EXHIBIT 10.4
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SETTLEMENT AGREEMENT
This Settlement Agreement (this "Agreement") is dated as of this 31st day
of December, 2002 between XXXxxx.xxx, Inc., a Delaware corporation ("CDK") and
Diversified Capital Holdings, LLC, a New York limited liability company
("Diversified", and together with CDK, the "Purchasers") and JWZ Holdings, Inc.,
a New York corporation ("JWZ"), and Xxx Xxxxxxxxxx ("Xxxxxxxxxx" and, together
with JWZ , the "Sellers").
1. Diversified entered into a Stock Purchase Agreement dated June 11,
2002 with JWZ and Xxxxxxxxxx (the "Stock Purchase Agreement"). CDK
agreed to issue an aggregate of 69,500 shares of its Series A
Preferred Stock to JWZ and Xxxxxxxxxx in exchange for all of the
outstanding capital stock of Comprehensive Resource Advisors, Inc. and
NBM Information Technology, Inc. pursuant to the Stock Purchase
Agreement.
2. Certain aspects of the Stock Purchase Agreement have not been fully
performed and the parties wish to settle their respective obligations
under the Stock Purchase Agreement in the manner set forth herein.2.
NOW, THEREFORE, for good and valuable consideration, the Parties, intending
to be legally bound, agree as follows:
1. SETTLEMENT TERMS.
1.1 Settlement Consideration. Subject to the terms and conditions
herein stated, the parties respective obligations shall be settled on the
Closing Date, as described in Section 1.5 of this Agreement, by CDK and
Diversified delivering to Rubinestein and JWZ consideration consisting of
5,100 shares of CDK Series A Preferred Stock (the "Settlement
Consideration").
1.2 Payment of the Settlement Consideration. In full consideration of
Sellers' settlement and release of the Purchasers from their obligations
under the Stock Purchase Agreement, CDK shall issue and deliver to Sellers
on the Closing Date 8,500 shares of its Series A Preferred Stock (the
"Series A Shares") in the following names and amounts:
NAME AMOUNT
---- ------
Xxxxxxxxxx 8,500
JWZ Holdings, Inc. 0
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8,500
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[Note: As a result of amendments to the designation setting froth the
relative rights and preferences of the Series A Shares and, after
giving effect to an amendment to CDK's certificate of incorporation
which has been approved by shareholders but is not effective, each
Series A Share will be convertible into 2 common shares of CDK.]
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1.3 Closing. The Closing shall take place upon the satisfaction or
waiver of the conditions set forth in Section 2 at 10:00 a.m. at the
offices of Xxxxxx & Xxxxxxxxx LLP, 000 Xxxxxxx Xxxxxx, Xxxxx 000, Xxxxxx
Xxxx, Xxx Xxxx 00000, (and may be by delivery of documents by overnight
courier) not later than January 17, 2003, or at such other time and date as
Sellers and Purchasers shall agree in writing. Such time and date are
herein referred to as the "Closing Date."
2. CONDITIONS TO CLOSING.
2.1 Purchasers. The Purchasers obligations under this agreement and
CDK's obligations to issue and deliver the Series A Shares are subject to:
(a) Xxx Xxxxxxx having executed the resignation in the form
annexed hereto as Exhibit A;
(b) Xxxxx Xxxxxxx having executed the Separation and Release
Agreement in the form annexed hereto as Exhibit B (the "Separation
Agreement"); and
(c) The representation and warranties of Sellers set forth in
this Agreement shall be true and correct in all material respects.
2.2 Sellers. The Sellers obligation under this Agreement shall be
subject to the representations and warranties of Sellers set forth in this
Agreement being true and correct in all material respects.
3. MUTUAL RELEASES. On the Closing Date, subject to the performance of
Purchasers of their obligation set forth in Section 2.1 of this Agreement,
each party hereto, such party's heirs, assigns and agents, do hereby fully
and forever, release, waive and discharge each of the parties hereto, and
their respective officers, directors, shareholders, agents, employees,
successors and assigns, (hereinafter collectively referred to as the
"Releasees") from and against each and every claim, demand, cause of
action, obligation, damage, complaint, expense or action of any kind,
description or nature whatsoever, known or unknown, suspected or
unsuspected, that each party has or may hereafter have, against the
Releasees arising out of the Stock Purchase Agreement, any agreement
between CDK and its subsidiaries, on one side and the Sellers and any of
their affliates on the other side, the Consulting Agreement and the
Employment Agreement dated March 15, 2002 between CDK and Xxxxx Xxxxxxx.
This mutual release specifically excludes the rights and obligations of the
parties under this Agreement, an Escrow Agreement between Buyers, JWZ
Adelpia Holdings, LLC and Xxxxxx & Xxxxxxxxx LLP, the Separation Agreement,
paragraph 7.18 of the Stock Purchase Agreement, the Settlement Agreement
described in Section 2.1 (a) of this Agreement and agreements relating to
the sale of certain assets of CDK and its affiliates to Universal Media
Holdings, Inc.
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4. REPRESENTATIONS OF SELLERS. The Sellers, individually, represent,
warrant and agree as follows:
4.1 Authority to Execute and Perform Agreement; No Breach. Each Seller
has the full legal right and power and all authority and approval required
to enter into, execute and deliver this Agreement and to perform fully
their respective obligations hereunder. This Agreement has been duly
executed and delivered by such Seller and, assuming due execution and
delivery by, and enforceability against, Purchasers, constitutes the valid
and binding obligation of such Seller enforceable in accordance with its
terms, subject to the qualifications that enforcement of the rights and
remedies created hereby is subject to (i) bankruptcy, insolvency,
reorganization, moratorium and other laws of general application affecting
the rights and remedies of creditors, and (ii) general principles of equity
(regardless of whether such enforcement is considered in a proceeding in
equity or at law). No approval or consent of, or filing with, any
governmental or regulatory body, and no approval or consent of, or filing
with, any other person is required to be obtained by such Sellers or in
connection with the execution and delivery by such Sellers of this
Agreement and consummation and performance by them of the transactions
contemplated hereby. The execution, delivery and performance of this
Agreement by such Sellers and the consummation of the transactions
contemplated hereby in accordance with the terms and conditions hereof by
such Sellers will not:
(a) knowingly violate, conflict with or result in the breach of
any of the material terms of, or constitute (or with notice or lapse
of time or both would constitute) a material default under, any
contract, lease, agreement or other instrument or obligation to which
such Sellers is a party or by or to which any of the properties and
assets of such Sellers may be bound or subject;
(b) violate any order, judgment, injunction, award or decree of
any court, arbitrator, governmental or regulatory body, by which
either such Sellers or the securities, assets, properties or business
of such Sellers is bound; or
(c) knowingly violate any statute, law or regulation.
4.2 Securities Acknowledgements. Sellers hereby acknowledges that:
(a) Neither the Series A Shares nor the shares of common stock
underlying the Series A Shares have been registered under the
Securities Act of 1933, as amended (the "Securities Act"), or any
state securities act in reliance on exemptions therefrom.
(b) In connection with the purchase of the Series A Shares, that
no representation has been made by representatives of CDK regarding
its business, assets or prospects other than that set forth herein and
as set forth in the filings made by CDK pursuant to Section 13 of the
Securities Exchange Act of 1934, as amended and such other
representations and warranties as set forth in this Agreement.
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(c) The certificate or certificates representing the Series A
Shares will bear the following legend:
"The securities represented by this certificate have not been
registered under the Securities Act of 1933. The securities have
been acquired for investment and may not be sold, transferred
assigned in the absence of an effective registration statement
for these securities under the Securities Act of 1933 or an
opinion of CDK's counsel, that registration is not required under
said Act."
4.3 Securities Representations. Sellers hereby represent, warrant and
agree as follows:
(a) The Series A Shares are being acquired solely for such
Seller's own account, for investment and are not being acquired with a
view to or for the resale or distribution thereof, Sellers have no
present plans to enter into any such contract, undertaking, agreement
or arrangement and Sellers further understand that the Series A Shares
and the Shares of Common Stock underlying such Series A Shares, may
only be resold pursuant to a registration statement under the
Securities Act, or pursuant to some other available exemption;
(b) Each Seller is an "accredited investor" as that term is
defined in Regulation D of the Securities Act and through its officers
and directors has sufficient knowledge and experience in financial and
business matters to be capable of evaluating the merits and the risks
of its investment in the Series A Shares and is able to bear the
economic risk of its investment in the Series A Shares;
5. REPRESENTATIONS OF PURCHASERS. Each Purchaser represents, warrants
and agrees as follows:
5.1 Authorization. Each Purchaser has full power, legal capacity and
authority to enter into this Agreement, to execute all attendant documents
and instruments necessary to consummate the transaction herein
contemplated, and, as to CDK, to issue and sell the Series A Shares to
Sellers, and to perform all of its obligations hereunder. This Agreement
and all other agreements, documents and instruments to be executed in
connection herewith have been effectively authorized by all necessary
action, corporate or otherwise, on the part of the Purchasers, which
authorizations remain in full force and effect, have been duly executed and
delivered by the Purchasers, and no other corporate proceedings on the part
of the Purchasers are required to authorize this Agreement and the
transactions contemplated hereby, except as specifically set forth herein.
This Agreement constitutes the legal, valid and binding obligation of the
Purchasers and is enforceable with respect to the Purchasers in accordance
with its terms, except as enforcement hereof may be limited by bankruptcy,
insolvency, reorganization, priority or other laws of court decisions
relating to or affecting generally the enforcements of creditors' rights or
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affecting generally the availability of equitable remedies. Neither the
execution and delivery of this Agreement, nor the consummation by the
Purchasers of any of the transactions contemplated hereby, or compliance
with any of the provisions hereof, will (i) conflict with or result in a
breach or, violation of, or default under, any of the terms, conditions or
provisions of any note, bond, mortgage, indenture, license, lease, credit
agreement or other agreement, document, instrument or obligation
(including, without limitation, any of its charter documents) to which the
Purchasers is a party or by which the Purchasers or any of its assets or
properties may be bound, or (ii) violate any judgment, order, injunction,
decree, statute or rule applicable to the Purchasers. No authorization,
consent or approval of any public body of authority or any third party is
necessary for the consummation by the Purchasers of the transactions
contemplated by this Agreement.
5.2 Shares. The Series A Shares to be issued and delivered to Sellers
shall be fully paid, non-assessable and free and clear of any lien, claim,
charge or encumbrance.
5.3 Holding Period. CDK acknowledges that the consideration for the
Series A Shares described in Section 1.2(a) was received June 11, 2002 and
accordingly June 11, 2002 is the date at which the Sellers holding period
for the purposes of Rule 144 under the Securities Act commences.
6. NO ADMISSION. The parties agree that the execution of this Agreement
is not an admission by any of them of liability with respect to damages,
except as set forth in this Agreement.
7. MISCELLANEOUS PROVISIONS.
7.1 Severability. In the event that any provision of this Agreement
is found to be illegal or unenforceable by any court or tribunal of
competent jurisdiction, then to the extent that such provision may be made
enforceable by amendment to or modification thereof, the Parties agree to
make such amendment or modification so that the same shall be made valid
and enforceable to the fullest extent permissible under existing law and
public policies in the jurisdiction where enforcement is sought, and in the
event that the Parties cannot so agree, such provision shall be modified by
such court or tribunal to conform, to the fullest extent permissible under
applicable law, to the intent of the Parties in a valid and enforceable
manner, if possible and if not possible, then be stricken entirely from the
Agreement by such court or tribunal and the remainder of this Agreement
shall remain binding on the parties hereto.
7.2 Amendment. No amendment or modification of the terms or conditions
of this Agreement shall be valid unless in writing and signed by the party
or parties to be bound thereby.
7.3 Governing Law. This Agreement shall be interpreted, construed,
governed and enforced according to the internal laws of the State of New
York without regard to conflict or choice of law principles of New York or
any other jurisdiction. This Agreement shall be executed in New York and is
intended to be performed in New York. In the event of litigation arising
out of this Agreement, the parties hereto consent to the personal
jurisdiction of the State of New York, and agree to exclusively litigate
said actions.
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7.4 No Waiver. If any party to this Agreement fails to, or elects not
to enforce any right or remedy to which it may be entitled hereunder or by
law, such right or remedy shall not be waived, nor shall such nonaction be
construed to confer a waiver as to any continued or future acts, nor shall
any other right or remedy be waived as a result thereof. No right under
this Agreement shall be waived except as evidenced by a written document
signed by the party waiving such right, and any such waiver shall apply
only to the act or acts expressly waived in said document.
7.5 Counterparts. This Agreement may be executed in any number of
counterparts, and each such counterpart will, for all purposes, be deemed
an original instrument, but all such counterparts together will constitute
but one and the same Agreement.
7.6 Binding Agreement. This Agreement shall be binding upon and shall
inure to the benefit of the parties hereto, and upon their respective
heirs, successors, assigns and legal representatives.
7.7 Counsel. Each of the parties hereto represents that it, she or he
has consulted legal counsel in connection with this Agreement, or has been
given full opportunity to review this Agreement with counsel of his, her or
its choice prior to execution thereof and has elected not to seek such
counsel. The parties hereto waive all claims that they were not adequately
represented in connection with the negotiation, drafting and execution of
this Agreement. Each party further agrees to bear its own costs and
expenses, including attorneys' fees, in connection with the Action and this
Agreement. If any Party initiates any legal action arising out of or in
connection with enforcement of this Agreement, the prevailing Party in such
legal action shall be entitled to recover from the other Party all
reasonable attorneys' fees, expert witness fees and expenses incurred by
the prevailing Party in connection therewith.
7.8 Notices. All notices and demands permitted, required or provided
for by this Agreement shall be made in writing, and shall be deemed
adequately delivered if delivered by hand or by mailing the same via the
United States Mail, prepaid certified or registered mail, return receipt
requested, or by priority overnight courier for next business day delivery
by a nationally recognized overnight courier service that regularly
maintains records of its pick-ups and deliveries and has daily deliveries
to the area to which the notice is sent, addressed to the parties at their
respective addresses as shown below:
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NAME ADDRESS
---- -------
To Purchasers: XXXxxx.Xxx, Inc.
000 Xxxxx Xxxxxx Xxxx, Xxxxx 000
Xxxxxxxx, XX 00000
Attn: Xxxxxx X. Xxxxxxxx, President
Facsimile: (000) 000-0000
With a Copy To: Xxxxxx & Xxxxxxxxx LLP
000 Xxxxxxx Xxxxxx, Xxxxx 000
Xxxxxx Xxxx, XX 00000
Attn: Xxxxxxx X. Xxxxxx
Facsimile: (000) 000-0000
To Xxxxxxxxxx: Xxx Xxxxxxxxxx
00 Xxxxxxxx Xxxx
Xxxx Xxxxxxxxxx, XX 00000
Facsimile: (000) 000-0000
To JWZ: JWZ Holdings, Inc.
000 Xxxx Xxxxxx Xxxxxx
Xxxxx Xxxxxxx, XX 00000
Attn: Xxxxx X. Xxxxxxx, President
Facsimile: (000) 000-0000
Notices delivered personally shall be deemed communicated as of the
date of actual receipt. Notices mailed as set forth above shall be deemed
communicated as of the date three (3) business days after mailing, and
notices sent by overnight courier shall be deemed communicated as of the
date one (1) business day after sending.
7.9 Entire Agreement. This Agreement and the Exhibits hereto set
forth the entire agreement and understanding of the parties hereto in
respect of the subject matter contained herein, and supersedes all prior
agreements, promises, understandings, letters of intent, covenants,
arrangements, communications, representations or warranties, whether oral
or written, by any party hereto or by any related or unrelated third party.
All exhibits attached hereto, and all certificates, documents and other
instruments delivered or to be delivered pursuant to the terms hereof are
hereby expressly made a part of this Agreement, and all references herein
to the terms "this Agreement", "hereunder", "herein", "hereby" or "hereto"
shall be deemed to refer to this Agreement and to all such writings.
7.10 Successors and Assigns. As used herein the term "the Parties"
shall include their respective successors in interest, licensees or
assigns.
7.11 Documents. At the conclusion of the Action, each Party shall
return to the other all documents and papers produced by the other in
connection with the Action.
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7.12 Execution. Each person who signs this Agreement on behalf of a
corporate entity represents and warrants that he has full and complete
authority to execute this Agreement on behalf of such entity. Each party
shall bear the fees and expenses of its counsel and its own out-of-pocket
costs in connection with this Agreement.
7.13 Captions. The captions appearing in this Agreement are for
convenience only, and shall have no effect on the construction or
interpretation of this Agreement.
[SIGNATURE PAGE FOLLOWS]
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Executed by the Parties on this ____ day of _____________, 2003.
PURCHASERS:
DIVERSIFIED CAPITAL HOLDINGS, LLC
By: /s/ Xxxxxx X. Xxxxxxxx
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Name: Xxxxxx X. Xxxxxxxx
Title: Chief Executive Officer
XXXXXX.XXX, INC.
By: /s/ Xxxxxx X. Xxxxxxxx
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Name: Xxxxxx X. Xxxxxxxx
Title: President and Chief Operating Officer
SELLERS:
JWZ HOLDINGS, INC.
By: /s/ Xxxxx X. Xxxxxxx
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Name: Xxxxx X. Xxxxxxx
Title: President
/s/ Xxx Xxxxxxxxxx
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Xxx Xxxxxxxxxx
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