WAIVER AGREEMENT
This
Waiver
(this “ Agreement ”)
is made and entered into as of the 30th day of June, 2008, by
and between
Cistera Networks, Inc. , a Nevada corporation (the “
Company
”), and
Roaring Fork Capital SBIC, LP, a Delaware limited
partnership (“ Roaring Fork
”).
Recitals
Whereas , Roaring Fork purchased a Convertible Promissory
Note in the original principal amount of $1,000,000 (the “
Note
”) and a warrant to purchase 1,000,000 shares of the
Company’s common stock (the “ Warrant ”) from
the Company in April 2007;
Whereas , in connection with the purchase of the Note and
the Warrant, the Company and Roaring Fork entered into a letter
agreement dated April 5, 2007;
Whereas , the Company is providing temporary incentive to
its investors by lowering the conversion price of outstanding notes
(including the Note) and by lowering the exercise price of
outstanding warrants (including the Warrant) (the
“Incentive”);
Whereas , Roaring Fork has accepted the Incentive with
respect to that portion of the principal amount of the Note equal
to $800,000, including all accrued but unpaid interest and
penalties with respect to that portion of the principal, and
delivered to the Company an the Allonge to Promissory Note attached
as Appendix
A;
Whereas , Roaring Fork has also accepted the Incentive with
respect to the entire Warrant and has determined to purchase an
additional 300,000 shares of the Company’s common stock at
$.30 per share resulting from its exercise of the Warrant; as
provided under the Incentive;
Whereas , in connection with its acceptance of the
Incentive, conversion of the Note, exercise of the Warrant and
purchase of additional shares, Roaring Fork has delivered to the
Company payment of $490,000 and the Company will issue to deliver
to Roaring Fork an aggregate of 3,259,424 shares of the
Company’s common stock (the “Shares”), of which
1,959,424 shares result from the conversion of the Note and
1,300,000 shares result from the exercise of the Warrant and
purchase of additional shares pursuant to the
Incentive.
Whereas , in connection with the aforementioned transaction,
the Company has requested that Roaring Fork waive the
Company’s obligation to register the Shares, and Roaring Fork
has agreed to provide such waiver as set forth in this
Agreement.
Agreement
Now, Therefore , in consideration of
the mutual promises, covenants and agreements set forth herein, the
sufficiency of which the parties acknowledge, the parties hereby
agree as follows:
1.
Termination
of Registration Obligation and Damages. The
Company’s obligation to register the shares of common stock
underlying the Note and the Warrant is terminated, and damages
related thereto are hereby waived, and the Company shall deliver to
Roaring Fork an irrevocable instruction letter to the
Company’s transfer agent to issue to Roaring Fork 58,777
shares of the Company’s common stock within five business
days of the date of this Agreement. The other provisions
of the letter agreement dated April 5, 2007 between the Company and
Roaring Fork remain in full force and effect.
2.
Representations,
Warranties and Covenants of the Company .
The Company hereby represents and warrants to Roaring Fork
as
follows:
2.1
Corporate Power
. The Company has all requisite corporate power and authority
to execute and deliver this Agreement, and to carry out and perform
the provisions of this Agreement.
2.2
Authorization .
All corporate action on the part of the Company, its officers,
directors and stockholders necessary for the authorization,
execution and delivery of this Agreement and the performance of all
obligations of the Company hereunder has been
taken. This Agreement, when executed and delivered by
the Company, will constitute a valid and binding obligation of the
Company, enforceable in accordance with its terms, except (i) as
limited by applicable bankruptcy, insolvency, reorganization,
moratorium and other laws of general application affecting
enforcement of creditors’ rights generally and (ii) as
limited by laws relating to the availability of specific
performance, injunctive relief or other equitable
remedies.
2.3
Note
Conversions. The Company had note payables of
$3,598,776 at May 31, 2008. The Company has made no
notes since May 31, 2008. Since May 31, 2008, the
Company has received: (i) note conversions of $1,325,723
into the Company’s common stock at $.53 per share, (ii)
warrant exercises at $.40 per share to purchase 729,395 shares of
the Company’s common stock for proceeds of $291,758 and (iii)
warrant exercises at $.30 per share to purchase 180,375 shares of
the Company’s common stock for proceeds of
$54,113.
2.4
Agreements with
John Jenkins. The Company has entered into a
Consulting Agreement with John Jenkins. The
Company’s Board of Directors (the “Board”) will,
within ten business days of the date hereof, elect Jenkins to serve
as a member of the Board and as Chairman of the Board, it being
understood that Jenkins requires that the Company obtain D&O
insurance prior to accepting these positions. The
Company covenants to obtain D&O insurance by no later than
August 31, 2008 and that the Jenkins elections to the Board will
not be revoked. The Company and its principal
stockholders have entered into an agreement with John Jenkins in
the form attached as Appendix C to this
Agreement.
2.5 Most
Favored Nation.
(a)
If
and whenever, on or after the date hereof and before June 30, 2009
(the “MFN
Period” ), the Company (i) permits the conversion of
any note payable outstanding as of the date hereof at a conversion
price below $.53 per share, then immediately
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