EXHIBIT 10.4
MUTUAL SETTLEMENT AND RELEASE AGREEMENT
THIS SETTLEMENT AND RELEASE AGREEMENT (hereinafter referred to as this
"Release"), dated July 31, 2002, is entered into by and between National
Scientific Corporation, a Texas corporation ("NSC"), and Xxx Xxxx, an individual
who resides at 0000 X. Xxxxxx Xx., Xxxxxxxxxx, Xxxxxxx ("Xxxx").
NSC and Xxxx, together with their respective assigns, sureties, heirs,
legal representatives, subrogees, trustees, guardians, successors-in-interest,
predecessors-in-interest and any other person or entity who hereafter asserts
any claims, right, or cause of action through or on behalf of any of the
foregoing, are hereinafter referred to as "Releasing Parties."
RECITALS
WHEREAS, NSC also owes Xxxx Back Wages ("Back Wages") for deferred salary
during calendar year 2002 of $21,000 plus accrued interest of $398.05;
WHEREAS, Xxxx has the following stock option Agreements with NSC dated
which are currently set to expire shortly after Xxxx'x resignation as an NSC
employee:
Number of Exercise
Type of Options Date of Grant Options Price
--------------- ---------------- ------------ ---------
Incentive December 1, 2000 50,000 $1.84
Non-Qualified December 1, 2000 450,000 $1.84
Non-Qualified December 1, 2000 100,000 $.46
Non-Qualified January 12, 2001 75,000 $2.00
Non-Qualified January 24, 2001 75,000 $3.00
Non-Qualified January 16, 2002 300,000 $.25
WHEREAS, the Releasing Parties have reached an agreement to settle any
amounts owed to Xxxx by NSC;
WHEREAS, Xxxx resigned his position as a member of the Board of Directors
effective July 31, 2002;
WHEREAS, Xxxx resigned his position as an Officer of NSC and an employee of
NSC effective July 31, 2002;
WHEREAS, the purpose of this Release is to memorialize the terms of the
settlement and to further provide for a general release relative to all claims
and causes of action that a Releasing Party may now or hereafter acquire and
arising from or relating in any way to the Xxxx Agreement;
WHEREAS, the Releasing Parties and each of them, jointly, separately, and
severally desire to settle all matters between or among them, so that they may
enter into a new relationship where Xxxx is a non-employee contractor to NSC;
WHEREAS, the terms of this separate Contractor Agreement, dated August 1,
2002, and separate and apart from this Release;
NOW, THEREFORE, for and in consideration of the settlement by the Releasing
Parties and other good and valuable consideration, the receipt, adequacy and
sufficiency of which is hereby acknowledged and confessed, the Releasing Parties
hereby agree as follows:
1. Each of the foregoing recitals is incorporated in this Release as a
material term and condition.
2. Effective July 31, 2002, the Company agrees to use best efforts pay Back
Wages plus accrued interest owed to Xxxx of $21,398.05 as soon as it has cash on
hand to reasonably do so, and in any case no later than it pays its other back
wages claims to other Officers and Directors who have deferred wages, and that
the Company will not be released from any of its obligations to Xxxx until such
back wages have between paid in full to Xxxx. Regardless, Xxxx is entitled to
payment of all such Back Wages upon written demand;
3. NSC acknowledges that Xxxx has accrued wages from unpaid vacation
totaling $8,775 as of July 31, 2002, which represents 101.4 hours of earned
vacation hours at an average hourly wage of $86.54. These hours may be exchanged
for paid hours away from the Company while not providing consulting (i.e.
consulting time off), or if any of these hours remain unpaid at the termination
of this agreement, they will be paid in full at that time.
4. NSC agrees to execute new option agreements on or before August 31, 2002
with Xxxx that have terms identical to his existing options agreements, except
that they would be applicable to a contractor role rather than an employee role;
5. The Releasing Parties do hereby compromise, settle, fully release and
forever discharge each other, and their respective successors, predecessors,
employees, agents, attorneys, assigns, representatives, shareholders, officers,
directors, partners, parents, subsidiaries or affiliated companies, and sureties
from any and all past, present, or future claims, demands, actions, causes of
action, costs, judgments, expenses, attorney's fees, damages, and all
liabilities whatsoever, at law or in equity, which the Releasing Parties now
have, claim to have, have ever had, or would but for this Release, have had in
the future arising from, related to or on account of the Settlement Matters.
6. As a part of the consideration for this Release, by executing this
Release, each Releasing Party expressly warrants and represents for himself,
itself, and each of their respective heirs, assigns, sureties, legal
representatives, subrogees, trustees, guardians, successors-in-interest, and any
other person or entity who hereafter asserts any claim, right, or cause of
action through or on behalf of any of the foregoing, to each other that: (i)
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such Releasing Party is legally competent to execute this Release or otherwise
has the organization authority to execute this Release; and (ii) such Releasing
Party has not assigned, pledged, or otherwise in any manner whatsoever sold or
transferred, either by instrument in writing or otherwise, any right, title, or
interest in any Claim.
7. Each Releasing Party expressly warrants and represents that before
executing this Release, each Releasing Party has fully informed himself or
itself of all the terms, contents, conditions and effects of this Release, and
that in making the settlement, no oral or written promise or representation of
any kind has been made to him or by any other Releasing Party, or anyone acting
for any of them, except as expressly stated herein. This Release comprises the
entire agreement, oral and written, between and among the Releasing Parties with
regard to the subject matter of this Release. This Release may not be amended in
any respect except by a writing duly executed by the party sought to be charged
with such amendment. Each Releasing Party has relied solely and completely upon
his, her or its judgment and the advice of his, her or its attorney.
8. This Release shall be construed in accordance with the laws of the State
of Arizona, without regard to the conflict of laws principles thereof.
9. During Xxxx'x tenure as a Director with NSC, the Company provided its
Directors and Officers with Directors and Officers liability insurance (D&O).
The purpose of this D&O insurance was to limit, though not necessarily
eliminate, each Director's individual liability in the event of a shareholder
lawsuit. Xxxx and NSC agree that this Mutual Settlement and Release Agreement in
and of itself should in no way affect the insurance coverage available to Xxxx
for liability arising from future lawsuits regarding acts performed during
Xxxx'x tenure as a Director. . Xxxx and NSC agree that any D&O coverage
available to Directors at the time of Xxxx'x service should be applied to Xxxx
in the same way as it applies to all other then-current Directors. The Company
may or may not offer this protection to future Directors, and the amounts of
coverage for future Directors may change, but that matter is wholly separate
from this Mutual Settlement and Release Agreement.
10. The parties agree that the Indemnity Agreement executed January 23,
2001 continues in effect.
11. If any provision of this Release or any portion of any provision of
this Release is at any time deemed or declared void, voidable, or unenforceable,
then such provision or portion of such provision is severable from the remainder
of the Release, and the remainder of this Release shall be enforced fully.
12. Each Releasing Party recognizes that should any action or other
proceeding be brought to enforce this Release, the party seeking enforcement of
this Release shall, if he or it prevails, be entitled to recover reasonable
attorney's fees and other expenses incurred in connection with such action or
proceeding.
13. EACH RELEASING PARTY ACKNOWLEDGES THAT HE OR IT HAS READ THIS RELEASE
IN ITS ENTIRETY AND THAT HE OR IT UNDERSTANDS AND APPRECIATES ITS CONTENTS AND
SIGNIFICANCE AND HEREBY EXECUTES THE SAME AND MAKES THE RELEASE PROVIDED FOR
VOLUNTARILY AND OF HIS OR ITS OWN FREE WILL.
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IN WITNESS WHEREOF, the Releasing Parties have executed this Release on
July 31, 2002 in Phoenix, Arizona,
NATIONAL SCIENTIFIC CORPORATION Xxx X.Xxxx
By: /s/ Xxxxxxx X. Xxxxxxxx By: /s/ Xxx X. Xxxx
------------------------------- --------------------------------
Name: Xxxxxxx X. Xxxxxxxx Name: Xxx X. Xxxx
Title: Chief Executive Officer
Date: July 31, 2002 July 31, 2002
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