AGREEMENT TO TERMINATE LOAN AGREEMENT
This
Agreement to Terminate Loan Agreement (this “Agreement”)
is
dated as of September 9, 2008, by and between Solution Technology International,
Inc. (the “Company”),
with
its principal place of business at Xxxxxxx Information Enterprise Center, 000
Xxxxxx Xxxx, Xxxxx 00, XxXxxxx, Xxxxxxxx 00000, and CrossHill
Georgetown Capital, L.P.,
a
Delaware limited partnership, with its principal place of business at 000 Xxxxx
Xxxxx Xxxxxx, Xxxxx
000, Xxxxxxxxxx, Xxxxxxxx 00000 (“CrossHill”).
Recitals
WHEREAS,
pursuant to that certain Loan and Security Agreement dated as of January 10,
2003 (as amended, the "Loan
Agreement")
between the Company and CrossHill, CrossHill has made revolving loans to the
Company in the principal amount of $750,000 and bearing interest at the initial
rate of 12% per annum pursuant to a Revolving Promissory Note dates as of
January 10, 2003 (as amended from time to time, the “Note),
which
principal amount has been reduced to $640,000;
WHEREAS,
pursuant to a Forbearance Agreement dated November 12, 2007, no further advances
were permitted under the Note and the unpaid balance was converted to term
debt
on or about July 1, 2004, and which matured on April 30, 2007 and remains
unpaid;
WHEREAS,
pursuant to the Loan Agreement, the Company granted liens in substantially
all
of its assets (the "Collateral")
in
favor of CrossHill to secure the Obligations defined in the Loan Agreement;
WHEREAS,
the
Company issued 10,122,245 warrants (the “Warrants”)
to
CrossHill for inducement to enter into the Loan Agreement, which warrants
increased as the Company failed to repay the Note;
WHEREAS,
in
light of the loans received by the Company from YA Global Investments, L.P.
(f/k/a Cornell Capital Partners, LP) (“YA
Global”)
that
also required the Company to grant a security interest in its assets to YA
Global, the Company, CrossHill and YA Global entered into an Intercreditor
Agreement dated June 28, 2004 (the “Intercreditor
Agreement”)
to
agree
upon the priorities of their respective liens on the Collateral and for the
application of proceeds of the Collateral after certain events and certain
payments with respect to their respective indebtedness;
WHEREAS,
the
Company requires additional financing to achieve its business plan;
and
WHEREAS,
the
Company has entered into discussions with a financing group to invest not less
than $2,500,000 (the “Financing”)
in the
Company and such Financing is conditioned upon (i) the Company eliminating
existing debt from its balance sheet, (ii) effecting a reverse split of its
shares of common stock to provide the financing group with 92.5% ownership
of
the Company’s issued and outstanding shares of common stock and the existing
shareholders 7.5% of the Company’s issued and outstanding shares of common stock
post reverse split and (iii) eliminating all liens against its assets;
WHEREAS,
the
Company, as a precondition to the Financing, must enter into an agreement with
CrossHill to terminate the Loan Agreement, the Note, the Intercreditor Agreement
and all liens of CrossHill against the Company; and
WHEREAS,
CrossHill is willing to terminate the Loan Agreement, the Note, the
Intercreditor Agreement and all liens of CrossHill against the Company subject
to the satisfaction of the conditions precedent set forth in this Agreement.
NOW
THEREFORE,
in
consideration of the foregoing, and for other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
Section
1. Payment
by the Company.
In
consideration of CrossHill’s agreement to terminate the Loan Agreement, the
Note, the Intercreditor Agreement and its liens on September 10, 2008 (the
“Closing
Date”)
in
accordance with the terms of this Agreement, the Company has caused or will
cause, CrossHill to be paid the sum of Three Hundred Ten Thousand Dollars
($310,000) (the “Payoff
Amount”)
by
wire transfer in immediately available funds.
Section
2. Delivery
of Documents on Closing Date.
On the
Closing Date, CrossHill agrees to deliver to the Company the following documents
(the “Closing
Documents”),
which
are to be held in escrow by the Company, pending satisfaction of the Conditions
Precedent (as hereinafter defined):
(a) the
original Warrants described on Schedule
2
attached
hereto to the Company or assigned to the Investor, at the Company’s
election.
(b) original
Loan Agreement and Note endorsed to the Company or to the Investor, at the
Company’s election, without warranty or recourse of any kind or nature; and
(c) such
other documents as the Company may reasonably request to terminate CrossHill’s
lien on the Collateral.
In
the
event that the Conditions Precedent are not fully satisfied by the close of
business on the Closing Date, the Company shall immediately return all of the
Closing Documents to CrossHill.
Section
3. Conditions
Precedent.
CrossHill’s obligations to terminate its lien on the Collateral and agreement to
accept the Payoff Amount is subject to satisfaction of the following conditions
precedent (the “Conditions
Precedent”)
on or
before the Closing Date:
(a) CrossHill’s
receipt of the Payoff Amount; and
(b) CrossHill
shall have received a written agreement from YA Global, which terminates the
Intercreditor Agreement, releases CrossHill from any and all liabilities
thereunder, waives any interest of YA Global in the Payoff Amount and is
otherwise acceptable to CrossHill in all material respects.
2
Upon
satisfaction of the Conditions Precedent, CrossHill authorizes the Company
or
its authorized representative to file UCC Financing Statement Terminations
with
the applicable filing office to terminate any UCC Financing Statements filed
naming CrossHill as secured party, and the Company as debtor, with respect
to
the Collateral.
Section
4. Mutual
Release.
In
consideration of the covenants and agreements contained in this Agreement,
effective upon satisfaction of the Conditions Precedent, the Company and
CrossHill hereby RELEASE AND FOREVER DISCHARGE the other party and its
subsidiaries and its respective affiliates, parents, joint ventures, officers,
directors, shareholders, interest holders, members, managers, employees,
consultants, representatives, successors and assigns, heirs, executors and
administrators from all causes of action, suits, debts, claims and demands
whatsoever known or unknown, at law, in equity or otherwise, which either party
had, now has, or hereafter may have, arising from or relating in any way to
the
Company’s status as a debtor of CrossHill on or prior to the date hereof, any
agreement between the Company and CrossHill entered into prior to the date
hereof, any claims for reasonable attorneys’ fees and costs, and including,
without limitation, any claims relating to fees, penalties, liquidated damages,
and indemnification for losses, liabilities and expenses. This release is
effective without regard to the legal nature of the claims raised and without
regard to whether any such claims are based upon tort, equity, or implied or
express contract. It is expressly understood and agreed that this release
shall operate as a clear and unequivocal waiver by both the Company and
CrossHill of any such claim whatsoever. The terms of this mutual release shall
not, however, preclude an action seeking
to enforce the parties’ rights and obligations under this
Agreement.
Section
5. Company
Representations and Warranties.
(a).
Organization,
Good Standing and Qualification.
The
Company has been duly incorporated and organized, and is validly existing in
good standing under the laws of the State of Delaware. The Company has the
corporate power and authority to own and operate its properties and assets
and
to carry on its business as currently conducted and as presently proposed to
be
conducted.
(b)
Authorization.
All
corporate action on the part of the Company’s directors and shareholders
necessary for the authorization, execution, delivery of, and the performance
of
all obligations of the Company under this Agreement have been taken or will
be
taken prior to the Closing Date, and this Agreement when executed and delivered,
will constitute, a valid and legally binding obligation of the Company,
enforceable in accordance with its terms.
(c)
Corporate
Power.
The
Company has the corporate power and authority to execute and deliver this
Agreement and to carry out and perform all its obligations under this
Agreement.
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(d).
SEC
Reports. The
Company has filed all forms, reports, schedules, registration statements, proxy
statements, and other documents (including any document required to be filed
as
an exhibit thereto) required to be filed by the Company with the Securities
and
Exchange Commission (“SEC”)
from
September 30, 2005 to September 30, 2007. All such required forms, reports,
schedules, registration statements, proxy statements and other documents
(including those that the Company may file subsequent to the date hereof) are
referred to herein as the “SEC
Reports.”
As
of
their respective dates, the SEC Reports (including any financial statements
or
schedules included or incorporated by reference therein) (i) were prepared
in
all material respects in accordance with the requirements of the Securities
Act
of 1933, as amended (the “Securities
Act”),
or
the Securities Exchange Act of 1934, as amended (the “Exchange
Act”),
as
the case may be, and the rules and regulations of the SEC thereunder applicable
to such SEC Reports and (ii) did not at the time they were filed (or if amended
or superseded by a filing prior to the date of this Agreement, then on the
date
of such filing) contain any untrue statement of a material fact or omit to
state
a material fact required to be stated therein or necessary in order to make
the
statements therein, in light of the circumstances under which they were made,
not misleading. As of the date hereof, there has not been any material adverse
change with respect to the Company that would require disclosure under the
Securities Act.
Section
6. Representations
and Warranties by CrossHill.
CrossHill hereby represents and warrants to, and agrees with, the Company,
that:
(a)
Authorization.
All
action the part of the CrossHill’s directors and shareholders necessary for the
authorization, execution, delivery of, and the performance of all obligations
of
CrossHill under this Agreement have been taken or will be taken prior to the
Closing Date, and this Agreement when executed and delivered, will constitute,
a
valid and legally binding obligation of Crosshill.
(b).
Power.
Crosshill has the power and authority to execute and deliver this Agreement
and
to carry out and perform all its obligations under this Agreement.
Section
7. Governing Law.
This
Agreement shall be governed by and construed under the laws of the State of
Delaware.
Section
8. Titles and Subtitles.
The
titles of the sections and subtitles of this Agreement are for convenience
of
reference only and are not to be considered in construing this
Agreement.
Section
9. Counterparts.
This
Agreement may be executed in counterparts, each of which shall be deemed an
original, and all of which shall constitute one and the same
instrument.
Section
10. Binding
Effect, Assignment.
This
Agreement shall be binding upon and shall insure to the benefit of the Company
and CrossHill and to their successors and assigns. Nothing in this Agreement
shall be construed to permit the assignment by the Company or CrossHill of
any
of their rights or obligations hereunder, and such assignment is expressly
prohibited without the prior written consent of the other party.
Section
11. Amendment
and Non-Waiver.
No
amendment or modification of this Agreement shall be valid unless in writing
and
signed by the parties. No waiver of any of the provisions of this Agreement
shall be valid unless the same is in writing and signed by the party against
whom it is sought to be enforced. Any waiver of any breach of this Agreement
shall not be considered to be a continuing waiver or consent to any subsequent
breach on the part of either party.
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Section
12. Severability.
All
provisions of this Agreement are severable, and if any of them is determined
to
be invalid or unenforceable for any reason, the remaining provisions and
portions of this Agreement shall be unaffected thereby and shall remain in
full
force to the fullest extent permitted by law.
Section
13. Entire
Agreement.
This
Agreement contains the entire understanding of the Company and CrossHill with
respect to the subject matter hereof and supersedes any and all prior
understandings, written or oral.
Section
14. Dispute
Expenses.
If a
party prevails in any action, suit, counterclaim, appeal, arbitration, mediation
or other proceeding for any relief (collectively “Action”)
to
enforce the terms of this Agreement or to declare rights hereunder, the other
party shall pay the sum incurred for ordinary and necessary attorneys’ fees and
costs in connection with such Action or enforcing the same in addition to any
damages and costs which the prevailing party otherwise would be entitled
regardless of whether such action is prosecuted to a final judgment or award.
Section
15. Confidentiality.
The
parties hereby agree to hold the terms of this Agreement, including any
information disclosed by the parties, in strictest confidence, and not to
disseminate in any manner such terms to any third party or parties other than
as
required by law or as reasonably necessary to attorneys, accountants or
immediate family members in rendering professional or counseling
services.
Section
16. Recitals.
The
parties acknowledge the accuracy of the Recitals and incorporate the Recitals
into and make them a part of this Agreement.
5
IN
WITNESS WHEREOF, the parties hereto have caused this Agreement to be signed
as
of the date first set forth above.
SOLUTION
TECHNOLOGY INTERNATIONAL, INC.
By:
/s/ Xxx Xxxxxx
Name:
Xxx Xxxxxx
Title:
President and CEO
CROSSHILL
GEORGETOWN CAPITAL, L.P.
By:
/s/ Xxxxxxx X. Xxxxxx
Name:
Xxxxxxx X. Xxxxxx
Title:
Managing Director
|
Signature
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