EXHIBIT 10.35
SETTLEMENT AGREEMENT
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This settlement agreement ("Agreement") is made and entered into by and
between Keith Cowan ("Cowan") on the one hand, and HiEnergy MicroDevices, Inc,
HiEnergy Technologies, Inc., and Bogdan Castle Maglich (collectively referred
to as the "HiEnergy Defendants") on the other hand, as of January 15, 2003, in
Irvine, California.
RECITALS
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WHEREAS an action is now pending in the Superior Court of the State of
California, County of Orange, Central Justice Center, styled Cowan v. HiEnergy
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MicroDevices, et al., Case No. 02CC05356 (the "Action"); and
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WHEREAS all parties wish to resolve the disputes and differences existing
between them by settling the Action and thereafter having their peace;
AGREEMENT
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NOW, THEREFORE, for and in consideration of the following terms and
conditions, each of the parties hereby agree as follows:
1. CONSIDERATION
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Within fifteen (15) days of execution of this agreement by all parties,
however no earlier than the eighth day following Cowan's execution, HiEnergy
Defendants shall provide Cowan with the following consideration:
(a) PAYMENT OF SETTLEMENT FUNDS: HiEnergy Defendants shall pay to
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Cowan the sum of Fifty Thousand Dollars ($50,000), payable as follows:
(1) Twenty Five Thousand Dollars ($25,000) shall be wages
subject to all payroll tax withholdings and shall be paid directly to Cowan,
with the check delivered to the Law Offices of David J. Harter, 5232 Bolsa Ave.,
Suite 2, Huntington Beach, CA 92649, prior to 5:00 p.m. on the due date. Cowan
shall have the right to provide a new W-4 prior to payment.
(2) Twenty Five Thousand Dollars ($25,000) shall be for the
reimbursement of moving expenses and legal fees in connection with the Action.
Such payment shall be made by issuing payment to the Law Offices of David J.
Harter Client Trust Account, and must be received by delivery to 5232 Bolsa
Ave., Suite 2, Huntington Beach, CA 92649, prior to 5:00 p.m. on the due date.
Cowan agrees that payment in this manner is fully satisfactory to him. The
parties agree that payroll taxes shall not be deductible from this payment as
the payment is not for wages, but rather reimbursement for attorney's fees and
moving expenses. Nevertheless, in the event any interest or penalties are
assessed by the Internal Revenue Service against HiEnergy as a result of this
payment without withholding, Cowan will indemnify HiEnergy for any such interest
and/or penalties imposed.
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(b) REGISTRATION OF STOCK: Eighty Thousand (80,000) shares of
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restricted stock in HiEnergy Technologies, Inc. ("STOCK") will be provided to
Cowan as further consideration. Within five (5) days of execution of this
agreement, the certificate representing the STOCK shall be issued and delivered
to Cowan. The STOCK is to be included in the next SEC registration statement
filed by HiEnergy and will be reissued with all restrictions removed within
three days after the registration statement becomes effective. Cowan agrees to
execute HiEnergy's standard Certificate of Representations, Warranties and
Covenants. If in the opinion of HiEnergy's counsel, restrictive legends on the
certificates cannot removed pursuant to state securities laws, and the holder
refuses to make such accommodations as would satisfy HiEnergy's counsel, then
HiEnergy shall not be required to remove the restrictive legend. If the
restriction is not removed from the stock on or before April 1, 2003, then
COWAN, at his option, can tender the shares to HiEnergy and make a claim for the
full amount of the funds being held pursuant to the provisions of section 1
subdivision (c) of this agreement.
(c) ISSUANCE OF LETTER OF CREDIT OR ESTABLISHMENT OF ESCROW
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ACCOUNT: HiEnergy Defendants shall do one of the following:
(i) Issue an irrevocable letter of credit from a major U.S. bank in
favor of Cowan for the sum of One Hundred Twenty Five Thousand
Dollars ($125,000). Payment terms of the letter of credit shall
say that the funds shall be payable to Cowan, upon certification
by Cowan, that one of the following conditions has been met: (1)
the restrictions from Cowan's share certificate were not removed
on or before April 1, 2003 and the share certificate representing
the 80,000 shares has been returned to HiEnergy, or (2) after
expiration of the 30-day period immediately following the date
the SEC registration statement becomes effective, and provided
that (A) Cowan possesses none of the 80,000 shares of HiEnergy
Technologies, Inc. stock described in Paragraph 1(b) and (B)
Cowan received less than $125,000 for sale of all 80,000 shares,
upon presentation of supporting documentation evidencing the
proceeds realized from the sale of the shares, in which case
Cowan may draw on said letter of credit up to a maximum amount
equaling the difference between the amount Cowan receives for
sale of all shares and $125,000, or;
(ii) Deposit the sum of One Hundred Twenty Five Thousand Dollars
($125,000) in an escrow account acceptable to Cowan. The escrow
instructions shall state that the funds shall be payable to
Cowan, upon certification by Cowan, that one of the following
conditions has been met: (1) if the restrictions from Cowan's
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share certificate are not removed on or before April 1, 2003 and
the share certificate representing the 80,000 shares has been
returned to HiEnergy, or (2) after expiration of the 30-day
period immediately following the date the SEC registration
statement becomes effective, provided that (A) Cowan possesses
none of the 80,000 shares of HiEnergy Technologies, Inc. stock
described in Paragraph 1(b), and (B) Cowan received less than
$125,000 for sale of all 80,000 shares, upon presentation of
supporting documentation evidencing the proceeds realized from
the sale of the shares, in which case Cowan may withdraw funds
from the escrow account up to a maximum amount equaling the
difference between the amount Cowan receives for sale of all
shares and $125,000.
Cowan hereby agrees that any sale of the shares shall be a good faith arms
length sale through a registered securities broker/dealer.
Cowan acknowledges that the HiEnergy Defendants vigorously deny any
wrongdoing whatsoever in connection with its dealing with Cowan, and that the
consideration provided pursuant to this Agreement is made solely for the purpose
of compromising disputed claims and avoiding the time and expense of litigation.
It is expressly understood and agreed that nothing contained in this Agreement
shall constitute or be treated as an admission of any wrongdoing or liability on
the part of the Company.
2 NOTICE OF SETTLEMENT / DISMISSAL OF ACTION
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Upon receipt of the settlement funds described in Paragraph 1(a) herein,
and the deposit of the additional settlement funds into escrow with the required
instructions or opening of the letter of credit described in Paragraph 1(c)
herein, Cowan shall cause a notice of settlement to be filed with the Orange
County Superior Court, Case No. 02CC05356 (the "Action"), and forward a
conformed copy to the attention of Jerry D. Underwood at Stradling Yocca Carlson
& Rauth, attorneys of record for the HiEnergy Defendants. The court shall
retain jurisdiction to enforce the terms of this settlement until such time as
Cowan has sold the STOCK or received any money due to him under the escrow or
letter of credit. Once the STOCK has been sold for an amount of not less than
$125,000, or an money held in escrow or under the letter of credit has been paid
consistent with Paragraph 1(c) herein, Cowan shall cause a Request for Dismissal
of the entire action against all defendants, heirs, and estates, as the case may
be, with prejudice, to be filed in the Action, and forward a conformed copy to
the attention of Jerry D. Underwood at Stradling Yocca Carlson & Rauth. No
defendant shall file a memorandum of costs in connection with this dismissal.
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3. RELEASE OF ALL CLAIMS
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Upon the performance of all obligations required under this agreement, the
parties hereby fully, finally, and forever release and discharge each other, as
well as their parent companies, subsidiaries, affiliates, predecessors in
interest, successors in interest, officers, directors, employees, agents,
attorneys, principals, joint and co-venturers, assigns, and representatives of
every nature from any and all claims for relief, causes of action, claims,
rights, obligations, liabilities, damages, costs, demands, complaints to the
board of registration, and actions at law, in equity or otherwise, related to
the Action, including, without limitation, those that are known and unknown,
those that are suspected and unsuspected, and those that exist as well as those
that may come into existence in the future, and including all causes of action
that could have been asserted in those actions.
The release in this Agreement includes, but is not limited to, claims
arising under federal, state or local law for race, color, sex, age, or other
forms of employment discrimination and retaliation. In accordance with the
Older Workers Benefit Protection Act, Cowan hereby knowingly and voluntarily
waives and releases all rights and claims, known or unknown, arising under the
Age Discrimination in Employment Act of 1967, as amended, which he might
otherwise have had against the HiEnergy Defendants. Cowan is advised to and
acknowledges that he has consulted with his attorney David J. Harter before
signing this Agreement and that he has 21 days in which to consider and accept
this Agreement. In addition, Cowan understands and acknowledges that he has a
period of seven (7) days following his execution of this Agreement in which he
may revoke this Agreement. If Cowan does not advise the HiEnergy Defendants by
a writing addressed and sent the attention of Jerry D. Underwood at Stradling
Yocca Carlson & Rauth, attorneys of record for the HiEnergy Defendants within
such seven day period of the his intent to revoke this Agreement, the Agreement
will become effective and enforceable upon the expiration of the seven days.
4. WAIVER OF ALL RIGHTS
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The parties hereby expressly, knowingly, and intentionally WAIVES ALL
RIGHTS AND PROTECTIONS afforded in connection with the Action by the terms and
provisions of California Civil Code section 1542 and by any and all similar laws
of and for any other state of the United States and all foreign governments.
California Civil Code section 1542 states that:
A general release does not extend to claims which the creditor does
not know or suspect to exist in his favor at the time of executing the
release, which if known by him must have materially affected his
settlement with the debtor.
In connection with such waiver, the parties hereby acknowledges that they
hereafter may discover claims, obligations, rights, causes of action, claims for
relief, liabilities, and facts, or any of them, in addition to or different from
those that he now knows or believes to be in existence, accrued, or true with
respect to the matters hereby released. Nevertheless, it is the intention of
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the parties, through this Release and with the independent advice of counsel or
the opportunity to receive such advice, fully, finally, and forever to settle
and release all such claims, obligations, rights, causes of action, claims for
relief, liabilities, and damages that heretofore have existed, now exist, or
hereafter may exist against the other party in connection with the Action.
5. CONFIDENTIALITY
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Each party agrees to keep the terms of this Agreement completely
confidential and not hereafter disclose the substance or contents hereof,
including specifically the amount of such payment(s), to any person or entity,
including but not limited to any past or present employee of the Company;
provided, however, that this provision shall not:
(a) preclude either party from making such disclosures (1) as are
necessary to comply with a valid subpoena or court order (provided, however,
that upon receipt of any such subpoena or court order the party receiving it
will immediately and prior to any disclosure notify the other party), or (2) to
their attorneys, accountants, or tax preparers as are necessary for either party
to comply with the law or generally accepted accounting principles, provided
such individuals are informed of this confidentiality provision and agree to be
bound thereby; and
(b) preclude HiEnergy from making such disclosures as necessary,
in the opinion of HiEnergy, for any filing with the Securities and Exchange
Commission.
If asked about the claim, each party shall state only that the matter has been
resolved.
6. ENTIRE AGREEMENT
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This Agreement contains the entire understanding between the parties
concerning the subject matter it contains. There are no representations,
agreements, arrangements, or understandings, oral or written, among the parties
relating to the subject matter of this Agreement, which are not fully expressed
herein.
7. JOINT PREPARATION
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This Agreement is the product of the parties' mutual discussions and
negotiations. This document is drafted, prepared and created by all the parties
collectively and shall not be construed in favor of, or against, any party.
8. OPPORTUNITY TO REVIEW AGREEMENT
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Each party has been given an opportunity to fully review and analyze this
Agreement and further have had the opportunity to seek legal counsel and to have
legal counsel review and analyze this Agreement. Each party has fully read and
understands each provision of this contract and all parties understand their
respective duties under this Agreement.
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9. WAIVERS, MODIFICATION AND AMENDMENT
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No supplement, modification, or amendment of this Agreement shall be
binding unless executed in writing and signed by all the parties. No waiver of
any of the provisions of this Agreement shall be deemed, or shall constitute, a
waiver of any other provision, whether or not similar, nor shall any waiver
constitute a continuing waiver. No waiver shall be binding unless executed in
writing by the party making the waiver.
10. SEVERABILITY CLAUSE
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If any provision of this Agreement is held by a court of competent
jurisdiction to be invalid, void or unenforceable for any reason, the remaining
provisions not so declared shall nevertheless continue in full force and effect,
but shall be construed in a manner so as to effectuate the intent of this
Agreement as a whole, notwithstanding such stricken provision or provisions.
11. PROPERLY EXECUTED.
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HiEnergy Defendants represent and warrant that this Agreement has been duly
authorized, executed and delivered and that all corporate action necessary to
approve and authorize the terms of this agreement have been performed.
12. INTEGRATION
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This agreement constitutes the entire agreement between the parties. This
agreement supersedes all prior negotiations, representations or agreements,
either written or oral. This agreement may be amended only by the written
agreement of all parties to this agreement.
13. COUNTERPARTS
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This Agreement may be executed in one or more counterparts, each of which
shall be deemed an original but all of which together shall constitute one and
the same instrument. In addition a faxed signature shall be binding as though
it were an original.
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IN WITNESS WHEREOF, the parties to this agreement have duly executed it on
the date stated below.
Dated: January 15, 2003 By: /s/ K. Cowan
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Keith Cowan
HiEnergy Microdevices, Inc.
Dated: January 15, 2003 By: /s/ BC Maglich
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HiEnergy Technologies, Inc.
/s/ Tom Pascoe
Dated: January 15, 2003 By: _______________________
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/s/ BC Maglich
Dated: January 15, 2003 By: _______________________
-- Bodgan Castle Maglich
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