SETTLEMENT AGREEMENT
Exhibit 10.2
THIS SETTLEMENT AGREEMENT (the “Settlement Agreement”)
is made as of May 22, 2008 (the “Settlement Date”), by and
between COMMERCE PLANET, INC., a Utah corporation, with
its principal executive offices at 00 Xxxxx Xx Xxxxxx Xxxx, Xxxxx 0,
Xxxxxx, Xxxxxxxxxx 00000 (the “Company”), XXXXXXX
XXXXXXXXX, a California resident and OLIVE TREE HOLDINGS, LLC,
a California limited liability company with an address at 00 Xxxxxxxxxx
Xx., Xxxxxx Xxxxx, Xxxxxxxxxx 00000 (hereinafter, “Xxxxxxxxx”).
The Company and Xxxxxxxxx may hereinafter be referred to singularly as a
“party,” and collectively as the “parties.”
PREAMBLES:
WHEREAS, over the duration of Xxxxxxxxx’x employment and position
as a Board Member, the Company and Xxxxxxxxx entered into Agreements
(the “Stock Award Agreements”) pursuant to which the
Company agreed to issue to Xxxxxxxxx for consideration, thirteen shares
of the Company’s Series D convertible preferred stock (the "Series
D Preferred") and cash payments as bonus compensation based upon the
Company’s achievement of certain monthly gross sales revenues in fiscal
2006 and 2007, for past services and to incentivize future performance
and for service on the Company’s Board of Directors; and
WHEREAS, Xxxxxxxxx and the Company agree that the Company’s
initial attempt to issue the Series D Preferred pursuant to the Stock
Award Agreements was legally defective because certain preconditions to
issuance of such stock were not satisfied by the Company; and
WHEREAS, the Company and Xxxxxxxxx agree that the best option to
resolve the defects in the earlier attempted Series D Preferred
issuance, to resolve compensation issues relating to the Stock Award
Agreements (including satisfying the Company’s obligation to issue Form
1099’s to the Executive for stock when properly issued) and to comply
with relevant income tax laws and regulations is for the Company and
Xxxxxxxxx to rescind ab initio the Stock Award Agreements
as of the Settlement Date by reason of the Company’s failure to obtain
stockholder approval for the Stock Award Agreements and the stock award
to Xxxxxxxxx thereunder; and
WHEREAS, the parties are desirous of settling and releasing any
claim, liability or obligation that any party has or may have against
the other or owe to the other in connection with the Stock Award
Agreements, the Series D Preferred stock award, cash performance bonuses
and all other compensation matters or otherwise.
NOW, THEREFORE, for good and valuable consideration, the receipt
and sufficiency of which is hereby acknowledged, the parties hereto
hereby agree as follows:
1. Rescission of the Stock Award Agreements. On the
Settlement Date, the Company and Xxxxxxxxx agree to rescind ab
initio the Stock Award Agreements and the stock award of all the
Series D Preferred to Xxxxxxxxx thereunder by reason of the Company’s
failure to obtain stockholder approval for the Stock Award Agreements
and the stock award of all the Series D Preferred to Xxxxxxxxx.
2. Issuance of Shares. Within ten (10) days from
the Settlement Date, Company shall issue 1,800,000 restricted shares of
the Company’s common stock (the “Shares”) to Olive
Tree Holdings, LLC. Olive Tree Holdings, LLC shall be deemed the owner
of such Shares as of the Settlement Date. The Company shall issue a Form
1099 to Olive Tree Holdings LLC that reflects a value per share on the
Settlement Date equal to one-half (50%) of the publicly traded Company
common stock price on the Settlement Date, in recognition of the trading
restrictions imposed by law upon the shares so issued.
3. Resignation as a Director. Effective as of the
Settlement Date, Xxxxxxxxx shall resign as a member of the Board of
Directors of the Company.
4. Representations and Warranties of Xxxxxxxxx; Covenants.
(a) Receipt of Shares. Xxxxxxxxx represents and warrants that
Xxxxxxxxx: (i) is an accredited investor under federal securities laws;
(ii) is acquiring the Shares solely for Xxxxxxxxx’x own account and
beneficial interest, for investment and not for sale or with a view to
distribution of the Shares or any part thereof; (iii) has no present
intention of selling (in connection with a distribution or otherwise) or
granting any participation in or otherwise distributing the Shares; and
(iv) is not aware of any presently existing facts which would cause a
change in such intention. Xxxxxxxxx also represents that any permitted
transfer of the Shares by Xxxxxxxxx will be made in compliance with
applicable law and only in accordance with this Settlement Agreement.
(b) No Reliance. Xxxxxxxxx represents and warrants that Xxxxxxxxx
is fully familiar with the Company’s business and financial condition,
and is acquiring the Shares solely in reliance on Xxxxxxxxx'x own
judgment as to the business, financial condition and prospects of the
Company and not in reliance on any representations and warranties of the
Company with respect thereto.
(c) Restricted Securities; Limitations on Disposition. Xxxxxxxxx
understands and agrees that the Shares are characterized as “Restricted
Securities” under the federal securities laws in as much as they are
being acquired from the Company in a transaction not involving a public
offering, and that under such laws and applicable regulations such
securities may be resold without registration under federal securities
laws only in certain limited sets of circumstances.
(d) Transfers. Xxxxxxxxx shall not, without the prior written
consent of the Company, voluntarily or involuntarily, publicly sell,
assign, transfer, give, bequeath, devise, donate or otherwise dispose
of, or pledge, deposit or otherwise encumber, in any manner, any of the
Shares (a “Transfer”) for a period of twelve (12) months
after the date of issuance of the Shares. The Company shall not cause or
permit the Transfer of the Shares to be made on its books except to the
extent expressly permitted by this 3(d).
(e) Dilution. Xxxxxxxxx understands and agrees that he shall have
no anti-dilution rights or preemptive rights of any kind with respect to
the Shares and therefore the Shares and his ownership interest in the
Company shall be subject to dilution.
5. Warranties and Representations of the Company; Covenants.
(a) Organization and Good Standing. The Company is a corporation
duly organized, validly existing and in good standing under the laws of
the State of Utah, and has all requisite corporate power and authority
to own and operate its assets and properties and to carry on its current
or contemplated business.
(b) Power and Authority. All corporate action on the part of the
Company, and its officers, directors and stockholders, necessary for the
authorization, execution and delivery of this Settlement Agreement, the
performance of all obligations of the Company hereunder, have been taken
or will be taken, as required.
(c) Governmental Consents. To the Company’s knowledge, no
consent, approval, order or authorization of, or registration,
qualification, designation, declaration or filing with, any federal,
regional, state or local governmental authority on the part of the
Company is required in connection with the transactions contemplated
hereunder.
(d) Dilution. The Company represents and warrants that Xxxxxxxxx
shall have the same rights and privileges under the Company’s
Certificate of Incorporation as the other holders of the Company’s
common stock, and no shareholders of the Company have been granted
preemptive rights under the Company’s Certificate of Incorporation.
(e) Valid Issuance of Shares. The Shares, when issued and
delivered in accordance with the terms hereof, will be duly and validly
issued, fully paid and non-assessable, and free of any liens or
encumbrances.
6. Further Assurances. The parties hereby agree to
execute and to deliver such additional documents, agreements and
instruments, and take or cause to be taken such additional action as
another party may request in order to more fully give effect to the
settlement reflected in this Settlement Agreement.
7. Release by Xxxxxxxxx. A separate release
entitled Attachment A has been executed by Xxxxxxxxx, attached hereto
and incorporated by reference.
8. Release by Company. A separate release entitled
Attachment B has been executed by the Company, attached hereto and
incorporated by reference.
9. Confidentiality.
(a) The parties warrant that the terms and conditions of this Settlement
Agreement (the “Confidential Information”) shall remain
confidential and shall not be disclosed to any entity or person unless
disclosure is: (i) ordered by a court of competent jurisdiction; (ii)
reasonably necessary for the conduct of the business of the Company;
(iii) required by federal or state securities laws; (iv) reasonably
necessary for compliance with federal or state income tax laws or
requests from taxing authorities for documentation relevant thereto; or
(v) necessary for the enforcement of the Settlement Agreement, in which
case the Settlement Agreement shall be filed with the court and/or
judicial body under seal.
(b) The Parties agree that their obligations under Section 9(a) hereof
are necessary and reasonable in order to protect the Parties, and
expressly agree that due to the unique nature of the Confidential
Information, monetary damages would be inadequate to compensate the
Parties for any breach of any covenants and agreements set forth herein.
Accordingly, the Parties agree and acknowledge that any such violation
or threatened violation will cause irreparable injury to the Parties and
that, in addition to any other remedies that may be available, in law,
in equity or otherwise, the Parties shall be entitled (i) to obtain
injunctive relief against the threatened breach of this Settlement
Agreement or the continuation of any such breach, without the necessity
of proving actual damages and, (ii) to be indemnified by the violating
Party from any loss or harm, including but not limited to attorney’s
fees, arising out of or in connection with any breach or enforcement of
the Parties’ obligations under Section 9(a) hereof.
10. Miscellaneous.
(a) Entire Agreement. All agreements, covenants, representations
and warranties, express or implied, oral or written, of the parties
hereto concerning the subject matter hereof are contained herein and
includes the attached releases by executed by both Parties. No other
agreements, covenants, representations or warranties, express or
implied, oral or written, have been made by any party hereto to any
other party concerning the subject matter hereof. All prior and
contemporaneous conversations, negotiations, possible and alleged
agreements, representations, covenants and warranties concerning the
subject matter hereof are merged herein.
(b) Negotiations between the Parties. The parties acknowledge
that each party has reviewed this Settlement Agreement, that this
Settlement Agreement has been voluntarily negotiated at arms length, and
that each party has had an opportunity to consult with legal counsel.
There shall be no presumption that any ambiguities in this Settlement
Agreement shall be resolved against any party. Any controversy regarding
the construction or interpretation of this Settlement Agreement shall be
decided neutrally, in light of its conciliatory purposes, and without
regard to events of authorship.
(c) Amendments and Waivers. This Settlement Agreement may not be
modified or amended except by an instrument or instruments in writing
signed by the party against whom enforcement of any such modification or
amendment is sought. Any party may, by an instrument in writing, waive
performance or compliance by any other party with respect to any term or
provision of this Settlement Agreement on the part of such other party
to be performed or complied with. The waiver by any party of a breach of
any term or provision of this Settlement Agreement shall not be
construed as a waiver of any subsequent breach.
(d) Notices. Any notice or other communication required or
permitted hereunder shall be in writing and delivered, or mailed by
registered or certified mail, return receipt requested, postage prepaid,
to the addresses first set forth above, or to such other address or
addresses as may hereafter be furnished by one party to the other party
in compliance with the terms hereof. Any party may, by like notice,
change the address to which notice should be given. All such notices and
communications shall be effective when delivered at the designated
addresses or five days after deposited in the mails in conformity with
the provisions hereof.
(e) Assignment. Neither this Settlement Agreement nor any right,
remedy, obligation or liability arising hereunder or by reason hereof
shall be assignable by either party without the prior written consent of
the other party.
(f) Binding Nature. This Settlement Agreement shall be binding
upon and shall inure to the benefit of the signatories and their
respective heirs, executors, administrators, trustees, beneficiaries,
predecessors, successors, affiliated and related entities, officers,
directors, principals, agents, employees, assigns, representatives, and
all persons, firms, associations, and/or corporations connected with
them, including, without limitation, their insurers, sureties and/or
attorneys.
(g) No Prejudicial Value. This Settlement Agreement is without
prejudice or value as precedent and shall not be used in any proceeding
or hearing to create, prove, or interpret the obligations under, or
terms and conditions of, any other agreement.
(h) Warranty Of Authorized Signatories. Each of the signatories
hereto warrants and represents that he is competent and authorized to
enter into this Settlement Agreement on behalf of the party for whom he
purports to sign.
(i) Section and Other Headings. The section and other headings
contained in this Settlement Agreement are for reference purposes only
and shall not be deemed to be a part of this Settlement Agreement or to
affect the meaning or interpretation of this Settlement Agreement.
(j) Execution in Counterparts. This Settlement Agreement may be
executed in counterparts, each of which shall be deemed to be an
original and all of which together shall be deemed to be one and the
same instrument.
(k) Governing Law. This Settlement Agreement shall be governed by
and construed in accordance with the laws of the State of California,
without giving effect to the conflicts of law provisions thereof.
(l) Consent to Jurisdiction. Each of the parties hereto: (i)
consents and submits to the jurisdiction of the Courts of the State of
California and of the Courts of the United States for a judicial
district within the territorial limits of the State of California for
all purposes of this Settlement Agreement, including, without
limitation, any action or proceeding instituted for the enforcement of
any right, remedy, obligation and liability arising under or by reason
of this Settlement Agreement; and (ii) consents and submits to the venue
of such action or proceeding in the City and County of Los Angeles (or
such judicial district of a Court of the United States as shall include
the same).
[SIGNATURE PAGE FOLLOWS THIS PAGE]
IN WITNESS WHEREOF, the parties have executed and delivered this
Settlement Agreement as of the date first above written.
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COMMERCE PLANET, INC. |
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By: |
/s/ Xxxx Xxxx |
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Name: |
Xxxx Xxxx |
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Its: |
Chief Executive Officer |
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/s/ Xxxxxxx Xxxxxxxxx |
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Xxxxxxx Xxxxxxxxx |
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