EXHIBIT 10.1
SETTLEMENT AGREEMENT DATED DECEMBER 31, 2006
MUTUAL RELEASE AND SETTLEMENT AGREEMENT
THIS MUTUAL RELEASE AND SETTLEMENT AGREEMENT ("Agreement") is made and
entered into effective as of the day of December 2006 (the "Effective Date"), by
and between River Capital Group, Inc., a Delaware corporation (the "Company"),
and Longview Fund, LP, Longview Equity Fund, LP, Longview International Equity
Fund, LP, (collectively, the "Noteholders" and, collectively with the Company,
the "Parties").
R E C I T A L S
WHEREAS, the Company is currently in default in connection with those
certain convertible notes as detailed in EXHIBIT A hereto (collectively the
"Notes"), issued to the Noteholders and secured by substantially all of the
assets of the Company; and
WHEREAS, the Company issued those certain Warrants to the Noteholders
as detailed in EXHIBIT A hereto (collectively the "Warrants"); and
WHEREAS the Parties have reached an agreement to settle and release any
and all claims and disputes between them arising out of or relating to the
payment of all principal and interest, performance or non-performance of the
terms and conditions of the Notes, Warrants and any subscription documents
associated with the Notes and Warrants, on the terms and conditions set forth in
this Agreement;
NOW, THEREFORE, for and in consideration of the premises, mutual
covenants and obligations set forth in this Agreement, the Parties agree as
follows:
1. ISSUANCE OF STOCK FOR THE NOTES. The Company agrees to issue
11,045,474 shares of its $.001 par value common stock (the "Common Stock
Payment") to the Noteholders, in the respective amounts set forth on EXHIBIT A
hereto, calculated at the rate of $0.05 per share, in full satisfaction of all
principal and interest owing under the Notes and the release of any security
interests arising thereunder.
2. CANCELLATION OF THE NOTES. The Noteholders agree to xxxx each Note
cancelled and to deliver each such Note to the Company in exchange for the
Common Stock Payment (the "Cancelled Notes") and to terminate any UCC financing
statements filed in connection thereto.
3. EXERCISE OF WARRANTS. The Noteholders agree to pay to the Company
cash in the amount of $46,250.00 (the "Warrant Payment") and deliver the duly
executed "Forms of Subscription" to exercise their respective Warrants.
4. ISSUANCE OF STOCK FOR THE WARRANTS. The Company agrees to issue
925,000 shares of its $.001 par value common stock (the "Warrant Stock") to the
Noteholders, in the respective amounts set forth on EXHIBIT A hereto, calculated
at the rate of $0.05 per share, in exchange for the Warrant Payment.
5. PAYMENT OF THE WARRANT PAYMENT. The Warrant Payment shall be paid
via wire transfer and shall be delivered to the Company immediately upon the
full execution of this Agreement.
The Company's delivery of the Common Stock Payment and the Warrant
Stock shall be contingent on the execution and delivery to the Company of the
Forms of Subscription for the Warrants and confirmation of receipt of the
Warrant Payment wire transfer.
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The Noteholders' delivery of the Cancelled Notes shall be contingent on
the execution and delivery to the Noteholders by the Company of the, Common
Stock Payment and the Warrant Stock.
6. TIME AND LOCATION OF CLOSING ON THIS AGREEMENT. Unless otherwise
agreed by the Parties, the execution and exchange of documents consummating this
Agreement shall take place at 10:00 a.m. on December __, 2006, at the offices of
XXXX XXXX XXXX XXXXXXXXXX & XXXXXXXXX, P.C., 000 Xxxxxxx Xxxxxx, Xxxxx 000,
Xxxxxx, Xxxxxxxx, 00000.
7. COMPANY'S REPRESENTATIONS AND WARRANTIES. The Company hereby agrees
to indemnify and hold the Noteholders harmless from all claims or demands
relating to the Notes, Warrants and any subscription documents related thereto,
pre- and post-execution of this Agreement, including without limitation, any and
all loss, costs, damages, or expenses, to include reasonable attorneys' fees
incurred by the Noteholders in connection thereto, except matters, if any,
arising from intentional misconduct of the individual Noteholders prior to the
date of this Agreement or any claim that arises after the date of this Agreement
that relates to a breach or failure of the Noteholders to perform their
obligations under this Agreement.
Further, the Company represents to the Noteholders that the share
certificates representing the Common Stock Payment and the Warrant Stock have
been duly set aside and reserved from the authorized but unissued shares of the
Company's common stock and shall be validly issued, fully paid and nonassessable
shares of common stock of the Company.
Further, the Company Represents that the holding period of the Common
Stock Payment for Rule 144 purposes tacks with the holding period for the Notes.
Further, the company represents that the terms of Section 18 of the
Subscription Agreement remain in effect and apply to the Common Stock Payment
and the Warrant Stock delivered in accordance with this Agreement.
8. NOTEHOLDERS' REPRESENTATIONS AND WARRANTIES. The Noteholders hereby
agree to indemnify and hold the Company and its officers and directors harmless
from all claims or demands relating to the Notes, Warrants and any subscription
documents related thereto, pre- and post-execution of this Agreement, including
without limitation, any and all loss, costs, damages, or expenses, to include
reasonable attorneys' fees incurred by the Company in connection thereto caused
by any knowingly illegal actions taken by the Noteholders, except matters, if
any, arising from intentional misconduct of the Company prior to the date of
this Agreement or any claim that arises after the date of this Agreement that
relates to a breach or failure of the Company to perform its obligations under
this Agreement. The Noteholders have not sold, transferred or otherwise impaired
the Notes and warrants being surrendered and the Noteholders indemnify as
contained herein for any such claims or damages.
The Noteholders acknowledge that the share certificates representing
the Common Stock Payment and the Warrant Stock shall bear a conspicuous legend
regarding the restricted nature of the securities and Rule 144 under the
Securities Act of 1933, as amended, which shall be substantially as follows:
"The shares represented by this certificate have not been
registered under the Securities Act of 1933 (the "Act"). The
shares may not be offered for sale, sold, or otherwise
transferred except pursuant to an effective registration
statement under the Act, or pursuant to an exemption from
registration under the Act, the availability of which is to
be established to the satisfaction of the Company."
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9. MUTUAL RELEASE. By this Agreement, the Company and the Noteholders
hereby agree to fully release and discharge each other from all known or unknown
claims, obligations, demands, commissions, rights to payments, including any
security interests arising in favor of the Noteholders under the Notes, Warrants
and any subscription documents related thereto, except as otherwise expressly
provided herein, and except matters related to the intentional misconduct, if
any, of the Parties, and the obligations of the Parties under this Agreement.
10. GENERAL PROVISIONS.
a. MUTUAL WARRANTIES AND ACKNOWLEDGMENTS. The Parties warrant that
no promise or inducement has been offered to them except as herein set forth;
that all agreements and understandings between the Parties are expressed herein;
that the terms of this Agreement are contractual and not a mere recital; that
they are legally competent to execute this Agreement and accept full
responsibility and assume the risk of any mistake of fact in entering into this
Agreement.
b. BINDING AGREEMENT. This Agreement will be binding upon and
inure to the benefit of the respective agents, heirs, personal representatives,
executors and administrators, assigns and successors of the Parties; and the
Parties have not transferred or assigned any part of their respective claims
against each other.
c. NOTICES. Any and all notices provided for herein will be in
writing and will be deemed effectively given or made on the date served upon the
Party to be notified personally; or three days after being deposited in the
United States mail registered or certified mail, return receipt requested,
postage prepaid; or one day after deposit or delivery to a reputable overnight
courier, prepaid, receipt acknowledged, to the address of such Party set forth
below or to such other address as such Party may last have designated by notice
hereunder.
IF INTENDED FOR THE COMPANY:
River Capital Group, Inc.
Xxxxx 000
0 Xxxx Xxxxxx
Xxxxxxxx Xxxxxxx XX00
IF INTENDED FOR THE NOTEHOLDERS:
c/o Redwood Grove Capital Management, LLC
The Transamerica Pyramid
000 Xxxxxxxxxx Xx., 00xx Xxxxx
Xxx Xxxxxxxxx, XX 00000
d. TIME OF THE ESSENCE. Time is of the essence under this
Agreement and all obligations to be performed under this Agreement.
e. GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York without regard to
principles of conflicts of laws. Any action brought by either party against the
other concerning the transactions contemplated by this Agreement shall be
brought only in the state courts of New York or in the federal courts located in
the state of New York. The parties and the individuals executing this Agreement
and other agreements referred to herein or delivered in connection herewith on
behalf of the Company agree to submit to the jurisdiction of such courts and
waive trial by jury.
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The prevailing party shall be entitled to recover from the other party its
reasonable a\ttorneys' fees and costs. In the event that any provision of this
Agreement or any other agreement delivered in connection herewith is invalid or
unenforceable under any applicable statute or rule of law, then such provision
shall be deemed inoperative to the extent that it may conflict therewith and
shall be deemed modified to conform with such statute or rule of law. Any such
provision which may prove invalid or unenforceable under any law shall not
affect the validity or enforceability of any other provision of any agreement.
f. SURVIVAL. All covenants and agreements of the Parties under
this Agreement and all representations, warranties, and indemnities by each
Party to the other Parties to this Agreement will survive the execution and
performance of this Agreement and will be binding upon and inure to the benefit
of the Parties and their respective agents, attorneys, members, officers,
directors, heirs, personal representatives, executors and administrators,
assigns and successors.
g. FURTHER ACTS. Each of the Parties covenants and agrees with the
other, upon reasonable request from the other, from time to time, to execute and
deliver such additional documents and instruments and to take such other actions
as may be reasonably necessary to give full force and effect to the basic terms
and intent of this Agreement.
h. SEVERABILITY. In case any one or more of the provisions
contained in this Agreement will for any reason be held to be invalid, illegal,
or unenforceable in any respect, such invalidity, illegality or unenforceability
will not affect any other provision and this Agreement will be construed as if
such invalid, illegal, or unenforceable provisions had never been contained
within the Agreement.
i. ENTIRE AGREEMENT. This Agreement contains the entire agreement
between the Parties and supersedes all prior representations, warranties,
understandings, and written and oral agreements. This Agreement may not be
modified except by an instrument in writing signed by the Parties.
j. ATTORNEYS' FEES. Anything to the contrary herein
notwithstanding, in the event of any litigation or agreed upon arbitration or
mediation proceedings between the Parties concerning the subject matter of this
Agreement, the prevailing party in the litigation or other proceedings will be
entitled to receive from the defaulting Party, in addition to the amount of any
judgment or other awa\rd entered, all reasonable costs and expenses, including
reasonable attorneys' fees, incurred by the prevailing Party in the litigation
or other proceedings.
k. COMPLIANCE. The performance by the Parties of their respective
obligations provided for in this Agreement will be in strict compliance with all
applicable laws and the rules and regulations of all governmental agencies,
municipal, county, state and federal, having jurisdiction in the premises.
l. AUTHORITY. Each of the Parties represents to the other that
each such Party has full power and authority to execute, deliver, and perform
this Agreement, that the individuals executing this Agreement on behalf of said
party are fully empowered and authorized to do so, that this Agreement
constitutes a valid and legally binding obligation of such Party enforceable
against such Party in accordance with its terms, that such execution, delivery,
and performance will not contravene any legal or contractual restriction binding
upon such Party or any of its assets and that there is no legal action,
proceeding, or investigation of any kind now pending or to the knowledge of such
Parties threatened against or affecting such Party or the execution, delivery,
or performance of this Agreement.
m. EXECUTION IN COUNTERPARTS. This Agreement may be executed
in separate counterparts, each of which will be deemed an original and all of
which when taken together will constitute a whole. This Agreement will be fully
executed when each Party whose signature is required has signed at least
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one counterpart even though no one counterpart contains the signatures of all
the Parties. A signed facsimile transmittal will be considered as an original
executed document.
n. COOPERATION. The Parties agree to cooperate fully and execute
any and all supplementary documents and to take all additional actions which may
be necessary or appropriate to give full force and effect to the basic terms and
intent of this Agreement.
o. PARAGRAPH HEADINGS, INTERPRETATION. The paragraph headings are
inserted only for convenient reference and do not define, limit, or prescribe
the scope of this Agreement. The Parties acknowledge that each has had an
opportunity to review, comment upon and negotiate the provisions of this
Agreement, and thus the provisions of this Agreement will not be construed more
favorably or strictly for or against either Party. The Parties each acknowledge
having been advised, and having had the opportunity, to consult legal counsel in
connection with this Agreement and the transactions contemplated by this
Agreement.
p. MODIFICATIONS. There may be no modification of this Agreement,
except in writing, executed with the same formalities as this Agreement.
q. WAIVER. Any one or more waivers of any covenant or condition by
a Party will not be construed as a waiver of a subsequent breach of the same
covenant or condition nor a consent to or approval of any act requiring consent
to or approval of any subsequent similar act.
THE PARTIES HAVE CAREFULLY READ the above and foregoing Agreement and
know the contents thereof, and have signed the same as their own free and
voluntary act.
RIVER CAPITAL GROUP, INC., LONGVIEW FUND, LP,
a Delaware corporation a California limited partnership
By: /s/ XXXXXX XXXXXX By: /s/ S. XXXXXXX XXXXXXX
------------------------------ ---------------------------------
Name: XXXXXX XXXXXX Name: S. XXXXXXX XXXXXXX
---------------------------- --------------------------------
Title: CHIEF EXECUTIVE OFFICER Title: CFO - INVESTMENT ADVISOR
--------------------------- -------------------------------
LONGVIEW EQUITY FUND, LP,
a Delaware limited partnership
By: /s/ S. XXXXXXX XXXXXXX
---------------------------------
Name: S. XXXXXXX XXXXXXX
--------------------------------
Title: CFO - INVESTMENT ADVISOR
-------------------------------
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LONGVIEW INTERNATIONAL EQUITY FUND, LP,
a British Virgin Islands limited partnership
By: /s/ S. XXXXXXX XXXXXXX
--------------------------------------
Name: S. XXXXXXX XXXXXXX
--------------------------------------
Title: CFO - INVESTMENT ADVISOR
-------------------------------------
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