AMENDMENT TO SETTLEMENT AGREEMENT
Exhibit 10.12
AMENDMENT TO SETTLEMENT AGREEMENT
This Settlement Agreement (the "Agreement") is made and effective as of the 22nd day of January 2011, by and between Xxxxxxxx X. Xxxxxxx "Xxxxxxx"), as one party, and Xxxxxxxxx Holdings, Inc. ("Xxxxxxxxx") and Xxxx Xxxxxxx Sens ("Sens"), as the other party (collectively the "parties").
WHEREAS, Xxxxxxx is the holder of a Confessed Judgment Promissory Note (the "Note") dated January 15, 2010 with a principal balance of $150,000, plus accrued interest through December 31,2010, and possible adjustments for changes in the price of gold as described therein, for a total amount owed of approximately $185,775 (the "Gross Amount Owed"), as of January 22,2011.
WHEREAS, Xxxxxxx granted Sens an option to purchase 500,000 shares of common stock of Xxxxxxxxx owned by Xxxxxxx for $51,000 (the "Option"), or $0.105 per share, pursuant to a Settlement Agreement between the parties dated January 15,2010;
WHEREAS, Xxxxxxx has since sold 100,000 shares of Xxxxxxxxx common stock as partial execution of the Option for $12,500 (the "Sold Xxxxxxxxx Shares"), but still holds 400,000 shares of Xxxxxxxxx common stock that are subject to the Option (the "Remaining Xxxxxxxxx Shares");
WHEREAS, Xxxxxxx will treat the Note as paid in full if he receives total proceeds of $186,500 from the sale of the Remaining Xxxxxxxxx Shares, and the Sold Xxxxxxxxx Shares, and shares that he will obtain upon conversion of the Note as described in section 2 below, which is not currently convertible;
NOW THEREFORE, for the consideration of the mutual covenants contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged by each party hereto, the parties hereby agree as follows:
1. Option Shares: The Option is hereby extended to February 28, 2011. Notwithstanding that the Remaining Xxxxxxxxx Shares are subject to the Option, Xxxxxxx may sell the Remaining Xxxxxxxxx Shares on the open market provided that he uses a limit price of $0.16 or higher, and any Remaining Xxxxxxxxx Shares that are sold will no longer be subject to the Option. Sens hereby waives any default by Kanakis arising from Xxxxxxx' sale of the Sold Xxxxxxxxx Shares while they were subject to the Option.
2. Conversion of Note: Xxxxxxx and Xxxxxxxxx hereby agree to convert the Note into 650,000 shares of Xxxxxxxxx common stock (the "Conversion Shares"). Xxxxxxxxx agrees to provide at its expense any legal opinion that its transfer agent requires to remove the restrictive legend from the Conversion Shares under Rule 144, provided that Kanakis provides any representation letter required by such attorney to confirm that Kanakis is eligible to sell such Conversion Shares under Rule 144. Xxxxxxxxx represents that Kanakis is currently eligible to sell all 650,000 of the Conversion Shares acquired hereunder under Rule 144. In particular, Xxxxxxx has a potential buyer (the "Conversion Shares Buyer") that has agreed to purchase all Conversion Shares for a total of $110,000 payable in full on or before March 31, 2011, and Xxxxxxxxx agrees to provide all legal opinions necessary to enable Kanakis to sell the Conversion Shares to the Conversion Shares Buyer without a restrictive legend.
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3. Nullification of Conversion of Note. Kanakis shall have the right at any time from 31 March, 2011 to June 30, 2011 to Nullify the Conversion Note event with Xxxxxxxxx, in full or in part, should he not be able to execute sale of his Option and/or Conversion Shares for fully paid proceeds totaling $186,500, which option shall be exercised by delivery of a written notice (a "Nullification Notice") to Xxxxxxxxx. In this event, Kanakis shall have the right to either return the remaining Conversion shares to Xxxxxxxxx, and/or the rights to any Stock Purchase Agreement for those shares. In the event Xxxxxxx does not have possession of the Conversion Shares, and has not been paid for the Conversion Shares by the Conversion Shares Buyer, then Kanakis may instead transfer his right to payment from the Conversion Shares Buyer to Xxxxxxxxx, which right to payment shall be deemed equivalent to the number of Conversion Shares for which payment was not received. Xxxxxxxxx shall then be considered the assignee of all claims and rights of action held by Kanakis against the Conversion Shares Buyer.
4. Release of Collateral for Note. In the event Kanakis (a) sells the Remaining Xxxxxxxxx Shares in accordance with Paragraph 1, and (b) either (i) receives payment in full for the Conversion Shares from the Conversion Shares Buyer in accordance with Paragraph 2, or (ii) does not receive payment in full from the Conversion Shares Buyer but does not exercise the Nullification Option for any reason by the deadline therefor, then, the parties agree that Kanakis shall have no further rights or claims against Xxxxxxxxx or Sens, and Kanakis shall return the original Note to Xxxxxxxxx marked "Paid in full" and shall execute and deliver such documents that Xxxxxxxxx may reasonably request to effectuate the release of Xxxxxxx' Deed of Trust lien on certain land of Xxxxxxxxx in August County, Virginia that secures the Note.
5. Effect of Sale of Sold Xxxxxxxxx Shares. If Xxxxxxx does not sell the Remaining Xxxxxxxxx Shares in accordance with Paragraph 1, and does not receive payment for any of the Conversion Shares and exercises the Put Option with respect to the Conversion Shares, then the parties agree that the Option shall be modified so that it only covers the Remaining Xxxxxxxxx Shares, and there shall be no change to the Note or the amount due thereunder.
6. Effect of Sale of Remaining Xxxxxxxxx Shares. If Xxxxxxx sells the Remaining Xxxxxxxxx Shares in accordance with Paragraph 1, but does not receive payment for any of the Conversion Shares and exercises the Put Option with respect to the Conversion Shares, then the parties agree that there shall be no change to the Note or the amount due thereunder, except that Xxxxxxxxx shall be entitled to a credit of $15,000 on the principal amount due on the Note, as well as a credit for all interest due on the Note through 5 April 2011 (representing all interest balances accrued through 31 March 2011).
7. Securities Representations. With respect to the Conversion Shares to be issued Kanakis hereunder, Xxxxxxx hereby represents and warrants to Xxxxxxxxx and Sens as follows:
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Xxxxxxx has had a reasonable opportunity to ask questions of and receive answers from Xxxxxxxxx'x officers and directors concerning Xxxxxxxxx, and to obtain any additional information, documents or instruments available without unreasonable effort or expense necessary to verify the accuracy of the information received by Kanakis or to answer any questions which Xxxxxxx may have. Prior to deciding to convert the Note into Xxxxxxxxx common stock, Xxxxxxx was provided, and reviewed, the unaudited financial statements of Xxxxxxxxx, and was familiar with its assets, liabilities, revenues, income or loss, and business prospects. All such questions have been answered to the full satisfaction of Kanakis.
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Xxxxxxx alone or together with persons retained by Kanakis with respect to this investment has such knowledge and experience in financial and business matters and investments that Xxxxxxx is fully capable of evaluating the merits and risks of this investment. Xxxxxxx has carefully considered and has, to the extent he, she or it believes such discussion necessary, discussed with his, her or its professional, legal, tax and financial advisors, the suitability of an investment in the Interest for his, her or its particular tax and financial situation and that Kanakis and his, her or its advisors, if such advisor were deemed necessary, have determined that the shares are a suitable investment for Xxxxxxx.
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Xxxxxxx acknowledges that only a limited public market exists for Xxxxxxxxx common stock and, accordingly, Kanakis may not be able to readily liquidate the shares of common stock that is receiving hereunder. Xxxxxxx acknowledges that no party can predict the future market price of Xxxxxxxxx common stock, or the price at which Kanakis will be able to sell the Xxxxxxxxx common stock that it acquires hereunder, and that Kanakis may receive more or less from the sale of the Xxxxxxxxx common stock than the amount owed on the Note.
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Xxxxxxx (i) has adequate means of providing for Xxxxxxx'x needs and possible contingencies, (ii) has no need for liquidity in this investment, (iii) is able to bear to the economic risks of an investment in the shares, and (iv) can afford a complete loss of such investment. Xxxxxxx recognizes that investment in the shares involves numerous risks.
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Xxxxxxx is acquiring the shares solely for Xxxxxxx'x own account for investment purposes only and not for the account of any other person or for the distribution, assignment or resale to others, except to the extent permitted by SEC Rule 144. No other person or entity has a beneficial interest in the shares being acquired by Xxxxxxx under this agreement.
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Xxxxxxx acknowledges that the shares to be acquired by Xxxxxxx will be issued and sold without registration and in reliance upon certain exemptions under the 1933 Act, and reliance upon certain exemptions from registration requirements under applicable state securities laws. Xxxxxxx will make no transfer or assignment of any such shares except in compliance with the 1933 Act, and any applicable state securities laws.
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Xxxxxxx has full legal power and authority to execute, deliver and perform this agreement and such execution, delivery and performance will not violate any agreement, contract, law, rule, decree or other legal restriction to which Xxxxxxx is subject or bound.
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8. Entire Agreement. This Agreement states the entire agreement and understanding of the parties and shall supersede all prior agreements and understandings. No amendment of the Agreement shall be made without the express written consent of the parties.
9. Survival of Assignment. The provisions of this Assignment shall survive the consummation of the transactions provided for herein.
10. Governing Law. This instrument shall be construed and enforced in accordance with and governed by the laws of the State of Virginia.
11. Binding Effect. This instrument shall bind and inure to the benefit of the parties hereto and their respective heirs, executors, personal representatives, successors and assigns.
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IN WITNESS WHEREOF, the parties have executed this Agreement under seal, intending to be bound thereby, as of the day, month and year written above.
XXXXXXXXX HOLDINGS, INC.
By: Xxxx Xxxxxxx Sens
(Print Name)
Title: President
Signature: /s/ Xxxx Xxxxxxx Sens
Date: 1/22/11
XXXX XXXXXXX SENS
Signature: /s/ Xxxx Xxxxxxx Sens
Date: 1/22/11
XXXXXXXXX SPRINGS, LLC
By: Xxxx Xxxxxxx Sens
(Print Name)
Title: Managing Member
Signature: /s/ Xxxx Xxxxxxx Sens
Date: 1/22/11
XXXXXXXX XXXXXXX
Signature: /s/ Xxxxxxxx Xxxxxxx
Date: 22 Jan 2011
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