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 effe
