SETTLEMENT AGREEMENT AND RELEASE
This Settlement Agreement and Mutual Release ("Agreement") is entered into
between Azco Mining, Inc., Xxxxxxx Xxxxxx ("Xxxxxx"), ARH Management Ltd.
("ARH"), Xxxx Xxxxxxx ("Lindsay"), and Xxxx Xxxxxxx and Associates, Ltd. ("ALA")
(the "parties").
The following events have resulted in the execution of this Agreement:
A. Azco entered into Management Agreements with ARH and ALA (the
"Management Agreements"), which included provisions related to payments to
ARH/Xxxxxx and ALA/Lindsay in the event that the Agreements were
terminated.
B. Azco filed a lawsuit against Xxxxxx, ARH, Xxxxxxx and ALA, United States
District Court for the District of Arizona Court Case No. CIV 002334 PHX
SRB, seeking a declaration that the termination fee provisions of the
Management Agreements were invalid (the "Complaint"). ARH and ALA filed a
counterclaim against Azco seeking payment of amounts due under the
termination fee provisions (the "Counterclaim".
C. The parties desire to settle the claims in the Complaint and
Counterclaim in an orderly and cooperative fashion, as specified in this
Agreement.
THEREFORE, the parties agree as follows:
1. Azco shall pay to ARH and ALA each the sum of $350,000. This amount is
to be paid in an initial payment of $20,000 to each ARH and ALA, due upon
the signing of this Agreement, and in monthly payments of $10,000
thereafter, with the entire balance due within 24 months of the date this
Agreement is signed or upon sale of the Company, whichever is first. The
monthly payments shall be due on July 10, 2002, and on the tenth day of
each month thereafter. In addition, Azco shall pay to Xxxxxx and Lindsay
each an amount equal to one half of the total attorneys' fees expended by
ARH, Xxxxxx, ALA and Lindsay on this matter up to the date this Agreement
is signed. ARH and ALA will present Azco with the entire attorneys' fees
figure upon execution of this Agreement, but estimate the total to be
approximately $42,000. One half of the total attorneys' fee amount is due
upon execution of this Agreement, and the other half will be added to the
principal to be paid pursuant to the terms set forth above.
2. In addition to the sums set forth in paragraph (1), Azco shall provide
Xxxxxx and Xxxxxxx each with 150,000 free shares of stock in Azco Mining,
Inc., which shares shall be unrestricted as allowed pursuant to Rule S-8 of
the Rules of the Securities and Exchange Commission. The shares shall be
issued within one month of the date this Agreement is signed by the
parties.
3. The parties will execute a Stipulated Judgment for the entire amount
agreed to in paragraphs (1) and (2) above, concurrently with the execution
of this Agreement. That Judgment will be filed with the U.S. District Court
in the matter identified above. A copy of the Judgment is attached as
Exhibit A hereto. In addition, the parties will sign a Covenant Not to
Execute, providing that ARH, Xxxxxx, ALA and Lindsay agree not to execute
on the Stipulated Judgment so long as the monthly payments are received by
them no later than the 10th day of each month in which a payment is due. A
copy of the Covenant Not to Execute is attached as Exhibit B hereto.
4. The settlement amounts set forth in paragraph (1), above, shall be fully
secured by the real property, structures and equipment owned by Azco and
located at 0000 Xxxxx Xx Xxxxxx Xxxx, subject to any current liens of
record, as well as by a security interest in Azco's 30% ownership interest
in the Piedras Verdes project. Copies of the documents conveying a security
interest are attached as Exhibit C hereto.
5. When the entire amounts set forth in paragraphs (1) and (2) above are
paid in full, ARH, Xxxxxx, ALA and Lindsay shall execute a Satisfaction of
Judgment and shall release their security interests in the properties
identified in paragraph (3) above.
6. ARH, Xxxxxx, ALA, and Lindsay, on behalf of themselves and their
principals, officers, directors, former and current employees, attorneys,
agents, heirs, successors and assigns, hereby unconditionally and forever
release, acquit, and discharge Azco, its members, principals, officers,
directors, former and current employees, attorneys, agents, heirs,
successors, insurers and assigns, of and from any and all claims, charges,
complaints, demands, liabilities, obligations, damages, penalties, fees,
costs, expenses, and causes of action of every kind, nature and description
whatsoever which they may have, or may hereafter have against them or any
of them arising out of the Management Agreements between Azco and ARH and
Azco and ALA.
7. Azco, on behalf of itself and its principals, officers, directors,
former and current employees, attorneys, agents, heirs, successors and
assigns, hereby unconditionally and forever release, acquit, and discharge
ARH, Xxxxxx, ALA, Xxxxxxx, their members, principals, officers, directors,
former and current employees, attorneys, agents, heirs, successors,
insurers and assigns, of and from any and all claims, charges, complaints,
demands, liabilities, obligations, damages, penalties, fees, costs,
expenses, and causes of action of every kind, nature and description
whatsoever which Azco may have, or may hereafter have against them or any
of them arising out of the Management Agreements between Azco and ARH and
Azco and ALA.
8. This Agreement is the complete and entire agreement between the parties.
No oral amendments, modifications, waivers or other changes to this
Agreement are binding or effective unless reduced to writing and executed
by the parties to this Agreement. Each of the parties has had an
opportunity to discuss the importance and content of this document with
their respective legal counsel. In the event any provision or provisions of
this Agreement are declared to be invalid by any court of competent
jurisdiction such invalidity shall not affect the remaining terms and
provisions of this Agreement which shall remain in full force and effect.
9. This Agreement may be executed in multiple parts, and a facsimile
signature shall be acceptable in lieu of an original signature.
10. This Agreement shall be governed by the law of Arizona.
AZCO MINING, INC. ARH MANAGEMENT, LTD.
DATED: ____________________ DATED: ____________________
By:______________________________ By:_____________________________________
Its: Its:
XXXX XXXXXXX & ASSOCIATES, XXXXXXX XXXXXX
LTD.
DATED: ____________________ DATED: ____________________
By:_____________________________ ________________________________________
Its:
XXXX XXXXXXX
DATED: ____________________
___________________________
