Mutual Settlement and Release MUTUAL SETTLEMENT AND RELEASE AGREEMENT AMONG ROSE WASTE SYSTEMS, INC., GEORGE GITSCHEL, ITEC ENVIRONMENTAL GROUP, INC., AND ITEC ACQUISITIONS, INC.
Exhibit
10.7
Mutual
Settlement and Release
AMONG
ROSE
WASTE SYSTEMS, INC., XXXXXX XXXXXXXX,
ITEC
ENVIRONMENTAL GROUP, INC., AND ITEC ACQUISITIONS, INC.
Come
now
Xxxxxx Xxxxxxxx, an individual (“Gitschel”),
Rose
Waste Systems, Inc., a California corporation (“Rose”),
Itec
Environmental Group, Inc., a Delaware corporation, (“Itec”)
and
Itec Acquisitions, Inc., a Delaware corporation (“Merger”)
(collectively referred to at times herein as the “parties”)
and
enter into this mutual settlement and release agreement (“Agreement”)
for
the express purpose of resolving all of the differences among the parties
relating to or stemming from the claims of Rose and Gitschel on the one hand
against Itec and Merger on the other against one another.
This
Agreement is entered into in light of the following facts:
X. Xxxx
supplied certain equipment to Itec in accordance with the terms and conditions
of a written agreement among Rose, Machinex, and Itec.
X. Xxxx
supplied certain additional goods and services to Itec at the request of and
for
the benefit of Itec. Collectively, the goods and services provided to Itec
by
Rose are referred to as the ‘Equipment.”
C. Itec
has
paid Rose for approximately 90% of the amount due with respect to the Machinex
and Getecha equipment packages supplied by Rose to Itec.
X. Xxxx
loaned Itec $37,000, in January 2006, which sum Itec has not repaid to Rose
(the
“Loan”).
E. On
May
17, 2006, Rose filed suit against Itec in civil action No. 380417, filed in
the
Superior Court of the State of California, Stanislaus County (the “Rose
Litigation”).
F. Itec
has
no claims against Rose with respect to the Equipment.
X. Xxxxxxxx,
Xxxx, Itec and Merger executed an
Agreement and Plan of Merger By and Among Itec Environmental Group, Inc., Itec
Acquisitions, Inc. and Rose Waste
Systems, Inc. on
May
25, 2005
by the
terms of which Rose was to be merged into Itec (the ‘Merger
Agreement”).
H. Xxx
Xxxxxxxx and Itec executed a Stock Purchase Agreement (the “Xxxxxxxx Agreement”)
by the terms of which Itec was to undertake certain performance that would,
inter alia, benefit Gitschel.
1
I. On
June
30, 2006, Gitschel filed suit against Itec and Merger in civil action No.
381562, filed in the Superior Court of California, County of Stanislaus County
(the “Gitschel Litigation”).
J. Itec
is
seeking capital financing from outside sources of from $5,000,000
to
$12,000,000 (the “Financing”). Itec expects to receive the Financing within
thirty days from the date hereof but does not warrant that the Financing will
be
forthcoming. Itec plans to use the Financing to, inter alia, pay all sums due
to
Rose hereunder.
K. Itec,
Rose and Gitschel are knowledgeable participants in the recycling processing
business.
In
light
of the foregoing, and without admitting any of the allegations of the Rose
Litigation or the Gitschel Litigation, the parties agree as
follows:
1. Conditional
Dismissal of Rose Litigation and Gitschel Litigation.
Itec and
Merger hereby agree to accept service of the summons, complaint and all other
pleadings related to the Gitschel Litigation. Itec hereby acknowledges it was
properly served with the summons and complaint related to the Rose Litigation,
on May 18, 2006. Itec and Merger further agree to submit to the jurisdiction
of
the Superior Court of California, Stanislaus County with respect to the Gitschel
Litigation. Itec further agrees to submit to the jurisdiction of the Superior
Court of California, Stanislaus County with respect to the Rose Litigation.
Upon
the general appearance of Itec in the Rose Litigation and of Itec and Merger
in
the Gitschel Litigation, Rose and Gitschel shall notify the court of this
Agreement as to both lawsuits and will request a conditional dismissal of the
Rose Litigation and the Gitschel Litigation subject to Itec’s and Merger’s
performance of their obligations under this Agreement. Upon dismissal, the
Superior Court of California, County of Stanislaus shall retain jurisdiction
of
the Rose Litigation and Gitschel Litigation to enforce this settlement agreement
pursuant to California Code of Civil Procedure Sections 664.6, et
seq.
2. Itec
Payment to Rose.
Itec
shall pay Rose the total sum of $300,000 (the “Settlement Amount”) payable,
subject to Section 3, below, in six installments of $50,000 commencing due
on
August 30,
2006 and
due on the 30th
day of
each month thereafter until the entire $300,000 shall have been paid in full.
The Settlement Amount includes and discharges the Loan amount.
3. Acceleration
of Payment of Settlement Amount.
Upon
Itec’s achievement of its Financing (receipt of an aggregate amount of
$5,000,000 or more in capital or subordinated debt from one or more persons
after July 1, 2006), Itec shall forthwith pay the balance of the Settlement
Amount that is theretofore unpaid to Rose.
4. Itec
Shares.
Itec
shall deliver to Gitschel 2,564,103 shares of Itec’s undiluted common stock
forthwith upon execution of this Agreement. These shares shall be delivered
with
Piggyback Registration rights.
2
5. Mutual
Commercial Cooperation. Itec
and
Rose shall cooperate with one another to find and exploit business
opportunities. Rose may, from time to time, present Itec with business
opportunities such as opportunities to acquire raw materials for its processing
and/or new or improved equipment, opportunities for new business relationships,
and other business opportunities (“Business Opportunities”). In each instance,
Itec and Rose shall agree upon the consideration due to Rose with respect to
the
Business Opportunity and Itec shall have no duty to compensate Rose except
in
the event that Rose and Itec agree upon seeking a Business Opportunity for
Itec
and upon a payment to Rose for services rendered in that effort. The parties
acknowledge that Rose expects to be compensated for its efforts with respect
to
Business Opportunities upon Itec’s successful closing on each such Business
Opportunity.
6. Public
Statements - No Disparagement.
No party
hereto shall make any disparaging statements regarding any other party hereto
with regard to the matters leading up to this Agreement.
7. Mutual
Release. The
parties hereto agree to release and discharge each other, and each of their
respective partners, agents, employees, attorneys, representatives, and the
successors, heirs and assigns of any of the preceding, from all sums of money,
claims, demands, contracts, actions, debts, controversies, agreements, damages
and causes of action whatsoever, whether known or unknown, suspected or
unsuspected by them, which they now own, hold, have or claim to have or at
any
time heretofore owned, held or claimed to have held against each other, by
reason of any matter or thing alleged or referred to, or in any way connected
with, arising out of or related to any of the matters, acts, events or
occurrences alleged or referred to in any of the pleadings on file in the Action
or otherwise, except for the right to enforce Defendant's obligations to
Plaintiff as set forth hereinabove. Notwithstanding the foregoing, this Release
does not release claims Plaintiff may have against Defendant’s extended family
but does release any claims Plaintiff may have against Defendant’s
spouse.
Upon
delivery of the Itec Shares to Gitschel as provided at Section 4, above, the
Merger Agreement is and shall be terminated and of no further force or
effect.
8. Release
of Known and Unknown Claims.
The
parties acknowledge that there is risk that subsequent to the execution of
this
Agreement, one or more of the parties will incur or suffer loss, damage or
injury which is in some way caused by the matters referred to above, but which
is unknown and unanswered at the time this Agreement is signed and the parties
hereby assume the above-mentioned risks and this Agreement shall apply to all
unknown or unanticipated results of the transactions and occurrence hereinabove
described, as well as those known and anticipated, and the parties do hereby
waive any and all rights under California Civil Code Section 1542, which section
reads as follows:
"A
general release does not extend to claims which the creditor does not know
or
suspect to exist in his favor at the time of executing the release, which if
known by him must have materially affected his settlement with the
debtor."
9. Mutual
Consideration. Each
of
the agreements, releases, and other provisions of this Agreement is executed
and
entered into in consideration for and in reliance upon the due execution and
enforceability of all other agreements, releases, and other provisions of this
Agreement.
The effectiveness and the validity of each agreement or other provision hereof
is conditioned upon the effectiveness and validity of each of the other
agreements, releases, and other provisions hereof.
3
10. No
Waiver or Disclaimer of Warranties. The
parties hereto agree that execution of this Agreement or any contemporaneous
or
subsequent agreements thereto do not constitute Itec’s waiver of its right as
purchaser to exercise any and all warranties, express or implied, recognized
by
law in connection with its purchase of equipment and/or services from Rose.
Furthermore, the parties hereto agree that that execution of this Agreement
or
any contemporaneous agreements thereto do not operate in any way to disclaim
any
and all warranties by Rose owing to Itec, whether express or implied, recognized
by law, in connection with equipment and/or services provided by
Rose.
(i) Further,
Gitschel and Rose do hereby affirmatively undertake, on a “best efforts” basis,
to repair or have repaired, at no cost to Itec, any damaged, malfunctioning
or
non conforming equipment, including but not limited to, the Machinext/Pellenc
Optical Sorter.
11. Exclusive
Representations. The
parties hereto represent, warrant, and agree that upon executing and entering
into this Agreement that they, and each of them, are not relying upon and have
not relied upon any representation, promise, or statement made by anyone which
is not recited, contained, or embodied in this Agreement. The parties, and
each
of them, understand, agree, and expressly assume the risk that any fact not
recited, contained, or embodied in this Agreement may turn out hereafter to
be
other than, different from, or contrary to the facts now known to them or
believed by them to be true, and further agree that this Agreement shall be
effective in all respects notwithstanding, and shall not be subject to
termination, modification, or rescission by reason of, any such difference
in
facts.
12. Reliance
Upon Separate Legal Counsel. The
parties to this Agreement are represented by counsel or have had the opportunity
to seek legal advice with respect to the terms of this Agreement.
13. No
Admission of Liability.
The
parties hereto understand and agree that by execution of this Agreement there
is
no admission of any liability of any nature whatsoever and that this settlement
is made entirely as a compromise and for the purpose of settlement of a disputed
claim.
14. Mutual
Settlement Cooperation. The
parties agree to execute and deliver all such other and additional instruments,
notices, consents or other documents and to do all such other acts and things
as
may be reasonably necessary to carry out the terms of this
Agreement.
15. Applicable
Law.
This
Agreement shall be governed and interpreted in accordance with the laws of
the
State of California.
4
16. Warranty
and Indemnity.
Each
party represents and warrants that it has not assigned or transferred and
will
not assign or transfer to any other persons, firm, or corporation, in
any
manner, by way of subrogation or operation of law, or otherwise, any portion
of
any claim, right, demand action, or cause of action that it has or might
have
arising out of any of the matters referred to in this Agreement, nor any
portion
of any recovery or settlement to which it might be entitled. In the event
that
claim, demand, or suit should be made or instituted against any party or
parties
because of any such purported assignment, subrogation, or transfer, the party
from whom such purported assignment, subrogation, or transfer was alleged
to
have occurred agrees to indemnify and hold harmless the other party against
such
claim, suit, or demand, including necessary expenses of investigation,
attorneys' fees and costs.
17. Ownership
of Claim and Further Assurances.
Rose
warrants and represents that it is the sole and only obligor of all sums to
be
paid hereunder and that, upon payment of all said sums, Itec shall not be
obligated to any person or entity for sums due for the purchase of the Equipment
purchased from Rose pursuant to Machinex Technologies Inc.’s proposals
MTI00253-2 and MTI00253-3 (Rose Invoices Nos. 112041 and 112070), for Getecha,
Inc. invoices numbered 21351, 21352, and 21584 (Rose invoices Nos. 112034,
112037, and 112102), and for the Equipment received by Itec and reflected on
Rose Invoices Nos. 112072, 112098, 112108, 112101, 112099, 112100, and 112123.
Rose indemnifies Itec against any claim by Getecha, Inc. and/or Machinex
Technologies, Inc and/or against any third party for payment of amounts over
and
above the amounts heretofore paid and to be paid pursuant to this Agreement
for
the Equipment reflected in the invoices specified in the preceding sentence.
18. Attorneys’
Fees and Costs for Enforcement.
The
parties hereto agree that, if any action or dispute arises regarding enforcement
of this Agreement, or any of the terms, covenants, or conditions hereof, whether
the same shall proceed to judgment or not, the prevailing party shall be
reimbursed for all reasonable expenses incurred in resolving such dispute,
including attorneys' fees.
19. Binding
Upon Successors.
This
Agreement shall be binding upon the heirs, administrators, executors,
successors, and assigns of the respective parties hereto, and any parent,
subsidiary and affiliated entity of each party.
20. Counterparts
and Facsimiles.
This
Agreement may be executed in any number of counterparts, each of which shall
constitute a duplicate original hereof. The parties agree to accept facsimile
copies of signatures as if originals.
21. Authority
to Bind Corporate Parties. The
undersigned represent and warrant their authority to bind by their signature
the
corporate parties to this agreement.
22. Security
Agreement as to goods obtained from Machinex Technologies,
Inc.
Itec
confirms that Machinex Technologies, Inc.’s proposals MTI00253-2, MTI00253-3
grant a valid and enforceable security interest to Machinex Technologies, Inc.
and Rose in
the
goods which are the subject of these proposals under the California Commercial
Code, and that such security interest secures Itec’s performance of this
Agreement. In the event of a failure of Itec to perform any obligation under
this Agreement, Rose
may (in
addition to any other remedies at law or otherwise) elect to foreclose upon
said
security interest by written notification to the agent for service of process
(as identified by the Secretary of State of California’s web site) for Itec,
via
certified first class U.S. mail. Itec further agrees to provide Rose
with
immediate and unrestricted right to possession and title to the goods identified
in the Machinex Technologies, Inc.’s proposals MTI00253-2 and MTI00253-3. Itec
further agrees to waive all bonding, undertaking, or security requirements
(applicable by law or contract) of Rose prior
or
subsequent to Rose’s
taking
of possession of the goods identified in the Machinex Technologies, Inc.’s
proposals MTI00253-2 and MTI00253-3. This agreement shall similarly apply to
any
successors in interest to the goods identified in the Machinex Technologies,
Inc.’s proposals MTI00253-2 and MTI00253-3. Each
of
the security interests referenced in this Section 21 shall be terminated upon
payment in full of the amounts due hereunder by Itec. Rose shall cause
termination statements to be filed as may be required to terminate such security
interests.
5
23. Security
Agreement as to goods obtained from Getecha, Inc.
Itec
confirms that Getecha, Inc. invoices numbered 21351, 21352, and 21584, grant
a
valid and enforceable security interest to Rose Waste Systems, Inc. in the
goods
which are the subject of these proposals under the California Commercial Code,
and that such security interest secures Itec’s performance of this Agreement. In
the event of a failure of Itec to perform any obligation under this Agreement,
Rose Waste Systems, Inc. may (in addition to any other remedies at law or
otherwise) elect to foreclose upon said security interest by written
notification to the agent for service of process (as identified by the Secretary
of State of California’s web site) for Itec, via certified first class U.S.
mail. Itec further agrees to provide Rose Waste Systems, Inc. with immediate
and
unrestricted right to possession and title to the goods identified in Getecha,
Inc. invoices numbered 21351, 21352, and 21584. Itec further agrees to waive
all
bonding, undertaking, or security requirements (applicable by law or contract)
of Rose Waste Systems, Inc. prior or subsequent to Rose Waste Systems, Inc.’s
taking of possession of the goods identified in Getecha, Inc. invoices numbered
21351, 21352, and 21584. This agreement shall similarly apply to any successors
in interest to the goods identified in Getecha, Inc. invoices numbered 21351,
21352, and 21584.
Each
of
the security interests referenced in this Section 22 shall be terminated upon
payment in full of the amounts due hereunder by Itec. Rose shall cause
termination statements to be filed as may be required to terminate such security
interests.
[Signature
page to follow]
6
| Dated: | ||||
| Xxxxxx Xxxxxxxx | ||||
| Dated: | Rose Waste Systems | |||
| By Xxxxxx Xxxxxxxx | ||||
|
Its
President
|
||||
| Dated: | Itec Environmental Group | |||
| By Xxxx XxXxxxxxxxxx | ||||
| Its President | ||||
| Dated: | ||||
| Dated: | Itec Acquisitions, Inc. | |||
|
By
Xxxx XxXxxxxxxxxx
|
||||
|
Its
President
|
7
