EXHIBIT 10.9
XXXXX SYSTEMS, INC./X.X XXXXX, XX. AGREEMENT
THIS XXXXX SYSTEMS, INC/X.X. XXXXX, XX. AGREEMENT (this "Agreement") is
made as of June __, 2002, by and among Xxxxx Systems, Inc., a Texas corporation
(the "Company"), X.X. Xxxxx, Xx., a Texas Resident ("Xxxxx"), and Xxxx, Xxxxx &
Strong, L.P., a Delaware general partnership ("CSS").
RECITALS
WHEREAS, CSS has agreed to assist the Company in restructuring certain of
the Company's secured and unsecured indebtedness (the "Restructuring") for
certain consideration;
WHEREAS, the Restructuring is being effectuated through the agreements
listed on Exhibit A attached hereto (the "Restructuring Agreements");
WHEREAS, as a condition to the Restructuring, CSS is requiring that the
Company cause the cancellation of all outstanding unvested options to acquire
capital stock of the Company (the "Options");
WHEREAS, as a further condition to the Restructuring, CSS is also requiring
that Xxxxx (i) release certain lien against property of the Company, as evidence
by UCC-1 Financing Statements, copies of which are attached hereto as Exhibit B
(the "Financing Statement"), and (ii) agree to cancel all of his outstanding
options, whether vested or unvested, to acquire capital stock of the Company
(the "Xxxxx Options") in consideration for warrants to purchase 175,000 shares
of common stock, par value $.01 per share, of the Company at a per share
exercise price of $.05 ("Xxxxx Warrants");
WHEREAS, the Company and Xxxxx each desire to facilitate the Restructuring
by agreeing to the terms set forth in these Recitals and as otherwise set forth
in this Agreement;
NOW, THEREFORE, in consideration of the premises and mutual covenants
contained herein, the parties hereto hereby agree as follows:
1. Cancellation of Options.
(a) Company Options. Subject to and effective upon the closing of the
transactions contemplated by the Restructuring Agreement, the Company hereby
agrees to cause the cancellation of the Options and to provide CSS written
evidence of the same in form and substance satisfactory to CSS in its sole and
absolute discretion. The Company hereby represents and warrants that Exhibit C
attached hereto contains a complete and accurate list of the Options.
(b) Xxxxx Options. Subject to and effective upon the issuance of the Xxxxx
Warrant and the closing of the transactions contemplated by the Restructuring
Agreement, Xxxxx hereby agrees to the cancellation of the Xxxxx Options and that
no further action on the part of the Company or Xxxxx is required to evidence
such cancellation. Xxxxx hereby represents and warrants that Exhibit D attached
hereto contains a complete and accurate list of the Xxxxx Options.
2. Xxxxx Warrants. Subject to the terms and conditions of this Agreement,
the Company hereby agrees to issue the Xxxxx Warrants to Xxxxx in consideration
for Xxxxx' agreement to cancel the Xxxxx Options, which Warrants shall be in the
form attached hereto as Exhibit E.
3. Release of Liens. Subject to the terms and conditions of this Agreement,
Xxxxx hereby agrees to release liens evidenced by the Financing Statement and to
take such further action as the Company or CSS shall request to carry into
effect the terms of this Section.
4. Expenses. Upon the effectiveness of the transactions contemplated by the
Restructuring, the Company hereby agrees to reimburse CSS for all fees
(including legal and accounting fees), out-of-pocket expenses and costs incurred
by CSS in connection with the negotiation, preparation, documentation and
execution of this Agreement, the Restructuring Agreements and the transactions
thereby.
5. Board Designees. Upon the effectiveness of the transactions contemplated
by the Restructuring, the Board of Directors of the Company shall cause all but
two of the Company's Directors to resign and shall have adopted a proposal to
fill the vacancies created by such resignations with two persons designated by
CSS.
6. Miscellaneous.
(a) Successors and Assigns. Except as otherwise provided herein, the
terms and conditions of this Agreement shall inure to the benefit of and be
binding upon the respective successors and assigns of the parties
(including transferees of any Securities). Nothing in this Agreement,
express or implied, is intended to confer upon any party other than the
parties hereto or their respective successors and assigns any rights,
remedies, obligations or liabilities under or by reason of this Agreement,
except as expressly provided in this Agreement.
(b) Governing Law. This Agreement and the transactions contemplated
hereunder shall be governed by and construed under the laws of the State of
Texas as applied to agreements among Texas residents entered into and to be
performed entirely within Texas. The parties hereto agree to waive all
rights they may otherwise have to trial by jury in connection with any
action, suit or proceeding brought to enforce or defend any rights or
remedies arising under or relating to this Agreement and the agreements and
transactions contemplated hereby, whether grounded in tort, contract or
otherwise.
(c) Counterparts. This Agreement may be executed in counterparts, each
of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.
(d) Titles and Subtitles. The titles and subtitles used in this
Agreement are used for convenience only and are not to be considered in
construing or interpreting this Agreement.
(e) Notices. All notices, reports to be provided under Section 4.1,
and other communications required or permitted hereunder shall be in
writing, shall be effective when given, and shall in any event be deemed to
be given upon receipt or, if earlier, (a) five (5) days after deposit with
the U.S. Postal Service or other applicable postal service, if delivered by
first class mail, postage prepaid; (b) upon delivery, if delivered by hand;
(c) one (1) business day after the business day of deposit with Federal
Express or similar overnight courier, freight prepaid; or (d) one (1)
business day after the business day of facsimile transmission (with
confirmation), if delivered by facsimile transmission and provided that a
copy is sent by first class mail, postage prepaid, and shall be addressed
(i) if to CSS, at CSS' address or facsimile number as set forth on the
signature page to this Agreement, (ii) if to the Company, at the address or
facsimile number of the Company's principal corporate offices, or at such
other address as a party may designate by ten (10) days' advance written
notice to the other party pursuant to the provisions above, and (iii)
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if to Xxxxx, at Evan's address or facsimile number set forth on the
signature page to this Agreement.
(f) Amendment and Waivers. Any term of this Agreement may be amended
and the observance of any term of this Agreement may be waived (either
generally or in a particular instance and either retroactively or
prospectively) only with the written consent of the Company, CSS and Xxxxx.
(g) Severability. If one or more provisions of this Agreement are held
to be unenforceable under applicable law, such provision shall be excluded
from this Agreement and the balance of the Agreement shall be interpreted
as if such provision were so excluded and shall be enforceable in
accordance with its terms.
(h) Entire Agreement. This Agreement and the documents referred to
herein constitute the entire agreement among the parties and no party shall
be liable or bound to any other party in any manner by any warranties,
representations or covenants except as specifically set forth herein or
therein.
(i) Survival of Warranties. The warranties, representations and
covenants of the Company and Xxxxx contained in or made pursuant to this
Agreement shall survive the execution and delivery of this Agreement and
shall in no way be affected by any investigation of the subject matter
thereof made by or on behalf of CSS.
(j) Attorneys' Fees. If any action at law or in equity is necessary to
enforce or interpret the terms of this Agreement, the Restructuring
Agreements or agreements contemplated thereby, the prevailing party shall
be entitled to reasonable attorneys' fees, costs, and disbursements in
addition to any other relief to which such party may be entitled.
7. Indemnification. CSS hereby agrees to indemnify each of the members of
the Board of Directors of the Company existing immediately prior to the
execution of this Agreement (the "Indemnitees") against and agrees to hold each
Indemnitee harmless from any and all damage, loss, liability, penalty,
assessment, settlement and judgment incurred or suffered by any such Indemnitee
arising out of the Company's failure to pay the $580,000 gas taxes currently
owed to the State of Texas (or governmental agency thereof), up to a maximum of
$500,000.
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The parties have executed this Agreement as of the date first above
written.
COMPANY: XXXXX SYSTEMS, INC.
By:
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Name:
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Title:
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CSS: XXXX, XXXXX & STRONG, L.P.
By:
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Name:
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Title:
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Address:
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XXXXX: X.X. XXXXX, Xx.
Address:
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EXHIBIT A
RESTRUCTURING AGREEMENTS
1. Amendment to Loan Agreement and Modification of Note (CSS/ESI).
2. Notice of Entire Agreement (JPMorgan/ESI).
3. Note (JPMorgan/ESI).
4. Release of Claims (ESI Entities/Xxxxx).
5. Assignment of Notes and Liens (JPMorgan/ESI).
6. Warrant to Purchase 4,000,00 Shares of ESI Common Stock.
7. Common Stock Purchase Agreement (Xxxxxxx & Xxxxx/ESI).
8. Registration Rights Agreement (ESI/Various Holders).
9. Xxxxx Systems, Inc./X.X. Xxxxx Agreement.
10. Each of the documents contemplated by the documents described in paragraphs
1-9 above.
A-1
EXHIBITS
Omitted
B-1
