Exhibit 4.24
COMPROMISE, SETTLEMENT AND RELEASE AGREEMENT
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This Compromise, Settlement and Release Agreement (the "Agreement") is made
and entered into by and between Fidelity Funding, Inc. ("Fidelity") and
Pollution Research and Control Corp. ("Pollution Research") and is as follows:
R E C I T A L S:
WHEREAS, on or about June 28, 1996, Fidelity agreed to provide financing to
Nutek, Inc. ("Nutek") pursuant to that certain Loan and Security Agreement
("Loan Agreement"), of even date by and between Fidelity and Nutek;
WHEREAS, Nutek's obligations under the Loan Agreement, including its
obligation to repay the advances made by Fidelity were secured by, among other
things, a General Continuing Guaranty dated June 28, 1996 (the "Guaranty")
executed by Pollution Research;
WHEREAS, Nutek defaulted under the terms of the Loan Agreement by, among
other things, (a) failing to pay when due certain payments pursuant to the terms
of the Loan Agreement; (b) failing to achieve for 1997 the net profits
requirements, such requirements established by the Loan Agreement; (c) allowing
the outstanding balance of advances to exceed the borrowing base established by
the Loan Agreement; and (d) suspending operations resulting in a material
adverse change, in violation of the Loan Agreement;
WHEREAS, by letter dated March 12 1998, Nutek and Pollution Research were
provided with formal notice of such defaults and of Fidelity's declaration that
all amounts due and owing by Nutek under the Loan Agreement had been declared
immediately due and payable, and in such letter Fidelity made demand for
immediate payment of all such amounts;
WHEREAS, by letter dated March 25, 1998, Fidelity, by and through its
counsel, once again advised Nutek of acceleration of its obligations under the
Loan Agreement and once again made demand upon Nutek, and by copy of such letter
demand upon Pollution Research, for payment of amounts then due and owing;
WHEREAS, on April 1, 1998, Nutek filed a bankruptcy case in the United
States Bankruptcy Court for the Northern District of Florida, Pensacola
Division;
WHEREAS, as a result of certain alleged defaults under the Guaranty a
lawsuit was filed on or about April 7, 1998, as amended on or about May 8, 1998,
in the 00xx Xxxxxxxx Xxxxx, Xxxxxx Xxxxxx, Xxxxx (the "State Court"), styled
Fidelity Funding, Inc. v. Pollution Research and Control Corporation; No.
98-02820-B (the "Lawsuit"), wherein Fidelity is Plaintiff and Pollution Research
is Defendant;
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WHEREAS, Fidelity has asserted that pursuant to the Guaranty, Pollution
Research is obligated to pay all sums due and owing under the Loan Agreement,
together with attorneys' fees;
WHEREAS, on or about June 22, 1998, a Default Judgment was entered in favor
of Fidelity in the amount of $766,708.77, together with attorneys' fees in the
amount of $10,322.50, prejudgment interest after June 9, 1998, at a per diem
rate of $326.42, and costs and post-judgment interest at the rate of fifteen
percent per annum;
WHEREAS, on or about July 21, 1998, Pollution Research removed the Lawsuit
to the United States District Court for the Northern District of Texas and filed
Defendant's Motion to (1) Dismiss and/or Quash Service of Process Pursuant to
Fed. R. Civ. P. 12(b)(2)(4)(5) and (II) Set Aside Default Judgment Pursuant to
Fed. R. Civ. P. 55(c) and 60(b);
WHEREAS, on or about August 10, 1998, Fidelity filed Plaintiff's Motion for
Remand;
WHEREAS, on or about January 7, 1999, the Lawsuit was remanded to the State
Court for further proceedings;
WHEREAS, on or about January 11, 1999, Pollution Research filed Defendant's
Motion to Quash Service,
and, Subject Thereto, to Set Aside Default Judgment and for New Trial;
WHEREAS, Defendant's Motion to Quash Service, and, Subject Thereto, to Set
Aside Default Judgment and for New Trial was denied by operation of law;
WHEREAS, on or about March 8, 1999, Pollution Research filed Defendant's
Second Motion to Quash Service, and, Subject Thereto, to Set Aside Default
Judgment and for New Trial;
WHEREAS, the State Court took Defendant's Second Motion to Quash Service,
and, Subject Thereto, to Set Aside Default Judgment and for New Trial under
advisement;
WHEREAS, on or about March 9, 1999, Pollution Research filed its Notice of
Appeal seeking review of the Default Judgment;
WHEREAS, the parties to the Lawsuit, acting through their duly authorized
agents, desire and have agreed to fully and finally compromise and settle all
claims and all disputes between them, including all claim asserted in the
Lawsuit which could have been asserted in the Lawsuit;
NOW, THEREFORE, for and in consideration of the mutual promises and
undertakings herein contained, and such good and other valuable consideration,
the receipt and sufficiency of which is hereby acknowledged and confessed by
each of the parties hereto, the parties hereto agree as follows:
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1. Contemporaneously with the execution of this Agreement, Pollution
Research shall pay to Fidelity the sum of Nine Thousand Dollars
($9,000.00) (the "Initial Payment").
2. In addition to the Initial Payment, on or before February 1, 2000,
Pollution Research shall pay to Fidelity the aggregate of the sum of
Four Hundred Fifty Thousand Dollars ($450,000.00) (the "Settlement
Payment"). The unpaid portion of the Settlement Payment shall bear
interest at the rate of twelve percent (12%) per annum. All accrued
but unpaid interest shall be payable monthly on the first (1st) day of
each month next following the expiration of one (1) full month after
the date of the execution of this Agreement. In addition to the
Settlement Payment, as an additional consideration to Fidelity,
Pollution Research shall issue to Fidelity a warrant for twenty
thousand (20,000) shares of common stock of Pollution Research (the
"Warrants"), exercisable for three (3) years at the price of
seventy-five cents ($0.75) per share, contemporaneously with the
execution and delivery of this Agreement. Any amount realized or
received by Fidelity as a result of any exercise of the Warrants shall
not apply toward Pollution Research's payment of the Settlement
Payment, but shall be in addition to such payment.
3. In order to induce Fidelity to enter into this Agreement, Pollution
Research shall use its best efforts to register for sale one hundred
thousand (100,000) shares of common stock of Pollution Research (the
"Settlement Consideration Shares"), the Settlement Consideration
Shares to be (a) issued in the name of Fidelity, (b) endorsed by
Fidelity and (c) placed in escrow with a brokerage designated by
Pollution Research, in accordance with the Escrow Agreement attached
hereto as Exhibit A and incorporated herein by reference for all
purposes. Pollution Research shall have the right under such escrow to
cause such Settlement Consideration Shares to be sold provided,
however, that proceeds from such sale shall be applied to Pollution
Research's obligation to pay the Settlement Payment as set forth in
paragraph (2) above. Such proceeds shall be applied first to any
accrued but unpaid interest, and thereafter to the Settlement Payment.
Upon the full and timely payment to Fidelity of the Settlement
Payment, and any accrued but unpaid interest thereon, Fidelity shall
have no further rights in the Settlement Consideration Shares or the
proceeds of sale thereof. In the event that the proceeds of the sale
of such Settlement Consideration Shares exceed the amount of the
Settlement Payment and any accrued but unpaid interest thereon, after
payment to Fidelity of the Settlement Payment and any accrued but
unpaid interest, any excess shall be paid to Pollution Research.
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4. Pollution Research agrees to dismiss the pending appeal from the
Default Judgment within three (3) days of the date of execution of
this Agreement. The parties agree that the dismissal order shall
provide that all costs incurred in the appeal shall be taxed against
Pollution Research. Pollution Research hereby acknowledges that the
Default Judgment is a valid and binding judgment and hereby agrees not
to initiate any action to set aside the Default Judgment, provided,
however, that in the event Fidelity take steps to enforce the Default
Judgment, in accordance with the terms of this Agreement, nothing
contained herein shall preclude Pollution Research from claiming
credit for consideration paid pursuant to this Agreement, or otherwise
challenging the amount then outstanding on said Judgment.
5. The parties hereto agree that as of the date of this Agreement, the
outstanding balance of the Default Judgment is $468,000.00. Fidelity
agrees to take no steps to execute upon the Default Judgment entered
by the Court unless and until Pollution Research defaults under this
Agreement by failing to timely pay any amount due or otherwise. In the
event that Pollution Research timely performs its obligations under
this Agreement, Fidelity shall execute a Release of the Default
Judgment. In the event that Pollution Research fails to pay any
payments when due, fails to deliver the Warrants or otherwise defaults
under this Agreement, Fidelity shall immediately be entitled to
enforce the Default Judgment, provided, however, that all
consideration received pursuant to this Agreement shall be applied to
the Default Judgment.
6. Subject to the terms and provisions of this Agreement, Fidelity hereby
releases, remises and forever discharges Pollution Research, its
shareholders, representatives, officers, directors, employees,
attorneys, agents, subsidiaries, servants and successors-in-interest,
hereinafter referred to as the "Pollution Research Released Parties"
from any and all rights, claims, demands, actions, causes of action,
judgments, whether known or unknown, suspected or unsuspected, which
Fidelity has, may have, or may claim to have against Pollution
Research and the Pollution Research Released Parties, and, without
limiting the generality of the foregoing release, specifically
releases, remises and forever discharges the Pollution Research
Released Parties from all claims or allegations asserted or which
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could have been asserted by Fidelity or on its behalf in the Lawsuit,
arising from or relating to execution of and performance under the
Guaranty; provided, however, that Fidelity does not hereby waive,
relinquish or release any of its rights, or any of the obligations of
Pollution Research arising out of this Agreement. Provided, however,
that Fidelity does not hereby waive, relinquish or release any of its
rights, including the right to enforce the Default Judgment upon any
event of default by Pollution Research under this Agreement, or any of
the obligations of Pollution Research, arising out of this Agreement.
7. Subject to the terms and provisions of this Agreement, Pollution
Research hereby releases, remises and forever discharges Fidelity, its
shareholders, representatives, officers, directors, employees,
attorneys, agents, subsidiaries, servants and successors-in-interest,
hereinafter referred to as the "Fidelity Released Parties," from any
and all rights, claims, demands, actions, causes of actions,
judgments, whether known or unknown, suspected or unsuspected, which
Pollution Research has, may have or may claim to have against Fidelity
and the Fidelity Released Parties and, without limiting the generality
of the foregoing release, specifically releases, remises and forever
discharges Fidelity and the Fidelity Released Parties from all claims
or allegations asserted or which could have been asserted by Pollution
Research or on its behalf in the Lawsuit, arising from or relating to
execution of the Guaranty or performance thereunder; provided,
however, that Pollution Research does not hereby waive, relinquish or
release any of its rights, or any of the obligations of Fidelity or
the Fidelity Released Parties, arising out of this Agreement.
7. The parties hereby agree that except as set forth herein this
Agreement does not constitute an admission of liability; does not
constitute any factual or legal precedent or finding whatsoever; and
may not be used as evidence in any subsequent proceeding of any kind,
except in an action alleging breach of this Agreement or to enforce
the Default Judgment.
8. The parties further agree and acknowledge that the terms of this
Agreement are contractual, and not merely a recital. Further, except
as otherwise provided in the releases contained herein, this Agreement
shall be binding upon, and inure to the benefit of, each party and
their heirs, successors, subsidiaries, partners, assigns, agents,
servants, employees and attorneys.
9. The parties hereto warrant that they own all claims asserted or
assertable in the Lawsuit, and that they have not assigned any part of
such claims to any person, business or entity.
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10. This Agreement shall be governed by and construed in accordance with
the laws of the State of Texas.
11. This Agreement, in conjunction with the exhibits attached hereto,
contains the full and complete agreements of the parties hereto, and
all prior negotiations and agreements pertaining to the subject matter
hereof were merged into this Agreement. Each party hereto expressly
disclaims reliance upon any facts, promises, undertakings or
representations made by any other party, or agents or attorneys, prior
to the execution of this Agreement.
12. All parties to this Agreement have had the benefit of counsel of their
choice and have been afforded an opportunity to review this Agreement
with their chosen counsel.
13. This Agreement is one which cannot be modified, irrespective of what
might take place or occur, unless each of the parties hereto expressly
agrees to such modification in writing.
14. This Agreement shall be in full force and effect as of the date
executed by all parties.
15. To the extent necessary, the parties hereby acknowledge that the terms
of this Agreement have been presented to and approved by the parties'
respective board of directors.
16. Notwithstanding the foregoing, each of the parties hereto represents
and warrants that the person executing this Agreement is duly
authorized to enter into and execute this Agreement for and on behalf
of the party each person purports to represent.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
as of the date set forth in the acknowledgements below:
[SIGNATURES TO FOLLOW ON SEPARATE PAGES]
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POLLUTION RESEARCH AND CONTROL CORP.
By: /s/ Xxxxxx X. Xxxxxxxx, Xx.
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Name: Xxxxxx X. Xxxxxxxx
Title: President
STATE OF CALIFORNIA )
)
COUNTY OF LOS ANGELES )
BEFORE ME, the undersigned authority, on this day personally appeared
XXXXXX X. XXXXXXXX, President of Pollution Research and Control Corp., a
California corporation, known to me to be the person whose name is subscribed to
the foregoing instrument, and acknowledged to me that he executed the same for
the purposes and consideration therein expressed, on behalf of said corporation.
GIVEN UNDER MY HAND AND SEAL OF OFFICE this 12th day of August, 1999.
/s/ Xxxxxx Xxxxx
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/s/ Xxxxxx Xxxxx
Notary Public in and for the
State of California
XXXXXX XXXXX
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Printed name of Notary
My commission expires:
Feb 21, 2003
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[SEAL]
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FIDELITY FUNDING, INC.
By: /s/ Xxxxxx Xxxxxx
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Name: Xxxxxx Xxxxxx
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Title: Agent for Fidelity Funding, Inc.
STATE OF TEXAS )
)
COUNTY OF DALLAS )
BEFORE ME, the undersigned authority, on this day personally appeared
Xxxxxx Xxxxxx , Xx. Vice President of Fidelity Funding, Inc., a Agent for
Fidelity Funding, Inc. , known to me to be the person whose name is subscribed
to the foregoing instrument, and acknowledged to me that he executed the same
for the purposes and consideration therein expressed, on behalf of said
corporation .
GIVEN UNDER MY HAND AND SEAL OF OFFICE this 19th day of August, 1999.
/S/ Xxxx X. Xxxxxxx
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Notary Public in and for the
[SEAL] State of Texas
Xxxx X. Xxxxxxx
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Printed Name of Notary
My commission expires:
July 30, 2001
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