REDEMPTION AGREEMENT
THIS
REDEMPTION AGREEMENT (this “Agreement”)
is
made and entered into as of June 2, 2006 (the “Effective
Date”),
by
and between United Companies Corporation, a Nevada corporation (“United”)
and
Cornell Capital Partners, LP, a Delaware limited partnership (“Cornell”
and
together with United, the “Parties”).
RECITALS:
WHEREAS,
United
is currently indebted to Cornell in the aggregate amount of Two Hundred Ten
Thousand Five Hundred Dollars ($210,500), plus accrued interest, pursuant
to
that certain $250,000 Secured Convertible Debenture, dated as of April 2,
2004
and that certain $125,000 Secured Convertible Debenture, dated as of July
23,
2004 (together, the “Debentures”);
WHEREAS,
United
desires to repay all amounts currently owed under the Debentures, and Cornell
desires to be so repaid, all on the terms and subject to the conditions set
forth in this Agreement (the “Redemption”);
and
WHEREAS,
in
order to effect the Redemption, no later than June 7, 2006 the Company is
providing to Cornell a Notice of Redemption, attached hereto as Exhibit
A,
in
accordance with those relevant Sections of the Debentures.
NOW,
THEREFORE,
for and
in consideration of the foregoing premises, the mutual agreements and covenants
set forth herein, and for other good and valuable consideration, the receipt
and
adequacy of which are hereby acknowledged, the Parties hereto, intending
to be
legally bound, hereby agree as follows:
AGREEMENT:
1. Incorporation
of Recitals.
The
recitals
to this Agreement are true, correct and are incorporated by
reference.
2. The
Redemption.
a. On
or
before June 7, 2006 (the “Closing
Date”),
United shall repay to Cornell a total of Two Hundred Sixty-Six Thousand Seven
Hundred Seventy-Seven Dollars $(266,777)
(the “Redemption
Price”),
which
shall be applied as follows: (i) Two Hundred Ten Thousand Five Hundred Dollars
($210,500) as full repayment of all outstanding principal due and owing under
the Debentures (the “Principal
Amount”);
(ii)
Thirty-four Thousand Seven Hundred Seventy-Seven Dollars ($34,777) as full
repayment of all outstanding interest due and owing under the Debentures;
and
(iii) a “Redemption
Fee”
equal
to Twenty-One Thousand Five Hundred Dollars ($21,500), which represents ten
percent (10%) of the Principal Amount of the Debentures.
b. The
Parties acknowledge and agree that upon payment by the Company to Cornell
of the
Redemption Price set forth in Section 2(a) above, the Company will have no
further obligations to Cornell under the Debentures, including, without
limitation, any obligations to issue any warrants to Cornell under the
Debentures and shall have no obligations to Cornell under that certain Standby
Equity Distribution Agreement dated April 2, 2004, by and between United
and
Cornell.
c. The
Parties acknowledge and agree that the Notice of Redemption being provided
to
Cornell herewith shall satisfy the redemption notice provisions under the
Debentures.
3. Intentionally
Omitted.
4. Representations
and Warranties of United.
United
hereby represents and warrants to Cornell that, except as set forth in the
SEC
Documents (as defined below):
a. Organization
and Qualification.
United
is a corporation duly organized and validly existing in good standing under
the
laws of the State of Nevada, and has the requisite corporate power to own
their
properties and to carry on their business as now being conducted. United
is duly
qualified as a foreign corporation to do business and is in good standing
in
every jurisdiction in which the nature of the business conducted by it makes
such qualification necessary, except to the extent that the failure to be
so
qualified or be in good standing would not have a material adverse effect
on
United and its subsidiaries taken as a whole.
b. Authorization,
Enforcement, Compliance with Other Instruments.
(i) United has the requisite corporate power and authority to enter into
and perform this Agreement and every agreement referenced herein and therein
(collectively, the “Transaction
Documents”),
all
in accordance with the terms hereof and thereof; (ii) the execution and delivery
of the Transaction Documents by United and the consummation by it of the
transactions contemplated hereby and thereby have been duly authorized by
United’s Board of Directors (the “Board”)
and no
further consent or authorization is required by United, its Board or its
stockholders; (iii) the Transaction Documents have been duly executed and
delivered by United; (iv) the Transaction Documents constitute the valid
and
binding obligations of United enforceable against United in accordance with
their terms, except as such enforceability may be limited by general principles
of equity or applicable bankruptcy, insolvency, reorganization, moratorium,
liquidation or similar laws relating to, or affecting generally, the enforcement
of creditors’ rights and remedies.
c. No
Conflicts.
The
execution, delivery and performance of the Transaction Documents by United
and
the consummation by United of the transactions contemplated hereby will not
(i)
result in a violation of the Articles of Incorporation, any certificate of
designations of any outstanding series of preferred stock of United or the
Bylaws; nor (ii) conflict with or constitute a default (or an event which
with
notice or lapse of time or both would become a default) under, or give to
others
any rights of termination, amendment, acceleration or cancellation of, any
agreement, indenture or instrument to which United or any of its subsidiaries
is
a party, or result in a violation of any law, rule, regulation, order, judgment
or decree (including federal and state securities laws and regulations and
the
rules and regulations of The National Association of Securities Dealers Inc.’s
Over-The-Counter Bulletin Board (“OTCBB”)
on
which the common stock is quoted) applicable to United or any of its
subsidiaries or by which any property or asset of United or any of its
subsidiaries is bound or affected. Neither United nor its subsidiaries is
in
violation of any term of or in default under its Articles of Incorporation
or
Bylaws or their organizational charter or bylaws, respectively, or any material
contract, agreement, mortgage, indebtedness, indenture, instrument, judgment,
decree or order or any statute, rule or regulation applicable to United or
its
subsidiaries. The business of United and its subsidiaries is not being
conducted, and shall not be conducted in violation of any material law,
ordinance, or regulation of any governmental entity. Except as specifically
contemplated by this Agreement and as required under the Securities Act and
any
applicable state securities laws, United is not required to obtain any consent,
authorization or order of, or make any filing or registration with, any court
or
governmental agency in order for it to execute, deliver or perform any of
its
obligations under or contemplated by this Agreement. All consents,
authorizations, orders, filings and registrations which United is required
to
obtain pursuant to the preceding sentence have been obtained or effected
on or
prior to the date hereof. United and its subsidiaries are unaware of any
facts
or circumstance, which might give rise to any of the foregoing.
2
d. SEC
Documents: Financial Statements.
Since
January 1, 2003, United has filed all reports, schedules, forms, statements
and
other documents required to be filed by it with the SEC under the Securities
Exchange Act of 1934, as amended (the “Exchange
Act”)
(all
of the foregoing filed prior to the date hereof or amended after the date
hereof
and all exhibits included therein and financial statements and schedules
thereto
and documents incorporated by reference therein, being hereinafter referred
to
as the “SEC
Documents”).
United has made available to Cornell through the SEC’s website at xxx.xxx.xxx,
true
and complete copies of the SEC Documents. As of their respective dates, the
financial statements of United disclosed in the SEC Documents (the “Financial
Statements”)
complied as to form in all material respects with applicable accounting
requirements and the published rules and regulations of the SEC with respect
thereto. Such financial statements have been prepared in accordance with
generally accepted accounting principles, consistently applied, during the
periods involved (except (i) as may be otherwise indicated in such Financial
Statements or the notes thereto, or (ii) in the case of unaudited interim
statements, to the extent they may exclude footnotes or may be condensed
or
summary statements) and, fairly present in all material respects the financial
position of United as of the dates thereof and the results of its operations
and
cash flows for the periods then ended (subject, in the case of unaudited
statements, to normal year-end audit adjustments). No other information provided
by or on behalf of United to Cornell which is not included in the SEC Documents,
including, without limitation, information referred to in this Agreement,
contains any untrue statement of a material fact or omits to state any material
fact necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
e. Absence
of Litigation.
Except
as set forth in the SEC Documents, there is no action, suit, proceeding,
inquiry
or investigation before or by any court, public board, government agency,
self-regulatory organization or body pending against or affecting United,
the
common stock or any of United’s subsidiaries, wherein an unfavorable decision,
ruling or finding would (i) have a material adverse effect on the transactions
contemplated hereby; (ii) adversely affect the validity or enforceability
of, or
the authority or ability of United to perform its obligations under, this
Agreement or any of the documents contemplated herein; or (iii) have a material
adverse effect on the business, operations, properties, financial condition
or
results of operations of United and its subsidiaries taken as a
whole.
3
f. Employee
Relations.
Neither
United nor any of its subsidiaries is involved in any labor dispute nor,
to the
knowledge of United or any of its subsidiaries, is any such dispute threatened.
None of United’s or its subsidiaries’ employees is a member of a union and
United and its subsidiaries believe that their relations with their employees
are good.
g. Title.
Any
real property and facilities held under lease by United and its subsidiaries
are
held by them under valid, subsisting and enforceable leases with such exceptions
as are not material and do not interfere with the use made and proposed to
be
made of such property and buildings by United and its subsidiaries.
h. Insurance.
United
and each of its subsidiaries are insured by insurers of recognized financial
responsibility against such losses and risks and in such amounts as management
of United believes to be prudent and customary in the businesses in which
United
and its subsidiaries are engaged. Neither United nor any such subsidiary
has
been refused any insurance coverage sought or applied for and neither United
nor
any such subsidiary has any reason to believe that it will not be able to
renew
its existing insurance coverage as and when such coverage expires or to obtain
similar coverage from similar insurers as may be necessary to continue its
business at a cost that would not materially and adversely affect the condition,
financial or otherwise, or the earnings, business or operations of United
and
its subsidiaries, taken as a whole.
i. No
Material Adverse Breaches, etc.
Neither
United nor any of its subsidiaries is subject to any charter, corporate or
other
legal restriction, or any judgment, decree, order, rule or regulation which
in
the judgment of United’s officers has or is expected in the future to have a
material adverse effect on the business, properties, operations, financial
condition, results of operations or prospects of United or its subsidiaries.
Neither United nor any of its subsidiaries is in breach of any contract or
agreement which breach, in the judgment of United’s officers, has or is expected
to have a material adverse effect on the business, properties, operations,
financial condition, results of operations or prospects of United or its
subsidiaries.
5. Representations
and Warranties of Cornell.
Cornell
hereby represents and warrants to United that:
a. Title.
Cornell
has good and marketable title to the Debentures, free and clear of all
encumbrances, liens or charges of any kind or character.
b. Authorization,
Enforcement.
This
Agreement has been duly and validly authorized, executed and delivered on
behalf
of Cornell and is a valid and binding agreement of Cornell enforceable in
accordance with its terms, except as such enforceability may be limited by
general principles of equity or applicable bankruptcy, insolvency,
reorganization, moratorium, liquidation and other similar laws relating to,
or
affecting generally, the enforcement of applicable creditors’ rights and
remedies.
c. Receipt
of Documents.
Cornell
and his or its counsel has received and read in their entirety: (i) this
Agreement and each representation, warranty and covenant set forth herein
and in
the other Transaction Documents; (ii) all due diligence and other information
necessary to verify the accuracy and completeness of such representations,
warranties and covenants; and (iii) United’s Form 10-KSB for the fiscal year
ended December 31, 2005; and Cornell has relied on the information contained
therein and has not been furnished any other documents, literature, memorandum
or prospectus.
4
d. No
Legal Advice From United.
Cornell
acknowledges, that it had the opportunity to review this Agreement and the
transactions contemplated by this Agreement with his or its own legal counsel
and investment and tax advisors. Cornell is relying solely on such counsel
and
advisors and not on any statements or representations of United or any of
its
representatives or agents for legal, tax or investment advice with respect
to
this investment, the transactions contemplated by this Agreement or the
securities laws of any jurisdiction.
6. Covenants.
a. Best
Efforts.
Each
Party shall use its best efforts to timely satisfy each of the conditions
to be
satisfied by it no later than June 7, 2006 as provided in this Agreement.
The
Parties hereby agree that in the event the Parties fail to satisfy all
conditions set forth herein by June 7, 2006 this Agreement shall be terminated
and neither Party hereunder shall have any obligations pursuant to the terms
of
this Agreement; however, all obligations under the Debentures shall remain
in
full force and effect.
b. Fees
and Expenses.
Each of
United and Cornell shall pay all costs and expenses incurred by such Party
in
connection with the negotiation, investigation, preparation, execution and
delivery of the Transaction Documents.
c. Operation
of this Agreement.
In the
event that United fails to pay in full to Cornell the Redemption Price on
or
before the Closing Date, then the agreements, transactions and undertakings
set
forth or contemplated under this Agreement shall be deemed null and
void.
7. Counterparts.
This
Agreement may be executed in one or more counterparts, each of which shall
be
deemed an original, but all of which taken together shall constitute one
and the
same instrument. Confirmation of execution by electronic transmission of
a
facsimile signature page shall be binding upon any Party so
confirming.
8. Governing
Law.
This
Agreement shall be governed by and construed in accordance with the laws
of the
State of Nevada, exclusive of conflicts or choice of laws rules or
comity.
9. Entire
Understanding.
This
Agreement, together with all other documents, instruments, certificates and
agreements executed in connection herewith or referenced herein, states the
entire understanding among the parties hereto with respect to the subject
matter
hereof and supersedes all prior oral and written communications and agreements
with respect to the subject matter hereof.
10. Modifications
of this Agreement.
This
Agreement shall not be amended or modified except in a written document signed
by each Party hereto.
5
11. Survival.
All
representations, warranties and covenants made by United or Cornell in this
Agreement or pursuant hereto shall survive the Effective Date and the
consummation of the transactions contemplated in this Agreement.
12. Parties
in Interest.
This
Agreement shall bind, benefit, and be enforceable by the Parties hereto and
their respective successors, legal representatives, and permitted
assigns.
13. No
Waivers.
Except
as otherwise expressly provided herein, no failure to exercise, delay in
exercising, or single or partial exercise of any right, power or remedy by
any
Party hereto shall constitute a waiver thereof or shall preclude any other
or
further exercise of the same or any other right, power or remedy.
14. Attorneys’
Fees.
The
Parties hereto shall be responsible for the payment of their respective
attorneys’ fees incurred in connection with this matter. In the event that
either Party hereto is required to bring an action for the enforcement of
this
Agreement or any provision herein or for the recovery of damages in the event
of
a breach of this Agreement, the prevailing Party shall be entitled to recover
its costs, including reasonable attorneys’ fees, associated with such
action.
15. Further
Undertakings.
The
Parties hereto shall execute and deliver such further documents as may be
necessary to accomplish the intent of this Agreement.
[SIGNATURE
PAGE TO FOLLOW]
6
IN
WITNESS WHEREOF, the parties hereto have executed this Redemption Agreement
as
of the Effective Date.
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UNITED
COMPANIES CORPORATION
|
|
|
By:
/s/
Xxxxxx
Xxxxxxxxxx
|
|
|
Name:
Xxxxxx
Xxxxxxxxxx
|
|
|
Title:
Chief
Executive Officer
|
|
|
CORNELL
CAPITAL PARTNERS, LP
|
|
|
By:
Yorkville Advisors, LLC, its General Partner
|
|
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By:
/s/
Xxxx
Xxxxxx
|
|
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Xxxx
Xxxxxx,
|
|
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its
President and Portfolio Manager
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7
EXHIBIT
A
Notice
of Redemption
To: Cornell
Capital Partners, LP
The
undersigned, an authorized representative of United Companies Corporation
(the
“Company”),
hereby irrevocably elects to redeem the full principal amount of that certain
$250,000 secured convertible debenture, dated April 2, 2004, and that certain
$125,000 secured convertible debenture, dated July 23, 2004 (collectively,
the
“Debentures”),
issued to Cornell Capital Partners, LP (“Cornell”)
in
accordance with those relevant Sections of the Debentures and the conditions
stated therein, effective as of the Redemption Date written below. Upon
redemption, the Company shall have no further obligations to Cornell under
the
Debentures.
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Redemption
Date:
|
June
2, 2006
|
|
Amount
of the Debentures:
|
$375,000
|
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Redemption
Amount (Principal Amount):
|
$210,500
|
|
Accrued
Interest:
|
$34,777.00
|
|
Redemption
Fee (10% of Principal Amount):
|
$21,
500
|
|
Total
Purchase Price:
|
$266,777.00
|
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Authorized
Signature:
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/s/
Xxxxxx Xxxxxxxxxx
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Name:
|
Xxxxxx
Xxxxxxxxxx
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Title:
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CEO
|
|
Date
of this Notice:
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June
2, 2006
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