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EXHIBIT 10.1
SETTLEMENT AGREEMENT
AGREEMENT ("Agreement"), dated as of May 22, 1996, by and between
Sunrise Financial Group, Inc., having an address at 000 X. 00xx Xxxxxx, Xxx
Xxxx, Xxx Xxxx 00000 (referred to herein as "Sunrise"), Xxxxxx Xxxx, having an
address at 000 Xxxxxxxx Xxxxx, Xxx Xxxxxx, Xxxxxxxxxx 00000 (referred to herein
as "Xxxx") and Phoenix Network, Inc., having an address at 000 Xxxxxxxxxx
Xxxxxx, Xxx Xxxxxxxxx, Xxxxxxxxxx 00000 (referred to herein as "Phoenix").
W I T N E S S E T H:
WHEREAS, Sunrise and Xxxx are parties to an agreement, dated March 10,
1993, whereby, inter alia, Xxxx granted Sunrise the option to purchase from
Xxxx up to 125,000 shares of common stock, par value $.001 per share of Phoenix
("Common Stock"), at an exercise price of $1.50 per share;
WHEREAS, Sunrise and Phoenix are parties to an agreement, dated March
10, 1993, whereby, inter alia. Sunrise agreed to perform certain financial
public relations services for Phoenix (the "Service Agreement");
WHEREAS, in November 1993, Phoenix granted Sunrise warrants to purchase
50,000 shares of Common Stock at $7.00 per share (the "Warrants")'
WHEREAS, in July 1993, Phoenix granted Sunrise warrants to purchase
53,333 shares of Common Stock at $3.75 per share (the "Teton Warrants");
WHEREAS, the Service Agreement terminated on or about September 6, 1994;
WHEREAS, Sunrise commenced an action against Xxxx and Phoenix in the
United States District Court, Xxxxxxx District of New York, 95 Civ. 2702 (PKL)
on or about April 6, 1995 (the "Litigation"); and
WHEREAS, the parties desire to settle the litigation;
NOW, THEREFORE, in consideration of the foregoing premises and the
mutual covenants made herein, and other good and valuable consideration,
receipt of which is hereby acknowledged, the parties hereby agree as follows:
1. Within fourteen days following the execution of this Agreement,
Xxxx will tender to Phoenix's transfer agent, Chemical-Mellon (the "Agent"),
certificates representing 92,500 (ninety-two thousand, five hundred) shares of
Common Stock registered in Xxxx'x name and bearing a restrictive legend (the
"Shares"), together with stock powers executed in blank with signatures
guaranteed, for transfer to the following individuals in the amounts set forth
opposite
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their respective names:
Name No. of Shares
---- -------------
Xxxxxx X. Low 40,300
Xxxxxx X. Xxxxx 18,825
Xxxxxxxx Xxxxxx 22,125
Xxxxx Xxxxxxxx 9,250
Xxxx Xxxxx 2,000
2. Promptly following notification from the Agent that the transfers
contemplated by Section 1 have been registered on the books of Phoenix and
certificates representing the Shares have been issued as set forth above,
Phoenix shall undertake, at its expense, to register the Shares, the shares
underlying the Warrants and the shares underlying the Teton Warrants for sale
to the public on Form S-3 (or another form, as Phoenix may in its discretion
determine, if Phoenix is not able for any reason to use Form S-3 to register
the Shares or any other such shares), in accordance with applicable Federal and
state laws and regulations, with a view to expediting the effective date of the
registration statement. Sunrise shall, and shall cause each of the transferees
named in Section 1 to, comply promptly with all requests for information from
Phoenix and otherwise cooperate with Phoenix to the fullest extent, as
necessary for Phoenix to perform its obligations under this Section 2.
3. Sunrise hereby represents and warrants to Phoenix that it does
not have the Warrants or the Teton Warrants in its possession and has not
transferred, assigned or conveyed any of the Warrants, the Teton Warrants or
any interest in either thereof, to any person or entity. Sunrise hereby
authorizes Phoenix and the Agent to cancel the Warrants and the Teton Warrants
on the books of Phoenix and, within fourteen days following the cancellation of
all such warrants on the books of Phoenix, Phoenix shall issue, or cause to be
issued, in substitution therefor, warrants of like tenor, expiring on the same
date as the Warrants and the Teton Warrants, respectively, for the purchase of
an equivalent number of shares of Common Stock at an exercise price of $4.00
per share in the case of the Warrants (the "Replacement Warrants"), and at the
original exercise price of $3.75, in the case of the Teton Warrants (the "New
Teton Warrants"), to the following persons in the amounts set forth opposite
their respective names:
Name No. of Replacement Warrants
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Xxxxxx X. Low 33,750
Xxxxxx X. Xxxxx 11,250
Trilogy Group, Inc. 3,700
Xxxxxx Xxxxxxxxx 1,250
Name No. of New Teton Warrants
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Xxxxxx Low 40,000
Xxxxxx X. Xxxxx 13,333
Sunrise shall bear all transfer, income and other taxes due or to become due in
connection with
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the issuance of the Replacement Warrants and the New Teton Warrants, and shall
otherwise indemnify and hold Phoenix harmless from and against all loss,
liability, costs and expense, including attorneys' fees and disbursements,
suffered or incurred by Phoenix in connection therewith or with any breach of
the representation and warranty with respect to the Warrants or the Teton
Warrants made herein or otherwise on behalf of Sunrise.
4. In consideration of the foregoing, Sunrise hereby releases and
forever discharges Xxxx, Phoenix and their respective shareholders, directors,
officers, employees, agents, successors, assigns, heirs, representatives and
affiliates (all such persons and entities being collectively referred to as the
"Phoenix Related Persons"), of and from any and all causes of action, claims,
demands and remedies of whatsoever kind and nature that Sunrise has or may in
the future have against Xxxx, Phoenix or any Phoenix Related Persons in any
manner on account of, arising out of or related to any event, occurrence,
relationship or agreement through the date hereof; provided, however, that such
release and discharge shall not operate to release or discharge any cause of
action, claim, demand or remedy against Xxxx, Phoenix or the Phoenix Related
Persons arising our of or related to the performance of their respective
obligations under this Agreement.
5. In consideration of the foregoing, Phoenix and Xxxx hereby
release and forever discharge Sunrise and its shareholders, directors,
officers, employees, agents, successors, assigns and affiliates (all such
persons and entities being collectively referred to as the "Sunrise Related
Persons"), of and from any and all causes of action, claims, demands and
remedies of whatsoever kind and nature that Phoenix or Xxxx has or may in the
future have against Sunrise or any Sunrise Related Persons in any manner on
account of, arising out of or related to any event, occurrence, relationship or
agreement through the date hereof; provided, however, that such release and
discharge shall not operate to release or discharge any cause of action, claim,
demand, or remedy against Sunrise or the Sunrise Related Persons arising out of
or related to the performance of their respective obligations under this
Agreement.
6. Simultaneously herewith, Sunrise or its counsel will execute a
stipulation discontinuing the Litigation with prejudice substantially in the
form annexed hereto as Exhibit A.
7. Any notice, request, demand or other communication required or
permitted under this Agreement shall be given in writing and shall be delivered
or sent by registered or certified mail, return receipt requested in a prepaid
envelope, by overnight mail or courier, or by facsimile transmission, to the
addresses set forth below are at such other address as such party shall
hereafter specify in accordance with this Section:
Sunrise Financial Group, Inc.
000 X. 00xx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
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Xxxxxx Xxxx
000 Xxxxxxxx Xxxxx
Xxx Xxxxxx, Xxxxxxxxxx 00000
Phoenix Network, Inc.
000 Xxxxxxxxxx Xxxxxx
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
Attention:
Such notice or other communication shall be deemed to have been given (a) when
delivered, if sent by registered or certified mail or delivered personally or
by facsimile transmission, or (b) on the second following business day, if sent
by overnight mail or overnight courier.
8. Each part of this Agreement is intended to be severable. If any
term, covenant, condition or provision of this Agreement is unlawful, invalid
or unenforceable, such illegality, invalidity or unenforceability shall not
affect the remaining provisions of this Agreement, which shall remain in full
force and effect and shall be binding upon the parties.
9. The headings of the Sections of this Agreement are inserted for
convenience only and shall not affect the meaning or interpretation of this
Agreement or any provision thereof.
10. This Agreement shall be construed, and the rights and obligations
of the parties under the Agreement shall be determined, in accordance with the
laws of the State of New York applicable to agreements made and fully to be
performed therein by residents thereof.
11. This Agreement may not be assigned by any party without the
express prior written consent of the other parties, which consent shall not be
unreasonably withheld. This Agreement shall inure to the benefit of and be
binding upon the respective successors and permitted assigns of the parties.
12. This Agreement constitutes the entire agreement between the
parties pertaining to the subject matter hereof and supersedes any and all
prior agreements, representations and understandings of the parties, written or
oral. The terms of this Agreement shall not be modified or amended except by a
writing signed by each of the parties.
13. This Agreement may be executed in any number of counterparts,
each of which shall be deemed an original and all of which together shall
constitute one and the same instrument.
14. No waiver by either party of the other party's breach of any
term, covenant or condition contained in this Agreement shall be deemed a
waiver of any subsequent breach of the same or any other term, covenant or
condition of this Agreement.
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15. Time is of the essence with respect to the parties' obligations
under this Agreement.
16. If any dispute should arise in connection with this Agreement or
the transactions contemplated hereby, it shall be settled by arbitration in New
York City before a single arbitrator designated by the American Arbitration
Association in accordance with the Rules of the American Arbitration
Association then and there obtaining. The cost of any arbitration proceedings
and the prevailing party's attorneys' fees shall be borne by the party against
whom an award is made. The decision of the arbitrator shall be binding and
conclusive upon the parties.
IN WITNESS WHEREOF, the undersigned have executed, or have caused to be
executed, this Agreement as of the date first above written.
SUNRISE FINANCIAL GROUP, INC.
By: /s/ Xxxxxx X. Low
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Xxxxxx X. Low
Title: President
XXXXXX XXXX
/s/ Xxxxxx Xxxx
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PHOENIX NETWORK, INC.
By: /s/ Xxxxxxx Xxxxxxx
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Xxxxxxx Xxxxxxx
Chief Executive Officer
By: /s/ Xxxxxxx Xxxxxx
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Xxxxxxx Xxxxxx
Chief Financial Officer
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