CAMHZN Master LDC c/o Centrecourt Asset Management LLC
Exhibit
10.1
December
31, 2008
CAMHZN
Master LDC
c/o
Centrecourt Asset Management LLC
000
Xxxxxxx Xxxxxx
Xxx Xxxx,
Xxx Xxxx 00000
Ladies
and Gentlemen:
We refer
to (i) the Purchase Agreement (the “Purchase Agreement”) dated November 27, 2007
between Neah Power Systems, Inc., a Nevada corporation (the “Borrower”), and
CAMHZN Master LDC (the “Lender”), (ii) the 12% Secured Promissory Note in the
principal amount of $500,000 dated November 27, 2007 issued by the Borrower to
the Lender (the “Note”), (iii) the Security Interest and Pledge Agreement dated
November 27, 2007 by and between the Borrower and the Lender (the “Pledge
Agreement”), (iv) the Warrant dated November 27, 2007 issued by the Borrower to
the Lender (the “Warrant”), and (v) the letter agreement by and between the
Borrower and the Lender, November 27, 2007 (the “Letter
Agreement”). The Purchase Agreement, the Note, the Pledge Agreement,
the Warrant and the Letter Agreement are referred to herein as the “Loan
Documents.” Unless otherwise defined herein, capitalized terms have the meanings
assigned to them in the Loan Documents.
The
Borrower confirms and agrees as follows:
Outstanding
Debt. The Borrower is indebted to the Lender in the principal
sum of $500,000, plus all accrued interest thereon and costs and expenses
(including legal expenses) incurred in connection therewith (the
“Obligations”). The Obligations arose under, and are evidenced by,
the Loan Documents and the documents, agreements and instruments pertaining
thereto. The Obligations are secured, among other things, by a first
priority security interest in the Pledged Securities, and all products and
proceeds of the foregoing in any form.
Default.
The Borrower acknowledges that (i) certain events of default have occurred and
are continuing under the Loan Documents and (ii) all obligations on the Lender’s
part to make advances or otherwise provide financial accommodations to the
Borrower have terminated. The Borrower waives any requirement of
notice with respect to existing events of default, or any other notice to which
the Borrower may be entitled under the Loan Documents.
Issuances. The
Borrower shall issue additional shares of its common stock as new collateral in
order to secure the Borrower’s obligations pursuant to this letter.
Forbearance. The
Lender agrees to forbear from exercising any further remedies available under
the Loan Documents or applicable law for a period ending on March 29, 2009 (the
“Forbearance Period”). In consideration of Lender’s agreement to so
forbear as set forth above, Borrower agrees to increase the amount of the Note
by $567,000. This amount ($567,000) will be payable in cash or stock, at the
company discretion, after the reverse split is completed. Borrower
shall cause to be delivered to the Lender or its designees (i) evidence of the
increased principal amount of the Note, (ii) additional shares as fees for a
management fee and for legal expenses, and (ii) all documentation necessary or
appropriate to consummate the transactions contemplated hereby, including but
not limited to, medallion guaranteed stock powers, opinions of counsel and/or
irrevocable letters of instruction directed to the Borrower’s Transfer Agent. As
additional consideration for such forbearance, the Borrower releases the Lender
from any claim, damage, suit or liability arising on or before the date hereof
relating to the Loan Documents or otherwise.
Additional
Documents. The Borrower agrees that it will, at the Lender's
request, execute such documents and provide such information as the Lender may
deem necessary or desirable, including without limitation to evidence the
additional indebtedness of the Borrower to the Lender, to confirm the Lender’s
security interest in the Collateral and the Pledged Securities or to effect the
disposition, collection, or other realization upon the Collateral and the
Pledged Securities in the event the Lender elects to exercise remedies following
the Forbearance Period.
Effectiveness
of Loan Documents. The Borrower confirms that the Loan
Documents remain in full force and effect in accordance with their respective
terms and that the Lender has not waived its rights or remedies, whether under
the Loan Documents or otherwise, except only to the extent of the forbearance
described herein.
Representations,
Warranties and Covenants. The Borrower represents, warrants
and covenants as follows: (i) the Borrower is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Nevada; (ii) the execution, delivery and performance by the Borrower of this
letter is within the powers of the Borrower, have been duly authorized by all
necessary action, and do not contravene (A) the Borrower’s certificate of
incorporation or by-laws or (B) (x) any law or (y) any agreement or document
binding on or affecting the Borrower, (iii) no authorization or approval or
other action by, and no notice to or filing with, any governmental authority,
regulatory body or third person is required for the due execution, delivery and
performance by the Borrower of this letter; (iv) this letter constitutes the
legal, valid and binding obligation of the Borrower enforceable against it in
accordance with its terms except as enforcement hereof may be limited by
bankruptcy, insolvency or other similar laws affecting the enforcement of
creditors’ rights generally and subject to the applicability of general
principles of equity; (v) there is no pending or, to the knowledge of the
Borrower, threatened action or proceeding affecting the Borrower before any
governmental agency or arbitrator which challenges or relates to this letter or
which may otherwise have a material adverse effect on the Borrower, and (vi)
Borrower shall, within 4 Trading Days of the date hereof, issue a Current Report
on Form 8-K disclosing the material terms of the transactions contemplated
hereby.
This
letter shall be governed by and construed in accordance with the laws of the
State of New York without regard to its conflict of laws rules. This
letter may be amended or modified only by a written instrument signed by the
Lender and the Borrower. The Lender’s failure at any time to require
the performance of any provision of this letter shall in no manner affect the
Lender’s right at a later time to enforce the same
provision. Headings are inserted for convenience of reference only
and shall not effect the interpretation of this letter. This letter
shall be binding upon the Borrower, and its legal representatives, successors
and permitted assigns. In no event may the Borrower assign any rights
or obligations under this letter without the Lender’s prior written consent,
which consent may be conditioned, withheld or delayed, and any
purported assignment without such consent shall be null and void.
| Very truly yours, | |||
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a
Nevada corporation
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By:
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/s/ Xxxxxx X X’Xxxxx | |
| Name: Xxxxxx X X’Xxxxx, Ph.D. | |||
| Title: President and CEO | |||
AGREED:
CAMHZN
Master LDC
| By: |
/s/
Xxxxxxx Xxxx
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Name:
Xxxxxxx Xxxx
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Title:
General Councel
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