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Exhibit 10.9
EXCLUDING REPRESENTATION
CONCERNING FINANCIAL RESOURCES
AGREEMENT AND RELEASE
THIS AGREEMENT AND RELEASE ("Agreement") is made and entered into on
January 19, 2001 by and between Elektryon, a Nevada corporation with its
principal place of business in Las Vegas, Nevada, and Xxxxx X. Xxxxxxx
("Xxxxxxx"), an individual, residing in Las Vegas, Nevada.
RECITALS
Xxxxx X. Xxxxxxx, along with Xxxx Xxxxxxxxx, and Xxxx Xxxxxxx, founded
Engine Corporation of America on March 1, 1994.
On February 12, 1996, the name of Engine Corporation of America was
changed to Engine World, Inc.
On May 24, 2000, the name of Engine World, Inc. was changed to Elektryon
(Engine Corporation of America, Engine World, Inc. and Elektryon, Inc. are
hereinafter referred to individually and collectively as the "Company.")
Xxxxxxx was elected a director, Treasurer and Secretary of the Company on
March 12, 1994, and served as Director, Treasurer, and Secretary of the Company
until December 17, 1999.
On January 8, 1997, the Company resolved to issue to Xxxxxxx options to
purchase 300,000 shares of the Company's common stock ("common stock") at a
price of $1.00 per share.
Xxxxxxx acquired from time to time, by purchase or otherwise, an
aggregated of shares of common stock from the Company and Xxxxxxx has
represented to the Company that he currently owns beneficially approximately
1,000,000 (one million) shares of common stock, all of which are held in the
Voting Trust (defined below).
On February 20, 1999, pursuant to a Compensation/Consulting Agreement
dated that date between the Company and Xxxxxxx, the Company engaged Xxxxxxx as
a consultant to the Board of Directors of the Company to render services and
advice. Xxxxxxx held his position as consultant from February 20, 1999 until
September 10, 2000 when, pursuant to the Termination Agreement dated that date
between the Company and Xxxxxxx, Xxxxxxx'x relationship as a consultant to the
Company was severed.
Xxxxxxx resigned as Treasurer, Secretary, and a Director of the Company on
December 17, 1999. On that same date, pursuant to an Advisory Agreement dated
that date between the Company and Xxxxxxx, the Company engaged Xxxxxxx as an
advisor to assist in ensuring a smooth transition to a new Chief Financial
Officer of the Company. Xxxxxxx held the position as advisor from December 17,
1999 until September 10, 2000 when, pursuant to the Termination Agreement, his
relationship as an advisor to the company was severed.
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Xxxxxxx placed all of the shares of common stock beneficially owned by him
in a voting trust dated November 11, 2000 (the "Voting Trust") pursuant to a
Voting Agreement dated that date between the Company and Xxxxxxx.
Between January 10, 2000 and August 20, 2000, Xxxxxxx sold no more than
233,000 shares of his founders common stock for no more than $20.00 per share,
(the "Sale Transactions").
Xxxxxxx estimates to the Company that approximately $3.9 million
constitutes the total proceeds to Xxxxxxx, his spouse and any person or entity
controlled by either of them or in which either of them has a financial
interest, arising from the sale or transfer of their common stock by any of
them.
Disputes have arisen between the Company's Board of Directors and Xxxxxxx
regarding Xxxxxxx'x activities with respect to the Company.
Both parties wish to resolve such disputes without the time and expense of
litigation.
NOW THEREFORE, in consideration of the mutual covenants and in reliance
on the representations contained herein, and for other good and valuable
consideration, the sufficiency of which is hereby acknowledged, the parties
agree as follows:
1. COVENANTS NOT TO XXX. The Company covenants not to xxx Xxxxxxx
regarding the Sale or transfer of any of his founders stock or for any incident
arising directly or indirectly from Wheelers performance of services to the
Company. This covenant not to xxx becomes effective only upon the completion and
fulfillment of Xxxxxxx'x obligations under paragraph 2 of this Agreement and
continues in effect only if Xxxxxxx'x representations contained in this
agreement are true, correct, and complete and Xxxxxxx complies with his
covenants and agreements set forth in this Agreement. As of the date of this
Agreement, the independent members of the Company's Board of Directors are
unaware of any other claims the Company may have against Xxxxxxx.
2. XXXXXXX'X OBLIGATIONS. In consideration for the foregoing covenant not
to xxx, Xxxxxxx agrees to undertake and complete the following not later than
January 30, 2001:
a. To Purchase 75,000 shares of common stock at a purchase price of
$20.00 per share in cash or immediately available funds and to
place all of such shares into the Voting Trust;
b. To contribute 550,000 shares of common stock from the Voting Trust
to the Company's treasury, at no cost to the Company;
c. To agree and acknowledge that all options to purchase shares of
common stock in which Xxxxxxx or his spouse holds any beneficial
interest, including without limitation the option to purchase
300,000 shares of common stock referred to in the Recitals, shall
be deemed null and void ab initio;
d. To sever any and all relationships with the Company in any
capacity, except in his capacity as the beneficial owner of the
common stock held in the Voting
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Trust, and to terminate any agreements or understandings of any
kind between Xxxxxxx or any affiliate of Xxxxxxx, on one hand, and
the Company on the other, without any payment by or obligation of
the Company;
e. The parties agree that Xxxxxxx shall be the owner of all furniture,
fixtures, and equipment now title him to or in the procession of
Xxxxx X. Xxxxxxx at his offices at 0000 X. Xxxxxxx, Xxxxx 000, Xxx
Xxxxx, XX 00000, in consideration of his prior transfers to the
company of all computer, furniture, fixtures previously owned by
him and currently in the procession of the company. Xxxxxxx agrees
to return any company books and records in his possession or under
his control.
3. COMMUNICATION RESTRICTION. In further consideration for the foregoing
covenant not to xxx, Xxxxxxx agrees not to communicate with any
director, officer or employee of the Company regarding any matters
regarding the Company other than is necessary to carry out the terms of
this Agreement and other than as specifically requested in a writing
authorized by action of the independent members of the Company's Board
of Directors.
4. EXTENSION OF VOTING AGREEMENT. In further consideration for the
foregoing covenant not to xxx, Xxxxxxx is executing, simultaneously
with the execution of the Agreement, an extension of the Voting
Agreement dated November 11, 2000 in the form annexed hereto as
Exhibit B.
5. RELEASE OF THE COMPANY
a. In Consideration of this Agreement and the other good and valuable
consideration provided to Xxxxxxx pursuant hereto, Xxxxxxx hereby
irrevocably and unconditionally releases, and forever discharges,
the Company, its affiliated companies, and their respective current
and former stockholders, officers, directors, employees, agents,
advisors, benefit funds and administrators (the "Releases"), from
any and all actions, causes of action, claims, demands, damages,
rights, remedies and liabilities of whatsoever kind or character,
in law or equity, whether known or unknown, suspected or
unsuspected, past or present, that he has ever had, may now have,
or may later have against any of the Releases, whether or not
arising out of or related to Xxxxxxx'x assignment of intellectual
property to the Company, employment and those services, or his
position as a shareholder of the Company (hereinafter referred to
as "Xxxxxxx'x Claims"), from the beginning of time to the date
hereafter.
b. To the fullest extent permitted by law, Xxxxxxx agrees not to lodge
any complaint in court, or with any federal, state or local agency
or any other forum, including without limitation arbitration, in
any jurisdiction, arising out of or related to Xxxxxxx'x Claims or
Xxxxxxx'x employment by or performance of services to or on behalf
of the Company, or any if the other Releases or the termination of
that employment or other services. Xxxxxxx hereby represents and
warrants that he has brought no complaint, claim, charge or
proceeding against any of the Releases in any jurisdiction or
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forum, nor assisted or encouraged any other person or persons in doing
so. Xxxxxxx further represents and warrants that he has not in the
past and will not in the future assign any of Xxxxxxx'x Claims to any
person, corporation or other entity.
c. Execution of this Agreement by Xxxxxxx operates as a complete bar and
defense against any and all of Xxxxxxx'x Claims in any charge,
compliant, action, claim or proceeding against the Company or any of
the other Releasee, this Agreement may be raised as and shall
constitute a complete bar to any such action, claim or proceeding and
the Company, and/or the other Releasees, shall be entitled to and
shall recover from Xxxxxxx all costs incurred, including without
limitations attorneys' fees, expenses and costs, in defending against
any such action, claim or proceeding.
6. Future Cooperation by Xxxxxxx. Xxxxxxx further covenants and agrees that
he will make himself available to cooperate with the Company and each
Releasee in the event that any action, claim or proceeding is brought
against the Company or any other Releasees as a result of any action or
non-action by Xxxxxxx or in which Xxxxxxx'x conduct is at issue. The
company agrees to hold Xxxxxxx harmless for any cooperation and agrees to
pay Xxxxxxx for all expense related to such action.
7. Confidentiality. The parties and their respective agents and employees
shall keep this Agreement, and the circumstances giving rise to it,
strictly confidential unless disclosure is required by law. Xxxxxxx
acknowledges that the Company may be obligated to make such disclosure
pursuant to securities laws applicable to it.
8. Non-Disparagement. Neither party shall disparage the other.
9. Notice. Any notice or other communication under this Agreement shall be in
writing and shall be considered given five days after it is mailed by
registered or certified mail, return receipt requested or in the next
business day after it is given to a reputable overnight courier or service
(such as Federal Express) for delivery to the parties at the addresses set
forth below (or any other address as a party may specify by notice to the
other, provided, that any such notice shall be effective only upon
receipt).
As to the company: Xxxxxx X. Xxxxxxxxxxx
Elektryon, Inc.
0000 Xxxxxxx Xxxxxx, Xxxxx 000
Xxx Xxxxx, Xxxxxx 00000
With a copy to:
Xxxx, Scholer, Fierman, Xxxx & Handler, LLP
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx X. Xxxxxxxx, Esq.
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As to Xxxxxxx: Xxxxx X. Xxxxxxx
XX Xxx 00000
Xxx Xxxxx, Xxxxxx, 00000
10. NON-DISCLOSURE OF PROPRIETARY INFORMATION. Xxxxxxx shall not at any time
use for any purpose or disclose to any person any trade secrets or other
confidential or proprietary information of the Company. The parties agree
that nothing contained herein shall prevent Xxxxxxx from disclosing: (1)
information required to be disclosed pursuant to compulsory legal process,
provided that Xxxxxxx shall have first given the Company timely notice of
such process and an opportunity to contest such disclosure or to take
appropriate action to minimize the required disclosure; (2) information
which was in Xxxxxxx'x lawful possession, without breach of any person's
obligations to the Company, at the time of or prior to Xxxxxxx obtaining
such information from the Company; or (3) Information which is already in
the public domain, without breach of any person's obligations to the
Company.
11. NO ADMISSIONS. Neither this Agreement nor the performance of this
Agreement is intended to be, and should not be construed as, an admission
of liability by either party to the other party. Neither party shall offer
this Agreement as evidence of liability of the other party in any
litigation, action or proceeding, except in an action seeking to enforce
the terms of this Agreement or to recover for an alleged breach of the
Agreement.
12. REPRESENTATION BY COUNSEL. This Agreement was drafted by the Company and
its counsel solely as a matter of convenience to the parties, and shall
not be construed for or against either party for that reason. The parties
acknowledge that they each have been afforded ample opportunity to review
and evaluate this Agreement prior to subscribing hereto and that they have
been represented and assisted by counsel chosen by them for that purpose.
The parties acknowledge and agree that they enter into this Agreement
freely and voluntarily, without or coercion of any kind, and as an
informed and well-reasoned exercise of their respective business
judgments.
13. REMEDIES AND ENFORCEMENT. Without limitation as to other available
remedies, any party hereto may compel specific performance of this
Agreement. In any action to enforce any promise, covenant, term, or
provision of this Agreement, the prevailing party shall be entitled to
recover its reasonable attorneys' fees, expenses, and costs incurred
therein.
14. FURTHER COOPERATION TO EFFECTUATE THIS AGREEMENT. The parties to this
Agreement covenant and agree that, without expanding their substantive
obligations hereunder, they shall do all acts and execute and obtain all
documents, to the full extent necessary or appropriate, to implement and
enforce this Agreement according to its terms.
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15. BINDING EFFECT. This agreement shall be binding upon the inure to the
benefit of the parties hereto and their respective heirs, representatives,
successors and assigns.
16. COUNTERPARTS. This Agreement may be executed in separate counterparts, each
of which shall be considered and treated as a complete and original
document.
17. CORPORATE POWER/AUTHORIZATION. Each party to this Agreement represents to
the other that:
-- Such party has all requisite power and authority, and the
legal right, to make, deliver and perform his or its
respective obligations under this Agreement,
-- Such party has taken all necessary action and obtained any
requisite consents to authorize execution and delivery of
this Agreement and the performance of his or its respective
obligations under this Agreement,
-- This Agreement has been duly executed and delivered on
behalf of such party,
-- Any statement of fact in this Agreement relating to such
party constitutes a representation by that party to the
other that such fact is true, correct and complete, and
-- This agreement constitutes the legal, valid, and binding
obligations of the party, enforceable against him or it in
accordance with its terms.
18. GOVERNING LAW. The validity of this Agreement, its interpretation and any
disputes arising from, or relating in any way to, this Agreement or the
relationship of the parties, shall be governed by the law of the State of
Nevada without regard to its conflicts of law principles.
19. ENTIRE AGREEMENT. The Agreement constitutes the entire agreement concerning
the subject matter hereof between the parties and supersedes any previous
agreement, memoranda of understanding, negotiations, or representations
with respect to its subject matter made prior to the date of this
Agreement. This Agreement may be modified or amended only by written
agreement executed by Xxxxxxx and the Company.
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly executed
as of the day and year first written above.
ELEKTRYON
By: /s/ M.E. Xxxxxxxx 1/22/01
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Title: PRESIDENT
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/s/ Xxxxx X. Xxxxxxx 1/22/01
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Xxxxx X. Xxxxxxx
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