EXHIBIT 10.2
SETTLEMENT AGREEMENT AND RELEASE
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AGREEMENT made this 28th day of April 2005 by and between Singer Frumento LLP
("Singer Frumento"), by and through its attorneys Xxxx X'Xxxxx & Associates
P.C., and X.X. Xxxxxx Group, Inc., X.X. Xxxxxx Direct, Inc., and Xxxxxx X. Xxxxx
(hereinafter "X.X. Xxxxxx");
WHEREAS, X.X. Xxxxxx acknowledges that it has not honored the terms of
Settlement Agreements between the Parties dated July 22, 2004; September 9,
2004; and November 1, 2004; and,
WHEREAS, X.X. Xxxxxx owes Singer Frumento $80,667.66 for legal services
provided; and,
WHEREAS, the Parties to this Settlement Agreement wish to settle all claims or
potential claims between them, to avoid the expense of litigation, and
WHEREAS, the Parties wish to maintain the confidentiality of the terms of this
settlement; and
NOW, THEREFORE, in consideration of the mutual promises and covenants set forth
herein, the Parties hereto agree as follows:
1. X.X. Xxxxxx will pay to Singer Frumento settlement funds in the amount of
$56,000 (the "Settlement Amount").
2. X.X. Xxxxxx will make eight monthly payments of $2,000 from March 2005
through October 2005 to Singer Frumento;
3. X.X. Xxxxxx authorizes Singer Frumento's legal counsel to negotiate the March
2005 payment currently in its possession and will immediately forward to Singer
Frumento the payment due for April 2005;
4. X.X. Xxxxxx will make a final balloon payment of $40,000 to Singer Frumento
by December 10, 2005. This amount is comprised of the original final payment
agreed by the Parties in the amount of $22,000, legal fees incurred to date by
Singer Frumento in the amount of $8,000 plus a default penalty of $10,000;
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5. The settlement drafts shall be made payable to "Xxxx X'Xxxxx & Associates
P.C. as attorneys for Singer Frumento LLP". Delivery of all payments shall be
made either in person or by mail addressed to Xxxx X'Xxxxx & Associates P.C.,
000 Xxxxxxxxx Xxxxxx, Xxxxx 000, Xxx Xxxx, Xxx Xxxx 00000.
6. In the event that X.X. Xxxxxx fails to timely make any payment due and owing
as described above, then Singer Frumento, or its counsel, shall give notice of
default to X.X. Xxxxxx by facsimile and regular mail to Xxxxxx Xxxxx, X.X.
Xxxxxx Group, Inc., 00 Xxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000 at (000) 000-0000.
Thereafter, X.X. Xxxxxx shall have seven (7) business days to cure said default
and, in the event X.X. Xxxxxx fails to cure said default; Singer Frumento shall
be authorized and permitted to pursue whatever remedy it deems appropriate to
procure payment. The cure provisions of this paragraph do not apply to the
initial payment and, thereafter, X.X. Xxxxxx will only be permitted to take
advantage of the cure provisions set forth in this paragraph on six separate
occasions.
7. X.X. Xxxxxx agrees to deliver a duly executed copy of this Agreement together
with a duly executed copy of the Confession of Judgment as attached hereto which
shall be held in escrow unless X.X.Xxxxxx fails to make the payments as set
forth above.
8. Notwithstanding any other provision of this Agreement, in the event that X.X.
Xxxxxx breaches this Agreement, and after X.X. Xxxxxx'x notice and opportunity
to cure has elapsed, Singer Frumento shall be entitled to pursue any remedy
available to it at law and equity and shall not be restricted to utilizing the
Confession of Judgment.
9. X.X. Xxxxxx will issue 500,000 shares (the "Stock") of X.X. Xxxxxx Group,
Inc. restricted stock to Xxxx Xxxxxx, Esq. with piggyback registration rights.
Subject to the terms of this Section 9, the Stock shall not be sold or
transferred by Xx. Xxxxxx, and, following payment in full of the Settlement
Amount by X.X. Xxxxxx, the Stock shall be returned to X.X. Xxxxxx within ten
(10) business days. Notwithstanding the foregoing, in the event of a default
that is not cured in accordance with the provisions of Paragraph 6, the 500,000
shares will no longer be subject to the contractual sale and transfer
restriction provided above and will no longer be subject to return to X.X.
Xxxxxx. X.X. Xxxxxx Group, Inc. shall file a registration statement under the
Securities Act with respect to an offering of its equity securities which shall
include the registration of the resale of the shares of Stock issued to Xxxx
Xxxxxx by November 1, 2005. Failure to file the registration statement by
November 1, 2005 will be deemed a default. All parties hereto acknowledge that
the provisions of this Paragraph are material terms to this Settlement
Agreement.
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10. Upon receipt of the 500,000 shares, Singer Frumento will return the 200,000
restricted shares of X. X. Xxxxxx Group, Inc. that it currently holds.
11. X. X. Xxxxxx shall file the registration statement respecting the
sale of the Stock no later than November 1, 2005 and in connection therewith
shall:
(a) prepare and file with the Securities and Exchange Commission a registration
statement on any form for which X.X. Xxxxxx Group, Inc. then qualifies; provided
that, (i) before filing a registration statement or prospectus or any amendments
or supplements thereto, X.X. Xxxxxx will furnish to Xxxx X'Xxxxx & Associates
P.C. copies of all such documents proposed to be filed, which documents will be
subject to the review and reasonable comment of such counsel and (ii) after the
filing of the registration statement, X.X. Xxxxxx shall promptly notify Xxxx
X'Xxxxx & Associates P.C. of any stop order issued or, to the knowledge of X.X.
Xxxxxx, threatened by the Securities and Exchange Commission and take all
reasonable actions to prevent the entry of such stop order or to remove it if
entered;
(b) prepare and file with the Securities and Exchange Commission such amendments
and supplements to such registration statement and the prospectus used in
connection therewith as may be necessary to keep such registration statement
effective for a period of not less than ninety (90) days or such shorter period
as shall terminate when the sale of the Stock covered by such registration
statement shall have been completed (but not before the expiration of the ninety
day (90) period referred to in Section 4(3) of the Securities Act and Rule 174
thereunder, if applicable) and comply with the provisions of the Securities Act
with respect to the disposition of all securities covered by such registration
statement during such period in accordance with the intended methods of
disposition by Xxxx Xxxxxx set forth in such registration statement;
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(c) as soon as reasonably practicable, furnish to Xxxx X'Xxxxx & Associates,
P.C., prior to filing a registration statement, copies of such registration
statement as proposed to be filed and thereafter furnish to such Xxxx X'Xxxxx &
Associates P.C. such number of copies of such registration statement, each
amendment and supplement thereto, the prospectus included in such registration
Statement (including each preliminary prospectus) and such other documents as
Xxxx X'Xxxxx & Associates P.C. may reasonably request in order to facilitate the
disposition of the Stock owned by Xxxx Xxxxxx;
(d) Register or qualify such Stock under such other securities or blue sky laws
of such jurisdictions within the United States and Canada as Xxxx X'Xxxxx &
Associates reasonably requests and do any and all other acts and things which
may be reasonably necessary or advisable to enable Xxxx Xxxxxx to consummate the
disposition in such jurisdictions of the Stock owned by Xxxx Xxxxxx; provided
that X.X. Xxxxxx Group, Inc. shall not be required to (i) qualify generally to
do business or file a general consent to service of process in any jurisdiction
or (ii) take any action that would subject itself to taxation in any such
jurisdiction;
(e) promptly notify Xxxx X'Xxxxx & Associates P.C., at any time when a
prospectus relating thereto is required to be delivered under the Securities
Act, of the occurrence of any event known to X.X. Xxxxxx requiring the
preparation of a supplement or amendment to such prospectus so that, as
thereafter delivered to the purchasers or recipients of such Stock, such
prospectus will not contain an untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary to make the
statements therein not misleading and promptly make available to Xxxx Xxxxxx any
such supplement or amendment;
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(f) make available for reasonable inspection by Xxxx Xxxxxx, any underwriter
participating in any sale or distribution pursuant to such registration
statement, and any attorney, accountant or other agent retained by Xxxx Xxxxxx
(collectively, the "Inspectors") all financial and other records, pertinent
corporate documents and properties of X.X. Xxxxxx (collectively, the "Records")
as shall be reasonably necessary to enable them to exercise their due diligence
responsibility, and cause X.X. Xxxxxx Group, Inc.'s officers and employees to
supply all information reasonably requested for such purpose by any such
Inspector in connection with such registration statement; provided that X.X.
Xxxxxx Group, Inc. shall have no obligation to permit such access to the Records
or its officers or employees in a manner that would unreasonably disrupt the
normal conduct of its business operations. Xxxx Xxxxxx and/or each Inspector
that actually reviews Records supplied by X.X. Xxxxxx Group, Inc. that include
information that X.X. Xxxxxx Group, Inc. identifies, in good faith, as being
confidential or proprietary ("Confidential Information") shall be required at
X.X. Xxxxxx Group, Inc.'s option, prior to any such review, to execute an
agreement with X.X. Xxxxxx Group, Inc. providing that Xxxx Xxxxxx and/or such
Inspector shall not publicly disclose any Confidential Information unless such
disclosure is required by applicable law or legal process and shall not use such
information for any purpose other than the limited purpose contemplated by this
subsection (f). Xxxx Xxxxxx and/or each Inspector shall be required further to
agree that it shall, upon learning that disclosure of Confidential Information
is sought in a court of competent jurisdiction, give notice to X.X.Xxxxxx Group,
Inc. and allow X.X. Xxxxxx Group, Inc., at its expense, to undertake appropriate
action to prevent disclosure of the Confidential Information;
(g) in the event such sale is pursuant to an underwritten offering, use its
reasonable best efforts to obtain a comfort letter or letters from X.X. Xxxxxx
Group, Inc.'s independent public accountants in customary form and covering such
matters of the type customarily covered by comfort letters as the managing
underwriter reasonably requests; and
(h) otherwise use its reasonable efforts to comply with all applicable rules and
regulations of the Securities and Exchange Commission and make available to its
security holders, as soon as reasonably practicable, an earnings statement
complying with the provisions of Section 11(a) of the Securities Act (including,
at the option of X.X. Xxxxxx Group, Inc., pursuant to Rule 158, or any successor
provision, under the Securities Act).
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Upon receipt of any notice from X.X. Xxxxxx Group, Inc. of the occurrence of any
event of the kind described in subsection (e) hereof, Xxxx Xxxxxx shall
forthwith discontinue all offerings, sales and other dispositions of Stock
pursuant to the registration statement covering such Stock until Xxxx Xxxxxx'x
receipt of the copies of the supplemented or amended prospectus contemplated by
subsection (e) hereof. In the event X.X. Xxxxxx Group, Inc. shall give any such
notice, X.X. Xxxxxx Group, Inc. shall extend the period during which such
registration statement shall be maintained effective pursuant to this Agreement,
including the period referred to in subsection (b) hereof, by the number of days
during the period from and including the date of the giving of such notice
pursuant to subsection (b) hereof to and including the first date on which Xxxx
Xxxxxx shall have received the copies of the supplemented or amended prospectus
contemplated by subsection (e) hereof. Xxxx Xxxxxx shall notify X.X. Xxxxxx if
any event relating to him occurs which would require the preparation of a
supplement or amendment to the prospectus so that such prospectus will not
contain an untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading.
12. Simultaneous with payment in full of the Settlement Amount, the Parties
shall release and forever discharge each other, their predecessors and
successors, affiliates, subsidiaries and affiliates and subsidiaries hereafter
created or acquired, their present and former officers, directors, successors,
assigns, attorneys, trustees, representatives, employees and agents, present and
former, from any and all manner of action and actions, causes and causes of
action, suits, debts, sums of money due, controversies, promises, damages,
judgments, executions, claims and demands of any nature whatsoever which the
Parties, or their predecessors, successors or assigns ever had, or now have
against each other for upon or reason of any matter, cause or thing whatsoever,
known or unknown, from the beginning of the world to the date of this Settlement
Agreement.
13. The Parties and their counsel will not, except as required by law, (1)
disclose to anyone the settlement terms as set forth herein or as previously
negotiated except as necessary to their accountants, and/or (2) deliver to any
third parties any materials obtained by the Parties. This paragraph is not
intended to prohibit the Parties from responding to requests made by, or
providing information to, a self-regulatory organization or the Securities and
Exchange Commission that identifies itself to the Parties as an organization of
which either of the Parties is a member and which has authority to request such
information. All parties hereto acknowledge that the provisions of this
Paragraph are material terms to this Settlement Agreement.
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14. This Settlement Agreement is the complete and integrated understanding of
the Parties with respect to all matters addressed herein and supersedes all
prior understandings and agreements, if any, among the Parties with respect to
the subject matter hereof. The terms of this Settlement Agreement may be
modified only by the written agreement of the Parties.
15. This Settlement Agreement is executed solely for the consideration above
explained and the Parties acknowledge and agree that they have not entered into
this Settlement Agreement in reliance on any other statement or representations
by the Parties hereto or by any other person not a party hereto. Each party has
carefully read this Settlement Agreement, has had an opportunity to discuss it
with counsel, fully understands its contents and, understanding such, sign it as
his or her own free act.
16. The Parties covenant and warrant that no claim released herein has
previously been conveyed, assigned or in any manner transferred in whole or in
part, to any third party, and the Parties have full authority to release any and
all claims released pursuant to this Settlement Agreement.
17. This Settlement Agreement and the terms, covenants, conditions, provisions,
obligations, undertakings, rights and benefits hereof shall be binding upon and
shall inure to the benefit of the undersigned Parties and their respective
heirs, executors, administrators, legal representatives, successors,
predecessors and assigns.
18. The Parties acknowledge, understand and represent that this Settlement
Agreement is entered into only for the purpose of the settlement and compromise
of disputed claims and that any action taken pursuant to this Settlement
Agreement is not to be construed or considered as an admission of liability or
fault on the part of any party.
19. This Settlement Agreement shall in all respects be governed by and construed
in accordance with the laws of the State of New York, including all matters of
construction, validity and performance, without regard to conflicts of law
principles. Any provision of this Settlement Agreement which is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
only to the extent of such prohibition or unenforceability without invalidating
the remaining provisions hereof, and any such prohibition or unenforceability in
any jurisdiction shall not invalidate or render unenforceable such provision in
any other jurisdiction.
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20. This Settlement Agreement may be executed in facsimile counterparts, and the
separate executed copies taken together shall constitute a whole.
Dated: New York, New York
April 28, 2005
Xxxxxx X. Xxxxx, in his individual capacity and for X.X. Xxxxxx Group, Inc., and
X.X. Xxxxxx Direct, Inc.
By:/s/ Xxxxxx Xxxxx
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STATE OF NEW YORK )
) ss.
COUNTY OF NEW YORK )
On the 28th day of April 2005, before the undersigned, a Notary Public in and
for said County and State, personally appeared Xxxxxx X. Xxxxx and known to me
to be the person whose name is subscribed to the within instrument, and
acknowledged that he has read and executed the same.
/s/ Xxxxxxx X. Xxxxxxxxxx
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Notary Public
My Commission Expires
Singer Frumento, LLP
By:/s/ Xxxx Xxxxxx
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STATE OF NEW YORK )
) ss.
COUNTY OF NEW YORK )
On the 2nd day of May 2005, before the undersigned, a Notary Public in and for
said County and State, personally appeared Xxxx Xxxxxx and known to me to be the
person whose name is subscribed to the within instrument, and acknowledged that
he has read and executed the same.
/s/ Xxxxxxx Xxxxxxxxx
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Notary Public
My Commission Expires
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