SETTLEMENT AGREEMENT AND RELEASE
THIS AGREEMENT is dated as of May 22, 2008 and is made by and between
CORPORATE DEBT SOLUTIONS I, INC. ("Corporate Debt") and XXXXXXXXX.XXX,
INC. ("Pricester" and/or the "Company").
WHEREAS RMU Management LLC provided Genesis Electronics, Inc., a
subsidiary of Pricester.ocm, Inc. monies over several years which were
represented by promissory notes totaling Eight Hundred and Sixty Seven
Thousand Five Hundred and Eighty Two Dollars ($867,582.00).
WHEREAS Xxxx Xxxxxx conducted services for Genesis Electronics, Inc.,
a subsidiary of Xxxxxxxxx.xxx, Inc. pursuant to a certain consulting
agreement which Genesis defaulted in the payment of said consulting
agreement and entered into a promissory note with Xxxx Xxxxxx which
remains unpaid in the amount of Sixty Two Thousand Six Hundred and
Twenty Four Dollars ($62,624.00); and
WHEREAS TLGG, LLC lent monies to Genesis Electronics, Inc. several
years ago, a subsidiary of Xxxxxxxxx.xxx, Inc. which are represented by
a promissory note totaling One Hundred and Nineteen Thousand Five
Hundred and Eleven Dollars ($119,511.00) which remains unpaid and has
been due and owing for several years. (The RMU Management, LLC
promissory note, the Xxxx Xxxxxx promissory note, and the TLGG, LLC
promissory note are herein individually and/or collectively referred to
as the "Promissory Note(s)").
The Promissory Notes are incorporated herein by reference.
WHEREAS on or about April 24, 2008, Corporate Debt Solutions I, Inc.
purchased the Promissory Note from Xxxx Xxxxxx. The Assignment
Agreement is incorporated herein by reference.
WHEREAS, on or about May 14, 2008, Corporate Debt filed an action
against Xxxxxxxxx.xxx, Inc. entitled Corporate Debt Solutions I, Inc.,
v. Xxxxxxxxx.xxx, Inc. Case No: 2008-CA 7664 WC, (the "Action") in the
Circuit Court of the Twelfth Judicial Circuit, Sarasota County, Florida
(the "Court"), whereby Corporate Debt asserted claims against
Xxxxxxxxx.xxx, Inc. alleging that Xxxxxxxxx.xxx, Inc. failed to pay
Corporate Debt according to the terms set forth in the Promissory
Notes, to wit, the amount due and owing under the Promissory Notes in
the total amount of One Million Forty Nine Thousand Seven Hundred and
Seventeen Dollars ($1,049,717.00) in principal and interest
(hereinafter, the "Claims");
WHEREAS, Xxxxxxxxx.xxx, Inc., in its Answer, denied any and all
wrongdoing and asserted affirmative defenses;
WHEREAS, Xxxxxxxxx.xxx, Inc. denies that it is liable for the amount
sought in the Action, but acknowledges that it does not have sufficient
cash to satisfy the claims made in the Action or to defend the Action
and Xxxxxxxxx.xxx, Inc. seeks to resolve this Action and agrees to pay
Corporate Debt on the Promissory Notes;
WHEREAS, Xxxxxxxxx.xxx, Inc. only has the means to satisfy payment of
Corporate Debt's bona fide claims through the issuance of authorized
shares to Corporate Debt, pursuant to Section 3(a)(10) of the
Securities Act of 1933 (hereinafter the "Act");
WHEREAS, Corporate Debt desires to resolve, settle, and compromise
Corporate Debt's bona fide claims that it has asserted against
Xxxxxxxxx.xxx, Inc., which arise out of or relate to the Promissory
Notes, in the amount of One Million Forty Nine Thousand Seven Hundred
and Seventeen Dollars ($1,049,717) in principal and interest due and
owing (hereinafter the "Compromised Amount");
With this background incorporated herein, the parties hereby agree to
the following settlement.
TERMS OF SETTLEMENT
1. CLAIMS. Corporate Debt agrees to resolve its bona fide claim with
Xxxxxxxxx.xxx, Inc. for the agreed upon sum of One Million Forty Nine
Thousand Seven Hundred and Seventeen Dollars ($1,049,717.00).
2. SETTLEMENT SHARES. As soon as practice following entry of an order
by the Court in accordance with Paragraph 4 herein and in accordance
with this Paragraph, Xxxxxxxxx.xxx, Inc. shall issue and deliver to
Corporate Debt shares of Xxxxxxxxx.xxx, Inc.'s common stock, ("Common
Stock") sufficient to satisfy the Compromised Amount through the
issuance of freely trading securities issued pursuant to Section
3(a)(10) of the Act. The parties agree that the total amount of Common
Stock to be delivered by Xxxxxxxxx.xxx, Inc., subject to the
limitations listed below, to satisfy the Compromised Amount shall be a
total of One Hundred Million (100,000,000) shares of Common Stock (the
"Settlement Shares"). However the parties have agreed that Corporate
Debt shall have no ownership rights to the Settlement Shares not yet
issued after the first requested issuance by Corporate Debt until it
has affirmed in a statement to Xxxxxxxxx.xxx, Inc. that it releases
Xxxxxxxxx.xxx, for the proportionate amount of claims represented by
the prior issuance (i.e. if Corporate Debt is issued 2,000,000 shares
then it has no ownership rights in the additional Settlement Shares not
yet issued until it has released Xxxxxxxxx.xxx, Inc. from two percent
(2%) of the Claims or Twenty Thousand Nine Hundred and Ninety Four and
thirty four cents ($20,994.34)). The parties have agreed that the
transfer agent, Florida Atlantic Transfer, Inc., shall upon the request
of Corporate Debt issue in the name of Corporate Debt the number of
shares requested so long as the number of shares requested does not
make Corporate Debt the owner of more than 4.99% of the outstanding
Xxxxxxxxx.xxx, Inc. stock (an "issuance"). Notwithstanding anything to
the contrary in this Agreement, in no event shall Corporate Debt be
entitled and in no event shall the Company permit the issuance to
Corporate Debt of that number of shares, which when added to the sum of
the number of shares of common stock beneficially owned (as such term
is defined under Section 13(d) and Rule 13d-3 of the Securities and
Exchange Act of 1934, as may be amended (the "1934 Act") by Corporate
Debt (together with Corporate Debt's Affiliates and any other person
acting as a group with Corporate Debt or any of Corporate Debt's
Affiliates), would exceed 4.99% of the number of shares of common stock
outstanding on each issuance of common stock made hereunder, as
determined after giving effect tot eh amount of shares to be issued on
that particular issuance. To the extent that the limitation in this
Paragraph 2 applies, the determination of whether the issuance can
occur shall be in the sole discretion of Corporate Debt and the
submission of an issuance request shall be deemed to be Corporate
Debt's determination that the issuance can be made subject to such
aggregate percentage limitations. To ensure compliance, Corporate Debt
will be deemed to represent to the Company that each time it makes an
issuance request that such issuance request has not violated the
restrictions in this Paragraph 2 and the Company shall have no
obligation to verify or confirm the accuracy of such determination.
For purposes of this Paragraph 2, in determining the number of
outstanding shares of common stock, Corporate Debt may rely on the
number of outstanding shares of common stock provided to Corporate Debt
in any of the following: (A) the Company's most recent Form 10-QSB or
Form 10-KSB, as the case may be, (B) a more recent public announcement
by the Company; or (C) a more recent notice by the Company or the
Company's transfer agent setting forth the number of shares of common
stock outstanding. Upon the request of Corporate Debt, the Company
shall within two trading days confirm orally or in writing the number
of shares of common stock then outstanding on the records of the
Company on the date of the request. In any case, the number of
outstanding shares of common stock shall be determined after giving
effect to the requested issuance by Corporate Debt since the date as of
which such number of outstanding shares of common stock was reported.
The beneficial ownership limitation shall be 4.99% of the number of
shares outstanding immediately after giving effect to the current
requested issuance. The beneficial ownership limitation of this
Paragraph 2 may be waived by Corporate Debt, at Corporate Debt's
election, upon not less than 61 days prior notice to the Company, to
change the beneficial ownership limitation to (i) 9.9% of the number of
shares of common stock outstanding immediately after giving effect to
the most recent requested issuance of common stock by Corporate Debt
and the other provisions of this Paragraph shall continue to apply, or
(ii) remove any beneficial ownership limitation under this Paragraph.
In the event that the number of shares of common stock outstanding as
determined in accordance with Section 13(d) of the 1934 Act is
different on any issuance date of common stock that it was on the date
of this Agreement, then the number of shares of common stock
outstanding on such issuance date shall govern for purposes of
determining whether Corporate Debt would be acquiring beneficial
ownership of more than 4.99% of the number of shares of common stock
outstanding on such issuance date.
3. PAYMENT IN FULL. Corporate Debt and Xxxxxxxxx.xxx, Inc. agree that
delivery of all of the Settlement Shares pursuant to the conditions set
forth herein shall satisfy Xxxxxxxxx.xxx, Inc.,'s obligation in full
regarding the invoices.
4. FAIRNESS HEARING. Upon execution hereof, Corporate Debt and
Xxxxxxxxx.xxx, Inc. agree, pursuant to 15 U.S.C. Section 77(a)(10), to
immediately submit the terms and conditions of this Agreement to the
Court for a hearing on the fairness of such terms and conditions, for
the issuance of an exemption from registration of the Settlement Shares
and an Order approving the Agreement. Xxxxxxxxx.xxx, Inc. avers it is
a "reporting issuer" that files reports with the SEC under Section 13
of the Securities and Exchange act of 1934 (the "Exchange Act");
Xxxxxxxxx.xxx, Inc. avers it is current in all its filing required
under the Exchange Act; and Corporate Debt avers it has access to, and
has accessed all such filings. In connection with such a fairness
hearing, Xxxxxxxxx.xxx, Inc., the issuer of the securities, and
Corporate Debt, the proposed person to whom the securities are to be
issued, agree that the value of the Settlement Shares utilized to
satisfy the Claims is fair and reasonable. This Agreement shall become
binding upon the parties only upon entry of an order by the Court
substantially in the form of annexed hereto as Exhibit A (the "order").
5. NECESSARY ACTION. At all times after the execution of this
Agreement and entry of the Order by the Court, each party hereto agrees
to take or cause to be taken all such necessary action including,
without limitation, the execution and delivery of such further
instruments and documents, as may be reasonably requested by any party
for such purposes or otherwise necessary to complete or perfect the
transaction contemplated hereby.
6. CONFIDENTIALITY AGREEMENT. At all times prior to execution of this
Agreement, the parties hereto agree to not disclose to any other person
any of the terms of said Agreement.
7. RELEASES. Upon delivery of each traunche of the Settlement Shares
to Corporate Debt and in consideration of the terms and conditions of
this Agreement, and except for the obligations and representations
arising or made hereunder or a breach hereof, the parties hereby
proportionately release, acquit and forever discharge the other and
each, every and all of their current and past officers, directors,
shareholder, affiliated corporations, subsidiaries, agents, employees,
representatives, attorneys, predecessors, successors and assigned (the
"Released Parties"), of and from any and all claims, damages, causes of
action, suits and costs, of whatever nature, character or description,
whether known or unknown, anticipated or unanticipated, which the
parties may now have or may hereafter have or claim to have against
each other with respect to the Claims. Nothing herein shall be deemed
to negate or affect Corporate Debt's right and title to any securities
heretofore issued to it by Xxxxxxxxx.xxx, Inc.
8. CONTINUING JURISDICTION: Simultaneously with the execution of this
Agreement, the attorneys representing the parties hereto will execute a
stipulation of dismissal substantially in the form annexed hereto as
Exhibit B (the "Stipulation of Dismissal"), which shall be held by
Corporate Debt's counsel and filed with the Court after Xxxxxxxxx.xxx's
delivery of all of the Settlement Shares in accordance with paragraph 2
herein. In order to enable the Court to grant specific enforcement and
other equitable relief in connection with this Agreement, (a) the
parties consent to the jurisdiction of the Court for purposes of
enforcing this Agreement and (b) each party to this Agreement expressly
waives any contention that there is an adequate remedy at law or any
like doctrine that might otherwise preclude injunctive relief to
enforce this Agreement.
9. CONTINUING OBLIGATION Both parties agree to use their best efforts
to cooperate with the Court to cause the Order to be timely entered and
agree that delays caused due to Court calendars shall not constitute a
valid reason to void this Agreement.
10. INFORMATION. Corporate Debt and Xxxxxxxxx.xxx, Inc. each
represent that prior to the execution of this Agreement, they have had
the advice of counsel and that they fully informed themselves of its
terms, contents, conditions and effects, and that no promise or
representation of any kind has been made to them except as expressly
stated in this Agreement.
11. OWNERESHIP AND AUTHORITY. Corporate Debt and Xxxxxxxxx.xxx, Inc.
represent and warrant that they have not sold, assigned, transferred,
conveyed or otherwise disposed of any or all of any claim, emand, right
or cause of action, relating to any matter which is covered by this
Agreement, that each is the sole owner of such claim, demand, right or
cause of action, and each has the power and authority and has been duly
authorized to enter into and perform this Agreement and that this
Agreement is a binding obligation of each, enforceable in accordance
with its terms.
12. BINDING NATURE. This Agreement shall be binding on all parties
executing this Agreement and their respective successors, assigns and
heirs.
13. AUTHORITY TO BIND. Each party to this Agreement represents and
warrants that the execution, delivery and performance of this Agreement
and the consummation of the transaction provided in this agreement have
been duly authorized by all necessary action of the respective entity
and that the person executing this Agreement on its behalf has the full
capacity to bind that entity. Each party further represents and
warrants that it has been represented by independent counsel of its
choice with the negotiation and execution of this Agreement and that
counsel has reviewed this Agreement.
14. SIGNATURES. This Agreement may be signed in counterparts and the
Agreement, together with its counterpart signature pages, shall be
deemed valid and binding on each party when duly executed by all
parties. Facsimile signatures shall be deemed valid and binding for
all purposes.
15. CHOICE OF LAW, ETC. Notwithstanding the place where this
Agreement may be executed by either of the parties, or any other
factor, all terms and provisions hereof shall be governed by and
construed in accordance with the laws of the State of Florida,
applicable to agreements made and to be fully performed in that State
and without regard to principles of conflicts of law thereof. Any
action brought to enforce, or otherwise arising out of this Agreement
shall be brought only in the Circuit Court of the Twelfth Judicial
Circuit sitting in the State of Florida, County of Sarasota.
16. INCONSISTENCY. In the event of any inconsistency between the
terms of this Agreement and any other document executed in connection
herewith, the terms of this Agreement shall control to the extent
necessary to resolve such inconsistency.
IN WITNESS WHEREOF, the parties have duly executed this Agreement as of
the date first indicated above.
CORPORATE DEBT SOLUTIONS I, INC.
By:
Its: President
XXXXXXXXX.XXX, INC.
By: /s/ Xxxxxx X. Xxxxxx
----------------------
Its: Chief Executive Officer
