EXHIBIT 10.12
SETTLEMENT AGREEMENT AND RELEASE
WHEREAS, on or December 9, 0000, Xxxxxxxxx Xxxxxxx Xxxxxxxx
Communications ("Xxxxxxx Xxxxxxxx") filed a complaint against Defendant Power
Channel Holdings Inc. ("Power Channel") in the Supreme Court of the State of New
York, County of New York (the "Complaint"), seeking damages for an alleged
breach of contract by Power Channel; and
WHEREAS, Xxxxxxx Xxxxxxxx and Power Channel are desirous of
amicably resolving this dispute without further litigation;
NOW THEREFORE, in consideration of the mutual covenants
contained herein and other valuable consideration, the receipt and adequacy of
which are hereby acknowledged, it is hereby stipulated and agreed by and between
Xxxxxxx Xxxxxxxx and Power Channel as follows:
1. Within three (3) business days of both parties' execution
of this Settlement Agreement and Release ("the Agreement"), Power Channel shall
issue to Xxxxxxx Xxxxxxxx 10,961 shares of common stock in Power Channel
Holdings, Inc. (the "Shares") and shall deliver certificates evidencing such
shares promptly following the execution of this Agreement. Such issuance of
Shares shall be evidenced by a Common Stock Agreement dated as of the date
hereto between the parties, which Common Stock Agreement shall provide that the
consideration for the Shares issued to Xxxxxxx Xxxxxxxx shall be the settlement
and release of claims under this Agreement.
2. Except as provided in paragraph 0, Xxxxxxx Xxxxxxxx shall
have no further obligations to Power Channel and Power Channel shall have no
further obligations to Xxxxxxx Xxxxxxxx.
3. No later than the earlier of (a) five (5) business days
after registration of the Shares pursuant to a Registration Statement, which
Registration Statement has been declared effective by the Securities and
Exchange Commission or (b) 60 days from the date of execution of this Agreement,
the parties shall dismiss the Complaint by filing with the Clerk of the Supreme
Court of the State of New York, New York County, a Stipulation of Discontinuance
with Prejudice in the form annexed.
4. Upon the registration of the Shares pursuant to a
Registration Statement, which Registration Statement has been declared
effective by the Securities Exchange Commission, Xxxxxxx Xxxxxxxx releases,
acquits and forever discharges Power Channel, its parents, subsidiaries,
officers, agents, representatives and employees and all other person(s) who may
be said to have acted on its behalf, from any and all claims, charges, demands,
sums of money, actions, rights, causes of action, obligations and liabilities of
any kind or nature whatsoever, at law or in equity, which Xxxxxxx Xxxxxxxx may
have had against Power Channel, claims to have had, now has, may claim to have
or claims to have, which were alleged or which could have been alleged in the
Complaint and/or which concern in any way Xxxxxxx Xxxxxxxx'x relationship with
Power Channel that is the subject of the Complaint, with the exception of claims
to enforce this Agreement.
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5. Power Channel hereby releases, acquits and forever
discharges Xxxxxxx Xxxxxxxx, its parents, subsidiaries, officers, agents,
representatives and employees and all other person(s) who may be said to have
acted on its behalf, from any and all claims, charges, demands, sums of money,
actions, rights, causes of action, obligations and liabilities of any kind or
nature whatsoever, at law or in equity, which Power Channel may have had against
Xxxxxxx Xxxxxxxx, claims to have had, now has, may claim to have or claims to
have, which were alleged or which could have been alleged in the Complaint
and/or a Counterclaim and/or which concern in any way Xxxxxxx Xxxxxxxx'x
relationship with Power Channel that is the subject of the Complaint, with the
exception of claims to enforce this Agreement.
6. This Agreement shall take effect upon the occurrence of (a)
both parties' execution and delivery of the Agreement and the Common Stock
Agreement and (b) the issuance of the Shares to Xxxxxxx Xxxxxxxx contemplated
in paragraph 1, above.
7. This Agreement may not be changed orally and shall be
binding and inure to the benefit of the parties hereto and their respective
successors, permitted assigns and legal representatives.
8. If any of the provisions of this Settlement Agreement shall
be held invalid or unenforceable according to law, the remaining provisions
herein shall not be affected thereby and shall continue in full force and
effect.
9. This Agreement sets forth the entire agreement between the
parties hereto and, except as otherwise expressly provided, fully supersedes any
and all prior
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agreements, or understandings between the parties hereto pertaining to the
subject matter hereof.
10. This Agreement shall be construed and enforced in
accordance with, and governed by, the laws of the State of New York.
11. This Agreement may be executed in counterparts, each of
which shall be deemed an original and all of which together shall constitute one
and the same instrument.
XXXXXXX XXXXXXXX COMMUNICATIONS
Witness or Attest: By: /s/ Xxxx Xxxxxxx
---------------------------------
Its: CEO
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Dated: 5/18/00 Xxxx Xxxxxxx
--------------------------------
POWER CHANNEL HOLDINGS, INC.
Witness or Attest: By: /s/ Xxxxx X. Xxxxxxxx
---------------------------------
Its: President
--------------------------------
Dated: 5/10/00 Xxxxx X. Xxxxxxxx
--------------------------------
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COMMON STOCK AGREEMENT
dated as of this 10th day of May, 2000 between POWERCHANNEL HOLDINGS, INC., a
Delaware corporation (the "Company"), and XXXXXXX XXXXXXXX COMMUNICATIONS (the
"Holder")
Subject to the terms and conditions of this Agreement and
pursuant to the terms of the Settlement Agreement and Release between the
parties dated as of the date hereof, (the "Settlement Agreement"), the Company
will issue Holder shares of the Company's Common Stock ($.001 par value (the
"Shares"). The term "Shares" refers to the Company's issued Shares and all
securities received in replacement of or in connection with the Shares pursuant
to stock dividends or splits, all securities received in replacement of the
Shares in a recapitalization, merger, reorganization, exchange or the like, and
all new, substituted or additional securities or other properties to which
Holder is entitled by reason of Holder's ownership of the Shares.
NOW THEREFORE, in consideration of the premises and the mutual
covenants hereinafter set forth, the parties hereby agree as follows:
1. ISSUANCE OF SHARES; REPRESENTATIONS BY SUBSCRIBER
1.1 Subject to the terms and conditions hereinafter set forth, the
Company agrees to issue to the Holder, the number of Shares set forth on the
signature page of this Agreement at a per share price of $2.50 per share. The
Company and Holder agree that the consideration for the Shares shall be the
settlement of all claims between Holder and Company pursuant to the Settlement
Agreement, which amount shall equal $27,402.50.
1.2 The Holder recognises that the issuance of Shares entails elements
of risk of which it is aware. Holder acknowledges that (i) he/it may not be able
to liquidate his/its investment; (ii) transferability of the Shares is extremely
limited; and (iii) in the event of a disposition, he/it could sustain a
significant loss.
1.3 The Holder represents (i) he/it is an "accredited investor" within
the meaning ascribed to such term in Rule 501 of Regulation D, promulgated under
the Securities Act of 1933, as amended (the "Act"), and has initialed the
provisions(s) of Rule 501 attached as Exhibit A - Accredited Investor
Verification Schedule hereto which are applicable to him/it.
1.4 The Holder acknowledges that: (i) he/it has adequate experience in
investing in non-listed and non-registered securities such that he/it is able to
evaluate the merits and risks of an investment in the Company; (ii) he/it
recognizes the speculative nature of this investment; and (iii) he/it is able to
bear the economic risk it hereby assumes. The Holder acknowledges that he/it
has read and is sufficiently familiar with the books and records of the Company
which have been provided to the Holder in connection with this issuance. The
Holder also acknowledges that he/it has been afforded the opportunity to make,
and has made, all inquiries of the officers of the Company and others as it
deemed appropriate with respect to the Company's affairs and prospects.
1.5 The Holder hereby acknowledges and represents that he/it is not
acquiring the Shares pursuant to an offering and that the sale by the Company of
the Shares hereby is the result of a privately negotiated transaction not
involving any public offering. Accordingly, the issuance of the Shares has not
been reviewed by the Securities and Exchange Commission ("SEC") or any other
regulatory body in reliance upon the exemption provided by Section 4(2) of the
Act.
(ii)
1.6 The Holder represents that the Shares are being issued for his/its
own account, for investment and not for distribution or resale to others. The
Holder agrees that he/it will not sell or otherwise transfer the Shares unless
they are registered under the Act or unless an exemption from such registration
is available.
1.7 The Holder acknowledges the following:
THE SECURITIES OFFERED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
ACT, THE SECURITIES LAWS OF THE VARIOUS STATES OF THE UNITED
STATES, OR THE LAWS OF ANY FOREIGN JURISDICTION AND ARE BEING
OFFERED AND SOLD IN RELIANCE ON EXEMPTIONS FROM REGISTRATION
REQUIREMENTS OF SAID ACT AND SUCH LAWS. THE SECURITIES ARE SUBJECT
TO RESTRICTIONS ON TRANSFERABILITY AND RESALE AND MAY NOT BE
TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER SAID ACT AND SUCH
LAWS PURSUANT TO REGISTRATION OR, EXEMPTION THEREFROM. INVESTORS
SHOULD BE AWARE THAT THEY WILL BE REQUIRED TO BEAR THE FINANCIAL
RISKS OF THIS INVESTMENT FOR AN INDEFINITE PERIOD OF TIME. THE
SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION, ANY STATE SECURITIES COMMISSION OR ANY
OTHER REGULATORY AUTHORITY, NOR HAVE ANY OF THE FOREGOING
AUTHORITIES PASSED UPON OR ENDORSED THE MERITS OF THE SALE. ANY
REPRESENTATION TO THE CONTRARY IS UNLAWFUL.
1.8 The Holder acknowledges that the Shares are restricted securities,
and any shares of capital stock received in respect thereof, whether by reason
of a stock split or share reclassification thereof, a stock dividend thereon or
otherwise, shall not be transferable except in compliance with the conditions
specified in Section II hereof.
II. PROCEDURES AND RESTRICTIONS UPON TRANSFER
2.1 The Shares (as hereinafter defined), and any shares of capital
stock received in respect thereof, whether by reason of a stock split or share
reclassification thereof, a stock dividend thereon or otherwise, shall not be
transferable except upon the conditions specified in this Section II, which
conditions are intended to insure compliance with the provisions of the Act in
respect of the transfer thereof.
2.2 Each certificate for the Shares and any shares of capital stock
received in respect thereof, whether by reason of a stock split or share
reclassification thereof, a stock dividend thereon or otherwise, and each
certificate for any such securities issued to subsequent transferees of any such
certificate shall be stamped or otherwise imprinted with a legend in
substantially the following form:
"The shares of Common Stock represented by this certificate have
not been registered under the Securities Act of 1933, as amended
(the "Act"), and may not be sold, offered for sale, assigned,
transferred or otherwise disposed of, unless registered pursuant
to the provisions of the Act or an
(iii)
opinion of counsel to the Company is obtained stating that such
disposition is in compliance with an available exemption from such
registration."
2.3 The Holder, by acceptance of the Share certificates, agrees, prior
to any transfer of any Shares, to give written notice to the Company of his/its
intention to effect such transfer and to comply in all other respects with the
provisions of this Section II. Each such notice shall describe the manner and
circumstances of the proposed transfer and shall be accompanied by the written
opinion, addressed to the Company, of counsel for the Holder as to whether in
the opinion of such counsel (which opinion shall be reasonably satisfactory to
counsel for the Company) such proposed transfer involves a transaction requiring
registration of such Shares under the Act, provided, however, that no such
opinion shall be required in connection with a transaction complying with the
requirements of Rule 144 (as amended from time to time) promulgated under the
Act (or successor Rule thereto). If in the opinion of such counsel (if such
opinion is required hereunder) and counsel for the Company, the proposed
transfer of the Shares may be effected without registration under the Act, the
Holder shall thereupon be entitled to transfer the Shares in accordance with the
terms of the notice delivered by it to the Company. Each certificate or other
instrument evidencing the securities issued upon the transfer of any Shares (and
each certificate or other instrument evidencing any untransferred balance of
such securities) shall bear the legend described in Section 2.2 hereof unless
(a) in the opinion of such counsel and counsel for the Company registration of
future transfer is not required by the applicable provisions of the Act or (b)
the Company shall have waived the requirement of such legends; provided,
however, that such legend shall not be required on any certificate or other
instrument evidencing the securities issued upon such transfer in the event such
transfer shall be made in compliance with the requirements of Rule 144 (as
amended from time to time) promulgated under the Act (or successor Rule
thereto). The Holder shall not transfer such Shares until such opinion of
counsel has been given to the Company (unless waived by the Company or unless
such opinion is not required in accordance with the provisions of this Section
2.3).
2.4 Notwithstanding the foregoing provisions of this Section II, the
restrictions imposed hereunder upon the transferability of any Shares shall
cease and terminate when any such Shares are sold or otherwise disposed of in
accordance with the intended method of disposition by the seller or sellers
thereof set forth in any registration statement or otherwise pursuant to Section
2.3 hereof. Whenever the restrictions imposed by this Section II shall
terminate, as herein provided, the Holder, with regard to any Shares as to which
such restrictions have terminated shall be entitled to receive from the Company,
without expense, a new certificate not bearing the restrictive legends referred
to in Section 2.2 hereof and not containing any other reference to the
restrictions imposed by this Section II.
III. REGISTRATION RIGHTS; LOCK-UP
3.1 The Company shall register the Shares pursuant to a registration
statement (a "Registration Statement") filed by the Company in connection with a
firm commitment public offering under the Act, covering the offer and sale of
Common Stock to the public (an "IPO"), provided, however, the Holder agrees that
if the foregoing Registration Statement is declared effective, it shall not sell
or offer to sell any Shares for a period of at least 12 months from the
effective date of the Registration Statement ("Holding Period") without the
consent of both the managing underwriter of such IPO and the Company. The
Company shall keep the Registration Statement effective and current until all
the securities registered thereunder are sold or may be sold without any
limitation under an appropriate exemption under the Securities Act.
3.2 In any Registration Statement under this Section III, the Company
shall bear all expenses and pay all fees incurred in connection with the filing
and modification or amendment of the registration statement, exclusive of
underwriting discounts and commissions payable in respect of the
(iv)
sale of the Shares and any attorneys' fees or other professional costs incurred
by the Holder in connection with such sale of the Shares.
3.3 The Company shall indemnify the registered holder(s) of the Shares
to be sold pursuant to any Registration Statement hereunder, the officers and
directors of each holder and each person, if any, who controls such holders
within the meaning of Section 15 of the Securities Act or Section 20(a) of the
Securities Exchange Act of 1934, as amended ("Exchange Act") or any state
securities law or regulation, against all loss, claim, damage, expense or
liability (including all reasonable attorneys' fees and other expenses
reasonably incurred in investigating, preparing or defending against any claim
whatsoever incurred by the indemnified party and any third party) to which any
of them may become subject under the Securities Act, the Exchange Act or any
other statute or at common law or otherwise arising from such Registration
Statement or based upon any untrue statement or alleged untrue statement of a
material fact contained in the Registration Statement or the omission or alleged
omission therefrom of a material fact required to be stated therein or necessary
to make the statements therein, in light of the circumstances under which they
were made, not misleading, unless such statement or omission is made in reliance
upon, and in conformity with, written information furnished to the Company by
and with respect to the registered holders expressly for use in any preliminary
prospectus, the Registration Statement or prospectus or any amendment or
supplement thereof, or in any application, as the case may be.
3.4 In the event that the Company does not register its common stock
under either Section 12 or Section 15 of the Exchange Act within twelve months
from the date of this Agreement, the Holder will have the right any time
thereafter to put the Shares issued under this Agreement to the Company and
receive payment within sixty days from the Client equal to $27,402.50.
IV. REPRESENTATIONS AND WARRANTIES BY THE COMPANY
The Company represents and warrants to the Holder as follows:
4.1 The Company is a corporation duly organized, validly existing and
in good standing under the laws of the State of Delaware.
4.2 The execution, delivery and performance of this Agreement by the
Company (a) has been duly authorized and approved by the Board of Directors of
the Company and all other necessary corporate action on the part of the Company
in connection therewith has been taken and (b) will not conflict with or
constitute a breach of, or default under, or result in the creation or
imposition of any lien, charge or encumbrance upon any property or assets of the
Company pursuant to (i) the charter documents or By-laws of the Company, (ii)
any material contract indenture, mortgage, loan agreement note, lease or other
agreement or instrument to which the Company is a party or by which it may be
bound or to which any of its properties may be subject or (iii) any law,
administrative regulation or court decree applicable to or binding upon the
Company.
4.3 This Agreement has been duly and validly executed and delivered by
the Company and constitutes the legal, valid and binding agreement of the
Company enforceable in accordance with its terms, except that (a) any
enforcement may be subject to bankruptcy, insolvency, reorganization, moratorium
or similar laws from time to time in effect and affecting the rights of
creditors generally and (b) the remedy of specific performance and injunctive
and other forms of equitable relief may be subject to equitable defenses and to
the discretion of the court before which any proceedings therefor may be
brought.
(v)
4.4 The Shares have been duly and validly authorized and, upon
execution of this Common Stock Agreement and the Settlement Agreement by the
Holder, such Shares will be duly and validly issued by the Company.
4.5 The information provided to the Holder by the Company in
connection with this issuance is correct and complete in all material respects,
and does not contain an untrue statement of material fact or omit to state a
material fact required to be stated therein or necessary to make the statements
therein, in the light of the circumstances under which they were made, not
misleading.
4.6 Since the respective dates of such information given to the
Holder, except as otherwise stated: (a) there has been no material adverse
change in the financial condition, or in the results of operations, affairs or
prospects of the Company, whether or not arising in the ordinary course of
business; and (b) there have been no transactions entered into by the Company,
other than those in the ordinary course of business, which are material to the
Company.
V. MISCELLANEOUS
5.1 Any notice, request, advice, consent or other communication given
hereunder shall be given in writing and sent by overnight delivery service or
registered or certified mail, return receipt requested, and addressed as
follows: if to the Company, to: President, PowerChannel Holdings, Inc., 00
Xxxxxxxx Xxxx., XXX 000, Xxx Xxxx, Xxx Xxxx, 00000 XXX, and if to the Holder, to
it at its address indicated below Holder's signature to this Agreement. Notices
so given shall be deemed to have been given on the earlier to occur of actual
receipt or three business days after the date of such mailing, except for
notices of change of address, which shall be deemed to have been given when
received.
5.2 This Agreement shall not be changed, modified or amended except by
a writing executed by the parties hereto.
5.3 This Agreement shall be binding upon and inure to the benefit of
the parties hereto and to their respective heirs, legal representatives,
successors and assigns. This Agreement and the Settlement Agreement set forth
the entire agreement and understanding between the parties as to the subject
matter thereof and merges and supersedes all prior discussions, agreements and
understandings of any and every nature among them.
5.4 References herein to a person or entity in either gender specific
or gender neutral terms include the other gender or no gender, as appropriate,
5.5 This Agreement and its validity, construction and performance
shall be governed in all respects by the laws of the State of New York.
5.6 This Agreement may be executed in counterparts.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and year first written above.
POWERCHANNEL HOLDINGS, INC.
By: /s/ Xxxxx X. Xxxxxxxx
Name: Xxxxx X. Xxxxxxxx
Title: President
Number of Shares Issued: 10,961
/s/ XX Xxxxxxx
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Signature of Holder/authorized officer
Xxxxxxx Xxxxxxxx Communications 00-0000000
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Name of Holder Social Security Number/E.I.D. #
(If US citizen or resident)
(vi)
POWER CHANNEL HOLDINGS, INC.
THE SECURITIES OFFERED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED, OR ANY FOREIGN SECURITIES LAWS AND ARE BEING OFFERED AND
SOLD IN RELIANCE ON EXEMPTIONS FROM THE REGISTRATION REQUIREMENTS OF SUCH LAWS.
THE SHARES OF COMMON STOCK ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND
RESALE AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER SUCH LAWS
PURSUANT TO REGISTRATION OR AN EXEMPTION THEREFROM. THE SHARES HAVE NOT BEEN
APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY OTHER
REGULATORY AUTHORITY, NOR HAVE ANY OF THE FOREGOING AUTHORITIES PASSED UPON OR
ENDORSED THE MERITS OF THIS OFFERING OR THE ACCURACY OR ADEQUACY OF THE OFFERING
MATERIALS. ANY REPRESENTATION TO THE CONTRARY IS UNLAWFUL.
(vii)
