1
EXHIBIT 12.1
TERMINATION AND MUTUAL RELEASE AGREEMENT
THIS AGREEMENT is entered into and dated as of August 4, 1998, by and
among Compressent Corporation, a Florida corporation ("Compressent"), Call Now,
Inc., a Florida corporation ("Call Now"), and Xxxxxxx Xxxxx, an individual
residing in the State of Florida ("Xxxxx").
RECITALS
A. Call Now, an early stage venture capital investor in Compressent, owns
shares of the common stock of Compressent and has warrants or options for the
purchase of additional shares of the common stock of Compressent.
B. Except as set forth in Compressent's shareholder list maintained by the
stock transfer agent, Xxxxx owns no shares of the common or preferred stock of
Compressent and has no warrants or options for the purchase of shares of the
common or preferred stock of Compressent.
X. Xxxxx is now a member of the Board of Directors of Compressent.
D. On or about February 3, 1998, Compressent secured a $10,000,000.00 line
of credit from Call Now in return for payment of a commitment fee of $400,000
within thirty days of the first draw ("Line of Credit Agreement"). In connection
with the Line of Credit Agreement, Call Now received a stock purchase warrant
for 500,000 shares of Compressent common stock.
E. On or about February 3, 1998, Compressent entered into a Preferred Stock
and Warrant Purchase Agreement with Call Now whereby Compressent agreed to sell
56,000 shares of its redeemable convertible Series A Preferred Stock ("Preferred
Stock") and a warrant to purchase up to 500,000 shares of Compressent common
stock to Call Now ("Preferred Stock Agreement").
F. The purchase price for the Preferred Stock and warrant under the
Preferred Stock Agreement paid by Call Now was $3,500,000.00 and was paid in the
form of Retama Park Racetrack Project Special Facilities Series A Revenue Bonds
with a face value of $3,500,000.00 ("Retama Bonds").
G. On March 10, 1998, Compressent entered into a loan agreement with Xxxx,
Xxxxxxx & Xxxx, Inc., a New Jersey corporation ("HSH") to borrow $2,000,000.00
principal at 10% per annum ("HSH Loan"). The loan was secured by the Retama
Bonds. In connection with the HSH Loan, Compressent and HSH entered into a
"Financial Advisory Agreement" whereby Compressent agreed to pay to HSH warrants
for 100,000 shares of Compressent common stock immediately exercisable by HSH
for $6.25 per share in exchange for financial advice.
H. On May 20, 1998, Compressent and Call Now entered into an agreement
which rescinded the February 3, 1998, Preferred Stock Agreement. Pursuant to
this rescission agreement, Call Now agreed to return to Compressent all issued
shares of Preferred Stock and the
1
2
stock purchase warrant. Compressent, in turn, agreed to return or cause to be
returned the Retama Bonds to Call Now. Call Now agreed to assume all obligations
of Compressent under the terms of the HSH Loan, including the Financial Advisory
Agreements between Compressent and HSH made in connection with the HSH Loan.
Finally, Compressent agreed to issue 1,333,333 shares of its common stock to
Call Now.
I. On May 20, 1998, Compressent and Call Now entered into an agreement
which terminated the February 3, 1998, Line of Credit Agreement, canceled the
associated stock purchase warrant issued to Call Now, and released Compressent
from any commitment fee and all other payments due Call Now in connection with
that Line of Credit Agreement.
J. Compressent believes it has claims against either one or both of Call
Now and Xxxxx arising from the actions of each of Call Now and Xxxxx. Call Now
and Xxxxx believe they have claims against Compressent.
K. The parties desire to modify their existing relationship as set forth
below to resolve all disputes between them and to allow Compressent to pursue
additional financing.
THEREFORE, in consideration of the mutual promises and other consideration
stated in this Agreement, the parties agree as follows:
1. Terminated Undertakings. Except for this Agreement, and any other agreement
attached hereto or referred to herein as an exhibit to this Agreement, the
parties hereby terminate all written and oral agreements, representations
and undertakings between, on the one hand, either one or both of Call Now
and Xxxxx, and on the other hand, Compressent to the extent not already
rescinded, terminated or canceled, including, without limitation, the
following "Terminated Agreements":
a) The February 3, 1998, Line of Credit agreement by and between Call Now
and Compressent and its connected stock purchase warrant for the
purchase of 500,000 shares of common stock of Compressent Corporation,
b) The February 3, 1998, Preferred Stock Agreement for the purchase of
56,000 shares of Compressent Convertible Preferred Stock and its
connected stock purchase warrant for purchase 500,000 shares of
Compressent common stock in return for Retama Bonds with a face value
of $3,500,000.00.
2. Return of Preferred Stock. Call Now hereby confirms that it does not own,
possess, or control any Compressent Preferred Stock and all such
Compressent Preferred Stock to be issued to Call Now pursuant to the
February 3, 1998 Preferred Stock Agreement was never issued and delivered
to Call Now.
3. No Previous Assignment. Except as set forth in paragraph 5(e) below with
respect to HSH, Call Now and Xxxxx, jointly and severally, hereby represent
and warrant that no agreement, representation or undertaking between Call
Now or Xxxxx and Compressent, including any agreement referred to in this
Agreement, has been transferred, assigned,
2
3
pledged or encumbered in any way whatsoever, directly or indirectly, by
absolute or partial conveyance, option, warrant or otherwise.
4. Mutual Release. Except for the rights and obligations of the parties under
this Agreement and all other agreements incorporated herein by reference
and not terminated under paragraph 1 above,
a) Compressent hereby forever releases, remises, acquits and discharges
Call Now and Xxxxx, and
b) Call Now and Xxxxx hereby jointly and severally release, remise,
acquit and discharge Compressent,
of and from any and all obligations, liens, claims, demands, damages,
liabilities, suits, actions and causes of action of whatsoever kind, nature of
description, present and future, now known or hereafter discovered, whether
arising in law or equity, upon contract, tort or warranty, or under state or
federal law or laws or under common law, or otherwise, which the respective
releasor has had, now has, or hereafter may have, or claim to have, against any
one or more of the respective releasees for or by reason of any act, omission,
matter, cause, or thing whatsoever, from the beginning of time to the date of
this Agreement, whether the lien, claim, demand, damage, liability, suit, action
or cause of action is known or unknown and whether the same may hereafter arise,
develop, be discovered, accrue or mature, relating to, but not limited to the
following:
c) any one or more of the Terminated Agreements or any breach or
nonperformance thereof by any party thereto,
d) conduct of Xxxxx in any way related to his duties as an officer or
director of Compressent, except for such conduct which violates any
applicable federal, state or local law, rule or regulation which is
expressly not released under this Agreement,
e) any and all other liens, claims, demands, damages, liabilities, suits,
actions and causes of action arising from any act or omission or from
any undertaking terminated in paragraph 1 above or any breach thereof,
f) any and all obligations of Call Now or Xxxxx to contribute capital or
to make advances to or for the benefit of Compressent,
g) any and all obligations of Compressent to contribute capital or to
make advances to or for the benefit of Call Now or Xxxxx, and
h) any loans, advances, goods or services or other thing of value
whatsoever of any kind provided by the releasor to or for the benefit
of any releasee relating in any way to Compressent.
3
4
5. Call Now and Xxxxx - Additional Obligations. Call Now and Xxxxx, as the
case may be, agree to the following:
a) Upon the arranging for the issuance of the Compressent shares pursuant
to paragraph 6(b) below, Xxxxx will immediately submit his resignation
as a member of the Board of Directors to Compressent via facsimile and
certified mail in form and substance similar to the resignation
attached hereto as Exhibit A and incorporated herein by this
reference;
b) Call Now hereby assumes and agrees to pay and perform and further
confirms and ratifies its assumption of all of Compressent's
obligations under the terms of the HSH Loan, including any Financial
Advisory Agreements between Compressent and HSH. Call Now will
continue to cause Compressent to be removed as maker or obligor under
the terms of the HSH Loan and related loan documents;
c)
d) Call Now and Xxxxx will each assign to Xxxxxx & Xxxx, pllc, in trust
for Compressent all of Call Now's voting rights arising from its
ownership or control of any and all shares of Compressent common or
preferred stock, for a two year period commencing on the date of this
Agreement, pursuant to a Voting Rights Assignment Agreement the terms
and conditions of which will be mutually agreed upon; and
e) Call Now will surrender for cancellation or cause to be surrendered
for cancellation to Compressent all shares and warrants of Compressent
stock previously held or possessed by HSH or International Trading
Group, Inc. as described in Exhibit 8.15 of the Call Now Form 10-KSB
dated December 31, 1997 filed with the Securities and Exchange
Commission in July 1998.
6. Obligations of Compressent - Additional Obligations. Compressent agrees to
the following:
a) Compressent hereby confirms and ratifies its transfer of all right,
title and interest of Compressent in and to the Retama Bonds to Call
Now,;
b) Compressent will instruct the transfer agent to arrange for the issue
of 500,000 shares of Compressent common stock to Call Now within five
(5) days of the execution of this Agreement by Xxxxx and Call Now in
consideration of Xxxxx'x release in paragraph 4 above. Such shares
will be registered for sale in the first registration statement under
the Securities Act of 1933 and blue sky laws of Compressent which
includes shares being sold by any shareholder of Compressent after May
1, 1999;
4
5
c) Compressent agrees to take such actions as are reasonably requested by
Call Now to complete the transfer of the Retama Bonds to Call Now;
d) Compressent will maintain Xxxxx'x director's and officer's insurance
coverage by Compressent relating to Xxxxx'x service to Compressent as
a director to the fullest extent permitted by Compressent's existing
articles and by-laws under Florida law (and incorporated herein by
this reference) and subject to approval by Compressent's insurers. In
addition, Compressent agrees not to modify ex post its by-laws as they
relate to the indemnification of Xxxxx as a then present or former
director or officer of Compressent; and
e) Compressent will pay Call Now, Inc. a ten percent (10%) commission on
net amounts received by Compressent from AmTote pursuant to any
agreement between Compressent and AmTote arising out of AmTote
providing services to OTB for off track betting video techology,
within thirty (30) days of Compressent's receipt of such funds.
f) Within five days after the execution of this Agreement, to extent
permitted by law, Compressent will instruct its transfer agent to
remove the restrictive legend on all Compressent shares owned by Xxxxx
or Call Now in excess of two years.
7. Representations and Warranties of Call Now. In addition to the
representations and warranties set forth elsewhere herein, Call Now hereby
makes the following representations and warranties to Compressent:
a) Shares Owned Directly and Indirectly. Except for those shares of
Compressent common and preferred stock now held of record in its name
with the stock transfer agent, Call Now has no common or preferred
shares of Compressent and has no options, warrants or rights regarding
any common or preferred shares of Compressent.
b) Corporate Existence and Power. Call Now is a corporation duly
incorporated, validly existing, and in good standing under the laws of
the State of Florida and has full corporate power and authority to
transact business in the corporate form in that state and to enter
into this Agreement and carry out the transactions provided for
herein. The execution and delivery of this Agreement does not and the
consummation of the transactions contemplated herein will not violate
any provision of its Articles of Incorporation or Bylaws, or any
provision of or result in accelerating of any obligation under any
mortgage, lien, lease, agreement, instrument, order, arbitration
award, judgment, or decree to which it is a party, or by which it is
bound, and will not violate any other restriction of any kind or
character to which it is subject.
c) Board of Directors Approval. Call Now's Board of Directors has duly
approved this Agreement and has authorized the execution and delivery
of this Agreement and all related agreements, documents and
instruments.
5
6
d) Disclosure. No representation or warranty by Call Now contained in
this Agreement, and nothing contained in any instrument or certificate
furnished or to be furnished by it or any of its representatives
pursuant to this Agreement or in connection with the transactions
contemplated hereby, contains or will contain any untrue or misleading
statement of fact.
e) Brokers and Finders. Call Now has not employed any investment banker,
broker or finder, or incurred any liability for any brokerage fees,
commissions or finders fees in connection with the transactions
contemplated by this Agreement.
8. Representations and Warranties of Compressent. In addition to
representations and warranties set forth elsewhere herein, Compressent
makes the following representations and warranties to Call Now and Xxxxx:
a) Corporate Existence and Power. Compressent is a corporation duly
incorporated, validly existing, and in good standing under the laws of
the State of Florida and has full corporate power and authority to
transact business in the corporate form in that state and to enter
into this Agreement and carry out the transactions provided for
herein. The execution and delivery of this Agreement does not and the
consummation of the transactions contemplated herein will not violate
any provision of its Articles of Incorporation or Bylaws, or any
provision of or result in the acceleration of any obligation under any
mortgage, lien, lease, agreement, instrument, order, arbitration
award, judgment, or decree to which it is a party, or by which it is
bound, and will not violate any other restriction of any kind or
character to which it is subject.
b) Board of Directors Approval. Compressent's Board of Directors has duly
approved this Agreement and has authorized the execution and delivery
of this Agreement and all related agreements, documents and
instruments.
c) Disclosure. No representation or warranty by Compressent contained in
this Agreement, and nothing contained in any instrument or certificate
furnished or to be furnished by it or any of its representatives
pursuant to this Agreement or in connection with the transactions
contemplated hereby, contains or will contain any untrue or misleading
statement of fact.
d) Brokers and Finders. Compressent has not employed any investment
banker, broker or finder, or incurred any liability for any brokerage
fees, commissions or finders fees in connection with the transactions
contemplated by this Agreement.
9. Representations and Warranties of Xxxxx. In addition to representations and
warranties set forth elsewhere herein, Xxxxx makes the following
representations and warranties to Compressent:
6
7
a) Shares Owned Directly and Indirectly. Except as set forth on Recital
B, Xxxxx has no common or preferred shares of Compressent and has no
options, warrants or rights regarding any common or preferred shares
of Compressent.
b) Power and Authority. Xxxxx has full power and authority to enter into
this Agreement and to carry out the transactions provided for herein.
The execution and delivery of this Agreement does not, and the
consummation of the transaction contemplated herein will not, violate
any provision of or result in accelerating any obligation under any
mortgage, lien, lease, agreement, instrument, order, arbitration
award, judgment, or decree to which he is a party, or by which he is
bound, and will not violate any other restriction of any kind or
character to which he is subject.
c) Disclosure. No representation or warranty by Xxxxx contained in this
Agreement, and nothing contained in any instrument or certificate
furnished or to be furnished by him or any of his representatives
pursuant to this Agreement or in connection with the transactions
contemplated hereby, contains or will contain any untrue or misleading
statement of fact.
d) Brokers and Finders. Xxxxx has not employed any investment banker,
broker or finder, or incurred any liability for any brokerage fees,
commissions or finders fees in connection with the transactions
contemplated by this Agreement.
10. Access and Information/Reliance. Compressent, Call Now and Xxxxx and their
respective accountants, legal counsel, and other representatives and agents
have each had full access and opportunity to examine and investigate all
properties, assets, liabilities, books, contracts, commitments,
undertakings and records of each other. Neither Xxxxx nor any officer of
Compressent or Call Now will be deemed to have knowledge of any information
or fact in any of the above-described items unless that officer had actual
knowledge thereof on the date of this Agreement. No party hereto is relying
on any agreement, statement, representation or warranty of any other party
or any other person or entity in entering into this Agreement and the
transactions contemplated hereby other than those set forth in this
Agreement (including exhibits, addenda, agreements, instruments,
certificates and other writings delivered pursuant hereto or in connection
herewith).
11. Intent. The undersigned agree that the Mutual Release set forth in
paragraph 4 above and the giving of consideration therefor does not
constitute an admission of liability by any one or more of the releasees,
and is given in full settlement and compromise of doubtful and disputed
claims, present and future, known and unknown and is also intended to
release any and all future injury and damage including effects or
consequences thereof, not now known but which may later develop or be
discovered, and all causes of action therefor, and a part of the
consideration is given and received by each respective releasee and
releasor in satisfaction of unknown liens, claims, injury and damage.
12. Bound and Remitted Persons. The foregoing Mutual Release set forth in
paragraph 4 above extends to and releases and binds and inures to the
benefit of each respective
7
8
releasee and releasor, as the case may be, and in the case of corporations,
all its shareholders, directors, officers, employees, underwriters,
lenders, beneficiaries, attorneys, agents, assigns, successors,
subsidiaries, affiliated and connected corporations, companies and
entities, and in the case of persons, all their marital communities, heirs,
executors, administrators, personal representatives, underwriters,
beneficiaries, attorneys, agents, and assigns.
13. Miscellaneous.
a) Choice of Law. This Agreement is made with reference to and is
intended to be construed in accordance with the laws of the State of
California without reference to its conflict of law provisions. The
parties agree that the exclusive jurisdiction and venue of any suit
will be in U.S. District Court in San Jose, California or San
Francisco, California, unless the federal court declines jurisdiction
in which such jurisdiction will be the state court in San Jose,
California.
b) Waiver and Modification. The failure of any party hereto to require
strict performance of any provision hereof will not in any manner
limit the right of that party at a later time to enforce the same. No
waiver by any party of the breach of any term or covenant contained in
this Agreement will be deemed to be a release or limit any liability
resulting from the breach. No waiver of any nature, whether by
conduct, course of dealing, or otherwise, in any one or more instances
will be deemed to be or construed as a continuing waiver of any such
condition or breach or as a waiver of any other condition or of any
other breach of any other term or covenant of this Agreement.
c) Successors in Interest. This Agreement is and will be binding upon and
is and will inure to the benefit of the successors and assigns of the
parties. No party hereto may assign any of its rights or obligations
under this Agreement without the prior written consent of all of
Compressent, Call Now and Xxxxx, except to a successor to at least 80%
of the business and assets of the assignor in which case both assignor
and assignee will be and remain jointly and severally liable to pay
and perform all indebtedness, liabilities and obligations of the
assignor under this Agreement.
d) Entire Agreement. This Agreement contains the entire agreement between
the parties hereto with respect to the subject matter hereof and
supersedes all prior negotiations and agreements. There are no
representations, warranties understandings, or agreements other than
those expressly set forth herein. Time is expressly declared to be of
the essence of this Agreement.
e) Exhibits. Exhibits, schedules and addenda attached to this Agreement
and any other agreements, documents, instruments and certificates
delivered in connection with this Agreement are expressly made a part
of this Agreement as fully as though completely set forth in it. All
references to this Agreement either in the Agreement itself or in any
of such writings will be deemed to refer to and include this
8
9
Agreement and all such exhibits, schedules, addenda, agreements,
documents, instruments and certificates. Any breach of or default
under any provision of any such writings will, for all purposes,
constitute a breach or default under this Agreement and all other such
writings.
f) Execution by Counterpart. This Agreement may be executed separately or
independently in any number of counterparts, each and all of which
together will be deemed to have been executed simultaneously and for
all purposes to be one agreement.
g) Captions. The respective captions of the sections and paragraphs
hereof are inserted for convenience of reference only and will not be
deemed to modify or otherwise affect in any respect any of the
provisions hereof.
h) Dispute Resolution Expenses. The prevailing party in any action,
proceeding or lawsuit arising out of the enforcement of any term or
condition of this Agreement will be entitled to an award of attorneys'
fees, costs and expenses.
EXECUTED as of the date first above written.
COMPRESSENT CORPORATION CALL NOW, INC.
By: By:
--------------------------------- ---------------------------------
Its: Its:
----------------------------- -----------------------------
/s/ XXXXXXX XXXXX
------------------------------------
Xxxxxxx Xxxxx, Individually
9
10
EXHIBIT A
Resignation of Xxxxxxx Xxxxx
10
11
August 4, 1998
To: The Shareholders and the Board of Directors of Compressent Corporation.
From: Xxxxxxx Xxxxx.
I hereby resign as a director of Compressent Corporation effective immediately.
/s/ XXXXXXX XXXXX
-------------------------
Xxxxxxx Xxxxx
11
