SETTLEMENT AND RELEASE AGREEMENT FOR XXXXXXX AND XXXXXX
XXXXXXXX AND AMENDMENT TO SEPARATION AGREEMENT FOR XXXXXX XXXXXXXX
THIS SETTLEMENT AND RELEASE AGREEMENT is entered into this 19th day of
December, 2003, by and between Xxxxxxx and Xxxxxx Xxxxxxxx (collectively
"the Jacobsons", or individually "Xxxx Xxxxxxxx" or "Xxxxxx Xxxxxxxx"),
husband and wife, both of whom are residents of the State of Colorado,
and Nighthawk Systems, Inc. ("Nighthawk" or "the Company"), a Nevada
corporation, and this AMENDMENT TO THE SEPARATION AGREEMENT amending
the Separation Agreement entered into between Xxxxxx Xxxxxxxx and
Nighthawk on September 8, 2003, now entered into this 19th day of
December, 2003 between Xxxxxx Xxxxxxxx and Nighthawk (referred to herein
as the "Amendment"). The Jacobsons, Xxxxxx Xxxxxxxx and Nighthawk may
collectively be referred to herein as "the Parties."
RECITALS
WHEREAS, Xxxx Xxxxxxxx and his son Xxxxx Xxxxxxxx founded the predecessor
company of Peregrine Control Technologies, Inc. ("PCT"), a Colorado
corporation, and served as two of the three members of the board of
directors of PCT along with Xxxxxx Xxxxxxxx, while Xxxxx Xxxxxxxx also
served as the Chief Executive Officer of PCT, and;
WHEREAS, in February 2002, PCT completed a share exchange agreement with
a predecessor company to Nighthawk, after which Nighthawk became the
parent corporation, expanding its board of directors but including only
Xxxx Xxxxxxxx and Xxxxx Xxxxxxxx from the PCT board of directors; and
WHEREAS, in a complaint filed in the District Court in Denver County,
Colorado on November 11, 2003 against Nighthawk, Xxxx Xxxxxxxx alleges
that he obtained a $50,000 line of credit from Citywide Bank in 1998,
which was guaranteed by PCT, and which he alleges was used by PCT, and
for which PCT made periodic interest payments to Xxxx Xxxxxxxx while
Xxxxx Xxxxxxxx was the Chief Executive Officer; and
WHEREAS, the Jacobsons' lawsuit against the Company demands priority
payment of the principal and interest on the line of credit ahead of
all other creditors of the Company, the Board of Directors of the
Company voted to remove Xxxx Xxxxxxxx, from the board of directors
for breach of his fiduciary duties and a conflict of interest, and;
WHEREAS Nighthawk timely filed an answer to the Jacobsons' complaint
and filed a counter-claim against the Jacobsons alleging, inter alia,
a breach of Xxxx Xxxxxxxx'x fiduciary duties, and;
WHEREAS, the Parties desire to resolve all disputes between the
Parties without further expense and the risk of litigation, and;
WHEREAS, a satisfactory resolution of the disputes between the
Jacobsons and Nighthawk requires the participation of Xxxxx Xxxxxxxx
and a modification of certain provisions of the Separation Agreement
entered into by Xxxxx Xxxxxxxx and Nighthawk;
NOW THEREFORE, in consideration for the foregoing, the mutual
promises and releases set forth herein and other good and valuable
consideration, the receipt and sufficiency of which is hereby
acknowledged, the Jacobsons, Xxxxxx Xxxxxxxx and Nighthawk each agree
as follows:
1. As consideration for the Jacobsons entering into this Agreement,
Nighthawk shall:
A. Dismiss with prejudice its counterclaim filed against Xxxx
Xxxxxxxx on December 3, 2003, in the Denver District Court;
B. Pay Citywide Bank $25,000 for the line of credit. Payments
to Citywide Bank will be made monthly in the amount of $6,250.00 such that
the entire loan is paid off in four months from the signing of this
agreement by all parties. The first payment of $6,250.00 will be made 30
days after the signing of this agreement by all parties, with subsequent
payments made every 30 days thereafter until complete. If the respective
30th day falls on a weekend or holiday the payment will be made on the
next business day. If a payment is not made on the respective 30th day
the company shall have 3 days to remedy after which non-payment shall
constitute a breach of a portion of this agreement, and section 2c as
described below shall no longer apply.
C. No later than December 31, 2003 pay Xxxx Xxxxxxxx an amount
not to exceed $1,850.00 for interest accrued and loan renewal fees on the
line of credit for relevant months in 2003 and thereafter the Company will
pay one half of the monthly interest until such time as the Company pays
the full $25,000 identified in 1B, above, after which the Company will not
pay any interest amounts on the line of credit. Interest payments will me
made by the 5th of each respective month until complete.
D. Upon execution of this document by all parties, issue a press
release naming the parties to the agreement, stating the major terms of the
agreement and stating that management and the board agree that the
agreement is a positive development for the Company.
E. Agree to include Xxxxxx Xxxxxxxx in the distribution of any
private placement memorandum issued during the twelve month period
following the execution of this Agreement.
2. As consideration for Nighthawk entering into this Agreement,
the Jacobsons shall:
A. Sell of an aggregate, Xxxx, Xxxxxx & Xxxxxx, of 850,000 shares
of stock owned by the Parties in two sales of 425,000 shares each sale,
the first sale to take place on or about December 22, 2003, or as soon
thereafter as practicable, and the second sale to take place on or about
the 9th of January, or as soon thereafter as practicable. The amount to be
sold by each of the Parties individually shall be subject to limitations of
securities laws. If the sale of said stock cannot be completed at a minimum
per share price of 22 cents, by 5 trading days after December 22 or January
9, section 2c as described below shall no longer apply;
B. Resign from any and all positions of Nighthawk Systems, Inc.
and its subsidiaries, including PCT, and refrain from claiming to represent
the Company or any of its subsidiaries, including PCT, in any capacity to
any employees, shareholder or third parties;
C. Refrain from selling, transferring, conveying or otherwise
disposing of the 3,070,300 shares owned by the Herb and Xxxxxx Xxxxxxxx
or subsequently acquired by either of them, after the 850,000 shares
identified in 2.A, above, are sold, for a period of eighteen (18) months
from the date of execution of this Agreement; provided, that in the event
the Company agrees to sell a controlling interest of its shares in a
transaction or series of transactions, this paragraph shall not apply;
D. In combination with Xxxxxx Xxxxxxxx, have the opportunity to
sell up to $100,000 worth of Company stock during the sixty day period
immediately following the one-year anniversary of the execution of this
Agreement;
E. Dismiss with prejudice the lawsuit filed in District Court,
Denver County, Colorado on November 11, 2003 against the Company by Xxxx
Xxxxxxxx and Xxxxxx Xxxxxxxx.
3. As consideration for Nighthawk entering into this Agreement,
Xxxxx Xxxxxxxx agrees to:
A. Sell an aggregate of 850,000 including: Herb and Xxxxxx
Xxxxxxxx shares, shares of stock owned by the Parties in two sales of
425,000 shares each sale, the first sale to take place on or about
December 22, 2003, or as soon thereafter as practicable, and the second
sale to take place on or about the 9th of January, or as soon thereafter
as practicable. The amount to be sold by each of the Parties individually
shall be subject to limitations of securities laws. If the sale of said
stock cannot be completed at a minimum per share price of 22 cents by 5
trading days after December 22 or January 9, section D as described below
shall no longer apply;
B. In combination with the Jacobsons, have the opportunity to
sell up to $100,000 worth of Company stock during the sixty day period
immediately following the one-year anniversary of the execution of this
Agreement.
C. Have the opportunity to completed the transfer of up to
50,000 shares of his stock to a private individual through a transaction
currently underway at the time of the signing of this agreement. This
being done with the full knowledge that the respective shares once
transferred will carry a one-year restriction.
D. Accept the following amendment to the Separation Agreement,
all other sections of the Separation Agreement remaining in effect.
1. Paragraph 2.D is amended in its entirety to read
as follows:
"Agree not to sell, transfer, convey or otherwise dispose of any
shares owned or held in trust by him, including the shares held for
[minor names redacted], for a period of eighteen (18) months following
the sale of 850,000 shares pursuant to that Agreement And Amendment
To The Separation Agreement for Xxxxxx Xxxxxxxx dated December 19th,
2003; provided, that in the event the Company agrees to sell a
controlling interest of its shares in a transaction or series of
transactions, this paragraph shall not apply."
4. Non-disparagement and non-compete. The Jacobsons agree not
to disparage Nighthawk, its Board of Directors management or employees
in any communication whether written or spoken, and Nighthawk agrees to
the same in return to the Jacobsons. This provision shall not apply to
statements made by either party in response to an investigation by law
enforcement agencies or any other legal proceeding. The Jacobsons shall
also not compete in the wireless remote control business for a period of
at least two years form the date of this Agreement and they further agree
that they will not solicit for employment, either for themselves or for
any third party, either directly or indirectly, any current employee of
Nighthawk for a period of two years from the date of this Agreement.
5. Release of the Jacobsons by Nighthawk. Nighthawk, by its
officers and directors hereby completely and unconditionally releases,
waives, discharges and holds harmless the Jacobsons, their agents,
representatives, attorneys, heirs and assigns, and each of them,
including any corporations, partnerships or other business
associations in which the Jacobsons are a director or principal, from
any and all actions, causes of action, claims (as that term is defined
in 11 U.S.C. ss. 101(5)) and demands, known or unknown, cost and
expenses sustained by Nighthawk, arising from or related to the dispute,
including but not limited to claims that could have been raised in a
lawsuit but were not.
6. Release of Nighthawk by the Xxxxxxxx'x. Xxxx and Xxxxxx
Xxxxxxxx, for themselves, their successors, representatives, heirs,
executors, agents, administrators and assigns, including any
corporations, partnerships or other business associations in which
they are a director or principal, hereby completely and unconditionally
release, waive, discharge and hold harmless Nighthawk, its employees,
directors, subsidiaries, agents, representatives, attorneys, heirs and
assigns from any and all actions, causes of action, claims (as that
term is defined in 11 U.S.C. ss. 101(5)) and demands, known or unknown,
cost and expenses sustained by the Jacobsons, arising from or related
to the dispute, including but not limited to claims that were raised
or could have been raised in the lawsuit but were not.
7. Denial of Liability. The Parties agree that this Agreement
is not to be construed as an admission of any nature by the Parties.
8. Consultation with additional Professionals. Each of the
Parties state that they have been advised of their rights to consult,
at their own expense, additional professionals of their own choosing,
including other attorneys, accountants or other professionals,
regarding any and all known and unknown, foreseen and unforeseen,
injuries, losses, damages, and liabilities of whatsoever kind and
nature that they may have, or will incur, resulting directory or
indirectly from this Agreement or any of the incidents underlying
this Agreement.
9. Consideration. The consideration stated herein in
contractual and not a mere recital. In entering into this Agreement,
each Party has relied solely upon its own judgment and the judgment
and advice of its attorneys, which are the attorneys of its own
choice. No Party has been influenced or induced to any extent
whatever by any representations or statements regarding its damages or
any other matters made by or on behalf of any other Party. The terms of
his Agreement have been completely read and explained to each Party by
its own respective attorney, and its terms are fully understood and
voluntarily accepted by each Party. There are no other understandings
or agreements between the Parties other than those set forth in this
Agreement.
10. Costs. Each Party shall bear its own attorneys' fees and
other costs in connection with the dispute.
11. Consequences of Actions to Set Aside, Avoid or Otherwise
Challenge this Agreement. If any Party to this Agreement or that Party's
successor or assign shall bring an action in any form that seeks to set
aside or avoid this Agreement, that Party, or his or her successor or
assigns, shall be liable for and shall pay the reasonable legal fees and
expenses paid or accrued by any other Party or its successors in
connection with such action. If any Party to this Agreement, or that
Party's successors or assigns, shall bring any action challenging the
validity, enforceability or interpretation of this Agreement or that
it does not seek to have this Agreement set aside or avoided, that
Party, or its successor or assigns, shall pay the reasonable legal fees
and expenses paid or accrued by any other Party or his or her successors
or assigns in connection with such action in the event that such other
Party or his successors or assigns prevails in such action brought by a
Party to this Agreement.
12. Divisibility. If any provisions of this Agreement, or any
portion of any provision of this Agreement is declared null and void,
such provision or such portion of a provision shall be considered
separate and apart from the remainder of this Agreement which shall
remain in full force and effect.
13. Facsimile Signature and Counterparts. This Agreement may
be executed by facsimile signature in counterparts, each of which together
shall constitute a single document.
14. Governing Law. The laws of the State of Colorado shall apply
to and control any interpretation, construction, performance or
enforcement of this Agreement.
15. Binding Effect. Each Party understands and agrees that this
Agreement shall bind and inure to the benefit of itself, its officers,
directors, employees, agents, servants, subsidiaries, and parent companies,
insurers, sureties, successors and assigns.
16. Board Approval. This agreement is being entered into with the
full knowledge and approval of the Company's Board of Directors.
/s/ Xxxxxxx Xxxxxxxx /s/ Xxxxxx Xxxxxxxx
Xxxxxxx Xxxxxxxx Xxxxxx Xxxxxxxx
/s/ Xxxxxx Xxxxxxxx
Xxxxxx Xxxxxxxx
/s/ Xxxxx Xxxxxx /s/ Xxxx Xxxxxxxx
Xxxxx Xxxxxx Xxxx Xxxxxxxx
President CEO
NightHawk Systems, Inc. NightHawk Systems, Inc.
