SETTLEMENT AGREEMENT
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THIS AGREEMENT is dated for reference the 29th day of January, 2003.
AMONG:
TURBODYNE SYSTEMS INC., of 0000 Xxxxxxxxxxx Xxxxxx, Xxxxxxxxxxx, XX,
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93013
a company incorporated pursuant to the laws of the State of Nevada
("TSI")
OF THE FIRST PART
AND:
TURBODYNE TECHNOLOGIES INC., of 0000 Xxxxxxxxxxx Xxxxxx, Xxxxxxxxxxx,
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XX, 00000
("TTI")
OF THE SECOND PART
AND:
XXXXXX X. XXXXXX, of 0000 Xxxxx Xxx Xxxxxx Xxxx, Xxxxx Xxxxxxx, XX,
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93111
("Halimi")
OF THE THIRD PART
AND:
MARCH TECHNOLOGIES INC., of 0000 Xxxxx Xxx Xxxxxx Xxxx, Xxxxx Xxxxxxx,
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XX, 00000
("March")
OF THE FOURTH PART
WHEREAS:
A. Pursuant to an Employment Agreement dated for reference August 1, 1997, as
amended January 27, 1998 (the "Employment Agreement"), Halimi was employed
as President and Chief Executive Officer of each of TTI and TSI.
B. In November of 2000 the Company ceased making payments to Halimi as
required by the Employment Agreement.
C. TSI and TTI wish to resolve any outstanding liability to Halimi under the
Employment Agreement.
X. Xxxxxx was a director and officer of TTI at the time it delisted from the
NASDAQ stock market (the "NASDAQ Delisting").
E. In connection with an application for listing on the proposed BBX Exchange
TTI wishes to be able to provide evidence to the BBX Exchange that none of
its directors or officers at the time of the NASDAQ delisting will have any
significant involvement in the affairs of the Company.
F. TSI and TTI wish to retain the right to obtain consulting services from
Halimi because of the specialized knowledge of Halimi in relation to TSI
and TTI's technology.
G. March Technologies Inc., a company affiliated with Halimi, holds 3,250,000
common shares of TTI (the "Escrow Shares"), which shares are currently held
in escrow by TTI's transfer agent, Computershare Trust Company of Canada
("Computershare").
NOW THEREFORE in consideration of the foregoing and of the mutual covenants and
agreements hereinafter provided, the parties have agreed and do hereby agree as
follows:
1. For the consideration set out in paragraph two (2) hereof, Halimi agrees
to release TTI and TSI from any and all liability under the Employment Agreement
(the "Release of Liabilities").
2. The consideration for the Release of Liabilities shall be $900,000 to be
satisfied and paid by the issuance to March of 45,000 shares of Series X
Preferred Stock of TTI at a price of $20.00 per share.
3. The shares of Series X Preferred Stock shall be identical to the common
shares of TTI save and except that they shall be non-voting (except where voting
is specifically required by the Nevada Revised Statutes) and shall be
convertible at any time at the option of the holder into common shares of TTI on
a one hundred (100) common shares for each one (1) Preferred Share basis.
4. March Technologies Inc. agrees to cancel and surrender to TTI the Escrow
Shares in consideration of the issuance of 32,500 shares of Series X Preferred
Stock.
5. Notwithstanding that the shares of Series X Preferred Stock shall be
convertible at any time into common shares, March agrees that it will not
exercise its rights to convert any shares of Series X Preferred Stock into
common shares at any time if, after conversion, March would own legally or
beneficially more than one half of one percent (0.5%) of the common shares of
TTI then issued and outstanding. In the event that March wishes to convert at
any time such number of shares as shall, when aggregated with previously
converted shares, be more than one half of one percent (0.5%) of the common
shares of TTI, March shall provide to TTI evidence that it has disposed through
sales in accordance with Rule 144, or bona fide dispositions under available
exemptions, (or offshore sales in accordance with Regulation S) the previously
converted shares.
6. The parties acknowledge and agree that the shares of Series X Preferred
Stock to be issued are restricted shares, as contemplated under the United
States Securities Act of 1933 (the "1933 Act") which will be issued to March
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pursuant to Section 4(2) of the 1933 Act without registration and that all share
certificates representing the shares of Series X Preferred Stock will be
endorsed with the following legend:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933 (THE "ACT"), AND HAVE BEEN ISSUED IN
RELIANCE UPON EXEMPTIONS FROM THE REGISTRATION REQUIREMENTS OF THE ACT.
SUCH SECURITIES MAY NOT BE REOFFERED FOR SALE OR RESOLD OR OTHERWISE
TRANSFERRED UNLESS THEY ARE REGISTERED UNDER THE APPLICABLE PROVISIONS OF
THE ACT OR ARE EXEMPT FROM SUCH REGISTRATION."
7.1 Closing shall take place at the offices of TTI's legal counsel, Cane
O'Xxxxx Xxxxxx, LLC at Las Vegas, Nevada, on the 5th business day following the
execution of this Agreement or at such other time and place as the parties may
mutually agree.
7.2 On the Closing Date:
(a) Halimi and March shall deliver to TTI and TSI:
i. a release in the form attached as Schedule A hereto;
ii. such documents as may be required to effect the surrender and
cancellation of the Escrow Shares; and
iii. copy of board minutes or resolutions of March approving the
execution of this Settlement Agreement and the cancellation of
the Escrow Shares.
(b) TTI and TSI shall deliver to Halimi and March:
i. a release in the form attached as Schedule B hereto;
ii. share certificates representing 77,500 shares of Series X
Preferred Stock registered in the name of March; and
iii. copy of board minutes or resolutions approving the execution of
this Settlement Agreement and the issuance of the shares of
Series X Preferred Stock .
8. Following the closing of the Agreement and for a period of five years
thereafter, Halimi shall provide consulting services if and when requested by
the management of TTI and subject to reasonable notice to Halimi at a rate of
$150.00 per hour.
9. This Agreement constitutes the entire agreement between the parties and
there are no representations or warranties, express or implied, statutory or
otherwise, and no agreements collateral hereto other than as expressly set forth
or referred to herein.
10. Time shall be of the essence of this Agreement.
11. This Agreement shall be construed and enforced in accordance with, and
the rights of the parties shall be governed by, the laws of the State of Nevada,
and each of the parties hereto irrevocably attorns to the jurisdiction of the
courts of the State of Nevada.
12. Any notice to be given under this agreement shall be duly and properly
given if made in writing and by delivering or telecopying the same to the
addressee at the address as set out on page one of this agreement. Any notice
given as aforesaid shall be deemed to have been given or made on, if delivered,
the date on which it was delivered or, if telecopied, on the next business day
after it was telecopied. Any party hereto may change its address for notice
from time to time by notice given to the other parties hereto in accordance with
the foregoing.
13. The parties shall deliver to each other such further documentation and
shall perform such further acts as and when the same may be required to carry
out and give effect to the terms and intent of this Agreement.
14. This Agreement shall enure to the benefit of and be binding upon the
parties hereto and their respective heirs, personal representatives, successors
and assigns.
15. Neither this Agreement nor any provision hereof may be amended, waived,
discharged or terminated orally, but only by an instrument in writing signed by
the party against whom enforcement of the amendment, waiver, discharge or
termination is sought.
16. This Agreement has been prepared by Cane O'Xxxxx Xxxxxx, LLC counsel for
TTI. The parties acknowledge that Cane O'Xxxxx Xxxxxx, LLC have advised that
they may have a conflict of interest in that Xx. Xxxxxx has been a long-time
client of Cane O'Xxxxx Xxxxxx, LLC and its predecessor law firms. The parties
agree to Cane O'Xxxxx Xxxxxx, LLC acting in drafting this agreement on behalf of
TTI notwithstanding the potential conflict of interest and acknowledge that the
obligations of TTI under this Agreement will be subject to TTI obtaining
independent legal advice. Halimi and March acknowledge that they have also been
advised to obtain independent legal advice.
17. This Agreement may be executed in one or more counter-parts, each of
which so executed shall constitute an original and all of which together shall
constitute one and the same agreement.
IN WITNESS WHEREOF the parties hereto have executed this Agreement as of the day
and year first above written.
TURBODYNE SYSTEMS INC.
By:
/s/ Xxxxxx Xxxxx
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Its duly authorized signatory
TURBODYNE TECHNOLOGIES INC.
By:
/s/ Xxxxxxx Xxxxxxx
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Its duly authorized signatory
MARCH TECHNOLOGIES INC.
By:
/s/ Xxxxxxx St. Xxxxx
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Its duly authorized signatory
/s/ Xxxxxx X. Xxxxxx
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XXXXXX X. XXXXXX
SCHEDULE "A"
Release in favor of Turbodyne Technologies Inc. and Turbodyne Systems Inc.
SCHEDULE "B"
Release in favor of Xxxxxx X. Xxxxxx and March Technologies Inc.
