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ACTIVE LINK COMMUNICATIONS, INC.
FORM 10-KSB
EXHIBIT 10(k)
SETTLEMENT AGREEMENT AND RELEASE OF CLAIMS
This Settlement Agreement and Release Of Claims ("Agreement") is made as of the
30th day of July, 2001, by and between: Active Link Communications, Inc., a
Colorado Corporation, f/k/a Communications World International, Inc., 0000 Xxxxx
Xxxxxx Xxxxxxx #0000, Xxxxxxxxx, Xxxxxxxx 00000 ("Active Link"); and Toshiba
America Information Systems, Inc., a California Corporation, 0000 Xxxxxx
Xxxxxxxxx, Xxxxxx, Xxxxxxxxxx 00000 ("TAIS"). Active Link and TAIS will
sometimes collectively be referred to herein as "the Parties."
RECITAL
WHEREAS, Active Link is engaged in the business of marketing and
installing telecommunications equipment and related products, as well as
distributing franchises for the sale of such products; and
WHEREAS, Active Link has been and is a TAIS authorized dealer of
Toshiba brand telecommunication products (the "Products"); and
WHEREAS, Active Link and TAIS have entered into various Dealer
Agreements, commencing in or around April, 1981, through and including the
Dealer Agreement dated April 1, 2000 (the "Dealer Agreements); and
WHEREAS, TAIS claims that Active Link owes TAIS the sum of
$1,107,536.07, related to Products ordered and received pursuant to the Dealer
Agreements (the "Debt"); and
WHEREAS, Active Link desires to pay off its Debt to TAIS; and
WHEREAS, the Parties desire to settle fully and finally, without
admission of any fact or liability, the differences, claims or events relating
to the Products, the Dealer Agreements and the Debt as set forth in this
Agreement below.
AGREEMENT
NOW, THEREFORE, in consideration of the mutual promises, covenants and recitals
contained in this Agreement, the Parties agree as follows:
1. On or before July 30, 2001, Active Link shall sign and deliver to TAIS the
original Promissory Note attached hereto as Attachment "A" and made apart
hereof.
2. Active Link acknowledges it will no longer act as a franchisor for the sale
of the Products and TAIS may transact business with any or all of Active Link's
current or former franchisees to, among other things, market and sell the
Products, subject to TAIS' credit approval, which shall be at TAIS' sole
discretion.
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3. Active Link represents and warrants that it has no knowledge of any claims or
disputes whatsoever against Active Link by any of its franchisees or other
customers, except as set forth on Attachment "B", attached hereto and made a
part hereof.
4. Active Link shall indemnify, defend and hold harmless TAIS from and against
any and all claims, causes of action, liabilities, damages, losses, costs or
expenses of any kind or nature (including attorneys' fees) (collectively
"Claims") which arise out of or are in any way connected with any activities
whatsoever between Active Link and any of its current or former franchisees or
customers, including, but not limited to, the performance of any term or
condition of any of its franchise or other agreements, or any alleged wrongful
act or omission in connection with its franchises or customers, or any other
activity. This indemnification shall apply to any acts or omissions, willful
misconduct or negligent conduct, whether active or passive, on the part of
Active Link, its officers, directors, employees, agents, representatives or
subcontractors, including, but not limited to, intellectual property
infringement, personal injury, property damage and wrongful death. Active Link
shall further indemnify TAIS and hold it harmless from any and all Claims
suffered or incurred by TAIS on account of any breach of Active Link's
obligations and covenants of this Section. No claim or suit against TAIS shall
be settled without TAIS' express written consent where the settlement would
impose a burden on TAIS above and beyond the liability assumed by Active Link.
Active Link shall have the right to select counsel to defend TAIS as set forth
herein. However, if TAIS reasonably believes that the counsel selected by Active
Link is not adequately representing TAIS, TAIS may submit such notice to Active
Link, and Active Link and TAIS shall select different counsel as mutually
agreed.
5. Except as to any and all claims covered by Paragraph No. 4 above, each Party
has released, acquitted and forever discharged the other Party, and does so for
itself, its executors, legal representatives and assigns, release, acquit and
forever discharge the other Party and its subsidiaries and affiliates,
employees, officers, directors, agents and representatives (the "Released
Parties"), and understands that this Agreement constitutes a full and final
settlement and extends to all claims of every nature, known or unknown,
suspected or unsuspected, arising from or attributable to any practices or
conduct of the Released Parties, relating directly or indirectly to the
Products, the Dealer Agreements, the Debt from the beginning of time up to and
including the date of this Agreement.
6. The Parties understand that all rights granted to them under California Civil
Code Section 1542, or any analogous state or federal law or regulation, are
hereby expressly waived. California Civil Code Section 1542 provides:
"A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH A CREDITOR
DOES NOT KNOW OR SUSPECT TO EXIST IN HIS FAVOR AT THE TIME OF
EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM MUST HAVE
MATERIALLY AFFECTED HIS SETTLEMENT WITH THE DEBTOR."
The Parties, for themselves, their affiliates and its assigns, expressly,
knowingly and voluntarily waive and relinquish all rights and benefits afforded
by Section 1542 and, in doing so, understand and acknowledge the significance
and consequences of the waiver.
7. This Agreement, consisting of three (3) pages and a two (2) page attachment,
constitutes the entire understanding between the Parties hereto, and shall in
all respects be interpreted, enforced and governed by the laws of the State of
California. The Parties further agree and acknowledge that should any portion of
this Agreement be deemed unenforceable by a court of competent jurisdiction, the
unenforceable provision shall be deemed severable from the rest of this
Agreement and shall not affect the validity or enforceability of the remainder
of this Agreement.
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8. The Parties acknowledge that the consideration referred to herein shall not
be construed as an admission or concession of liability, wrongdoing, or any
fact.
9. The Parties represent that in entering into this Agreement they have not
relied upon any statement, representation or promise of any other Party, other
than the provisions set forth in this Agreement.
10. This Agreement may be executed in two or more counterparts, each of which
shall be deemed an original, but all of which together shall constitute one and
the same instrument.
11. The Parties acknowledge that they are entering into this Agreement freely
and voluntarily, with a full understanding of its terms.
IN WITNESS WHEROF, the Parties hereto have duly executed this Settlement
Agreement and Release of Claims as of the date written above.
ACTIVE LINK COMMUNICATIONS, INC. f/k/a
COMMUNICATIONS WORLD INTERNATIONAL, INC.
By: /s/ Xxxxx X. Xxxxx
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Title: V.P. - Chief Financial Officer
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TOSHIBA AMERICA INFORMATION SYSTEMS, INC.
By: /s/
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Xxx Xxxxx
Title: Vice President, Treasurer
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Attachment "A"
PROMISSORY NOTE
Principal Amount: $807,536.07 Date: July 30, 2001
FOR VALUE RECEIVED, Active Link Communications, Inc., a Colorado Corporation,
f/k/a Communications World International, Inc., 0000 Xxxxx Xxxxxx Xxxxxxx #0000,
Xxxxxxxxx, Xxxxxxxx 00000 ("Active Link") promises to pay to Toshiba America
Information Systems, Inc., a California Corporation, at 0000 Xxxxxx Xxxxxxxxx,
Xxxxxx, Xxxxxxxxxx 00000 ("TAIS"), or designee which may be named in writing
from time to time, the principal sum of Eight Hundred Seven Thousand Five
Hundred Thirty-Six Dollars and Seven Cents ($807,536.07), as set forth herein
below.
Active Link agrees and acknowledges that the aforementioned amount shall be due
in 43 payments to be made on the 15th day of each month, commencing on August
15, 2001. The first twelve (12) monthly payments shall be in the sum of
$20,000.00. Active Link's payments for month thirteen (13) through and including
month forty-three (43) shall be in the sum of $20,000.00, plus interest at a
rate of 6.75% per year on the applicable portion of the unpaid balance of this
Note.
Active Link shall pay TAIS twenty-five percent (25%) of the Net Proceeds from
any and all sales of business units sold by Active Link on or after August 1,
2001 ("Acceleration Payment"). For purposes of this Note, Net Proceeds shall be
defined as gross proceeds (including cash, promissory notes, marketable
securities and other compensation) from the sale of Active Link's business
units, less any required payment as provided for in the sales agreement
(provided that any such required payment shall not include any payment
whatsoever to any Active Link affiliate or director, or the director of any such
affiliate), less regularly scheduled payment to Active Link's secured lender
Spectrum Commercial Services, and less reasonable and customary third party
expenses directly resulting from the sale from any business unit sold. All
Acceleration Payments are due ten (10) days after Active Link receives the cash
proceeds from the proceeds of the business unit sold, unless TAIS agrees in
writing otherwise. If Active Link receives any portion of the proceeds in
partial payments as a result of a promissory note or other payment arrangement
with the buyer, Active Link shall pay TAIS its Acceleration Payment, on the net
proceeds of such partial payment, within ten (10) days of receipt of each such
partial payment.
All payments shall be made in lawful money of the United States, without offset,
deduction or counterclaim of any kind. Time is of the essence for every
obligation under this Note.
Active Link may prepay this Note in whole or part without penalty. In the event
Active Link fails to make any payment hereunder when due, the entire balance
shall be immediately due and payable upon demand by TAIS.
All sums remaining unpaid under this Note shall become immediately due and
payable, at TAIS's option: (1) on the occurrence of any of items listed in (a),
(b) and (c) below without notice, demand or presentment, and regardless of any
prior forbearance; and (2) on the occurrence of any of items (d), (e) or (f)
below upon default by Active Link, provided that Active Link fails to cure such
default within seven (7) calendar days of default:
(a) The filing of a petition in bankruptcy by, or the initiation of any
proceeding under any bankruptcy or insolvency laws against, Active
Link;
(b) Active Link's making of a general assignment for the benefit of
creditors, or applying for or consenting to appointment of a receiver
or trustee;
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(c) Any change in Active Link's control or principal ownership without
giving TAIS prior written notice thereof, or the sale of 25% of the net
book value of Active Link's assets;
(d) Active Link's failure to make any payment when due under the terms
of this Note;
(e) Active Link's default under any instrument executed in connection
with this Note, or any other agreement made with Active Link,
including, but not limited to the credit terms of Active Link's open
trade account with TAIS, as established by TAIS in writing from time to
time in TAIS's sole discretion; or
(f) Active Link's default under any other promissory note executed by
Active Link in favor of TAIS.
Except as specifically set forth above, diligence, demand, presentment, notice
of dishonor and protest are hereby waived by Active Link and all of its
sureties, guarantors, and endorsers of this Note. Active Link further agrees to
remain bound to the terms and conditions of this Note, notwithstanding any
extensions, waivers, or other indulgences by TAIS, at its sole and absolute
discretion. No waiver of a breach, failure of any condition, or any right or
remedy contained in or granted by the provisions of this Agreement shall be
effective unless it is in writing and signed by the party waiving the breach,
failure, right or remedy. No waiver of any breach, failure, right or remedy
shall be deemed a waiver of any other breach, failure, right or remedy, whether
or not similar, nor shall any waiver constitute a continuing waiver unless the
writing so specifies.
The terms of this Promissory Note shall be interpreted and governed in
accordance with the laws of the State of California, excluding therefrom its
conflict of laws provisions. Active Link hereby submits to the jurisdiction of
any competent court in the State of California for adjudication of any dispute
between TAIS and Active Link.
IN WITNESS WHEREOF, the undersigned have executed this Promissory Note as of the
date first written above.
ACTIVE LINK COMMUNICATIONS, INC. f/k/a
COMMUNICATIONS WORLD INTERNATIONAL, INC.
By:
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Title:
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SIGNATURE WITNESSED BY:
STATE OF COLORADO )
) ss:
COUNTY OF: )
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Notary Public
Date commission expires:
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ATTACHMENT "B"
FRANCHISEE SETTLEMENT - In 1993, as the result of a dispute between the Company
and a Franchisee, the Company agreed to purchase back the Franchisee's inventory
and to pay the Franchisee a 7.5% royalty on the sales of the Irvine and South
Bay franchises as long as those franchises existed in any form. The Company has
made payments on Toshiba product sales.
Toshiba product sales were suspended to the Irvine franchise by the Company in
November 1998 due to xxxx marketing activities on the part of Franchisee, at
which point payments under the settlement agreement were suspended. The South
Bay franchise is still in existence with minimal purchase levels. The South Bay
franchise is charged 0% royalty at the time of purchase, with the arrangement
that Xx. Xxxxxx will forward sales reports and a check for the royalty to CWII.
CWII then forwards a check of equal amount to Xx. Xxxx.
The last payment and report received from Xx. Xxxxxx was in March, 2000.
Attempts via telephone were made for approximately 6 months to obtain sales
reporting and payment from Xx. Xxxxxx to no avail. No communication has been
received from Xx. Xxxx regarding payments due after March, 2000. The Amendment
states that Xx. Xxxx must notify CWII in writing of a delinquent payment; no
such notice has been received.
