SETTLEMENT AGREEMENT AND MUTUAL RELEASE
1. Parties. This settlement agreement and mutual release ("Mutual Release") is
effective as of October __, 2002, by and between Oxford Knight
International, Inc., a Texas corporation ("Oxford"), Xxxxx & Spitts, Inc.,
a Texas corporation ("Xxxxx Texas"), Fabricating Solutions, Inc., a Texas
corporation ("Fabricating"), Har-Whit, Inc., a Texas corporation ("Har"),
Har-Whit/Xxxxx & Spitts, Inc., a Texas corporation ("Har Pitt"), Xxxxx and
Spitts, Inc., a Nevada corporation ("Xxxxx Nevada"), American International
Industries, Inc. "(American"), Xxxx Syracuse and Xxxxxxxx Syracuse
(collectively referred to as "Syracuse" unless otherwise noted), Xxxxxx
Xxxx ("Dror"), and Xxxxxxx X. Xxxxxx ("Xxxxxx") collectively referred to as
the parties ("Parties").
2. Facts.
2.1 In March 0000, Xxxxxx, Xxxxx Xxxxx, and Xxxx Syracuse executed two
Promissory Notes with American for an aggregate of $2,000,000 plus interest
a copy of which are attached as Exhibit "A" as well as Security Agreements,
copies of which are attached hereto as Exhibit "B", a Deed of Trust,
Security Agreement and Financing Statement, a copy of which is attached
hereto as Exhibit "C", and a Stock Purchase Agreement attached hereto as
Exhibit "D".
2.2 In December 0000, Xxxxxx issued shares of Series A convertible preferred
stock to American.
2.3 In July 2002, Xxxxxx and Oxford entered into a lease agreement a copy of
which is attached hereto as Exhibit "D".
2.4 The parties have entered into various other agreements.
2.5 The parties agree and acknowledge that the business of Fabricating and
Xxxxx Texas will be transferred into Xxxxx Nevada and this is part of the
consideration for the various parties entering into this Mutual Release.
3. Mutual Release.
3.1 In consideration of the agreements and covenants set forth hereinabove
and hereinbelow, the sufficiency of which American, Dror, and Xxxxxx hereby
acknowledge and confess, for themselves and/or themself, their agents, servants,
directors, managers, members, representatives, successors, employees and
assigns, to the extent legally allowed, hereby covenant and agree as follows:
3.1.1 Except as otherwise provided herein, that American, Dror, and
Xxxxxx hereby release, acquit and forever discharge Oxford, Xxxxx Texas,
Fabricating, Xxxxx Nevada, Har, Har Pitt, and Syracuse, their agents,
officers, directors, servants, representatives, successors, employees and
assigns from any and all rights, obligations, claims, demands and causes of
action, whether in contract, tort, or state and/or federal securities
regulations, arising from or relating to the Promissory Notes; Security
Agreements; Deed of Trust, Security Agreement and Financing Statement;
Stock Purchase Agreement; and all correspondence, agreements and/or stock
rights, including all obligations arising therefrom, and omissions and/or
conduct of Oxford, Xxxxx Texas, Fabricating, Xxxxx Nevada, Syracuse and/or
their agents, servants, representatives, successors, employees, directors,
officers and assigns, relating to the Oxford, Xxxxx Texas, Fabricating,
Xxxxx Nevada, Har, Har Pitt, and Syracuse correspondence, agreements and
stock rights.
3.2 In consideration of the agreements and covenants set forth hereinabove
and hereinbelow, the sufficiency of which is hereby acknowledged and confessed,
Oxford, Xxxxx Texas, Fabricating, Xxxxx Nevada, Har, Har Pitt, and Syracuse, for
themselves and their agents, servants, representatives, successors, employees
and assigns to the extent legally allowed, hereby covenant and agree as follows:
3.2.1 That Oxford, Xxxxx Texas, Fabricating, Xxxxx Nevada, Har, Har
Pitt, and Syracuse hereby release, acquit and forever discharge American,
Dror, Zeller, and their agents, officers, directors, servants,
representatives, successors, employees and assigns from any and all rights,
obligations, claims, demands and causes of action, whether in contract,
tort, or state and/or federal securities regulations, arising from or
relating to the Promissory Notes; Security Agreements; Deed of Trust,
Security Agreement and Financing Statement, Stock Purchase Agreement and
all correspondence, agreements and/or stock rights, including all
obligations arising therefrom, and omissions and/or conduct of American,
Dror, Xxxxxx and/or their agents, servants, representatives, successors,
employees, directors, officers and assigns, relating to American, Dror,
Xxxxxx correspondence, agreements and stock rights.
4. Consideration for American's, Dror's, and Xxxxxx'x Release. As
consideration for the release by American, Dror, and Xxxxxx set forth in section
3.1 hereof, Xxxxx Nevada agrees to issue American 10,700,000 shares of
restricted common stock pursuant to Rule 144, of which the parties to this
Mutual Release acknowledge that 500,000 shares have already been issued to
American. An additional 300,000 shares of restricted common stock shall be
issued to Xxxxxxx X. Xxxxxx which shares shall be subject to Rule 144. This
Mutual Release assumes that Oxford and Xxxx Syracuse enter into an agreement
whereby the Series A preferred stock of Xxxxx Nevada is transferred from Oxford
to Xxxx Syracuse. As additional consideration, Xxxx Syracuse agrees to convert
the Series A Preferred Stock of Xxxxx Nevada into common stock as per section 16
and hold the Xxxxx Nevada common stock in an escrow account with Vanderkam &
Xxxxxxx until the earlier of American receiving $2,000,000 from the sale of its
Xxxxx Nevada common stock or three years from the date this Mutual Release is
executed. If American receives $2,000,000 from the sale of its Xxxxx Nevada
common stock prior to three years from the date this Mutual Release is executed,
Xxxx Syracuse's shares held in escrow with Vanderkam & Xxxxxxx shall be returned
to Xxxx Syracuse. Except as described in item 6, in the event that American has
not received $2,000,000 from the sale of its Xxxxx Nevada common stock within
three years of the date this Mutual Release is executed then Xxxx Syracuse
hereby instructs the Escrow Agent and hereby agrees to turn over his shares to
American without further notice and at that time the 17,300,000 shares will
immediately become the property of American. Upon Xxxxx Nevada and/or Oxford
refinancing mortgages against the property located at 00000 Xxxxxx Xxxxxxx in an
amount sufficient to payoff the first mortgage balance owed to Southwest Bank of
Texas and the $200,000 2nd lien owed to American, American shall receive
$200,000. American will retain the 2nd lien in the amount of $200,000 with no
interest until such time as it is paid. Xxxxx Nevada and/or Oxford agree to
notify American of the status of a new mortgage by January 30, 2003.
10,500,000 of the shares of Xxxxx Nevada issued to American shall be
appropriately adjusted to take into account any other stock split, stock
dividend, reverse stock split, recapitalization, similar change in the
Company common stock, or stock issuances resulting in the Company's common
stock exceeding 33,900,000 shares of Xxxxx Nevada common stock outstanding
which may occur between the date of the execution of this Agreement and
American receiving an aggregate of $2,000,000 through the sale of stock
pursuant to this Mutual Release. In the event that Xxxxx Nevada's common
stock exceeds 33,900,000 shares prior to American receiving an aggregate of
$2,000,000 as discussed herein, American shall be entitled to receive that
proportion of additional shares of common stock so as to own that
percentage equal to 10,500,000 shares divided by 33,900,000 shares.
Oxford and Xxxxx Nevada agree to transfer the businesses and/or stock of
Fabricating and Xxxxx Texas to Xxxxx Nevada within twenty days from the
execution of this Mutual Release.
American, Dror, and Xxxxxx acknowledge that they will receive valid
consideration from this.
5. Consideration for the Oxford's, Xxxxx Texas's, Fabricating's, Xxxxx
Nevada's, and Syracuse's Release. As consideration for the release by Oxford,
Xxxxx Texas's, Fabricating, Xxxxx Nevada's, and Syracuse set forth in Section
3.2 hereof, American, Dror and Xxxxxx agree to cancel any and all agreements
with Oxford, Xxxxx Texas, Fabricating, Xxxxx Nevada, Har, Har Pitt, and Syracuse
and agree to return all shares, warrants and securities received pursuant to the
various agreements for immediate cancellation or returned to its respective
owner upon execution of this Mutual Release, including, but not limited to
common stock of Oxford Knight, Har, Har Pitt, and preferred stock of Oxford
Knight. The 10,700,000 shares of Xxxxx Nevada issued to American in connection
with this Mutual Release shall bear a customary restrictive legend, which shares
include the 500,000 shares previously issued to American. American and/or its
affiliates agrees that it will not sell short shares of Xxxxx Nevada at any time
before Xxxx Syracuse's shares are returned to him from Vanderkam & Xxxxxxx.
6. Release of 17,300,000 shares held in escrow and accounting of $2,000,000
owed to American. It is agreed and acknowledged by the parties that American
shall have the ability to sell or transfer its shares at whatever price it deems
appropriate. However, to the extent American sells or transfers its shares of
Xxxxx Nevada for less than $.20 per share, the shares shall be treated as if
they were sold for $.20 per share for accounting purposes. Shares sold by
American for greater than $.20 per share shall be treated at the sales price per
share for accounting purposes. For example, if 100,000 shares are sold by
American for $.05 per share, the sale of such shares shall be treated as if they
were sold for $.20 per share or $20,000. The $20,000 amount would reduce the
$2,000,000 amount of American pursuant to this Mutual Release. In the event
American sells 100,000 shares at $.50 per share, the sale of such shares shall
be treated at $.50 per share or $50,000. The $50,000 amount would reduce the
$2,000,000 amount of American pursuant to this Mutual Release. Upon American
selling or transferring shares equivalent to $2,000,000 prior to three years
from the date this Mutual Release is executed, based upon the criteria in this
section, the shares held in escrow shall be released to Xxxx Syracuse. In the
event that American refuses to sell its shares of Xxxxx Nevada in order to
satisfy the $2,000,000 obligation it is owed, the shares held in escrow shall be
released to Syracuse and American's obligation shall be deemed satisfied. This
shall be determined based on a good faith buyer (funds available via bank
confirmation or cashier's check).
7. Termination of All Previous Agreements. All previous agreements among
American, Dror and Xxxxxx, Oxford, Xxxxx Texas, Fabricating, Xxxxx Nevada, Har,
Har Pitt, and Syracuse and any and all related agreements and obligations are
hereby terminated without further rights, obligations or liabilities of any
Party thereunder.
8. No Other Cause of Action. Neither American, Dror, Zeller, Oxford, Xxxxx
Texas, Fabricating, Xxxxx Nevada, Har, Har Pitt nor Syracuse are aware of any
claims not being released herein against American, Dror, Zeller, Oxford, Xxxxx
Texas, Fabricating, Xxxxx Nevada, Har, Har Pitt and Syracuse.
9. Capacity. The Parties represent that they are lawfully authorized to
execute this Mutual Release. The Parties to this Mutual Release further
represent that they have read it in full before its execution and that they
fully understand the meaning, operation and effect of its terms.
10. Prior Assignments. American, Dror and Xxxxxx represent that they have not
assigned, in whole or in part, any claims, demands and/or causes of action
against Oxford, Xxxxx Texas, Fabricating, Xxxxx Nevada, Har, Har Pitt
and/or Syracuse to any person or entity prior to their execution of this
Mutual Release. Oxford, Xxxxx Texas, Fabricating, Xxxxx Nevada, Har, Har
Pitt and Syracuse represent that they have not assigned, in whole or in
part, any claim, demand and/or causes of action against American, Dror, or
Xxxxxx to any person or entity prior to their execution of this Mutual
Release.
11. Binding Effect. This Mutual Release shall be binding on and inure to the
benefit of the Parties and their respective heirs, successors, assigns,
director, officers, agents, employees and personal representatives.
12. Modification. No modification or amendment of this Mutual Release shall be
effective unless such modification or amendment shall be in writing and
signed by all Parties hereto.
13. Entire Agreement. This Mutual Release constitutes the entire agreement
between the Parties pertaining to the subject matter hereof and supersedes
all prior and contemporaneous agreements, understandings, negotiations and
discussions, whether oral or written, of the Parties in connection with the
subject matter hereof.
14. Interpretation. The interpretation, construction and performance of this
Mutual Release shall be governed by the laws of the State of Texas.
Whenever used herein, the singular number shall include the plural, the
plural shall include the singular and the use of any gender shall be
applicable to all genders.
15. Execution. This Mutual Release may be executed in several counterparts,
each of which shall be deemed an original, and such counterparts taken
together shall constitute but one and the same Mutual Release. This Mutual
Release shall be effective on the day and year first above written. All
shares shall be transferred to the Escrow Agent upon execution of this
Mutual Release until such time as the shares issued to American are
received by Escrow Agent.
16. Conversion of Shares. Xxxx Syracuse agrees that he will issue instructions
to convert the Series A preferred stock of Xxxxx Nevada into 17,300,000
shares of common stock within three days of the execution of this Mutual
Release and that prior to such conversion instructions for the issuance of
1,200,000 shares shall be made and when issued such shares shall be placed
in escrow for certain creditors.
17. Arbitration. If a dispute should arise regarding this agreement, the
parties agree that all claims, disputes, controversies, differences or
other matters in question arising out of this relationship shall be settled
finally, completely and conclusively by arbitration in Houston, Texas in
accordance with the Commercial Arbitration Rules of the American
Arbitration Association ("the Rules"). The governing law of this agreement
shall be the law of the State of Texas, without giving effect to conflict
of laws. A decision of the arbitrator shall be final and binding on Xxxxx,
Oxford, Syracuse, Dror, Zeller, American, and the other parties to this
Mutual Release.
18. Failure of Xxxxx Nevada to Acquire Stock or Businesses of Fabricating and
Xxxxx Texas. Notwithstanding above, until the businesses and/or stock of
Fabricating and Xxxxx Texas are acquired by Xxxxx Nevada, it shall be
deemed that the two $1,000,000 notes presently secured by the assets as
attached by Exhibit A will remain in effect. Escrow Agent shall hold all
stock to be issued, exchanged, or transferred pursuant to this Mutual
Release until such time as the earlier of (1) the businesses and/or stock
of Fabricating and Xxxxx Texas are acquired by Xxxxx Nevada; or (2) twenty
days from the execution of the Mutual Release. In the event the businesses
and/or stock of Xxxxx Texas and Fabricating are not acquired by Xxxxx
Nevada within twenty days from the execution of this Mutual Release, the
two notes evidenced by Exhibit A shall remain in effect and this Mutual
Release shall be null and void.
IN WITNESS WHEREOF, intending to be legally bound, the Parties hereto have
executed this Mutual Release as of the __th day of October, 2002.
OXFORD KNIGHT INTERNATIONAL, INC.
By: /s/ Xxxx Syracuse
Its: CEO
PITT'S & SPITT'S, INC., a Texas corporation
By: /s/ Xxxx Syracuse
Its: CEO
FABRICATING SOLUTIONS, INC.
By: /s/ Xxxx Syracuse
Its: CEO
XXXXX AND SPITTS, INC., a Nevada corporation
By: /s/ Xxxx Syracuse
Its: CEO
HAR-WHIT, INC.
By: /s/ Xxxx Syracuse
Its: CEO
HAR-WHIT/XXXXX & SPITTS, INC.
By: /s/ Xxxx Syracuse
Its: CEO
AMERICAN INTERNATIONAL INDUSTRIES, INC.
By: /s/ Xxxxxx Xxxx
Its: President
XXXX SYRACUSE, INDIVIDUALLY
By: /s/ Xxxx Syracuse
Its: CEO
XXXXXXXX SYRACUSE, INDIVIDUALLY
By: /s/ Xxxxxxxx Syracuse
Its: CEO
XXXXXX XXXX, INDIVIDUALLY
/s/ Xxxxxx Xxxx
XXXXXXX X. XXXXXX, INDIVIDUALLY
/s/ Xxxxxxx Xxxxxx
