SETTLEMENT AGREEMENT
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This Settlement Agreement ("Settlement Agreement") is made and entered
into this 21th day of November 2000 by and between Atlas Communications, Ltd.
("Atlas"), Win-Gate Equity Group, Inc. ("Win-Gate") and Globaltron
Communications Corporation ("Globaltron"). Each of the aforementioned parties
may hereinafter be individually referred to as the "Party" or collectively as
the "Parties."
WHEREAS, Atlas and Win-Gate had previously entered into negotiations
for the purchase and/or merger of Atlas by Win-Gate (the "Negotiations"); and
WHEREAS, during the Negotiations Atlas entered into certain billing,
lease, service and management agreements (the, "Contracts", and collectively
with the Negotiations, the "Agreements") with Globaltron, a wholly owned
subsidiary of Win-Gate; and
WHEREAS, Atlas and Win-Gate have recently agreed to terminate their
discussions relating to any such purchase and/or merger; and
WHEREAS, the Parties now wish to enter into a final settlement of the
claims that each may have against the other, including, but not limited to, any
claims arising out of the Agreements as follows.
NOW THEREFORE, in consideration of mutual covenants set forth herein,
together with other good and valuable consideration, the receipt of which is
hereby acknowledged by the Parties hereto, the Parties agree as follows:
1. Upon the execution of this Settlement Agreement, Win-Gate
shall transfer 400,000 shares of Win-Gate Common Stock (the
"Win-Gate Shares") to Atlas which shall not be subject to any
encumbrances or set offs. Win-Gate shall issue to Atlas an
additional 50,000 shares of Win-Gate Common Stock (the
"Additional Win-Gate Shares") in the event that the price of
the common stock of Win Gate does not have an average closing
price of $7.00 or more for twenty (20) consecutive trading
days within twelve (12) months from the date hereof (the $7.00
per share average price target and the number of Additional
Win-Gate Shares shall be proportionately adjusted to reflect
any stock split, reverse stock split or combination of shares,
stock dividend or other similar change in Win-Gate common
stock). Win Gate undertakes that it will immediately issue the
Additional Win-Gate Shares if the condition described in the
preceding sentence is not satisfied within (12) twelve months
from the date hereof and a notation has been put in the books
of Win Gate as to the "set aside" of the Additional Win Gate
Shares for such purposes. If (but without any obligation to do
so) Win Gate proposes to register any of its common stock or
other securities under the Securities Act in connection with
the public offering of such securities solely for cash
(whether for its own account or that of selling shareholders),
Win Gate shall, at such time, promptly give Atlas written
notice of such registration. Upon the written request of Atlas
given within twenty (20) days
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after receipt of such notice by Atlas, Win Gate shall use its
best efforts to cause to be registered under the Securities
Act all of the Win Gate Shares and if received by Atlas, the
Additional Win-Gate Shares that Atlas has requested to be
registered. Win Gate shall have no obligation under this
Section 1 to make any offering of its securities, or to
complete an offering of its securities that it proposes to
make. Notwithstanding the foregoing, if the managing
underwriter of such proposed registration determines and
advises in writing that the inclusion of the Win Gate Shares
or the Additional Win Gate Shares proposed to be included in
the proposed registration of Win Gate's common stock would
interfere with the successful completion of the registration
of Win Gate's stock, then Win-Gate shall not be under any
obligation to include any of the Win Gate Shares or the
Additional Shares in excess of the amount, if any, of those
shares which the managing underwriter of such underwritten
offering shall agree in writing to include; provided that if
another existing shareholder of Win Gate is permitted to
register its shares, Atlas shall be given the right to include
in the proposed registration a pro rata number of Win Gate
Shares or Additional Win-Gate Shares as to the shares
permitted to be registered to the other existing shareholders'
of Win-Gate.
Win Gate shall pay all expenses incurred by it in complying
with the registration provided in this Section; provided,
however, that the fees and expenses of complying with the
securities or blue sky laws applicable to the Win Gate Shares
or the Additional Win Gate Shares to be registered in any
state in which Win-Gate is not registering its shares, all
attorney fees, underwriting discounts and selling commissions
shall be borne by Atlas.
2. The Win Gate Shares and the Additional Win Gate Shares shall
be received by Atlas for investment purposes for its own
account, and not with the view to, or for resale in connection
with, any distribution thereof. Atlas understands that the Win
Gate Shares and the Additional Win Gate Shares have not been
registered under the Securities Act of 1933, as amended (the
"Securities Act"), or under the securities laws of various
states, by reason of a specified exemption from the
registration provisions there under. Atlas acknowledges that
the Win Gate Shares and the Additional Win Gate Shares must be
held indefinitely unless they are subsequently registered
under the Securities Act and under applicable state securities
laws or an exemption from such registration is available.
Atlas has been advised or is aware of the provisions of Rule
144 promulgated under the Securities Act which permits limited
resale of the securities purchased in a private placement
subject to the satisfaction of certain conditions including,
among other things, the availability of certain current public
information about Win Gate and compliance with applicable
requirements regarding the holding period and the amount of
securities to be sold and the manner of sale. Atlas has
received and carefully reviewed (i) Win Gate's Registration
Statement on Form S-1, (ii) all other information filed by Win
Gate pursuant to the Securities Act or the Securities Exchange
Act of 1934, as amended. Atlas is aware that no federal or
state or other agency has passed upon or made any finding or
determination concerning the fairness of the transactions
contemplated by this Settlement Agreement or the adequacy of
the disclosure of the exhibits and
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schedules hereto and Atlas must forego the Win Gate Shares and
the Additional Win Gate Shares, if such a review would so
provide. Atlas understands and acknowledges that neither the
Internal Revenue Service nor any other tax authority has been
asked to rule on nor has it ruled on the tax consequences of
the transactions contemplated hereby. Atlas understands that
all certificates for the Win Gate Shares and the Additional
Win Gate Shares shall bear a legend in substantially the
following form:
"THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR QUALIFIED
UNDER ANY STATE SECURITIES LAWS. THE SECURITIES MAY
NOT BE OFFERED, SOLD, TRANSFERRED OR OTHERWISE
DISPOSED OF WITHOUT SUCH REGISTRATION OR THE DELIVERY
TO THE ISSUER OF AN OPINION OF COUNSEL, SATISFACTORY
TO THE ISSUER, THAT SUCH DISPOSITION WILL NOT REQUIRE
REGISTRATION OF SUCH SECURITIES UNDER THE SECURITIES
ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES
LAWS."
3. Upon the execution of this Settlement Agreement, Globaltron
shall pay to Atlas the sum of $50,000 as full and final
payment of all amounts due under the Agreements. In addition,
each party waives any amounts invoiced, or that could have
been invoiced, to the other party under any of the Agreements.
4. Starting on November 27, 2000 and until December 11, 2000,
Atlas shall cooperate with Globaltron's representatives and
allow those representatives to enter into Atlas' sites (under
the supervisions of Atlas' representatives and during normal
business hours); provided that if any force majeure event
occurs, the term provided in this Paragraph 4 shall be
extended for another 10-days term starting on the termination
of such force majeure event. A list of the above referred
equipment is attached to this Settlement Agreement as Exhibit
A.
5. Except for any obligations set forth herein, the Parties do
hereby mutually release each other, its shareholders,
officers, employees, directors, consultants, professional
advisors, representatives, predecessors, GNB Bank Panama S.A.
and Colpafinsa S.A. and affiliates of each of them, from and
against any and all claims, actions, causes of action,
demands, rights, damages, costs and/or expenses including but
not limited to any claims or rights arising under the
Agreements.
6. No Party to this Settlement Agreement shall, at any time
disclose to any person any and all the confidential and
proprietary information which each party has furnished to the
other or its respective representatives or advisors,
including, without limitation, all financial statements,
operating or capital strategies, industry statistics,
analyses, compilations, studies or other documents, which
contain or otherwise reflect such information whether oral or
written (the "Confidential Information") delivered or made in
connection with the Agreements. Except as provided in this
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Settlement Agreement, each Party agrees not to use the
Confidential Information for any purpose other than for
performing its obligations under this Settlement Agreement,
provided that such information shall not be disclosed to any
other persons. The obligations of each Party under this
Settlement Agreement shall remain in effect beginning with the
date of disclosure of the Confidential Information and ending
5 years after the date of this Settlement Agreement. The
Confidential Information may be disclosed by any of the
Parties hereto: (i) to any affiliate, employees or
professional advisor's of each Party, only to such extent as
is necessary for the purposes of this Settlement Agreement or
to implement the rights and obligations of the Parties hereto,
and subject in each case to the recipient to hold the same
confidential in a written instrument and that the recipient
further agreeing not to use same except for the purposes for
which the disclosure is made; and (ii) to any governmental,
taxation or other authority or regulatory body to the extent
required to carry out the purposes of this Settlement
Agreement or to enforce the terms hereof, or as required by
law. In the event that any of the Parties or their respective
affiliates or representatives are requested or required (by
oral questions, interrogatories, requests for information,
subpoena, civil investigative demand, or similar process) to
disclose the Confidential Information, such party will provide
to the other prompt notice of such request(s) so that the
other Party may have a reasonable period of time to seek an
appropriate protective order or waive compliance with the
provisions of this Settlement Agreement. It is further agreed
that if, in the absence of a protective order or the receipt
of a waiver hereunder, either Party, upon the advice of
counsel, determines that it is compelled to disclose the
Confidential Information under penalty of contempt or suffer
other penalty or liability, such Party may disclose such
material without liability hereunder, and shall use its best
efforts to have the recipient undertake to maintain its
confidentiality.
7. The Parties hereto undertake not to make any Disparaging
Comments about the other. For the purpose of this Settlement
Agreement, Disparaging Comments refer to any comments, whether
oral or in writing (inclusive of those to governmental,
regulatory or self regulatory authorities) to the press, the
employees, consultants, tenants, customers of either Atlas,
Win-Gate or Globaltron or those of their affiliates or to any
other person, which is negative in nature or which could
adversely effect (i) the conduct of the business either of the
Parties hereto and their affiliates; (ii) the reputation or
quality of either Party hereto or their affiliates or those of
any of their employees, consultants, direct or indirect
shareholders or beneficial owners, directors or officers, past
or present, or the manner in which any of them conducts their
respective businesses.
8. The Parties agree that any and all disputes arising from or
related to this Settlement Agreement shall be submitted to
binding arbitration before one arbitrator in accordance with
the rules of the American Arbitration Association. Any such
arbitration shall be held exclusively at the offices of the
American Arbitration Association in New York, New York.
Notwithstanding the foregoing either party can seek injunctive
relief in aid of arbitration in any court of competent
jurisdiction
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and to seek equitable or legal remedies in respect to a breach
of Paragraphs 6 and 7 in any such court. This Settlement
Agreement shall be governed by the laws of the State of New
York without regard to any conflict or choice of law
considerations.
9. Except for the Settlement Agreement for The Use and
Nondisclosure of Proprietary Information by and between Atlas
and Globaltron dated May 19, 2000 (the, "NDA"), this
Settlement Agreement shall represent the complete agreement
between the Parties hereto and supercedes any prior written
agreements or oral representations and/or promises between the
Parties hereto. The Parties hereto acknowledge that the terms
of the NDA shall remain in full force and effect. However, no
modification or amendment to this Settlement Agreement shall
be effective unless set forth in writing and executed by all
of the Parties hereto.
10. The Parties to this Settlement Agreement agree to provide each
other with any other documentation necessary to give effect to
this Settlement Agreement.
11. This Settlement Agreement may be executed in counterparts and
shall be effective as of the date that it is executed by all
of the Parties hereto.
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THE PARTIES hereto have caused this Settlement Agreement to be
executed by their Officers thereunto on the day and year first above
written.
Atlas Communications, Ltd. Win-Gate Equity Group, Inc.
By: Illegible By: /s/ Kevin P. Fitzgerald
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Kevin P. Fitzgerald
GNB Bank Panama S.A. (*) Colpafinsa S.A.(*)
By: /s/Camilo Verastegui By: /s/ Magda Rodriguez
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Camilo Verastegui Magda Rodriguez
Globaltron Communications Corporation
By: /s/ Kevin P. Fitzgerald
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Kevin P. Fitzgerald
(*) Only as to Section 5 under this Settlement Agreement
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