 $ 0.125 per share
In addition, LTS has agreements in place that obligate the Company to issue
further warrants to him, subject to LTS providing additional capital to the
Company. The warrants issued, as enumerated above, as well as the warrants to
be issued shall be collectively referred to herein as the "Warrants."
6. LTS has either distributed to or had the Company issue directly some
portion of the Warrants to parties other than Xxxxxxxx X. Xxxxx or the X.X.
Xxxxx Family Limited Partnership (the "Distributed Warrants"). LTS represents
that he is empowered to act on behalf of any and all holders of Distributed
Warrants.
7. LTS is the holder of a $12,500 demand note issued by the Company, dated
April 5, 2000 (the "Demand Note").
8. As part of that certain Senior Convertible Note Purchase Agreement
between LTS and the Company, dated November 29, 2000, LTS is obligated to
purchase an aggregate of $600,000 in additional Conversion Notes subsequent to
the date of this agreement, collectively known as the "New Conversion Notes."
9. The parties to this Agreement acknowledge that LTS has economic
interests in the Company not specifically enumerated herein (the "Other
Interests"), including, but not limited to:
a. A subordinated convertible note dated February 24, 2000 with a face
value of $100,000 with a 12% annual interest rate.
b. Options granted to Xxxxxxxx X. Xxxxx as Chairman and a director of the
Company under the xxxxxxxx.xxx 1999 Stock Incentive Plan.
10. As part of the various agreements wherein LTS has purchased stock,
warrants and/or convertible notes from the Company over time, LTS was granted
blanket demand registration rights on all securities owned, then or in the
future. These registration rights, without enumeration, in their entirety
shall be referred to herein as the "Demand Registration Rights".
NOW THEREFORE, in consideration of the foregoing premises, and for other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto, intending to be legally bound, hereby agree
as follows:
1. LTS Economic Interests Restructuring (the "Restructuring").
a. The $730,000 of Conversion Notes issued to LTS as of the date of this
Agreement will be converted to common equity of the Company at a rate of $0.10
per share, for a total of 7,300,000 shares (the "Conversion").
b. All interest on the Conversion Notes will be converted to common stock
at the rate of ten (10) shares of common stock per dollar of accrued interest.
The effective date of the calculation of accrued interest on the Conversion
Notes will be January 31, 2001.
c. The Demand Note and accrued interest thereon will be exchanged for a
term note bearing a simple annual interest rate often percent (10%), which due
date will be March 31, 2002, with interest due at maturity.
d. The parties hereto acknowledge that it will be necessary to seek
shareholder approval to increase the Company's number of authorized shares to
permit all aspects of this Agreement to be implemented (the "Shareholder
Approval"). LTS agrees to vote his/its shares in favor of such increase as the
Company's Board of Directors shall recommend to the Company's shareholders at
the next immediate shareholder meeting.
e. All New Conversion Notes issued after the date hereof and prior to
Shareholder Approval will be issued as simple term notes with a common due
date of July 31, 2001, and with each bearing a simple annual interest rate of
ten percent (10%) (the "New Notes"). The interest on the New Notes shall
accrue and be paid upon maturity or conversion, as the circumstances warrant.
As contemplated herein, the face value of such New Notes will aggregate
$600,000.
f. Upon completion and the effective date of the Shareholder Approval, all
of the New Notes shall be converted to common stock on the basis of 10 shares
of common stock for each dollar of principal amount outstanding. As
contemplated herein, this will result in six million (6,000,000) shares being
issued to the holder(s) of the New Notes. Furthermore, the accrued interest on
the New Notes up to and including the date of conversion shall also be
converted to common stock on the basis of 10 shares of common stock for each
dollar of accrued interest outstanding. The Company shall not be required to
issue any fractional shares.
g. LTS agrees to cancel all issued Warrants, as well as to cancel any
obligations of the Company under all agreements predating the date of this
Agreement to issue to him any further warrants after the effective date
hereof. Xxxxxxxx X. Xxxxx acknowledges that it is his sole responsibility to
accomplishing the cancellation of Warrants that may have been issued in the
names of others at his direction.
h. LTS agrees to cancel all registration rights (past, present and
future), including, but not limited to, the Demand Registration Rights
(collectively, the "Registration Rights") that have been granted to him. All
parties hereto acknowledge that registration rights such as LTS may have and
as are described in the general securities laws of the country including, but
not limited to, that section commonly referred to as Rule 144, remain
unaffected by this Agreement.
2. Compensation to LTS for Restructuring. In return for agreeing to the
terms of this Agreement, the Company agrees to issue to LTS or his/its
designees 1,765,000 common shares (the "New Shares"). The effective date of
this issuance shall be the effective date of the Shareholder Approval. In
addition, the Company agrees to issue a note to LTS or his/its designees in
the amount of $300,000, the substantial terms of which will be as follows: (a)
the note may be converted, in part or in whole and at the sole option of LTS,
into common shares of the Company at the rate of two shares per dollar of
principal amount converted, (b) the maturity date of the note shall be April
30, 2003, (c) the note shall carry a simple interest rate of 10%, (d) the
interest payable on the note shall accrue beginning on April 15, 2001, and
shall be paid at maturity or upon conversion of the note into common shares,
which ever is earlier, and (e) the interest accrued on the note may be paid in
cash or common stock on the same basis as the note is converted to common
stock at the sole option of the holder.
3. All parties to this Agreement agree and accept that the Other Interests
of LTS in the Company remain unaffected by this Agreement.
4. The Company represents and warrants to LTS that:
a. The Company has the corporate power and authority to execute, deliver
and perform this Agreement, and to execute, deliver and perform all other
documents and instruments required to be delivered by the Company.
b. This Agreement has been duly authorized, executed and delivered by the
Company. This Agreement is, and when executed and delivered by the Company
will be, a legal, valid and binding obligation of the Company, enforceable
against the Company in accordance with its terms.
c. Neither the execution or delivery of this Agreement by the Company, nor
the performance by the Company of the transactions contemplated hereby and
thereby, conflicts with, or constitutes a breach of or a default under (i) the
Certificate of Incorporation or By-Laws of the Company, (ii) any applicable
law or any applicable rule, judgment, order, writ, injunction or decree of any
court, (iii) any applicable rule or regulation of any administrative agency or
other governmental authority or (iv) any applicable agreement, indenture,
contract or instrument to which the Company is a party or by which it is
bound.
d. The shares of Common Stock to be issued by the Company pursuant to this
Agreement, when issued as contemplated herein, shall be duly and validly
authorized, fully paid and non-assessable.
5. Miscellaneous.
a. The representations and warranties made by the parties to this
Agreement shall survive the consummation of the transactions contemplated
herein. Anything in this Agreement to the contrary notwithstanding, the
representations and warranties of the Company and LTS shall not be affected by
any investigation made by or on behalf of any party hereto.
b. All notices or other communications permitted or required under this
Agreement shall be in writing and shall be sufficiently given if and when
hand-delivered to the persons set forth below or if sent by document overnight
delivery service or registered or certified mail, postage prepaid, receipt
acknowledged, or by facsimile, addressed as set forth below or to such other
person or persons and/or at such other address or addresses as shall be
furnished in writing by any party hereto to the others. Any such notice or
communication shall be deemed to have been given as of the date received, in
the case of personal delivery, or on the date shown on the receipt or
confirmation therefor in all other cases.
If to Xxxxxxxx X Xxxxx or to the X.X. Xxxxx Family Limited Partnership:
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Xxxxxxxx X. Xxxxx
X.X. Xxx 000
Xxxxxxx-xx-Xxxxxxxx, XX 00000
If to the Company:
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xxxxxxxx.xxx, Inc.
0000 Xxxxx 000
Xxxxxxxxxxx, XX 00000
Attention: Xxxxxx X. Xxxxxx
7. Any party hereto shall not assign this Agreement, or any rights
hereunder, or delegate any obligations hereunder, without the prior written
consent of all parties hereto.
8. This Agreement shall not be construed as giving any person, other than
the parties hereto and their permitted successors and assigns, any legal or
equitable right, remedy or claim under or in respect of this Agreement or any
of the provisions herein contained. This Agreement and all provisions and
conditions hereof is intended to be, and is, for the sole and exclusive
benefit of such parties, and permitted successors and assigns for the benefit
of no other person or entity.
9. The parties hereto may amend or modify this Agreement in any respect
only with the prior written consent of each party hereto. Any such amendment,
modification, extension or waiver shall be in writing. The waiver by a party
of any breach of any provision of this Agreement shall not constitute or
operate as a waiver of any other breach of such provision or of any provision
hereof, nor shall any failure to enforce any provision hereof operate as a
waiver of such provision or of any other provision hereof.
10. Each party hereto shall use best efforts to comply with all
requirements imposed hereby on such party and to cause the transactions
contemplated hereby to be consummated as contemplated hereby and shall, from
time to time and without further consideration, either before or after the
execution and delivery of this Agreement, the closing, execute such further
instruments and take such other actions as any other party hereto shall
reasonably request in order to fulfill its obligations under this Agreement
and to effectuate the purposes of this Agreement. Each party shall promptly
notify the other parties of any event or circumstance known to such party that
could prevent or delay the consummation of the transactions contemplated
hereby or which would indicate a breach or non-compliance with any of the
terms, conditions, representations, warranties or agreements of any of the
parties to this Agreement.
11. This Agreement constitutes the complete and entire agreement by,
between and among Xxxxxxxx X. Xxxxx, the FLP and the Company regarding the
restructuring of the LTS economic interests in the Company. Furthermore, the
parties hereto agree that this Agreement supercedes all prior agreements and
addenda thereto relating to the matters contained herein.
12. The interpretation, performance and enforcement of this Agreement
shall be governed by the laws of the Commonwealth of Pennsylvania without
resort to that state's conflict-of-laws principles.
13. This Agreement may be executed in two or more counterparts, each of
which shall be deemed an original; and any person may become a party hereto by
executing a counterpart hereof, but all of such counterparts together shall be
deemed to be one and the same instrument. It shall not be necessary in making
proof of this Agreement or any counterpart hereof to produce or account for
any of the other counterparts.
IN WITNESS WHEREOF, each of the parties has duly executed this Restructuring
Agreement as of this 1st day of February, 2001.
Signed:
/s/Xxxxxxxx X. Xxxxx /s/Xxxxxx X. Xxxxxx
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Xxxxxxxx X. Xxxxx, on behalf of the Xxxxxx X. Xxxxxx
X.X. Xxxxx Family Limited Partnership President and Chief Executive
Officer
xxxxxxxx.xxx, Inc.
/s/Xxxxxxxx X. Xxxxx
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Xxxxxxxx X. Xxxxx, individually
