ICF Corporation Concord, CA 94520 Attention: Chief Financial Officer Dear Sir/Madame:
EXHIBIT
1.1
April
13,
2007
ICF
Corporation
0000
Xxxx
Xxxx
Concord,
CA 94520
Attention: Chief
Financial Officer
Dear
Sir/Madame:
Re: Outstanding
Obligations Between ICF Corporation(f/k/a COMC, Inc.) and Laurus Master Fund,
Ltd.
WHEREAS,
ICF Corporation, a Delaware corporation (the “Company”), and Laurus Master Fund,
Ltd. (“Laurus”) are parties to (i) a Securities Purchase Agreement dated as of
November 30, 2004 (as amended, modified or supplemented from time to time,
the
“Purchase Agreement”); (ii) the Related Agreements referred to in the Purchase
Agreement, as the same may have been amended restated, modified or supplemented
from time to time; (iii) a Security Agreement by and among the Company, IFC
Communication Solutions, Inc. (“IFC”), and Xxxxxx dated as of November 30, 2004
(as amended, modified or supplemented from time to time, the “Security
Agreement”); (iv) the Ancillary Agreements referred to in the Security
Agreement, as the same may have been amended restated, modified or supplemented
from time to time; and (v) any other written agreements, including, but not
limited to, any stock purchase warrants or options heretofore issued by the
Company to Laurus (the documents referred to in items (i) through (v) above,
each as amended, restated, modified or supplemented from time to time being
referred to collectively herein as the “Security Documents”);
WHEREAS,
pursuant to the Purchase Agreement, Xxxxxx purchased a Secured Convertible
Term
Note (as amended, restated, modified or supplemented from time to time, the
“Term Note”) in the aggregate principal amount of $2,000,000;
WHEREAS,
pursuant to the Security Agreement, Xxxxxx agreed to make certain loans to
the
Company not to exceed $4,500,000 in the aggregate principal amount at any time
outstanding, to be evidenced by one or more Secured Minimum Borrowing Notes
and
a Secured Revolving Note (together with the Term Note, each as amended, modified
or supplemented from time to time, the “Notes”, and collectively with the
Security Documents, the “Laurus Documents”);
WHEREAS,
certain events of default have occurred under the Laurus Documents
(collectively, the “Defaults”); and
WHEREAS,
as of April 13, 2007, the aggregate outstanding principal amount due under
the
Notes is $5,194,611.15 (the “Obligations”).
Xxxxxx
proposes settlement of the Defaults and the assignment of the Obligations to
Xxxxx Xxxx (together with any co-investors, “Xxxx”) pursuant to the terms set
out in this letter agreement (the “Letter Agreement”):
|
1.
|
Upon
the execution hereof, (i) first, Xxxxxx (subject to the consummation
of
the other transactions contemplated in this Section 1 and Section
2 of
this Letter Agreement) hereby forgives any and all accrued interest
and
penalties on the Obligations, and (ii) then, Laurus hereby sells
and
assigns to Xxxx, and Xxxx purchases and acquires from Laurus, all
of
Laurus’ right, title and interest in and to the Notes and the Obligations
thereunder, together with any security interests, liens, encumbrances
and
mortgages securing the Obligations, in exchange for a payment from
Xxxx to
Laurus in the sum of $2,000,000 plus the amount, if any, by which
the
Obligations exceed $5,200,000 or minus the amount, if any, by which
the
Obligations are less than $5,200,000, in cash via wire transfer in
immediately available funds in accordance with the wire transfer
instructions set forth on Exhibit A hereto. Such sale and assignment
shall
be made by Xxxxxx without representation or warranty (other than
of title)
and shall otherwise be without recourse to Laurus. Upon the consummation
of such sale and assignment, in no event shall the Company make,
nor shall
Xxxx accept, any payments on the Obligations, except for equity issued
upon conversion thereof in accordance with Section 4 of this Letter
Agreement.
|
|
2.
|
Laurus
hereby agrees that upon its receipt from the Company of five-year
warrants
(the “Laurus Warrants”) to purchase a number of shares of Common Stock of
the Company (“Common Stock”) that equals 30% of the outstanding shares of
Common Stock (giving effect to the transactions contemplated in Section
4
of this Letter Agreement) on a fully-diluted basis, at a price of
$0.01
per share in the form attached hereto as Exhibit B, all warrants
or
options heretofore issued by the Company to Laurus (other than the
Laurus
Warrants) shall be cancelled.
|
|
3.
|
The
Company shall use commercially reasonable efforts, consistent with
the
Company’s directors’ fiduciary duties, to cause the shareholders of the
Company to sell the Company within 24 months from the date hereof
(the
“Sale Transaction”). The Company agrees to consult with Xxxxxx with
respect to any proposed Sale Transaction. A Sale Transaction shall
include
(i) a sale of all or substantially all of the assets of the Company
in an
arm’s length transaction; (ii) a sale by the shareholders of the Company
of shares representing at least 50%, on a fully diluted basis, of
the
equity interest of the Company in an arm’s length transaction; or (iii) a
corporate transaction (including a merger) conducted in an arm’s length
manner, following which the current shareholders of the Company cease
to
hold, in the aggregate, at least 50%, on a fully diluted basis, of
the
equity interest of the entity surviving such merger or other transaction.
So long as Laurus holds any portion of the Laurus Warrants, as further
consideration for settlement of the Defaults and the assignment of
the
Obligations, as the case may be, (i) the Company, in respect of a
Sale
Transaction consummated pursuant to clause (i) above, and (ii) Xxxx,
in
respect of a Sale Transaction consummated pursuant to either clause
(ii)
or (iii) above, hereby agree to pay, transfer and/or forward to Laurus
the
Applicable Percentage (as defined below and as determined as of the
date
of payment) of the payment received by the Company, Xxxx and other
affiliates of the Company, as applicable, in consideration of such
Sale
Transaction (the “Required Payment”).
|
-2-
The
Applicable Percentage shall mean: (x) in respect of the first $2,000,000 of
Cash
Net Proceeds (as defined below), the product of (I) 0.5 multiplied by (II)
the
sum of (A) the percentage of the Company’s issued and outstanding Common Stock
which, as of the date of determination, is held and/or may be acquired by Laurus
upon exercise of the Laurus Warrants plus (B) the percentage of the Company’s
issued and outstanding Common Stock which, as of the date of determination,
is
held and/or may be acquired by Xxxx and other affiliates of the Company upon
exercise of securities of the Company held by Xxxx and other affiliates of
the
Company as of the date of determination, and (y) in respect of (i) Cash Net
Proceeds received in excess of the first $2,000,000 of Cash Net Proceeds
described in (x) above and/or (ii) consideration received through the issuance
of securities, the percentage of the Company’s issued and outstanding Common
Stock which, as of the date of determination, is held and/or may be acquired
by
Laurus upon exercise of the Laurus Warrants. Notwithstanding anything herein
to
the contrary, the Required Payment otherwise required hereunder shall be reduced
by such amounts disbursed to Laurus after the date hereof if such amounts are
disbursed by the Company or a third party to Laurus solely in its capacity
as an
equity holder of the Company without reference to the obligations of the Company
and Xxxx set forth in this Section 3. For purposes of this Letter Agreement,
“affiliate” shall have the meaning contained in the Securities Act of 1933, as
amended (the “Securities Act”), and “Cash Net Proceeds” shall mean the gross
cash proceeds received from a Sale Transaction, after subtracting out-of-pocket
transaction costs and sales tax (if any) (for the avoidance of doubt, it is
understood and agreed that securities and other property shall not be deemed
to
be Cash Net Proceeds unless such property (but not securities, which shall
never
be deemed Cash Net Proceeds) received by the Company or shareholders, as
applicable, in consideration of a Sale Transaction is converted into cash within
24 months of the date hereof). During the 24 month period following the date
hereof, the parties hereto agree to provide Laurus upon its request with an
accounting of all such property (but not securities) received by such party
in
consideration of a Sale Transaction. Upon consummation of a Sale Transaction
that does not include the sale by Xxxxxx of the Laurus Warrants to a third
party, and receipt by Xxxxxx of the Required Payment, the Laurus Warrants shall
be cancelled at the discretion of the Company.
|
4.
|
The
Company shall use commercially reasonable efforts to cause the
shareholders of the Company to convert any and all outstanding debt
of the
Company to five-year warrants (the “Warrants”) within 120 days after the
date hereof (provided that the Company may offer shares to creditors
who
are not affiliates (as defined in Section 3)). The Warrants and the
debt
conversion with respect to creditors who are affiliates shall be
on no
better terms to such affiliates than the terms of the warrant certificate
set forth as Exhibit B hereto.
|
|
5.
|
In
the case the consideration for a Sale Transaction consists of securities,
and if Laurus as an equity holder of the Company otherwise would
be
entitled in connection with such Sale Transaction to receive in excess
of
9.99% of the issued and outstanding shares of common stock of the
issuer
of such securities, the Company or Xxxx, as applicable, shall take
whatever action as shall be reasonably requested by Laurus so that
Xxxxxx
shall instead receive warrants or options at a nominal exercise price
to
acquire the same number of such securities.
|
-3-
|
6.
|
Subsequent
to the Sale Transaction, if the Sale Transaction constitutes the
sale of
all or substantially all the assets of the Company, the Company shall
use
commercially reasonable efforts to cause the outstanding capital
stock of
the Company (the “Corporate Shell”) to be sold to a third party. Any
consideration payable to the Company or the stockholders of the Company
who are affiliates (as defined in Section 3 hereof) in connection
with
such sale of the Corporate Shell shall be paid to Laurus and shall
not
reduce any other obligations of the Company under this Letter Agreement.
Prior to the Company notifying Xxxxxx of a pending sale of the Corporate
Shell to a third party, Xxxxxx shall have the option of acquiring
the
Corporate Shell by paying the non-affiliated stockholders their
proportionate share of the fair value of the Corporate Shell.
|
|
7.
|
a)
Special Representations. Xxxx understands that the Notes are being
offered
pursuant to an exemption from registration contained in the Securities
Act
of 1933, as amended (the “Securities Act”), based in part upon Xxxx’x
representations contained in this Agreement, including, without
limitation, that Xxxx is an “accredited investor” within the meaning of
Regulation D under the Securities Act. Xxxx has received or has had
full
access to all the information it considers necessary or appropriate
to
make an informed investment decision with respect to the Notes to
be
assigned to it under this Agreement and the securities acquired by
it upon
the conversion of the Notes.
|
(b) Xxxx
Bears Economic Risk. Xxxx has substantial experience in evaluating and investing
in private placement transactions of securities in companies similar to the
Company so that it is capable of evaluating the merits and risks of its
investment in the Company and has the capacity to protect its own interests.
Xxxx must bear the economic risk of this investment until the Notes and
securities are sold pursuant to (i) an effective registration statement under
the Securities Act, or (ii) an exemption from registration is
available.
(c) Investment
for Own Account. The Notes are being sold to Xxxx for its own account for
investment only, and not as a nominee or agent and not with a view towards
or
for resale in connection with their distribution.
(d) Xxxx
Can
Protect Its Interest. Xxxx represents that by reason of its, or of its
management’s, business and financial experience, Xxxx has the capacity to
evaluate the merits and risks of its investment in the Notes, and the Securities
and to protect its own interests in connection with the transactions
contemplated in this Agreement. Further, Xxxx is aware of no publication of
any
advertisement in connection with the transactions contemplated in the
Agreement.
(e) Accredited
Investor. Xxxx represents that it is an accredited investor within the meaning
of Regulation D under the Securities Act.
-4-
|
8.
|
This
Letter Agreement shall be binding upon the Company, ICF, Xxxx and
Laurus.
The parties shall endeavor to complete and execute all formal
documentation contemplated herein.
|
|
9.
|
This
Letter Agreement shall be governed by the laws of New York without
regard
to its principles of conflicts of
law.
|
|
10.
|
This
Letter Agreement shall constitute the entire agreement between the
parties
with respect to the subject matter hereof and supersedes all prior
and
subsequent agreements, understandings, negotiations and discussions,
whether oral or written, between the parties. No statement made by
either
party (whether oral or written, express or implied), no course of
conduct
between the parties, and no other conditions, representations, warranties,
or other agreements between the parties in respect of the subject
matter
of this Letter Agreement (whether oral or written, express or implied,
statutory, equitable, or otherwise), shall bind the parties in the
absence
of a duly executed written
agreement.
|
|
11.
|
Neither
party shall make any public announcements or disclosures regarding
the
subject matter of this Letter Agreement (including, without limitation,
the announcement or disclosure of the existence or terms of this
Letter
Agreement) without the prior written consent of the other party,
except as
may be required by applicable law. The form of any such announcements
or
disclosures shall be submitted to the other party for prior written
approval (which approval shall not be unreasonably
withheld).
|
|
12.
|
This
Letter Agreement may be executed in any number of and by different
parties
hereto on separate counterparts, all of which, when so executed,
shall be
deemed an original, but all such counterparts shall constitute one
and the
same agreement. Any signature delivered by a party by facsimile or
electronic pdf transmission shall be deemed to be an original signature
hereto.
|
|
13.
|
On
and after consummation of the transactions described in Sections
1 and 2
above, each of Laurus and the Company, their successors and assigns,
if
any, and their agents, servants, employees, affiliates, parent and
subsidiary entities and attorneys, do hereby unconditionally and
irrevocably hold harmless, remise, release, quitclaim and forever
discharge each other and each other’s respective successors and assigns,
present or past directors, officers, employees, agents, affiliates,
parent
and subsidiary entities, stockholders, partners, attorneys, heirs,
executors and administrators, if any, of and from any and all rights,
liabilities, debts, sums of money, actions, causes of action, suits,
covenants, contracts, controversies, agreements, promises, damages,
judgments, executions, claims and demands, whatsoever, in law or
in
equity, whether now known or unknown, anticipated or unanticipated,
contingent or accrued, which either party has or may have against
the
other party by reason of any matter or thing whatsoever from the
beginning
of the world until the date of this Letter Agreement, except only
for the
obligations set forth in this Letter Agreement.
|
|
14.
|
The
parties agree from time to time to execute and deliver all further
documents and instruments and to do such further acts and things
as any
other party may reasonably request in order to effectively carry
out the
transactions contemplated by this Letter
Agreement.
|
* * *
-5-
Please
indicate your acceptance of the terms and conditions hereof on or before April
13, 2007, by signing below and returning this Letter Agreement by fax to Xxxxxxx
Xxxxx, Laurus Capital Management (fax: 000-000-0000).
Yours
truly,
|
LAURUS
MASTER FUND, LTD.
|
||
|
By:
|
/s/
Xxxxxx Xxxx
|
|
|
Name:
Xxxxxx Xxxx
|
||
|
Title:
|
||
|
Xxxxxx
and accepted this 13th day of April, 2007
|
||
|
ICF
CORPORATION
|
||
|
By:
|
/s/
Xxxxxx X. Xxxxxxxxx
|
|
|
Name:
Xxxxxx X. Xxxxxxxxx
|
||
|
Title:
Chairman
|
||
|
IFC
COMMUNICATION SOLUTIONS, INC.
|
||
|
By:
|
/s/
Xxxxxx X. Xxxxxxxxx
|
|
|
Name:
Xxxxxx X. Xxxxxxxxx
|
||
|
Title:
Chairman
|
||
|
/s/
Xxxxx Xxxx
|
||
|
Xxxxx
Xxxx
|
||
-6-
