Exhibit 10.35.5
STANDSTILL AGREEMENT
THIS AGREEMENT effective as provided herein by and between ENVIRONMENTAL
REMEDIATION HOLDING CORPORATION ("ERHC"), a Colorado corporation, with offices
at ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ and the Investors or their
permitted assigns whose names are included in Schedule A annexed hereto and made
a part hereof (collectively the "Investors" or individually, the "Investor").
WHEREAS, ERHC and the Investors executed a Securities Purchase Agreement
and Registration Rights Agreement both dated June 24, 1998 under which ERHC
issued its 5.5% convertible notes due June 23, 2000 (the "Notes), granted
warrants to purchase ERHC's common stock with an exercise date on or before June
23, 2003 (the "Warrants") and agreed to file a Registration Statement with the
Securities and Exchange Commission ("SEC") relative to the Notes and Warrants
(the "SPA" and "RRA" respectively) ; and
WHEREAS, ERHC has executed and its Board of Directors have approved a
letter of intent dated April 8, 1999 with ERHC Investment Group, Inc. which
requires certain consents from the Investors and amendments and modifications to
the SPA, RRA the Notes and the Warrants, a copy of which letter of intent is
annexed hereto and made a part hereof as Exhibit A (the "Letter of Intent"); and
WHEREAS, the parties wish to confirm in writing their understanding and
agreement regarding these matter.
NOW THEREFORE in consideration of the mutual promises contained herein and
for other good and valuable consideration, the receipt and adequacy of which are
hereby acknowledged, the parties agree as follows:
1. Confidential Information. Investors' consent and amendments and
modifications to the SPA, RRA, Notes and Warrant as provided in the Letter
of Intent are conditions precedent to the Initial Closing. This is due to
the fact that the Notes and Warrants have certain adjustments which may
render it impossible for ERHC to issue the requisite control interest
required under the term of the Letter of Intent. The matters contained
herein and in the Letter of Intent are confidential information not
available to the public. These matters will only be made public with a
filing by ERHC of a Form 8K within the time required from the Initial
Closing as defined in the Letter of Intent (the "Initial Closing"), the
date on which an 8K event takes place. Accordingly, the Investors expressly
agree not to disclose, use or trade on this information either directly or
indirectly in any manner until such time as the Form 8K reporting this
Letter of Intent is filed with the SEC.
2. Amendments and Modifications. The SPA provides that upon the vote of 66
2/3% of the Investors under such agreement, any of the terms and conditions
of the SPA, RRA, the Notes and the Warrants may be amended or modified,
provided such amendment or modification is in writing and executed by not
less than 66 2/3% of the Investors. In such event, the amendment and
modification will be effective as to all of the Investors under such
agreement. In the event that 66 2/3% of the Investors under the SPA execute
this Agreement, and except as otherwise specifically provided for herein,
from the date of the Initial Closing under the Letter of Intent, it is
agreed that the following terms and conditions are amended and modified:
A. The adjustment provisions to the terms of the Notes or Warrants, if
any, contained in the SPA are deleted.
B. The Notes are amended and modified as follows:
1. The provision for payment of interest contained in paragraph 1(b)
is amended to permit the payment of interest in the form of
shares in common stock in an amount equal to the amount of
interest due divided by the Conversion Price.
2. In addition to the amendment to paragraph 1(b), the following
will be added to such paragraph: "Notwithstanding any other
provision contained in this paragraph 1(b), interest is waived
from the date of the Initial Closing and thereafter until October
15, 1999.
3. The provisions for voluntary conversion contained in paragraph
5(a) is amended to permit, in addition to conversion of all or a
portion of the Notes, for the conversion of outstanding interest
amd penalties, if any, into Common Stock at the time a voluntary
conversion of principal is made for the amount of interest due on
the Notes.
4. The conversion formula in paragraph 5(c) of the Notes is deleted
in its entirety and the following substituted in its place,
"Subject to the Adjustments from time to time as provided in
Section 5(d) below, the "Conversion Price" shall mean $0.25.
5. The adjustments of Conversion Price in paragraph 5(d) of the
Notes are deleted in their entirety and the text set forth in
Exhibit B annexed hereto and made a part hereof substituted in
its place:
C. The Warrants are amended and modified as follows:
1. The antidilution provisions in paragraphs 2 and 3 of the Warrants
are deleted in their entirety and the text set forth in Exhibit C
substituted in its place.
D. The RRA is amended and modified to add the following subparagraph:
1. ARTICLE 2, Paragraph 2.2(a) - "(vii) Notwithstanding any other
provision contained in this subparagraph (a) , the penalty and/or
liquidated damage set forth in this paragraph for failing to have
ERHC's Registration Statement become effective during a specified
period of time is waived from the date of the Initial Closing and
thereafter UNTIL October 15, 1999."
E. In addition to the foregoing amendments and modifications, the
Investors consent and agree to the following additional terms:
1. From the date of the Initial Closing and thereafter until October
15, 1999 (i) not to convert all or any part of the Notes, (ii)
not to declare a default or seek acceleration of any payments
under the Notes, (iii) not to commence any collections actions or
proceedings under the Notes, (iv) not to commence any foreclosure
or bankruptcy actions under the Notes, and (v) not to declare any
Event of Default or commence any arbitration action under the
SPA, RRA, Notes or Warrants.
2. From the date of execution of this Agreement, to waive all rights
under any adjustments, antidilution provisions or preemptive
rights previously granted in the SPA, Notes, Warrants, or RRA or
provided by these amendments and modifications (i) relative to
the transaction contemplated in the Letter of Intent or (ii)
relative to any settlement with Procura Financial entered into by
the Company upon commercially reasonable terms to complete the
assignment of all rights, title and interest in Sao Tome in favor
of the Company.
3. Through the Initial Closing, to accept shares of Common Stock for
all accrued and unpaid interest and penalties on the Notes as of
the Initial Closing, which shares shall be delivered within ten
(10) days of the Closing Date.
4. From the date of execution of this Agreement and thereafter until
October 15, 1999, to vote with the Company in the event that any
third party, other than each of the other note and warrant
holders listed as a Selling Shareholder in Amendment No. 3 to the
Form S- 1 filed with the SEC, commences any bankruptcy or
foreclosure action against the Company or any of its
subsidiaries.
3. Effects of No Closing under the Letter of Intent. In the event that no
Closing as defined in the Letter of Intent (the "Closing") occurs within
ninety (90) days from the date of the Initial Closing, the amendments,
modifications and consents in paragraph 2 above shall be null and void ab
initio.
4. ERHC Representations and Warranties. ERHC represents and warrants that the
amendments, modifications and consents set forth in paragraph 2 are
substantially similar to the amendments, modifications and consents sought
from each of the other convertible note and warrant holders listed as
Selling Shareholders in the Amendment No. 3 to the Form S-1 filed with the
SEC and differ only in those matters which are specific to any particular
note or warrant transaction listed therein.
5. Effect upon Other Terms and Conditions. Notwithstanding the amendments and
modifications contained herein, it is expressly agreed by the parties
hereto that all other terms, conditions and provisions of the SPA, RRA,
Notes and Warrants remain in full force and effect.
6. Ratification. The Investors ratify the acts of and hold harmless the Board
of Directors and Officers for all actions taken by them in compliance with
the interpretations of any court of competent jurisdiction as to the
application of the Business Judgment Rule from inception through the
Initial Closing Date.
7. Intended Beneficiaries. ERHC and ERHC Investment Group Inc. are the
intended beneficiaries of this Agreement. In the event of any breach, the
parties and the intended beneficiaries of this Agreement shall have all
remedies available at law or in equity including the right to seek
injunctive relief.
8. Effective Date. This Agreement shall be effective and binding upon ERHC and
the Investors set forth in Schedule A from the date ERHC receives
signatures from not less than 66 2/3% of such Investors as to paragraph 2
and from the date of execution by each Investor as to such Investor as to
the other provisions of this Agreement.
9. Binding Obligations. The obligations of the parties set forth herein shall
be binding upon and inure to the benefit of each party's heirs, executors,
administrators, beneficiaries, transferees, successors and assigns.
10. Governing Law, Jurisdiction and Venue. The governing law, jurisdiction and
venue set forth in the SPA, Notes, Warrants and RRA shall remain in full
force and effect.
11. Counterparts. This Agreement may be executed in one or more counterpart,
each of which when taken together shall represent one binding agreement.
Delivery of an executed counterpart hereof via telecopier shall be as
effective as delivery of a manually executed counterpart hereof.
IN WITNESS WHEREOF, each party set their hand and seal effective as
provided herein.
ENVIRONMENTAL REMEDIATION
HOLDING CORPORATION
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Secretary
INVESTOR:
Execution Date: April 20, 1999 By Global Capital Advisors Ltd
The Funds Investment Advisor
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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Signature and Title
Print Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Print Title: President & Sr.Managing Director
[Signature Page Third June 1998 Financing]
SCHEDULE A
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & ASSOCIATES
THE INTERCONTINENTAL HOLING COMPANY
GCA STRATEGIC INVESTMENT FUND LIMITED
(Permittee Assignee of
ProFutures Special Equities Fund L.P.)
EXHIBIT B
Adjustments of Conversion Price. The Conversion Price in effect from time to
time shall be, subject to adjustment in accordance with the provisions of this
Section .
(i) Adjustments for Stock Splits and Combinations. If the Company shall at
any time or from time to time after the Issuance Date, effect a stock split of
the outstanding Common Stock, the applicable Conversion Price in effect
immediately prior to the stock split shall be proportionately decreased. If the
Company shall at any time or from time to time after the Issuance Date, combine
the outstanding shares of Common Stock, the applicable Conversion Price in
effect immediately prior to the combination shall be proportionately increased.
Any adjustments under this Section (i) shall be effective at the close of
business on the date the stock split or combination occurs.
(ii) Adjustments for Certain Dividends and Distributions. If the Company
shall at any time or from time after the Issuance Date, make or issue or set a
record date for the determination of holders of Common Stock entitled to receive
a dividend or other distribution payable in shares of Common Stock, then, and in
each event, the applicable Conversion Price in effect immediately prior to such
event shall be decreased as of the time of such issuance or, in the event such a
record date shall have been fixed, as of the close of business on such record
date, by multiplying, as applicable, the applicable Conversion Price then in
effect by a fraction;
(A) the numerator of which shall be the total number of shares of
Common Stock issued and outstanding immediately prior to the time of such
issuance or the close of business on such record date; and
(B) the denominator of which shall be the total number of shares of
Common Stock issued and outstanding immediately prior to the time of such
issuance or the close of business on such record date plus the number of shares
of Common Stock issuable in payment of such dividend or distribution.
(iii) Adjustment for Other Dividends and Distributions. If the Company
shall at any time or from time to time after the Issuance Date, make or issue or
set a record date for the determination of holders of Common Stock entitled to
receive a dividend or other distribution payable in other than shares of Common
Stock, then, and in each event, an appropriate revision to the Conversion Price
shall be made and provision shall be made (by adjustments of the Conversion
Price or otherwise) so that the holder of this Note shall receive upon
conversions thereof, in addition to the number of shares of Common Stock
receivable thereon, the number of securities of the Company which they would
have received had this Note been converted into Common Stock on the date of such
event and had thereafter, during the period from the date of such event to and
including the Conversion Date, retained such securities (together with any
distributions payable thereon during such period), giving application to all
adjustments called for during such period under this Section (iii) with respect
to the rights of the holders of the Note.
(iv) Adjustments for Reclassification, Exchange or Substitution. If the
Common Stock issuable upon conversion of this Note at any time or from time to
time after the Issuance Date shall be changed into the same or different
number of shares of any class or classes of stock, whether by reclassification,
exchange, substitution or otherwise (other than by way of a stock split or
combination of shares or stock dividends provided for in Sections (i), (ii) and
(iii), or a reorganization, merger, consolidation, or sale of assets provided
for in Section (v)), then, and in each event, an appropriate revision to the
Conversion Price shall by made and provisions shall be made (by adjustments of
the Conversion Price of otherwise) so that the holder of this Note shall have
the right thereafter to convert such Note into the kind and amount of shares of
stock and other securities receivable upon reclassification, exchange,
substitution or other change, by holders of the number of shares of Common Stock
into which such Note might have been converted immediately prior to such
reclassification, exchange, substitution or other change, all subject to further
adjustment as provided herein.
(v) Adjustments for Reorganization, Merger, Consolidation or Sales of
Assets. If at any time or from time to time after the Issuance Date there shall
be a capital reorganization of the Company (other than by way of a stock split
or combination of shares or stock dividends or distributions provided for in
Section (i), (ii) and (iii), or a reclassification, exchange or substitution of
shares provided for in Section (iv)), or a merger or consolidation of the
Company with or into another corporation, or the sale of all or substantially
all of the Company's properties or assets to any other person, then as a part of
such reorganization, merger, consolidation, or sale, an appropriate revision to
the Conversion Price shall be made and provision shall be made (by adjustments
of the Conversion Price or otherwise) so that the holder of this Note shall have
the right thereafter to convert this Note into the kind and amount of shares of
stock and other securities or property of the Company or any successor
corporation resulting from such reorganization, merger, consolidation, or sale,
to which a holder of Common Stock deliverable upon conversion of such shares
would have been entitled upon such reorganization, merger, consolidation, or
sale, to which a holder of Common Stock deliverable upon conversion of such
shares would have been entitled upon such reorganization, merger, consolidation,
or sale. In any such case, appropriate adjustment shall be made in the
application of the provisions of this Section (v) with respect to the rights of
the holders of this Note after the reorganization, merger, consolidation, or
sale to the end that the provisions of this Section (v) (including any
adjustment in the applicable Conversion Ratio then in effect and the number of
shares of stock or other securities deliverable upon conversion of this Note)
shall be applied after that event in as nearly an equivalent manner as may be
practicable.
EXHIBIT C
Antidilution Provision. The Exercise Price in effect from time to time shall be,
subject to adjustment in accordance with the provisions of this Section .
(a) Adjustments for Stock Splits and Combinations. If the Company shall at
any time or from time to time after the date hereof, effect a stock split of the
outstanding Common Stock, the applicable Exercise Price in effect immediately
prior to the stock split shall be proportionately decreased. If the Company
shall at any time or from time to time after the date hereof, combine the
outstanding shares of Common Stock, the applicable Exercise Price in effect
immediately prior to the combination shall be proportionately increased. Any
adjustments under this Section (a) shall be effective at the close of business
on the date the stock split or combination occurs.
(b) Adjustments for Certain Dividends and Distributions. If the Company
shall at any time or from time after the date hereof, make or issue or set a
record date for the determination of holders of Common Stock entitled to receive
a dividend or other distribution payable in shares of Common Stock, then, and in
each event, the applicable Exercise Price in effect immediately prior to such
event shall be decreased as of the time of such issuance or, in the event such a
record date shall have been fixed, as of the close of business on such record
date, by multiplying, as applicable, the applicable Exercise Price then in
effect by a fraction;
(i) the numerator of which shall be the total number of shares of
Common Stock issued and outstanding immediately prior to the time of such
issuance or the close of business on such record date; and
(ii) the denominator of which shall be the total number of shares of
Common Stock issued and outstanding immediately prior to the time of such
issuance or the close of business on such record date plus the number of shares
of Common Stock issuable in payment of such dividend or distribution.
(c) Adjustment for Other Dividends and Distributions. If the Company shall
at any time or from time to time after the date hereof, make or issue or set a
record date for the determination of holders of Common Stock entitled to receive
a dividend or other distribution payable in other than shares of Common Stock,
then, and in each event, an appropriate revision to the Exercise Price shall be
made and provision shall be made (by adjustments of the Exercise Price or
otherwise) so that the holder of this Note shall receive upon conversions
thereof, in addition to the number of shares of Common Stock receivable thereon,
the number of securities of the Company which they would have received had this
Note been converted into Common Stock on the date of such event and had
thereafter, during the period from the date of such event to and including the
date hereof, retained such securities (together with any distributions payable
thereon during such period), giving application to all adjustments called for
during such period under this Section (c) with respect to the rights of the
holders of the Warrant.
(d) Adjustments for Reclassification, Exchange or Substitution. If the
Common Stock issuable upon conversion of this Warrant at any time or from time
to time after the date hereof shall be changed into the same or different
number of shares of any class or classes of stock, whether by reclassification,
exchange, substitution or otherwise (other than by way of a stock split or
combination of shares or stock dividends provided for in Sections (a), (b) and
(c), or a reorganization, merger, consolidation, or sale of assets provided for
in Section (e), then, and in each event, an appropriate revision to the Exercise
Price shall by made and provisions shall be made (by adjustments of the Exercise
Price of otherwise) so that the holder of this Warrant shall have the right
thereafter to convert such Warrant into the kind and amount of shares of stock
and other securities receivable upon reclassification, exchange, substitution or
other change, by holders of the number of shares of Common Stock into which such
Warrant might have been converted immediately prior to such reclassification,
exchange, substitution or other change, all subject to further adjustment as
provided herein.
(e) Adjustments for Reorganization, Merger, Consolidation or Sales of
Assets. If at any time or from time to time after the date hereof there shall be
a capital reorganization of the Company (other than by way of a stock split or
combination of shares or stock dividends or distributions provided for in
Section (a), (b), and (c), or a reclassification, exchange or substitution of
shares provided for in Section (d), or a merger or consolidation of the Company
with or into another corporation, or the sale of all or substantially all of the
Company's properties or assets to any other person, then as a part of such
reorganization, merger, consolidation, or sale, an appropriate revision to the
Exercise Price shall be made and provision shall be made (by adjustments of the
Exercise Price or otherwise) so that the holder of this Warrant shall have the
right thereafter to convert this Warrant into the kind and amount of shares of
stock and other securities or property of the Company or any successor
corporation resulting from such reorganization, merger, consolidation, or sale,
to which a holder of Common Stock deliverable upon conversion of such shares
would have been entitled upon such reorganization, merger, consolidation, or
sale, to which a holder of Common Stock deliverable upon conversion of such
shares would have been entitled upon such reorganization, merger, consolidation,
or sale. In any such case, appropriate adjustment shall be made in the
application of the provisions of this Section (e) with respect to the rights of
the holders of this Warrant after the reorganization, merger, consolidation, or
sale to the end that the provisions of this Section (e) (including any
adjustment in the applicable conversion ratio then in effect and the number of
shares of stock or other securities deliverable upon conversion of this Warrant)
shall be applied after that event in as nearly an equivalent manner as may be
practicable.