October 12, 2006
AJW Partners, LLC
New Millennium Capital Partners II, LLC
AJW Offshore, Ltd.
AJW Qualified Partners, LLC
0000 Xxxxxxxx Xxxxxxxxx
Xxxxxx, Xxx Xxxx 00000
Attn: Xxxxxxxx X. Xxxxxxxxx, General Counsel
Re: Astrata Group, Inc. (the "Company")
Dear Xxxxxxxx:
This letter agreement outlines the terms and conditions pertaining to the
Company's repayment ("Repayment") of all amounts of principal and interest owing
and outstanding under those certain Callable Secured Convertible Notes (the
"Notes") issued on or about October 7, 2005 and November 17, 2005 pursuant to
that certain Securities Purchase Agreement (the "SPA") by and between the
Company and AJW Partners, LLC ("Partners"), New Millennium Capital Partners, II,
LLC ("Millennium"), AJW Offshore, Ltd. ("Offshore") and AJW Qualified Partners,
LLC ("Qualified, with Partners, Millennium and Offshore", collectively, the "NIR
Group"). The Repayment shall be applied to the outstanding principal and
interest owing under the Notes and the termination of any and all UCC-1s filed
in favor of NIR. Currently, the Company owes the NIR Group $1,488,000 in
principal under the Notes.
Further, in connection with the SPA, Notes and Warrants, the following
ancillary documents were executed and/or filed: (1) Guaranty and Pledge
Agreement, dated October 7, 2005, by and between the Company, Xxxxxx Xxxxx, Xxxx
Xxxxxxxx, Xxxx Trust and Retnev Trust ("Pledgors") for a total of 900,000
shares, and NIR ("Pledge Agreement"); (2) Security Agreement by and between the
Company and NIR, dated October 7, 2005 ("Security Agreement"); and (3) UCC-1
Financing Statements ("UCC-1s") filed by NIR.
For purposes of this Agreement, the Notes, SPA, Warrants, Pledge Agreement
and Security Agreement shall be referred to collectively as "Original
Documents".
In connection with the Repayment, the Company and NIR agree to execute and
deliver this letter agreement (the "Agreement"), a new promissory note (the "New
Notes"), attached hereto as Exhibit A and a new registration rights agreement
("New Registration Agreement"), attached hereto as Exhibit B. Further, NIR shall
file in the Jurisdictions listed above UCC-3 Termination Statements ("UCC-3s")
necessary to terminate any perfected security interest they had obtained
pursuant to the Security Agreement.
For purposes of the Agreement, the Agreement, New Notes and New
Registration Agreement shall be referred to collectively as the "New Documents".
The following outlines the terms and conditions of the Repayment:
I. Cash Payment
Upon signing of Agreement, the Company shall make the Cash Payment to NIR
in the amount of $550,000. In addition, the Company shall have the option to pay
an additional $950,000 prior to December 31, 2006 for a full payment of
$1,500,000 or can pay an additional $1,200,000 ($400,000 per quarter) within a
year from the date hereof. In the event that the Company pays the $950,000 prior
to December 31, 2006, the Company shall also issue to the NIR Group a total of
500,000 warrants at 120% of the five day VWAP (such 5 day VWAP shall be
determined by taking the 5 day VWAP immediately prior to the payment of the
Notes). These warrants shall be in addition to the 480,000 warrants already
retained by the NIR Group under the current financing. In the event that the
Company pays the total of $1,750,000 over the course of the year the Company
will not have to issue the additional warrants. The Cash Payment shall be
applied to the repayment of all amounts of principal and interest owing and
outstanding under the Notes.
II. New Notes
Upon signing of the Agreement, the Company shall issue to NIR, New Notes
in the aggregate amount of $1,200,000; the New Notes to be issued in accordance
with Schedule B attached hereto. The New Notes shall be self-amortizing over a
one-year time period with the first payment due on January 15, 2006 and with
each installment payment due every three months thereafter. As set forth above,
the New Notes may be prepaid by the Company at anytime without penalty and in
the event that the New Notes are repaid prior to December 31, 2006 such New
Notes can be repaid for a total of $950,000.
III. Warrants
NIR Group shall retain the Warrants previously issued which are
exercisable into an aggregate of 480,000 shares of the Company's Common Stock at
$2.00 per share. The shares underlying the warrants shall have piggyback
registration rights as set forth below. In addition, the NIR Group may receive
an additional 500,000 warrants in the event that the Company prepays the
outstanding loan as set forth above.
IV. Shares
In consideration for the waiver of any and all outstanding defaults by the
Company under the Original Documents, the Company agrees to issue to the NIR
Group an aggregate of 500,000 restricted shares of the Company's common stock.
Such shares shall have piggy-back registration rights as set forth below.
V. New Registration Agreement
Upon signing of the Agreement, the Company and NIR shall execute and
deliver the New Registration Agreement providing for the registration of the
Common Stock and Warrant Shares with the Securities and Exchange Commission. The
New Registration Agreement provides for one piggyback registration right no
sooner than six months from the date of hereof.
VI. Agreement Not to Short
NIR agrees that it will comply with the provisions of Section 9 of the
Securities Exchange Act of 1934 Act, as amended, and the rules promulgated
thereunder, with respect to transactions involving the Company's Common Stock.
Further, NIR agrees not to sell the Company's Common Stock short, either
directly or indirectly through its affiliates, principals or advisors.
VII. Termination of Original Documents
The Company and NIR mutually agree that the Original Documents shall be
terminated in all respects, shall be rendered null and void and shall no longer
bind NIR or the Company to any obligations, duties and responsibilities
contained therein. Further, NIR and the Company mutually agree that the New
Documents shall supersede the Original Documents in all respects.
In connection with the termination of the Original Documents, NIR shall
deliver to the Company upon execution of the Agreement, the original Notes and
Warrants issued by the Company on October 7, 2005 and November 17, 2005, to be
cancelled on the Company's book and records. Moreover, NIR shall deliver to
Xxxxxx and Jaclin, LLP, counsel to the Company, the Pledgors stock certificates
representing a total of 900,000 shares of the Company's Common Stock that was
pledge by Pledgors pursuant to the Pledge Agreement.
VIII. Withdrawal of Registration Statement
NIR acknowledges that the Company was entitled to file a Form RW to
withdraw the Registration Statement on Form SB-2 on file with the Securities and
Exchange Commission covering the shares of common stock underlying the Notes and
the Warrants.
IX. Termination of UCC Filings
All security interests perfected by NIR on the "Collateral" (as defined in
the Security Agreement), pursuant to the Original Documents, including the
Security Agreement, shall be terminated. Accordingly, NIR agrees to file within
(2) days of this Agreement, UCC-3 Termination Statements in all jurisdiction
where UCC-1s Financing Statements were filed pursuant to the Security Agreement.
NIR shall deliver to the Company all filing receipts for such UCC-3 filings upon
receipt from the Jurisdictions in which the UCC-1s are filed.
X. Miscellaneous
(a) This Agreement constitutes the entire agreement of the parties with respect
to the subject matter hereof and is intended to supersede all prior
negotiations, understandings and agreements with respect thereto. Except as
specifically set forth in this Agreement, no provision of this Agreement may be
modified or amended except by a written agreement specifically referring to this
Agreement and signed by the parties hereto.
(b) In the event that any provision of this Agreement is held to be invalid,
prohibited or unenforceable in any jurisdiction for any reason, unless such
provision is narrowed by judicial construction, this Agreement shall, as to such
jurisdiction, be construed as if such invalid, prohibited or unenforceable
provision had been more narrowly drawn so as not to be invalid, prohibited or
unenforceable. If, notwithstanding the foregoing, any provision of this
Agreement is held to be invalid, prohibited or unenforceable in any
jurisdiction, such provision, as to such jurisdiction, shall be ineffective to
the extent of such invalidity, prohibition or unenforceability without
invalidating the remaining portion of such provision or the other provisions of
this Agreement and without affecting the validity or enforceability of such
provision or the other provisions of this Agreement in any other jurisdiction.
(c) No waiver of any breach or default or any right under this Agreement shall
be considered valid unless in writing and signed by the party giving such
waiver, and no such waiver shall be deemed a waiver of any subsequent breach or
default or right, whether of the same or similar nature or otherwise.
(d) This Agreement shall be binding upon and inure to the benefit of each party
hereto and its successors and assigns.
(e) Each party shall take such further action and execute and deliver such
further documents as may be necessary or appropriate in order to carry out the
provisions and purposes of this Agreement.
(f) This Agreement shall be construed in accordance with the laws of the State
of New York, except to the extent the validity, perfection or enforcement of a
security interest hereunder in respect of any particular Collateral which are
governed by a jurisdiction other than the State of New York in which case such
law shall govern. Each of the parties hereto irrevocably submit to the exclusive
jurisdiction of any New York State or United States Federal court sitting in
Manhattan county over any action or proceeding arising out of or relating to
this Agreement, and the parties hereto hereby irrevocably agree that all claims
in respect of such action or proceeding may be heard and determined in such New
York State or Federal court. The parties hereto agree that a final judgment in
any such action or proceeding shall be conclusive and may be enforced in other
jurisdictions by suit on the judgment or in any other manner provided by law.
The parties hereto further waive any objection to venue in the State of New York
and any objection to an action or proceeding in the State of New York on the
basis of forum non conveniens.
(g) EACH PARTY HERETO HEREBY AGREES TO WAIVE ITS RESPECTIVE RIGHTS TO A JURY
TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS
AGREEMENT. THE SCOPE OF THIS WAIVER IS INTENDED TO BE ALL ENCOMPASSING OF ANY
DISPUTES THAT MAY BE FILED IN ANY COURT AND THAT RELATE TO THE SUBJECT MATER OF
THIS AGREEMENT, INCLUDING WITHOUT LIMITATION CONTRACT CLAIMS, TORT CLAIMS,
BREACH OF DUTY CLAIMS AND ALL OTHER COMMON LAW AND STATUTORY CLAIMS. EACH PARTY
HERETO ACKNOWLEDGES THAT THIS WAIVER IS A MATERIAL INDUCEMENT FOR EACH PARTY TO
ENTER INTO A BUSINESS RELATIONSHIP, THAT EACH PARTY HAS ALREADY RELIED ON THIS
WAIVER IN ENTERING INTO THIS AGREEMENT AND THAT EACH PARTY WILL CONTINUE TO RELY
ON THIS WAIVER IN THEIR RELATED FUTURE DEALINGS. EACH PARTY FURTHER WARRANTS AND
REPRESENTS THAT IT HAS REVIEWED THIS WAIVER WITH ITS LEGAL COUNSEL, AND THAT
SUCH PARTY HAS KNOWINGLY AND VOLUNTARILY WAIVES ITS RIGHTS TO A JURY TRIAL
FOLLOWING SUCH CONSULTATION. THIS WAIVER IS IRREVOCABLE, MEANING THAT,
NOTWITHSTANDING ANYTHING HEREIN TO THE CONTRARY, IT MAY NOT BE MODIFIED EITHER
ORALLY OR IN WRITING, AND THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS,
RENEWALS AND SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT. IN THE EVENT OF A
LITIGATION, THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE
COURT.
(i) This Agreement may be executed in any number of counterparts, each of which
when so executed shall be deemed to be an original and, all of which taken
together shall constitute one and the same Agreement. In the event that any
signature is delivered by facsimile transmission, such signature shall create a
valid binding obligation of the party executing (or on whose behalf such
signature is executed) the same with the same force and effect as if such
facsimile signature were the original thereof.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
IN WITNESS WHEREOF, the parties hereto have caused this Security Agreement
to be duly executed on the day and year first above written.
ASTRATA GROUP, INC.
By: /s/ Xxxxxx Xxxxx
--------------------
Xxxxxx Xxxxx
Chief Executive Officer
AJW PARTNERS, LLC
By: SMS Group, LLC
By: /s/ Xxxxx X. Xxxxxxxx
-------------------------
Xxxxx X. Xxxxxxxx
Manager
AJW OFFSHORE, LTD.
By: First Street Manager II, LLC
By: /s/ Xxxxx X. Xxxxxxxx
-------------------------
Xxxxx X. Xxxxxxxx
Manager
AJW QUALIFIED PARTNERS, LLC
By: AJW Manager, LLC
By: /s/ Xxxxx X. Xxxxxxxx
-------------------------
Xxxxx X. Xxxxxxxx
Manager
NEW MILLENNIUM CAPITAL PARTNERS II, LLC
By: First Street Manager II, LLC
By: /s/ Xxxxx X. Xxxxxxxx
-------------------------
Xxxxx X. Xxxxxxxx
Manager
