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EXHIBIT 10.6
September 27, 1996 (3:59PM)
SETTLEMENT AGREEMENT AND RELEASE
This Settlement Agreement and Release (this "Agreement") is entered
into as of September 27, 1996, by and between:
(a) The following parties, on one hand, referred to herein
as "Plaintiff":
Xxxx X. Xxxx
(b) The following parties, on the other hand, collectively
referred to herein as "Defendants":
StarTronix International, Inc., formerly known as
Gold Express Corporation ("GEC")
Xxxxxx Xxxxxxxx
RECITALS
A. Disputes have arisen between Plaintiff and Defendants in various
contexts, primarily related to matters arising out of Plaintiff's former
employment with GEC.
B. The disputes have resulted in the filing of an arbitration
proceeding. On May 22, 1996 a panel of arbitrators awarded King a total of
$155,014 less a $3,600 set-off for a total of $151,414.
C. On August 15, 1996, pursuant to a motion filed by Plaintiff, the
District Court for Arapahoe County in Civil Action No. 94 CV 668, Xxxx X. Xxxx
v. Gold Express Corporation and Xxxxxx Xxxxxxxx, confirmed the arbitration
award, making it a judgment (the "Judgment") in favor of Plaintiff. The
foregoing action is referred to herein as the "Litigation". The above-referenced
disputes may result in other litigation absent this Agreement.
D. Plaintiff and Defendants desire to settle all of their respective
disputes and controversies, including those asserted in the Litigation, and all
matters pending between them, and hereby agree to the following satisfaction of
this judgment.
AGREEMENT
1. Settlement. This Agreement shall be effective immediately upon the
execution of this Agreement by all parties hereto, and delivery to counsel for
the respective parties of such executed copies and the additional documents
required to be delivered hereunder. This Agreement shall constitute a full and
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final settlement of all claims, demands, disputes and controversies between the
parties hereto.
2. Consideration.
(a) No later than three business days from receipt by GEC or
its counsel of a copy of this Settlement Agreement duly executed by
Plaintiff, GEC will pay to Plaintiff the gross amount of $75,000, by
check payable jointly to Xxxxxx, Xxxxxxxx and Xxxx X. Xxxx. Of that
amount, $46,014 will be considered the payment for loan reimbursement,
reimbursable expenses, interest, attorney's fees and filing and service
fees as set forth in the arbitration award. No taxes will be withheld
from any of those payments. In January 1997 GEC will provide an IRS
Form 1099 to Plaintiff in the amount of $39,814 which represents the
interest and attorneys' fees portion of this payment. Of the $75,000
payment, $28,986 will be considered back wages and will be subtracted
from the amount of back wages owed pursuant to the award less the
$3,600 offset. From the $28,986 payment GEC will deduct and pay to
appropriate state and federal taxing authorities 28% for federal
withholding tax, 5% for Colorado withholding tax and Plaintiff's share
of FICA tax. GEC shall pay the employer's share of FICA tax on this
amount. In January 1997 Plaintiff will receive a W-2 in the amount of
$28,986.
(b) The balance due under the Judgment, consisting of the
principal sum of $76,414, will be paid and discharged by the issuance
to Plaintiff of 110,000 shares of the common stock of GEC. Such stock
shall be unregistered stock, and Plaintiff shall sign and deliver to
GEC, concurrently with execution and delivery of this Agreement, an
Investment Agreement in the form of Exhibit "A" attached hereto. Such
stock may, at plaintiff's option, be issued in multiple certificates,
but all certificates shall be legended as restricted stock and shall be
subject to a stop transfer order placed with GEC's stock transfer agent
until such time as the restrictions on transferability thereof have
been lifted. The parties acknowledge that this stock transfer
represents payment for back wages under the arbitration award and
Judgment. At the time the restrictions are removed from the stock, the
money (up to a maximum of $76,414) will become taxable wages to
Plaintiff. At that time, GEC will make timely payment to the
appropriate tax authorities its share of the FICA tax. GEC shall also
withhold and pay all Federal and State withholding taxes, including
Plaintiff's share of FICA, due on the value of the stock up to $76,414.
In order to fund such withholding, GEC will retain 55715 shares out of
the stock issued to Plaintiff hereunder in GEC's name but for the
account of Plaintiff. That amount is based on withholding estimated at
28% FIT, 5% Colorado SIT, 7.65% FICA & Medicare (employee's share), and
10% for errors and increases. GEC is hereby authorized and directed to
adjust State or Federal income tax withholding if and to the extent
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necessary to meet legal withholding requirements within the limits of
funds available from the 55715 shares retained. At such time as the
restrictions on Plaintiff's shares in GEC lapse, GEC may demand payment
in cash from Plaintiff of the withholding taxes due and, upon payment
thereof, release to Plaintiff and reissue in Plaintiff's name, the
unrestricted shares of GEC common stock so held. Upon failure of
Plaintiff to tender to GEC the necessary amount of withholding, GEC
shall be entitled to sell for Plaintiff's account so much of such stock
as is reasonable and appropriate to generate sufficient funds for GEC
to fund the withholding taxes and shall, thereafter, deliver to
Plaintiff the remaining cash proceeds and stock, if any.
(c) In the event Plaintiff desires to sell his Stock pursuant
to an exemption from registration under the Securities Exchange Act of
1933, as amended, and that an opinion of counsel with respect thereto
is required by GEC in its sole discretion, GEC shall pay the actual
attorneys fees expense incurred for preparation of such opinion to a
maximum of $1,000. Plaintiff shall be responsible for any charges or
costs above that sum.
(d) If at any time prior to the Termination Date the Company
proposes to file a registration statement under the Securities Act of
1933 for the purpose of registering the sale by the Company of any
Common Stock, other than a registration statement on Form S-4 or S-8 or
any successor or equivalent forms, it shall provide Plaintiff with 15
days advance notice of such proposed registration. If Plaintiff
notifies the Company in writing within 15 days of the giving of such
notice that he desires to include in such registration statement any or
all of the Shares issued to Plaintiff hereunder, the Company shall,
subject to the terms hereof, use all reasonable efforts to include the
Shares in such registration statement.
(i) For purposes hereof, the term "Termination Date"
shall mean the date that the Company reasonably determines
that the Shares may be sold pursuant to Rule 144 under the
Securities Act (or any successor provision).
(ii) The Company shall be entitled to abandon any
registration referred to in this Section 2.(d) at any time,
without the consent of the Plaintiff. In the event the sale
proposed to be registered is a underwritten public offering,
Plaintiff agrees to enter into any reasonable and customary
underwriting agreement required by the underwriter(s) in
connection with such transaction, which underwriting agreement
may contain, if required by the underwriter(s), customary
provisions by which the Plaintiff agrees to indemnify the
Company
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and the underwriter with respect to information provided by
the Plaintiff.
(iii) Notwithstanding any other provision of this
Section 2.(d), if the representative of the Company's
underwriters advises the Company in writing that marketing or
other factors require limitation on the number of shares to be
underwritten, the representative may exclude the Shares from,
or limit the number of Shares to be included in, the
registration and underwriting. Any Shares so excluded shall
continue to be eligible for registration in accordance with
the terms of this Section 2.(d) on any subsequent Registration
Statement filed by the Company, on the same terms and subject
to the same conditions set forth herein.
(iv) Plaintiff shall be responsible for, and shall
pay to the Company upon request, a pro rata portion, based on
the value of the securities to be registered, of the costs of
registration, including filing fees, costs of the Company's
legal counsel and accounting firm, printing expenses and other
reasonable expenses of the registration, to the extent that,
and in the amount by which, such pro rata share exceeds
$1,000. GEC shall pay the first $1,000 thereof, but the
maximum amount GEC shall pay for Plaintiff's account pursuant
to the preceding sentence plus any sums paid pursuant to
Section 2.(c) above shall be a total of $1,000, and Plaintiff
shall be responsible for all sums over and above that amount
if Plaintiff elects to take advantage of both provisions.
Plaintiff shall also be responsible for all of Plaintiff's own
legal and accounting expenses and for commissions or discounts
applicable to the sale of the Shares.
(e) Nothing in this agreement impacts in any way the parties'
individual responsibilities for payment of the fees of the Board of
Arbitrators as set forth in the award of the arbitrators.
3. Termination of Action. Immediately upon receipt of this Agreement,
duly executed by Defendants, together with the payment and delivery of documents
required as provided hereunder, Plaintiff shall file with the District Court for
Arapahoe County a Satisfaction of Judgment in the form attached hereto as
Exhibit "B" hereto.
4. Defendants' Representations. Defendants jointly and severally
represent and warrant to Plaintiff:
(a) Defendants are duly authorized to enter into this
Agreement and to perform the terms and obligations herein contained,
and have not assigned, transferred or conveyed,
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either voluntarily or by operation of law (including, without
limitation, by way of having suffered any liens or encumbrances
thereon), any of their rights or claims as against Plaintiff, nor any
of the rights, claims or obligations being terminated and released
hereunder. To the extent that any such claims have, contrary to such
representation, heretofore been assigned or transferred, the party
having made or suffered such transfer, assignment or conveyance shall,
and hereby agrees to, defend, indemnify, and hold Plaintiff harmless
from and against any and all claims that may be asserted against
Plaintiff by reason of such transfer, assignment or conveyance.
5. Plaintiff's Representations. Plaintiff represents and warrants to
Defendants:
(a) Plaintiff is duly authorized to enter into this Agreement
and to perform the terms and obligations herein contained, and has not
assigned, transferred or conveyed, either voluntarily or by operation
of law (including, without limitation, by way of having suffered any
liens or encumbrances thereon), any of its rights or claims as against
Defendants, nor any of the rights, claims or obligations being
terminated and released hereunder. To the extent that any such claims
have, contrary to such representation, heretofore been assigned or
transferred, the party having made or suffered such transfer,
assignment or conveyance shall, and hereby agrees to, defend,
indemnify, and hold Defendants harmless from and against any and all
claims that may be asserted against Defendants by reason of such
transfer, assignment or conveyance.
6. Release of Defendants. Plaintiff hereby releases Defendants, and
each of them, and their parent, subsidiary and affiliated corporations,
officers, directors, stockholders, agents, attorneys, employees,
representatives, successors and assigns, jointly and severally, from all claims,
demands, acts or omissions, and/or causes of action, known or unknown, suspected
or unsuspected, which may now exist or later be discovered, arising from,
related to, or connected with the Litigation, the facts and circumstances from
which the Litigation arose, or any dispute or relationship between the parties.
This release shall not apply to or detract from the obligations of the
Defendants to Plaintiff arising under this Agreement.
7. Release of Plaintiff. Defendants, and each of them, hereby release
Plaintiff, and his heirs, executors, administrators, agents, attorneys,
representatives, successors and assigns, jointly and severally, from all claims,
demands, acts or omissions, and/or causes of action, known or unknown, suspected
or unsuspected, which may now exist or later be discovered, arising out of,
related to or connected with the Litigation, the facts and circumstances from
which the Litigation arose, or any dispute or relationship between the parties.
This release shall not apply to
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or detract from the obligations of Plaintiff to Defendants arising under this
Agreement.
8. Waiver of Civil Code Section 1542. Each of the parties to this
Agreement waives the benefits of California Civil Code Section 1542 which
provides as follows:
"A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE
CREDITOR DOES NOT KNOW OR SUSPECT 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."
9. Legal Representation. Each party acknowledges the receipt of the
advice of independent legal counsel prior to the execution of this Agreement;
that the legal nature and effect of this Agreement has been fully explained to
it by counsel; and that each party fully understands the terms and provisions of
this Agreement and its nature and effect. Each party further represents that it
is relying solely on the advice of its own counsel in executing this Agreement
and has not relied on the representation of any other party, except as expressly
set forth herein, or of the counsel for any other party. Each party further
represents that this Agreement, and the terms hereof, were arrived at after
bargaining and negotiation among the parties, and each provision hereof shall be
construed as having been drafted by each and all of the parties hereto.
10. Unknown Damages. There is a risk that subsequent to the execution
of this Agreement one party will incur damage or loss which that party deems in
some way attributable to the prior actions of the other party or parties, but
which are unknown and unanticipated at the time this Agreement is signed. Each
party acknowledges and assumes the risk that damages presently known may become
progressive, greater or more serious than is now known, expected or anticipated.
11. Reliance on Known Facts. Each party agrees that if the facts with
respect to this Agreement are found hereafter to be different from the facts now
believed by such party to be true, that party nevertheless expressly accepts and
assumes the risk of such possible difference in facts and agrees that this
Agreement is and will remain effective notwithstanding such difference in facts.
12. Further Acts. The parties to this Agreement shall promptly take
such further acts and execute such other documents as shall be necessary to
carry out the spirit and letter of this Agreement. Without limiting the
generality of the foregoing, in the event any court, county recorder, secretary
of state, or other governmental agency may require any additional or different
documents or actions in order to effect the purposes contemplated by this
Agreement, the parties to this Agreement shall execute the necessary documents
and take the necessary steps to comply with those requirements.
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13. Notice. Unless otherwise provided herein, any notice, offer,
exercise of rights or other communication required or permitted to be given
hereunder shall be in writing and shall be given by registered or certified
mail, confirmed facsimile or telecopy, overnight delivery service such as
Federal Express if a receipt is obtained showing delivery, or personal delivery
against receipt to the party to whom it is given, at such party's address set
forth next below or such other address as such party may hereafter specify by
notice to the other parties hereto. Any notice or other communication shall be
deemed to have been given as of the date so personally delivered or transmitted
by confirmed telecopy or like transmission, on the date of delivery shown on the
receipt when sent by overnight delivery service, or on the date shown on the
return receipt for delivery or refusal when given by registered or certified
mail. Address and fax numbers for such notice are as follows:
If to Plaintiff, to:
Xx. Xxxx X. Xxxx
0000 Xxxxxxxxx Xxxxx
Xxxxxxxxx, XX 00000
Fax: 000-000-0000
With a copy to:
Xx. Xxxxxx X. Xxxxxxxx
Brauer, Buescher, Valentine, Xxxxxxxxxx & Xxxxxx,
P.C.
0000 Xxxxxxx Xxxxxx
Xxxxxx, Xxxxxxxx 00000
Phone: 000-000-0000
Fax: 000-000-0000
If to the Defendants, to:
Mr. Xxxx Xxxxxxx
StarTronix International, Inc.
0000 Xxxxxxxxxx
Xxxxx 000
Xxxxxx, XX 00000
Phone: 000-000-0000
Fax: 000-000-0000
With a copy to:
Xxxxxx X. Xxxxxxx, Xx., Esq.
Xxxxx & Xxxxxx
000 Xxxxx Xxxxxxxxx
Xxxxx 0000
Xxxxx Xxxx, XX 00000
Phone: 000-000-0000
Fax: 000-000-0000
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If delivered by mail, the date of delivery shall be deemed to be five
calendar days (including Sundays and holidays) from the date of deposit in the
United States mail.
14. Entire Agreement. This Agreement constitutes the entire agreement
between the parties hereto concerning the subject matter hereof and supersedes
all prior and contemporaneous agreements, understandings, negotiations, and
discussions, whether oral or written, of the parties, and there are no
warranties, representations or agreements among the parties except as set forth
herein. No amendment, supplement, modification, waiver, or termination of this
Agreement, or any provision hereof, shall be binding unless executed in writing
by the party against whom any of the foregoing is sought to be enforced. No
waiver of any provision of this Agreement shall constitute a waiver of any other
provision (whether similar or not), nor shall any waiver constitute a continuing
waiver unless otherwise expressly provided hereunder or in writing signed by the
party against whom any such waiver is sought to be enforced.
15. Counterparts. This Agreement may be executed in counterparts, and
each executed counterpart shall be deemed to be a duplicate original of this
Agreement.
16. Successors and Assigns. This Agreement shall be binding on and
inure to the benefit of the heirs, executors, administrators, successors and
assigns of the parties to it.
17. Attorneys' Fees. If any party breaches any obligation under this
Agreement, the non-breaching party (or the prevailing party in the event of any
litigation or alternate dispute resolution procedure) shall be entitled to its
reasonable expenses, attorneys' fees, and costs incurred in any action taken,
with or without litigation, to enforce, work out, or renegotiate the terms of
this Agreement, or to remedy or compensate for such breach.
18. Severability. In the event that any one or more of the provisions
of this Agreement shall be invalid, illegal, or unenforceable in any respect,
the validity, legality and enforceability of the remaining provisions contained
herein shall not be in any way affected or impaired thereby.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
Dated: September 27, 1996 _____________________________________
Xxxx X. Xxxx
BY AFFIXING MY SIGNATURE
HERETO, I HEREBY ACKNOWLEDGE
THAT THE SUBJECT OF UNKNOWN
CLAIMS WAS DISCUSSED WITH MY
COUNSEL, AND THAT I UNDERSTAND THAT I
AM RELEASING CLAIMS THAT MAY BE
DISCOVERED IN THE FUTURE WHICH ARISE
OUT OF FACTS OR EVENTS WHICH NOW
EXIST OR HAVE PREVIOUSLY OCCURRED.
Dated: September 27, 1996 _____________________________________
Xxxxxx Xxxxxxxx
BY AFFIXING MY SIGNATURE
HERETO, I HEREBY ACKNOWLEDGE THAT THE
SUBJECT OF UNKNOWN CLAIMS WAS
DISCUSSED WITH MY COUNSEL, AND THAT I
UNDERSTAND THAT I AM RELEASING CLAIMS
THAT MAY BE DISCOVERED IN THE FUTURE
WHICH ARISE OUT OF FACTS OR EVENTS
WHICH NOW EXIST OR HAVE PREVIOUSLY
OCCURRED.
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StarTronix International, Inc.,
formerly known as Gold Express
Corporation
/s/ Xxxx Xxxxxxx
Dated: September 27, 1996 ------------------------------------
By Xxxx Xxxxxxx
Its President
BY AFFIXING MY SIGNATURE HERETO, I
HEREBY ACKNOWLEDGE THAT THE SUBJECT
OF UNKNOWN CLAIMS WAS DISCUSSED WITH
MY COUNSEL, AND THAT I UNDERSTAND
THAT I AM RELEASING CLAIMS THAT MAY
BE DISCOVERED IN THE FUTURE WHICH
ARISE OUT OF FACTS OR EVENTS WHICH
NOW EXIST OR HAVE PREVIOUSLY
OCCURRED.
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