SETTLEMENT AGREEMENT
This
SETTLEMENT
AGREEMENT (the
“Agreement”) is made and entered into as of this 15th day of April, 2008, by and
between Xxxxxxx X. Xxxxxxxxxx, Xx. (“Xxxxxxxxxx”), on the one hand, and Airbee
Wireless, Inc. (“Airbee”), (each a Party and, together, the “Parties”).
RECITALS:
WHEREAS,
Xxxxxxxxxx
filed an action against Airbee and others in the Circuit Court for Xxxxxxxxxx
County, Maryland (the “Court”) entitled Xxxxxxx
X. Xxxxxxxxxx, Xx. v. Airbee Wireless, Inc.,
Civil
Case No. 265130-V, in which Airbee filed certain counterclaims against
Xxxxxxxxxx (the “Action”);
WHEREAS,
on
June 8, 2007, the Court issued an Order that, inter
alia,
required Airbee to pay Xxxxxxxxxx $183,316.64 in accrued but unpaid salary,
together with pre-judgment interest on the accrued unpaid salary, calculated
from the date each payment was due until the date final judgment was entered
in
the case;
WHEREAS,
on
July 1, 2007, the Parties entered into a Settlement Agreement (the
“July 2007 Agreement”) pursuant to which they resolved their differences
without either party admitting any liability or wrongdoing;
WHEREAS,
Airbee
did not perform its obligations under the July 2007 Agreement, and
accordingly judgment was entered against Airbee on September 26, 2007 in
the amount of $700,000, plus interest and costs of the Action, such that as
of
April 26, 2008, the amount owed on the judgment will be $740,833.33, plus
costs, with interest continuing to accrue until the judgment is paid in full;
WHEREAS,
Airbee
has not paid any portion of the judgment entered against it;
WHEREAS,
as of
September 26, 2007, the value of the Court’s June 8, 2007 award to
Xxxxxxxxxx had increased to $211,657.90 due to accretion of prejudgment
interest;
WHEREAS,
as of
February 29, 2008, Xxxxxxxxxx had incurred legal fees, court costs and
other expenses in the amount of $148,737.21 in the Action and in enforcing
his
judgment, such that the total amount owed to Xxxxxxxxxx as of March 1, 2008
(excluding legal fees incurred after February 29, 2008 was $912,078.47); and
WHEREAS,
the
Parties wish to fully and finally resolve all disputes existing between them.
NOW,
THEREFORE, in
consideration of the premises and mutual promises herein, the Parties do hereby
agree as follows:
|
1.
|
|
Entire
Agreement Between the Parties:
It
is specifically understood and agreed that this Agreement sets forth
and
constitutes the sole and entire agreement between the Parties, any
and all
prior and/or contemporaneous agreements, discussions or understandings
between the parties pertaining to the subject matter hereof (including,
but not limited to, the July 2007 Agreement) are superseded by this
Agreement.
|
|
2.
|
|
Payments
by Airbee to Xxxxxxxxxx.
In full and final settlement of all disputes between the parties,
whether
known or unknown, and in exchange for the full release set forth
in
Paragraph 4 below, the Parties agree that Airbee shall pay Xxxxxxxxxx
a total of Eight Hundred Fifteen Thousand Dollars ($815,000) in the
following manner:
|
|
|
a.
|
|
On
or before April 18, 2008, Airbee shall pay to Xxxxxxxxxx the sum of
Three Hundred Fifty Thousand Dollars ($350,000) via wire transfer
to the
Savit & Xxxxxxxxxx, LLP Trust Account, Account #00000000, ABA
#000000000, located within the Sun Trust Bank Wildwood Branch, 00000
Xxx
Xxxxxxxxxx Xxxx, Xxxxxxxx, XX 00000, Telephone (000) 000-0000. The
amount paid shall be deemed to include payment of $183,316.64 in
salary
per the June 8, 2007 court order and $148,737.21 in legal fees and
expenses.
|
|
|
b.
|
|
On
or before April 15, 2008, Airbee shall issue to Xxxxxxxxxx a
subordinated secured convertible debenture, substantially in the
form
attached hereto as Exhibit
A,
in the principal amount of Four Hundred Sixty Five Thousand Dollars
($465,000) (the “Subordinated Debenture”). The shares of Airbee’s common
stock, par value $0.00004 per share (the “Common Stock”), issuable upon
conversion of the Subordinated Debenture are referred to herein as
the
“Conversion Shares.”
|
|
|
c.
|
|
On
or before April 15, 2008, Airbee shall issue to Xxxxxxxxxx certain
warrants (the “Warrants”), substantially in the form attached hereto as
Exhibit B,
each evidencing the right to purchase an aggregate of 2,841,667 shares
of
Common Stock. The purchase price of the Common Stock issuable upon
exercise of the Warrants (the “Warrant Shares”) shall be as follows:
1,550,000 of the Warrant Shares shall have a purchase price of $0.10
per
share; 775,000 of the Warrant Shares shall have a purchase price
of $0.20
per share; and 516,667 of the Warrant Shares shall have a purchase
price
of $0.30 per share.
|
1
|
3.
|
|
Termination
of the Action Upon Payment Under Paragraph 2.
Immediately upon receipt of the payment described in Paragraph 2(a)
above,
and the execution of all documents necessary to convert the outstanding
judgment balance to the Subordinated Debenture described in Paragraph
2(b)
above, Xxxxxxxxxx shall:
|
|
|
a.
|
|
File
a Line, in the form attached hereto as Exhibit C,
asking the Court to xxxx the judgment entered in the Action “Paid and
Satisfied;”
|
|
|
b.
|
|
Consent
to a Joint Motion for Return of Seized Property to be filed by Airbee
at
its expense, in the form attached hereto as Exhibit D,
asking the Court to direct, at the earliest possible time, the Xxxxxxxxxx
County Sheriff (the “Sheriff”) to permit Airbee to retrieve (at Airbee’s
expense) all property seized by the Sheriff from Airbee’s offices in
Rockville, Maryland on February 27,
2008;
|
|
|
c.
|
|
After
the Court has entered the relief requested by the Line referenced
in
Paragraph 3(a) and the Consent Motion referenced in Paragraph 3(b),
file a Stipulation of Dismissal With Prejudice, in the form attached
hereto as Exhibit E,
dismissing the Action.
|
|
|
d.
|
|
File
a termination statement (or equivalent instrument) with respect to
each
financing statement, judgment notice or other instrument filed with
any
filing office (including, without limitation the Maryland Secretary
of
State, the Delaware Secretary of State, the California Secretary
of State,
and any county filing office) where any such financing statement,
judgment
notice or other instrument was filed or recorded by Xxxxxxxxxx with
respect to the judgment obtained by him against Airbee, in each case
terminating such filing, all such filings to be at Airbee’s
expense.
|
|
|
e.
|
|
Enter
into an Intercreditor and Subordination Agreement (the “Intercreditor
Agreement’), substantially in the form attached hereto as Exhibit F,
with Airbee and the Senior Creditors (as defined
therein).
|
|
4.
|
|
Full
and Final Releases.
Upon execution of this Agreement, and for good and valuable consideration,
the receipt and sufficiency of which is acknowledged by each of the
Parties:
|
|
|
x.
|
|
Xxxxxxxxxx,
for himself, and for his heirs, attorneys, legal representatives,
agents,
estates, successors in interest and assigns, hereby irrevocably and
unconditionally releases, acquits and forever discharges Airbee and
its
parent companies, subsidiaries, predecessors, successors, attorneys,
legal
representatives, insurance carriers, officers, directors, employees,
servants, shareholders, agents, assigns, affiliates and investors
from any
and all claims whatsoever (including, but not limited to, causes
of
action, suits, charges, debts, dues, liabilities, sums of money,
accounts,
reckonings, bonds, bills, specialties, covenants, contracts, torts,
controversies, agreements, promises, variances, trespasses, damages,
requests for costs or attorney’s fees, judgments, obligations, extends,
executions, actions, rights, claims and demands) in law, admiralty,
equity
or federal or state statute of whatever kind and character, which
Xxxxxxxxxx ever had, now has, or may have (including any claim for
damages
occurring at any time after the date of this Agreement because of
alleged
continuing effects of any alleged acts or omissions involving the
Parties
which occurred on or before the date of this Agreement), whether
such
claims are known or unknown, by reason of, or arising out of, touching
upon, or concerning his employment with Airbee or termination therefrom,
and any and all other matters of whatever kind, nature or description,
including, but not limited to, any and all claims for breach of contract
or implied contract, breach of the covenant of good faith and fair
dealing, inducement of breach, wrongful or unlawful discharge or
demotion,
violation of public policy, retaliation, intentional or negligent
infliction of emotional distress, intentional or negligent
misrepresentation, tortious denial of contract, interference with
proprietary interests, failure to pay wages, bonuses, benefits, vacation
pay, severance pay or other compensation of any sort, defamation,
unlawful
efforts to prevent employment, violation of constitutional rights,
discrimination or harassment on the basis of race, color, sex, sexual
orientation, national origin, religion, age (including but not limited
to
claims arising under the Age Discrimination in Employment Act and
Older
Worker Benefit Protection Act, 29 U.S.C. § 621, et
seq.),
disability, medical condition or marital status, and/or violation
of any
statutes, rules, regulations or ordinances, whether federal, state
or
local, including, but not limited to, Title VII of the Civil Rights
Act of
1964, the California Fair Employment and Housing Act, and actions
pursuant
to any federal, state or local statute, rule, regulation or
ordinance.
|
2
|
|
b.
|
|
Airbee,
for itself, and for its heirs, attorneys, legal representatives,
officers,
directors, employees, servants, shareholders, agents, assigns, affiliates
and investors, hereby irrevocably and unconditionally releases, acquits
and forever discharges Xxxxxxxxxx and his predecessors, attorneys,
legal
representatives, estates, successors in interest, insurance carriers,
employees, servants, agents, assigns and affiliates from any and
all
claims whatsoever (including, but not limited to, causes of action,
suits,
charges, debts, dues, liabilities, sums of money, accounts, reckonings,
bonds, bills, specialties, covenants, contracts, torts, controversies,
agreements, promises, variances, trespasses, damages, requests for
costs
or attorney’s fees, judgments, obligations, extends, executions, actions,
rights, claims and demands) in law, admiralty, equity or federal
or state
statute of whatever kind and character, which Airbee ever had, now
has, or
may have (including any claim for damages occurring at any time after
the
date of this Agreement because of alleged continuing effects of any
alleged acts or omissions involving the Parties which occurred on
or
before the date of this Agreement), whether such claims are known
or
unknown.
|
|
5.
|
|
Grant
of Security Interest
Airbee hereby grants to Xxxxxxxxxx a subordinated security
interest in and
to: (a) all goods of Airbee, including, without limitation,
machinery, equipment, furniture, furnishings, fixtures, signs,
lights,
tools, parts, supplies and motor vehicles of every kind and
description,
now or hereafter owned by Airbee or in which Airbee may have
or may
hereafter acquire any interest, and all replacements, additions,
accessions, substitutions and proceeds thereof, arising from
the sale or
disposition thereof, and where applicable, the proceeds of
insurance and
of any tort claims involving any of the foregoing; (b) all inventory
of Airbee, including, but not limited to, all goods, wares,
merchandise,
parts, supplies, finished products, other tangible personal
property,
including such inventory as is temporarily out of Airbee’s custody or
possession and including any returns upon any accounts or other
proceeds,
including insurance proceeds, resulting from the sale or disposition
of
any of the foregoing; (c) all contract rights and general intangibles
of Airbee, including, without limitation, goodwill, trademarks,
trade
styles, trade names, leasehold interests, partnership. limited
liability
company, or joint venture interests, patents and patent applications,
copyrights, deposit accounts whether now owned or hereafter
created;
(d) all documents, warehouse receipts, instruments and chattel
paper
of Airbee whether now owned or hereafter created; (e) all accounts
and other receivables, instruments or other forms of obligations
and
rights to payment of Airbee (herein collectively referred to
as
“Accounts”),
together with the proceeds thereof, all goods represented by
such Accounts
and all such goods that may be returned by Airbee’s customers, and all
proceeds of any insurance thereon, and all guarantees, securities
and
liens which Airbee may hold for the payment of any such Accounts
including, without limitation, all rights of stoppage in transit,
replevin
and reclamation and as an unpaid vendor and/or lienor, all
of which Airbee
represents and warrants will be bona fide and existing obligations
of its
respective customers, arising out of the sale of goods by Airbee
in the
ordinary course of business; (f) to the extent assignable, all of
Airbee’s rights under all present and future authorizations, permits,
licenses and franchises issued or granted in connection with
the
operations of any of its facilities; (g) all products and proceeds
(including, without limitation, insurance proceeds) from the
above-described pledged property (collectively referred to
as the
“Pledged
Property”)
in order to secure the repayment of the Subordinated Debenture
issued to
Xxxxxxxxxx pursuant to Section 2(b) of this Agreement (such
secured
obligations, the “Obligations”).
|
|
|
a.
|
|
Subordination
of Obligations and Liens Under Intercreditor Agreement.
The Obligations and all liens, security interests and other encumbrances
of any nature (including judgment liens) granted to Xxxxxxxxxx hereunder
or otherwise held at any time by Xxxxxxxxxx in and to the Pledged
Property
are subordinated in right and priority of payment to the Senior Debt
(as
defined in and provided for pursuant to the Intercreditor Agreement.
Notwithstanding any provision in this Agreement, the Subordinated
Debenture or any other document to the contrary, all of Xxxxxxxxxx’x
rights and remedies with respect to the Obligations or any other
indebtedness owing by Airbee to Xxxxxxxxxx are subject in all respect
to
the terms of the Intercreditor Agreement. In the event of any conflict
or
inconsistency between the terms of this Agreement, the Subordinated
Debenture or any other agreement or law with respect to issues governed
by
the Intercreditor Agreement, the terms of the Intercreditor Agreement
shall control to the full extent permitted by applicable
law.
|
3
|
|
b.
|
|
Rights;
Interests; Etc.
So long as no default shall have occurred and be continuing under
the
Subordinated Debenture (an “Event of
Default”):
|
|
|
(i)
|
|
Airbee
shall be entitled to exercise any and all rights pertaining to the
Pledged
Property or any part thereof for any purpose not inconsistent with
the
terms hereof; and
|
|
|
(ii)
|
|
Airbee
shall be entitled to receive and retain any and all payments paid
or made
in respect of the Pledged Property.
|
|
|
c.
|
|
Default
and Remedies.
If an Event of Default occurs, then in each such case Xxxxxxxxxx
may
declare the Obligations to be due and payable immediately, by a notice
in
writing to Airbee, and upon any such declaration, the Obligations
shall
become immediately due and payable; provided,
however,
that the Obligations shall become immediately due and payable without
the
requirement of the giving of any notice upon an Event of Default
occurring
as the result of Airbee being dissolved or liquidated (or any judgment,
order or decree therefor shall be entered); or if a creditors’ committee
shall have been appointed for the business of Airbee; or if Airbee
shall
have made a general assignment for the benefit of creditors or shall
have
been adjudicated bankrupt and if not an adjudication based on a filing
by
Airbee, it shall not have been dismissed within thirty (30) days, or
shall have filed a voluntary petition in bankruptcy or for reorganization
or to effect a plan or arrangement with creditors or shall fail to
pay its
debts generally as such debts become due in the ordinary course of
business (except as contested in good faith and for which adequate
reserves are made in such party’s financial statements); or shall file an
answer to a creditor’s petition or other petition filed against it,
admitting the material allegations thereof for an adjudication in
bankruptcy or for reorganization; or shall have applied for or permitted
the appointment of a receiver or trustee or custodian for any of
its
property or assets; or such receiver, trustee or custodian shall
have been
appointed for any of its property or assets (otherwise than upon
application or consent of Airbee) and shall not have been removed
within
thirty (30) days; or if an order shall be entered approving any
petition for reorganization of Airbee and shall not have been reversed
or
dismissed within thirty (30) days; or if Airbee shall take any action
(corporate or other) authorizing or in furtherance any of the actions
described above in this subsection.
|
|
|
d.
|
|
Method
of Realizing Upon the Pledged Property; Other Remedies.
Upon the occurrence of an Event of Default, in addition to any rights
and
remedies available at law or in equity, the following provisions
shall
govern Xxxxxxxxxx’x right to realize upon the Pledged
Property:
|
|
|
(i)
|
|
Any
item of the Pledged Property may be sold for cash or other value
in any
number of lots at brokers board, public auction or private sale and
may be
sold without demand, advertisement or notice, except that Xxxxxxxxxx
shall
give Airbee ten (10) days’ prior written notice of the time and place
or of the time after which a private sale may be made (the “Sale
Notice”),
which notice period is hereby agreed to be commercially reasonable.
At any
sale or sales of the Pledged Property, Airbee may bid for and purchase
the
whole or any part of the Pledged Property and, upon compliance with
the
terms of such sale, may hold, exploit and dispose of the same without
further accountability to Xxxxxxxxxx. Airbee will execute and deliver,
or
cause to be executed and delivered, such instruments, documents,
assignments, waivers, certificates, and affidavits and supply or
cause to
be supplied such further information and take such further action
as
Xxxxxxxxxx reasonably shall require in connection with any such
sale.
|
|
|
(ii)
|
|
Any
cash being held by Xxxxxxxxxx as Pledged Property and all cash proceeds
received by Xxxxxxxxxx in respect of, sale of, collection from, or
other
realization upon all or any part of the Pledged Property shall be
applied
as follows:
|
4
|
|
(A)
|
|
to
the payment of the Senior Debt pursuant to the terms of the Intercreditor
Agreement;
|
|
|
(B)
|
|
to
the payment of all amounts due Xxxxxxxxxx for the expenses reimbursable
to
it hereunder or owed to it pursuant to Section 5.f.
hereof;
|
| (C) | to the payment of the Obligations then due and unpaid; and |
|
|
(D)
|
|
the
balance, if any, to the person or persons entitled thereto, including,
without limitation, Airbee.
|
|
|
(iii)
|
|
In
addition to all of the rights and remedies which Xxxxxxxxxx may have
pursuant to this Agreement, Xxxxxxxxxx shall have all of the rights
and
remedies provided by law, including, without limitation, those under
the
Uniform Commercial Code.
|
|
|
(iv)
|
|
Xxxxxxxxxx
is specifically entitled to file, in his sole discretion, UCC-1 statements
reflecting this Agreement in any jurisdiction in which Airbee is
incorporated, the costs of preparing and filing such statements to
be paid
by Airbee.
|
|
|
e.
|
|
Proofs
of Claim.
In case of the pendency of any receivership, insolvency, liquidation,
bankruptcy, reorganization, arrangement, adjustment, composition
or other
judicial proceeding relating to Airbee or the property of Airbee,
subject
to the Intercreditor Agreement, Xxxxxxxxxx (irrespective of whether
the
Obligations shall then be due and payable as therein expressed or
by
declaration or otherwise and irrespective of whether Xxxxxxxxxx shall
have
made any demand on Airbee for the payment of the Obligations), subject
to
the rights of prior security holders, shall be entitled and empowered,
by
intervention in such proceeding or
otherwise:
|
|
|
(i)
|
|
to
file and prove a claim for the whole amount of the Obligations and
to file
such other papers or documents as may be necessary or advisable in
order
to have the claims of Xxxxxxxxxx (including any claim for the reasonable
legal fees and expenses and other expenses paid or incurred by Xxxxxxxxxx
permitted hereunder and of Xxxxxxxxxx allowed in such judicial
proceeding), and
|
|
|
(ii)
|
|
to
collect and receive any monies or other property payable or deliverable
on
any such claims and to distribute the same; and any custodian, receiver,
assignee, trustee, liquidator, sequestrator or other similar official
in
any such judicial proceeding is hereby authorized by Xxxxxxxxxx to
make
such payments to Xxxxxxxxxx and, in the event that Xxxxxxxxxx shall
consent to the making of such payments directed to Xxxxxxxxxx, to
pay to
Xxxxxxxxxx any amounts for expenses due it
hereunder.
|
|
|
f.
|
|
Expenses.
In the event of an Event of Default, and subject to the Intercreditor
Agreement, including, but in no way limited to, Section 7.2(j)(b)(B)
of the Intercreditor Agreement, Airbee will pay to Xxxxxxxxxx the
amount
of any and all reasonable expenses, including the reasonable fees
and
expenses of its counsel, which Xxxxxxxxxx may incur in connection
with:
(i) the custody or preservation of, or the sale, collection from, or
other realization upon, any of the Pledged Property; (ii) the
exercise or enforcement of any of the rights of Xxxxxxxxxx hereunder
or
(iii) the failure by Airbee to perform or observe any of the
provisions hereof.
|
|
|
g.
|
|
Continuing
Security Interest.
This Section 5 shall create a continuing security interest in the
Pledged Property and shall: (i) remain in full force and effect until
payment in full of the Obligations or conversion of the Subordinated
Debenture; and (ii) be binding upon Airbee and its successors and
heirs and (iii) inure to the benefit of Xxxxxxxxxx. Upon the payment
or satisfaction in full of the Obligations or conversion of the
Convertible Debenture, Airbee shall be entitled to the return, at
its
expense, of such of the Pledged Property as shall not have been sold
in
accordance with Section 5.d. hereof or otherwise applied pursuant to
the terms hereof.
|
5
|
6.
|
|
Representations
and Warranties of Airbee.
Airbee hereby represents and warrants to Xxxxxxxxxx
that:
|
|
|
a.
|
|
Authorization.
Airbee has the requisite corporate power and authority to execute
this
Agreement and perform its obligations hereunder. All corporate action
on
the part of Airbee necessary for the authorization, execution and
delivery
of this Agreement, the performance of Airbee hereunder and the
authorization, issuance and delivery of the Subordinated Debenture
and the
Warrants has been taken or will be taken, and each of this Agreement,
the
Subordinated Debenture and Warrants when executed and delivered by
Airbee,
shall constitute valid and legally binding obligations of the Company,
enforceable in accordance with their respective terms, except (a) as
limited by applicable bankruptcy, insolvency, reorganization, moratorium,
fraudulent conveyance, and other laws of general application affecting
enforcement of creditors’ rights generally and (b) as limited by laws
relating to the availability of specific performance, injunctive
relief,
or other equitable remedies.
|
|
|
b.
|
|
Valid
Issuance of the Securities.
The Subordinated Debenture and Warrants that are being issued to
Xxxxxxxxxx hereunder, when issued and delivered in accordance with
the
terms of this Agreement for the consideration expressed herein, will
be
duly and validly issued and fully paid and non-assessable, will be
free of
restrictions on transfer other than restrictions on transfer under
this
Agreement and applicable state and federal securities laws and will
be
issued in compliance with applicable state and federal securities
laws.
The Conversion Shares and the Warrant Shares to be issued and delivered
upon conversion of the Subordinated Debenture or upon exercise of
the
Warrants, in accordance with the terms thereof for the consideration
expressed therein, will be duly and validly issued, fully paid and
non-assessable, will be free of restrictions on transfer other than
restrictions on transfer under this Agreement and applicable state
and
federal securities laws and will be issued in compliance with applicable
state and federal securities laws. Airbee (i) has duly and validly
authorized and reserved for issuance shares of Common Stock, which
is a
number sufficient for the Conversion Shares and the Warrant Shares
and
(ii) at all times from and after the date hereof shall have a
sufficient number of shares of Common Stock duly and validly authorized
and reserved for issuance to satisfy the issuance of the Conversion
Shares
and Warrant Shares in full. The Debentures, Warrants, Conversion
Shares
and Warrant Shares are collectively referred to herein as the
“Securities.”
|
| c. | Private Placement. Assuming the accuracy of Xxxxxxxxxx’x representations and warranties set forth in Section 7 hereof, no registration under the Securities Act of 1933, as amended (the “Securities Act”), is required for the offer and issuance of the Securities by Airbee to Xxxxxxxxxx as contemplated hereby. |
|
|
d.
|
|
No
Conflicts.
The execution and delivery of this Agreement and the consummation
of the
transactions herein contemplated will not conflict with or result
in a
breach of any of the terms or provisions of, or constitute a default
under, any indenture, mortgage, deed of trust or other agreement
or
instrument to which Airbee is a party or by which Airbee or any of
its
respective properties is bound, or of the articles of incorporation
or
by-laws of Airbee or any law, order, rule or regulation, judgment,
writ or
decree applicable to Airbee of any court or of any government, regulatory
body or administrative agency or other governmental body having
jurisdiction.
|
|
|
e.
|
|
Absence
of Litigation.
There is no action, suit, claim, investigation, inquiry or proceeding
pending against Airbee before any court or administrative agency
or
otherwise, which if determined adversely to Airbee would prevent
the
consummation of the transactions contemplated
hereby.
|
|
|
f.
|
|
No
Assignment or Subrogation of Rights.
Airbee has not assigned or subrogated any of said rights, claims
and
causes of action referenced in Section 4(b) above, or authorized
any other
person or entity to assert such a claim or claims on its behalf,
and
agrees to indemnify and hold Xxxxxxxxxx harmless against and from
any and
all liability, damages, awards, costs and expenses of any kind whatsoever,
by reason of, or arising out of, touching upon, or concerning the
assignment of said rights, claims and/or causes of
action.
|
|
7.
|
|
Representations
and Warranties of Xxxxxxxxxx.
Xxxxxxxxxx hereby represents and warrants to Airbee
that:
|
|
|
a.
|
|
Authorization.
Xxxxxxxxxx has full power and authority to enter into this Agreement.
Each
of the Agreement, the Debentures and Warrants, when executed and
delivered
by Xxxxxxxxxx, will constitute valid and legally binding obligations
of
Xxxxxxxxxx, enforceable in accordance with its terms, except (a) as
limited by applicable bankruptcy, insolvency, reorganization, moratorium,
and other laws of general application affecting enforcement of creditors’
rights generally and (b) as limited by laws relating to the
availability of a specific performance, injunctive relief, or other
equitable remedies.
|
6
|
|
b.
|
|
Purchase
Entirely for Own Account.
This Agreement is made with Xxxxxxxxxx in reliance upon Xxxxxxxxxx’x
representation to Airbee, which by Xxxxxxxxxx’x execution of this
Agreement, Xxxxxxxxxx hereby confirms, that the Subordinated Debenture
and
Warrants to be acquired by Xxxxxxxxxx hereunder, and the Conversion
Shares
and Warrant Shares to be issued to Xxxxxxxxxx upon conversion of
the
Subordinated Debenture or upon exercise of the Warrants, will be
acquired
for investment for Xxxxxxxxxx’x own account, not as a nominee or agent,
and not with a view to the resale or distribution of any part thereof,
and
that Xxxxxxxxxx has no present intention of selling, granting any
participation in, or otherwise distributing the same. By executing
this
Agreement, Xxxxxxxxxx further represents that Xxxxxxxxxx does not
presently have any contract, undertaking, agreement or arrangement
with
any person to sell, transfer or grant participations to such person
or to
any third person, with respect to the Subordinated
Debenture.
|
|
|
c.
|
|
Disclosure
of Information.
Xxxxxxxxxx believes he has received all the information he considers
necessary or appropriate for deciding whether to acquire the Subordinated
Debenture and Warrants. Xxxxxxxxxx further represents that he has
had an
opportunity to ask questions and receive answers from Airbee regarding
the
terms and conditions of the offering of the Subordinated Debenture
and
Warrants and the business, properties, prospects and financial condition
of Airbee.
|
|
|
d.
|
|
Investment
Experience; Independent Counsel.
Xxxxxxxxxx acknowledges that he can bear the economic risk of his
investment, and has such knowledge and experience in financial or
business
matters that it is capable of evaluating the merits and risks of
the
investment in the Subordinated Debenture and Warrants. Xxxxxxxxxx
is
represented by his own legal counsel in connection with this Agreement,
the related agreements and the transactions contemplated hereby,
and has
not been represented by, or been provided with any legal advice of
Airbee’s counsel in connection
herewith.
|
|
|
e.
|
|
Accredited
Investor.
Xxxxxxxxxx is an “accredited investor” within the meaning of Rule 501
of Regulation D under the Securities
Act.
|
|
|
f.
|
|
Restricted
Securities.
Xxxxxxxxxx understands that the Securities have not been, and will
not be,
registered under the Securities Act, by reason of a specific exemption
from the registration provisions of the Securities Act which depends
upon,
among other things, the bona fide nature of the investment intent
and the
accuracy of Xxxxxxxxxx’x representations as expressed herein. Xxxxxxxxxx
understands that the Securities are “restricted securities” under
applicable United States federal and state securities laws and that,
pursuant to these laws, Xxxxxxxxxx must hold the Securities indefinitely
unless they are registered with the Securities and Exchange Commission
and
qualified by state authorities, or an exemption from such registration
and
qualification requirements is available. Xxxxxxxxxx acknowledges
that
Airbee has no obligation to register or qualify the Securities for
resale.
Xxxxxxxxxx further acknowledges that if an exemption from registration
or
qualification is available, it may be conditioned on various requirements
including, but not limited to, the time and manner of sale, the holding
period for the applicable Securities, and on requirements relating
to
Airbee which are outside of Xxxxxxxxxx’x control, and which Airbee is
under no obligation and may not be able to
satisfy.
|
|
|
g.
|
|
Further
Limitations on Disposition.
Without in any way limiting the representations set forth above,
Xxxxxxxxxx further agrees not to make any disposition of all or any
portion of the Securities, unless and until the transferee has agreed
in
writing for the benefit of Airbee to be bound by this Section 7,
provided and to the extent this Section 7(g) is then applicable,
and:
|
|
|
(i)
|
|
There
is then in effect a registration statement under the Securities Act
covering such proposed disposition and such disposition is made in
accordance with such registration statement;
or
|
|
|
(ii)
|
|
Xxxxxxxxxx
shall have notified Airbee of the proposed disposition and shall
have
furnished Airbee with a detailed statement of the circumstances
surrounding the proposed disposition, and (ii) if reasonably
requested by Airbee, Xxxxxxxxxx shall have furnished Airbee with
an
opinion of counsel, reasonably satisfactory to Airbee that such
disposition will not require registration of such shares under the
Securities Act.
|
7
|
|
h.
|
|
Legends.
Xxxxxxxxxx understands that the Securities may bear one or all of
the
following legends:
|
|
|
(i)
|
|
“THE
SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR UNDER THE
SECURITIES LAWS OF CERTAIN STATES. THESE SECURITIES ARE SUBJECT TO
RESTRICTIONS ON TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED
OR
RESOLD EXCEPT AS PERMITTED UNDER THE SECURITIES ACT AND APPLICABLE
STATE
SECURITIES LAWS, PURSUANT TO REGISTRATION OR EXEMPTION THEREFROM.
HOLDERS
SHOULD BE AWARE THAT THEY MAY BE REQUIRED TO BEAR THE FINANCIAL RISKS
OF
THIS INVESTMENT FOR AN INDEFINITE PERIOD OF TIME. THE ISSUER OF THESE
SECURITIES MAY REQUIRE AN OPINION OF COUNSEL IN FORM AND SUBSTANCE
REASONABLY SATISFACTORY TO THE ISSUER TO THE EFFECT THAT ANY PROPOSED
TRANSFER OR RESALE IS IN COMPLIANCE WITH THE SECURITIES ACT AND ANY
APPLICABLE STATE SECURITIES LAWS.”
|
|
|
(ii)
|
|
Any
legend required by the Blue Sky laws of any state to the extent such
laws
are applicable to the shares represented by the certificate so
legended.
|
|
|
f.
|
|
No
Assignment or Subrogation of Rights.
Xxxxxxxxxx
has not assigned or subrogated any of said rights, claims and causes
of
action referenced in Section 4(a)
above, or authorized any other person or entity to assert such a
claim or
claims on his
behalf, and agrees to indemnify and hold Airbee
harmless against and from any and all liability, damages, awards,
costs
and expenses of any kind whatsoever, by reason of, or arising out
of,
touching upon, or concerning the assignment of said rights, claims
and/or
causes of action.
|
8. Tax
Matters.
|
|
a.
|
|
Notwithstanding
anything in this Agreement to the contrary, the Parties acknowledge
and
agree to treat the payments described in Section 2 of this Agreement
as follows for federal and state income tax purposes: (i) $183,316.64
of
the payment as salary; (ii) $17,946.15 of the payment as interest;
and (iii) $148,737.21 as legal fees and
expenses.
|
|
|
b.
|
|
The
portion of the payments treated as salary (i) shall be deemed paid
from the cash portion of the payment described in Section 2(a), and
(ii) will be reported for federal and state income and employment tax
purposes as compensation income to Xxxxxxxxxx on Form W-2 and VA-2.
By
execution of this Agreement, Xxxxxxxxxx hereby authorizes Airbee
to deduct
and withhold from the salary portion of the payment all legally required
payroll withholdings and deductions upon such amount, including federal
and state income taxes and the employee’s share of FICA and Medicare.
Xxxxxxxxxx acknowledges and agrees that he will only receive the
net
amount of such salary, after withholding, on the applicable payment
date
but that the gross amount of such salary shall be deemed paid to
Xxxxxxxxxx pursuant to this
Agreement.
|
|
|
x.
|
|
Xxxxxxxxxx
shall provide Airbee with all information required from time to time
to
perform tax reporting on IRS Form X-0, XX-0 and/or 1099 on or prior
to the
applicable payment date.
|
|
|
x.
|
|
Xxxxxxxxxx
shall indemnify and hold harmless Airbee, and its officers, directors,
former officers, former directors, legal predecessors, successors,
assigns, and those who at any time purport for any reason to be acting
in
association with them or on their behalf, from and against any liability
paid or incurred as a result of any federal, state or local income
and
employment reporting and withholding tax obligations related in any
way to
the payments made to Xxxxxxxxxx pursuant to Section 2 of this
Agreement, including, without limitation, interest, penalties, attorneys’
fees and other out of pocket costs.
|
|
9.
|
|
Notices
of Certain Events.
Airbee shall promptly provided written notice to Xxxxxxxxxx, if either
Airbee’s Chief Executive Officer or Chief Financial Officer obtains actual
knowledge (without any duty of diligence or investigation being implied)
of the occurrence or existence of any of the following: (i) an
increase in the principal amount of, acceleration of the obligations
under
or extension of the maturity date of, the Senior Debt (as that term
is
defined in the Intercreditor Agreement; (ii) an event of default
under the Senior Debt for which the Senior Creditors (as that term
is
defined in the Intercreditor Agreement) deliver a notice of default
to
Airbee; and (iii) any waivers, forbearances or other agreements with
the Senior Creditors relating to any events of default as to which
the
Senior Creditors have previously provided Airbee with written notice
of.
|
8
|
10.
|
|
Miscellaneous.
Within 10 days following execution of this agreement, Airbee will, at
its expense, file a consent motion, substantially in the form attached
hereto as Exhibit
G,
asking the Court to place under seal the copy of Airbee’s answers to
Xxxxxxxxxx’x interrogatories in aid of execution that was filed with
Airbee’s January 2, 2008 motion to compel
discovery.
|
|
|
|
|
|
|
|
11.
|
|
Severability.
|
|
If
at any time after the full execution of this Agreement,
any provision of this Agreement shall be
held by any court or other forum of competent jurisdiction
to be illegal, void, or unenforceable,
such provision shall be of no force and
effect. The illegality or unenforceability of such
provision, however, shall have no effect upon,
and shall not impair the enforceability of, any
other provision of this Agreement.
|
| 12. | Choice of Law. The terms of this agreement and all rights and obligations of the parties hereto, including its enforcement, shall be interpreted and governed by the laws of the State of Maryland, without regard to conflicts of law principles. | |||
|
13.
|
|
Forum.
|
|
|
|
14.
|
|
Attorney
Fees to Prevailing Party in Dispute Regarding
Agreement.
In the event that a dispute arises between the Parties under this
Agreement, the prevailing Party shall be entitled, in addition to
any
other relief obtained, to recover his/its costs, including reasonable
attorney’s fees.
|
|
|
|
|
|
|
|
15.
|
|
Modification
of Xxxxxxxxx.Xx
provision of this agreement may be modified, altered, waived or
discharged
unless such modification, alteration, waiver or discharge is agreed
to in
writing and signed by the parties hereto. No waiver by either party
hereto
of any condition or provision of this agreement to be performed
by such
other party shall be deemed a waiver of similar or dissimilar provisions
or conditions at the same or at any prior or subsequent
time.
|
||
|
16.
|
|
Headings.
The
headings of the sections contained in this agreement are for
convenience
only and shall not be deemed to control or affect the meaning
or
construction of any provision of this
agreement.
|
||
|
17.
|
|
Continuing
Obligations.Each
Party acknowledges that the terms of this Agreement shall survive
the
execution of the Agreement and the provision of payments specified
herein.
|
||
|
18.
|
|
Counterparts.
|
|
This
Agreement may be executed simultaneously in two (2) or more
counterparts, each of which shall be deemed an original and all
of which
together shall constitute but one and the same instrument. For
purposes of
this Agreement, facsimile signatures are valid and have the same
force and
effect as original
signatures.
|
9
|
19.
|
|
Acknowledgments.
|
|
The
Parties acknowledge that:
|
|
|
|
|
|
|
|
a.
|
|
No
promises or inducements have been made to them except as expressly
set
forth in this agreement;
|
|
|
b.
|
|
No
Party is relying upon any promises, inducements, representations
or
statements not expressly set forth in this
agreement;
|
|
|
c.
|
|
All
Parties have had the opportunity adequately to review and consider
the
terms and provisions of this
Agreement;
|
|
|
d.
|
|
Each
Party has consulted with an attorney of his or its own choosing prior
to
executing this Agreement;
|
|
|
e.
|
|
All
Parties have carefully read this Agreement in its entirety and fully
understand the significance of all of the terms and
provisions;
|
|
|
f.
|
|
The
Agreement was drafted by attorneys for both Parties, and thus language
contained herein shall not be construed against either Party;
and
|
|
|
g.
|
|
All
Parties are signing this Agreement voluntarily and of it or their
own free
will and each assents to all the terms and conditions contained
herein.
|
|
20.
|
|
No
Admission of Liability.
This Agreement does not constitute an admission of any kind by Airbee
or
Xxxxxxxxxx. The Parties hereto desire to resolve their disputes in
an
amicable fashion and have entered into this Agreement with the desire
to
forever resolve between them those matters described in this
Agreement.
|
|
21.
|
|
Time
Is of the Essence.
Time
is of the essence with respect to the obligations set forth in this
agreement.
|
|
|
|
|
|
22.
|
|
Notices.
Any
notice required to be sent under this Agreement
shall
be given in writing, as follows:
|
|
|
|
To
Airbee:
|
|
|
|
0000
Xxx Xxxx Xxxxxx
Xxxxxxxxx,
Xxxxxxxx 00000
|
Attention:
E. Xxxxxx Xxxxxx, President
Facsimile:
(301) 57-1861
with
a
copy to:
Xxxxxxxxx
Xxxxx Xxxxxxx & Xxxxx
0000
Xxxxxxx Xxxxxx Xxxxx, Xxxxx 0000
Xxxxxxx
Xxxxx, Xxxxxxxxxx 00000
Attention:
Xxxxxxx X. Xxxxxx, Esq.
Telephone:
(000) 000-0000
Facsimile:
(000) 000-0000
To
Xxxxxxxxxx:
Xxxxxxx
X. Xxxxxxxxxx, Xx.
000
X.
Xxx Xxxxxx
00
Xxxxx
Xxxxxx, Xxxxxxxx 00000
with
a
copy to:
Savit
& Xxxxxxxxxx, LLP
0000
Xxxxxxxxx Xxxxxx
Xxxxx 000X
Xxxxxxxx,
Xxxxxxxx 00000
Attention:
Xxxxx X. Xxxxx, Esq.
Telephone:
(000) 000-0000
Facsimile:
(000) 000-0000
The
contact information provided herein for each party shall be presumed accurate
unless new or different information is provided in writing to the other party
at
the address provided in this paragraph.
The
notice provision in this paragraph will not, however, apply to any court
filings, which will be served in accordance with the applicable Rules of Civil
Procedure.
[Signature
Page Follows]
11
IN
WITNESS WHEREOF, intending
to be legally bound, the Parties have executed this settlement agreement.
XXXXXXX
X. XXXXXXXXXX, XX.
By:
/s/Xxxxxxx
X. Xxxxxxxxxx, Xx.
Name:
Xxxxxxx X. Xxxxxxxxxx, Xx.
By:
/s/
E.
Xxxxxx Xxxxxx
Name:
E.
Xxxxxx Xxxxxx
Title:
President
12
