EXHIBIT 99.1
TERMINATION AND SETTLEMENT AGREEMENT
TERMINATION AND SETTLEMENT AGREEMENT, dated as of May 1, 2001, among
ROTARY POWER INTERNATIONAL, INC., a Delaware corporation ("RPI"); LONDONDERRY
CAPITAL STRUCTURING LTD., an Ontario, Canada corporation ("Londonderry
Capital"); and LONDONDERRY MANAGEMENT SERVICES LTD., an Ontario, Canada
corporation ("Londonderry Services").
WHEREAS,
1. RPI and Londonderry Capital have heretofore entered into the
following three agreements:
DATE OF AGREEMENT SERVICES
November 1, 1999 Consulting Agreement
November 1, 1999 Investor Relations Services Agreement
November 6, 1999 Facilitation Fee Agreement, as amended
(herein collectively called the "Prior Agreements") pursuant to which
Londonderry Capital provides certain consulting, investor relations and other
services to RPI;
2. RPI and Londonderry Capital have determined, upon the terms and
conditions herein set forth, to terminate the Prior Agreements earlier than
originally contemplated when they were entered into; and
3. RPI desires to employ Xxxxxx XxXxxxx, a Canadian citizen ("XxXxxxx"),
as RPI's Executive Vice President and Director of Marketing as herein more fully
set forth.
NOW, THEREFORE, in consideration of the premises, the mutual covenants
herein contained, and for other good and valuable consideration, the receipt and
sufficiency of which is mutually acknowledged by the parties,
IT IS HEREBY AGREED AS FOLLOWS:
SECTION 1. TERMINATION OF THE PRIOR AGREEMENTS. Simultaneously with the
execution of this Agreement, each of the Prior Agreements shall automatically
terminate and be of no further force and effect and impose no further liability
or obligation on either party thereto to the other party.
SECTION 2. SETTLEMENT PAYMENTS AND GRANTS. In consideration of the early
termination of the Prior Agreements and in order to enable Londonderry Capital
to settle certain long-term
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commitments, RPI agrees, as soon as possible after the execution of this
Agreement:
(a) to pay to Londonderry Capital in U.S. currency the sum of $50,000
(Fifty Thousand U.S. Dollars), which amount has been agreed upon by the parties
after taking into account certain amounts and expenses which RPI has agreed to
reimburse to Londonderry Capital and certain facilitation fees previously
received by Londonderry Capital which Londonderry Capital has agreed to refund
to RPI; and
(b) to issue to Londonderry Capital assignable warrants (the
"Settlement Warrants") to purchase 500,000 shares of RPI's restricted common
stock (par value $.01 per share) as hereinafter described. The Settlement
Warrants shall be immediately exercisable as of their date of issuance and shall
remain exercisable by the holders thereof until the third anniversary of the
date of their issuance. The Settlement Warrants shall entitle the holder thereof
to purchase from RPI 500,000 shares of its restricted common stock for a cash
purchase price equal $5.00 per share. The Settlement Warrants shall be issued to
Londonderry Capital and/or its designees and assigns, as directed by Londonderry
Capital.
SECTION 3. NEW EMPLOYMENT ARRANGEMENT WITH XXXXXXX. RPI and Londonderry
Services agree that, concurrently with the execution of this Agreement, they
will enter into an agreement substantially in the form of Exhibit A hereto
pursuant to which XxXxxxx will be appointed as Executive Vice President and
Director of Marketing of RPI responsible for the marketing of its products and
services and RPI will pay to Londonderry Services a monthly fee of $9,500.
In addition, as consideration for XxXxxxx serving as Executive Vice
President and Director of Marketing of RPI, RPI will:
(a) issue to Londonderry Services, on the terms and conditions
hereinafter described, 200,000 shares of RPI's restricted common stock (the
"Employment Shares"). The Employment Shares shall be issued to Londonderry
Services if and when the gross revenues earned by RPI after May 1, 2001, minus
any adjustments or allowances for product returns, shall equal, on a cumulative
basis, at least $5,000,000 (the "Revenue Target"). The determination as to
whether RPI has achieved the Revenue Target shall be based upon the revenues of
RPI as reported on the income statements of RPI which are contained in its
periodic reports filed with the Securities and Exchange Commission pursuant to
Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended. The
Employment Shares will be issued to Londonderry Services as soon as possible
after the last day of the calendar quarter in which RPI achieves the Revenue
Target, without the need for any additional consideration or payment from
Londonderry Services and whether or not XxXxxxx is then still serving as the
Executive Vice President and Director of Marketing of RPI or in any other
capacity with RPI; and
(b) grant to XxXxxxx, as soon as possible after the execution of this
Agreement, an option (the "Employment Option") to purchase 300,000 shares of
RPI's restricted common stock on the terms and conditions hereinafter described.
The Employment Option shall be issued under RPI's 2000 stock option plan and
shall be subject to the terms and conditions of the stock option plan. XxXxxxx
shall be fully vested in the Employment Option immediately upon its grant and
the Employment Option shall remain fully exercisable at all times by XxXxxxx in
accordance with its terms whether or not XxXxxxx is still serving as the
Executive Vice President and Director of Marketing of RPI or in any other
capacity with RPI. The Employment Option shall become
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exercisable as of the first date after it is determined that RPI has achieved
the Revenue Target (the "Effective Date") and shall remain exercisable until its
expiration date. The Employment Option shall entitle XxXxxxx to purchase 300,000
shares of RPI's restricted common stock at a cash exercise price per share equal
to the average of the closing bid prices per share of RPI common stock for the
ten (10) trading days preceding the Effective Date. The Employment Option shall
expire on the earlier to occur of the fifth anniversary of the Effective Date or
the tenth anniversary of the date of grant of the Employment Option. The
Employment Option shall not be assignable. The determination as to whether RPI
has achieved the Revenue Target shall be based upon the revenues of RPI as
reported on the income statements of RPI which are contained in its periodic
reports filed with the Securities and Exchange Commission pursuant to Section 13
or 15(d) of the Securities Exchange Act of 1934, as amended.
SECTION 4. MUTUAL RELEASES. Each party hereto (each a "Releasor") hereby
releases, remises and forever discharges all of the other parties hereto and any
and all of their respective subsidiaries, affiliates, officers, directors,
employees, consultants, accountants, attorneys, agents, successors and assigns
(collectively, the "Released Parties") from any and all demands, debts,
liabilities, claims, rights, actions, causes of action, court orders,
obligations, contracts, agreements, suits and proceedings whatsoever of every
kind, whether known or unknown, foreseen or unforeseen, whether in law or in
equity, which the Releasor now has, has ever had or may hereafter have against
the Released Parties based upon any injuries or damages or alleged injuries or
damages sustained by the Releasor through the date hereof relating to, or in any
way involved with or arising out of, the Prior Agreements or any other
transaction or agreement relating to RPI.
SECTION 5. GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of New Jersey applicable to
contracts made and to be performed in the State of New Jersey.
SECTION 6. COUNTERPARTS. This Agreement may be executed in two or more
counterparts, all of which shall be considered one and the same agreement, and
shall become effective when counterparts have been signed by each party and
delivered to the other parties. This Agreement, once executed by a party, may be
delivered to the other parties hereto by facsimile transmission of a copy of
this Agreement bearing the signature of the party so delivering this Agreement.
SECTION 7. HEADINGS. The headings of this Agreement are for convenience of
reference only and shall not form part of, or affect the interpretation of, this
Agreement.
SECTION 8. SEVERABILITY. If one or more provisions of this Agreement are
held to be unenforceable under applicable law, such provision shall be excluded
from this Agreement and the balance of the Agreement shall be interpreted as if
such provision were so excluded and shall be enforceable in accordance with its
terms.
SECTION 9. ENTIRE AGREEMENT. This Agreement constitutes the entire
agreement among the parties and supercedes all prior agreements and
understandings, whether oral or written, with respect to the subject matter
hereof.
SECTION 10. AMENDMENTS AND WAIVERS. This Agreement or any term hereof may
be changed, waived, discharged or terminated only by an instrument in writing
signed by the party against
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which such change, waiver, discharge or termination is sought to be enforced. No
waiver by a party of any condition or of any breach of any term, covenant or
other provision contained herein shall be effective unless in writing, and no
waiver in any one or more instances shall be deemed to be a further or
continuing waiver of any such condition or breach in any other instances or a
waiver of any other condition or breach of any other term, covenant or other
provision.
SECTION 11. NOTICES. Each notice required or desired to be given or made
under this Agreement shall be in writing and shall be effective and deemed to
have been received (i) when delivered in person, (ii) when sent by fax with
receipt acknowledged, (iii) five (5) days after having been mailed by certified
or registered United States mail, postage prepaid, return receipt requested, or
(iv) the next business day after having been sent by a nationally recognized
overnight mail or courier service, receipt requested. Notices shall be addressed
as follows:
IF TO RPI:
Rotary Power International, Inc.
Xxx Xxxxxxx Xxxxxx
X.X. Xxx 000
Xxxx-Xxxxx, Xxx Xxxxxx 00000-000
Facsimile: (000) 000-0000
Attention: President
IF TO LONDONDERRY CAPITAL:
Londonderry Capital Structuring Ltd.
XX#0 00 Xxxxxxxxxxxxx Xxxxxxx
Xxxxxxxxxxx, Xxxxxxx, Xxxxxx X0X 0X0
Facsimile: (000) 000-0000
Attention: President
IF TO LONDONDERRY SERVICES:
Londonderry Management Services Ltd.
XX#0 00 Xxxxxxxxxxxxx Xxxxxxx
Xxxxxxxxxxx, Xxxxxxx, Xxxxxx X0X 0X0
Facsimile: (000) 000-0000
Attention: President
Each party shall provide notice to the other parties of any change in
address.
SECTION 12. SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon
and inure to the benefit of the parties and their successors and assigns. Except
as provided herein, no party shall assign this Agreement or any or any of its
rights or obligations hereunder without the prior written consent of the other
parties.
SECTION 13. FURTHER ASSURANCES. Each party to this Agreement shall do and
perform, or cause to be done and performed, all such further acts and things,
and shall execute and deliver all such other agreements, certificates,
instruments and documents, as any other party to this Agreement may reasonably
request in order to carry out the intent and accomplish the purposes of this
Agreement and
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the consummation of the transactions contemplated hereby.
IN WITNESS WHEREOF, the undersigned parties have caused this Agreement to
be duly executed as of the date first above written.
ROTARY POWER INTERNATIONAL, INC.
By: /s/ Xxxxxx X. Xxxxxx
------------------------------------------
Xxxxxx X. Xxxxxx
Chairman
LONDONDERRY CAPITAL STRUCTURING LTD.
By: /s/ Xxxxxx X. XxXxxxx
------------------------------------------
Xxxxxx X. XxXxxxx
President
LONDONDERRY MANAGEMENT SERVICES LTD.
By: /s/ Xxxxxx X. XxXxxxx
------------------------------------------
Xxxxxx X. XxXxxxx
President
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EXHIBIT A
MANAGEMENT CONSULTING AGREEMENT
THIS AGREEMENT dated as of May 1, 2001 is between:
Rotary Power International, Inc., a Delaware Corporation ("RPI")
and
Londonderry Management Services Ltd. an Ontario, Canada Corporation
("LMS").
TERMS AND PROVISIONS
1. PURPOSE: LMS will provide RPI management assistance in making
available to RPI the services of Xxxxxx X. XxXxxxx, a
Canadian citizen ("XxXxxxx"), to be Executive Vice President
and Director of Marketing of RPI. In this capacity, XxXxxxx
shall, subject to the oversight and control of RPI's Board
of Directors, be responsible for the promotion, marketing
and sale of such products and services as are from time to
time offered by RPI. XxXxxxx shall have the authority to
retain such consultants and hire such employees as he may
deem reasonably necessary to fulfill his corporate
responsibilities. XxXxxxx shall report to RPI's Chief
Executive Office ("CEO") and consult with the CEO on matters
of marketing strategy, plans and budgets; retention of
consultants; hiring of employees; and other significant
prospective marketing expenditures and initiatives. XxXxxxx
shall keep the CEO informed of his activities through
periodic reports of RPI's progress in meeting marketing
budgets and goals.
Additionally, LMS will be responsible to provide
administrative, clerical and secretarial services which will
support XxXxxxx. These services will be rendered by persons
or entities to be determined by LMS.
2. TERM: Subject to the provisions of Section 5 below, this Agreement
shall be for a term of 12 months, effective May 1, 2001 and
ending April 30, 2002.
3. FEE: Nine thousand five hundred U.S. Dollars (U.S. $9,500) shall
be payable monthly by wire transfer to LMS's bank account.
Seven thousand ($7,000) is designated for the compensation
of XxXxxxx with respect to his role as Executive
Vice-President and Director of Marketing of RPI. Two
thousand five hundred ($2,500) is designated to compensate
the persons or entities which provide the administrative,
clerical and secretarial services to support XxXxxxx. The
wire transfer instructions will be provided to RPI by LMS at
a later date under separate cover.
4. FIRST PAYMENT: The first payment will be due on May 30, 2001.
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5. TERMINATION: The Agreement may be terminated by either party on 30 days
prior written notice.
6. INDEMNITY: RPI will indemnify LMS against any damages, demands,
litigation or any other claims resulting from the services
provided in accordance with this Agreement, provided that
RPI shall not indemnify for any damages, demands, litigation
or other claims arising out of the gross negligence or
willful misconduct of LMS or its representatives, including
XxXxxxx.
7. EXPENSES: RPI agrees to pay LMS all reasonable out-of-pocket costs
upon submission of appropriate supporting documentation.
8. TAXES: LMS will pay any applicable taxes including goods and
services taxes that may result from this Agreement.
9. ENTIRETY: The terms and provisions herein contained constitute the
entire agreement relating to the subject matter of this
Agreement between RPI and LMS.
10. NOTICES: All notices hereunder shall be in writing and shall be
deemed to have been duly given if delivered by courier or by
fax as follows:
TO: TO:
RPI LMS
Xxxxxx Xxxxx, President and CEO Xxxxxx X. XxXxxxx, President
Rotary Power International, Inc. Londonderry Management Services Ltd.
X.X. Xxx 000 XX#0
Xxx Xxxxxxx Xxxxxx 00 Xxxxxxxxxxxxx Xxxxxxx
Xxxx-Xxxxx, XX 00000 0128 Xxxxxxxxxxx, XX X0X 0X0
Fax: (000) 000-0000 Fax: (000) 000-0000
11. ASSIGNMENT: This Agreement shall not be assigned by either party hereto
without the written consent of the other party. This
Agreement shall inure to the benefit of and shall be binding
upon RPI's successors and LMS's successors.
12. GOVERNING LAW: This Agreement shall be interpreted in accordance with the
laws of the State of New Jersey without regard to principles
of conflicts of law.
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Accepted and Agreed to as of this 1st day of May, 2001:
ROTARY POWER INTERNATIONAL, INC. LONDONDERRY MANAGEMENT SERVICES LTD.
By: By:
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Xxxxxx X. Xxxxxx Xxxxxx X. XxXxxxx
Chairman President
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