EXHIBIT 10.2
MUTUAL RELEASE AND SETTLEMENT AGREEMENT
The parties to this Mutual Release and Settlement Agreement ("Agreement")
are Xxxx Xxxxxxx ("Xxxxxxx"), Interactive Objects, Inc. ("IO"), Northwest
Capital Partners, LLC ("Northwest Capital"), Xxxxx Xxxxxxx ("Wollach"), Xxxx
Xxxxxxx ("Xxxxxxx") and Xxxxx Xxxxxx ("Xxxxxx") (Northwest Capital, Wollach,
Xxxxxxx and Xxxxxx are sometimes referred to as "the other parties to this
Agreement"). The intent of this Agreement is to resolve all disputes between
Xxxxxxx, on the one hand, and IO and the other parties to this Agreement, on the
other, pertaining in any way to (a) Xxxxxxx'x employment at IO; (b) Xxxxxxx'x
Executive Employment Agreement dated January 1, 1998, as amended July 1, 1998
(the "Employment Agreement"), (c) Xxxxxxx'x service as an officer and a director
of IO, (d) Xxxxxxx'x relations with IO and the other parties to this Agreement,
and such parties' relations with Xxxxxxx, and (e) any claims or rights Xxxxxxx
or the other parties to this Agreement may have individually, as shareholders,
as shareholders on behalf of IO, or as officers, directors, employees or agents
of IO, from the beginning of the involvement of each with IO (and any
predecessor(s) of IO) to the date of Xxxxxxx'x resignation from his positions in
management of IO on or about October 12, 1998.
RECITATIONS
WHEREAS Xxxxxxx is a founder of IO (or its predecessor(s)), who served as
an officer and a member of IO's Board of Directors from its inception to October
12, 1998; and
WHEREAS Xxxxxxx owns 1,200,000 shares of common stock of IO, as well as
options to purchase an additional 50,000 shares as reflected more particularly
in the Minutes of Board meetings and financial statements of IO; and
WHEREAS Xxxxxxx and IO entered into the Employment Agreement on or about
January 1, 1998, as amended July 1, 1998; and
WHEREAS Xxxxxxx resigned from his positions as an officer and director of
IO on or about October 12, 1998, such resignations having been accepted by IO on
the same date; and
WHEREAS the other parties to this Agreement are or have been involved from
time to time in the management of IO as officers and directors or are otherwise
involved as investors or substantial shareholders; and
WHEREAS disputes have arisen between Xxxxxxx, on the one hand, and IO and
the other parties to this Agreement, on the other, regarding matters of
compensation, management and direction; and
WHEREAS Xxxxxxx, on the one hand, and IO and the other parties to this
Agreement, on the other, wish to resolve their differences and settle their
disputes upon the terms and conditions hereafter set forth,
AGREEMENT
NOW, THEREFORE, in consideration of the mutual covenants and agreements set
forth herein, the sufficiency of which is hereby acknowledged, the parties
hereto agree as follows:
1. OPTIONS TO PURCHASE STOCK. Xxxxxxx, with respect to his 1,200,000
shares of IO, will provide IO and/or its assignee options for the purchase of up
to 75% of such shares, and any shares related and/or arising therefrom by stock
split or stock dividend or otherwise, (900,000) in the manner and at the times
set forth on the schedule attached hereto. The first option, the exercise of
which is irrevocably committed, is for 400,000 shares at $.50 per share for a
total option payment of $200,000. Subsequent options will be for 100,000 shares
each at $.50 per share and shall be exercised by the payment of cash into
escrow, as prescribed hereafter, on or before the exercise dates set forth in
the attached schedule. IO and/or its assignee may exercise/purchase all or a
portion of the shares covered by each subsequent option. In the event any such
subsequent option is not exercised or not completely exercised by purchase of
all shares covered by this option on or before its appointed date, then the
option, to the extent shares remain that were not purchased, shall be deemed to
have expired, and the remaining
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shares represented by such option shall be immediately returned to Xxxxxxx. The
total value of the options is $450,000, including the initial committed option
payment of $200,000.
2. ESCROW. IO and Xxxxxxx agree to share the expense and will open an
agreed escrow into which will be deposited 900,000 shares of Xxxxxxx'x
shareholdings in IO and $200,000 cash representing the initial committed option
payment, such deposits to be made within seven (7) days from the date of
execution of this Agreement. The escrowee will be instructed to release 400,000
of Xxxxxxx'x shares as directed by IO, but no later than twenty (20) days from
the date of execution of this Agreement and simultaneously with the release of
such shares, the escrowee shall release $200,000 to Xxxxxxx. In the event no
direction is received from IO, within such twenty (20) days, the escrowee shall
nonetheless release $200,000 to Xxxxxxx and shall then retain the shares
represented by such payment pending receipt of direction from IO. Any interest
earned on escrowed funds shall be for the account of IO. Xxxxxxx shall
cooperate with IO in assuring that escrowed shares can be released by the
escrowee in appropriate numbers represented by appropriate certificates on
timely payment of the option amounts. Xxxxxxx agrees to execute any and all
documentation necessary directed to either the escrowee and/or the transferring
agent to effectuate transfers contemplated hereunder. Such documentation will
include but not be limited to any necessary medallion guarantees. In the event
that any subsequent option (after the initial committed option or portion
thereof) is not timely exercised and expires, then the remaining unpurchased
shares represented by that option shall be immediately returned to Xxxxxxx, with
shares represented by any unexpired options to remain in escrow pending either
timely exercise or return to Xxxxxxx as the case may be.
3. EXPIRED OPTIONS. Excepting the initial option, execution of which is
irrevocably committed, if any subsequent option is not timely exercised in the
manner described above, and the shares represented by such option or a portion
thereof are returned to Xxxxxxx, any such returned shares shall be returned in
freely tradable form, subject only to applicable rules and regulations of the
SEC or other agency with jurisdiction, and subject further to Xxxxxxx'x
agreement that he will not, without the permission of IO, endeavor to sell any
such returned shares at a rate greater than 5,000 shares per day. IO shall
cooperate fully in assuring that any returned shares are freely tradable.
4. XXXXXXX'X OPTIONS. Xxxxxxx shall retain any and all options he may
have received to purchase shares of IO, based upon the rules and regulations of
the stock option plan of IO. It is the intent of the parties that Xxxxxxx'x
options shall not be affected by this Agreement. Nothing in this Agreement
shall be interpreted or construed as expanding or modifying Xxxxxxx'x option
rights.
5. XXXXXXX'X RETAINED SHARES. With respect to the 300,000 shares retained
by Xxxxxxx which are not a part of this Agreement, Xxxxxxx shall not sell those
shares, with the exceptions hereinafter set forth, until on or after the date of
expiration of the last option, i.e., October 15, 2000. Xxxxxxx also agrees that
in connection with any sale of such retained shares, he shall sell no more than
5,000 shares per day. However, in the event any option is not timely exercised
or not completely exercised, and expires, Xxxxxxx shall not only have the right
to sell any shares returned pursuant to such expired option, but also an
additional matching amount of 100,000 shares from the 300,000 shares Xxxxxxx has
retained, provided that the sale of all such shares shall be restricted to
Xxxxxxx'x agreed limitation of 5,000 shares per day. In addition, in the event
all options are executed before their expiration dates, then Xxxxxxx'x retained
shares shall be freed for sale immediately following the last date of execution,
subject only to the 5,000 share per day limitation. IO shall cooperate fully in
assuring that, subject to the above time and volume limitations, Xxxxxxx'x
retained shares are freely tradable, subject to the aforesaid limitation and to
applicable rules and regulations of the SEC or other agency with jurisdiction.
6. RIGHTS OF FIRST REFUSAL RELEASED. IO and Northwest Capital may have
certain rights of first refusal with respect to the shares owned by Xxxxxxx and
optioned pursuant to this Agreement. IO and Northwest Capital hereby relinquish
any and all such rights of first refusal.
7. VOTING RIGHTS DURING ESCROW. Xxxxxxx assigns to Xxxxx Xxxxxxx and/or
Xxxxx Xxxxxx and/or Xxxx Xxxxxxx the proxy to vote all of his escrowed shares.
Xxxxxxx, Xxxxxx and/or Xxxxxxx agree to vote said shares as directed by the
Board of Directors of IO. This proxy is coupled with an interest in said
shares. Notwithstanding the above this proxy shall not be exercised in favor of
any proposal which would treat Xxxxxxx, as a shareholder, less favorably than
would be treated any other director or officer of IO who is also a shareholder.
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8. ASSIGNABILITY. The options provided for herein shall be assignable by
the company, provided, however, that the shares represented by such options will
only be released on timely receipt of option payments, as specified herein, or
shall be promptly returned to Xxxxxxx on expiration of relevant option periods.
9. SURVIVAL OF CERTAIN RIGHTS AND OBLIGATIONS. Notwithstanding the mutual
releases set forth below, it is the parties' intent that certain provisions of
the Employment Agreement, as well as certain other rights and obligations, shall
survive this Agreement. These provisions of the Employment Agreement are [_] 11
(Indemnification) and [_] 12 (Invention, Confidentiality, Nonraiding and
Noncompetition Agreement). In addition to the survival of such provisions,
Xxxxxxx shall retain all other rights of indemnity and/or contribution as may be
provided for in corporate articles and bylaws or other corporate documents,
resolutions and minutes, as well as any and all rights of indemnity and/or
contribution allowed under applicable law. Xxxxxxx shall also retain,
unimpaired by this Agreement, his interest in and right to insurance coverage
under all applicable D&O insurance policies, consistent with the terms and
conditions of such D&O policies. Nothing in this Agreement shall be construed
as requiring the company to continue the coverage if the company is unable to do
so; provided however, that Xxxxxxx'x interest in and right to coverage shall be
no less favorable than that of any other director or officer of IO; and provided
further that Xxxxxxx shall receive timely advance notice of any decision
affecting his coverage and the opportunity to purchase tail coverage if
available.
10. MUTUAL RELEASES. The parties intend that their releases be mutual.
(a) XXXXXXX'X RELEASE. In consideration of the initial option
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payment, and the mutual promises set forth in this Agreement, and upon receipt
by Xxxxxxx of such initial option payment Xxxxxxx unconditionally and
irrevocably releases and discharges IO and the other parties to this Agreement,
their respective marital communities, affiliates, former affiliates,
predecessors, successors, assigns and any person claiming an interest through or
under any of them (and the respective directors, officers, partners, employees,
agents and representatives of any of the foregoing) from
(i) any and all actions, claims, demands, causes of action,
arbitrations, disputes or controversies, whether based on contract, tort,
statute or otherwise, and
(ii) any direct or indirect liability (whether absolute, accrued
or unaccrued, contingent, liquidated or unliquidated, matured or
unmatured), indebtedness, obligation, expense or loss, known or unknown,
arising out of relating to or resulting from, directly or indirectly, (A) his
employment at IO and/or (B) the Employment Agreement and/or (C) such parties'
management of or relations with IO or with Xxxxxxx whether in their capacities
as officers, directors or shareholders from the date any such management or
relations commenced to the date of Xxxxxxx'x resignation as an officer and
director of IO on or about October 12, 1998. Except as set forth in this
Agreement,the release given hereunder is intended to be a general release. This
Agreement shall not affect or impair, however, the rights or obligations of the
parties under this Agreement, or Xxxxxxx'x rights as a shareholder of IO,
following October 12, 1998.
(b) IO AND THE OTHER PARTIES' RELEASE. In consideration of the
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options provided for herein, and the mutual promises set forth in this
Agreement, IO and the other parties to this Agreement unconditionally and
irrevocably release and discharge Xxxxxxx, his marital community, successors and
assigns, and any person claiming an interest through or under Xxxxxxx from
(i) any and all actions, claims, demands, causes of action,
arbitrations, disputes or controversies, whether based on contract, tort,
statute or otherwise, and
(ii) any direct or indirect liability (whether absolute, accrued
or unaccrued, contingent, liquidated or unliquidated, matured or
unmatured), indebtedness, obligation, expense or loss, known or unknown,
arising out of relating to or resulting from, directly or indirectly, (A)
Xxxxxxx'x employment at IO and/or (B) the Employment Agreement, and/or (C)
Xxxxxxx'x management of or relations with IO or the other parties to this
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Agreement whether in his capacity as officer, director or shareholder from the
date any such management or relations commenced to the date of Xxxxxxx'x
resignation as an officer and director of IO on or about October 12, 1998.
Except as set forth in this Agreement, the release given hereunder is intended
to be a general release. This Agreement shall not affect or impair, however, the
rights or obligations of the parties under this Agreement or Xxxxxxx'x rights as
a shareholder of IO, following October 12, 1998.
(c) All parties to this Agreement expressly understand and acknowledge
that unknown losses or claims may exist with respect to the releases
contemplated by this Section 10(a) and (b), that present claims or interests may
have been underestimated in amount or severity, and that they explicitly took
that into account in determining the amount of consideration to be received
hereunder, and that a portion of such consideration, having been bargained for
among the parties with the knowledge of the possibility of such unknown losses
or claims, was given in exchange for a full accord, satisfaction and discharge
of all such losses or claims.
(d) Neither Xxxxxxx, nor IO, nor the other parties to this Agreement
will bring, commence, institute or prosecute in the name of that person,
individually as shareholder, in a corporate capacity or in the name of the
corporation or any other person, any action, claim, demand, cause of action,
suit, arbitration, dispute or controversy based in whole or in part upon any
fact or event to be released herein, whether known or unknown. This Section
10(d) may be pleaded as a full and complete defense to, and may be used as a
basis for injunctive relief against any action, claim, demand, cause of action,
suit, arbitration, dispute or controversy which may be instituted, prosecuted or
attempted in breach of this Section 10(d). None of the parties hereto will
enter into any arrangement or understanding with any third party with respect to
the foregoing or any discussions designed to advise, assist or encourage any
third party in connection with the foregoing.
11. CONFIDENTIALITY. Except as provided, the terms and conditions of this
Agreement, and the disputes addressed herein, shall be and remain confidential
and shall not be disclosed to any third party except on a need-to-know basis,
i.e., attorneys, accountants, and the like, and except to the SEC or other
regulatory authorities as required by law. If anyone asks, the parties agree
that they will only state that any disputes between Xxxxxxx on the one hand and
IO and the other parties hereto on the other have been satisfactorily resolved.
Notwithstanding the foregoing, IO is authorized to disclose to former IO
principal Xxx Xxxxxxx and his attorney(s) the terms of this Agreement (including
a copy of this Agreement) providing that Xx. Xxxxxxx and his attorney agree in
advance to keep the terms of this Agreement confidential. Further,
notwithstanding the foregoing the parties acknowledge that the terms of this
Agreement and the Agreement itself may be filed with the SEC and fully disclosed
to the public. the parties further agree that each shall not disparage the
character, conduct and/or abilities and/or reputation of any other party to this
Agreement.
12. REPRESENTATIONS AND WARRANTIES. IO represents as follows:
(a) It is a corporation duly organized and existing in good standing
under the laws of the state of its incorporation and has the power to own its
properties and to carry on its business as now being conducted.
(b) It has full legal right, power and authority to enter into and
perform this Agreement; the execution and delivery of this Agreement by it and
the consummation by it of the transactions contemplated hereby have been duly
authorized by it and to the best of its knowledge do not contravene any law or
regulation governing the parties hereto and have been appropriately noticed, if
required, to any and all regulatory bodies having jurisdiction; this Agreement
has been duly executed and delivered by it and constitutes its valid and binding
obligation enforceable against it in accordance with its terms, except that such
enforcement is subject to the effect of any bankruptcy, insolvency,
reorganization, moratorium, liquidation or similar laws relating to, or
affecting, generally, the enforcement of creditors' rights and remedies.
13. VOLUNTARY AGREEMENT. The parties hereto understand the significance
and consequences of this Agreement and acknowledge that it is voluntary and has
not been given as a result of any coercion. The parties also acknowledge that
they have been given full opportunity to review and negotiate this Agreement,
have been represented by competent legal counsel and execute this Agreement only
after full reflection and analysis and after mediation before Xxxxx X. Xxxxxx,
Esq. The parties acknowledge that they have reviewed the Memorandum of
Settlement prepared by Xx. Xxxxxx following mediation, that such Memorandum of
Settlement
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accurately reflected the parties' agreements reached at mediation and that this
Agreement is intended to and does restate and formalize such Memorandum of
Settlement.
14. NO ADMISSION OF LIABILITY. This Agreement shall not be construed as
an admission of wrongdoing by any party hereto and all parties hereto do
expressly deny wrongdoing of any kind.
15. GOVERNING LAW AND VENUE. This Agreement shall be interpreted in
accordance with the laws of the state of Washington with the venue for any
dispute to be set in King County, Washington.
16. ATTORNEYS' FEES. Any party to this Agreement may xxx for breach of
its terms and, in the event of suit, the prevailing party shall be entitled to
recover his or its reasonable costs and attorneys' fees incurred therein and on
any appeal.
17. ENTIRE AGREEMENT. This Agreement represents and contains the entire
understanding among the parties in connection with the subject matter of the
Agreement. The Agreement shall not be modified or varied except by a written
document signed by the parties.
18. OPPORTUNITY TO REVIEW. Each party hereto acknowledges that he or it
has had sufficient time to review and consider this Agreement and to consult
with attorneys of its choosing. By their signatures, the parties acknowledge
that they have carefully read and fully understand all of the provisions of the
Agreement and that they are voluntarily entering into this Agreement.
19. NOTICES. Any notice required under this Agreement may be sent regular
mail postage prepaid to the parties at the following address and shall be deemed
delivered three days following deposit into the mail postage prepaid.
Interactive Objects Xxxx Xxxxxxx with a copy to:
-------------------- ------------ ---------------
000 Xxxx Xxxxxx 19302-218th Pl. X.X. Xxxxx X. Xxxxxx, Xx.
0xx Xxxxx Xxxxxxxxxxx, XX 00000 0000 Xxxxx Xxx., Xxx. 0000
Xxxxxxx, Xx 00000 Xxxxxxx, XX 00000
Each party agrees to notify the other in writing of any change in address.
DATED this 4th day of March, 1999.
/s/ XXXX XXXXXXX
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Xxxx Xxxxxxx
Interactive Objects, Inc.
By: /s/ XXXXXX X. XXXXXXX /s/ XXXXX XXXXXXX
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Its: President and Chief Financial Officer Xxxxx Xxxxxxx
Northwest Capital Partners LLC
By: /s/ XXXXX X. XXXXXX /s/ XXXX XXXXXXX
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Its: Managing Partner Xxxx Xxxxxxx
/s/ Xxxxx Xxxxxx
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Xxxxx Xxxxxx
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SCHEDULE OF OPTIONS PROVIDED BY XXXXXXX
EXERCISE DATE EXERCISE PRICE NUMBER OF SHARES
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1. Within 30 days of $200,000 (committed) 400,000
execution of Agreement
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2. 10/15/99 $ 50,000 100,000
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3. 1/15/00 $ 50,000 100,000
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4. 4/15/00 $ 50,000 100,000
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5. 7/15/00 $ 50,000 100,000
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6. 10/15/00 $ 50,000 100,000
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TOTAL $450,000 900,000
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