EXHIBIT 10.1
SETTLEMENT AGREEMENT AND MUTUAL RELEASE
THIS SETTLEMENT AGREEMENT AND MUTUAL RELEASE (the "Agreement") is made and
entered into this 9th day of May, 2005, by and between PAID, Inc., a Delaware
corporation ("PAID") and Xxxxxx Xxxxxx ("Seller").
Recitals:
A. PAID, formerly known as Sales Online Direct, Inc., and Seller are
parties to an Agreement and Plan of Merger ("Merger Agreement") dated October
23, 2001, whereby Rotman Collectibles, Inc., a Massachusetts corporation engaged
in the movie poster business ("Target"), was merged with and into a subsidiary
of PAID. As consideration for such merger, Seller received a 6% Convertible
Promissory Note equal to One Million Dollars ($1,000,000) (the "Note"). The
principal and interest due under the Note was convertible into shares of common
stock of PAID. Seller has converted the entire amount due under the Note into
shares of Common Stock of PAID ("Common Stock"). PAID does not owe any
additional amount under the Note.
B. Pursuant to the Merger Agreement, Seller and PAID engaged an appraiser
to appraise the total retail value of certain movie posters (the "Posters"),
which were the primary asset of Target. The appraisal provided that the total
retail value of the Posters was $2,233,685.18 (the "Appraised Value").
C. The Company anticipates, based on its current history of sales, that
the posters will sell for an amount that is less than the Appraised Value;
D. Seller contends that the appraisal of the Posters was made
independently, based on knowledge at the time, and that if the Posters sold for
a lower retail value, it is due to timing of the sales and a general decline in
retail sales over the past several years.
E. The parties desire to fully settle and resolve all differences and
disputes that have been or could have been asserted by the parties arising out
of the Merger Agreement or the claims made by PAID, upon the terms and
conditions set forth herein.
AGREEMENT:
IN CONSIDERATION of the recitals, mutual promises, obligations and
agreements contained herein, and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, Seller and PAID agree
as follows:
1. SETTLEMENT.
1.1 Payment of Cash Consideration or Requirement to Escrow Shares. Seller
shall pay to PAID, Six Hundred Thousand Dollars ($600,000) in cash, delivered as
of the date hereof (the "Cash Consideration"), or, in lieu thereof, in Seller's
sole discretion, Seller shall deliver to the Company, in the manner set forth in
Section 1.2 hereof, options to purchase 2,000,000 shares of Common Stock of PAID
(the "Shares") pursuant to the terms of the Escrow Agreement attached hereto
(the "Escrow Agreement"), in which case PAID and Seller shall execute the Escrow
Agreement as of the date hereof.
1
1.2 PAID Call Option. In the event that Seller does not pay the Cash
Consideration as of the date hereof, Seller hereby grants to PAID or its
designee the right, commencing as of the date hereof, to purchase from Seller
2,000,000 shares of Common Stock (as adjusted for any stock split, reverse stock
split, stock dividend, reclassification, recapitalization, share exchange,
reorganization, or other similar event or transaction) at a purchase price per
share of the share's par value, which is $.001, subject only to such other terms
agreeable to PAID. PAID may freely transfer or assign all or part of the option.
The number of shares is based on a closing bid price as of May 6, 2005 of $.30.
This option shall terminate one year from the date hereof. In the event the
option expires, the Escrow Agent shall be instructed by PAID and Seller to
return the shares to Seller or its designee, at PAID's expense. The purchase
price for the shares acquired pursuant to this option shall be paid in
immediately available funds to an account designated by Seller.
2. RELEASES.
2.1 Except with respect to the obligations created by or arising out of
this Agreement, PAID, for itself and its officers, directors, employees,
consultants, attorneys, accountants, agents, affiliates, successors,
representatives and assigns, hereby releases and fully discharges Seller, its
officers, directors, employees, consultants, attorneys, accountants, agents,
affiliates, successors, representatives and assigns from any and all claims,
demands, damages, debts, liabilities, accounts, obligations, costs, expenses,
liens, attorneys' fees, actions and causes of action of every kind or nature
whatsoever, at law or in equity, known or unknown, suspected or unsuspected,
that now exist or may arise in the future, arising out of or in any way related
to the Merger Agreement or the transactions contemplated therein.
2.2 Except with respect to the obligations created by or arising out of
this Agreement, Seller, for itself and its officers, directors, employees,
consultants, attorneys, accountants, agents, affiliates, successors,
representatives and assigns, hereby releases and fully discharges PAID, its
officers, directors, employees, consultants, attorneys, accountants, agents,
affiliates, successors, representatives and assigns from any and all claims,
demands, damages, debts, liabilities, accounts, obligations, costs, expenses,
liens, attorneys' fees, actions and causes of action of every kind or nature
whatsoever, at law or in equity, known or unknown, suspected or unsuspected,
that now exist or may arise in the future, arising out of or in any way related
to the Merger Agreement or the transactions contemplated therein.
3. MISCELLANEOUS.
3.1 No Admissions. It is understood that this Agreement is a full
compromise of disputed claims and that neither this Agreement nor its terms
shall be construed as an admission of liability, fault or wrongdoing of any
nature by any party.
3.2 Successors and Assigns. This Agreement shall be binding upon and inure
to the benefit of the parties hereto and their respective employees, agents,
representatives, successors and assigns.
3.3 Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the Commonwealth of Massachusetts, exclusive of any
conflicts of law principle which would apply the substantive law of another
jurisdiction.
3.4. Entire Agreement. This Agreement constitutes the entire understanding
and agreement of the parties and supersedes all prior agreements or
understandings, written or oral, between the parties with respect to this
specific subject matter, including without limitation the Merger Agreement and
the Note.
2
3.5. Attorneys' Fees. Each party hereto shall bear its own attorneys' fees
and costs with respect to the claims and matters referenced herein, and other
than as set forth herein, no party shall have any obligation to the attorneys of
the other party, or to pay any costs incurred by the other party.
3.6 Amendment; Waiver. Any amendment to this Agreement may be only made
upon the written consent of both parties. Any waiver of any provision hereof may
be made in writing signed by the party waiving such party's right or condition
to performance hereunder.
3.7 Counterparts. This Agreement may be executed in multiple counterparts,
each of which shall be an original and all of which together shall constitute
one and the same agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the day
and year first above written.
/s/ Xxxxxx Xxxxxx
--------------------------------
Xxxxxx Xxxxxx
PAID, INC.
By: /s/ Xxxxxxx Xxxxxx
---------------------------------
Name: Xxxxxxx Xxxxxx
Title: President
3
