Exhibit 10.1
WAIVER OF RIGHTS AGREEMENT
This Waiver of Rights Agreement (the "AGREEMENT") is made and entered into
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as of July 17, 2006, to be effective as of June 30, 2006 (the "EFFECTIVE DATE"),
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by and between XA, INC., a Nevada corporation ("XA") and ALPHA CAPITAL
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AKTIENGESELLSCHAFT, ▇▇▇▇▇▇▇▇▇▇▇ LIMITED PARTNERSHIP, WHALEHAVEN FUNDS LIMITED,
GREENWICH GROWTH FUND LIMITED and GENESIS MICROCAP INC. (the "PURCHASERS"), each
individually a "PARTY" and 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 was due and payable on June 30, 2006, but
has since been reduced to $1,020,000, due to the conversion of a portion of the
Notes into shares of XA's common stock (not including any accrued and unpaid
interest, the "FIRST TRANCHE") and an aggregate of $1,250,000 sold on September
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13, 2004, which amount was due and payable on September 13, 2006, but has since
been reduced to $1,012,500, due to the conversion of a portion of the Notes into
shares of XA's common stock (not including any accrued and unpaid interest, the
"SECOND TRANCHE") as well as 5,000,000 Class A Warrants to purchase shares of
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XA's common stock (the "PURCHASER WARRANTS");
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WHEREAS, XA failed to repay the amount owed under the First Tranche of the
Notes to the Purchasers on June 30, 2006 (the "DEFAULT");
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WHEREAS, the Purchasers provided XA notice of XA's Default and Purchasers
intend to make the Second Tranche immediately due and payable on or about July
11, 2006 (the "ACCELERATION"); and
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WHEREAS, XA has obtained a non-binding term sheet (the "TERM SHEET,"
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attached to this Agreement as EXHIBIT A) from a third-party which provides,
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among other items, that it will provide XA with $1,250,000 in funding in the
form of a Senior Secured Promissory Note (the "FUNDING NOTE") and Warrants (the
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"FUNDING WARRANTS," and collectively with the Funding Note, the "FUNDING").
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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. PAYMENT BY XA OF THE FIRST TRANCHE.
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XA agrees to repay the Purchasers the full amount due under the
First Tranche, including any accrued and unpaid interest at such time
as XA receives the Funding pursuant to the Term Sheet (the "PAYMENT").
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XA agrees that the Payment will be made to the Purchasers on or
prior to July 27, 2006 (the "PAYMENT DATE").
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2. PURCHASER'S WAIVER OF THE DEFAULT, THE RESET AND ANTI-DILUTION
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RIGHTS OF THE NOTES, PURCHASER WARRANTS AND SUBSCRIPTION AGREEMENT.
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In connection with XA's entry into the Term Sheet, and the timely
making of the Payment on or prior to the Payment Date (as provided in
(1) above), the Purchasers agree to:
a) Waive the Default;
b) 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 with:
i) the Funding; and
ii) certain other securities issuable by XA, which
securities are described in greater detail on the Term Sheet; and
c) Waive the Redemption provisions of the Subscription
Agreement (Section 7.7) and the Purchaser Notes (Section 4.8),
and to allow the prepayment of the outstanding balance of the
Second Tranche at any time prior to September 13, 2006, without
penalty.
Collectively a), b) and c) above are referred to as the "FUNDING
WAIVER." -------
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3. PURCHASER'S WAIVER OF THE DEFAULT AND THE ACCELERATION.
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The Purchasers agree to waive the Acceleration and contingent
upon XA's timely making of the First Tranche payment agree that XA
shall have until September 13, 2006, the original due date of the
Second Tranche, to repay the Second Tranche; provided, however, that
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in the event that XA fails to make the required Payment on or prior to
the Payment Date or the Second Tranche on or prior to September 13,
2006:
a) The Funding Waiver shall be automatically and retroactively
revoked; and
b) All of the Purchasers' rights and remedies under the
Subscription Agreement, 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; and
c) Any Notices of Default previously delivered to the Company
shall be reinstated as of the date originally given, without the
requirement of further notices relative to the subject matter of
the notices previously given.
4. 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. 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/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
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▇▇▇▇▇▇ ▇▇▇▇▇▇
CHIEF EXECUTIVE OFFICER
PURCHASERS:
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ALPHA CAPITAL AKTIENGESELLSCHAFT ▇▇▇▇▇▇▇▇▇▇▇ LIMITED PARTNERSHIP
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BY: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ BY: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇
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ITS: ITS: President
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PRINTED NAME: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ PRINTED NAME: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇
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WHALEHAVEN FUNDS LIMITED GREENWICH GROWTH FUND LIMITED
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BY: /s/ Evan Schemanauer BY: /s/ ▇▇▇▇▇ ▇▇▇▇
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ITS: CFO ITS: Director
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PRINTED NAME: Evan Schemanauer PRINTED NAME: ▇▇▇▇▇ ▇▇▇▇
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GENESIS MICROCAP INC.
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BY: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇
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ITS: Director
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PRINTED NAME: ▇▇▇▇▇▇▇ ▇▇▇▇▇
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