EXHIBIT 10.34
SETTLEMENT AGREEMENT AND RELEASE
This Settlement Agreement ("Agreement") is entered into by and between IRATA,
INC ("Irata") on the one hand, and ________________________ on the other hand
("Creditor"), (Creditor and Irata are hereinafter referred to as the Parties"),
for the purposes of settling, resolving and satisfying the various claims,
causes of action, controversies, and/or other disputes between them as
hereinbelow provided.
RECITALS
The parties have entered into this Agreement under the following circumstances
and to effect the following aims and purposes:
A. Irata and Creditor agree that as of the date of this Agreement Irata
is indebted to Creditor in the amount of $__________ (the "Claim"). By
entering into this Agreement, the Parties intend to resolve and
satisfy all claims against each other.
B. The Parties, without admitting or denying any liability to each other,
wish to compromise and settle this matter in a manner satisfactory to
the Parties.
C. The Parties acknowledge specifically the costs, hazards, uncertainties
and pitfalls of adversarial collection efforts, including litigation
and appeals, and they desire to enter this Agreement in order to
settle any controversy, to avoid further costs, litigation and risks,
and to buy the peace and time necessary to allow Irata to arrange for
a $1.5 million capital infusion required for the effective and
profitable continuation of its business operations (the "New
Capital");
IT IS THEREFORE AGREED:
1. Upon Creditor's execution of this Agreement and its delivery to Irata, and
provided Irata receives a sufficient number of acceptances of the Agreement
from its other principal creditors, Irata will undertake the steps
necessary to obtain the New Capital.
2. Following receipt by Irata of the New Capital, the Claim of Creditor shall
be satisfied and settled as follows:
a. CASH. One-third of Creditor's Claim will be paid in cash installments,
(i) the first of which shall be equal to fifteen percent (15%) of the
Claim (the "Initial Payment"), (ii) with the remaining balance of the
one-third to be paid monthly beginning September 15, 1996, and
continuing for fifteen (15) months thereafter;
and
b. STOCK. Two-thirds of Creditor's Claim will be satisfied through the
issuance of Irata Class A Common Stock, $.10 par value each (the
"Stock"). The exchange will be $1.00 of debt forgiveness for each $1
dollar value of shares issued. The price of the shares to be issued to
Creditor shall be fixed at the greater of-
i) $2.25 per share; or
ii) the lower of-
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a) 80 percent of the average closing price at which the stock
trades during the thirty calendar day period following the
date of Irata's receipt of the New Capital; or
b) the lowest closing price at which the stock trades during
such thirty day period.
3. CONSIDERATION. The Parties acknowledge the receipt and adequacy of
consideration as expressed by the recitations and mutual covenants of this
Agreement.
4. WARRANTIES. Creditor represents and warrants to Irata (a) that it has full
knowledge of the terms, conditions, and effects of the Agreement; (b) that
is has had the benefit of independent legal counsel in entering into this
Agreement; (c) that no promise or inducement has been offered or made to it
except as expressly stated in the Agreement; that this Agreement is
executed without reliance on any statement or representation by any third
party or any third party's agent, and that this Agreement supersedes all
prior negotiations and discussions; (d) that it is the sole owner of the
claims or causes of action it has released in this Agreement and has not
previously assigned or transferred or purported to assign or transfer any
interest in such claims to any person or entity; (e) that it is not in a
disparate bargaining position with respect to the negotiation of this
Agreement and that it is executing this Agreement of its own free will,
act, and deed; (f) that it has full authority to enter this Agreement on
its behalf and is competent to do so; and (g) that the person executing
this Agreement on its behalf is duly authorized and empowered to do so and
that all corporate and other formalities necessary for its approval of the
Agreement have been satisfied.
Further, Creditor acknowledges its understanding that the Stock which will
be issued to creditors pursuant to this Agreement will not be registered at
the time of its issuance with the United States Securities and Exchange
Commission nor with the State Securities Board of Texas or with any other
state. Rather, the Stock will be issued by Irata in reliance upon an
exemption from the securities registration provisions of applicable federal
and state law and may be transferred by the holders of such common stock
only in accordance with the provisions of Rule144 promulgated under the
Securities Act of 1933, as amended, or in accordance with some other
available exemption. In other words, the Stock will not be tradable in
accordance with Rule 144 for two years following its issuance to Creditor.
A legend to this effect will be placed by Irata on each stock certificate
issued by Irata under this Agreement and Creditor will be required to
execute an Acknowledgment will also contain representations and warranties
from the Creditor, including but not limited to, the representation that
Creditor has consulted with its respective legal, tax, and financial
advisors in reaching the decision to accept the terms and conditions of
this Agreement.
However, notwithstanding the tow year trading restriction applicable to the
Stock by way of Rule 144, Irata has agreed to seek registration of the
Stock with the Securities & Exchange Commission by no later than December
of 1997.
5. RELEASE. EXCEPT for the agreements, representations, and warranties
contained in this Agreement, Creditor on behalf of itself and on behalf of
nay other persons claiming by, through, or under shall upon receipt by
Creditor of the Initial Payment and the Stock, as recited herein, and
Irata's receipt of the New Capital by September 30, 1996, RELEASE,
DISCHARGE AND ACQUIT Irata from any and all past and present claims
demands, debts, liabilities, expense or costs owing Creditor by Irata, in
connection with the Claim, and agrees to execute any and all documents
relating thereto.
6. CESSATION OF COLLECTION. It is the intent of the Parties that the mutual
consideration received pursuant to this Agreement satisfies and resolves
the controversies that have arisen between them. It is expressly intended
and agreed that
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upon execution of this Agreement by Creditor, Creditor shall cease to
pursue and all collection efforts, and shall dismiss any collection suit
with prejudice immediately following the receipt of the Initial Payment and
the Stock.
7. DENIAL OF LIABILITY. No term or provision of the Agreement shall constitute
or be deemed to be an admission of liability on the part of any party
hereto, all such liability being executed by both Parties.
8. EFFECTIVE DATE. The effective date of this Agreement shall be the date on
which the last party signs this Agreement. No party to this Agreement shall
be bound by it until it has been executed by both of the Parties.
9. CONFIDENTIALITY. The Parties agree to use their best efforts to keep
confidential this dispute, the terms of this Agreement and the
Consideration for this Agreement, except as may be otherwise required by
law, statute, tax or accounting requirement, or to effectuate this
Agreement. Furthermore, Creditor agrees to return to Irata any and all
Confidential Information received from Irata in accordance with the terms
of the Confidentiality Agreement heretofore executed by Creditor.
10. MISCELLANEOUS.
a. This Agreement embodies the entire agreement between the Parties
hereto and supersedes all prior proposals, negotiations, agreements,
and understandings relating to the subject matter hereof.
b. This Agreement shall be binding upon and inure to the benefit of all
the Parties and their respective subsidiaries, related entities,
successors and assigns, including purchasers of all or substantially
all of the assets of any corporate party hereto.
c. In the event that any provision of the Agreement should be held to be
void, voidable, or unenforceable in any respect, the remaining
portions shall remain in full force and effect.
d. Any modifications or waivers of any provision of this Agreement or any
consent to any departure from its terms shall not be binding unless
the same is in writing and signed by all of the parties hereto.
e. The parties specifically agree to execute any and all documents
necessary to effectuate this Agreement.
IN WITNESS WHEREOF, the Parties hereby execute this Agreement effective as of
the last date reflected below.
IRATA, INC. __________________________
By: _________________________ By: __________________________
_________________________ __________________________
Title: _________________________ Title: __________________________
Date: _________________________ Date: __________________________
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