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Exhibit 10b
SETTLEMENT AND MUTUAL RELEASE AGREEMENT
This Settlement and Mutual Release Agreement ("Agreement") is entered
into by and among (1) PowerTel USA, Inc., a Delaware corporation with its
principal place of business situated in East Lansing, Michigan and formerly
known as Xxxxxx Geothermal, Inc. and also formerly known as Nevada Energy
Company ("PowerTel"), (2) Viva Telecommunications, Inc., a Nevada corporation
with its principal place of business situated in Sarasota, Florida ("VivaTel"),
(3) Xxxxx X. Xxxxxxx, a resident of Sarasota, Florida ("Xx. Xxxxxxx"), (4)
Xxxxxxx Xxxxxxxx, a resident of Reno, Nevada ("Xx. Xxxxxxxx"), (5) Xxxx Xxxxx, a
resident of Tucson, Arizona ("Xx. Xxxxx"), and (6) Xxxx Xxxxxxxxxxx, a resident
of Portland, Oregon ("Xx. Xxxxxxxxxxx"), collectively referred to as "the
Parties". This Agreement is entered into and deemed to be effective as of
January 25, 1998.
R E C I T A L S
WHEREAS, in August, 1996, NEC purchased 100.0% of the issued and
outstanding Common Stock of Telecom Technologies, Inc. ("TTI"), which was
engaged at that time in the purchase and resale of long distance
telecommunication services; and
WHEREAS, subsequent to the purchase of TTI, the officers of NEC, former
members of the Board of Directors of NEC and representatives of major
shareholders of NEC began to focus on the telecommunications industry for the
purpose of determining whether the TTI acquisition had economic value and
whether NEC should consider additional acquisitions in that industry segment;
and
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WHEREAS, in 1997 Xx. Xxxxxxx incorporated Viva Telecommunications, Inc.
("VivaTel"), for the purpose of purchasing and selling telecommunication
services; and
WHEREAS, in or about December, 1997, PowerTel acquired 100.0% of the
issued and outstanding Common Stock of VivaTel from Xx. Xxxxxxx based upon Xx.
Xxxxxxx'x representation that he was the sole shareholder of VivaTel; and
WHEREAS, Messrs. Xxxxx and Xxxxxxxxxxx have asserted that each of them
has a right in and to some or all of the Common Stock of VivaTel; and
WHEREAS, the assertions made by Messrs. Xxxxx and Xxxxxxxxxxx were
based upon their personal understanding of what is right or equitable and an
individual belief that they should receive part ownership in VivaTel because
they were to be employees of VivaTel; and
WHEREAS, upon further reflection Messrs. Xxxxx and Xxxxxxxxxxx are
aware that they were never VivaTel shareholders of record, there was never a
written contract indicating that they would receive VivaTel stock, nor was there
at any time a legal right for them to hold or own stock in VivaTel; and
WHEREAS, PowerTel has commenced a declaratory judgment action in the
United States Bankruptcy Court for the District of Nevada for the purpose of
confirming that it has acquired 100.0% of the issued and outstanding Common
Stock of VivaTel, said proceeding being identified as In re PowerTel, Inc. vs..
Messrs Xxxxxx, Xxxxx and Xxxxxxx, ADV 97-3151 (U.S. Bankruptcy Court, NV) (the
"Declaratory Judgment Action"); and
WHEREAS, in the Declaratory Judgment Action, PowerTel has named as
Respondents, Messrs. Xxxxxxx and Xxxxx; and
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WHEREAS, PowerTel has provided written notice to Xx. Xxxxxxxxxxx of its
intent to add Xx. Xxxxxxxxxxx as an additional Respondent in the Declaratory
Judgment Action identified above; and
WHEREAS, the Clerk of the Court for the United States Bankruptcy Court
has entered a default because neither Xx. Xxxxxxx, nor Xx. Xxxxx has filed a
timely response to the declaratory judgment complaint filed by PowerTel; and
WHEREAS, Xx. Xxxxx has provided notice of his intention to file an
answer to the Declaratory Judgment Action and to initiate a Third-Party
complaint and cross-claim for damages; and
WHEREAS, Xx. Xxxxxxxxxxx has tendered notice of his intent to seek to
become a Party in the Declaratory Judgment Action; and
WHEREAS, Messrs. Xxxxxxxxxxx and Xxxxx now recognize that if they were
to pursue a Third-Party complaint and cross-claim for damages alleging that they
have a right to own shares of VivaTel stock, their claim would be without legal
support and would be solely based upon their emotional belief; and
WHEREAS, PowerTel has provided Xx. Xxxxxxxxxxx with notice that
PowerTel intends to seek disgorgement of certain proceeds totaling $45,000
received by Xx. Xxxxxxxxxxx in conjunction with the sale of TTI to NEC, such
disgorgement to be sought pursuant to Sections 547 and 548 of the United States
Bankruptcy Code; and
WHEREAS, Xx. Xxxxxxxxxxx objects to any claim that he has acted in
violation of Sections 547 or 548 of the United States Bankruptcy Code; and
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WHEREAS, the Parties to this Agreement desire to reach a full, final
and complete compromise and settlement of any and all disputes, claims and
causes of action (if any) which anyone of them may have arising out of the
transactions summarized above;
NOW, THEREFORE, in consideration of the mutual covenants and conditions
set forth herein, the consideration paid and to be paid to Messrs. Xxxxx and
Xxxxxxxxxxx by PowerTel, and other good and valuable consideration, the receipt
and sufficiency of which is hereby acknowledged, the Parties to this Agreement,
having had the opportunity to confer with legal counsel, enter into this
Agreement intending to be legally bound and do hereby agree that:
1. The recitals set forth are true and correct and are incorporated
herein by reference for all purposes.
2. This Agreement shall be governed by the laws of the State of Nevada,
without regard to its conflicts of laws provisions.
3. Any communication required or permitted to be given to any Party to
this Agreement shall be transmitted to the addresses set forth below, which
address may be amended at anytime by providing written notice to all Parties to
this Agreement:
TO: PowerTel USA, Inc.
c/o Xx. Xxxxxxx X. Xxxxxxxxxx, President
000 Xxxx Xxxx Xxxxxxx Xxxx, Xxxxx 000
Xxxx Xxxxxxx, XX 00000
Telefax: 517/333-9869
With a copy to:
Xxxxxx & Xxxxxxxxxx P.L.L.
Legal Counsel to PowerTel
0000 Xxxxxxxx Xxxxx
Xxxxxxxxx, XX 00000
x/x Xxx X. Xxxxxx, Xxx.
Telefax: 216/575-0911
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TO: Viva Telecommunications, Inc.
c/o Mr. Xxxxx Xxxxxxx, President
0000 Xxxxxx Xxxx Xxxxx
Xxxxxxxx, XX 00000
TO: Xx. Xxxxxxx Xxxxxxxx
000 X. Xxxxxx Xxxxxx
Xxxx, XX 00000
TO: Xx. Xxxxx X. Xxxxxxx
0000 Xxxxxx Xxxx Xxxxx
Xxxxxxxx, XX 00000
TO: Mr. Xxxx Xxxxx
0000 X. Xxxxx Xxxxxxx
Xxxxxx, XX 00000
TO: Xx. Xxxx Xxxxxxxxxxx
00000 Xxxxx Xx.
Xxxxxxxx, XX 00000
4. This Agreement is intended to be a full, complete and final
compromise and settlement of each and every dispute, claim, cause of action or
grievance of any nature whatsoever, whether real or personal, contractual,
equitable or otherwise, whether arising in contract, statute or by common law
(the "Claims") and each Party does hereby waive and forever relinquish each and
every Claim which it has or may have (a) against each and every Party to this
Agreement and his/its successors, heirs, insurers, shareholders, assigns,
executors, estates and successors in interest, and (b) against each and every
officer, director, employee, attorney, accountant, financial advisor, consultant
to any Party to this Agreement, including, but not limited to, Xx. Xxxxx
Xxxxxx-Xxxxx, Mr. Van X. Xxxxxx, Xxxxxx & Xxxxxxxxxx P.L.L., Xx. Xxxxxxx
Xxxxxxxx, Xx. Xxxxxxx X. Xxxxxxxxxx, and each and every subsidiary of any Party
to this Agreement, collectively referred to as the "Non-Party Beneficiaries".
5. Messrs. Xxxxx and Xxxxxxxxxxx, individually and on behalf of their
heirs, assigns, executors, agents and representatives, do hereby represent and
warrant that they have not filed, transmitted or submitted and will not file,
transmit or submit any complaint, grievance, claim or allegation of wrongdoing,
whether made in writing or orally, in any court or with any federal, state or
local regulatory agency or disciplinary authority with respect to (a) the
transactions and events described in the Recitals to this Agreement, or (b) any
Party to this Agreement or Non-Party beneficiary as identified in Paragraph 4(b)
of this Agreement. Every Party and each Non-Party Beneficiary may rely upon the
representation and warranty set forth in this Paragraph 5.
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6. It is the specific intention of this Agreement that any and all
Claims by and among the Parties to this Agreement shall be permanently,
completely compromised and settled. To the extent, however, that Xx. Xxxxxxxxxxx
or Xx. Xxxxx retain, by operation of law or otherwise, any Claim whatsoever, Xx.
Xxxxxxxxxxx and Xx. Xxxxx in consideration of this Agreement, including but not
limited to Paragraphs 11 and 12 hereof, do hereby grant, bargain, sell and
convey all of their right, title and interest in and to any residual claim or
cause of action to PowerTel. Xx. Xxxxxxxxxxx and Xx. Xxxxx furthermore agree to
cooperate with PowerTel in any and all proceedings which may result or have
resulted from the transaction set forth herein, including, without limitation,
the Bankruptcy proceeding and any adversary proceeding filed therein.
7. This Agreement does not include any express or implied covenant of
noncompetition. Accordingly, every Party to this Agreement has the right to
engage in competitive business activities with any other Party to this
Agreement.
8. Messrs. Xxxxx, Xxxxxxxxxxx and Xxxxxxx do hereby agree to execute
and consent to the entry of the judgment in the form attached hereto as Exhibit
A, pursuant to which (a) PowerTel will be deemed to own 100.0% of the issued and
outstanding Common Stock of VivaTel, and (b) the United States Bankruptcy Court
for the District of Nevada pursuant to Xxxxxxx 000 xx xxx Xxxxxx Xxxxxx
Bankruptcy Code and Rule 9018(2) of the Federal Rules of Bankruptcy Procedure
shall seal all documents in the Declaratory Judgment Action.
9. Messrs. Xxxxx and Xxxxxxxxxxx represent and warrant that they shall
immediately cease and desist from conducting any business utilizing the name
"VivaTel" or "Viva Telecommunications" and that they shall cease and desist and
shall forever refrain from holding themselves out as officers, directors or
shareholders of VivaTel. Messrs. Xxxxx and Xxxxxxxxxxx represent and warrant
that they shall, within five calendar days of the effective date of this
Agreement, deliver to PowerTel at the address set forth above any and all
documents or assets in their possession, custody or control which belong to, are
owned by, or pertain to VivaTel, its business, organization, operation or
structure, including but not limited to correspondence, memoranda, contracts,
bank statements, checks, canceled checks, corporate records, corporate minute
books, and any other written document of any nature whatsoever, whether or not
the document has been prepared by Xx. Xxxxxxxxxxx or Xx. Xxxxx. Messrs. Xxxxx
and Xxxxxxxxxxx represent and warrant that, upon request by PowerTel, they will
meet in person or telephonically with a designated representative of PowerTel
for the purpose of providing information with respect to the business affairs of
VivaTel, any actions which they undertook by or on behalf of or in the name of
VivaTel, including but not limited to, any contracts, marketing presentations,
sales presentations or negotiations which were held with third-parties. Messrs.
Xxxxx and Xxxxxxxxxxx represent and warrant that all information provided to
PowerTel pursuant to this Section 9 of this Agreement shall be true and accurate
in all material respects and that they shall not omit material information in
the course of such disclosure and PowerTel is and may rely upon the disclosures
addressed herein and such disclosures are material terms and conditions of this
Agreement.
10. Xx. Xxxxx represents and warrants that over a reasonable time
period he shall pay, cause to be paid or otherwise secure the release of all
debts and obligations of VivaTel as of the date of this Agreement such that
VivaTel shall have no financial obligation of any nature to any creditor,
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including but limited to the Internal Revenue Service and state or local
authorities for payment of taxes of any nature whatsoever, wages, rent, services
or products secured from JD Services of Salt Lake City, Utah and any and all
other accounts payable except that Xx. Xxxxx shall have no obligation toward any
debts incurred to or on behalf VivaTel by Mr. Xxxx Xxxxxx. PowerTel agrees to
assume responsibility for the debts incurred by VivaTel as a result of actions
by Xx. Xxxxxxx.
11. In addition to the mutual covenants and conditions set forth in
this Agreement, as further and additional consideration, PowerTel hereby agrees
as follows:
A. Within 10 days of confirmation of the Plan of Reorganization
to be filed by PowerTel in the United States Bankruptcy Court
for the District of Nevada, PowerTel will issue a $20,000
check to Xx. Xxxxx as compensation for services rendered to
VivaTel, and PowerTel agrees that this payment will be
perfected in a security interest in the letter of credit
advanced to VivaTel in effect as of February 2, 1998.
B. PowerTel agrees that it shall not pursue its claim against
Xx. Xxxxxxxxxxx that Xx. Xxxxxxxxxxx disgorge pursuant to
Sections 547 or 548 of the United States Bankruptcy Code the
$45,000 previously paid to him by NEC and Xx. Xxxxxxxxxxx
hereby agrees that (i) he shall confirm in an affidavit that
he has received no consideration, directly or indirectly, for
the sale of TTI other than the $45,000 paid to him by NEC,
(ii) he shall assist PowerTel in its investigation into the
circumstances surrounding the acquisition of TTI and in
PowerTel's attempt to recoup the $500,000 cash and 2,000,000
shares of Common Stock which were transferred in exchange for
the TTI Common Stock, (iii) he hereby stipulates that
PowerTel owns 100.0% of the issued and outstanding Common
Stock of TTI and agrees to assist and cooperate with PowerTel
in its investigation into the business affairs of TTI; and,
(iv) he hereby stipulates that he is not entitled to any
further compensation from PowerTel arising out of the TTI
Agreement or otherwise.
12. As further and additional consideration for this Agreement, Xx.
Xxxxxxxx agrees to transfer $50,000 worth of PowerTel Class A Common stock to
Xx. Xxxxx (or his assigns) 6 months after the confirmation date for the Plan of
Reorganization to be submitted by PowerTel to the United States Bankruptcy Court
for the District of Nevada. The number of shares of stock shall be determined by
the per-share closing price for the trading date immediately preceding transfer
of the shares.
13. This Agreement is specifically contingent upon confirmation of the
Plan of Reorganization to be submitted by PowerTel to the United States
Bankruptcy Court for the District of Nevada. In the event that the Plan is not
confirmed as submitted, any Party to this Agreement has the right to declare
this Agreement to be null and void as to that Party, in which event the
Agreement shall remain operative with respect to those Parties which have not
elected to terminate the Agreement.
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14. Every Party to this Agreement represents and warrants that he/it
shall refrain from making disparaging, derogatory or inflammatory statements and
comments, whether orally or in writing regarding any other Party to this
Agreement.
15. Every Party to this Agreement shall be responsible for his/its own
expenses, including legal fees.
16. This Agreement may be executed by multiple counterpart and the
receipt of a telefaxed signature page shall be accepted as if it were an
originally executed signature page.
17. In the event that any Party to this Agreement breaches any
representation or warranty or fails to perform any covenant or obligation as set
forth in this Agreement, the damaged Party or Non-Party Beneficiary (as the case
may be) shall be entitled (1) to offset any payments due pursuant to this
Agreement by the the damages incurred, including attorney fees, and (2) to
reimbursement of actual and consequential damages, including attorneys fees. In
the event that any Party violates the terms of paragraphs 5, 9 or 14 of this
Agreement, the violating Party hereby consents to the entry of a temporary
restraining order, preliminary and permanent injunction to be issued by the
Second Judicial District Court, County of Washoe, State of Nevada and hereby
consents to the jurisdiction of that Court. The provisions of paragraphs 4, 5,
8, 9, 10, 11, 12, 14, 17 and 18 of this Agreement are perpetual and shall
survive performance of all other provisions of this Agreement.
18. To the extent that any supplemental documents are required to be
executed in order to implement the objectives of this Agreement, each Party to
this Agreement agrees to cooperate in good faith in order that such supplemental
documents may be prepared and executed.
IN WITNESS WHEREOF, this Agreement has been executed as of the
effective date set forth above.
WITNESSES: POWERTEL USA, INC.
/s/ (Unknown) By: /s/ Xxxxxxx X. Xxxxxxxxxx
-------------------------------- ---------------------------------
Its: President
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VIVA TELECOMMUNICATIONS, INC.
By: /s/ Xxxxx X. Xxxxxxx
-------------------------------- ---------------------------------
Its: President
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XXXXXXX XXXXXXXX, Individually
/s/ (Unknown) /s/ Xxxxxxx Xxxxxxxx
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XXXXX X. XXXXXXX, Individually
/s/ Xxxxx X. Xxxxxxx
-------------------------------- ---------------------------------
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XXXX XXXXX, Individually
/s/ (Unknown) /s/ Xxxx Xxxxx
-------------------------------- ---------------------------------
-------------------------------- ---------------------------------
XXXX XXXXXXXXXXX, Individually
/s/ (Unknown) /s/ Xxxx Xxxxxxxxxxx
-------------------------------- ---------------------------------
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