SETTLEMENT AGREEMENT AND MUTUAL RELEASE
1. Parties. This settlement agreement and mutual release ("Mutual Release") is
effective as of November __, 2002, by and between Oxford Knight International,
Inc., a Texas corporation ("Oxford"), Xxxxx & Spitts, Inc., a Texas corporation
("Xxxxx Texas"), Fabricating Solutions, Inc., a Texas corporation
("Fabricating"), Har-Whit, Inc., a Texas corporation ("Har"), Har-Whit/Xxxxx &
Spitts, Inc., a Texas corporation ("Har Pitt"), Xxxxx and Spitts, Inc., a Nevada
corporation ("Xxxxx Nevada"), American International Industries, Inc.
"(American"), Xxxx Syracuse and Xxxxxxxx Syracuse (collectively referred to as
"Syracuse" unless otherwise noted), Xxxxxx Xxxx ("Dror"), Vanderkam & Xxxxxxx
("Xxxxxxxxx") and Xxxxxx & Xxxxxxxxx ("Xxxxxx") collectively referred to as the
parties ("Parties").
Facts.
2.1 In March 0000, Xxxxxx, Xxxxx Xxxxx, and Xxxx Syracuse executed two
Promissory Notes with American for an aggregate of $2,000,000 plus interest
a copy of which are attached as Exhibit "A" as well as Security Agreements,
copies of which are attached hereto as Exhibit "B", a Deed of Trust,
Security Agreement and Financing Statement, a copy of which is attached
hereto as Exhibit "C", and a Stock Purchase Agreement attached hereto as
Exhibit "D".
2.2 In December 0000, Xxxxxx issued shares of Series A convertible preferred
stock to American.
2.3 The Parties have entered into various other agreements.
2.4 In October, 2002, the Parties and Xxxxxxx X. Xxxxxx, with the exception of
Vanderkam and Xxxxxx, entered into a Settlement Agreement and Mutual
Release of which the obligations and consideration surrounding Xxxxxxx X.
Xxxxxx remain in effect and for which the other terms this Mutual Release
supercedes.
2.5 In July, 2002, Vanderkam and Xxxxxx each received 400,000 shares of Xxxxx
Nevada common stock pursuant to an S-8 registration statement in
consideration for services rendered.
2.6 In November 2002, Vanderkam and Xxxxxx each received 400,000 shares of
Xxxxx Nevada common stock pursuant to an S-8 registration statement in
consideration for services rendered.
2.7 On November 6, 2002, American through its counsel stated that various
parties including, but not limited to, Xxxx Syracuse, Oxford, and Har Pitt
defaulted under a note and deed of trust by failing to pay a promissory
note dated March 10, 1997 in the original amount of $650,000 constituting a
default. American further stated that the entire indebtedness due under the
$1,000,000 note has been accelerated plus all accrued interest. Xxxx
Syracuse, Oxford and Har Pitt disagree with the statements made by American
and its counsel. Upon execution of this Mutual Release, it is deemed that
the default is cured.
3. Mutual Release.
3.1 In consideration of the agreements and covenants set forth hereinabove
and hereinbelow, the sufficiency of which American and Dror hereby acknowledge
and confess, for themselves and/or themself, their agents, servants, directors,
managers, members, representatives, successors, employees and assigns, to the
extent legally allowed, hereby covenant and agree as follows:
3.1.1Except as otherwise provided herein, that American and Dror hereby
release, acquit and forever discharge Oxford, Xxxxx Texas,
Fabricating, Xxxxx Nevada, Har, Har Pitt, Syracuse, Vanderkam &
Xxxxxx, their agents, officers, directors, servants, representatives,
successors, employees and assigns from any and all rights,
obligations, claims, demands and causes of action, whether in
contract, tort, or state and/or federal securities regulations,
arising from or relating to the Promissory Notes; Security Agreements;
Deed of Trust, Security Agreement and Financing Statement; Stock
Purchase Agreement; Settlement Agreement and Mutual Release and all
correspondence, agreements and/or stock rights, including all
obligations arising therefrom, and omissions and/or conduct of Oxford,
Xxxxx Texas, Fabricating, Xxxxx Nevada, Vanderkam, Syracuse, and
Xxxxxx and/or their agents, servants, representatives, successors,
employees, directors, officers and assigns, relating to the Oxford,
Xxxxx Texas, Fabricating, Xxxxx Nevada, Har, Har Pitt, Syracuse,
Vanderkam, and Xxxxxx correspondence, agreements and stock rights.
3.2 In consideration of the agreements and covenants set forth hereinabove
and hereinbelow, the sufficiency of which is hereby acknowledged and confessed,
Oxford, Xxxxx Texas, Fabricating, Xxxxx Nevada, Har, Har Pitt, Syracuse,
Vanderkam, and Xxxxxx for themselves and their agents, servants,
representatives, successors, employees and assigns to the extent legally
allowed, hereby covenant and agree as follows:
3.2.1That Oxford, Xxxxx Texas, Fabricating, Xxxxx Nevada, Har, Har Pitt,
and Syracuse hereby release, acquit and forever discharge American and
Dror, and their agents, officers, directors, servants,
representatives, successors, employees and assigns from any and all
rights, obligations, claims, demands and causes of action, whether in
contract, tort, or state and/or federal securities regulations,
arising from or relating to the Promissory Notes; Security Agreements;
Deed of Trust, Security Agreement and Financing Statement, Stock
Purchase Agreement, Settlement Agreement and Mutual Release and all
correspondence, agreements and/or stock rights, including all
obligations arising therefrom, and omissions and/or conduct of
American and Dror and/or their agents, servants, representatives,
successors, employees, directors, officers and assigns, relating to
American and Dror correspondence, agreements and stock rights.
4. Consideration for American's and Dror's Release. As consideration for the
release by American and Dror set forth in section 3.1 hereof, Xxxxx Nevada
agrees to pay American $7,900 upon execution of this Mutual Release; Vanderkam
agrees to sell American or a designee of American 400,000 shares of Xxxxx Nevada
for $35,000 in certified funds; and Xxxxxx agrees to sell American or a designee
of American 800,000 shares of Xxxxx Nevada for $70,000 in certified funds. It is
understood by the parties that Vanderkam previously sold 400,000 shares of Xxxxx
Nevada for $35,000 to a designee of American. American and/or its designee
agrees to place in escrow $105,000 with Vanderkam, of which $35,000 shall be
released to Vanderkam upon the receipt via DTC of 400,000 shares of Xxxxx
Nevada, and of which $70,000 shall be released to Xxxxxx following Xxxxxx'x DTC
of 400,000 shares to American and/or its designee and Vanderkam's receipt of
400,000 shares of Xxxxx Nevada with a medallian guarantee signature and
instructions to the transfer agent for reissuance as designated by American. As
additional consideration, 10,500,000 of the shares of Xxxxx Nevada issued to
American pursuant to the previous settlement agreement and mutual release shall
be placed in escrow with Vanderkam & Xxxxxxx until such time as American and/or
its designee receives $2,150,000 from the sale of the 1,600,000 shares of Xxxxx
Nevada pursuant to this Mutual Release. It is acknowledged by the parties that
American and/or its designees shall retain the 1,600,000 shares regardless of
the amount of proceeds received. Such 10,500,000 shares of Xxxxx Nevada stock
shall be adjusted proportionately so that the shares held in escrow for the
benefit of American and/or its designee shall be adjusted upon any future stock
issuances or stock splits so that the percentage of the shares held in escrow
shall remain 70.6% of the issued and outstanding shares of Xxxxx Nevada, with
the exception of the conversion of the Series A preferred stock and the
convertible debt into shares of common stock. If American and/or its designee
receives $2,150,000 from the sale of its 1,600,000 shares of Xxxxx Nevada common
stock pursuant to the terms and conditions of this Mutual Release, all the
shares of common stock held in escrow with Vanderkam shall be returned to Xxxxx
Nevada for disposition. In the event American and/or its designee do not receive
$2,150,000 from the sale of the 1,600,000 shares of Xxxxx Nevada common stock
pursuant to the terms and conditions of this Mutual Release, American shall
receive from the escrow agent beginning one year from the date of this Mutual
Release, that number of shares from the shares of Xxxxx Nevada common stock held
in escrow that will enable American and/or its designee to receive an aggregate
of $2,150,000, up to the amount of common stock held in escrow. The number of
shares to be transferred to American or its designee shall be based on a request
by American to release such shares from escrow to American and based on the
average closing bid price for the prior ten trading days prior to American's
request for such transfer of shares. American and/or its designee shall supply
Xxxxx Nevada with all brokerage statements on a monthly basis and trade
confirmations as executed involving the 1,600,000 shares of Xxxxx Nevada and any
subsequent sale of shares released from escrow.
American is the owner of a $1,000,000 2nd lien against the
property located at 00000 Xxxxxx Xxxxxxx (previously referred to
as a $1,000,000 note in 2.7). The lien on such property shall be
reduced to $40,000 on execution of this Mutual Release. However,
upon payment of $40,000 to satisfy this lien on or before January
25, 2003, the lien shall become null and void, only if the first
lien presently owned by Southwest Bank of Texas is refinanced and
paid in full. If by January 31, 2003, the property is not
refinanced or $40,000 is not paid to American, Xxxxx Nevada will
retain the right to pay in full the first and second lien no later
than March 1, 2003. The failure to (1) refinance the property
located at 00000 Xxxxxx Xxxxxxx, (2) pay off the balance of the
first lien presently owned by Southwest Bank of Texas which said
lien has a present balance of approximately $380,000, and (3)
timely pay off the $40,000 second lien shall result in a default
by Xxxxx Nevada and allow American to immediately post the
property for foreclosure in order for American to prevent a
foreclosure by Southwest Bank of Texas. In the event of a posting
of foreclosure by American of the building located at 00000 Xxxxxx
Xxxxxxx, Xxxxx Xxxxxx shall have the option to cure its default
and pay off the first and second lien balances by March 1, 2003.
In the event of a foreclosure by American, Xxxxx Nevada may
continue officing rent free through June 30, 2003. In the event
American receives more than $500,000 at the time of foreclosure,
Xxxxx Nevada shall receive 20% of any amounts exceeding $500,000.
The previous mutual release provided that Xxxx Syracuse would
enter into an agreement with Oxford whereby the Series A preferred
stock of Xxxxx Nevada would be transferred from Oxford to Xxxx
Syracuse and Xxxx Syracuse would then convert the Series A
preferred stock of Xxxxx Nevada into 17,300,000 shares of Xxxxx
Nevada. This Mutual Release supercedes the terms mentioned in the
sentence above as it provides that Syracuse shall retain ownership
of the Series A preferred stock of Xxxxx Nevada under the terms
and conditions of the Certificate of Designations of Series A
Xxxxx Nevada Convertible Preferred Stock, a copy of which is
attached as Exhibit E.
Syracuse acknowledges that it is the owner of the Series A
preferred stock. Syracuse agrees not to sell or transfer the
Series A preferred stock or the common stock resulting from the
conversion of the Series A preferred stock until such time as
American receives $2,150,000 pursuant to this Mutual Release or
receives shares held in escrow to reach receipt of $2,150,000
pursuant to this Mutual Release. Syracuse agrees to place the
Series A preferred stock in escrow until such time as American
and/or its designees receive an aggregate of $2,150,000. Syracuse
shall retain voting control over the Series A preferred stock. At
closing, Syracuse agrees to provide American with a personal
guarantee for the receipt by American and/or its designees of
$2,150,000.
Oxford and Xxxx Syracuse acknowledge that notice of a shareholders
meeting has been mailed to the Oxford shareholders and that Xxxx
Syracuse has agreed to vote to approve Xxxxx Nevada's acquisition
of the stock of Fabricating and Xxxxx Texas pursuant to the
Exchange Agreement attached hereto as Exhibit X.
Xxxx Syracuse represents and acknowledges that as of the date of
this Mutual Release there are 14,870,000 shares of common stock
issued and outstanding and 1,000,000 shares of Series A preferred
stock are issued and outstanding. Xxxx Syracuse further represents
that there are no additional securities issued and outstanding or
convertible into additional securities.
American and Dror acknowledge that they have received valid consideration from
the previous settlement agreement and mutual release and will receive valid
consideration from this Mutual Release.
5. Consideration for the Oxford's, Xxxxx Texas's, Fabricating's, Xxxxx
Nevada's, and Syracuse's Release. As consideration for the release by
Oxford, Xxxxx Texas's, Fabricating, Xxxxx Nevada's, and Syracuse set forth
in Section 3.2 hereof, American and Dror agree to cancel any and all
agreements, including, but not limited to the $2,000,000 of notes with
Oxford, Xxxxx Texas, Fabricating, Xxxxx Nevada, Har, Har Pitt, and Syracuse
and agree to return all shares, warrants and securities received pursuant
to the various agreements for immediate cancellation or returned to its
respective owner upon execution of this Mutual Release, including, but not
limited to common stock of Oxford Knight, Har, Har Pitt, and preferred
stock of Oxford Knight. The 10,500,000 shares of Xxxxx Nevada issued to
American in connection with the pervious settlement agreement and mutual
release shall be turned over to Vanderkam & Xxxxxxx as escrow agent along
with the two $1,000,000 notes. Upon American receiving $2,150,000 from the
sale of Xxxxx Nevada common stock, the shares held in escrow shall be
returned to Xxxxx Nevada for disposition and the two $1,000,000 notes will
be cancelled. American, its affililiates, and its designees agree not to
sell short shares of Xxxxx Nevada.
6. Release of shares held in escrow and accounting of $2,150,000 owed to
American. It is agreed and acknowledged by the parties that American shall
have the ability to sell or transfer its shares at whatever price it deems
appropriate. However, to the extent American and/or its designee sells or
transfers its shares of Xxxxx Nevada for less than $.625 per share, the
shares shall be treated as if they were sold for $.625 per share for
accounting purposes. Shares sold by American for greater than $.625 per
share shall be treated at the sales price per share for accounting
purposes. For example, if 100,000 shares are sold by American for $.50 per
share, the sale of such shares shall be treated as if they were sold for
$.625 per share or $62,500. The $62,500 amount would reduce the $2,150,000
amount of American pursuant to this Mutual Release. In the event American
sells 100,000 shares at $2.00 per share, the sale of such shares shall be
treated at $2.00 per share or $200,000. The $200,000 amount would reduce
the $2,150,000 amount of American pursuant to this Mutual Release. Upon
American selling or transferring shares equivalent to $2,150,000 prior to
twelve months from the date this Mutual Release is executed, based upon the
criteria in this section, the shares held in escrow shall be released to
Xxxxx Nevada in accordance with this Mutual Release. In the event American
and/or its designee do not receive $2,150,000 from the sale of the Xxxxx
Nevada common stock pursuant to the terms and conditions of this Mutual
Release, American shall receive from the escrow agent that number of shares
from the shares of Xxxxx Nevada held in escrow that would amount to
American and/or its designee receive an aggregate of $2,150,000. The number
of shares to be transferred to American or its designee shall be based on
the average closing bid price for the ten trading days prior to one year
from the execution of this Mutual Release less the number of shares that
remain unsold by American and/or its designee out of the 1,600,000 shares
of Xxxxx Nevada.
7. Termination of All Previous Agreements. All previous agreements among
American, Dror, Oxford, Xxxxx Texas, Fabricating, Xxxxx Nevada, Har, Har
Pitt, and Syracuse and any and all related agreements and obligations
are hereby terminated without further rights, obligations or liabilities
of any Party thereunder.
8. No Other Cause of Action. Neither American, Dror, Oxford, Xxxxx Texas,
Fabricating, Xxxxx Nevada, Har, Har Pitt nor Syracuse are aware of any
claims not being released herein against American, Dror, Oxford, Xxxxx
Texas, Fabricating, Xxxxx Nevada, Har, Har Pitt and Syracuse.
3. Capacity. The Parties represent that they are lawfully authorized to
execute this Mutual Release. The Parties to this Mutual Release further
represent that they have read it in full before its execution and that
they fully understand the meaning, operation and effect of its terms.
10. Prior Assignments. American and Dror represent that they have not
assigned, in whole or in part, any claims, demands and/or causes of
action against Oxford, Xxxxx Texas, Fabricating, Xxxxx Nevada, Har, Har
Pitt and/or Syracuse to any person or entity prior to their execution of
this Mutual Release. Oxford, Xxxxx Texas, Fabricating, Xxxxx Nevada,
Har, Har Pitt and Syracuse represent that they have not assigned, in
whole or in part, any claim, demand and/or causes of action against
American or Dror to any person or entity prior to their execution of
this Mutual Release.
11. Binding Effect. This Mutual Release shall be binding on and inure to the
benefit of the Parties and their respective heirs, successors, assigns,
director, officers, agents, employees and personal representatives.
12. Modification. No modification or amendment of this Mutual Release shall
be effective unless such modification or amendment shall be in writing
and signed by all Parties hereto.
13. Entire Agreement. This Mutual Release constitutes the entire agreement
between the Parties pertaining to the subject matter hereof and
supersedes all prior and contemporaneous agreements, understandings,
negotiations and discussions, whether oral or written, of the Parties in
connection with the subject matter hereof.
14. Interpretation. The interpretation, construction and performance of this
Mutual Release shall be governed by the laws of the State of Texas.
Whenever used herein, the singular number shall include the plural, the
plural shall include the singular and the use of any gender shall be
applicable to all genders.
15. Execution. This Mutual Release may be executed in several counterparts,
each of which shall be deemed an original, and such counterparts taken
together shall constitute but one and the same Mutual Release. This
Mutual Release shall be effective on the day and year first above
written. All shares shall be transferred to the Escrow Agent upon
execution of this Mutual Release until such time as the shares issued to
American are received by Escrow Agent.
16. Arbitration. If a dispute should arise regarding this agreement, the
parties agree that all claims, disputes, controversies, differences or
other matters in question arising out of this relationship shall be
settled finally, completely and conclusively by arbitration in Houston,
Texas in accordance with the Commercial Arbitration Rules of the
American Arbitration Association ("the Rules"). The governing law of
this agreement shall be the law of the State of Texas, without giving
effect to conflict of laws. A decision of the arbitrator shall be final
and binding on Xxxxx, Oxford, Syracuse, Dror, American, and the other
parties to this Mutual Release.
IN WITNESS WHEREOF, intending to be legally bound, the Parties hereto
have executed this Mutual Release as of the __th day of November, 2002.
OXFORD KNIGHT INTERNATIONAL, INC.
By: /s/ Xxxx Syracuse
Its: CEO
PITT'S & SPITT'S, INC., a Texas corporation
By: /s/ Xxxx Syracuse
Its: CEO
FABRICATING SOLUTIONS, INC.
By: /s/ Xxxx Syracuse
Its: CEO
XXXXX AND SPITTS, INC., a Nevada corporation
By: /s/ Xxxx Syracuse
Its: CEO
HAR-WHIT, INC.
By: /s/ Xxxx Syracuse
Its: CEO
HAR-WHIT/XXXXX & SPITTS, INC.
By: /s/ Xxxx Syracuse
Its: CEO
AMERICAN INTERNATIONAL INDUSTRIES, INC.
By: /s/ Xxxxxx Xxxx
Its: President
XXXX SYRACUSE, INDIVIDUALLY
--------------------------------
XXXXXXXX SYRACUSE, INDIVIDUALLY
-----------------------------------
XXXXXX XXXX, INDIVIDUALLY
/s/ Xxxxxx Xxxx
VANDERKAM & XXXXXXX
/s/ Xxxxxxxxx & Xxxxxxx
XXXXXX & XXXXXXXXX
/s/ Xxxxxx & Xxxxxxxxx
