Exhibit 10.2
MODIFICATION TO
SETTLEMENT AND RELEASE AGREEMENT
This Modification to Settlement and Release Agreement
("Modification Agreement") is made and entered into this ___ day
of ________, 2001 (the "Revised Effective Date"), between and
among California Software Corporation, a corporation organized
under the laws of the state of Nevada (the "Company"), Xxxxx
Xxxxxx, Xxxxx Xxxxxx, and NevWest Securities Corporation, a
corporation organized under the laws of the state of Nevada
including its officers, directors, employees and agents
("NevWest"), on the one hand (collectively, the "Released
Parties"), and certain of the subscribers (the "Subscribers") to
the Company's Private Placement Memorandum dated February 14, 2000
(the "PPM"). All the above-described individuals and entities are
sometimes referred to herein as "the Parties."
W I T N E S S E T H:
WHEREAS, this Modification Agreement is intended to modify a
certain Settlement Agreement entitled "Settlement and Release
Agreement" involving California Software Corporation and investors
participating as PPM investors ("the Subscribers") in a private
placement conducted by the Company;
WHEREAS, the Settlement and Release Agreement allowed
California Software Corporation, the discretion to demand, as a
condition precedent to consummation, acceptance by participating
subscribers representing no less than ninety percent (90%) of all
common shares sold through the PPM (the "Required Number of
Subscribers") on a date no later than December 4, 2000 (the
"Effective Date") and whereas such condition precedent was not
satisfied;
NOW, THEREFORE, in consideration of the Company's willingness
to extend the time period allotted to the Subscribers for
acceptance of the Settlement, and in consideration of the
Company's willingness to reduce the required participation
precedent to consummation of the Settlement and Release Agreement,
the Parties hereby agree to modify the Settlement and Release
Agreement as follows:
A G R E E M E N T:
I. The Parties hereby mutually agree to amend the following
paragraphs of the Settlement and Release Agreement:
A. Paragraph Three (3) and its sub-paragraphs, entitled
Conditions to Settlement shall now read as follows. (The use of
italics and underlining herein are for clarification purposes
only.)
3. Conditions to Settlement. This Settlement Agreement
shall have no force or effect absent satisfaction of each and all
of the following conditions, which conditions are for the benefit
of the Company and may be waived in writing in the Company's sole
and unfettered discretion:
3.1. Execution of the Settlement Agreement by Subscribers
representing no less than seventy percent (70%) of all common
shares sold through the PPM (the "Required Number of
Subscribers"), all of which Subscribers shall participate to the
full extent of the Subscriber's shareholdings in the Company,
whether those shares are held in the Subscriber's name, in trust,
or in a related name or entity (Those Subscribers who execute the
Settlement Agreement and this Modification Agreement and thereby
agree to participate are referred to herein as the "Participating
Subscribers"); and
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3.2. Delivery to the Company's representative, Xxxxx &
Xxxxxx, on or before January 31, 2001, of Settlement Agreements
and Modification Agreements executed by all Subscribers electing
to participate in the Settlement Agreement as modified. (The date
of such delivery shall be referred to herein as the Revised
Effective Date.) The Company and NevWest Securities Corporation
shall each evidence acceptance of the Settlement and Release
Agreements and this Modification Agreement by due execution of the
Settlement and Release Agreement and Modification Agreement and
shall cause to be delivered to each of the participating
Subscribers a copy of the Settlement Agreement and the
Modification Agreement duly executed.
B. Paragraph Five (5) and its sub-paragraphs, entitled Cash
Compensation (5.1) and Securities Based Compensation (5.2) shall
now read as follows. (The use of italics and underlining herein
are for clarification purposes only.)
5.1. Cash Compensation. The Company shall compensate the
participating Subscribers in the form of cash on a pro-rata basis
related to their investment participation in the PPM, in the
maximum aggregate amount of Two Million Five Hundred Thousand
Dollars ($2,500,000.00). The terms of such monetary based
compensation shall include:
5.1.1. A maximum aggregate amount of One Million Five
Hundred Thousand Dollars ($1,500,000.00) shall be made
available to Participating Subscribers within sixty (60)
days of the Revised Effective Date or March 30, 2001,
whichever is later. The Company shall be solely and
exclusively responsible for such payment and shall
effectuate such payment by paying the Participating
Subscribers 56.5 cents ($0.565) for each share of the
Company's common stock purchased through the PPM.
Should all Subscribers execute the Settlement Agreement,
this amount reflects an aggregate payment of
approximately $1.5 million.
5.1.2. Within sixty (60) days of the Revised Effective
Date or by March 30, 2001, whichever is later, by
Promissory Note, a maximum aggregate amount of One
Million Dollars ($1,000,000.00) shall be made available
to Participating Subscribers by the Company. The
Company shall be solely and exclusively responsible for
such payment and shall effectuate such payment via
Promissory Note, which Promissory Note shall take the
form of the sample note attached as Exhibit "A" to the
Settlement and Release Agreement. This Note shall
obligate the Company to pay the Participating
Subscribers 36.5 cents ($0.365) for each share of the
Company's stock obtained through the PPM within thirty-
six (36) months pursuant to the terms of a Promissory
Note (the "Promissory Note"). Should all Subscribers
execute the Settlement Agreement, the aggregate payment
to be made under the Promissory Note totals
approximately $1 million.
5.2 Securities Based Compensation.
5.2.1 Within sixty (60) days of the Revised Effective
Date or by March 30, 2001, whichever is later, Xxxxx
Xxxxxx and Xxxxx Xxxxxx shall each transfer to the
Participating Subscribers, on a pro rata basis, based on
the number of shares purchased through the PPM by all
Participating Subscribers, up to 600,000 shares (the
"Xxxxxx/Xxxxxx Shares") of their individual holdings in
the Company's common stock, or such lesser sum equal to
the percentage of all common shares sold through the PPM
represented by the Participating Subscribers. [By way
of example, should the Participating Subscribers
represent only 95% of the shares sold through the PPM,
the number of shares each would transfer would total
570,000 shares.]
5.2.2 Within sixty (60) days of the Revised Effective Date
or by March 30, 2001, whichever is later, NevWest shall
transfer to the Participating Subscribers, on a pro rata
basis, based on the number of shares purchased through the
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PPM by all Participating Subscribers, up to 500,000 shares
(the "NevWest Shares") of NevWest's holdings in the
Company's common stock, or such lesser sum equal to the
percentage of all common shares sold through the PPM
represented by the Participating Subscribers. [By way of
example, should the Participating Subscribers represent
only 95% of the shares sold through the PPM, the number
of shares NevWest would transfer would total 475,000
shares.] NevWest shall be solely and exclusively
responsible for transferring the shares referenced in
this sub-paragraph.
II. The Settlement and Release Agreement referred to throughout
this Modification Agreement is fully incorporated herein in its
entirety. Any terms and/or provisions contained in the original
Settlement and Release Agreement which terms and/or provisions are
not expressly modified or amended by this Modification Agreement,
remain in full force and effect. This Modification Agreement
together with the Settlement and Release Agreement constitute one
Agreement, which Agreement is meant to be interpreted in such a
manner as to substitute the provisions and/or terms expressly
modified hereby for their counterparts as appearing in the
Settlement and Release Agreement.
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WHEREFORE, the parties hereto, having been duly authorized to do
so, have caused this Modification Agreement to be executed as of
the date first above written.
CALIFORNIA SOFTWARE CORPORATION
/s/ Xxxxx Xxxxxx
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By Xxxxx Xxxxxx, its CEO
/s/ Xxxxx Xxxxxx
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By Xxxxx Xxxxxx, its President
/s/ Xxxxx Xxxxxx
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Xxxxx Xxxxxx, personally and individually
/s/ Xxxxx Xxxxxx
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Xxxxx Xxxxxx, personally and individually
NEVWEST SECURITIES CORPORATION
/s/ Xxxxxxx X. Xxxxx, III
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By Xxxxxxx X. Xxxxx, III, its authorized representative
/s/ Xxxxxx X. Xxxxxx
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By Xxxxxx X. Xxxxxx, its authorized representative
SUBSCRIBER(S)
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Signature
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Printed Name
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Date
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