SETTLEMENT AGREEMENT
THIS SETTLEMENT AGREEMENT ("Agreement") is entered into and is effective
as of May 6, 2000 by and between Crys*Tel Xxxxxxxxxxxxxxxxxx.xxx, Inc., a
Florida corporation with principal offices at 0000 Xxxxxxxxx Xxxxxx, Xxxxx
0000, Xx Xxxxx, Xxxxxxxxxx 00000 (Corporate Releasee), Xxxxxxx Xxxx (A Musa),
Xxxxxx Xxxxx (Xxxxx), and Xxxxxxx X. Xxxxxxx, Xx. (X.X. Xxxxxxx) each with
principal offices at 0000 Xxxxxxxxx Xxxxxx, Xxxxx 0000, Xx Xxxxx, Xxxxxxxxxx
00000 (collectively, as the Individual Releasees) and Xxxxxx Xxxxxxx (the First
Releasor), Xxxxxxx Xxxxxxx (the Second Releasor), Kaiden, SA with principal
address at Galerie St. Francois 8 - X.X. Xxx 0000 - XX - 0000, Xxxxxxxx,
Xxxxxxxxxxx (the Kaiden Releasor), Packer Information Systems, Inc. (the Packer
Releasor), and PacRim Information Systems, Inc. with principal address at 0000
Xxxxxx Xxxxxx, Xxxx Xxxxxxxxx, Xxxxxxx Xxxxxxxx, Xxxxxx X0X 0X0 (the PacRim
Releasor) and Crys-Tel International, Inc. (the CT Releasor). Musa, Nixon, and
X.X. Xxxxxxx, individually and collectively together with the Corporate
Releasee are hereinafter identified as the Releasees and, in addition, the
First Releasor, the Second Releasor, the Kaiden Releasor, the Packer Releasor,
the PacRim Releasor, and the CT Releasor are collectively identified herein as
the Releasors.
WHEREAS:
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A. The Kaiden Releasor, the PacRim Releasor and the Corporate Releasee
are parties to that certain understanding captioned as Heads of
Agreement and dated November 18, 1998 (the Understanding).
In accordance with the Understanding, the Corporate Releasee issued
certain shares of the capital stock of the Corporate Releasee as
follows:
(i) six million seven hundred fifty thousand (6,750,000) shares of
the Common Stock of Corporate Releasee to the Kaiden Releasor
in the form of stock certificate number 2001 (the Kaiden Common
Shares);
(ii) two million two hundred fifty thousand (2,250,000) shares of
the Common Stock of the Corporate Releasee to the Packer
Releasor in the form of stock certificate number 2002 (the
Packer Common Shares);
(iii) five million six hundred twenty-five thousand (5,625,000)
shares of the Preferred Stock of the Corporate Releasor to the
Kaiden Releasee in the form of certificate number P201 (the
Kaiden Preferred Shares);
(iv) one million eight hundred seventy-five thousand (1,875,000)
shares of the Preferred Stock of the Corporate Releasor to the
Packer Releasee in the form of stock certificate number P202
(the Packer Preferred Shares); and
(v) and the Corporate Releasee shall, upon receipt of all said
shares, cancel and return said shares to its treasury.
The First Releasor has filed Complaint Number 744518 in Superior
Court for the County of San Diego (the Court), State of California
(the Civil Action) wherein the First Releasor alleged certain injury
and sought certain damages against the Releasees and certain other
persons named in the Civil Action.
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All parties to this Agreement hereby acknowledge and agree that this
Agreement is an accord and satisfaction of contested matters. The
Releasors and each person who is named and listed as Releasors and
the Releasees and each person who is named and listed above as a part
of the Releasees acknowledges and agrees that this Agreement is not
and shall not be construed as an admission of liability or
responsibility on the part of any party with each party expressly
disclaiming any such liability and each party further agrees that,
pursuant to California Evidence Code Section 622, said disclaimer of
liability is part of the consideration given by each party to this
Agreement.
The Releasees and the Releasors, subject to the terms and conditions
of this Agreement, seek to fully and finally settle and terminate all
liabilities and obligations that the Releasees (including, but not
limited to, any one or more of the Releasees) have or may have to the
Releasors (including, but not limited to, any one or more of the
Releasors) and to fully and finally settle and terminate all
liabilities and obligations that the Releasors (including, but not
limited to, any one or more of the Releasors) may have to the
Releasees (including, but not limited to any one or more of the
Releasees).
NOW, THEREFORE, THE PARTIES AGREE AS FOLLOWS:
---------------------------------------------
1.00. RELEASE OF CLAIMS BY THE RELEASORS AND RELEASEES.
1.01. RELEASE BY RELEASORS. In consideration of: (i) the mutual releases
herein; (ii) the indemnification set forth herein; (iii) the delivery of the
Kaiden Common Shares, the Packer Common Shares, the Kaiden Preferred Shares,
and the Packer Preferred Shares by the Releasors to the Corporate Releasee as
set forth in Section 2.00 of this Agreement; (iv) the First Releasors assurance
that he will, on behalf of himself and on behalf of all other Releasors,
promptly and before May 9, 2000 file a Stipulation for Entry of Judgment and
Dismissal With Prejudice and Order Thereon, to fully and irrevocably dismiss
the Civil Action; and (v) together with other good and valuable consideration,
the receipt and sufficiency of which is hereby acknowledged and upon execution
of this Agreement by all Releasors and all Releasees, then the Releasors,
individually and collectively and on their own behalf and on behalf of each of
all their current and former officers, directors, agents, parent corporations,
sister corporations, affiliates, attorneys, heirs, successors in interest, and
assigns, hereby fully and forever releases, acquits and discharges each and
every one of the Releasees and each of their current and former officers,
directors, agents, parent corporations, sister corporations, affiliates, heirs,
assigns, trustees, trustors, beneficiaries, attorneys, together with all
affiliates, business associates, all entities currently or previously
associated or affiliated with any one or more of the Releasees and each of
them, of and from any and all liabilities, claims, demands, actions, causes of
action and rights (contingent accrued, or otherwise) which the Releasors
(including any one or more of them) may now have against any or all parties
released.
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1.02. RELEASE BY RELEASEES. In consideration of: (i) the mutual releases
herein; (ii) the indemnification set forth herein; (iii) the delivery of the
Kaiden Common Shares, the Packer Common Shares, the Kaiden Preferred Shares,
and the Packer Preferred Shares by the Releasors to the Corporate Releasee as
set forth in Section 2.00 of this Agreement whereby all said shares shall be
cancelled; and (iv) the First Releasors assurance that he will, on behalf of
himself and on behalf of all other members of the Releasor Group, promptly and
before May 9, 2000 file a Stipulation for Entry of Judgment and Dismissal With
Prejudice and Order Thereon, to fully and irrevocably dismiss the Civil Action;
(v) together with other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged and upon execution of this
Agreement by all Releasors and all Releasees, then the Releasees, individually
and collectively and on their own behalf and on behalf of each of all their
current and former officers, directors, agents, parent corporations, sister
corporations, affiliates, attorneys, heirs, successors in interest, and
assigns, hereby fully and forever releases, acquits and discharges each and
every one of the Releasors and each of their current and former officers,
directors, agents, parent corporations, sister corporations, affiliates, heirs,
assigns, trustees, trustors, beneficiaries, attorneys, together with all
affiliates, business associates, all entities currently or previously
associated or affiliated with any one or more of the Releasors and each of
them, of and from any and all liabilities, claims, demands, actions, causes of
action and rights (contingent accrued, or otherwise) which the Releasees
(including any one or more of them) may now have against any or all parties
released.
1.03. MUTUAL WAIVER; SECTION 1542. In executing and delivering this
Agreement and releasing each of the other respective parties herein, each party
hereby waives any and all rights, which may exist under Section 1542 of the
Civil Code of the State of California, which provides as follows:
A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH
THE CREDITOR DOES NOT KNOW OR EXPECT 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.
1.04. ACTIONS TO BE TAKEN UPON EXECUTION. All of the parties hereto agree
that upon execution of this Agreement:
(a) Releasors shall immediately, fully, and irrevocably abandon the Civil
Action pursuant to California Rules of Court; and
(b) Releasors shall, on or before May 9, 2000 file and present to the
Court the Stipulation for Entry of Judgment and Dismissal and Order
Thereon dismissal with prejudice and irrevocably and fully withdraw
all actions the Releasors, or any of them, have filed or have pending
against the Releasees and any one or more of them;
(c) Releasors shall promptly, without delay, and before May 9, 2000
transfer and deliver the Kaiden Common Shares, the Packer Common
Shares, the Kaiden Preferred Shares, and the Packer Preferred Shares
to the Corporate Releasee (as set forth in Section 2.00 of this
Agreement) and, in so doing, transfer all right, title, and interest
to all said shares to the Corporate Releasee free from all claims,
interests, encumbrances, and other charges that may be asserted by
any third party.
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2.00. OBLIGATIONS OF THE FIRST RELEASOR. Upon execution of this Agreement
by the First Releasor and without any delay, the First Releasor shall deliver
the Kaiden Common Shares, the Packer Common Shares, the Kaiden Preferred
Shares, and the Packer Preferred Shares by the Releasors to the Corporate
Releasee, or its designated agent. In addition, the First Releasor shall:
2.01. DELIVERY OF STIPULATIONS. On or before May 9, 2000, execute and
deliver (via First Class U.S. Mail, Postage Prepaid) to the Corporate
Releasee's counsel, Xxxxxxx X. Xxx, at 0000 Xxxxxxxxx Xxxxxx, Xxxxx 000,
Xx Xxxxx, Xxxxxxxxxx 00000 (the Releasee's Counsel), a Stipulation for Entry of
Judgment and Dismissal and Order Thereon With Prejudice.
3.00. REPRESENTATIONS AND WARRANTIES OF ALL THE RELEASORS. The Releasors
individually and collectively hereby warrant and represent that:
3.01. the Kaiden Releasor owns, and will own on the date and time at which
the Kaiden Common Shares and the Kaiden Preferred Shares are delivered to the
Releasees Counsel, all right, title, and interest to the Kaiden Common Shares
and the Kaiden Preferred Shares with full right to convey the Kaiden Common
Shares and the Kaiden Preferred Shares to the Corporate Releasee free from any
claims, interests, charges, or interests of any third party; and
3.02. the Packer Releasor owns, and will own on the date and time at which
the Packer Common Shares and the Packer Preferred Shares are delivered to the
Releasees Counsel, all right, title, and interest to the Packer Common Shares
and the Packer Preferred Shares with full right to convey the Packer Common
Shares and the Packer Preferred Shares to the Corporate Releasee free from any
claims, interests, charges, or interests of any third party.
4.00. TERMINATION OF PRIOR AGREEMENTS. The parties hereby acknowledge that
the subject matter of the Civil Action involves, in part, the Understanding.
The parties hereto who are parties to the Understanding hereby terminate the
Understanding and expressly intend that the releases provided for herein shall
release each and every party thereto from all obligations and liabilities
thereunder. Each of the parties to the Understanding further agree that they
have not assigned the Understanding or any rights accruing to them thereunder
to any third party and agree to hold each and every other party to the
Understanding harmless from and against any claims or interests that may be
asserted by any person or entity that may later assert that any rights as an
assignee or transferee thereby.
5.00. INTERPRETATION OF RELEASE. Notwithstanding anything herein set forth
to the contrary, no provision of this Agreement: (i) shall constitute or be
construed as a release or discharge of any obligation, claims or causes of
action hereafter arising out of the breach of any of the terms or provisions of
this Agreement; nor (ii) shall it constitute an admission of liability by any
party to any other party.
6.00. INDEMNIFICATION BY THE RELEASORS. The Releasors shall, upon receipt
of an executed copy of this Agreement, indemnify the Releasees and each person
released and discharged, and their respective heirs, assigns, trustees,
trustors, beneficiaries, attorneys, fiduciaries, employees, and consultants,
and each of them (all collectively, as the "First Indemnitees"), and shall hold
the First Indemnitees harmless from and against any and all loss, expense
and/or liability arising directly or indirectly out of the enforcement or
attempted enforcement by anyone (including, but not limited to, all current and
former officers, directors, shareholders, parent corporations, sister
corporations, agents, fiduciaries, and all current and previous affiliates of
the Releasees, and each of them) against any such indemnitee of any of the same
liabilities, claims, demands, actions, causes of action, and rights released
and discharged by each such indemnitor, respectively. The Releasors further
indemnify and agree to hold the Corporate Releasee harmless from and against
any claims, expenses, charges, and all other costs and expenses (including
attorneys fees and necessary disbursements) that the Corporate Releasee may
incur in defending any claims by persons who may assert an ownership or other
interest in the Kaiden Common Shares, the Packer Common Shares, the Kaiden
Preferred Shares, and the Packer Preferred Shares to be delivered to the
Corporate Releasee pursuant to Section 2.00 of this Agreement.
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7.00. INDEMNIFICATION BY THE RELEASEES. The Releasees shall, upon receipt
of an executed copy of this Agreement and the First Releasors full and faithful
performance of all the obligations recited in Section 2.00 and 2.01 of this
Agreement (which shall result in the cancellation of all shares identified in
Section 2.00 of this Agreement), indemnify the Releasors and each person
released and discharged, and their respective heirs, assigns, trustees,
trustors, beneficiaries, attorneys, fiduciaries, employees, and consultants,
and each of them (all collectively, as the "Second Indemnitees"), and shall
hold the Second Indemnitees harmless from and against any and all loss, expense
and/or liability arising directly or indirectly out of the enforcement or
attempted enforcement by anyone (including, but not limited to, all current and
former officers, directors, shareholders, parent corporations, sister
corporations, agents, fiduciaries, and all current and previous affiliates of
the Releasors, and each of them) against any such indemnitee of any of the same
liabilities, claims, demands, actions, causes of action, and rights released
and discharged by each such indemnitor, respectively.
8.00. WAIVER OF SERVICE OF SUMMONS AND COMPLAINT. Each of the Releasees
hereby waives service of summons and complaint in the Civil Action and
expressly agrees that they are a party to the Stipulation for Entry of Judgment
with Prejudice and Order Thereon.
9.00. MISCELLANEOUS.
9.01. FURTHER ASSURANCES. Each of the parties shall hereafter execute all
documents and do all acts reasonably necessary to effect the provisions of this
Agreement.
9.02. INDEPENDENT COUNSEL. Each of the parties to this Agreement
acknowledges and agrees that it has had an opportunity to be represented by
independent counsel of its own choice throughout all negotiations which
preceded the execution of this Agreement and the transaction referred to in
this Agreement, and each has executed this Agreement with the consent and upon
the advice of said independent counsel. Each party represents that he or it
fully understands the provision of this Agreement, has consulted with counsel
concerning its terms, and executes this Agreement of his or its own free choice
without reference to any representations, promises or expectations not set
forth herein.
9.03. SUCCESSORS. The provisions of this Agreement shall be deemed to
obligate, extend to, and inure to the benefit of the successors, assigns,
transferees, grantees, and indemnitees of each of the parties to this
Agreement.
9.04. ATTORNEYS' FEES. In the event of a dispute between the parties
concerning the enforcement or interpretation of this Agreement, the prevailing
party in such dispute, whether by legal proceedings or otherwise, shall be
reimbursed immediately for the reasonably incurred attorneys' fees and other
costs and expenses by the other parties to the dispute.
9.05. INTEGRATION AND AMENDMENTS. This Agreement, and those stipulations
and other exhibits attached hereto, and which are hereby expressly incorporated
herein by reference, after full execution, acknowledgment and delivery,
memorializes and constitutes the entire agreement and understanding between the
parties and supersedes and replaces all prior negotiations and agreements of
the parties, whether written or unwritten. Each of the parties to this
Agreement acknowledges that no other party, nor any agent or attorney of any
other party has made any promises, representations or warranty whatsoever,
express or implied, which is not expressly contained in this Agreement; and
each party further acknowledges the he or it has not executed this Agreement in
reliance upon any belief as to any fact not expressly recited above herein. No
amendment or waiver of any provision, term, or condition of this Agreement
shall be effective unless the same is in writing and executed by the party
against whom enforcement is sought.
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9.06. INTERPRETATION. Whenever the context so requires: the singular number
shall include the plural; the plural shall include the singular; and the
masculine gender shall include the feminine and neuter genders.
9.07. CAPTIONS. The captions by which the sections and subsections of this
Agreement are identified are for convenience only, and shall have no effect
whatsoever upon its interpretation.
9.08. EXHIBITS. Exhibit A is an integral part of this Agreement and is
incorporated by reference herein.
9.09. SEVERANCE. If any provision of this Agreement is held to be illegal
or invalid by a court of competent jurisdiction, such provision shall be deemed
to be severed and deleted; and neither such provision, nor its severance and
deletion, shall affect the validity of the remaining provisions.
9.10. DISCLAIMER OF LIABILITY. The parties to this Agreement hereby
expressly recognize and agree that the terms and conditions of this Agreement
constitute an accord and satisfaction of contested matters and neither the
offer nor the acceptance of the terms and conditions hereof represent an
admission of liability or responsibility on the part of any party, each party
expressly disclaiming any such liability.
9.11. EXPENSES ASSOCIATED WITH THIS AGREEMENT. Each of the parties hereto
agrees to bear its own costs, attorneys' fees, and related expenses associated
with this Agreement.
9.12. COUNTERPARTS. This Agreement may be executed in any number of
counterparts.
9.13. SURVIVAL OF WARRANTIES. All representations and warranties made in
this Agreement shall survive any closing and any execution of this Agreement
for a period of three (3) years after any applicable period provided under any
statutes of limitation, repose, or otherwise.
9.14. JOINT AND SEVERAL OBLIGATIONS. Each obligation imposed on the
Releasors by this Agreement shall be deemed to be a joint and several
obligation of each of the Releasors as if such obligation were imposed
individually upon each of them. Each obligation imposed on the Releasees by
this Agreement shall be deemed to be a joint and several obligation of each of
the Releasees as if such obligation were imposed individually upon each of
them.
9.15. POWER TO BIND. Each party to this Agreement represents that it has
read and understands the contents of this Agreement and is empowered and duly
authorized to execute it in his individual and representative capacities.
9.16. INTERPRETATION OF AGREEMENT. This Agreement shall be interpreted in
accordance with the law of the State of California as if this Agreement was
fully performed and executed within the State of California.
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9.17. ARBITRATION. Any dispute or claim arising to or in any way related to
this Agreement shall be settled by arbitration in San Diego, California but any
dispute or controversy arising out of or interpreting this Agreement shall be
settled in accordance with the laws of the State of California as if this
Agreement were executed and all actions were performed hereunder within the
State of California. All arbitration shall be conducted in accordance with the
rules and regulations of the American Arbitration Association ("AAA"). AAA
shall designate an arbitrator from an approved list of arbitrators following
both parties' review and deletion of those arbitrators on the approved list
having a conflict of interest with either party. Each party shall pay its own
expenses associated with such arbitration (except as set forth in Section 9.04
Above). A demand for arbitration shall be made within a reasonable time after
the claim, dispute or other matter has arisen and in no event shall such demand
be made after the date when institution of legal or equitable proceedings based
on such claim, dispute or other matter in question would be barred by the
applicable statutes of limitations. The decision of the arbitrators shall be
rendered within 60 days of submission of any claim or dispute, shall be in
writing and mailed to all the parties included in the arbitration. The decision
of the arbitrator shall be binding upon the parties and judgement in accordance
with that decision may be entered in any court having jurisdiction thereof.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date set
forth above and each of them expressly acknowledge and agree that each
individual signing this Agreement warrants and represents that he has the
authority to execute this Agreement on behalf of the organization or entity on
whose behalf he signs this Agreement.
FOR: FIRST RELEASOR
/S/ Xxxxxx Xxxxxxx
------------------
Xxxxxx Xxxxxxx
Individually
FOR: SECOND RELEASOR
/S/ Xxxxxxx Xxxxxxx
-------------------
Xxxxxxx Xxxxxxx
Individually
FOR: KAIDEN RELEASOR
/S/ Xxxxxx Xxxxxxx
------------------
Settlement Agreement of May 6, 2000
FOR: PACKER RELEASOR
/S/ Xxxxxx Xxxxxxx
------------------
FOR: PACRIM RELEASOR
/S/ Xxxxxx Xxxxxxx
------------------
FOR: CT RELEASOR
/S/ Xxxxxx Xxxxxxx
------------------
FOR: CORPORATE RELEASEE
/S/ Xxxxxxx Xxxx
----------------
By: Xx. Xxxxxxx Xxxx
President & CEO
FOR: MUSA
/S/ Xxxxxxx Xxxx
----------------
Xx. Xxxxxxx Xxxx
(Individually)
Settlement Agreement of May 6, 2000
FOR: XXXXX
/S/ Xxxxxx Xxxxx
----------------
Xxxxxx Xxxxx
FOR: X.X. XXXXXXX
/S/ Xxxxxxx Xxxxxxx
-------------------
Xxxxxxx X. Xxxxxxx
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Attachment to Settlement Agreement of May 6, 2000
EXHIBIT A
CONSULTING AGREEMENT
THIS CONSULTING AGREEMENT (the Consulting Agreement) IS ENTERED INTO AND
IS EFFECTIVE THIS 6th day of May 2000 by and between Crys*Tel
Xxxxxxxxxxxxxxxxxx.xxx, Inc., a Florida corporation with principal offices at
0000 Xxxxxxxxx Xxxxxx, Xxxxx 000, Xx Xxxxx, Xxxxxxxxxx 00000 (the Company) and
Xxxxxx Xxxxxxx (Consultant).
WHEREAS:
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1. The Company seeks consulting services from Consultant and Consultant
is willing to provide consulting services to the Company subject to
the terms and conditions of this Agreement.
2. Consultant has worked with the Company and is familiar with the
Company's business, proposed strategy, and the officers and directors
of the Company and their background and prior business experience.
3. Consultant is experienced in investing in small, publicly-held
development-stage companies that have no history of generating any
revenues or profits, have limited managerial and financial resources,
have no history of proving commercial acceptance of their business
strategy, and whose common stock is sporadically traded in limited
quantities on the NASDAQ Over-The Counter pink sheets and electronic
markets.
4. Consultant is an astute and experienced business consultant with
worldwide business contacts and investment and financial experience
in the United States, Canada, Europe, and elsewhere.
5. Consultant is an Accredited Investor as that term is defined under
Rule 501 of Regulation D of the Securities Act of 1933 and is able to
assume the risks associated with making an investment in the Company.
6. Consultant is not relying upon the Company or its officers,
directors, employees, agents, or attorneys for any investment or tax
advice in connection with the investment Consultant is making
pursuant to this Agreement.
NOW, THEREFORE, THE PARTIES AGREE AS FOLLOWS:
---------------------------------------------
1.00. DESCRIPTION OF CONSULTING SERVICES. Consultant agrees to be available
to provide the following consulting services for a period of one (1) year from
the date first stated above:
1.01. Assist the Company in identifying one or more potential acquisition
candidates;
1.02. Assist the Company in evaluating alternative financing strategies;
and
1.03. Assist and advise the Company's Board of Directors in evaluating its
business plan.
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The parties agree that the term of this Consulting Agreement may be extended,
by written agreement of the parties for additional one year periods, upon
ninety (90) days written notice to each party prior to the expiration of this
Agreement.
2.00. FEE TO BE PAID CONSULTANT. In consideration for the services to be
rendered by Consultant as described in Section 1.00 of this Agreement, the
Company shall, within thirty (30) days of the date first stated above, issue to
Consultant (or Consultants assignees) an aggregate of Two Million (2,000,000)
shares of the Common Stock (the Shares) of the Company on a private placement
basis as a fee for all services to be rendered by Consultant under this
Agreement (the Fee). All Shares shall be deemed restricted securities in
accordance with the Securities Act of 1933 and the private placement exemptions
allowed under applicable state securities laws wherein all acts to be performed
under this Consulting Agreement may be performed.
2.01. ACKNOWLEDGMENT OF FACTS RE: THE COMPANY. Consultant acknowledges
that: (i) he has a pre-existing business relationship with the Company; (ii) he
has not been solicited by the Company in connection with the issuance of the
Shares; (iii) he is sophisticated and experienced in investing in small
companies whose common stock is traded only on a sporadic basis in the OTC pink
sheets or similar markets; and (iv) he has had ample opportunity to ask
questions of the Company's management regarding the Company's affairs and to
receive answers to all said questions; and (v) he has received the disclosures
regarding the Company's business and financial affairs as recited in Section
2.02 which he acknowledges has assisted him in making an informed investment
decision.
2.02. ACKNOWLEDGMENT OF RECEIPT OF DISCLOSURES. Consultant acknowledges and
agrees that prior to execution of this Consulting Agreement, Consultant has
reviewed and understands: (i) the Company's 1998 audited financial statements
together with all attachments thereto; (ii) the Company's unaudited financial
statements for the nine months ending September 30, 1999 together with all
attachments thereto; (iii) the Company's Form 10-SB, as filed with the U.S.
Securities and Exchange Commission (the SEC) and which is available at the
SEC's internet Web Site; and (iii) such other press releases issued by the
Company regarding the Company's plans, intentions, and strategies.
2.03. ACKNOWLEDGMENT OF RISKS & HIGH RISKS OF INVESTMENT. Consultant
acknowledges and agrees that he understands that the purchase of the Company's
Shares involves substantial and significant risks in that the Company is a
development-stage company, with no history of generating any sales revenues or
profits. Consultant further understands that the Company's management have no
prior experience in managing or operating a business as contemplated by the
Company and that the Company will need to raise substantial additional amounts
of external capital and that there can be no assurance that the Company will be
successful in raising any additional capital or, if it is successful, that it
can be raised on terms that are reasonable in light of the Company's current
circumstances. Further, Consultant acknowledges and agrees that he is acquiring
the Shares for his home account and not with a view to distribution and that
the Shares will bear a restricted securities legend consistent with the
requirements of the Securities Act of 1933. The Shares issued to Consultant
pursuant to this Consulting Agreement carry no registration rights and
represent a small, minority interest in the outstanding common stock of the
Company and, as such, are subordinate to the Company's existing and future
creditors. Consultant will need to consult his own tax and investment advisor
and is not relying upon the Company for any investment or tax advice or the
suitability of this investment. The Company faces intense competition in its
markets from other, well-established competitors who possess significantly
greater financial and managerial resources than the Company. The Company has
incurred substantial and continuing losses and there can be no assurance that
the Company will not continue to incur significant losses in the future. The
Company can not and expressly does not make any prediction as to the success of
its business strategy and there can be no assurances that the Shares issued to
Consultant pursuant to this Agreement will have any market liquidity or, if a
trading market for the Company's common stock is achieved, that the Shares will
hold or achieve any value.
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3.00. INDEPENDENT CONTRACTOR & RESPONSIBILITY FOR EXPENSES. Consultant
acknowledges and agrees that he is an independent contractor and that all
services to be performed by him under this Consulting Agreement or contemplated
by this Agreement shall be performed as an independent contractor. Consultant
agrees to indemnify and hold the Company harmless from and against all
employment and other taxes that may arise from or out of this Consulting
Agreement. Further, Consultant acknowledges and agrees that he shall be solely
responsible for all costs and expenses he incurs in connection with the
services to be performed by Consultant and rendered to the Company pursuant to
this Consulting Agreement.
4.00. OBLIGATIONS OF COMPANY. The Company shall cooperate with Consultant,
provide Consultant with copies of necessary reports, correspondence,
agreements, other documents and information requested by Consultant and deemed
needed by the Company. The parties hereto expressly agree that Consultant's
evaluation of the Company's affairs requires that the information required by
Consultant shall be broadly construed but both parties understand that if the
Company requires any information to remain confidential, Consultant and
Consultant's agents shall not release said information without the written
consent of the Company.
5.00. TERMINATION. This Agreement may be terminated by either party hereto
at any time after one year from the date first stated above with or without
cause except that the Consultant shall have no obligation to refund any portion
of the Fee.
6.00. MISCELLANEOUS.
6.01. SUCCESSORS. The provisions of this Agreement shall be deemed to
obligate, extend to and inure to the benefit of the successors of each of the
parties to this Agreement.
6.02. INDEPENDENT COUNSEL. Each of the parties to this Agreement
acknowledges and agrees that it has been represented by independent counsel of
its own choice throughout all negotiations which preceded the execution of this
Agreement and the transactions referred to in this Agreement, and each has
executed this Agreement with the consent and upon the advice of said
independent counsel. Each party represents that he or it fully understands the
provisions of this Agreement, has consulted with counsel concerning its terms
and executes this Agreement of his or its own free choice without reference to
any representations, promises or expectations not set forth herein.
6.03. INTEGRATION. This Agreement, after full execution, acknowledgment and
delivery, memorializes and constitutes the entire agreement and understanding
between the parties and supersedes and replaces all prior negotiations and
agreements of the parties, whether written or unwritten, or related thereto.
Each of the parties to this Agreement acknowledges that no other party, nor any
agent or attorney of any other party has made any promises, representations, or
warranty whatsoever, express or implied, which is not expressly contained in
this Agreement; and each party further acknowledges that he or it has not
executed this Agreement in reliance upon any belief as to any fact not
expressly recited herein above.
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6.04. ATTORNEYS FEES. In the event of a dispute between the parties
concerning the enforcement or interpretation of this Agreement, the prevailing
party in such dispute, whether by legal proceedings or otherwise, shall be
reimbursed immediately for the reasonably incurred attorneys' fees and other
costs and expenses by the other parties to the dispute.
6.05. INTERPRETATION. Wherever the context so requires: the singular number
shall include the plural; the plural shall include the singular; and the
masculine gender shall include the feminine and neuter genders.
6.06. CAPTIONS. The captions by which the sections and subsections of this
Agreement are identified are for convenience only, and shall have no effect
whatsoever upon its interpretation.
6.07. AMENDMENTS. No amendment to this Agreement shall be effective unless
the same shall be in writing executed by the party against whom enforcement is
sought.
6.08. SEVERANCE. If any provision of this Agreement is held to be illegal
or invalid by a court of competent jurisdiction, such provision shall be deemed
to be severed and deleted; and neither such provision, nor its severance and
deletion, shall affect the validity of the remaining provisions.
6.09. COUNTERPARTS. This Agreement may be executed in any number of
counterparts.
6.10. EXPENSES ASSOCIATED WITH THIS AGREEMENT. Each of the parties hereto
agrees to bear its own costs, attorney's fees and related expenses associated
with this Agreement.
6.11. ARBITRATION. Any dispute or claim arising to or in any way related to
this Agreement shall be settled by arbitration in San Diego, California. All
arbitration shall be conducted in accordance with the rules and regulations of
the American Arbitration Association ("AAA"). AAA shall designate an arbitrator
from an approved list of arbitrators following both parties' review and
deletion of those arbitrators on the approved list having a conflict of
interest with either party. Each party shall pay its own expenses associated
with such arbitration (except as set forth in Section 6.04 Above). A demand for
arbitration shall be made within a reasonable time after the claim, dispute or
other matter has arisen and in no event shall such demand be made after the
date when institution of legal or equitable proceedings based on such claim,
dispute or other matter in question would be barred by the applicable statutes
of limitations. The decision of the arbitrators shall be rendered within 60
days of submission of any claim or dispute, shall be in writing and mailed to
all the parties included in the arbitration. The decision of the arbitrator
shall be binding upon the parties and judgement in accordance with that
decision may be entered in any court having jurisdiction thereof.
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6.12. CONFIDENTIALITY. The parties hereto agree that the terms of this
Agreement and all documents released to Consultant pursuant to this Agreement
or any documents, reports, memoranda, or correspondence constituting parts of
this transaction shall be kept strictly confidential except to the extent
necessary to protect the rights of the parties hereto.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date set
forth above.
FOR THE COMPANY:
By: /S/ Xxxxxxx Xxxx
----------------
Xx. Xxxxxxx Xxxx
President
FOR CONSULTANT:
By: /S/ Xxxxxx Xxxxxxx
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Xxxxxx X. Xxxxxxx
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