EXHIBIT 10.1(h)
MEMORANDUM OF UNDERSTANDING
THIS MEMORANDUM OF UNDERSTANDING, dated as of January 12, 2001 by and
among XXXXXX XXXXXXX ("Thralow") an individual having an address at 000 Xxxx 0xx
Xxxxxx, Xxxxxx, XX 00000, and XXXXXXX.XXX, INC. ("EyeCity"), a Delaware
corporation, having an address at 00 Xxxxxxx Xxxxxx, Xxxxxxxxx, Xxx Xxxx 00000.
WHEREAS, Thralow and EyeCity are parties to a Memorandum of Understanding,
dated as of May 23, 2000 (the "Memorandum Agreement"), and EyeCity, Peepers,
Inc., Thralow and Peepers Sunglasses and Accessories, Inc. are parties to an
Agreement and Plan of Merger, dated as of May 7, 1999 (the "Merger Agreement");
and
WHEREAS, pursuant to the Merger Agreement, EyeCity, as Maker, has
delivered to Thralow, as Holder, the Secured Promissory Note and Security
Agreement, dated May 7, 1999, as amended (the "Note"), in the original principal
amount of $875,000, and having a current principal balance outstanding of
$724,750 and interest of $34,633 as of the close of business on January 12, 2001
("Closing Date"); and
WHEREAS, pursuant to the Memorandum Agreement there is a current balance
outstanding as of the Closing Date of $45,161.24 for the non-exclusive
consultant services provided to EyeCity by Thralow ("Consultant Agreement");
WHEREAS, pursuant to an Employment Agreement dated as of May 7, 1999 and
terminated on May 23, 2000 there is a current balance as of the Closing Date of
$7,923.12 due and payable to Thralow; and
WHEREAS, Thralow and EyeCity (i) have agreed to compromise, settle and
cancel the Note and principal and interest due thereunder, the balances due
under the Consultant Agreement and Employment Agreement, and any other
obligations due in the aggregate amount of $812,467.36 (collectively the
"Indebtedness") and (ii) have agreed to the other terms and conditions set forth
below.
NOW, THEREFORE, in consideration of the mutual promises, agreements and
premises set forth herein, it is hereby agreed as follows:
1. Thralow and EyeCity hereby agree to compromise, settle and cancel the
Indebtedness in the amount of $812,467.36 as of the Closing Date, consisting of
the Note, and the principal balance of $724,750 and interest of $34,633 due
thereunder; and the balances due under the Consultant Agreement in the amount of
$45,161.24; and the Employment Agreement in the amount of $7,923.12, for the
following consideration:
A. EyeCity shall immediately convey, sell, transfer, assign and
deliver to Thralow the ownership and title of the following
domain names, and the content and code associated therewith, as
the same shall exist on the Closing Date:
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EXHIBIT 10.1(h)
1. xxxx.xxx
2. xxxxxxxxxx.xxx
3. xxxxxxxxx.xxx
4. xxxxxxxxxx.xxx
5. xxxxxxxxxx.xx
6. xxxxxxxxxx.xxx
7. xxxxxxx.xxx
8. xxxxxxx.xxx
9. xxxxxxxxxxxxx.xxx
10. xxxxxxx.xxx
11. xxxxxxxxxxx.xxx
12. xxxxxxxxxxx.xxx
13. xxxxxxxxxxxxxxxxx.xxx
14. xxxxxxxxxxxx.xxx
15. xxxxxxxxxxxxx.xxx
B. EyeCity shall immediately transfer to Thralow the following
telephone numbers, and Thralow agrees to advise the telephone
company thereof:
1. 0-000-000-0000
2. 0-000-000-0000
3. 0-000-000-0000
4. 0-000-000-0000
5. 0-000-000-0000
6. 0-000-000-0000
7. 0-000-000-0000
B. EyeCity hereby sells, transfers, assigns and delivers to Thralow
full right title and interest in and to certain personal property
(the "Equipment") set forth in Exhibit A attached hereto. Thralow
hereby acknowledges that the Equipment is being conveyed "as is" as
of the Closing Date.
C. EyeCity hereby sells, transfers, assigns and delivers to Thralow
full right title and interest in and to certain inventory (the
"Inventory") set forth in Exhibit B attached hereto, valued at
approximately $111,000. Thralow hereby acknowledges that the
Inventory is being conveyed "as is" as of the Closing Date.
D. 1. EyeCity hereby agrees that within ten days following the Closing
Date, EyeCity shall issue to Thralow 125,000 shares of its Common
Stock, $.001 par value per share (the "Shares"). Thralow shall have
piggyback registration rights on the Registration Statement to be
filed by the Company on its present Private Placement as to the
Shares. The certificate representing the Shares shall contain the
following legend:
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EXHIBIT 10.1(h)
"THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933.
THEY MAY NOT BE OFFERED OR TRANSFERRED BY SALE, ASSIGNMENT, PLEDGE OR OTHERWISE
UNLESS (I) A REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT
OF 1933 IS IN EFFECT OR (II) THE COMPANY HAS RECEIVED AN OPINION OF COUNSEL,
WHICH OPINION IS SATISFACTORY TO THE COMPANY, TO THE EFFECT THAT SUCH
REGISTRATION IS NOT REQUIRED UNDER THE SECURITIES ACT OF 1933."
2. Thralow (a) represents and warrants to EyeCity that he is acquiring
all of the Shares to be issued to him pursuant to the provisions of
this Agreement for his own account and for the purposes of
investment and not with a view to, or for sale in connection with,
any distribution thereof and (b) agrees that he will not at anytime
sell or otherwise transfer, or permit the sale or other transfer of,
such Shares other than in transactions that are not in violation of
the Securities Act of 1933, as amended, or the provisions of any
other applicable securities laws, rules or regulations; and
3. Thralow shall return the original Note to EyeCity within 10 days
following the Closing Date marked "Canceled".
7. Excluding the assets transferred to EyeCity pursuant to the Merger
Agreement, EyeCity represents and warrants that it has good title to all the
above-enumerated items of consideration assigned by it hereunder, free and clear
of liens and other competing claims.
1. Except as otherwise provided herein, EyeCity shall indemnify and
hold harmless Thralow from and against any and all losses,
liabilities, or damages, including, without limitation, reasonable
attorneys' fees, incurred as a result of or arising from any breach
of said representation and warranty.
1. If Thralow determines to seek indemnification under Paragraph 1(G(1)
resulting from the assertion of liability by third parties, he shall
give notice to EyeCity within 20 days of his becoming aware of any
such claim.
2. EyeCity shall be entitled, if it so elects by written notice
delivered to Thralow within 10 days after receiving said notice, to
assume the defense thereof with counsel satisfactory to EyeCity, and
shall have the right, at its own cost and expense, to defend,
compromise or settle such claim provided such settlement or
compromise includes a release of Thralow.
3. In the event that EyeCity, within 10 days after receipt of the
aforesaid notice of a claim, fails to assume the defense of Thralow
against such claim, Thralow shall have the right to undertake the
defense, compromise or settlement of such action on behalf of and
for the account and risk of EyeCity, and at EyeCity's sole cost and
expense.
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EXHIBIT 10.1(h)
8. To the extent that any court of competent jurisdiction sets aside
any portion of this Agreement as a "preferential" payment or transfer,
thereby reducing the value of the consideration transferred hereunder,
such amount, together with Thralow's costs of defending such claim,
including reasonable attorneys fees , shall be reinstated to the
Indebtedness due and owing to Thralow by EyeCity.
2. Thralow shall be responsible for the payment of any and all losses,
liabilities or damages, including, but not limited to, court costs and
reasonable attorneys' fees, incurred after the Closing Date in connection with
the lawsuit pending between EyeCity and American Eyewear, Inc. with respect to
the "Peepers" trademark.
3. Thralow shall take possession of the Equipment and Inventory located at
the principal place of business of Peepers, Inc., at 0000 Xxxxxx Xxxx, Xxxxxx,
XX 00000 (the "Premises") on the Closing Date. Thralow shall be permitted to use
the Premises through January 31, 2001, and shall vacate same and remove the
Equipment and Inventory as of that date. EyeCity represents and warrants that
the rent on said space is paid through January 31, 2000. Effective as of the
Closing Date, Thralow shall arrange to have all accounts on sales processed
through new bank accounts established by Thralow. EyeCity shall have the right
to remove all accounting related documents and leased equipment by January 31,
2001 from the Premises.
4. The Consultant Agreement is hereby terminated as of the date hereof
without liability to any party and neither party shall have any further
obligations thereunder, all of which are hereby released by the parties.
5. EyeCity agrees not to engage in the sale of Binoculars on the internet
for a period of two years from the Closing Date.
6. Thralow warrants that the performance of the terms of this Agreement
will not conflict with or result in the breach of any other Agreement to which
he is a party or by which he is bound.
7. Concurrently with the execution hereof, the parties have entered into
the Mutual General Release attached as Exhibit C hereto.
8. EyeCity acknowledges and agrees that Thralow's operation of the assets
conveyed hereunder shall not be deemed violations of the Noncompetition and
Nondisclosure Agreement, Proprietary Rights and Information Agreement of any
noncompetition provisions of the Employment Agreement or the Consultant
Agreement between it and Thralow.
9. This Memorandum of Understanding, and Exhibits attached hereto, sets
forth the parties' complete agreement with respect to the subject matter hereof
and supersedes all prior or contemporaneous agreements or understandings,
written or oral, with respect thereto. The parties intend to be bound hereby and
to operate pursuant hereto. This Agreement shall be binding upon and inure to
the benefit of the parties hereto and their heirs, personal representatives,
successors and assigns. The terms of this Memorandum of Understanding and all
proprietary information of each of the parties is confidential and may not be
disclosed except pursuant to applicable securities laws. This Memorandum
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EXHIBIT 10.1(h)
of Understanding may not be amended or modified except by a written instrument
signed by the parties hereto.
10. Each party hereto shall cooperate, shall take such further action and
shall execute and deliver such further documents as may be reasonably requested
by any other party in order to carry out the provisions and purposes of this
Agreement.
11. This Memorandum of Understanding and all other agreements referred to
herein may be executed in one or more counterparts, each of which shall for all
purposes be deemed to be an original and all of which shall constitute the same
instrument, but only one of which need be produced. The parties agree to execute
any additional documents and/or agreements as required to implement the
transactions contemplated herein.
12. This Memorandum of Understanding and any other agreement entered into
in connection herewith shall be governed by, and construed under and in
accordance with, the laws of the State of New York applicable to contracts made
and wholly to be performed therein by residents thereof, without giving effect
to the conflict of laws principles thereof. All actions proceedings seeking the
interpretation and/or enforcement of this Agreement shall be brought only in the
Supreme Court of the State of New York located in New York County, all parties
hereby submitting themselves to the jurisdiction of such courts for such
purpose. Any process in any action or proceeding commenced in the courts of the
State of New York arising out of any claim, dispute or disagreement, may, among
other methods be served upon any party by delivering or mailing the same, via
registered or certified mail, addressed to such party at the address set forth
above. Any such delivery or mail services shall be deemed to have the same force
and affect as personal service within the State of New York, New York County.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the day and year first above written.
XXXXXXX.XXX, INC.
BY:/s/ Xxxx X. Xxxxx
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Name: Xxxx X. Xxxxx
Title: President and CEO
/s/ Xxxxxx Xxxxxxx
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Xxxxxx Xxxxxxx
