EXHIBIT 10.25
SETTLEMENT AGREEMENT
THIS SETTLEMENT AGREEMENT (this "Agreement") is made and entered into
effective as of this 16th day of March, 2004, by and between Guardian
Technologies International, Inc., a Delaware corporation ("Guardian"), and
Xxxxxxxx Capital Corp., a California corporation ("Xxxxxxxx").
WITNESSETH:
WHEREAS, Guardian and Xxxxxxxx entered into a letter agreement, dated
November 7, 2003 (the "Letter Agreement"), pursuant to which Xxxxxxxx agreed to
provide certain corporate finance advisory services to Guardian in consideration
of, among other things, the payment and issuance of certain compensation by
Guardian to Xxxxxxxx; and
WHEREAS, Guardian and Xxxxxxxx have determined to terminate the Letter
Agreement and to settle all claims that one party hereto may have against the
other party under the Letter Agreement or otherwise and upon the terms set forth
hereinbelow.
NOW, THEREFORE, in consideration of the mutual covenants, agreements and
recitals set forth above and below, and other good and valuable consideration,
the receipt and adequacy of which are hereby acknowledged, the parties hereby
agree and covenant as follows:
1. Guardian and Xxxxxxxx hereby agree to terminate the Letter Agreement
effective as of the date hereof, and such Letter Agreement shall have no
further force or effect.
2. In consideration of the termination of the Letter Agreement and the
releases and other agreements and covenants set forth herein, Guardian
hereby agrees to pay and/or issue to Xxxxxxxx the following:
(a) on or before thirty (30) days after the date of the execution and
delivery of this Letter Agreement by the parties, $50,000 by wire
transfer of immediately available United States' funds; and
(b) upon execution hereof, a common stock purchase warrant ("Warrant")
to purchase 250,000 shares of common stock, $.001 par value per
share ("Common Stock"), of Guardian exercisable for a period of two
(2) years from the date of issue at a price of $1.00 per share. Such
warrants shall contain a cashless exercise provision, a piggy back
registration right and other customary provisions.
3. Xxxxxxxx agrees that, upon execution hereof, except as set forth in
Section 2 above, Xxxxxxxx shall have no further right or claim to receive
any compensation pursuant to any term or provision of the Letter Agreement
or otherwise.
4. In consideration of the mutual covenants and agreements set forth herein
by Xxxxxxxx, Guardian and all of its successors, assigns, heirs,
executors, administrators, legal representatives and all other persons who
might claim through them, hereby compromise, release and forever discharge
Xxxxxxxx, its directors, officers, agents, attorneys, affiliates,
subsidiaries and related companies, successors of Xxxxxxxx and control
persons (within the meaning of the Securities Act of 1933 and Securities
Exchange Act of 1934) and all persons who might be liable through them,
from any and all rights, demands and claims, of whatsoever kind or nature
relating to any matters of any kind, whether presently known or unkown,
suspected or unsuspected, arising from any omission, act or fact that has
occurred up until and including the date of this Agreement including, but
not limited to, under the Letter Agreement, any other agreement between
Guardian and Xxxxxxxx, or in connection with any financial advisory or
other services rendered to Guardian by Xxxxxxxx, effective as of and from
the beginning of time. Except as set forth herein, Guardian and all of its
successors, assigns, heirs, executors, administrators, legal
representatives and all persons or entities acting on their behalf, or who
might claim through them, hereby agree and covenant not to xxx or bring
any action at law or in equity referring to, relating to, or in connection
with the Letter Agreement, any other agreement between the parties, in
connection with any financial advisory or other services rendered to
Guardian by Xxxxxxxx or otherwise, including, but not limited to, an
action in any court or other forum or an arbitration proceeding against
Xxxxxxxx or any third party beneficiary hereunder; provided, however, that
Guardian or its successors or assigns may initiate any action required to
enforce this Agreement and may initiate a claim by way of counterclaim,
cross claim, third party process, impleader, claim for contribution and
indemnity or other claim arising from a claim by an unaffiliated third
party against Guardian. It is understood and agreed that the release and
covenant not to xxx herein are a full and final general release and
covenant not to xxx from Guardian which covers any and all future damages
not now known to Guardian which may later develop or be discovered,
arising from, referring to, relating to, or in connection with the Letter
Agreement, any other agreement between the parties, or in connection with
any financial advisory or other services rendered to Guardian by Xxxxxxxx
or otherwise, except that this does not cover any damages or claims which
may arise solely as a result of a breach by a party of any provision of
this Agreement. Guardian acknowledges and agrees that this Agreement shall
be a final and effective settlement as provided hereinabove,
notwithstanding any facts or mistakes that may come to its attention
hereafter, whether or not known to Xxxxxxxx or any of the persons released
by Guardian hereunder.
5. In consideration of the agreements set forth in Sections 1, 2, and 3,
above, and other good and valuable consideration, Xxxxxxxx and all of its
successors, assigns, heirs, executors, administrators, legal
representatives and all other persons who might claim through them, hereby
compromise, release and forever discharge Guardian, its directors,
officers, agents, attorneys, affiliates, subsidiaries and related
companies, successors of Guardian and control persons (within the meaning
of the Securities Act of 1933 and Securities Exchange Act of 1934) and all
persons who might be liable through them, from any and all rights, demands
and claims, of whatsoever kind or nature relating to any matters of any
kind, whether presently known or unkown, suspected or unsuspected, arising
from any omission, act or fact that has occurred up until and including
the date of this Agreement including, but not limited to, under the Letter
Agreement, any other agreement between Guardian and Xxxxxxxx, or in
connection with any financial advisory or other services rendered to
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Guardian by Xxxxxxxx or otherwise, effective as of and from the beginning
of time. Except as set forth herein, Xxxxxxxx and all of its successors,
assigns, heirs, executors, administrators, legal representatives and all
persons or entities acting on their behalf, or who might claim through
them, hereby agree and covenant not to xxx or bring any action at law or
in equity referring to, relating to, or in connection with the Letter
Agreement, any other agreement between the parties, in connection with any
financial advisory or other services rendered to Guardian by Xxxxxxxx or
otherwise, including, but not limited to, an action in any court or other
forum or an arbitration proceeding against Guardian or any third party
beneficiary hereunder; provided, however, that Xxxxxxxx or its successors
or assigns may initiate any action required to enforce this Agreement and
may initiate a claim by way of counterclaim, cross claim, third party
process, impleader, claim for contribution and indemnity or other claim
arising from a claim by an unaffiliated third party against Xxxxxxxx. It
is understood and agreed that the release and covenant not to xxx herein
are a full and final general release and covenant not to xxx from Xxxxxxxx
which covers any and all future damages not now known to Xxxxxxxx which
may later develop or be discovered, arising from, referring to, relating
to, or in connection with the Letter Agreement, any other agreement
between the parties, or in connection with any financial advisory or other
services rendered to Guardian by Xxxxxxxx or otherwise, except that this
does not cover any damages or claims which may arise solely as a result of
a breach by a party of any provision of this Agreement. Xxxxxxxx
acknowledges and agrees that this Agreement shall be a final and effective
settlement as provided hereinabove, notwithstanding any facts or mistakes
that may come to its attention hereafter, whether or not known to Guardian
or any of the persons released by Xxxxxxxx hereunder.
6. The parties represent that they are not aware of any claim by either of
them other than the claims that are released by this Agreement. Guardian
and Xxxxxxxx acknowledge that they have been advised by legal counsel and
are familiar with the provisions of California Civil Code Section 1542,
which provides that "A general release does not extend to claims which the
creditor does not know or suspect to exist in his favor at the time of
executing the release, which if known by him must have materially affected
his settlement with the debtor."
7. In order to establish the suitability of Xxxxxxxx'x investment in or
acquisition of the Warrants and the underlying shares, Xxxxxxxx hereby
represents and warrants to Guardian as follows:
(a) Investment Intent. Xxxxxxxx is aware of and familiar with the
business affairs and financial condition of Guardian and has
acquired sufficient information about Guardian to reach a
knowledgeable and informed decision to acquire the Warrants and the
shares of Common Stock of Guardian underlying such Warrants.
Xxxxxxxx is acquiring the Warrants, and upon exercise of the
Warrants the underlying shares of Common Stock of Guardian, for its
own account and not with a view to or for sale in connection with
any distribution of the Warrants or underlying shares of Common
Stock; provided that Guardian hereby consents to the assignment by
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Xxxxxxxx of all or any portion of the Warrant and/or shares of
Common Stock underlying the Warrant to one or more principals and/or
employees of Xxxxxxxx; provided further that in the event of any
such assignment each such principal or employee is an "accredited"
investor within the meaning of Rule 501(a) of Regulation D and
executes an investment representation letter in such form as is
reasonably satisfactory to Guardian and its counsel.
(b) Relationship. Xxxxxxxx has either a preexisting personal or business
relationship with Guardian or its partners, officers, directors or
controlling persons.
(c) Experience. Xxxxxxxx has such business or financial experience
enabling it to protect its own interests in connection with the
acquisition of the Warrants and underlying shares of Common Stock.
(d) Accredited Investor. Xxxxxxxx is an "accredited investor" within the
meaning set forth in Rule 501(a) of Regulation D under the
Securities Act of 1933, as amended (the "Securities Act"), and can
afford a total loss of its investment.
(e) Risks. Xxxxxxxx understands that an investment in Guardian is highly
speculative and subject to substantial risks, that any possible
profits therefrom are uncertain or may never arise, and that it
bears the economic risks of the investment in Guardian for an
indefinite period of time. Xxxxxxxx is able to bear these economic
risks and to hold the Warrants and the shares of Guardian's Common
Stock underlying the Warrants for an indefinite period.
(f) Information. Xxxxxxxx has received all information and data with
respect to Guardian which it has requested and has deemed relevant
in connection with its evaluation of the merits and risks of this
investment in Guardian and does not desire any further information
or data with respect to Guardian prior to the acquisition of the
Warrants. Xxxxxxxx has had the opportunity to ask such questions of
the President, Xxxxxx X. Xxxxxx, and Chief Executive Officer,
Xxxxxxx X. Xxxxxxx, of Guardian as it has deemed necessary or
appropriate and has had the opportunity to review copies of all
filings Guardian has made with the Securities and Exchange
Commission ("SEC"). The foregoing documents are available through
the SEC's Xxxxx database accessible through its website at
xxxx://xxx.xxx.xxx.
(g) Securities Laws. Xxxxxxxx understands that the Warrants and shares
of the Guardian's Common Stock underlying the Warrants have not been
registered under the Securities Act in reliance on certain
exemptions from registration under the Securities Act set forth in
Section 4(2) thereof and Rule 506 of Regulation D promulgated
thereunder, and that the Warrants and underlying shares have not
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been registered under the "Blue Sky" laws of any state, including
the Blue Sky laws of the Commonwealth of Virginia or the State of
California. Xxxxxxxx understands that the shares will be "restricted
securities" within the meaning of Rule 144(a)(3) of the Securities
Act. Xxxxxxxx is domiciled in the State of California.
(h) Transfers. Xxxxxxxx understands that the Warrants and underlying
shares of Common Stock may have to be held indefinitely unless they
are subsequently registered under the Securities Act and qualified
or registered under other applicable securities laws, rules or
regulations, or unless an exemption from such qualification or
registration requirements is available.
(i) Further Limitations. Without in any way limiting its representations
set forth above, Xxxxxxxx further agrees that, except as permitted
pursuant to Section 7(a) above, it shall in no event make any
disposition of all or any portion of the Warrants or shares of
Guardian's Common Stock underlying the Warrants unless and until:
(A) there is then in effect a registration statement under the
Securities Act covering such proposed disposition and such
disposition is made in accordance with such registration statement;
or (B) (1) Xxxxxxxx shall have notified Guardian of the proposed
disposition, (2) Xxxxxxxx shall have furnished Guardian with an
opinion of counsel to the effect that such disposition will not
require registration of such Warrants or underlying shares of Common
Stock under the Securities Act, and (3) such opinion of counsel
shall have been reasonably concurred in by counsel for Guardian and
Guardian shall have advised Xxxxxxxx of such concurrence; provided
that in the case of subsection (B) above, Guardian shall act within
ten (10) business days of the receipt of notice pursuant to
subsection (B)(1) and the opinion required pursuant to subsection
(B)(2) above and cause its counsel to act within such period in
connection with the review of the aforementioned opinion of
Xxxxxxxx'x counsel.
(j) Certificates. The certificate(s) evidencing the Warrants and the
shares of Common Stock issued upon exercise of the Warrants shall
bear a legend evidencing the restricted nature of the Warrants and
underlying shares in accordance with the above. Guardian may impose
stop transfer restrictions with its transfer agent to prevent the
transfer or other disposition of the Warrants and underlying shares.
8. Except as set forth herein, this Agreement contains the entire agreement
of the parties with respect to the matters set forth herein, and shall not
be modified, except in writing, and shall be binding and inure to the
benefit of the executors, administrators, heirs, successors and permitted
assigns of the parties hereto. This Agreement may not be assigned by
either party hereto without the prior written consent of the other party
hereto. This Agreement shall be interpreted in accordance with its plain
meaning and not for or against any party hereto.
9. This Agreement may be executed in any number of counterparts (and by
facsimile) each of which shall be an original of this Agreement for all
purposes, and all of which together shall constitute one and the same
instrument. Signed facsimile copies of this Agreement shall be legal,
valid and binding.
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10. Xxxxxxxx agrees to maintain the confidentiality of all confidential and
proprietary information of Guardian and will not intentionally divulge,
furnish or make available to any party any of the confidential or
proprietary information of Guardian until after such time as such
information has become publicly known otherwise than by act of Xxxxxxxx
unless obligated to do so under applicable law or an order of a court of
competent jurisdiction.
11. Each party represents and warrants that such party has carefully read and
has been afforded reasonable opportunity to have the contents and legal
effect of this Agreement explained by legal counsel of its choice; and
that each party has the sole and exclusive power and authority to execute
this Agreement and does so of its own free act.
12. In the event of any legal dispute between the Guardian and Xxxxxxxx
relating to this Agreement, all reasonable attorneys' fees of the
prevailing party shall be paid by the other party.
13. Each party warrants and represents that no promise or inducement has been
offered or made with respect to the matters set forth herein except as
stated in this Agreement, and that each party has determined to execute
this Agreement without reliance upon such statement or representation by
the other party or his or its agents.
14. Subject to the terms and conditions herein provided, each of the parties
hereto shall use its best efforts to take, or cause to be taken, such
action, to execute and deliver, or cause to be executed and delivered,
such additional documents and instruments, and to do, or cause to be done,
all things necessary, proper and advisable under the provisions of this
Agreement and under applicable law to consummate and make effective the
transactions contemplated by this Agreement.
15. In case any one or more provisions or part of a provision contained in
this Agreement shall for any reason be held to be invalid, illegal or
unenforceable in any respect in any jurisdiction, such invalidity,
illegality or unenforceability shall be deemed not to affect any other
provision or part of a provision of this Agreement, but this Agreement
shall be reformed and construed in such jurisdiction as if such provision
or part of a provision held to be invalid or illegal or unenforceable had
never been contained herein and such provision or part reformed so that it
would be valid, legal and enforceable in such jurisdiction to the maximum
extent possible.
16. The parties agree that this Agreement shall be governed by the law of the
Commonwealth of Virginia.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed and delivered effective as of the date and year first above written.
GUARDIAN TECHNOLOGIES
INTERNATIONAL, INC.
By: /s/ Xxxxxxx X. Xxxxxxx
-----------------------
Name: Xxxxxxx X. Xxxxxxx
Title: Chief Executive Officer
XXXXXXXX CAPITAL CORP.
By: /s/ Xxxxx X. Xxxxxx
-----------------------
Name: Xxxxx X. Xxxxxx
Its: Managing Director
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