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EXHIBIT 10.3
SETTLEMENT AND OPTION AGREEMENT
Date: December 7, 1995
PARTIES:
Attn.: Xxxxx Xxxxxxxx, President & C.E.O.
PAN Environmental Corporation (PAN)
00000 X.X. 00xx Xxx
Xxxxxx, XX 00000
Attn.: Xxxxxxx X. Xxxxx
Republic Bank C.F.B.O., Xxxxxxx X. Xxxxx X.X.X.
and Xxxxxxx X. Xxxxx (Xxxxx)
10650 Riviera Place, N.E.
Xxxxxxx, XX 00000
Attn.: Xxxxxxx X. Chysik, President
Maximum Resources, Inc. (Maximum)
X.X. Xxx 00000
Xxxxxxxxx, X.X. Xxxxxx X0X 0X0
Attn.: Xxxxxxxx X. Xxxxxxxx, Managing Member
Xxxxx X. Xxxxxx, Managing Member
Valhalla Financial Group, L.L.C.
0000 - 000xx Xxxxxx, XX, Xxxxx 000
Xxxxxxxxx Xxxxxxx, XX 00000
RECITALS
WHEREAS, PAN is a U.S. 12(g) reporting public company, and
WHEREAS, Maximum through its proposed U.S. subsidiary, is willing to acquire
PAN on a reverse takeover, provided that at the time of takeover, PAN is clean
and has no litigation, threatened or pending, no outstanding stock options, no
outstanding employee benefit plans nor any outstanding debts of any kind, actual
or contingent, and
WHEREAS, Valhalla has a consulting agreement with Maximum to obtain agreements
from the appropriate parties to ensure that PAN is clean and has no threatened
or pending litigation, no outstanding stock options, no employee benefit plans,
nor outstanding debts of any kind, actual or contingent, and
WHEREAS, Xxxxx purchased 166,666 shares of PAN on Dec. 28, 1993, and 333,334
shares of PAN on Jan. 11, 1994 for a total of 500,000 shares of PAN, and
WHEREAS, PAN and Xxxxx Xxxxxxxx (Xxxxxxxx) executed an agreement on January 11,
1994, to purchase 450,000 shares of PAN from Xxxxx for U.S. $161,250 payable in
full on or before June 28, 1994, and
WHEREAS, Xxxxx retained title to the 450,000 shares of PAN as collateral for the
loan, however at the time of the due date for the loan the market for the stock
had collapsed and the shares could not be sold, and
WHEREAS, when Xxxxx did not receive payment when due, Xxxxx sued PAN and
Xxxxxxxx, and was granted a default judgment for U.S. $161,250 principal, U.S.
$38,988.85 interest plus attorney's of U.S.
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$500.00 for a total judgment of $200,909.10 which was to bear interest from the
date of judgment at the rate of 25% per annum until paid, and
WHEREAS, Maximum through its proposed U.S. subsidiary, is willing to acquire
PAN on a reverse takeover, provided that at the time of takeover, PAN is clean
and has no litigation nor any debts.
NOW, THEREFORE, For the mutual consideration and promises contained herein, the
parties agree as follows:
AGREEMENT
1. Maximum through its proposed U.S. subsidiary agrees to acquire PAN on a
reverse takeover through PAN's issuance of 8,000,000 common shares to
Maximum, provided that PAN (a) brings its accounting up to date through
12-31-95; (b) files all necessary 10-Ks, 10-Qs and any other SEC
compliance reports due through 12-31-95; (c) pays off the U.S.
$225,000 PAN debt to Xxxxx using the U.S. $1.50 option for 150,000
shares created by this agreement; (d) pays off the U.S. $175,000 in PAN
debts to general creditors using the U.S. $0.50 option for 257,000
shares created by an option agreement with two directors of PAN; and
(e) secures an agreement with all principals, officers, directors and
other affiliates and associates of PAN to accept 800,000 - 80,000 (to
pay for approximately $40,000 in expenses advanced by Maximum of its
assigns @ U.S. $0.50 per share) equaling 720,000 shares in full
satisfaction of any right, title and interest in accrued salaries,
accrued fees, accrued expense reimbursements, employee benefit plans,
stock options and any other claims against PAN.
2. In consideration of Maximum's undertakings in and in consideration of
this option agreement for 150,000 shares @ U.S. $1.50 per share to
Valhalla which serves as a consultant to Maximum, Xxxxx agrees to
cancel his debt against PAN and upon closing of the Agreement and Plan
of Business Combination between PAN and Maximum through Maximum's
proposed U.S. subsidiary to execute and file all necessary
satisfactions of his judgment against PAN together with the
cancellation of his previous agreements and promissory note with and
from PAN (satisfactions and cancellations attached as Exhibit A).
3. Xxxxx agrees to transfer his 150,000 PAN shares into an escrow under
the X.X.X.'s name set up by his attorney firm Robben, Blauert, Rahles
and Roheback which would serve as escrow agent upon terms and
conditions mutually acceptable to Xxxxx and Valhalla.
4. The escrow agreement (attached as Exhibit B) will provide that the
shares will be placed for sale at a minimum of U.S. $2.00 per share
licensed U.S. or Canada broker/dealer with instructions to remit all
proceeds to the escrow agent. The escrow agent will then remit U.S.
$1.50 per share to Xxxxx up to a maximum of U.S. $225,000 with any
excess over U.S. $1.50 to be remitted to Valhalla provided that all
funds payable to Valhalla will stay in escrow until the full U.S.
$225,000 has been paid to Xxxxx.
5. The escrow agreement also shall provide that Xxxxx shall vote all
shares under his control in favor of the Agreement and Plan of Business
Combination between PAN and Maximum.
6. Maximum agrees to use its best efforts to institute an investor
relations campaign to in obtain a sale price for each share of at least
U.S. $2.00 per share. Upon mutual agreement by Xxxxx and Valhalla, the
stock may be sold for less than U.S. $2.00 per share pursuant to a
mutually agreed strategy.
7. Responsibility of Escrow Agent. The Escrow Agent has made no
representations or warranties in connection with this transaction and
has not been involved in the negotiation of the terms of this agreement
or any matters relative thereto. The Escrow Agent has no liability
hereunder to either party other than to hold the stock and to deliver
it under the terms thereof and to deliver any funds received to Xxxxx
and Maximum or its assignee upon payment. The Escrow Agent may resign
at any time by tendering the stock to a court of competent jurisdiction
or to any successor escrow agent upon by all parties hereto. Each party
hereto agrees to indemnify and hold harmless the Escrow Agent from and
with respect to any suits, claims, actions or liabilities
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arising in any way out of this transaction including the obligation to
defend any legal action brought which in any way arises out of or is
related to this Escrow.
8. Notices. Any notices required or permitted to be given hereunder shall
be sufficient is mailed, postage prepaid, to the respective parties at
the addresses set forth above.
9. Construction. This agreement shall be construed and interpreted in
accordance with the laws of the State of Washington.
10. Default. In the event of any default hereunder, the non-defaulting
party shall be entitled to reimbursement of all costs including
reasonable attorneys fees, incurred in enforcing this agreement, whether
with or without suit and the venue of such action may be King County,
Washington.
11. Further Assurances. At any time, and from time to time, after the
execution hereof, each party will execute such additional instruments
and take such action as may be reasonably requested by the other party
to confirm or perfect title to any property transferred hereunder or
otherwise to carry out the intent and purposes of this Agreement.
12. Counterparts. This Agreement may be executed in any number of
counterparts, all of which shall constitute one and the same agreement.
13. Binding Effect. This Agreement shall be binding upon and inure to the
benefit of the respective parties and their heirs, successors and
assigns.
14. This Agreement shall be construed and interpreted in accordance with the
laws of the State of Washington.
IN WITNESS WHEREOF, the parties have executed this Agreement to be effective as
of the day and year first above written
PAN Environmental Corporation Xxxxxxx X. Xxxxx, individually
/s/ XXXXX XXXXXXXX /s/ XXXXXXX X. XXXXX
--------------------------------- --------------------------------
Xxxxx Xxxxxxxx, President & C.E.O. Xxxxxxx X. Xxxxx
Maximum Resources, Inc. Republic Bank C.F.B.O.,
Xxxxxxx X. Xxxxx, X.X.X.
/s/ XXXXXXX X. XXXXX
--------------------------------- --------------------------------
Xxxxxxx X. Chysik, President Xxxxxxx X. Xxxxx
Valhalla Financial Group, L.L.C.
/s/ XXXXXXXX X. XXXXXXXX
---------------------------------
Xxxxxxxx X. Xxxxxxxx
---------------------------------
Xxxxx X. Xxxxxx
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ADDENDUM TO AGREEMENTS DATED
DECEMBER 7, 1995 and DECEMBER 1, 1997
1. It is hereby agreed that all funds received from the initial sale of PAN
Environmental stock controlled by TCKTS, L.L.C. dba Bristol Media, Ltd.,
Xxxxx Xxxxxxxx and Xxxxxxxx X. Xxxxxxxx, Managing Members, or its
representatives shall go first to pay off Xxxxx'x $95,000 interest and
$225,000 principal before any other obligations are paid, with the
exception of the $75,000 settlement payments in paragraph 2 below.
2. TCKTS, L.L.C. dba Bristol Media, Ltd., through Xxxxxxx Xxxxxxx, Escrow
Agent, agrees to retire Xxxxx'x $95,000 interest payment and an estimated
$75,000 of settlement payments to retire debt on a pro-rata basis from the
initial sale of 450,000 shares of PAN common stock issued to cover PAN's
debt before Bristol Media, Ltd. receives any of the excess proceeds above
Bristol's exercise price of $0.50 per share.
3. It is also agreed that Xxxxxxxx X. Xxxxxxxx, Xxxxx Xxxxxxxx, and Bristol
Media, Ltd. will provide the additional funds required to bring PAN into
compliance as a reporting company through 1997 if Xxxxx (Commerce Bank)
contributes $15,000.
DATED this 19th day of December 1997.
XXXXXXX X. XXXXX TCKTS, L.L.C.
XXXXXXX X. XXXXX, XXX dba BRISTOL MEDIA, LTD.
By /s/ XXXXXXX X. XXXXX By /s/ XXXXXXXX X. XXXXXXXX
----------------------------- -----------------------------
Xxxxxxx X. Xxxxx Xxxxxxxx X. Xxxxxxxx
Managing Member
XXXXXXXX X. XXXXXXXX XXXXX XXXXXXXX
/s/ XXXXXXXX X. XXXXXXXX /s/ XXXXX XXXXXXXX
----------------------------- -----------------------------
Xxxxxxxx X. Xxxxxxxx, Xxxxx Xxxxxxxx,
individually individually
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VALHALLA FINANCIAL GROUP, L.L.C.
00000 Xxxxxx Xxxxxx Xxxxx
Xxxxxxxxx, XX 00000-0000
Tel (000)000-0000 Fax (000)000-0000
December 1, 1997
Xxxxxxx X. Xxxxx PAN Environmental Corporation
Xxxxxxx X. Xxxxx, X.X.X. x/x Xxxxx Xxxxxxxx
00000 Xxxxxxx Place NE 00000 Xxxxxx Xxxxxx Xxxxx
Xxxxxxx, XX 00000 Xxxxxxxxx, XX 00000
RE: Extension of Settlement and Option Agreement dated December 7, 1995 and
Joint Escrow Instructions dated December 7, 1995 (copies attached) and
additional proposals
Dear Xxxxx:
PAN Environmental Corporation has proven to be a very difficult company to
clean up and resurrect.
Maximum Resources, Inc. pulled out of the deal because of time delays and its
lack of resources to adequately finance the PAN project.
Valhalla Financial Group, L.L.C. has continued to work for PAN to locate
a suitable merger candidate, however, this has proved to be a difficult task as
PAN has a considerable amount of debt to clean up and a substantial amount of
accounting to do in order to obtain certified audits for 1994, 1995, 1996 and
1997.
In addition, we estimate that PAN will require $40-50,000 cash for
transfer agent fees, accounting fees, certified audit fees, legal fees and
other similar business expenses between now and December 31, 1997, which is our
target date to complete the work of bringing PAN into compliance as a reporting
company, so that we can complete the merger we are working on in the first week
of January 1998.
Accordingly, we propose that you consider the following proposal:
1. That you extend the subject Settlement and Option Agreements to
December 31, 1998.
2. That you, for your part in assisting us in generating immediate cash to
complete all tasks to bring PAN into compliance by December 31, 1997,
contribute $15,000.00 in exchange for new issue Rule 144 common shares at
$0.25 per share, or 60,000 shares.
3. That PAN, through its escrow agent, Xxxxxxx Xxxxxxx, will assign to a
separate escrow 189,805 of the 450,000 common shares that it had authorized
for issuance to cover PAN's debt. PAN and/or Xxxxxxx will negotiate with
PAN's creditors to settle out debt as cheaply as possible and will only
sell enough stock to cover such settlements and will return any stock
remaining to PAN's treasury. A portion of PAN's debt is the accrued
interest on your judgment from March 12, 1996 to March 12, 1998 (the
interest from March 12, 1995 to March 12, 1996 having been covered by the
Settlement and Option
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Xxxxxxx X. Xxxxx
December 1, 1997
Page 2 of 2
Agreement dated December 7, 1995). This two-year amount of accrued
interest is as follows:
$161,250.00 $39,659.10
Principal Amount Interest, Attorney
@25% per annum Fees and Costs
@ 18% per annum
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March 12, 1996 to March 12, 1997 $40,312.50 $ 7,138.64
March 12, 1997 to March 12, 1998 40,312.50 7,138.64
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Total $80,625.00 $14,277.28
TOTAL INTEREST $94,902.28
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Unlike PAN's other creditors where PAN and Xxxxxxx are going to
negotiate settlements, PAN intends to fully pay the above accrued
interest through this separate agreement.
4. The terms and conditions of the separate escrow agreement to be set up
will be as follows: That we form a separate escrow to pay off the
$94,902.28 with 189,805 common shares of PAN assigned to the separate
escrow by PAN and Xxxxxxx Xxxxxxx and that TCKTS, L.L.C. dba Bristol
Media, Ltd. ("Bristol") be granted an option at $0.50 per share on the
escrow shares, good until December 31, 1998. Bristol will be handling
investor relations duties for PAN and this option will serve as an
additional incentive to Bristol to get this debt paid off as soon as
possible. If Bristol does not exercise its option by December 31, 1998,
all such shares will become the sole and separate property of Xxxxxxx X.
Xxxxx/Xxxxxxx X. Xxxxx, X.X.X. (The judgment will not accrue any
additional interest until December 31, 1998, the expiration of the
option agreement to Bristol.)
If you agree to this proposal, please sign and date below:
Sincerely,
VALHALLA FINANCIAL GROUP, L.L.C.
Xxxxxxxx X. Xxxxxxxx, Managing Member
AGREED: AGREED:
XXXXXXX X. XXXXX PAN ENVIRONMENTAL
XXXXXXX X. XXXXX, X.X.X. CORPORATION
---------------------------------- ----------------------------------
Xxxxx Xxxxxxxx, President
