SETTLEMENT AGREEMENT AND GENERAL MUTUAL RELEASE
This Settlement Agreement ("Settlement") is entered into as of this 6th day
of August, 1999, by and between STARTRONIX INTERNATIONAL, INC., a Delaware
corporation (hereinafter referred to as "StarTronix" or the "Company"), and
SHALOM LIEBENTHAL, an individual (hereinafter referred to as "Liebenthal").
Each of StarTronix and Liebenthal shall be referred to as a "Party" and
collectively as the "Parties").
RECITALS
A. WHEREAS, Liebenthal is the holder of an aggregate of 15,000 shares
of StarTronix Series C Preferred Stock, represented by Series C Preferred Stock
Certificate No. 1032, which he acquired on or about September 10, 1996 for the
sum of $150,000;
B. WHEREAS, the holders of StarTronix Series C Preferred Stock are
entitled to certain dividends, penalties, interest, and other payments from time
to time, and are entitled to convert the outstanding face value of their
securities into common stock of StarTronix according to a pre-determined
formula;
C. WHEREAS, a dispute (the "Dispute") has arisen between StarTronix and
Liebenthal with respect to the amount of dividends, fines, penalties, and
interest owed to Liebenthal, and the method by which Liebenthal may convert said
amounts;
D. The Parties desire, pursuant to the terms of this Settlement, to settle
the Dispute and all disputes between StarTronix and Liebenthal with respect to
the StarTronix Series C Preferred Stock.
NOW, THEREFORE, for good and adequate consideration, the receipt of which
is hereby acknowledged, without admitting or denying any wrongdoing by any Party
hereto, the Parties covenant, promise and agree as follows:
AGREEMENT
1. Obligations of StarTronix. As a material term of this Settlement,
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StarTronix agrees to the following:
A. Face Value of StarTronix Series C Preferred Stock. StarTronix hereby
acknowledges and agrees that the outstanding face value of the StarTronix Series
C Preferred Stock held by Liebenthal shall be the sum of Two Hundred Sixty Two
Thousand Five Hundred Dollars ($262,500), which consists of the original
purchase price paid for the shares (the sum of $150,0000)(the "Original
Principal"), plus the sum of One Hundred Twelve Thousand Five Hundred Dollars
($112,500) in dividends, fines, penalties, and interest (the "Penalty
Principal").
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B. Conversion of Face Value. StarTronix hereby acknowledges and agrees that
upon execution of this Agreement, Liebenthal will be deemed to have converted
the entire face value of the Series C Preferred Stock into an aggregate of One
Million Two Hundred Fifty Thousand (1,250,000) shares of StarTronix common stock
(the "Conversion Shares"). StarTronix shall deliver the Conversion Shares to
Liebenthal, or his assigns, on the date of execution of this Settlement.
C. The Conversion Shares shall be issued without registration under the
Securities Act of 1933, as amended (the "Act") pursuant to the exemption from
registration set forth in Rules 901 to 904, inclusive, promulgated under the Act
("Regulation S") and subject to no liens, security interests, pledges,
encumbrances, charges, restrictions, demands or claims in any other party
whatsoever, and shall bear no restrictive legend.
D. StarTronix agrees that it will not enter into a settlement agreement with
any other holders of Series C Preferred Stock on terms any more advantageous to
the holder thereof than the terms of this Agreement. Further, StarTronix will
require that, as a material term of any settlement agreement with any other
holders of Series C Preferred Stock, that the holders thereof will not sell any
shares of StarTronix common stock received in the settlement until such time as
Liebenthal has received a minimum of $175,000 is gross receipts from the sale of
the Conversion Shares.
E. Release. Except as set forth above, effective on the date of this
Settlement, StarTronix shall release and discharge Liebenthal, his affiliates,
divisions, predecessors, successors and assigns, and each and all of his present
and former agents, officers, directors, attorneys, and employees, from and
against any and all claims, agreements, contracts, covenants, representations,
obligations, losses, liabilities, demands and causes of action which StarTronix
may now or hereafter have or claim to have against Liebenthal arising out of or
pertaining to the subject matter of the Dispute. This release of claims and
defenses shall not alter the prospective duties between the parties under this
Settlement.
2. Obligations of Liebenthal.
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A. Waiver of Dividends, Penalties, Fines and Interest. Liebenthal hereby
acknowledges and agrees that the entire Original Principal and Penalty Principal
is as set forth in Section 1A hereof. Liebenthal hereby irrevocably and forever
waives whatever rights he may now have or which may arise in the future to
dividends, fines, penalties, and/or interest accruing in accordance with the
terms of the StarTronix Series C Preferred Stock Certificate of Designation, as
amended, and any stock purchase agreement or subscription agreement entered into
by StarTronix and Liebenthal.
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B. Release. Except as set forth above, effective on the date of this
Settlement, Liebenthal shall release and discharge StarTronix, their affiliates,
divisions, predecessors, successors and assigns, and each and all of their
present and former agents, officers, directors, attorneys, and employees, from
and against any and all claims, agreements, contracts, covenants,
representations, obligations, losses, liabilities, demands and causes of action
which Liebenthal may now or hereafter have or claim to have against StarTronix
arising out of or pertaining to the subject matter of the Dispute. This release
of claims and defenses shall not alter the prospective duties between the
parties under this Settlement.
3. Confidentiality. Each Party hereto will hold and will cause its
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agents, officers, directors, attorneys, employees, consultants and advisors to
hold in strict confidence, unless compelled to disclose by judicial or
administrative process or, in the opinion of its counsel, by other requirements
of law, all documents and information concerning any other Party furnished it by
such other Party or its representatives in connection with the subject matter of
the Dispute (except to the extent that such information can be shown to have
been (i) previously known by the Party to which it was furnished, (ii) in the
public domain through no fault of such Party, or (iii) later lawfully acquired
from other sources by the Party to which it was furnished), and each Party will
not release or disclose such information to any other person, except its
auditors, attorneys, financial advisors, bankers and other consultants and
advisors in connection with this Settlement. Each Party shall be deemed to have
satisfied its obligation to hold confidential information concerning or supplied
by the other Party if it exercises the same care as it takes to preserve
confidentiality for its own similar information.
4. No Representations. Each Party acknowledges and represents that, in
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executing this Settlement, such Party has not relied on any inducements,
promises, or representations made by any Party or any party representing or
serving such Party, unless expressly set forth herein.
5. Disputed Claim. This Settlement pertains to a disputed claim and
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does not constitute an admission of liability by any Party for any purpose.
6. Covenant Re: Assignment. The Parties hereto, and each of them,
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represent and warrant to each other that each is the sole and lawful owner of
all right, title and interest in and to every claim and other matter which each
purports to release herein, and that they have not heretofore assigned or
transferred, or purported to assign or transfer, to any person, firm,
association, corporation or other entity, any right, title or interest in any
such claim or other matter. In the event that such representation is false,
and any such claim or matter is asserted against any Party hereto (and/or the
successor of such Party) by any Party or entity who is the assignee or
transferee of such claim or matter shall fully indemnify, defend and hold
harmless the Party against who such claim or matter is asserted (and its
successors) from and against such claim or matter and from all actual costs,
fees, expenses, liabilities, and damages which that Party (and/or its
successors) incurs as a result of the assertion of such claim or matter.
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7. Survival of Warranties. The representations and warranties
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contained in this Settlement are deemed to and do survive the execution hereof.
8. Modifications. This Settlement may not be amended, canceled,
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revoked or otherwise modified except by written agreement subscribed by all of
the Parties to be charged with such modification.
9. Settlement Binding on Successors. This Settlement shall be binding
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upon and shall inure to the benefit of the Parties hereto and their respective
partners, employees, agents, servants, heirs, administrators, executors,
successors, representatives and assigns.
10. Attorney's Fees. All Parties hereto agree to pay their own costs
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and attorneys' fees except as follows:
(a) In the event of any action, suit or other proceeding instituted to
remedy, prevent or obtain relief from a breach of this Settlement, arising out
of a breach of this Settlement, involving claims within the scope of the
releases contained in this Settlement, or pertaining to a declaration of rights
under this Settlement, the prevailing Party shall recover all of such Party's
attorneys' fees and costs incurred in each and every such action, suit or other
proceeding, including any and all appeals or petitions therefrom.
(b) As used herein, attorneys' fees shall be deemed to mean the full
and actual costs of any legal services actually performed in connection with the
matters involved, calculated on the basis of the usual fee charged by the
attorneys performing such services.
11. Choice of Law; Venue. This Settlement and the rights of the
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parties hereunder shall be governed by and construed in accordance with the laws
of the State of New York including all matters of construction, validity,
performance, and enforcement and without giving effect to the principles of
conflict of laws.
12. Terms & Conditions. The Parties agree and stipulate that each
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and every term and condition contained in this Settlement is material, and that
each and every term and condition may be reasonably accomplished within the time
limitations, and in the manner set forth in this Settlement.
13. Time is of the Essence. The Parties agree and stipulate that time
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is of the essence with respect to compliance with each and every item set forth
in this Settlement.
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14. Entire Agreement. This Settlement, along with the exhibits
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attached hereto, sets forth the entire agreement and understanding of the
Parties hereto and supersedes any and all prior agreements, arrangements and
understandings related to the subject matter hereof. No understanding, promise,
inducement, statement of intention, representation, warranty, covenant or
condition, written or oral, express or implied, whether by statute or otherwise,
has been made by any party hereto which is not embodied in this Settlement or
the written statements, certificates, or other documents delivered pursuant
hereto or in connection with the transactions contemplated hereby, and no Party
hereto shall be bound by or liable for any alleged understanding, promise,
inducement, statement, representation, warranty, covenant or condition not so
set forth.
15. Counterparts. This Settlement may be executed in one or more
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counterparts, each of which when executed and delivered shall be an original,
and all of which when executed shall constitute one and the same instrument.
IN WITNESS WHEREOF, the Parties hereto, agreeing to be bound hereby,
execute this Settlement upon the date first set forth above.
"STARTRONIX" "LIEBENTHAL"
StarTronix International, Inc., /s/ Shalom Liebental
a Delaware corporation _________________________________
Shalom Liebenthal
/s/ Greg Gilber
_________________________________
By: Greg Gilbert
Its: President
