1
LEADING-EDGE EARTH PRODUCTS, INC.
JULY 31, 1998
EXHIBIT 99
SETTLEMENT AGREEMENT
This Settlement Agreement ("Agreement") is entered into effective the
latest date signed by LEEP and the Records (the "Effective Date") by and
between the following parties:
Tim Metz and his spouse, and their marital community (collectively
"Metz" herein), residents of the State of Washington; and
Leading Edge Earth Products, Inc. ("LEEP" herein), an Oregon
corporation; and
Grant Record and his spouse, and their marital community (collectively
"Record" herein), formerly residents of the State of Washington and
presently residents of the State of Idaho; and
Phoenix ("Phoenix" herein), a British Virgin Island Corporation.
BACKGROUND
A. LEEP has a pending lawsuit filed against Metz in the King County Superior
Court (Seattle Courthouse), Seattle, Washington (the "State Action" herein).
B. Metz petitioned to remove the claims of the State Action to the U.S.
District Court, Western District of Washington, Seattle, Washington, and
Metz counterclaimed against LEEP and brought third-party claims against
Record in the federal court pleadings (the "Federal Action" herein).
C. The Federal Action has been stayed and certain counterclaims and third-party
claims remain in the Federal Action, while other claims, counterclaims and
third-party claims have been remanded to the State Action, which is
presently stayed.
D. Phoenix has asserted potential claims against Metz regarding stock in LEEP
transferred to Phoenix by Metz, and Metz has asserted potential claims
against Phoenix regarding some of the aforesaid shares of stock.
E. Phoenix has asserted potential claims against LEEP and Record, and LEEP has
asserted potential claims against Phoenix and Metz with respect to events
occurring after the commencement of the State Action and the Federal Action.
F. Metz has asserted potential claims against LEEP and Record with respect to
events occurring after the commencement of the State Action and the Federal
Action, but which are not presently asserted in either the pending State
Action or Federal Action.
G. All parties hereto are desirous of resolving their claims, known and
unknown, against
14
2
each other through the date of execution of this Agreement, on the terms and
conditions described herein.
NOW, THEREFORE, in consideration of the terms and conditions described herein
and for other good and valuable consideration,
IT IS AGREED:
1. NO ADMISSION. Nothing contained herein shall be deemed to admissions by any
party of any other party's claims, counter-claims, third-party claims,
cross-claims, or third-party counterclaims, or of any claims not included in
the State or Federal Actions.
2. PHOENIX NOT SUBJECT TO JURISDICTION IN THE UNITED STATES. Execution of this
Agreement by Phoenix shall not be deemed to be consent by Phoenix to be
subject to the jurisdiction of any courts in the United States. None of the
terms and conditions contained herein shall cause or be deemed to cause
Phoenix to be subject to the jurisdiction of any courts in the United
States. The parties other than Phoenix agree that enforcement of this
Agreement between them shall be pursuant to the arbitration and governing
law provisions of Section 9(a)(1) and 9(b) below. The parties further agree
that any claims that may arise from this Agreement between any of them and
Phoenix shall be subject to the arbitration and governing law provisions of
Section 9(b) below.
3. MUTUAL RELEASES; DISMISSAL OF ACTIONS. Each of the Parties shall be
considered a "Settling Party." The Settling Parties shall mutually release
each other from any and all claims, causes of actions, damages, attorney
fees, costs, expenses (collectively "Claims") through the date of execution
of this Agreement, whether or not such Claims were asserted in the State or
Federal Actions and whether or not the Claims are known or unknown. Upon
full execution of this Agreement, Metz, LEEP and Record shall cause the
State Action and the Federal Action each to be dismissed with prejudice,
with each party to bear his, her, or its own costs and attorney fees.
4. DISCHARGE OF NOTES. The parties hereby cancels and discharges any and all
notes made by LEEP to Metz or Phoenix or their respective assigns, any and
all notes made by Phoenix or Metz to LEEP or Record or their respective
assigns, and any and all notes made by either Metz or Record to each other.
This provision is not intended to and shall not cause the discharge of any
notes between Metz and Phoenix, which shall be the subject of a separate
confidential agreement between Metz and Phoenix.
5. QUIT CLAIM BY METZ. Tim Metz hereby withdraws his Claims relating to the
co-inventorship of certain inventions described in the patents or patent
applications described in the State or Federal Actions (the "Inventions"
herein). Metz further agrees that they hereby assign, quitclaim, convey,
bargain and sell, and otherwise transfer (collectively "Quit Claims" herein)
to LEEP and Record any right, title or interest Tim Metz may have in any of
such Inventions. Metz agree to execute any additional documents reasonably
necessary to evidence the Quit Claims.
15
3
6. TREATMENT OF PHOENIX STOCK AND LOCK-UP AND TRICKLE-OUT AGREEMENT.
a. LEEP hereby agrees that Certificate # 6025 (Beneficial Ownership Date
12/30/94) for 90,000 shares of LEEP common stock shall be deemed to be
fully paid as of February 1, 1996 (date Phoenix paid Tim Metz) and shall
be considered Rule 144 shares. Phoenix or its assigns hereby agree to a
1 year holding period starting 29 December 1998 on the sale of these
shares into the US market. LEEP shall within five (5) business days
following full execution of this Agreement provide PHOENIX with an
acknowledgement that the aforesaid shares are fully paid for as of
February 1, 1996. LEEP shall also promptly provide to Phoenix any other
documents necessary to evidence this provision in a form reasonably
satisfactory to Phoenix or its assigns. Phoenix or its assigns hereby
agree to the terms of the "Lock-up and Trickle-out Agreement" attached
hereto as Exhibit A, and shall deliver to LEEP executed copies of said
Exhibit A with respect to these 90,000 Rule 144 shares.
b. Phoenix shall promptly deliver to LEEP 604,569 shares of LEEP Reg. "S"
legend stock in exchange for 604,569 shares of Rule 144 legend stock.
These shares are dated November 16, 1994, and were issued from the
exercise of options by Phoenix on October 3, 1994. The certificate
numbers for these shares held by Phoenix are 5215, 5216, 5217, 5218,
5219, 5220, and 5221 (dated November 16, 1994). LEEP shall treat the
exchanged Rule 144 shares as fully paid as of the "Effective Date". LEEP
shall within five (5) business days following full execution of this
Agreement provide PHOENIX with an acknowledgement that the aforesaid
shares are fully paid for as of the Effective Date. Phoenix shall
deliver to LEEP executed copies of Exhibit A, "Lock-up and Trickle-out
Agreement", with respect to these 604,569 Rule 144 shares. Phoenix or
its assigns hereby agree to a 1 year holding period on the sale of these
shares into the US market. The one year holding period, per Rule 144,
shall begin on the "Effective Date" of this agreement. LEEP shall also
promptly provide to Phoenix any other documents necessary to evidence
this provision in a form reasonably satisfactory to Phoenix or its
assigns.
c. LEEP shall issue a "proof of payment in full" as of the "Effective Date"
in a form acceptable to Phoenix, or its assigns, for certificate # 5673
(Beneficial Ownership Date 1/25/95) for 80,000 shares of "Rule 144"
legend LEEP common stock. Phoenix shall deliver to LEEP executed copies
of Exhibit A, "Lock-up and Trickle-out Agreement", with respect to these
80,000 Rule 144 shares. Phoenix or its assigns hereby agree to a 1 year
holding period on the sale of these shares into the US market. The one
year holding period, per Rule 144, shall begin on the "Effective Date"
of this agreement. LEEP shall also promptly provide to Phoenix any other
documents necessary to evidence this provision in a form reasonably
satisfactory to Phoenix or its assigns.
d. LEEP shall immediately withdraw any stop transfer notices on any shares
owned at any time by Phoenix or Metz.
7. BANK INSLINGER DISPUTES. Phoenix shall resolve the disputes with Bank
Inslinger and any assigns of Phoenix with respect to certain share transfers
which were the subject of "stop transfer" notices issued by LEEP to its
transfer agent. Phoenix shall hold harmless LEEP, Metz and Record from any
and all claims that Bank Inslinger or any assigns of Phoenix may otherwise
have against LEEP, Metz, and Record.
16
4
8. NO DISPARAGEMENT. The parties shall agree on a form of a statement which in
essence pronounces that the parties have resolved their differences, that no
party admits liability on any of the claims, and that each of the parties
have nothing negative to say about any other party. Each of the parties
agree not to defame or disparage any of the other parties.
9. MISCELLANEOUS.
a. ARBITRATION.
(1) U.S. SETTLING PARTIES. Metz, LEEP and Record agree that any disputes
between them or arising out of this Agreement shall be resolved by
binding arbitration in accordance with the Commercial Rules of the
American Arbitration Association, except that instead of arbitrators
chosen from the American Arbitration Association, the parties agree
to select one arbitrator mutually agreed by them within 45 days
after any party makes a demand for arbitration. Metz, LEEP and
Record agree that the venue for any arbitration between them shall
be in Seattle, Washington. The U.S. Settling Parties agree further
that no party may seek to bar any arbitration on the basis that
Phoenix is not and may not be a party to any such arbitration.
(2) PHOENIX. Any dispute between any of the parties and Phoenix shall be
resolved by binding arbitration through a mutually agreeable
arbitration service. Such arbitration shall have one arbitrator
only, and the place for any such arbitration shall be in the Road
Town, Tortola, British Virgin Islands.
b. GOVERNING LAW. With respect any and all matters between any of the
parties and Phoenix, this Agreement shall be governed by the laws of the
British Virgin Islands. With respect to any and all matters between or
among the U.S. Settling Parties, this Agreement shall be governed by the
laws of the State of Washington.
c. ENTIRE AGREEMENT. This Agreement and the addition agreements described
herein shall constitute the entire agreement among the parties herein
and supersede and replace any oral or written agreements prior to the
Effective Date. This Agreement may be amended only by a written
instrument executed by all of the parties.
d. ATTORNEY REPRESENTATION. The law firms of Daniel D. Woo, P.S. ("Woo")
and Foster Pepper (FP) have represented and represent only Metz and no
other party to this Agreement. Frank W. Birkholz ("Birkholz") represents
LEEP and Record and no other party to this Agreement. Phoenix has sought
the counsel and advice of its own attorneys and does not rely on Woo, FP
or Birkholz.
e. COUNTERPART ORIGINALS AND FACSIMILE SIGNATURES. This Agreement may be
signed in counterpart originals. A copy of a facsimile signature of a
party hereto shall be deemed to have the same authenticity and effect as
an original signature.
17
5
AGREED:
METZ PARTIES:
________________________________. Dated this ____ day of _______, 1998. Tim
Metz, on behalf of himself, his spouse and their marital community. Signed at
__________________________________.
________________________________. Dated this ____ day of _______, 1998. Mrs. Tim
Metz, on behalf of herself, her spouse, and their marital community. Signed at
________________________________.
LEADING EDGE EARTH PRODUCTS, INC.
________________________________. Dated this ____ day of _______, 1998.
Name:
Title:
Signed at __________________________________.
________________________________. Dated this ____ day of _______, 1998.
Attest:
Name:
Title:
Signed at __________________________________.
RECORD PARTIES
________________________________. Dated this ____ day of _______, 1998. Grant
Record, on behalf of himself, his spouse, and their marital community. Signed at
__________________________________.
18
6
________________________________. Dated this ____ day of _______, 1998. Mrs.
Grant Record, on behalf of herself, her spouse, and their marital community.
Signed at __________________________________.
PHOENIX
________________________________. Dated this ____ day of _______, 1998.
Name:
Title:
Signed at __________________________________.
________________________________. Dated this ____ day of _______, 1998.
Attest:
Name:
Title:
Signed at __________________________________.
19
7
EXHIBIT A
LOCK-UP AND TRICKLE-OUT AGREEMENT
This Agreement applies only to the shares cited in paragraphs 6a, 6b, and 6c of
the attached "Settlement Agreement".
Phoenix, Metz or their assigns hereby agree to restrict their sale(s) of LEEP
stock, which is subject to this Agreement, to 5% of their total position per
quarter. Phoenix, Metz or their assigns understands this right is not
cumulative, i.e., if the full 5% permitted to be sold is not sold in a given
quarter, the seller can not accumulate and carry over the unsold portion to add
to another 5% increment for sale in a subsequent period.
Phoenix, Metz or their assigns hereby agree to advise LEEP's management each
time they wish to sell stock which is subject to this Agreement and to give LEEP
a 10 day window of opportunity to supply a buyer for increment (s) they wish to
sell. After the 10 day period, if LEEP has not supplied a buyer or buyers, then
Phoenix, Metz or their assigns shall have the right to sell the subject
increment of stock in the US market. Phoenix, Metz or their assigns agree not to
sell any shares into the US market at a price less than $0.03 higher than the
bid price on the day(s) the stock is sold.
20