SETTLEMENT AGREEMENT
among
ISO BLOCK PRODUCTS (USA), INC.,
R-S PLUS INVESTMENT CORP.,
JOSEF RATEY, an Individual
and
HELGE SEIDEL, an Individual
This Settlement Agreement is entered into effective as of November 19,
1996, between ISO BLOCK PRODUCTS (USA), INC., a Colorado corporation ("ISO
BLOCK"); JOSEF RATEY, individually ("Ratey"); HELGE SEIDEL, individually
("Seidel"); and R-S PLUS INVESTMENT CORP., a Florida corporation, ("R-S PLUS").
R E C I T A L S :
On March 28, 1994, the Company entered into an Agreement and Plan of
Reorganization ("Exchange Agreement") with R-S Iso-Block Produktions GmbH, a
German limited liability company ("Iso-Block GmbH"), Josef Ratey, an individual,
Helge Seidel, an individual, and R-S Plus Investment Corp., a Florida
corporation ("R-S PLUS"). Pursuant to the Exchange Agreement, on March 31, 1994
the Company purchased from Ratey and Seidel all of the equity interest in
Iso-Block GmbH, and purchased from R-S PLUS all of its right, title and interest
in and to Iso-Block GmbH, including all R-S PLUS property theretofore
contributed to Iso-Block GmbH and all R-S PLUS' rights to Iso-Block GmbH
profits, in exchange for the issuance of an aggregate of 2,000,000 shares of the
Company's authorized but heretofore unissued common stock, no par value (the
"Exchange Shares"). The Exchange Shares were issued in the following
proportions: 1,000,000 shares to R-S PLUS, 900,000 shares to Ratey, and 100,000
shares to Seidel. In addition, Ratey, Seidel and R-S PLUS received options for a
two-year period to purchase an aggregate of not more than 1,000,000 shares of
the Company at a nominal price in order to prevent their aggregate equity
interest in ISO-BLOCK from being diluted below 57% of the ownership of
ISO-BLOCK's common stock.
The parties, wishing now to enter into this Settlement Agreement and to
cancel the issuance of the Exchange Shares, have designed this Agreement to
settle their respective differences and pretermit potential litigation among
them.
NOW, THEREFORE, in consideration of the mutual representations,
warranties and covenants set forth below, the parties agree that:
1. Settlement. On the terms and subject to the conditions of this
Agreement, R-S PLUS, Ratey and Seidel each hereby agree to irrevocably and
forever settle, forgive and discharge all their existing and potential claims
against ISO-BLOCK, against all persons now or formerly serving or acting as
officers, directors or employees of ISO-BLOCK or legal counsel, accountants or
other advisers or consultants to ISO-BLOCK, both known and unknown, effective
upon all parties having signed this Agreement. The parties agree that this
Agreement shall pretermit the need for litigation and litigation expenses in
relation to any action or lawsuit by ISO-BLOCK against the other parties or vice
versa. All parties acknowledge the sufficiency of the consideration respectively
realized by them pursuant to this Agreement.
2. Issuance of Options to Ratey; Settlement Shares. (a) In full
settlement of all existing claims, if any, and all potential claims of R-S PLUS,
Ratey and Seidel against ISO-BLOCK, Ratey shall be allowed to keep and not
cancel an aggregate of 250,000 of the Exchange Shares issued to Ratey pursuant
to the Exchange Agreement (herein referred to as the "Settlement Shares"), and
ISO-BLOCK shall issue and deliver to Ratey options to purchase an aggregate of
240,000 shares of the common stock of ISO-BLOCK at the price of Eighty Cents
(US$0.80) per share, subject to customary adjustments, for a period of two years
from the effective date of this Agreement (the "Settlement Options").
ISO-BLOCK_________ R-S PLUS__________ Ratey_________ Seidel _________
Page 1
A certificate evidencing the Settlement Shares will be issued only after Ratey
has returned to ISO-BLOCK the certificate evidencing the 900,000 Exchange Shares
originally issued to Ratey. All or any part of such shares or options may be
conveyed by Ratey to other parties to this Agreement or, subject to the
restrictions below, to third persons, as he sees fit. Upon the effective date of
this Agreement and the issuance of these options, neither R-S PLUS, Ratey nor
Seidel shall have any further claim of any kind against ISO-BLOCK.
(b) Ratey acknowledges and agrees that the Settlement Shares and the
shares purchasable upon exercise of the Settlement Options have not been
registered under the Securities Act of 1933, as amended ("Act"), in reliance
upon exemptions from registration provided by Section 4(2) of the Act, on the
grounds that the issuance of such shares does not involve any public offering.
Ratey acquired the Settlement Shares and will acquire any shares upon exercise
of the Settlement Options for his own account, with no present intent to resell
or make a distribution of all or any portion thereof except to R-S PLUS or
Seidel. Ratey acknowledges that all such shares are "restricted securities," as
that term is defined in Rule 144 of the General Rules and Regulations of the
Securities and Exchange Commission ("SEC") under the Act and understands that
such shares must be held indefinitely, unless they are subsequently registered
under the Act or an exemption from such registration requirements is available
for their resale. Ratey understands and agrees that the prior written consent of
ISO-BLOCK will be necessary for any transfer of any or all of such shares,
unless and until the shares have been duly registered under the Act or the
transfer is made in accordance with Rule 144 under the Act. Any transferee of
Ratey's to whom Settlement Shares or Settlement Options are issued may be
required to execute an investment letter satisfactory to ISO-BLOCK prior to
ISO-BLOCK's transfer of the shares or options.
(c) Ratey acknowledges and agrees that, unless and until the legend is
removed in accordance with law, any and all certificates which issued evidencing
the Settlement Shares or shares obtained upon exercise of the Settlement Options
shall contain a customary form of investment legend in substantially the
following form:
"The shares represented by this Certificate have not been
registered under the Securities Act of 1933, as amended (the "Act"),
and are "restricted securities" as that term is defined in Rule 144
under the Act. These shares may not be offered for sale, sold or
otherwise transferred except pursuant to an effective registration
statement under the Act, or pursuant to an exemption from registration
under the Act, the availability of which must be established to the
satisfaction of the Company's counsel."
3. Cancellation of Certain of the Exchange Shares and Certain Options.
The parties acknowledge and agree that ISO-BLOCK has returned to the original
makers several of the Deutsche Grundschulden acquired by ISO- BLOCK pursuant to
the Exchange Agreement and all amendments thereto, which act would require in
any event adjustment in the number of Exchange Shares properly issuable under
the Exchange Agreement. The shares described in this paragraph, which
constituted most of the 2,000,000 "Exchange Shares" issued to R-S PLUS, Ratey
and Seidel, shall be cancelled and voided as if never issued, such cancellation
to be effective upon all parties having signed this Agreement, irrespective of
when the original stock certificates are received by ISO-BLOCK and physically
marked as cancelled:
(i) All 100,000 of the Exchange Shares issued to Seidel pursuant to
the Exchange Agreement;
(ii) 650,000 shares (that is, all but 250,000) of the Exchange Shares
issued to Ratey pursuant to the Exchange Agreement; and
(iii)987,500 shares (that is, all but 12,500) of the 1,000,000
Exchange Shares issued to R-S PLUS pursuant to the Exchange
Agreement, which includes 200,000 of such shares subsequently
transferred to Arnold Stolle and 100,000 of such shares
subsequently transferred to Jan ter Stege.
Pursuant to Section 1.06 of the Exchange Agreement, R-S PLUS, Ratey and
Seidel were issued options to purchase an aggregate of 1,000,000 shares of the
authorized but unissued shares of ISO-BLOCK in order to prevent dilution. All of
such options shall be cancelled and voided as if never issued, such cancellation
to be effective upon all parties having signed this Agreement, irrespective of
when the original option certificates are received by ISO-BLOCK and physically
marked as cancelled. All other options and similar rights, if any, heretofore
issued to R-S PLUS, Ratey and Seidel shall be cancelled as if never issued, for
no additional consideration other than as set forth in this Agreement.
ISO-BLOCK_________ R-S PLUS__________ Ratey_________ Seidel _________
Page 2
4. Deliveries and Conditions Precedent. On the terms and subject to the
conditions of this Agreement, the parties each agree to do and deliver the
following things:
(a) ISO-BLOCK shall promptly arrange for three certificates evidencing
the Settlement Shares (100,000, 100,000 and 50,000) and the option evidencing
the Settlement Options to be issued and delivered to Ratey.
(b) Ratey shall return to ISO-BLOCK the certificate evidencing the
900,000 shares required by Section 3 hereof to be cancelled. His failure to do
so shall entitle ISO-BLOCK to unilaterally cancel and rescind the Settlement
Options. Ratey may not transfer any or all of the Settlement Shares or
Settlement Options until the certificate evidencing such 900,000 shares has been
returned to ISO-BLOCK and a new certificate issued evidencing the Settlement
Shares.
(c) Seidel shall return to ISO-BLOCK the certificate evidencing the
100,000 shares required by Section 3 hereof to be cancelled.
(d) R-S PLUS shall return to ISO-BLOCK the certificates evidencing the
987,500 shares required by Section 3 hereof to be cancelled, ISO-BLOCK
acknowledging the receipt of certificate number 1541 evidencing 687,500 shares
issued in the name of R-S PLUS.
(e) Ratey shall resign from ISO-BLOCK's board of directors.
5. Miscellaneous. All of the undersigned parties have the unconditional
right, power and authority to execute, consummate and perform this Agreement.
Upon due execution, this Agreement shall be valid and binding upon the parties
and their respective successors, enforceable in accordance with its terms,
except as enforceability may be limited by applicable federal or state laws.
This Agreement may be executed in counterparts, at different times and places,
all of which shall constitute one and the same instrument. This Agreement shall
be governed by and interpreted under Colorado law, and shall be construed as if
all parties hereto participated equally in its preparation and drafting. Any
dispute arising hereunder shall be settled by arbitration in Denver, Colorado,
in accordance with the rules of the American Arbitration Association; and
parties to such an arbitration proceeding shall pay their own respective legal
fees and other costs. Notwithstanding any other language of this Agreement, this
Agreement shall be effective among ISO- BLOCK, Ratey and R-S Plus even if Seidel
fails for any reason to sign this Agreement.
IN WITNESS WHEREOF, the undersigned parties have executed this
Agreement and Plan of Reorganization and initialled every preceding page hereof,
effective as of the date first above written.
ISO BLOCK PRODUCTS (USA), INC. R-S PLUS INVESTMENT CORP.
By /s/ Egin Bresnig By /s/ Josef Ratey
- ------------------- ------------------
Egin Bresnig, Chief Executive Officer Josef Ratey, President
JOSEF RATEY, Individually HELGE SEIDEL, Individually
By /s/ Josef Ratey By /s/ Helge Seidel
- ------------------ -------------------
Josef Ratey Helge Seidel
ISO-BLOCK_________ R-S PLUS__________ Ratey_________ Seidel _________
Page 3
NOTARIAL ACKNOWLEDGEMENT BY PARTIES
STATE OF COLORADO )
) ss.
COUNTY OF DENVER )
I HEREBY CERTIFY that before me, the undersigned Notary Public, duly
commissioned and qualified in and for the jurisdiction aforesaid, personally
came and appeared Egin Bresnig, the chief executive officer of Iso Block
Products (USA), Inc., and Josef Ratey, both individually and as President of R-S
Plus Investment Corp., all being persons known to me and each of whom, after
being duly sworn, did depose and say that he executed the foregoing Settlement
Agreement as his own free act and deed.
By /s/ John D. Brasher
----------------------
NOTARY PUBLIC
(SEAL) My Commission Expires:
ISO-BLOCK_________ R-S PLUS__________ Ratey_________ Seidel _________
Page 4