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EXHIBIT 10.40
AMENDED AGREEMENT OF SETTLEMENT AND MUTUAL RELEASE
THIS AMENDED AGREEMENT OF SETTLEMENT AND MUTUAL RELEASE ("Agreement") is made by
and between Xxxxxxx Xxxx Xxxxx ("Xx. Xxxxx") on the one hand, and MicroTel
International, Inc. ("MicroTel") on the other.
SECTION I
RECITALS
1.1 A dispute has arisen between the parties regarding a Letter Agreement dated
April 18, 1995 relating to, inter alia, the issuance, tender, and registration
by the Securities and Exchange Commission of one hundred thirty thousand
(130,000) shares of unrestricted, freely tradable MicroTel common stock (the
"Stock") for the benefit of Xx. Xxxxx. As a result of MicroTel's failure to
issue, register or tender the stock to Xx. Xxxxx, Xx. Xxxxx filed an action in
the Santa Xxxxx County Superior Court, titled XXXXXXX XXXX XXXXX v. MicroTel
International, Inc., et al. SCSC Case No. CV758208 (the "Action"). Parties
settled the Action pursuant to the terms of an Agreement of Settlement and
Mutual Release dated June 28, 1996 (the "Settlement Agreement").
1.2 It is the desire of the above named parties to the Agreement to amend the
Settlement Agreement to reflect certain changes agreed to by the parties, and to
extend the date of performance under the Settlement Agreement, while otherwise
keeping the terms of the Settlement Agreement intact.
THEREFORE, in consideration of the following terms, conditions, covenants and
promises as set forth in this Amending Agreement the parties agree as follows:
SECTION II
SETTLEMENT AND PAYMENT
2.1 Payments by MicroTel
2.1.1 Extension and Interest Payments. MicroTel shall, as part of this Amending
Agreement, pay to Xx. Xxxxx, the sum of Seventeen Thousand Five Hundred Dollars
($17,500) (the "Extension Payment") upon execution of this Amending Agreement,
and shall continue the payments of One Thousand Seven Hundred Dollars (the
"Interest Payment") on the first working day of each month as set forth in this
Settlement Agreement, and continuing until the sooner of July 1, 1997, or the
lifting of the restrictions on the stock as defined in the Settlement Agreement,
pursuant to Section 2.2 below. The parties agree that the Extension Payment
shall constitute further punitive damages against MicroTel.
2.2.2 Attorneys' Fees. MicroTel also shall pay Xx. Xxxxx'x reasonable attorney's
fees incurred in connection with this Amending Agreement which currently totals
One Thousand Dollars ($1,000). Accordingly, concurrent with the execution of
this Amending Agreement, MicroTel shall deliver to Xx. Xxxxx a check in the
amount of One Thousand Dollars ($1,000) made payable to "Xxxxx & Xxxxx L.L.P."
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2.2 Lifting of Restrictions. MicroTel shall cause all restrictions with respect
to the transferability of the Stock to be lifted so that on or before June 30,
1997, the Stock shall be fully paid, registered, and non-assessable shares of
MicroTel common stock, freely tradable and without any restrictions as to
transferability.
2.3 Obligations of MicroTel upon Failure to Lift Restrictions. In the event that
MicroTel is not able to comply with the provisions of Section 2.2 or before June
30, 1997, then MicroTel shall pay to Xx. Xxxxx the sum of One Hundred Seventy
Thousand Dollars ($170,000) as liquidated damages on or before July 10, 1997. At
the time this consideration is tendered to Xx. Xxxxx, Xx. Xxxxx shall surrender
the Certificate(s) representing the stock that he is holding as security for
performance. The parties specifically agree that the liquidated damages paid
under this section shall be allocated as follows: twenty-five percent (25%) of
the damages shall consist of Compensatory damages under the April 18, 1995
Letter Agreement, and the remaining shall constitute punitive damages.
2.4 Dismissal of Action. Xx. Xxxxx shall, within two (2) days of his receipt of
the Extension Payment, execute and file with the Superior Court for the County
of Santa Xxxxx an Amended Notice of Structured Settlement which incorporates
this Amending Agreement and the Settlement Agreement, and sets forth the
conditions under which an executed Request for Dismissal with Prejudice of SCSC
Case No. CV 758208 would be filed, along with any and all other documents needed
to effect a complete and final termination of said litigation as to the parties.
Xx. Xxxxx agrees to promptly execute and file the Dismissal with the Superior
Court, immediately notify MicroTel that the Dismissal has been filed, and
provide MicroTel with conformed copies of the fully executed Dismissal, upon
lifting of restrictions on the stock or, in the alternative, payment under
Section 23 above.
2.5 Default by MicroTel. Should MicroTel default under any of the terms of this
amending Agreement, the parties agree that Xx. Xxxxx may seek enforcement of the
terms of this amending Agreement through the provisions of California Code of
Civil Procedure 664.6. In addition should MicroTel fail to make any payment
required when due, Xx. Xxxxx shall be entitled to recover interest on such
unpaid obligation at the rate of one and one half percent (1 1/2%) interest per
month (the "Default Rate").
3.1 Applicability of Settlement Agreement. All other terms and conditions of the
Settlement Agreement shall apply to the parties except as herein provided, and
except as amended herein, the Settlement Agreement is hereby confirmed and
ratified as to its terms by each of the parties and shall continue in full force
and effect.
3.2 Governing Law. This Amending Agreement shall be interpreted and governed
according to the laws of the State of California.
3.3 Binding on Successors. The provisions of this Amending Agreement shall be
binding upon and shall inure to the benefit of the successors, assigns, heirs,
executors, administrators, etc. of the respective parties.
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3.4 Acknowledge Understanding. All parties state that they have carefully read
and understand the foregoing Amending Agreement and know the contents thereof,
that they have consulted with attorneys about its purpose and legal effect, and
that they are signing same as their own free act with advice of counsel.
XXXXXXX XXXX XXXXX
Date: November 30, 1996 /s/ Xxxxxxx Xxxx Xxxxx
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Xxxxxxx Xxxx Xxxxx
MICROTEL INTERNATIONAL, INC.
Date: November 27, 1996 /s/ Xxxxx X. Xxxxxx
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Xxxxx X. Xxxxxx, President
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