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TERMINATION AGREEMENT
The Termination Agreement (the "AGREEMENT") is dated as of May 21,
2002 by and between Valesc Inc., a Delaware corporation ("VALESC") and ▇▇▇▇▇▇
Private Equity, LLC ("▇▇▇▇▇▇").
WHEREAS, the parties entered into an Investment Agreement for an
equity line transaction dated June 7, 2001, which was amended and restated as of
August 29, 2001 and September 26, 2001 (the "INVESTMENT AGREEMENT");
WHEREAS, the parties entered into a Registration Rights Agreement
dated June 7, 2001 in connection with the Investment Agreement which was amended
and restated as of August 29, 2001 and September 26, 2001 (the "REGISTRATION
RIGHTS AGREEMENT");
WHEREAS, Valesc granted ▇▇▇▇▇▇ certain warrants to purchase shares of
its common stock in connection with the Investment Agreement (the "COMMITMENT
WARRANTS");
WHEREAS, Valesc filed Amendment No. 2 of a registration statement on
Form SB-2 covering the ▇▇▇▇▇▇ stock on March 25, 2002, but withdrew the
registration statement on April 26, 2002 at the recommendation of the Securities
and Exchange Commission;
WHEREAS, the Commission informed Valesc that a "completed private
placement" would be deemed not to have occurred in connection with an equity
line transaction in cases where no market exists for the underlying securities
at the time of registration;
WHEREAS, no market currently exists for Valesc's securities;
WHEREAS, the Commission informed Valesc that the existence of an
equity line agreement such as the Investment Agreement prior to the time when a
market exists for a company's securities would preclude a "completed private
placement" necessary for the registration exemption upon which equity line
transactions are based;
WHEREAS, the parties desire to terminate the Investment Agreement and
Registration Rights Agreement in anticipation of the establishment of a market
for Valesc's securities;
NOW, THEREFORE, in consideration of the mutual representations,
warranties, covenants and agreements, and upon the terms and conditions
hereinafter set forth, the parties do hereby agree as follows:
1. INVESTMENT AGREEMENT. Notwithstanding anything to the contrary in
the Investment Agreement, the parties hereby agree to terminate the Investment
Agreement in its entirety with no continuing rights, warranties or other
obligations of any kind on the part of ▇▇▇▇▇▇ or Valesc, except as set forth in
SECTION 3 hereof. In connection with the termination, the parties specifically
waive SECTION 2.6 of the Investment Agreement pertaining to the payment of
termination fees and any agreements on the part of Valesc to register shares on
behalf of ▇▇▇▇▇▇, whether underlying warrants or otherwise.
2. REGISTRATION RIGHTS AGREEMENT. The parties hereby agree to
terminate the Registration Rights Agreement in its entirety with no continuing
rights, warranties or other obligations of any kind on the part of ▇▇▇▇▇▇ or
Valesc.
3. COMMITMENT WARRANTS. Notwithstanding the termination of the
Investment Agreement and Registration Rights Agreement, ▇▇▇▇▇▇ shall retain full
ownership of the Commitment Warrants, provided that such warrants shall be
amended in accordance with the Second Amended Warrant to Purchase Common Stock
attached hereto as EXHIBIT A, which Valesc agrees to execute concurrently with
this Agreement.
4. NEW YORK LAW TO GOVERN. This Agreement and the enforcement thereof
shall be governed by and construed under the internal laws of the State of New
York.
5. COOPERATION. The parties shall use their best efforts to take, or
cause to be taken, such action, to execute and deliver, or cause to be executed
and delivered, such additional documents and instruments and to do, or cause to
be done, all things necessary, proper or advisable to consummate the
transactions contemplated by this Agreement.
6. COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which is an original and all of which together shall be
deemed to be one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the date first written above.
VALESC INC.
By:_______________________
Name: ▇▇▇▇▇▇ ▇▇▇▇▇
Title: President
▇▇▇▇▇▇ PRIVATE EQUITY, LLC
By:________________________
Name: ▇▇▇▇. ▇. ▇▇▇▇▇▇
Title: Manager
EXHIBIT A
SECOND AMENDED WARRANT