EXHIBIT 10
SETTLEMENT AGREEMENT
EXHIBIT 10
SETTLEMENT AGREEMENT
AGREEMENT, dated August __, 2004, by and between Infinity Capital
Group, Inc., a Maryland corporation ("Infinity") and L & M Specialties, Inc., a
California corporation ("L & M").
WHEREAS, L & M has loaned Infinity $125,000, evidenced by a Promissory
Note dated September 22, 2003 bearing interest at the rate of seven (7%) percent
per annum (the "Original Note") for the purpose of purchasing 5,700,000 common
shares of Azonic Corporation, a Nevada corporation (the "Company");
WHEREAS, the Original Note was due and payable in full on December 22,
2003, and Infinity is in default thereunder with respect to approximately
$114,000 (including accrued interest and related expenses);
WHEREAS, the Original Note was secured by 4,500,000 shares of Common
Stock of the Company held in escrow by SEC Attorneys, LLC (the "Escrow Agent")
pursuant to a Security Agreement dated September 22, 2003 (the "Security
Agreement") and an Escrow Agreement (the "Escrow Agreement") dated September 22,
2003. The 4,500,000 shares are now 18,000,000 shares following a 4:1 stock split
(the "Escrow Shares");
WHEREAS, L&M currently holds 4,800,000 shares of Common Sock of the
Company (the "L&M Shares");
WHEREAS, the Parties hereto desire to settle certain disputes which
have arisen concerning the Original Note, the Security Agreement and the Escrow
Agreement;
NOW, THEREFORE, in consideration of the covenants and conditions herein
contained, the parties hereto hereby agree as follows:
1. Principal Settlement Terms.
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(a) Simultaneously with the execution and delivery of this Agreement, L&M shall
receive an immediate cash payment equal to $125,000.
(b) L&M shall receive a cash payment of $12,500 on each of September 30, October
31, November 30 and December 31, 2004 (collectively, the "Additional Payments").
Simultaneously with the execution and delivery of this Agreement, Infinity shall
issue four $12,500 promissory notes to L&M evidencing its obligations to make
the Additional Payments, which notes shall accrue simple interest at a 7% annual
rate from the date of this Agreement until such note has been paid in full.
(c) Simultaneously with the execution and delivery of this Agreement, the
Original Note shall be deemed cancelled and paid in full.
(d) Simultaneously with the execution and delivery of this Agreement, L&M shall
instruct the Escrow Agent to disburse the Escrow Shares to Infinity.
(e) Simultaneously with the execution and delivery of this Agreement, L&M shall
transfer and deliver the L&M Shares to Infinity, and Infinity shall immediately
deposit 1,500,000 of such shares with the Escrow Agent (1,000,000 of which shall
be registered in the name of Infinity (the "Retained Shares") and 500,000 of
which shall be registered in the name of L&M ("the Transaction Shares")) to be
held as follows:
(i) The Retained Shares shall be placed into escrow until the
Additional Payments have been paid in full (with 250,000 Retained
Shares being released upon L&M's receipt of each Additional
Payment). The Escrow Agent shall deliver 250,000 Retained Shares
to L&M if any Additional Payment is not made within seven days
after the date that it is due. Infinity shall leave a stock power
with the Escrow Agent in the event of any event of default with
respect to any Additional Payment.
(ii) The Transaction Shares shall remain in escrow until the Company
completes its first reverse merger or similar transaction (a
"Company Transaction"). Immediately after the Company completes a
Company Transaction, the Escrow Agent shall distribute a portion
of the Transaction Shares to L&M so that L&M will hold (subject
to the adjustment set forth below in this subsection) 5% of the
number of shares of Common Stock of the Company held by Infinity
(including its officers, directors and employees) immediately
after the Company completes a Company Transaction (without giving
effect to this subsection), and shall thereafter distribute all
remaining Transaction Shares to Infinity. Notwithstanding the
foregoing, L&M shall be permitted to sell a portion of the
Transaction Shares ("Eligible Shares") if the Company has not
completed a Company Transaction in accordance with the schedule
set forth below:
Days after the date of Cumulative # of
this Agreement that No Transaction Shares that
Company Transaction has May be Sold by L&M
Occurred
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90 50,000
180 100,000
270 200,000
360 300,000
450 400,000
540 500,000
If L&M provides notice to Infinity and the Escrow Agent that
it wishes to sell Eligible Shares that L&M is eligible to sell in
accordance with the above schedule (which notice shall contain the
number of such Eligible Shares that L&M wishes to sell), the Escrow
Agent shall disburse such number of Eligible Shares to L&M. If a
Company Transaction occurs at any time after L&M has received Eligible
Shares for sale as contemplated in the immediately preceding sentence,
at the time of a Company Transaction, the Escrow Agent shall distribute
a portion of the Transaction Shares to L&M so that the number of shares
distributed to L&M immediately after the Company completes a Company
Transaction is equal to the number determined in accordance with the
following formula: # of shares = 5% * (1- (Eligible Shares previously
distributed to L&M/ 500,000)). For example, if L&M has received 150,000
Eligible Shares prior to a Company Transaction, at the Closing of the
Company Transaction, the Escrow Agent shall disburse a portion of the
Transaction Shares to L&M so that L&M will receive 3.5% (being 5% * .7
(or 1- (150/500)) of the number of shares of Common Stock of the
Company held by Infinity (including its officers, directors and
employees) immediately after the Company completes a Company
Transaction (without giving effect to this subsection). After making
such disbursement to L&M, the Escrow Agent shall disburse all remaining
Transaction Shares to Infinity.
(f) Simultaneously with the execution and delivery of this Agreement, L&M shall
surrender for cancellation to Infinity the 200,000 warrants (the "Warrants")
which L&M owns to purchase shares of Infinity at an exercise price of $0.25 per
share exercisable until September 22, 2008.
2. Mutual Releases.
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(a) L&M Release and Indemnity. L&M, for itself and on behalf of the other L&M
Related Parties, hereby irrevocably an unconditionally releases and forever
discharges each of the Infinity Related Parties from any and all manner of
action, claims, suits, causes of action, rights, dues, accounts, bonds, bills,
debts, sums of money, contracts, controversies, omissions, agreements, promises,
variances, trespasses, damages, liabilities, losses, costs, expenses,
reimbursements, indemnities, executions, judgments and demands whatsoever, in
law, admiralty, or equity which any L&M Related Party ever had, now has, or
hereafter can, shall or may have against any Infinity Related Party, whether or
not now known, for, upon, or by reason of any matter, cause, or thing whatsoever
related to the Original Note, the Security Agreement, the Escrow Agreement, the
Warrants and any other document, agreement or instrument between L&M and
Infinity in connection therewith on or before the date hereof, but excluding
only those obligations under this Agreement (the "L&M Released Claims"). As used
herein, "L&M Related Parties" means L&M, its officers, directors, employees,
shareholders, affiliates, agents and representatives. As used herein, "Infinity
Related Parties" means Infinity, its officers, directors, employees,
shareholders, affiliates, agents and representatives
L&M, for itself and on behalf of the other L&M Related
Parties, hereby agrees to indemnify and hold harmless each of the Infinity
Related Parties with respect to any and all losses, costs, expenses or damages
(including attorneys' and advisors' fees) in any way related to any claims
asserted against any Infinity Related Party (including third party claims), in
connection with any L&M Released Claim or any breach by any L&M Related Party of
its obligations under this letter, and L&M, for itself and on behalf of the
other L&M Related Parties, hereby covenants not to commence, prosecute, pursue
or give any aid in connection with, any action or proceeding against any
Infinity Related Party with respect to any of the L&M Released Claims.
L&M, FOR ITSELF AND ON BEHALF OF THE OTHER L&M RELATED
PARTIES, EXPRESSLY ACKNOWLEDGES THAT THE CONSIDERATION SET FORTH HEREIN,
INCLUDING THE RELEASE BY THE INFINITY RELATED PARTIES SET FORTH BELOW,
CONSTITUTES ADEQUATE AND SUFFICIENT CONSIDERATION FOR THE FOREGOING RELEASE AND
INDEMNITY.
Although the parties have expressly elected the laws of the
State of New York to govern the interpretation and enforcement of this
Agreement, L&M, as a corporation domiciled in the State of California, expressly
waives and relinquishes, for itself and on behalf of the other L&M Related
Parties, all rights and benefits afforded by Section 1542 of the Civil Code of
the State of California, and does so understanding and acknowledging the
significance of such specific waiver of Section 1542. Section 1542 of the Civil
Code of the State of California states as follows:
"A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE 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."
Thus, notwithstanding the provisions of Section 1542, and for
the purpose of implementing a full and complete release and discharge of the
Infinity Related Parties, L&M, on behalf of itself and the other L&M Related
Parties, expressly acknowledges that this Agreement and General Release is
intended to include in its effect without limitation, all claims which it does
not know or suspect or exist in its favor at the time of execution hereof, and
that this General Release contemplates the extinguishment of any such claim or
claims.
(b) Infinity Release and Indemnity. Infinity, for itself and on behalf of the
other Infinity Related Parties, hereby irrevocably an unconditionally releases
and forever discharges each of the L&M Related Parties from any and all manner
of action, claims, suits, causes of action, rights, dues, accounts, bonds,
bills, debts, sums of money, contracts, controversies, omissions, agreements,
promises, variances, trespasses, damages, liabilities, losses, costs, expenses,
reimbursements, indemnities, executions, judgments and demands whatsoever, in
law, admiralty, or equity which any Infinity Related Party ever had, now has, or
hereafter can, shall or may have against any L&M Related Party, whether or not
now known, for, upon, or by reason of any matter, cause, or thing whatsoever
related to the Original Note, the Security Agreement, the Escrow Agreement, the
Warrants and any other document, agreement or instrument between L&M and
Infinity in connection therewith on or before the date hereof from the beginning
of time but excluding only those obligations under this Agreement (the "Infinity
Released Claims").
Infinity, for itself and on behalf of the other Infinity
Related Parties, hereby agrees to indemnify and hold harmless each of the L&M
Related Parties with respect to any and all losses, costs, expenses or damages
(including attorney's and advisor's fees) in any way related to any claims
asserted against any L&M Related Party (including third party claims), in
connection with any Infinity Released Claim or any breach by any Infinity
Related Party of its obligations under this letter, and Infinity, for itself and
on behalf of the other Infinity Related Parties, hereby covenants not to
commence, prosecute, pursue or give any aid in connection with, any action or
proceeding against any L&M Related Party with respect to any of the Infinity
Released Claims.
INFINITY, FOR ITSELF AND ON BEHALF OF THE OTHER INFINITY
RELATED PARTIES, EXPRESSLY ACKNOWLEDGES THAT THE CONSIDERATION SET FORTH HEREIN,
INCLUDING THE L&M PAYMENT AND THE RELEASE BY THE L&M RELATED PARTIES SET FORTH
ABOVE, CONSTITUTES ADEQUATE AND SUFFICIENT CONSIDERATION FOR THE FOREGOING
RELEASE AND INDEMNITY.
3. Mutual Nondisparagement. L&M, for itself and on behalf of the other L&M
Related Parties, will not disclose or cause to be disclosed any negative,
adverse or derogatory comment or information about any Infinity Related Party.
Infinity, for itself and on behalf of the other Infinity Related parties, will
not disclose or cause to be disclosed any negative, adverse or derogatory
comments or information about any L&M Related Party. Nothing in this Section 3
will be construed to prevent any L&M Related Party or any Infinity Related Party
from giving truthful testimony in response to direct questions asked pursuant to
a lawful subpoena or other legal process during any legal proceeding.
4. Confidentiality. The parties to this letter agree to keep confidential the
existence of this letter, as well as all of its terms and conditions, and not to
directly or indirectly disclose to any person or entity the existence, terms or
conditions of this letter except to their respective attorneys, financial
advisors and investors, and any other third party necessary to effect or
implement the agreements set forth herein; provided they agree to keep
confidential the existence, terms and conditions of this letter. If either party
believes that it or any or its respective Related Parties is compelled by law to
divulge the existence, terms or conditions of this letter, such party will
notify the other party of the basis for the belief sufficiently in advance of
actually divulging the information to enable the other party to seek appropriate
protective orders.
5. Governing Law. The Agreement is executed and delivered within the State of
New York and it is expressly agreed that it shall be construed in accordance
with the laws of the State of New York (without regard to conflicts of laws
principles).
6. Entire Agreement. This Agreement sets forth the entire agreement and
understanding between the parties and may not be orally changed, altered,
modified or amended in any respect. To effect any change, modification,
alteration or amendment, the same must be in writing signed by both parties
hereto.
7. Successors, Assigns. This Agreement shall inure to the benefit of and shall
be binding upon the heirs, executors, administrators, personal representatives,
successors and assigns of the parties hereto, and their respective Related
Parties. None of the parties hereto shall assign this Agreement or any rights or
obligations hereunder without the prior written consent of the other parties and
any such attempted assignment shall be void and of no force or effect.
8. Representation by Counsel. EACH PARTY HAS CAREFULLY READ AND FULLY
UNDERSTANDS THE PROVISIONS OF THIS AGREEMENT INCLUDING THE WAIVER OF CLAIMS
AGAINST EACH OTHER. EACH PARTY HAS BEEN REPRESENTED BY LEGAL COUNSEL OF ITS
CHOICE IN CONNECTION WITH ITS ENTERING INTO THIS AGREEMENT. NO PARTY HAS RELIED
UPON ANY OTHER REPRESENTATION OR STATEMENT, WRITTEN OR ORAL.
9. Further Assurances. Each Party shall, at any time and from time to time after
the date of this Agreement, upon the request of the other Party, do, execute,
acknowledge and deliver and cause to be done, executed, acknowledged or
delivered, all such further acts, deeds, assignments, transfers, conveyances,
powers of attorney or assurances as may be reasonably required to effect and
confirm the agreements contained herein.
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the day and year first above written.
L & M SPECIALTIES, INC.
By: __________________________
Xxxxxxxx Xxxxxxxx, President
INFINITY CAPITAL GROUP, INC.
By: __________________________
Xxxxxxx X. Xxxxxxx, President
