EXHIBIT 10.3
EXECUTION COPY
AGREEMENT
AGREEMENT dated as of January 31, 2005 (this "AGREEMENT"), by and
between Cadence Resources Corporation, a Utah corporation (the "COMPANY") and
each of the persons signatory hereto (each an "INVESTOR" and collectively, the
"INVESTORS").
RECITALS:
WHEREAS, the Company and the Investors entered into that certain
Securities Purchase Agreement, dated as of April 2, 2004 (the "PURCHASE
AGREEMENT"), pursuant to which, among other things, the Investors purchased from
the Company (i) an aggregate of $6,000,000 principal amount of Senior Secured
Notes of the Company (the "NOTES") and warrants (the "WARRANTS") to purchase the
Company's common stock, par value $.01 per share (the "COMMON STOCK"); and
WHEREAS, the Company and certain of the Investors (the "REDEEMING
INVESTORS") desire to enter into this Agreement, pursuant to which, among other
things, the Company will redeem the principal amount of such Redeeming
Investor's Notes set forth on such Redeeming Investor's Signature Page hereto;
and
WHEREAS, the Company and certain of the Investors (the "EQUITY
INVESTORS") desire to enter into this Agreement, pursuant to which, among other
things, the Equity Investor shall exchange the principal amount of such Equity
Investor's Notes as set forth on such Investor's Signature Page hereto (as
adjusted for any stock splits, stock dividends, stock combinations or other
similar transactions) (the "EXCHANGE SHARES"); and
WHEREAS, the Company and each of the Investors desire to enter into
this Agreement, pursuant to which, among other things, the Company shall amend
the Warrants such that the exercise price of the Warrants shall be reduced from
$4.00 to $1.25; and
WHEREAS, the exchange of the Equity Investors' Notes for the
Exchange Shares is being made in reliance upon the exemption from registration
provided by Section 3(a)(9) of the 1933 Act; and
WHEREAS, the Notes provide that if the Company prepaid any portion
of the Notes, the Company would be required to pay, in addition to the principal
and accrued but unpaid interest, an amount equal to the interest that the
prepaid portion of the Notes would have earned had the Notes been outstanding to
the maturity date of the Notes; and
WHEREAS, the Company has entered into a certain Merger Agreement
with Aurora Energy, Ltd. ("AURORA"), pursuant to which a subsidiary of the
Company will merge (the "MERGER") with Aurora; and
WHEREAS, the Company wishes to enter into a financing transaction
with, among others, Rubicon Master Fund, pursuant to which the Company will
receive approximately $9,700,000, subject to the Notes being redeemed (the
"FINANCING").
NOW THEREFORE, for and good and valuable consideration, the receipt
and legal adequacy of which is hereby acknowledged, the Company and the
Investors agree as follows:
1. Redemption or Exchange of Notes.
(a) Payment or Exchange of the Notes.
(i) On the Closing Date (as defined below), the Company shall
pay, by wire transfer of immediately available funds in accordance with such
Investor's written wire instructions, to each Redeeming Investor an amount equal
to the principal amount of such Redeeming Investor's Note, plus any accrued but
unpaid interest thereon up to and including the Closing Date (the "REDEEMING
INVESTOR'S REDEMPTION AMOUNT") in full satisfaction and cancellation of such
Redeeming Investor's Note;
(ii) On the Closing Date, the Company shall issue to each
Equity Investor a certificate representing the number of shares of Common Stock
indicated on such Investor's signature page hereto (the "EQUITY INVESTOR SHARE
AMOUNT"), in full satisfaction and cancellation of such Equity Investor's Note.
(iii) As promptly as practicable upon receipt of payment of
such Redeeming Investor's Redemption Amount, such Redeeming Investor shall
deliver such Redeeming Investor's Note to the Company for cancellation.
(b) Closing Date. The date and time of the Closing (the "CLOSING
DATE") shall be 10:00 a.m., New York Time, within three (3) Business Days of the
date hereof. The Closing shall occur on the Closing Date at the offices of
Schulte Roth & Zabel LLP, 919 Third Avenue, New York, New York 10022.
(c) Payment of Fees.
(i) Simultaneously with execution of this Agreement, the
Company shall pay to Schulte Roth & Zabel LLP ("LEGAL Counsel") by wire transfer
of immediately available funds in accordance with wire instructions provided to
the Company the outstanding invoice in the amount of $4,700.
(ii) On the Closing Date, the Company shall pay to Legal
Counsel by wire transfer of immediately available funds in accordance with wire
instructions provided to the Company (A) the amount required by Section 6.3 of
the Purchase Agreement in connection with the review of any amendment to the
Registration Statement or any prospectus supplement and (B) an amount equal to
the fees and expenses in connection with the review and negotiation of this
Agreement on behalf of Smithfield Fiduciary LLC (a Redeeming Investor).
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2. Release of Security Interest. Each Investor shall take all
reasonably necessary and appropriate actions to release all of the Company's
assets and property (both real property and personal property) from the security
interests (the "SECURITY INTERESTS") created by the Purchase Agreement, the
Notes and the Security Agreement dated April 2, 2004 by and among the Company
and Smithfield Fiduciary LLC as collateral agent for the Investors (the
"COLLATERAL AGENT"). The Collateral Agent agrees that it will execute any and
all documents reasonably necessary to release all of the Company's assets and
property (both real property and personal property) from the Security Interests,
including, but not limited to a Mortgage Cancellation Agreement for release of a
mortgage in Louisiana, a Satisfaction and Release for the release of a mortgage
in Texas and any UCC-3 termination statements required. In connection with any
of the foregoing, the Company agrees that it will pay (or promptly reimburse)
the Collateral Agent for all fees and expenses (included legal fees and
expenses) incurred in connection therewith.
3. Amendment of Warrants. Each of the Warrants is hereby amended
such that the exercise price of such Warrants is reduced from $4.00 to $1.25. As
promptly as practicable after the receipt of any Investor's outstanding Warrant,
the Company agrees to issue to such Investor a new Warrant in the same form
except to reflect the amendment to the exercise price.
4. No Adjustments to the Warrant Exercise Price. Each Investor
hereby agrees that there will not be any adjustment to the exercise price of the
Warrants due to the issuance of Common Stock or any security convertible into,
exercisable for or exchangeable for Common Stock in the Financing or the Merger,
provided, that the price attributable to the Common Stock or exercisable,
convertible or exchangeable for such Common Stock is not less than $1.25 per
share in any such issuance.
5. Amendment to Securities Purchase Agreement. The Securities
Purchase Agreement is hereby amended such that the defined term "Transaction
Documents" includes this Agreement.
6. Representations And Warranties.
(a) Investor Bring Down. Each Investor, severally and not
jointly, hereby represents and warrants as to itself only as set forth in
Section 3.2 of the Securities Purchase Agreement as if such representations and
warranties were made as of the date hereof and set forth in their entirety in
this Agreement.
(b) Company Bring Down. (i) The Company hereby represents and
warrants to the Investor as set forth in Section 3.1 of the Securities Purchase
Agreement as if such representations and warranties were made as of the date
hereof and set forth in their entirety in this Agreement; provided that the
Schedules to the Securities Purchase Agreement are replaced in their entirety by
the Schedules attached to this Agreement (the "NEW SCHEDULES") and the
representations and warranties in the Securities Purchase Agreement are
qualified in their entirety by the New Schedules.
(ii) The Exchange Shares are duly authorized and, upon
issuance in accordance with the terms hereof, shall be validly issued and free
from all taxes, liens and charges with respect to the issue thereof.
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7. Certain Covenants.
(a) Disclosure of Transactions and Other Material Information.
On or before 8:30 a.m., New York Time, on the second trading day following the
date hereof, the Company shall file a Current Report on Form 8-K describing the
terms of the transactions contemplated by this Agreement on the Closing Date in
the form required by the 1934 Act, and attaching the material transaction
documents (including, without limitation, this Agreement (and all schedules to
this Agreement)) as exhibits to such filing (including all attachments, the "8-K
FILING", and the description and attachments, the "8-K MATERIALS"). The 8-K
Materials shall be subject to the Investor's prior approval, not to be
unreasonably withheld or delayed. From and after the filing of the 8-K Filing
with the SEC, the Investor shall not be in possession of any material, nonpublic
information received from the Company, any of its Subsidiaries or any of its
respective officers, directors, employees or agents, that is not disclosed in
the 8-K Filing. The Company shall not, and shall cause each of its Subsidiaries
and its and each of their respective officers, directors, employees and agents,
not to, provide the Investors with any material nonpublic information regarding
the Company or any of its Subsidiaries from and after the filing of the 8-K
Filing with the SEC without the express written consent of the Investor. In the
event of a breach of the foregoing covenant by the Company, any of its
Subsidiaries, or any of its or their respective officers, directors, employees
and agents, in addition to any other remedy provided herein or in the
Transaction Documents, the Investor shall have the right to make a public
disclosure, in the form of a press release, public advertisement or otherwise,
of the 8-K Materials without the prior approval by the Company, its
Subsidiaries, or any of its or their respective officers, directors, employees
or agents. The Investor shall not have any liability to the Company, its
Subsidiaries, or any of its or their respective officers, directors, employees,
shareholders or agents for any such disclosure. Each Investor hereby agrees not
to knowingly request that the Company provide him, her or it with material,
nonpublic information. Subject to the foregoing, neither the Company nor the
Investor shall issue any press releases or any other public statements with
respect to the transactions contemplated hereby; provided, however, that the
Company shall be entitled, with the prior approval of the Investor (not to be
unreasonably withheld or delayed), to make any press release or other public
disclosure with respect to such transactions (i) in substantial conformity with
the 8-K Filing and contemporaneously therewith and (ii) as is required by
applicable law and regulations, including the applicable rules and regulations
of the Principal Market (provided that in the case of clause (i) the Investor
shall be consulted by the Company (although the consent of the Investor shall
not be required) in connection with any such press release or other public
disclosure prior to its release).
(b) Prospectus Supplement. The Company shall, as soon as
practicable but in no event later than ten (10) days after the date hereof,
prepare and file with the SEC and provide each Investor with a supplement to the
Prospectus (as defined in the Registration Rights Agreement) pursuant to Rule
424(b) reflecting the terms set forth in this Agreement. The Company represents
and warrants to each Investor that from and after the time that the Company
provides to such Investor the Prospectus supplement, each Investor shall be
permitted to resell all of the Registrable Securities pursuant to the
Registration Statement.
8. Notice. All notices, consents, directions, approvals,
instructions, requests and other communications required or permitted by the
terms of this Agreement shall be in writing, and shall be sent to the Company
and each Investor to the address or facsimile number of the signature pages
hereto or to such other address or facsimile number as the Company or the
Investor may have furnished to the other in writing in accordance herewith. All
notices, consents, directions, approvals, instructions, requests and other
communications hereunder shall be sent and effective as follows: (i) on the
business day delivered, when delivered personally; (ii) five (5) business days
after mailing if mailed by registered or certified mail, return receipt
requested (postage prepaid); (iii) on the next business day if sent by a
nationally recognized overnight express courier service with all costs prepaid
and provided evidence of delivery is available; or (iv) on the business day of a
facsimile transmission if received on a business day between the hours of 9:00
a.m. and 6:00 p.m., local time, or on the next business day if received after
that time, in each case provided that an automatic machine confirmation
indicating the time of receipt is generated.
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9. Severability. If any provision of this Agreement is held by a
court of competent jurisdiction to be invalid, illegal or unenforceable, such
invalidity, illegality or unenforceability shall not affect or render invalid,
illegal or unenforceable any other provision of this Agreement and to the
fullest extent permitted by applicable law, such provision will be valid, legal
and fully enforceable, and such invalid, illegal or unenforceable provision
shall be amended in a manner that such provision will be valid, legal and fully
enforceable. It is the intent of the Company and the Investors that each and
every provision of this Agreement shall be enforced to the maximum extent
permitted by applicable law.
10. Entire Agreement; Amendment. Except for the Transaction
Documents (to the extent any such Transaction Document is not amended by this
Agreement), this Agreement sets forth the entire understanding and agreement
between the Company and the Investors with respect to the subject matter hereof
and its supersedes all prior and/or contemporaneous understandings and
agreements, whether written or oral, with respect to such subject matter, all of
which are merged herein. This Agreement may not be modified, released,
discharged, abandoned or otherwise amended, in whole or in part, except by a
written instrument, executed by the Company and the Investors.
11. Headings. The headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning,
construction or interpretation of this Agreement.
12. Counterparts. This Agreement may be executed in any number of
counterparts, each of which when executed shall be deemed to be an original, but
all of which, when together, shall constitute one and the same document. This
Agreement may be executed by facsimile signature which shall constitute a valid
and binding signature for the purposes hereof.
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IN WITNESS WHEREOF, the undersigned has executed this Agreement as
of the day and year above first written.
CADENCE RESOURCES CORPORATION
By: __________________________
Name: John P. Ryan
Title: Vice President
Address for Notice:
6 East Rose Street
P.O. Box 2056
Walla Walla, WA 99362
Facsimile No.: (509) 526-3492
Telephone No.: (509) 526-3491
Attn: Howard Crosby
With a copy to: Jenkens & Gilchrist Parker Chapin LLP
The Chrysler Building
New York, New York 10174
Facsimile No.: (212) 704-6288
Telephone No.: (212)704-6000
Attn: Henry I Rothman, Esq.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK
SIGNATURE PAGES FOR INVESTORS FOLLOW]
IN WITNESS WHEREOF, the undersigned has executed this Agreement as of the
day and year above first written.
SMITHFIELD FIDUCIARY LLC
By: __________________________
Name: Adam J. Chill
Title: Authorized Signatory
Aggregate principal amount of Note
outstanding: $2,000,000
Redeeming Investor's Redemption Amount:
$_________________________
Address for Notice:
Smithfield Fiduciary LLC
c/o Highbridge Capital Management, LLC
9 West 57th Street, 27th Floor
New York, New York 10019
Facsimile No.: (212) 751-0755
Telephone No.: (212) 287-4720
Attn: Ari J. Storch / Adam J. Chill
With a copy to: Schulte Roth & Zabel LLP
919 Third Avenue
New York, New York 10022
Facsimile No.: (212) 593-5955
Telephone No.: (212) 756-2000
Attention: Eleazer Klein, Esq.
IN WITNESS WHEREOF, the undersigned has executed this Agreement as of the
day and year above first written.
OMICRON CAPITAL
By: __________________________
Name: Bruce Bernstein
Title: Managing Partner
Aggregate principal amount of Note
outstanding: $1,000,000
Redeeming Investor's Redemption Amount:
$_________________________
Address for Notice:
Omicron Capital
650 Fifth Avenue
24th Floor
New York, NY 10019
Facsimile No.: (212) 803-5263
Telephone No.: (212) 803-5269
Attn: Brian Daly
IN WITNESS WHEREOF, the undersigned has executed this Agreement as of the
day and year above first written.
PORTSIDE GROWTH AND OPPORTUNITY FUND
By: __________________________
Name:
Title:
Aggregate principal amount of Note
outstanding: $1,000,000
Redeeming Investor's Redemption Amount:
$_________________________
Address for Notice:
Portside Growth and Opportunity Fund
c/o Ramius Capital Group, LLC
666 Third Avenue
26th Floor
New York, New York 10006
Facsimile No.: (212) 845-7999
Telephone No.: (212) 845-7917
Attn: Roger Anscher
Jeffrey Smith
IN WITNESS WHEREOF, the undersigned has executed this Agreement as of the
day and year above first written.
LISA LOW AS CUSTODIAN FOR
GABRIEL S. LOW UNYGMA
By: __________________________
Name:
Title:
Aggregate principal amount of Note
outstanding: $450,000
Equity Investor Share Amount:
_________________________
Equity Investor Warrant Amount:
_________________________
Address for Notice:
Lisa Low as Custodian for
Gabriel S. Low UNYGMA
c/o Sunrise Securities Corp.
641 Lexington Avenue, 25th Floor
New York, NY 10024
Facsimile No.: (212) 750-7277
Phone No.: (212) 421-1616
Attn: Nathan Low
IN WITNESS WHEREOF, the undersigned has executed this Agreement as of the
day and year above first written.
BEAR STEARNS AS CUSTODIAN FOR
NATHAN A. LOW ROTH IRA
By: __________________________
Name:
Title:
Aggregate principal amount of Note
outstanding: $250,000
Equity Investor Share Amount:
_________________________
Equity Investor Warrant Amount:
_________________________
Address for Notice:
Bear Stearns as Custodian for
Nathan A. Low Roth IRA
c/o Sunrise Securities Corp.
641 Lexington Avenue
25th Floor
New York, NY 10024
Facsimile No.: (212) 750-7277
Phone No.: (212) 421-1616
Attn: Nathan Low
IN WITNESS WHEREOF, the undersigned has executed this Agreement as of the
day and year above first written.
_________________________
RUTH LOW
Aggregate principal amount of Note
outstanding: $300,000
Equity Investor Share Amount:
_________________________
Equity Investor Warrant Amount:
_________________________
Address for Notice:
Ruth Low
614 Trenton Drive
Beverly Hills, CA 90210
Facsimile No.: (212) 750-7277
Telephone No.: (212) 421-1616
Attn: Nathan Low
IN WITNESS WHEREOF, the undersigned has executed this Agreement as of the
day and year above first written.
_________________________
MOSHE AZOULAY
Aggregate principal amount of Note
outstanding: $1,000,000
Redeeming Investor's Redemption Amount:
$_________________________
Address for Notice:
Moshe Azoulay
c/o Skyrise Properties
18111 Preston Road, Suite 1000
Dallas, TX 75252
Facsimile No.: (972) 733-3920
Attn: Peter Kaufman