EXHIBIT 10.4
SETTLEMENT AGREEMENT
This AGREEMENT made as of April 2, 1998
BETWEEN:
Java Group, Inc.
(hereinafter referred to as the "Company")
OF THE FIRST PART
AND:
New Vision Financial Ltd.
(hereinafter referred to as the "Creditor")
OF THE SECOND PART
Whereas the Company is indebted to the Creditor in the amount of US$240,793
(the "DEBT") for monies advanced by the Creditor to the Company:
And Whereas the Creditor considers it both appropriate and necessary to
settle the Debt by the issuance of 3,546,000 shares of the Company to the
Creditor (the "Shares")
AND WHEREAS THE SHARES HAVE NOT BEEN REGISTERED WITH THE UNITED STATES
SECURITIES AND EXCHANGE COMMISSION UNDER THE US SECURITIES ACT OF 1933, AS
AMENDED, OR THE SECURITIES COMMISSION OF ANY STATE UNDER ANY STATE SECURITIES
LAW THEY ARE BEING OFFERED PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER
REGULATIONS ("REGULATIONS") PROMULGATED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (the "ACT") THE SHARES MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED
IN THE UNITED STATES OR TO US PERSONS (AS SUCH TERM IS DEFINED IN REGULATION S)
UNLESS THE SHARES ARE REGISTERED UNDER THE ACT AND APPLICABLE STATE SECURITIES
LAWS, OR SUCH OFFERS, SALES AND TRANSFERS ARE MADE PURSUANT TO AVAILABLE
EXEMPTIONS FROM THE REGISTRATION REQUIREMENTS OF THOSE LAWS.
AND WHEREAS THE SUBSCRIPTION AGREEMENT DOES NOT CONSTITUTE AN OFFER TO
SELL, OR A SOLICITATION OF AN OFFER TO BUY. ANY OF THE SHARES OFFERED HEREBY BY
OR TO ANY PERSON IN ANY JURISDICTION IN WHICH SUCH OFFER OF SOLICITATION WOULD
BE UNLAWFUL. INVESTMENT IN THESE SHARES INVOLVES A HIGH DEGREE OF RISK. IN
MAKING AN INVESTMENT DECISION, INVESTORS MUST RELY ON THEIR OWN EXAMINATION OF
THE COMPANY AND THE TERMS OF THE OFFERING,
INCLUDING THE MERITS AND THE RISKS INVOLVED. THESE SHARES HAVE NOT BEEN
RECOMMENDED BY ANY FEDERAL OR STATE SECURITIES COMMISSION OR REGULATORY
AUTHORITY. FURTHERMORE, THE FOREGOING AUTHORITIES HAVE NOT CONFIRMED OR
DETERMINED THE ACCURACY OR ADEQUACY OF THIS DOCUMENT. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
NOW THEREFORE THIS AGREEMENT WITNESSETH that in consideration of one
($1.00) dollar (the receipt and sufficiency of which is hereby acknowledged) the
mutual covenants and agreements herein and agreements herein contained and
subject to the terms and conditions set forth herein, the parties agree as
follows:
1. The Company hereby agrees to issue to the Creditor and the Creditor hereby
agrees to accept from the Company the Shares at a deemed price of $0.0679 per
share in full and final settlement of the Debt and any other monies owed to the
Creditor, including without limitation, any interest, costs or other claims of
the Creditor related either directly or indirectly to the Debt.
2. The Creditor covenants, represents and warrants to the Company that:
(I) the Creditor is not a "US person" as that term is defined in
Regulation S and the Creditor is not an entity organized or incorporated
under the laws of any foreign jurisdiction by any "US person" principally
for the purpose of investing in securities not registered under the Act:
(ii) the shares were not offered to the Creditor in the United States and
at the time of execution of this Agreement and of any offer to the
Creditor, the Creditor was physically outside the United States:
(iii) the Creditor is purchasing the Shares for its own account and not on
behalf of or for the benefit of any US person and the sale and resale of
the Shares have not been prearranged with any buyer in the United States:
(iv) all offers and sales of the Shares prior to the expiration of a
period commencing on the Closing of the Agreement and ending forty (40)
days thereafter (the "Restricted Period") shall not be made to US persons
or for the account or benefit of US persons and shall otherwise be made in
compliance with the provisions of Regulation S;
(v) the Creditor has not been engaged or acted as or on behalf of a
distributor or dealer (and is not an affiliate of a distributor or dealer)
with respect to this transaction:
(vi) the Creditor has not, and to the best of the Creditor's knowledge,
neither the Company nor any distributor, if any, participating in the
offering of the Shares nor any person acting for the Company or any such
distributor has conducted any "directed selling Efforts" as that term is
defined in Regulation S. Such activity includes, without limitation, the
mailing of printed materials to investors residing in the United States,
the holding of promotional seminars in the United States, the placements of
advertisements with radio or television stations broadcasting in the United
States or in
publications with a general circulation in the United States, which discuss
the offering of Shares: (vii)the Creditor will not make any sale, transfer
or other disposition of the Shares in violation of the Act (including
Regulation S) the Securities Exchange Act of 1934, as amended or the rules
and regulations of the Securities and Exchange Commissions promulgated
thereunder. (viii) the Creditor acknowledges and agrees that the Shares may
and will only be resold (a) in compliance with Regulation S: (b) pursuant
to a Registration Statement under the Act: or (c) pursuant to an exemption
from registration under the Act.
3. The certificates representing the Shares shall bear the legend set forth
below and any other legend if such legend or legends are reasonably
required by the Company to comply with state, federal or foreign law.
Subject to the Company's transfer agent's receipt of a legal opinion from
US legal counsel to the Company, the certificate representing the Shares
after the Restricted Period shall not bear a legend.
"The securities represented by this certificate have been issued pursuant
to Regulation S, promulgated under the Securities Act of 1933, as
amended(the "act"), and have not been registered under the Act or any
applicable state securities laws. These securities may not be offered or
sold within the United States or to or for the account of a "US Person"(as
that term is defined in Regulation S) during the period commencing on the
sale of these securities and ending on the fortieth (40th) day following
completion of the Regulation S offering of the Issuer pursuant to which
these securities have been issued, which day is May 12, 1998 (the
"Restricted Period"). The Issuer will notify the transfer agent of the date
of completion of such offering and of the expiration of such Restricted
Period. Following expiration of the Restricted Period, these securities may
not be offered or sold unless such offer or sale is registered or exempt
from registration under the Act."
4. Subject to receipt of a legal opinion from US legal counsel to the Company,
the Company agrees and shall instruct its agents, that the Shares may be
transferred to any person or entity who is not an affiliate of the Company
if such transfer occurs after the Restricted Period, without(a) any further
restriction on transfer (provided the transfer is made in compliance with
the Act) or (b) the entry of a "stop transfer" order against such Shares,
and the Shares delivered to the transferee shall not bear a legend.
5. The Creditor represents and warrants that it has not assigned the Debt, in
whole or in part, to any other party and that it is not settling the Debt
for the Shares as a result of any information about the material affairs of
the Company that is not generally known to the public.
6. This Agreement constitutes the entire Agreement and supersedes any previous
understandings, communications, representations and agreements, whether
written or oral.
7. This Agreement shall endure to the benefit of and be binding upon the
parties hereto, their and each of their heirs executors, administrators,
successors and permitted assigns.
8. This Agreement may be executed in counterparts, which taken together shall
constitute one and the same instrument, and any facsimile signature shall
be taken as an original.
In WITNESS WHEREOF the parties have hereunto executed this Agreement as of the
day first above mentioned.
New Vision Financial Ltd.
/s/ XXXXXXX XXXXXX
_______________________________________
Per: Authorized Signatory
Java Group, Inc.
/s/ XXX XXXXXXXXXX
_______________________________________
Per: Authorized Signatory
