Exhibit 4.1
EXHIBIT 4.1: FORM OF LOAN CONVERSION AGREEMENT
Socrates Technologies Corporation
0000 Xxxxxxxx Xxxx, Xxxxx 000, Xxxxxx, XX 00000
(000) 000-0000
December 15, 1999
Xx. Xxxxxx Xxxxxxxxx
Socrates Technologies Corporation
0000 Xxxxxxxx Xxxx, Xxxxx 000
Xxxxxx, Xxxxxxxx 00000
RE: CONVERSION OF LOANS
BY HAND
Dear Xx. Xxxxxxxxx:
Pursuant to our recent discussions, this letter sets forth the
agreement between Socrates Technologies Corporation, a Delaware corporation,
(the "Company") and yourself concerning the conversion of the unpaid principal
and accrued interest thereon on your two outstanding loans to the Company. By
signing below, the Company and you agree to the following terms and conditions.
For purposes of this letter agreement, the terms "he", "his", "him",
"you", "your" and "yourself" refer to Xx. Xxxxxx Xxxxxxxxx, and the terms
"party" and "parties" shall refer, respectively, to an individual party to this
letter agreement or, collectively, to the parties to this letter agreement. The
phrase "Socrates Entities" shall mean the Company, its subsidiaries and their
respective officers, directors, employees and agents.
You have loaned the Company a total principal amount of $1,240,000.00,
including accrued interest thereon through December 15, 1999. The Company and
you wish to resolve all claims that you have, had or may have under the Loans
against the Company and to do so in accordance with the following terms and
conditions:
1. The unpaid principal and accrued interest thereon shall be converted
to shares of Common Stock of the Company at a rate of 96 cents per share (based
on the average closing bid price of the Company's Common Stock for the thirty
consecutive trading days immediately preceding December 15, 1999). Based on our
estimation, this would result in the issuance of 1,291,666 "restricted" (as
defined in Rule 144 under the Securities Act of 1933, as amended) shares of
Company Common Stock (the "Shares") to you. The Shares will be registered under
the Securities Act of 1933, as amended, ("Act") under the first non-Form S-8
registration statement filed by the Company in 2000 with the Securities and
Exchange Commission ("Commission") and as soon as the Commission declares, if
its does, such registration statement to be effective. The Company will use its
good faith, diligent efforts to file said registration statement and to file
such amendments or post effective amendments thereto that the Commission may
require as a condition to the registration statement being declared effective
under the Act. If the Company pursued such registration in good faith and in a
diligent manner, the Company will not be liable to you for any failure on the
part of the Commission to declare said registration statement effective without
amendment or without change of form under the Act. The Company will bear the
cost of filing said registration statement and all amendments, post-effective
amendments and exhibits thereto.
2. The issuance of the Shares will constitute a full accord and
satisfaction of all claims by you and your executors, legal representatives and
heirs under the Loans against the Company and/or any of its subsidiaries, and
any of their respective officers, directors, shareholders, employees or agents.
3. The effective date of this Agreement is December 15, 1999, provided,
however, that the parties agree, understand and acknowledge that this letter
agreement must be ratified by the disinterested directors of the Company before
it will be binding upon the Company.
4. Neither party shall, without the prior written consent of the other
party, xxx any press release or make any written or oral statement relating to
Xx. Xxxxxxxxx'x employment with Socrates or service as a director of the
Company, other than communications that advise interested persons that Xx.
Xxxxxxxxx has resigned as an officer and director of the Socrates Entities
without giving the reasons therefor and without commenting upon his services,
actions or performance in such capacities. The following restriction shall not
apply to disclosures required by the Company in any legal proceeding,
investigative proceeding, administrative proceeding or arbitration proceeding,
or by any court or agency with competent
jurisdiction. Xx. Xxxxxxxxx agrees not to disparage or otherwise criticize and
will not encourage others to defame or disparage the Socrates Entities, in
public or private, or any other form of communication. The Socrates Entities
shall not defame or disparage Xx. Xxxxxxxxx in any public communication.
5. For and in consideration of the commitments made herein by the
Socrates Entities, Xx. Xxxxxxxxx, for himself and for his heirs, family members,
successors, and assigns (collectively, the "Ratkovich Entities"), does hereby
release completely and forever discharge the Socrates Entities and their
respective subsidiaries, affiliates, stockholders, attorneys, officers,
directors, agents, employees, successors, and assigns, from any and all claims,
rights, demands, actions, liabilities, obligations, causes of action, of any or
all kinds, nature and character whatsoever, known or unknown, whether based on
tort, including, but not limited to a negligent or intentional tort, contract or
agreement (implied, oral, or written), or any other theory of recovery under the
federal, state or foreign law or regulation and whether compensatory, punitive
damages or other relief, whether legal or equitable, including, but not limited
to, any claim under the Civil Rights Act of 1964, the Civil Rights act of 1991,
the Americans with Disability Act of 1990, and the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"), any state law versions of such acts,
and any and all claims that Xx. Xxxxxxxxx or any other Ratkovich Entities may
now have, or may in the future have, arising from or in any way whatsoever
connected with Xx. Xxxxxxxxx'x employment, service, termination of his
employment or service, dealings, transactions, or activities of any nature,
character or kind whatsoever with Socrates Entities, or termination thereof, the
Company's public disclosures under federal, state of foreign securities laws and
the management of the Socrates Entities. Notwithstanding he foregoing, Ratkovich
Entities do not release the Company from any claims arising out of any breach of
the Agreement, or for any of the aforementioned claims, rights, demands,
actions, liabilities, obligations, or causes of action that cannot be, because
of laws, regulations, or public policy that is applicable to the Company, now or
in the future, the subject of a liability release. Further, nothing contained
herein shall be construed so as to limit the rights of the Company's
stockholders in any dispute with Xx. Xxxxxxxxx.
6. Xx. Xxxxxxxxx also, on behalf of himself and each of the Ratkovich
Entities, further expressly and specifically waives any and all rights or claims
that Xx. Xxxxxxxxx may have under the Age Discrimination in Employment Act of
1967 and the Older Workers Benefit Protection Act, and any similar state or
local statutes or codes (collectively, the "Acts") against the Socrates
Entities. Xx. Xxxxxxxxx acknowledges that this waiver of all rights and claims
under the ADEA
Acts (the "Waiver") is knowingly and voluntarily made, and specifically agrees
that (i) this letter agreement and the Waiver are written in a manner which he
understands; (ii) this Waiver specifically relates to rights and claims under
the ADEA Acts; (iii) he does not waive any rights or claims under the ADEA Acts
that may arise after the date of the execution of this letter agreement; (iv) he
waives rights or claims under the ADEA Acts in exchange for substantial
consideration in excess of anything of value to which he already is entitled to
receive from the Company; and (v) that he has been advised in writing and given
the opportunity to consult with any attorney prior to executing this letter
agreement and the Waiver.
7. For, and in consideration of the commitments made herein by Xx.
Xxxxxxxxx, the Company hereby releases completely and forever discharge Xx.
Xxxxxxxxx and the Ratkovich Entitles from any and all claims, rights, demands,
actions, liabilities, obligations and causes of action of any and all kinds,
nature and character whatsoever, known or unknown, whether based on a tort,
including, but not limited to, (i) a negligent or intentional tort, contract or
agreement (implied, oral or written) or any other theory of recovery under
federal, state or foreign laws and whether for compensatory, punitive damages,
or other legal or for equitable relief, (ii) any and all claims that the
Socrates Entities may have had, may now have, or may in the future have, arising
from or in any way whatsoever connected with Xx. Xxxxxxxxx'x employment and
services as an officer or director with any of the Socrates Entities or the
termination thereof; and (iii) any claims arising out of or relating to the 1999
Special Management Committee Review by the Board of Directors of the Company
(the "Special Review"), or any actions taken by the Company pursuant to said
Special Review. Notwithstanding the foregoing, the Company and each of the other
Socrates Entities do not release Xx. Xxxxxxxxx or the other Ratkovich Entities
from any breach of this letter agreement, or from any of the aforementioned
claims, rights, demands, actions, liabilities, obligations and causes of action
that cannot be waived, released, hold harmless or indemnified under applicable
federal or state securities laws or regulations, the General Corporation Laws of
the State of Delaware, or applicable federal or state public policy, or under
any charter or by-law provision applicable to any of the Socrates Entities.
Further, nothing contained herein shall affect any such rights, demands,
actions, liabilities, obligations and causes of action that any stockholder may
have against any of the Ratkovich Entities.
8. Each party agrees to maintain the confidentiality of the other
party's confidential information, non-public and material information and trade
secrets (regardless of form, format or means of communication). By stamp,
legend, cover letter or memo, or oral statement made or applied at the time of
disclosure, a party
may designate any data, information, materials or documents, regardless of form,
format or means of communication, as its "confidential information", "trade
secrets" or "non-public material information".
9. Xx. Xxxxxxxxx shall be solely responsible for and shall timely
comply with any and all reporting obligations under the Act, Securities and
Exchange Act of 1934, as amended, ("Exchange Act"), and any regulations and
schedules and forms promulgated under the Act or Exchange Act.
10. Xx. Xxxxxxxxx has not filed or caused or permitted to be filed and
he will never file or cause or permit to be filed a any time subsequent to the
Effective Date in any federal, state or foreign court, or before any federal,
state or foreign administrative or investigative agency, any claim or action or
proceeding of any kind, nature or character whatsoever, known or unknown, which
he may have had, may have or may in the future have with respect to any matter
pertaining to or arising from his contracts, agreements, employment, service,
retirement, or termination of employment or service, with the Socrates Entities
or any other matter within the scope of the release set forth in Section 5 or
Section 6 above; specifically including, but not limited to, any claim under
ERISA, the Civil Rights Act of 1964, the Civil Rights Act of 1991, the American
Disabilities act of 1990, and/or the ADEA Acts, but excluding claims that any of
the Ratkovich Entities might have arising out of any breach of this letter
agreement. Xx. Xxxxxxxxx specifically agrees this letter agreement extends to
claims that he does not know or suspect to exist in his favor and which if he
did know to exist would have materially affected this letter agreement. Xx.
Xxxxxxxxx agrees not to participate as a class representative or class member in
any class action proceeding against any Socrates Entities and agrees to opt-out
of any class action filed against the Company or any other Socrates Entities,
including their respective officers, directors, employees, agents or
stockholders.
11. The parties acknowledge, and Xx. Xxxxxxxxx understands that, Xx.
Xxxxxxxxx has 21 days from the receipt of this letter agreement to accept it,
and that even if he does not timely accept it, he may revoke any such acceptance
at any time within 7 days thereof. This letter agreement shall not become
effective until the eighth day following Xx. Xxxxxxxxx'x acceptance hereof, but
upon such eighth day shall be effective after the Effective Date.
12. The parties understand and agree that this is a compromise and
settlement of claims and/or potential claims and that the furnishing of the
consideration as a settlement and general release of all such claims shall not
be deemed or construed as an admission of liability or responsibility at any
time for any purpose.
13. Xx. Xxxxxxxxx shall make himself available for, and upon receipt of
a prior written notice that is sent to him at least 10 days prior to the date
of, any interview or testimony in any legal, administrative, arbitration or
investigative proceeding involving any Socrates Entities and concerning any
claims, events or causes of action that arose or occurred during, in whole or in
part, during the period of Xx. Xxxxxxxxx'x service as an officer or director of
any Socrates Entities. The Company shall make its officers, directors and
employees available upon receipt of a prior written notice from Xx. Xxxxxxxxx
for, which notice is sent to the Company at least 10 days prior to the date of,
an interview or testimony involving any Socrates Entities and concerning any
clams, events or causes of action that arose or occurred, in whole or in part,
during the period of Xx. Xxxxxxxxx'x service as an officer or director of any
Socrates Entities.
14. The parties acknowledge that any breach of the provisions or
covenants set forth herein will cause irreparable damage that would be incapable
of precise measurement and for which no adequate remedy would exist at law and
agrees that injunctive relief, in addition to all other remedies, shall be
available therefor. It is the intent and understanding of each party hereto that
if, in any action before any court or agency legally empowered to enforce this
letter agreement, any term, restriction, covenant, or promise is found to be
unreasonable or illegal or against public policy, and for that reason(s)
unenforceable, then such term, restriction, covenant, or promise shall be deemed
modified to the extent necessary to make it enforceable by such court or agency.
15. Notice. Any notice required or permitted to be given under this
letter agreement shall be sufficient if in writing, and if (i) sent by
registered or certified mail to the address set forth below (which may be
changed by notice to the other party), or (ii) hand delivered to the intended
party and written evidence thereof is obtained, and shall be deemed given on the
earlier to occur of receipt by the party for whom the notice is intended or
three (3) days after mailing by registered or certified mail as set forth above.
Notwithstanding the foregoing, no notice shall be deemed insufficient if (i) the
party for whom such notice is intended admits to its receipt, or (ii) receipt by
the party for whom such notice is intended is otherwise proven. Initial notice
address for each party is as follows:
(a) Socrates Technologies Corporation
0000 Xxxxxxxx Xxxx, Xxxxx 000
Xxxxxx, XX 00000
(000) 000-0000, Facsimile: (000) 000-0000
ATTN: Xxxx X. Xxxxxxx
(b) Xxxxxx Xxxxxxxxx:
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16. Governing Law. This letter agreement shall be construed and
administered in accordance with the laws of the State of Delaware, exclusive of
its conflict of laws rules. The parties hereto agree and stipulate that this
Agreement shall be deemed to have bee. Any claim or cause of action arising out
of or connected with this Agreement shall be brought solely and exclusively in
either the U.S. District Court for the State of Delawae or the first state court
of record in State of Delaware, and the parties consent to submit to the
personal jurisdiction of such courts, and waive all objections to such
jurisdiction and venue.
17. Assignment: The rights and obligations of the Parties under this
letter agreement may be assigned, and shall inure to the benefit, and shall be
binding upon, their respective successors and assigns.
18. Severability: In the event that any one or more of the provisions
of this Agreement shall for any reason be held to be invalid, illegal, or
unenforceable, the remaining provisions of this Agreement shall be unimpaired,
and shall continue in full force and effect.
19. Singular and plural, genders: The singular shall be substituted for
the plural, and any gender or the neuter for any other gender, as appropriate.
20. Construction: This letter agreement shall be interpreted in
accordance with its plain meaning, and the rule that ambiguities shall be
construed against the drafter of the document shall not apply in connection with
the construction or interpretation hereof. The parties expressly agree that the
principle of contract interpretation that ambiguities are construed against the
author Counterparts: This letter aegreement may be executed in two or more
counterparts, each of which shall be deemed to be an original, but all of which
together shall constitute one and the same instrument and agreement.
21. Entire Agreement: This Agreement contains the entire understanding
of the parties with respect to the subject matter hereof. All prior promises,
understandings, or agreements are merged herein. It may not be changed orally,
but only by an agreement in writing, signed by the party against whom
enforcement of any waiver, change, modification, or discharge is sought.
IN WITNESS WHEREOF, the parties have set their hands and seals on the
day and year first above written.
Socrates Technologies Corporation, a Delaware corporation
By: _________________________________________
Name/Title: ______________________________________
Date: _______________________ SEAL
Xxxxxx Xxxxxxxxx
By: __________________________________________
Date: ____________________
