SETTLEMENT AGREEMENT AND
MUTUAL RELEASE OF ALL CLAIMS
This Settlement Agreement and Mutual Release of All Claims ("Agreement") is
made on November 8th 2004, by and between AMERICAN FIRE RETARDANT CORP., a
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Nevada corporation ("Buyer"); XXXXXX X. XXXXX and XXXXXXX XXXXX,
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("Shareholders"); and ALCHEMCO, INC., a California corporation ("Alchemco").
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Recitals
A. The parties previously entered into an Agreement for Purchase and
Sale of Stock dated October 20, 2004 (the "Purchase Agreement") whereby Buyer
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acquired Shareholders' stock in Alchemco.
B. The parties desire to rescind the Purchase Agreement based upon the
terms set forth in this Agreement.
WHEREFORE, PREMISES CONSIDERED, the parties hereby agree as follows:
1. The Purchase Agreement and all documents executed in connection with
the Purchase Agreement, including the Promissory Note in the amount of
$2,953,056.47 and the Pledge Agreement securing the Promissory Note (such
documents referred to below as the "Purchase Documents") are hereby rescinded.
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2. As consideration for the rescission and the full and complete mutual
releases of all claims arising under the Purchase Documents by either Buyer or
Shareholders, Buyer shall pay to Shareholders the sum of Two Hundred
Fifty Thousand Dollars ($250,000) (the "Settlement Amount"). Shareholders
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received Two Hundred Fifty Thousand Dollars ($250,000) as a down payment on the
purchase price under the Purchase Documents, which amount the parties agree
shall be retained by Shareholders as satisfaction in full of the Settlement
Amount.
3. With the exception of any claims arising under this
Agreement, each of Shareholders and Alchemco, for itself and for its
officers, directors, employees, agents, assigns, any parent, subsidiary, and
affiliated corporations, and any and all other related persons or entities
hereby releases, acquits and forever discharges Buyer, its officers, directors,
employees, agents, assigns, any parent, subsidiary, and affiliated corporations,
and any and all other related persons or entities from any and all claims or
causes of action that Shareholders or Alchemco may now have or claim to have
against Buyer arising out of or related to the Purchase Documents.
4. With the exception of any claims arising under this Agreement, Buyer
for itself and for its officers, directors, employees, agents, assigns, any
parent, subsidiary, and affiliated corporations, and any and all other related
persons or entities hereby releases, acquits and forever discharges each of
Shareholders and Alchemco, its officers, directors, employees, agents,
assigns, any parent, subsidiary, and affiliated corporations, and any and all
other related persons
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or entities from any and all claims or causes of action Buyer may now have or
claim to have against either Shareholders or Alchemco arising out of or related
to Purchase Documents.
5. It is the intention of the parties that this Agreement shall be
effective as a full and final accord and satisfaction, and release of each and
every released matter. In furtherance of this intention, the Parties acknowledge
that they are familiar with Section 1542 of the California Civil Code, which
provides 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."
The parties hereby waive and relinquish every right or benefit which they
have or may have under Section 1542 of the California Civil Code to the full
extent that they may lawfully waive such rights or benefits with regard to the
subject matter of this Agreement. In connection with such waiver and
relinquishment, the parties acknowledge that they are aware that they may later
discover facts in addition to or different from those which they now know or
believe to be true with respect to the subject matter of this Agreement, but
that it is their intention hereby fully, finally, and forever, to settle and
release all released matters, known or unknown, suspected or unsuspected, which
now exist, may exist, or previously existed between them. In furtherance of such
intention, the releases given here shall be in, and shall remain in, effect as a
full and complete release, notwithstanding the discovery or existence of any
such additional or different facts.
6. The releases in this Agreement shall extend and inure to the
benefit of the parties and their past and present attorneys,
officers, employees, directors, agents, alter egos, shareholders,
partners, joint venturers, licensees, distributors, representatives, heirs,
executors, administrators, affiliates, subsidiaries, divisions, legal
predecessors, successors and assigns, and their respective insurers, sureties,
and underwriters.
7. This Agreement has been entered into for the sole purpose of
disposing of all existing claims of the parties arising out of or relating to
the Purchase Documents. It is understood and agreed that none of the parties
admits or acknowledges any wrongdoing in connection with the matters at issue,
and this Agreement has been made by the parties to settle matters relating to
the rescission of the Purchase Documents.
8. Buyer agrees that Buyer and its officers, directors,
employees and other representatives will hold in strict confidence, and will
not use to the detriment of Shareholders or Alchemco, any data and information
about the business of Alchemco obtained in connection with this transaction or
the Purchase Documents, except as far as the data and information may be
required by law. Buyer shall promptly return to Alchemco all data and
information, including worksheets, test reports, manuals, lists, memoranda, and
other documents, prepared by or made available to Buyer in connection with the
Purchase Documents and the transactions thereunder.
9. This Agreement and any attachments hereto represent the entire
agreement of the parties with respect to the subject matter hereof. The parties
declare that no promise, inducement or agreement not expressly set forth or
incorporated herein has been made by the parties.
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10. Each of the parties to this Agreement warrant and represent that
its respective right, title and interest in and to the claims being settled and
released hereby have not been assigned, pledged, conveyed or transferred to any
other party, person or entity. Each of the parties hereto further represents and
warrants that he, she, or it is authorized to enter into this Agreement.
11. This Agreement is the product of negotiations between the parties
and, for the purpose of construction, the language used in this Agreement shall
not be construed for or against either party.
12. In the event of any dispute between the parties arising out of or
relating to this Agreement, the prevailing party shall be entitled to recover
its reasonable attorneys' fees and costs.
13. This Agreement may be executed in one or more counterparts, each of
which shall be deemed an original but all of which together shall constitute one
and the same Agreement.
ALCHEMCO, INC., a California corporation
By:
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XXXXXX X. XXXXX, President
By:
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XXXXXXX XXXXX, Secretary
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XXXXXX X. XXXXX
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XXXXXXX XXXXX
AMERICAN FIRE RETARDANT CORP, a
Nevada corporation
By: /s/ Xxxxx X. Xxxxxxx
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XXXXX X. XXXXXXX, Vice President
By: /s/ Xxxxx X Xxxxx
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XXXXX X XXXXX, CFO
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