EXHIBIT 10.1
MUTUAL RELEASE AND SETTLEMENT AGREEMENT
The parties to this Mutual Release and Settlement Agreement ("Agreement")
are Xxxx Xxxxx ("Xxxxx"), Interactive Objects, Inc. ("IO"), Northwest Capital
Partners, LLC ("Northwest Capital"), Xxxxx Xxxxxxx ("Wollach"), Xxxx Xxxxxxx
("Xxxxxxx") and Xxxxx Xxxxxx ("Xxxxxx") (Northwest Capital, Wollach, Xxxxxxx and
Xxxxxx are sometimes referred to as "the other parties to this Agreement"). The
intent of this Agreement is to resolve all disputes between Xxxxx, on the one
hand, and IO and the other parties to this Agreement, on the other, pertaining
in any way to (a) Xxxxx'x employment at Interactive Objects; (b) Xxxxx'x
Executive Employment Agreement dated January 1, 1998, as amended July 1, 1998
(the "Employment Agreement"), (c) Xxxxx'x service as CEO and a director of IO,
(d) Xxxxx'x relations with IO and the other parties to this Agreement, and such
parties' relations with Xxxxx, and (e) any claims or rights Xxxxx or the other
parties to this Agreement may have individually, as shareholders, as
shareholders on behalf of IO, or as officers, directors, employees or agents of
IO, from the beginning of the involvement of each with IO (and any
predecessor(s) of IO) to the date of Xxxxx'x resignation from his positions in
management of IO on or about October 8, 1998.
RECITATIONS
WHEREAS Xxxxx is a founder of IO (or its predecessor(s)), who served as CEO
and a member of IO's Board of Directors from its inception to October 8, 1998;
and
WHEREAS Xxxxx owns 1,680,800 shares of common stock of IO, as well as
options to purchase an additional 50,000 shares as reflected more particularly
in the Minutes of Board meetings and financial statements of IO; and
WHEREAS Xxxxx and IO entered into the Employment Agreement on or about
January 1, 1998, as amended July 1, 1998; and
WHEREAS Xxxxx resigned from his positions as an officer and director of IO
on or about October 8, 1998, such resignations having been accepted by IO on the
same date; and
WHEREAS the other parties to this Agreement are or have been involved from
time to time in the management of IO as officers and directors or are otherwise
involved as investors or substantial shareholders; and
WHEREAS disputes have arisen between Xxxxx, on the one hand, and IO and the
other parties to this Agreement, on the other, regarding matters of
compensation, management and direction; and
WHEREAS Xxxxx, on the one hand, and IO and the other parties to this
Agreement, on the other, wish to resolve their differences and settle their
disputes upon the terms and conditions hereafter set forth,
AGREEMENT
NOW, THEREFORE, in consideration of the mutual covenants and agreements set
forth herein, the sufficiency of which is hereby acknowledged, the parties
hereto agree as follows:
1. OPTIONS TO PURCHASE STOCK. Xxxxx, with respect to his 1,680,800 shares
of IO, will provide IO and/or its assignee options for the purchase of up to
100% of such shares, and any shares related and/or arising therefrom by stock
split or stock dividend or otherwise, in the manner and at the times set forth
on the schedule attached hereto. The first option, the exercise of which is
irrevocably committed, is for 550,000 shares at $.50 per share for a total
option payment of $275,000. Subsequent options will be for 226,160 shares each
at $.50 per share and shall be exercised by the payment of cash into escrow, as
prescribed hereafter, on or before the exercise dates set forth in the attached
schedule. IO and/or its assignee may exercise/purchase all or a portion of the
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shares covered by each subsequent option. In the event any such subsequent
option is not exercised or not completely exercised by a purchase of all shares
covered by the option on or before its appointed date, then the option, to the
extent shares remain that were not purchased, shall be deemed to have expired,
and the remaining shares represented by such option shall be immediately
returned to Xxxxx. The total value of the options is $840,400, including the
initial committed option payment of $275,000.
2. ESCROW. IO and Xxxxx agree to share the expense, and will open an
agreed escrow into which will be deposited all of Xxxxx'x shareholdings in IO
and $275,000 cash representing the initial committed option payment, such
deposits to be made within seven (7) days from the date of execution of this
Agreement. The escrowee will be instructed to release 550,000 of Xxxxx'x shares
as directed by IO, but no later than twenty (20) days from the date of execution
of this Agreement and simultaneously with the release of such shares, the
escrowee shall release $275,000 to Xxxxx. In the event no direction is received
from IO, within such twenty (20) days, the escrowee shall nonetheless release
$275,000 to Xxxxx and shall then retain the shares represented by such payment
pending receipt of direction from IO. Any interest earned on escrowed funds
shall be for the account of IO. Xxxxx shall cooperate with IO, in assuring that
escrowed shares can be released by the escrowee in appropriate numbers
represented by appropriate certificates on timely payment of the option amounts.
Xxxxx agrees to execute any and all documentation necessary directed to either
the escrowee and/or the transferring agent to effectuate transfers contemplated
hereunder. Such documentation will include but not be limited to any necessary
medallion guarantees. In the event that any subsequent option (after the
initial committed option or portion thereof) is not timely exercised and
expires, then the remaining unpurchased shares represented by that option shall
be immediately returned to Xxxxx, with shares represented by any unexpired
options to remain in escrow pending either timely exercise or return to Xxxxx as
the case may be.
3. EXPIRED OPTIONS. Excepting the initial option, execution of which is
irrevocably committed, if any subsequent option is not timely exercised in the
manner described above, and the shares represented by such option or a portion
thereof are returned to Xxxxx, any such returned shares shall be returned in
freely tradable form, subject only to applicable rules and regulations of the
SEC or other agency with jurisdiction, and subject further to Xxxxx'x agreement
that he will not, without the permission of IO, endeavor to sell any such
returned shares at a rate greater than 5,000 shares per day. IO shall cooperate
fully in assuring that any returned shares are freely tradable.
4. XXXXX'X OPTIONS. Xxxxx shall retain any and all options he may have
received to purchase shares of IO, based upon the rules and regulations of the
stock option plan of IO. It is the intent of the parties that Xxxxx'x options
shall not be affected by this Agreement. Nothing in this Agreement shall be
interpreted or construed as expanding or modifying Xxxxx'x option rights.
5. RIGHTS OF FIRST REFUSAL RELEASED. IO and Northwest Capital may have
certain rights of first refusal with respect to the shares owned by Xxxxx and
optioned pursuant to this Agreement. IO and Northwest Capital hereby relinquish
any and all such rights of first refusal.
6. PARTIAL PAYMENT OF COSTS. Upon execution of this Agreement, Xxxxxxx
Coie shall invoice IO for the sum of $16,000 for costs and fees. IO agrees to
pay Xxxxxxx Coie said sum within seven (7) days of the date of receiving said
invoice.
7. VOTING RIGHTS DURING ESCROW. Xxxxx assigns to Xxxxx Xxxxxxx and/or
Xxxxx Xxxxxx and/or Xxxx Xxxxxxx the proxy to vote all of his escrowed shares.
Wollach, Nelson, and/or Xxxxxxx agree to vote said shares as directed by the
Board of Directors of IO. This proxy is coupled with an interest in said shares.
Notwithstanding the above, this proxy shall not be exercised in favor of any
proposal which would treat Xxxxx, as a shareholder, less favorably than would be
treated any other director or officer of IO who is also a shareholder.
8. ASSIGNABILITY. The options provided for herein shall be assignable by
the company, provided, however, that the shares represented by such options will
only be released on timely receipt of option payments, as specified herein, or
shall be promptly returned to Xxxxx on expiration of relevant option periods.
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9. SURVIVAL OF CERTAIN RIGHTS AND OBLIGATIONS. Notwithstanding the mutual
releases set forth below, it is the parties' intent that certain provisions of
the Employment Agreement, as well as certain other rights and obligations, shall
survive this Agreement. These provisions of the Employment Agreement are [_] 11
(Indemnification) and [_] 12 (Invention, Confidentiality, Nonraiding and
Noncompetition Agreement). In addition to the survival of such provisions,
Xxxxx shall retain all other rights of indemnity and/or contribution as may be
provided for in corporate documents, resolutions and minutes, as well as any and
all rights of indemnity and/or contribution allowed under applicable law. Xxxxx
shall also retain, unimpaired by this Agreement, his interest in and right to
insurance coverage under all applicable D&O insurance policies, consistent with
the terms and conditions of such D&O policies. Nothing in this Agreement shall
be construed as requiring the company to continue the coverage if the company is
unable to do so; provided however, that Xxxxx'x interest in and right to
coverage shall be no less favorable than that of any other director or officer
of IO; and provided further that Xxxxx shall receive timely advance notice of
any decision affecting his coverage and the opportunity to purchase tail
coverage if available.
10. MUTUAL RELEASES. The parties intend that their releases be mutual.
(a) XXXXX'X RELEASE. In consideration of the initial option payment,
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and the mutual promises set forth in this Agreement, and upon receipt by Xxxxx
of such initial option payment Xxxxx unconditionally and irrevocably releases
and discharges IO and the other parties to this Agreement, their respective
marital communities, affiliates, former affiliates, predecessors, successors,
assigns and any person claiming an interest through or under any of them (and
the respective directors, officers, partners, employees, agents and
representatives of any of the foregoing) from
(i) any and all actions, claims, demands, causes of action,
arbitrations, disputes or controversies, whether based on contract, tort,
statute or otherwise, and
(ii) any direct or indirect liability (whether absolute, accrued
or unaccrued, contingent, liquidated or unliquidated, matured or
unmatured), indebtedness, obligation, expense or loss, known or unknown,
arising out of relating to or resulting from, directly or indirectly, (A)
Xxxxx'x employment at IO and/or (B) his employment at IO and/or (C) the
Employment Agreement and/or (C) such parties' management of or relations with IO
or with Xxxxx whether in their capacities as officers, directors or shareholders
from the date any such management or relations commenced to the date of Xxxxx'x
resignation as an officer and director of IO on or about October 8, 1998.
Except as set forth in this Agreement, the release given hereunder is intended
to be a general release. Except as set forth in this Agreement, the release
given hereunder is intended to be a general release. This Agreement shall not
affect or impair, however, the rights or obligations of the parties under this
Agreement, or Xxxxx'x rights as a shareholder of IO, following October 8, 1998.
(b) IO AND THE OTHER PARTIES' RELEASE. In consideration of the
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options provided for herein, and the mutual promises set forth in this
Agreement, IO and the other parties to this Agreement unconditionally and
irrevocably release and discharge Xxxxx, his marital community, successors and
assigns, and any person claiming an interest through or under Xxxxx from
(i) any and all actions, claims, demands, causes of action,
arbitrations, disputes or controversies, whether based on contract, tort,
statute or otherwise, and
(ii) any direct or indirect liability (whether absolute, accrued
or unaccrued, contingent, liquidated or unliquidated, matured or
unmatured), indebtedness, obligation, expense or loss, known or unknown,
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arising out of relating to or resulting from, directly or indirectly, (A)
Xxxxx'x employment at IO and/or (B) the Employment Agreement, and/or (C) Xxxxx'x
management of or relations with IO or the other parties to this Agreement
whether in his capacity as officer, director or shareholder from the date any
such management or relations commenced to the date of Xxxxx'x resignation as an
officer and director of IO on or about October 8, 1998. Except as set forth in
this Agreement, the release given hereunder is intended to be a general release.
This Agreement shall not affect or impair, however, the rights or obligations of
the parties under this Agreement or Xxxxx'x rights as a shareholder of IO,
following October 8, 1998.
(c) All parties to this Agreement expressly understand and acknowledge
that unknown losses or claims may exist with respect to the releases
contemplated by this Section 10(a) and (b), that present claims or interests may
have been underestimated in amount or severity, and that they explicitly took
that into account in determining the amount of consideration to be received
hereunder, and that a portion of such consideration, having been bargained for
among the parties with the knowledge of the possibility of such unknown losses
or claims, was given in exchange for a full accord, satisfaction and discharge
of all such losses or claims.
(d) Neither Xxxxx, nor IO, nor the other parties to this Agreement
will bring, commence, institute or prosecute in the name of that person,
individually as shareholder, in a corporate capacity or in the name of the
corporation or any other person, any action, claim, demand, cause of action,
suit, arbitration, dispute or controversy based in whole or in part upon any
fact or event to be released herein, whether known or unknown. This Section
10(d) may be pleaded as a full and complete defense to, and may be used as a
basis for injunctive relief against any action, claim, demand, cause of action,
suit, arbitration, dispute or controversy which may be instituted, prosecuted or
attempted in breach of this Section 10(d). None of the parties hereto will
enter into any arrangement or understanding with any third party with respect to
the foregoing or any discussions designed to advise, assist or encourage any
third party in connection with the foregoing.
11. CONFIDENTIALITY. Except as provided, the terms and conditions of this
Agreement, and the disputes addressed herein, shall be and remain confidential
and shall not be disclosed to any third party except on a need-to-know basis,
i.e., attorneys, accountants, and the like, and except to the SEC or other
regulatory authorities as required by law. If anyone asks, the parties agree
that they will only state that any disputes between Xxxxx on the one hand and IO
and the other parties hereto on the other have been satisfactorily resolved.
Notwithstanding the foregoing, IO is authorized to disclose to former IO
principal Xxx Xxxxxxx and his attorney(s) the terms of this Agreement (including
a copy of this Agreement) providing that Xx. Xxxxxxx and his attorney agree in
advance to keep the terms of this Agreement confidential. Further,
notwithstanding the foregoing, the parties acknowledge that the terms of this
Agreement may be filed with the SEC and fully disclosed to the public. The
parties further agree that each shall not disparage the character, conduct
and/or abilities and/or reputation of any other party to the Agreement.
12. REPRESENTATIONS AND WARRANTIES. IO represents as follows:
(a) It is a corporation duly organized and existing in good standing
under the laws of the state of its incorporation and has the power to own its
properties and to carry on its business as now being conducted.
(b) It has full legal right, power and authority to enter into and
perform this Agreement; the execution and delivery of this Agreement by it and
the consummation by it of the transactions contemplated hereby have been duly
authorized by it and to the best of its knowledge do not contravene any law or
regulation governing the parties hereto and have been appropriately noticed, if
required, to any and all regulatory bodies having jurisdiction; this Agreement
has been duly executed and delivered by it and constitutes its valid and binding
obligation enforceable against it in accordance with its terms, except that such
enforcement is subject to the effect of any bankruptcy, insolvency,
reorganization, moratorium, liquidation or similar laws relating to, or
affecting, generally, the enforcement of creditors' rights and remedies.
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13. VOLUNTARY AGREEMENT. The parties hereto understand the significance
and consequences of this Agreement and acknowledge that it is voluntary and has
not been given as a result of any coercion. The parties also acknowledge that
they have been given full opportunity to review and negotiate this Agreement,
have been represented by competent legal counsel and execute this Agreement only
after full reflection and analysis and after mediation before Xxxxx X. Xxxxxx,
Esq. The parties acknowledge that they have reviewed the Memorandum of
Settlement prepared by Xx. Xxxxxx following mediation, that such Memorandum of
Settlement accurately reflected the parties' agreements reached at mediation and
that this Agreement is intended to and does restate and formalize such
Memorandum of Settlement.
14. NO ADMISSION OF LIABILITY. This Agreement shall not be construed as
an admission of wrongdoing by any party hereto and all parties hereto do
expressly deny wrongdoing of any kind.
15. GOVERNING LAW AND VENUE. This Agreement shall be interpreted in
accordance with the laws of the state of Washington with the venue for any
dispute to be set in King County, Washington.
16. ATTORNEYS' FEES. Any party to this Agreement may xxx for breach of
its terms and, in the event of suit, the prevailing party shall be entitled to
recover his or its reasonable costs and attorneys' fees incurred therein and on
any appeal.
17. ENTIRE AGREEMENT. This Agreement represents and contains the entire
understanding among the parties in connection with the subject matter of the
Agreement. The Agreement shall not be modified or varied except by a written
document signed by the parties.
18. OPPORTUNITY TO REVIEW. Each party hereto acknowledges that he or it
has had sufficient time to review and consider this Agreement and to consult
with attorneys of its choosing. By their signatures, the parties acknowledge
that they have carefully read and fully understand all of the provisions of the
Agreement and that they are voluntarily entering into this Agreement.
19. NOTICES. Any notice required under this Agreement may be sent regular
mail postage prepaid to the parties at the following address and shall be deemed
delivered three days following deposit in the mail.
Interactive Objects Xxxx Xxxxx with a copy to:
------------------- ---------- ---------------
000 Xxxx Xxxxxx 0000 X. Xxxx Xxxxxxxxx Xxxx. XX Xxxxx X. Xxxxxx, Xx.
0xx Xxxxx Xxxxxxxx, XX 00000 0000 Xxxxx Xxxxxx, Xxx. 0000
Xxxxxxx, XX 00000 Xxxxxxx, XX 00000
Each party agrees to notify the other in writing of any change in address.
DATED this 4th day of March, 1999.
/s/ XXXX XXXXX
--------------------
Xxxx Xxxxx
Interactive Objects, Inc.
By: /s/ XXXXXX X. XXXXXXX /s/ XXXXX XXXXXXX
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Its: President and Chief Financial Officer Xxxxx Xxxxxxx
Northwest Capital Partners LLC
By: /s/ XXXXX X. XXXXXX /s/ XXXX XXXXXXX
-------------------------- ----------------------
Its: Managing Partner Xxxx Xxxxxxx
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SCHEDULE OF OPTIONS PROVIDED BY XXXXX
EXERCISE DATE EXERCISE PRICE NUMBER OF SHARES
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1. Within 30 days of $275,000 (committed) 550,000
execution of Agreement
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2. 10/15/99 $113,080 226,160
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3. 1/15/00 $113,080 226,160
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4. 4/15/00 $113,080 226,160
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5. 7/15/00 $113,080 226,160
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6. 10/15/00 $113,080 226,160
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TOTAL $840,400 1,680,800
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