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EXHIBIT 10.1
SETTLEMENT AGREEMENT DATED DECEMBER 31, 2006
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MUTUAL RELEASE AND SETTLEMENT AGREEMENT
THIS MUTUAL RELEASE AND SETTLEMENT AGREEMENT ("Agreement") is made
and
entered into effective as of the day of December 2006 (the
"Effective Date"), by
and between River Capital Group, Inc., a Delaware corporation (the
"Company"),
and Longview Fund, LP, Longview Equity Fund, LP, Longview
International Equity
Fund, LP, (collectively, the "Noteholders" and, collectively with
the Company,
the "Parties").
R E C I T A L S
WHEREAS, the Company is currently in default in connection with
those
certain convertible notes as detailed in EXHIBIT A hereto
(collectively the
"Notes"), issued to the Noteholders and secured by substantially
all of the
assets of the Company; and
WHEREAS, the Company issued those certain Warrants to the
Noteholders
as detailed in EXHIBIT A hereto (collectively the "Warrants");
and
WHEREAS the Parties have reached an agreement to settle and release
any
and all claims and disputes between them arising out of or relating
to the
payment of all principal and interest, performance or
non-performance of the
terms and conditions of the Notes, Warrants and any subscription
documents
associated with the Notes and Warrants, on the terms and conditions
set forth in
this Agreement;
NOW, THEREFORE, for and in consideration of the premises,
mutual
covenants and obligations set forth in this Agreement, the Parties
agree as
follows:
1. ISSUANCE OF STOCK FOR THE NOTES. The Company agrees to issue
11,045,474 shares of its $.001 par value common stock (the "Common
Stock
Payment") to the Noteholders, in the respective amounts set forth
on EXHIBIT A
hereto, calculated at the rate of $0.05 per share, in full
satisfaction of all
principal and interest owing under the Notes and the release of any
security
interests arising thereunder.
2. CANCELLATION OF THE NOTES. The Noteholders agree to mark each
Note
cancelled and to deliver each such Note to the Company in exchange
for the
Common Stock Payment (the "Cancelled Notes") and to terminate any
UCC financing
statements filed in connection thereto.
3. EXERCISE OF WARRANTS. The Noteholders agree to pay to the
Company
cash in the amount of $46,250.00 (the "Warrant Payment") and
deliver the duly
executed "Forms of Subscription" to exercise their respective
Warrants.
4. ISSUANCE OF STOCK FOR THE WARRANTS. The Company agrees to
issue
925,000 shares of its $.001 par value common stock (the "Warrant
Stock") to the
Noteholders, in the respective amounts set forth on EXHIBIT A
hereto, calculated
at the rate of $0.05 per share, in exchange for the Warrant
Payment.
5. PAYMENT OF THE WARRANT PAYMENT. The Warrant Payment shall be
paid
via wire transfer and shall be delivered to the Company immediately
upon the
full execution of this Agreement.
The Company's delivery of the Common Stock Payment and the
Warrant
Stock shall be contingent on the execution and delivery to the
Company of the
Forms of Subscription for the Warrants and confirmation of receipt
of the
Warrant Payment wire transfer.
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The Noteholders' delivery of the Cancelled Notes shall be
contingent on
the execution and delivery to the Noteholders by the Company of
the, Common
Stock Payment and the Warrant Stock.
6. TIME AND LOCATION OF CLOSING ON THIS AGREEMENT. Unless
otherwise
agreed by the Parties, the execution and exchange of documents
consummating this
Agreement shall take place at 10:00 a.m. on December __, 2006, at
the offices of
DILL DILL CARR STONBRAKER & HUTCHINGS, P.C., 455 Sherman
Street, Suite 300,
Denver, Colorado, 80203.
7. COMPANY'S REPRESENTATIONS AND WARRANTIES. The Company hereby
agrees
to indemnify and hold the Noteholders harmless from all claims or
demands
relating to the Notes, Warrants and any subscription documents
related thereto,
pre- and post-execution of this Agreement, including without
limitation, any and
all loss, costs, damages, or expenses, to include reasonable
attorneys' fees
incurred by the Noteholders in connection thereto, except matters,
if any,
arising from intentional misconduct of the individual Noteholders
prior to the
date of this Agreement or any claim that arises after the date of
this Agreement
that relates to a breach or failure of the Noteholders to perform
their
obligations under this Agreement.
Further, the Company represents to the Noteholders that the
share
certificates representing the Common Stock Payment and the Warrant
Stock have
been duly set aside and reserved from the authorized but unissued
shares of the
Company's common stock and shall be validly issued, fully paid and
nonassessable
shares of common stock of the Company.
Further, the Company Represents that the holding period of the
Common
Stock Payment for Rule 144 purposes tacks with the holding period
for the Notes.
Further, the company represents that the terms of Section 18 of
the
Subscription Agreement remain in effect and apply to the Common
Stock Payment
and the Warrant Stock delivered in accordance with this
Agreement.
8. NOTEHOLDERS' REPRESENTATIONS AND WARRANTIES. The Noteholders
hereby
agree to indemnify and hold the Company and its officers and
directors harmless
from all claims or demands relating to the Notes, Warrants and any
subscription
documents related thereto, pre- and post-execution of this
Agreement, including
without limitation, any and all loss, costs, damages, or expenses,
to include
reasonable attorneys' fees incurred by the Company in connection
thereto caused
by any knowingly illegal actions taken by the Noteholders, except
matters, if
any, arising from intentional misconduct of the Company prior to
the date of
this Agreement or any claim that arises after the date of this
Agreement that
relates to a breach or failure of the Company to perform its
obligations under
this Agreement. The Noteholders have not sold, transferred or
otherwise impaired
the Notes and warrants being surrendered and the Noteholders
indemnify as
contained herein for any such claims or damages.
The Noteholders acknowledge that the share certificates
representing
the Common Stock Payment and the Warrant Stock shall bear a
conspicuous legend
regarding the restricted nature of the securities and Rule 144
under the
Securities Act of 1933, as amended, which shall be substantially as
follows:
"The shares represented by this certificate have not been
registered under the Securities Act of 1933 (the "Act"). The
shares may not be offered for sale, sold, or otherwise
transferred except pursuant to an effec
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