SETTLEMENT AND RELEASE AGREEMENT
THIS AGREEMENT is entered into by and among Xxxxxxxx X. Xxxxxxx, Xxxxxxx
X. Xxxxxxx, individually and on behalf of Xxxxxxx Associates, Inc., Xxxxxx X.
Xxxxxxx, Xxxx X. Xxxxxx, Xxxxxxxx Xxxxxxx, Xxxxxxx Xxxxxxx, Xxxxxx X. Xxxxxxx
and Xxxx X. Xxxxxx (collectively "Management and former management") and
Magna-Lab Inc. ("Magna-Lab") as of the date on which this Agreement is accepted
by Magna-Lab.
WHEREAS, Management and former management are owed an aggregate of
$113,112 in compensation earned but not paid during the period from September 1,
2002 through January 15, 2003 ("deferred compensation") as indicated on the
enclosed Exhibit 1; and
WHEREAS, certain of the Management and former management hold outstanding
options to purchase an aggregate of 4,825,000 shares of common stock of
Magna-Lab Inc. ("stock options") as indicated on Exhibit 2; and
WHEREAS, Magna-Lab Inc. does not currently have the means to pay the
deferred compensation; and
WHEREAS, both Management and former management and Magna-Lab. believe that
it is in their mutual interest that this liability and these stock options
(other than those options to purchase 2,500,000 shares at $0.49 held by Xxxxxxxx
Xxxxxxx and expiring 625,000 on each of August 31, 2005, January 31, 2006,
625,000, August 31, 2006 and 625,000 on January 31, 2007 which shall remain
outstanding according to their terms) be resolved at this time; and
WHEREAS, Management and former management have each agreed to release
Magna-Lab from all of its obligations to Management and former management
associated with the deferred compensation and, except for Xx. Xxxxxxx, stock
options subject to the terms and conditions set forth in this Agreement.
NOW THEREFORE, IN CONSIDERATION OF the mutual promises and covenants
contained herein and for other good and valuable consideration, receipt and
legal sufficiency of which is hereby acknowledged, the parties hereby agree as
follows:
1. Promptly following the date of this Agreement, Magna-Lab will issue and
deliver to each member of Management and former management a certificate
representing class A common shares of Magna-Lab common stock in the
denominations set forth beside their respective names on the signature
page hereof. In connection with the issuance of the shares, each member of
Management and former management makes the investment and other
representations set forth on Exhibit 3 hereto.
2. Subject to receipt of their respective share certificates, each member of
Management and former management hereby individually (i) releases and
forever discharges Magna-Lab and its respective subsidiary and their
respective officers, directors, affiliates, shareholders, agents,
employees, representatives, successors and assigns, from any and all
claims, defenses, demands, rights of setoff or recoupment, suits,
lawsuits, liabilities, damages, actions, causes of action or complaints of
whatever nature or kind, formal or informal, known or unknown, in law or
at equity, in tort or contract ("Claims") relating to the deferred
compensation to which each is entitled as set forth on Exhibit 1 and (ii)
except for Xx. Xxxxxxx, cancels all stock options to which each is
entitled as set forth on Exhibit 2.
3. Promptly following the date of this Agreement and in order to
administratively effectuate the cancellation of stock options referred to
above, each member of Management and former management, other than Xx.
Xxxxxxx, will tender to Magna-Lab for cancellation each original stock
option agreement, if any.
4. Each member of Management and former management represents and warrants to
Magna-Lab that the deferred compensation listed on Exhibit 1 and the stock
options listed on Exhibit 2, if any, opposite their respective names
constitutes the full amount of compensation owing by Magna-Lab to such
persons, except for any current services which have been billed and
recorded by the Company, and the full number of stock options, if any,
owned or owing to such persons.
5. The parties agree that they are entering into this Agreement as a
compromise and to avoid the cost and expense of any dispute or litigation.
By entering into this agreement, neither party admits wrongdoing or any
liability whatsoever.
6. This Agreement shall be of no force or effect unless and until accepted by
Magna-Lab, which acceptance shall not be valid unless obtained on or
before September 30, 2005.
7. This Agreement embodies the full and complete understanding and agreement
between the parties hereto with respect to the matters involved herein,
and supercedes any previous negotiations or agreements between the parties
with respect to such matters. This Agreement was not entered into in
reliance upon any statement or representation by either party other than
those set forth herein. If one or more provisions of this Agreement are
held to be unenforceable under applicable law, such provisions(s) shall be
excluded from this Agreement and the balance of the Agreement shall be
interpreted as if such provision(s) were so excluded (but in a manner that
most closely effects the intent of the parties as of the date of this
Agreement) and the modified agreement shall be enforceable in accordance
with its remaining terms. No amendment or modification of this Agreement
shall be effective unless executed in writing by the parties hereto.
8. The parties state that it is their intention that this Agreement be given,
and remain in effect, as a full and complete release of the Claims
described herein, notwithstanding the discovery or existence of any
additional Claims or facts not now known or suspected which may exist in
any party's favor, which if known might have materially affected this
Agreement.
9. This Agreement shall be binding and inure to the benefit of each of the
parties, and to each of their attorneys, agents, directors, officers,
employees, heirs, executors, administrators, legal successors and assigns,
and any other person claiming by and through them.
10. The parties acknowledge that they are authorized and competent to execute
this Agreement, and that before executing it, each has read this document,
discussed and reviewed it with their counsel, and that each part fully
understands each provision contained herein.
11. This Agreement may be executed in two or more counterparts each of which
shall be considered an original, but all of which together shall
constitute the same agreement.
12. If any action, suit or proceeding is brought by a party hereto with
respect to any controversy, claim or other matter arising out of or
relating to this Agreement, or the breach thereof, all costs and expenses
of such action, suit or proceeding, including reasonable attorney's fees
and expenses, shall be borne by each party separately.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed as of
the day and year set forth below and do each hereby warrant and represent that
their respective signatories whose signature appears below have been and are on
the date of this Agreement duly authorized by all necessary and appropriate
action to execute this Agreement.
By: /s/ Xxxxxxxx X Xxxxxxx By: /s/ Xxxxxxx X. Xxxxxxx
------------------------------- -------------------------------
Name: Xxxxxxxx X. Xxxxxxx (764,068 shares) Name: Xxxxxxx X. Xxxxxxx,
individually and on behalf of
Xxxxxxx Associates Inc.
(610,212 shares)
By: /s/ Xxxxxx Xxxxxxx By: /s/ Xxxx Xxxxxx
------------------------------- -------------------------------
Name: Xxxxxx Xxxxxxx (157,682 shares) Name: Xxxx Xxxxxx (142,035 shares)
By: /s/Xxxxxxxx Xxxxxxx By: /s/ Xxxxxxx Xxxxxxx
------------------------------- -------------------------------
Name: Xxxxxxxx Xxxxxxx (208,620 shares) Name: Xxxxxxx Xxxxxxx
(142,035 shares)
By: /s/ Xxxxxx X. Xxxxxxx By: /s/ Xxxx X. Xxxxxx
------------------------------- -------------------------------
Name: Xxxxxx X.Xxxxxxx (166,948 shares) Name: Xxxx X. Xxxxxx
(782,323 shares)
ACCEPTED:
MAGNA-LAB INC.
By: /s/ Xxxxxxx X. Xxxxxxx
-------------------------------
Name: Xxxxxxx X. Xxxxxxx
Title: Treasurer and Secretary
Date: as of September 29, 2005
By: /s/ Xxxxxxxx X. Xxxxxxx
-------------------------------
Name: Xxxxxxxx X. Xxxxxxx
Title: President
Date: as of September 29, 2005
EXHIBIT #1
Deferred Compensation
Management and former management
Xxxxxx $ 30,000
Minkoff $ 29,300
Xxxxxxx $ 23,400
Adereth $ 8,000
Xxxxxxx $ 6,162
Xxxxxxx $ 5,417
Kanter $ 5,417
Xxxxxxx $ 5,417
--------
$113,112
--------
EXHIBIT #2
Outstanding Stock Options
Management and former management
Options Strike
O/S Term Price
------- ---- ------
Xxxxxx 0 expired 2004 0
Minkoff 0 expired 2003 & 2004 0
Xxxxxxx 0 expired 2003 & 2004 0
Adereth 2,500,000 expires in 2005 & 2006 $0.49
Xxxxxxx 600,000 expires 2005, 2006, 2007 $0.22
Xxxxxxx 1,575,000 expires 2005 & 2006 $0.28
Kanter 75,000 expires 1/1/2006 $0.25
Xxxxxxx 75,000 expires 1/1/2006 $0.25
---------
4,825,000
---------
EXHIBIT 3
Investment Representations
(a) Each of Xxxxxxxx X. Xxxxxxx, Xxxxxxx X. Xxxxxxx, Xxxxxx X. Xxxxxxx, Xxxx
X. Xxxxxx, Xxxxxxxx Xxxxxxx, Xxxxxxx Xxxxxxx, Xxxxxx X. Xxxxxxx and Xxxx
X. Xxxxxx (collectively "Management and former management") has been given
the opportunity to ask questions of, and receive answers from, Magna-Lab
Inc. ("Magna") concerning the business of Magna and to obtain such
additional written information, to the extent Magna possesses such
information or can acquire it without unreasonable effort or expense,
necessary to verify the accuracy of same as Magna desires in order to
evaluate the investment. Each member of Management and former management
has also been given the opportunity to review Magna's public filings with
the Securities and Exchange Commission. Each member of Management and
former management acknowledges that they have received no representations
or warranties from Magna or its employees or agents in making this
investment decision.
(b) Each member of Management and former management is aware that its
investment in Magna is speculative, involving a high degree of risk and
that there is no guarantee that they will realize any gain from the
investment, and that they could lose the total amount of their investment.
(c) Each member of Management and former management is purchasing the class A
common stock of Magna-Lab Inc. ("Shares") for his own account, with no
present intention of dividing or allowing others to participate in this
investment or of reselling or otherwise participating, directly, in a
distribution of the Shares, and shall not make any sale, transfer, or
pledge thereof without registration under the Securities Act of 1933 and
any applicable securities laws of any state or unless an examination from
registration is available under those laws.
(d) Each member of Management and former management represents that he is an
"Accredited Investor" as defined in Rule 501(a) of Regulation D
promulgated under the Securities Act of 1933.
(e) Each member of Management and former management has such knowledge and
experience in financial and business matters as to be capable of
evaluating the merits and risks of an investment in the Shares.
(f) Each member of Management and former management acknowledges that the
certificate for the Shares will contain a legend substantially as follows:
THE SECURITIES WHICH ARE REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE
SOLD, TRANSFERRED, HYPOTHECATED OR OTHERWISE DISPOSED OF UNTIL A
REGISTRATION STATEMENT WITH RESPECT THERETO IS DECLARED EFFECTIVE UNDER
SUCH ACT, OR THE COMPANY RECEIVES AN OPINION OF COUNSEL FOR THE COMPANY
THAT AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF SUCH ACT IS
AVAILABLE.
