Exhibit 10.12
WAIVER OF RIGHTS AGREEMENT
This Waiver of Rights Agreement (the "AGREEMENT") is made and entered into
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as of October ___, 2006 (the "EFFECTIVE DATE"), by and between XA, INC., a
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Nevada corporation ("XA") and ALPHA CAPITAL AKTIENGESELLSCHAFT, XXXXXXXXXXX
LIMITED PARTNERSHIP, WHALEHAVEN FUNDS LIMITED, GREENWICH GROWTH FUND LIMITED and
GENESIS MICROCAP INC. (the "PURCHASERS"), each individually a "PARTY" and
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collectively the "PARTIES."
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W I T N E S S E T H:
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WHEREAS, pursuant to a Subscription Agreement entered into with the
Purchasers on June 30, 2004 (the "SUBSCRIPTION AGREEMENT"), XA sold the
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Purchasers an aggregate of $2,500,000 in two tranches of Convertible Promissory
Notes (the "NOTES" or the "PURCHASER NOTES"), with an aggregate of $1,250,000
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sold on June 30, 2004, which amount has been paid in full to date (the "FIRST
TRANCHE") and an aggregate of $1,250,000 sold on September 13, 2004, which has
since been reduced to $1,012,500 (not including any accrued and unpaid interest,
the "SECOND TRANCHE," as described in the Schedule of payments due under the
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Second Tranche, attached hereto as Exhibit A), due to the conversion of a
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portion of the Notes into shares of XA's common stock which amount is due and
payable on September 13, 2006 as well as 5,000,000 Class A Warrants to purchase
shares of XA's common stock, which were reduced to 250,000 Class A Warrants
pursuant to XA's reverse stock split affected December 9, 2004 (the "PURCHASER
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WARRANTS");
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WHEREAS, the Purchasers and XA previously entered into a Waiver of Rights
Agreement on July 17, 2006, effective as of June 30, 2006, and extended via
email on August 3, 2006, to August 9, 2006, to waive XA's default of the
repayment of the First Tranche and certain Reset Provisions which may have come
into effect in connection with the sale of $1,250,000 in 11% Senior Secured
Convertible Promissory Notes and warrants to various third party purchasers (the
"FIRST WAIVER"), which funding closed August 8, 2006 and a Waiver of Rights
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Agreement on September 13, 2006, to waive the Reset Provisions in connection
with the previous sale of $1,250,000 in 11% Senior Secured Convertible
Promissory Notes (the "FIRST FUNDING NOTES") and the issuance of 175,000
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warrants to purchase shares of XA's common stock at $1.10 per share (the "FIRST
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FUNDING WARRANTS" and collectively the entire August 8, 2006 funding
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transaction, the "PRIOR FUNDING");
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WHEREAS, the Parties have previously entered into a First Amendment to
Waiver Agreement, which extends the payment terms of the Second Tranche (the
"FIRST AMENDMENT");
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WHEREAS, XA plans to raise $1,500,000 of additional capital to repay the
Second Tranche, and provide working capital for XA subsequent to the Parties
entry into this Agreement in the form of 11% Senior Secured Promissory Notes
(the "FUNDING NOTES") and certain other Warrants, including 225,000 warrants to
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purchase shares of XA's common stock at an exercise price of $1.10 per share,
and 100,000 warrants to purchase shares of XA's common stock at an exercise
price of $0.30 per share (collectively the "FUNDING WARRANTS"), pursuant to a
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Securities Purchase Agreement to be entered into between XA and certain third
parties subsequent to the Parties entry into this Agreement (the "PURCHASE
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AGREEMENT," and together with the Funding Warrants, Funding Notes and any and
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all other agreements and documents entered into in connection with the Funding,
the "FUNDING" and the "FUNDING DOCUMENTS");
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WHEREAS, XA plans to affect a private offering of up to $10,000,000 of its
debt or equity securities (the "PRIVATE OFFERING"), which the Purchasers have
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previously waived the Reset Provisions in connection with, as set forth in the
term sheet that XA received in connection with the Funding, which was previously
waived by the Prior Waivers.
WHEREAS, the Parties desire to enter into this Agreement in furtherance of
the terms and conditions of the Prior Waivers; however, both Parties agree that
none of the terms or provisions of the Prior Waivers shall be revised or amended
by this Agreement other than as provided below in connection with the Funding.
NOW, THEREFORE, in consideration for the promises and pledges contained
below and other good and valuable consideration, which consideration XA and the
Purchasers acknowledge receipt of, and the premises and the mutual covenants,
agreements, and considerations herein contained, the Parties hereto agree as
follows:
1. PURCHASERS' WAIVER OF THE RESET AND ANTI-DILUTION RIGHTS OF THE
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NOTES, PURCHASER WARRANTS AND SUBSCRIPTION AGREEMENT.
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Assuming the Final Payment (as defined in the Prior Waivers) is
paid in full on or prior to October 18, 2006, the Purchasers agree to:
a) Waive the Favored Nations Provision, Section 12(c) of the
Subscription Agreement; Section 3.4 of the Purchaser Warrants;
Section 2.1(c)D of the Purchaser Notes; as well as any other
reset, anti-dilution or re-pricing rights in connection
(collectively the "RESET PROVISIONS") with:
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i) the Funding and the Private Offering; and
ii) certain other securities issuable by XA included and
detailed in the Funding Documents and previously waived,
including:
a. the First Funding Notes and First Funding Warrants
issued in connection with the First Funding, and the
issuance of common stock in connection with the
conversion of the First Funding Notes and the exercise
of the First Funding Warrants, the issuance of which
was previously waived by the Purchasers pursuant to the
Prior Waivers, and is herein reaffirmed;
b. the issuance of up to 250,000 shares of XA common
stock for professional services;
c. the issuance of 1,000,000 warrants to purchase
shares of XA's common stock at an exercise price of
$0.30 per share;
d. the Funding Notes and the shares of common stock
issuable in connection with the conversion of the
Funding Notes;
e. the Funding Warrants and the shares of common
stock issuable in connection with the exercise of the
Funding Warrants;
f. certain shares of XA common stock issuable,
convertible and/or exercisable in connection with the
Private Offering, which shares, as originally detailed
on a Term Sheet attached as an exhibit to the First
Waiver, were previously waived pursuant to the First
Waiver; and
g. all of the previously waived Excepted Issuances
(waived pursuant to Section 3.4 of the Purchaser
Warrants and 2.1(c)D of the Purchaser Notes), as such
term is defined in Section 12(a) of the Subscription
Agreement.
iii) the Purchasers further affirm all previous waivers
granted to XA pursuant to the Prior Waivers and the First
Amendment (collectively with i and ii, the "FUNDING
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WAIVER").
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PROVIDED, HOWEVER, that in the event that XA fails to make the
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required Final Payment on or prior to the Final Payment Date:
a) The Funding Waiver shall be automatically revoked; and
b) All of the Purchasers' rights and remedies under the
Subscription Agreement, the September 2004 Purchaser Notes and
Purchaser Warrants will automatically be restored, other than
those rights waived pursuant to the December 29, 2004, Waiver
Agreement between the Parties.
2. PURCHASERS' CERTIFICATION.
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Subject to the waiver granted in Section 1(a), each of the
Purchasers hereby certify that all of the Purchasers own an aggregate
of 250,000 Class A Warrants to purchase shares of XA's common stock
which represent all of the warrants of XA held by any Purchaser and
such Class A Warrants have an exercise price per share equal to $9.60.
Other than the Class A Warrants and upon payment in full of the Notes,
neither Purchaser will own or hold any other securities or claims
issued by XA.
3. MISCELLANEOUS.
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(a) Assignment. All of the terms, provisions and conditions of
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this Agreement shall be binding upon and shall inure to the
benefit of and be enforceable by the Parties hereto and their
respective successors and permitted assigns.
(b) Applicable Law. This Agreement shall be construed in
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accordance with and governed by the laws of the State of New
York, excluding any provision of this Agreement which would
require the use of the laws of any other jurisdiction.
(c) Entire Agreement, Amendments and Waivers. This Agreement
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constitutes the entire agreement of the Parties hereto and
expressly supersedes all prior and contemporaneous understandings
and commitments, whether written or oral, with respect to the
subject matter hereof, other than the Prior Waivers and First
Amendment, which shall remain in effect and be fully enforceable
against the Parties. No variations, modifications, changes or
extensions of this Agreement or any other terms hereof shall be
binding upon any Party hereto unless set forth in a document duly
executed by such Party or an authorized agent or such Party.
(d) Waiver. No failure on the part of any Party to enforce any
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provisions of this Agreement will act as a waiver of the right to
enforce that provision.
(e) Section Headings. Section headings are for convenience only
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and shall not define or limit the provisions of this Agreement.
(f) Effect of Facsimile and Photocopied Signatures. This
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Agreement may be executed in several counterparts, each of which
is an original. It shall not be necessary in making proof of this
Agreement or any counterpart hereof to produce or account for any
of the other counterparts. A copy of this Agreement signed by one
Party and faxed to another Party shall be deemed to have been
executed and delivered by the signing Party as though an
original. A photocopy of this Agreement shall be effective as an
original for all purposes.
[Remainder of page left intentionally blank. Signature page follows.]
This Agreement has been executed by the Parties on the date first written
above, with an Effective Date as provided above.
XA, INC.
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/s/ Xxxxxx Xxxxxx
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XXXXXX XXXXXX
CHIEF EXECUTIVE OFFICER
PURCHASERS:
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ALPHA CAPITAL AKTIENGESELLSCHAFT XXXXXXXXXXX LIMITED PARTNERSHIP
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BY: /s/ Xxxxxx Xxxxxxxx BY: /s/ Xxxxxxx Xxxxxxxxxxx
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ITS: ITS:
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PRINTED NAME: Xxxxxx Xxxxxxxx PRINTED NAME: Xxxxxxx Xxxxxxxxxxx
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WHALEHAVEN FUNDS LIMITED GREENWICH GROWTH FUND LIMITED
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BY: /s/ Evan Schemanauer BY: /s/ Xxxxx Xxxx
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ITS: ITS: Director
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PRINTED NAME: Evan Schemanauer PRINTED NAME: Xxxxx Xxxx
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GENESIS MICROCAP INC.
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BY: /s/ Xxxxx Xxxxxxx
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ITS: Authorized Signatory
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PRINTED NAME: Xxxxx Xxxxxxx
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EXHIBIT A
Schedule of payments due under the Second Tranche
Late Payments Per Day 15%
Amount Due Interest per day, if the
October 18, 0000 Xxxxxx Xxxxxxx is not paid
on October 18, 2006)
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Alpha Capital Aktiengesellschaf $ 585,302.74 $ 236.30
Xxxxxxxxxxx Limited Partnership $ 356,271.23 $ 143.84
Whalehaven Funds Limited $ 89,000.63 $ 35.93
Greenwich Growth Fund Limited $ - $ -
Genesis Microcap Inc. $ - $ -
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Total Due $ 1,030,574.60 $ 416.07
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