EXHIBIT 10.1
SETTLEMENT AGREEMENT AND GENERAL RELEASES
This Mutual Settlement Agreement and General Release ( the "Agreement") is
made and entered into by and between X. Xxxxxx and Xxxxxxxx Xxxxxxxx, husband
and wife and K. Xxxxxx Xxxxxxxx individually, Xxxxxxx X. and Xxxxxxx X.
Xxxxxxxx, husband and wife, Xxxxxxx X. Xxxxxxxxxx, the Xxxxx X. Xxxxxxx Estate,
Xxxxxxxxx X. Xxxxxxx and the Xxxxxxxxx X. Xxxxxxx Revocable Trust, Xxxxxxxxx X.
Xxxxxxx, Xxxxxxx X. and Xxxxx X. Xxxxxx, husband and wife, Xxxxxxxxx Xxxxxx,
Xxxxx X. Xxxxxx, and Xxxxxx X. Xxxxxx and the Xxxxxx X. Xxxxxx 1995 Trust
(hereinafter collectively the "Debenture Holders") and Water Chef, Inc.
(hereinafter "WaterChef").
WHEREAS, the Debenture Holders provided Bridge Loan funding to WaterChef in
exchange for the issuance of Subordinated Debentures and Warrants to Purchase
Stock;
WHEREAS, in the course of the parties' dealing, a dispute arose relative to
WaterChef's obligations to the Debenture Holders and Debenture Holders'
obligations to Defendant pursuant to the aforementioned Subordinated Debentures
and Warrants to Purchase Stock;
WHEREAS, the Debenture Holders initiated a legal action against WaterChef
in the New Hampshire Superior Court for Hillsborough County (Northern District),
docketed 00-C-714 seeking damages flowing from alleged breaches of WaterChef's
obligations to the Debenture Holders, allegedly resulting in breach of contract,
breach of implied covenant of good faith and fair dealing, liability for debt,
unjust enrichment and liability under a theory of quantum meruit (the "Legal
Action");
WHEREAS, Defendant asserted counterclaims against the Debenture Holders
seeking damages flowing from alleged breaches of the Debenture Holders'
obligations to WaterChef, allegedly resulting money damages to Defendant;
WHEREAS, the Debenture Holders and WaterChef wish to resolve their
differences and buy peace by agreement without further expense, delay or
litigation;
NOW THEREFORE, in consideration of these promises and of the mutual
promises and covenants set forth below, the Debenture Holders and WaterChef
hereby agree as follows:
1. Upon execution of this Agreement, the Debenture Holders and WaterChef
shall execute a dismissal with prejudice of the Legal Action (described below)
currently pending which dismissal shall be held in escrow by Debenture Holders'
counsel pending performance by Debenture Holders and Defendant of their
respective obligations under the terms of this Settlement Agreement. Debenture
Holders and Defendant agree that prior to the filing of the dismissal they shall
execute such other document(s), if any, as may be required by the Hillsborough
County Superior Court regarding the fact of settlement of the Legal Action and
agree that if required by the Court that each will execute a notice of
conditional settlement and continuance pending performance of the parties
obligations hereunder.
2. (a) Upon execution of this Agreement, each of the Debenture Holders
shall deliver to Debenture Holders' counsel, Xxxxx Peabody, LLP, all of
WaterChef's Debentures held by Debenture Holders marked "Satisfied in accordance
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with the terms of the Settlement Agreement dated as of June 20, 2002 between
[name of Debenture Holder(s)] and WaterChef to be held in escrow by Xxxxx
Xxxxxxx, LLP against the delivery of Defendant's shares of Common Stock
described in Paragraphs (c) and (d).
(b) Defendant's Board of Directors, pursuant to the power granted to
them under WaterChef's Articles of Incorporation, if not previously approved,
will no later than one (1) day following the execution of this Agreement by all
of the Debenture Holders authorize an increase in the number of authorized
shares of Common Stock of WaterChef in an amount at least sufficient to permit
WaterChef to issue not less than three million (3,000,000) shares and such
number of additional shares of Common Stock to the Debenture Holders as provided
for herein. Defendant shall provide Debenture Holders' counsel with a copy of
the minutes of the Board of Directors meeting.
(c) No later than June 20, 2002 or two (2) days following the
execution of this Settlement Agreement by all of the Debenture Holders,
whichever is later, WaterChef shall pay to the Debenture Holders an aggregate of
$497,500.00 by issuing to the Debenture Holders an aggregate of not less than
3,000,000 shares of its Common Stock, $.01 par value. Such shares shall be
allocated among the Debenture Holders as shown on Exhibit A to this Agreement.
Defendant shall deliver said Shares to Debenture Holders' counsel with its
delivery of its executed copy of this Agreement and said shares (and the shares,
if any, issued pursuant to Paragraph (d))shall be held by Debenture Holders'
counsel until receipt of all of the Debenture Holders' Debentures described in
Paragraph (a) above. Upon receipt of all of the Debenture Holders' Debentures
and Defendant's shares, Debenture Holders' counsel shall exchange the Debentures
and shares and distribute them to the Debenture Holders and WaterChef.
(d) WaterChef shall also calculate the average daily trading price of
its Common Stock for the thirty (30) consecutive trading days immediately
following the date WaterChef issues the shares described in paragraph (c) above.
To determine such average daily trading price, WaterChef shall calculate the
average of the ending bid and asked price on each such trading day as reported
by Nasdaq and shall divide the sum of such averages by thirty (30). WaterChef
shall distribute its calculations and the underlying data on which its
calculations are based to the Debenture Holders for their approval, which shall
not be unreasonably withheld. If $497,500.00 divided by such average daily
trading price equals 3,000,006 or less, no additional shares shall be issued to
the Debenture Holders. If the product of $497,500.00 divided by such average
daily trading price exceeds 3,000,006, then WaterChef shall issue to the
Debenture Holders such additional number of shares of its Common Stock, rounded
to the next whole number of shares, as equals the amount of such excess. Such
shares shall be allocated among the Debenture Holders in accordance with a
schedule to be provided by the Debenture Holders within ten (10) days of the
final determination of the total number of shares to be issued and shall be
delivered to Debenture Holders' counsel within twenty (20) days of the delivery
of such schedule.
(e) WaterChef shall and does hereby extend the term of each of the
Debenture Holders' outstanding and unexercised warrants to purchase Common Stock
of WaterChef for an additional twenty-four (24) months from the current
expiration date of each such warrant. WaterChef further agrees that any and all
of the restrictions or conditions which limit the piggy-back registration rights
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currently in effect with respect to the said warrants shall be, and hereby are,
waived and removed. Debenture Holders shall deliver to Debenture Holders'
counsel each of their outstanding and unexercised warrants to be held by such
counsel until Defendant shall have issued with respect to each such warrant its
Allonge To and Amendment and Extension of Warrant dated the date hereof which
shall amend the expiry and piggy-back registration restrictions of such warrant
as provided herein and shall further confirm that except as so amended the
original terms of such warrant remain in full force and effect. Defendant shall
issue an Allonge To and Amendment and Extension of Warrant with respect to each
outstanding and unexercised warrant on the terms set forth herein regardless of
the vote of the shareholders regarding the proposed increase in authorized
capital stock. Defendant shall deliver an Allonge To and Amendment and Extension
of Warrant for each outstanding and unexercised warrant to Debenture Holders'
counsel within thirty (30) days of the date of the execution hereof which
Debenture Holders' counsel shall affix to and make a part of each of the
outstanding and unexercised warrants, and Debenture Holders' counsel shall
thereupon redeliver the warrants as amended to Debenture Holders.
3. In consideration of this Agreement and other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged,
WaterChef, on behalf of itself, its parents, affiliates, subsidiaries,
directors, shareholders, officers, employees, administrators, successors,
agents, or other assigns, does hereby unconditionally release and forever
discharge each and every one of the Debenture Holders, (including each of their
heirs, executors, administrators, successors, agent, representatives, employees
and assigns), from any and all claims, actions, liabilities and demands of any
kind, whether at law or in equity, and whether such claims arise in contract or
tort, and whether such claims are founded upon statutory or common law,
including, but not limited to, breach of contract, negligence, breach of any
duty of good faith and fair dealing, causes of action arising out of or
construed to be deceptive trade practices, business torts, breach of warranty,
or any other cause of action whatsoever, whether such claims are known or
unknown, contingent or liquidated, arising out of or in any way related to the
Bridge Loan Transactions described above and the debentures, shares or warrants
issued in connection therewith, or the transactions contemplated thereby, which
Defendant may now have against the Debenture Holders (to the extent such claims
originated in whole or in part or, based on presently existing facts, could have
originated in whole or in part on or before the date hereof), including, without
limitation, any and all claims which have been asserted or could have been
asserted by Defendant in the case captioned K. XXXXXX XXXXXXXX ET. AL V. WATER
CHEF, INC. now pending before the Hillsborough County Superior Court and
identified as docket number 00-C-714 (the "Legal Action") and any and all claims
directly or indirectly arising from or in connection with (1) the bridge loans,
(2) the debentures executed in connection therewith (3) any shares issued to
Debenture Holders pursuant to the debentures (4) the warrants issued in
connection with the debentures, (5) any action or omission to act by any of the
Debenture Holders in connection with any of the foregoing, or any other
documents executed in connection with the bridge loan transactions, (6) or
arising from the negotiation of the terms of this Agreement.
4. In consideration of this Agreement and other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged, each
of the Debenture Holders, on behalf of themselves, and each of their heirs,
executors, administrators, successors, agents, representatives, employees and
assigns, does hereby unconditionally release and forever discharge WaterChef,
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(including its parents, affiliates, subsidiaries, directors, shareholders,
officers, employees, administrators, successors, agents, or other assigns), from
any and all claims, actions, liabilities and demands of any kind, whether at law
or in equity, and whether such claims arise in contract or tort, and whether
such claims are founded upon statutory or common law, including, but not limited
to, breach of contract, negligence, breach of any duty of good faith and fair
dealing, causes of action arising out of or construed to be deceptive trade
practices, business torts, breach of warranty, or any other cause of action
whatsoever, whether such claims are known or unknown, contingent or liquidated,
arising out of or in any way related to the bridge loan transaction and the
debentures, shares or warrants issued in connection therewith, or the
transactions contemplated thereby, which Debenture Holders may now have against
WaterChef (to the extent such claims originated in whole or in part or, based on
presently existing facts, could have originated in whole or in part on or before
the date hereof), including, without limitation, any and all claims which have
been asserted or could have been asserted by Debenture Holders in the Legal
Action and any and all claims directly or indirectly arising from or in
connection with (1) the bridge loans, (2) the debentures executed in connection
therewith (3) any shares issued to Debenture Holders pursuant to the debentures
(4) the warrants issued in connection with the debentures, (5) any action or
omission to act by WaterChef in connection with any of the foregoing, or any
other documents executed in connection with the bridge loan transactions, (6) or
arising from the negotiation of the terms of this Agreement.
5. ADEQUACY OF CONSIDERATION. WaterChef and each of the Debenture Holders
acknowledge that the consideration for this Agreement and their respective
releases is hereby accepted in satisfaction of all claims and/or damages
sustained or ever to be sustained, in full and complete discharge for the
claims. Each acknowledges they understand that the Agreement, and the rights
conferred herein represent the entire consideration that will ever be exchanged
between the parties.
6. COVENANT NOT TO XXX. Defendant, for itself, its officers and directors,
affiliates, successors and assigns, and Debenture Holders, on behalf of
themselves, and each of their heirs, executors, administrators, successors,
agents, representatives, employees and assigns and all others claiming by or
through them, hereby covenant not to bring, commence, prosecute or maintain any
suit, action or proceeding, either at law or in equity, in any court of the
United States or of any State thereof, arising under or by virtue of the
negotiations and/or communications entertained in connection with this
Agreement. Defendant, for itself, its officers and directors, affiliates,
successors and assigns, and Debenture Holders, on behalf of themselves, and each
of their heirs, executors, administrators, successors, agents, representatives,
employees and assigns and all others claiming by or through them, hereby fully
and forever release and discharge the other from any and all causes of action,
whether sounding in contract or in tort, or otherwise, and any and all
liability, accrued or unaccrued, known or unknown, fixed or contingent, on
account of any and all claims, demands, and causes of action for all losses,
damages, expenses or liabilities to them, arising out of any negotiations or
communications entertained in connection with this Agreement, the bridge loans,
the debentures, the shares and the additional shares.
7. RETAINED RIGHTS AND CLAIMS. Notwithstanding anything contained in
paragraphs 3, 4 and 6 hereof to the contrary, none of the parties releases the
other from the obligations created by this Agreement.
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8. The parties expressly agree not to publicize, communicate, reveal or
otherwise disclose, directly or indirectly to any person, any term or condition
of this Agreement except pursuant to compulsory process of law and/or to their
legal and financial advisors to the extent necessary to receive professional
advice if such persons are expressly advised of this confidentiality provision
and agree to be bound thereby.
9. This Agreement supersedes all prior communications regarding the matters
contained herein between the parties, their attorneys and representatives. There
shall not be a presumption that the terms of this Agreement are to be construed
more or less favorably for or against the signatories hereto. The parties have
consulted with counsel with respect to this Agreement. The Agreement contains
the entire agreement between the parties regarding this matter and no
representations or promises have been made or relied on by any party other than
as stated herein.
10. Nothing in this Agreement or the actions of any of the parties to it in
negotiating, executing or complying with this Agreement shall be regarded as an
admission of liability or wrongdoing by any of the parties.
11. The parties acknowledge that this is a compromise on disputed claims
and this Agreement is entered to buy the peace of the respective parties.
12. The parties acknowledge and agree that this Agreement shall not be
admitted into evidence in any proceeding, except as may be required to
effectuate or enforce the terms of this Agreement.
13. This Agreement shall be governed by and construed in accordance with
the internal laws of the State of New Hampshire, without giving effect to any
choice of law provisions that might apply.
14. This Agreement may be executed in counterparts each of which will
constitute an original but all of which constitutes but one Agreement.
15. REPRESENTATIONS AND WARRANTIES. Each undersigned expressly warrants and
represents to the parties released herein, as a condition to this Agreement
that:
a. Each person executing this Agreement and the Releases contained herein
is over the age of eighteen (18) years of age, of sound mind, and legally
capable of making this agreement.
b. Each person executing this Agreement and the Releases contained herein
has read and understands this Settlement and Release Agreement, and each
has been provided the advice of attorneys of their selection with regard to
the legal consequences of this agreement.
c. No promise or representation of any kind has been expressed or implied
by any party, or by anyone acting for them, except as is expressly stated
in this Agreement.
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d. No person executing this Agreement and the Releases contained herein is
relying on the advice the other party or parties or their representatives
or attorneys, on any matters relating to this Agreement.
16. None of the persons executing this Agreement have assigned, conveyed,
or pledged any part of the claims and cause of actions released herein.
17. This Agreement may be executed in any number of counterparts and by the
parties hereto in separate counterparts, each of which when so executed shall be
deemed to be original and all of which taken together shall constitute one and
the same agreement.
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IN WITNESS HERETO, the parties have executed under seal this Agreement to
be effective as of June 20, 2002.
DEBENTURE HOLDERS: WATER CHEF, INC.
/s/ K. Xxxxxx Xxxxxxxx By: /s/ Xxxxx Xxxxxx
------------------------------- ------------------------------
K. Xxxxxx Xxxxxxxx Name: XXXXX XXXXXX
Its: President
Duly Authorized
/s/ Callaway Xxxxxxxx
-------------------------------
Callaway Xxxxxxxx
/s/ Xxxxxxx X. Xxxxxxxx
-------------------------------
Xxxxxxx X. Xxxxxxxx
/s/ Xxxxxxx X. Xxxxxxxx
-------------------------------
Xxxxxxx X. Xxxxxxxx
/s/ Xxxxxxx X. Xxxxxxxxxx
-------------------------------
Xxxxxxx X. Xxxxxxxxxx
/s/ Xxxxxx Xxxxxxx
-------------------------------
Xxxxxx Xxxxxxx, Executrix of the Xxxxx X. Xxxxxxx Estate
/s/ Xxxxxxxxx X. Xxxxxxx
-------------------------------
Xxxxxxxxx X. Xxxxxxx, individually and as Trustee of the
Xxxxxxxxx X. Xxxxxxx Trust
/s/ Xxxxxxxxx X. Xxxxxxx
-------------------------------
Xxxxxxxxx X. Xxxxxxx
/s/ Xxxxxxx X. Xxxxxx
-------------------------------
Xxxxxxx X. Xxxxxx
/s/ Xxxxx X. Xxxxxx
-------------------------------
Xxxxx X. Xxxxxx
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/s/ Xxxxxxxxx Xxxxxx
-------------------------------
Xxxxxxxxx Xxxxxx
/s/ Xxxxx X. Xxxxxx
-------------------------------
Xxxxx X. Xxxxxx
/s/ Xxxxxx X. Xxxxxx
-------------------------------
Xxxxxx X. Xxxxxx, Trustee of the Xxxxxx X. Xxxxxx 1995 Trust
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EXHIBIT A
DEBENTURE HOLDER ORIGINAL ISSUE DATE AMOUNT OF DEBENTURE
---------------- ------------------- -------------------
Xxxxxxx X. Xxxxxxxxxx March 27, 1997 $50,000
Xxxxx X. Xxxxxxx April 1, 1997 $25,000
Xxxxxxx X. and Xxxxxxx April 22, 1997 $25,000
X. Xxxxxxxx, JTWROS
Xxxxxxxxx X. Xxxxxxx April 22, 1997 $25,000
Revocable Trust
Xxxxxxxxx X. Xxxxxxx April 24, 1997 $25,000
Xxxxxx X. Xxxxxx '95 April 24, 1997 $50,000
Trust
X. Xxxxxx and April 25, 1997 $30,000
Callaway Xxxxxxxx
Xxxxx X. Xxxxxx April 28, 1997 $10,000
Xxxxxxxxx Xxxxxx April 29, 1997 $10,000
Xxxxxxx X. and Xxxxx X. April 30, 1997 $25,000
Hayden, JTWROS
K. Xxxxxx Xxxxxxxx June 4, 1997 $25,000
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