Exhibit 4.5
SETTLEMENT AGREEMENT AND MUTUAL GENERAL RELEASES
This SETTLEMENT AGREEMENT AND MUTUAL GENERAL RELEASES ("Agreement") is made
as of this 10th day of June, 2003, by and between Robert Moore ("Moore") and
NDMS Investments, L.P., a Nevada limited partnership ("NDMS"), on the one hand,
and QT-5, Inc., a Delaware corporation ("QT-5"), on the other hand, with
reference to the following facts and definitions:
R E C I T A L S:
A. QT-5 is the successor to Quicktest-5, Inc. and Moneyzone.com, Inc.
B. NDMS previously loaned One Hundred Fifty Thousand Dollars ($150,000) to
QT-5 (as successor to Quick Test-5, Inc.), pursuant to that certain Promissory
Note dated September 30, 2002 (the "September 2002 Note"). Pursuant to a
February 28, 2003 Amendment to the September 2002 Note, the principal amount
outstanding under the September 2002 Note is $152,500.
C. NDMS previously loaned up to Three Hundred Thousand Dollars ($300,000)
to QT-5 (as successor to Quick Test-5, Inc.), pursuant to that certain
Promissory Note dated December 31, 2002 (the "December 2002 Note").
D. NDMS previously loaned Thirty Five Thousand Dollars ($35,000) to QT-5
(as successor to Quick Test-5, Inc.), pursuant to that certain Promissory Note
dated January 24, 2003.
E. The principal amount outstanding under the September 2002 Note, the
December 2002 Note and the January 2003 Note (collectively, the "NDMS Notes") is
$337,500.
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F. No payment has been made of any of the principal amount due under the
NDMS Notes and QT-5 is in default under the NDMS Notes.
G. Moore and QT-5 are parties to that certain Consulting Agreement dated as
of January 1, 2003 (the "Moore Consulting Agreement").
H. At various times, Moore has received from QT-5 certain shares of QT-5's
common stock (the "Moore Shares").
I. At various times, NDMS has received from QT-5 certain shares of QT-5's
common stock (the "NDMS Shares").
J. Pursuant to agreements with QT-5, QT-5 is obligated to issue to NDMS
certain additional shares of QT-5's common stock, and is obligated to issue
additional shares in the future.
K. NDMS and Moore contend that QT-5 has materially breached its obligations
to them and that it and its directors, officers, agents, and/or representatives
have engaged in wrongful acts that have caused harm to NDMS and Moore.
L. QT-5 contends that NDMS and Moore have materially breached their
obligation to it and that they engaged in wrongful acts that have caused harm to
QT-5 and others.
M. The contentions in Paragraphs K and L are disputed.
N. QT-5 is presently unable to cure its default under the NDMS Notes and is
desirous of obtaining a restructuring of the NDMS Notes on the terms set forth
herein.
O. QT-5 and Devenshire Management Corp ("Devenshire") are parties to that
certain Bridge Loan Promissory Note dated as of September 29, 2002 (the
"Devenshire Note"). The principal amount outstanding under the Devenshire Note
is $25,000. No payment has been made
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of any of the principal amount due under the Devenshire Note and QT-5 is in
default under the Devenshire Note. QT-5 is presently unable to cure its default
under the Devenshire Note and is desirous of obtaining a restructuring of the
Devenshire Note on the terms set forth herein.
P. QT-5 and Alliance Financial Network, Inc. a Nevada corporation
("Alliance") are parties to that certain Bridge Loan Promissory Note dated as of
September 29, 2002 (the "Alliance Note"). The principal amount outstanding under
the Alliance Note is $25,000. No payment has been made of any of the principal
amount due under the Alliance Note and QT-5 is in default under the Alliance
Note. QT-5 is presently unable to cure its default under the Alliance Note and
is desirous of obtaining a restructuring of the Alliance Note on the terms set
forth herein.
Q. QT-5 and Dale Affonso ("Affonso") are parties to that certain Promissory
Note dated as of January 24, 2003 (the "Affonso Note"). The principal amount
outstanding under the Affonso Note is $50,000. No payment has been made of any
of the principal amount due under the Affonso Note and QT-5 is in default under
the Affonso Note. QT-5 is presently unable to cure its default under the Affonso
Note and is desirous of obtaining a restructuring of the Affonso Note on the
terms set forth herein.
R. QT-5 and Sunset Holdings International Ltd. ("Sunset") are parties to
that certain Consulting Agreement dated as of June 25, 2002 (the "Sunset
Consulting Agreement").
S. QT-5 and Christopher Ewing ("Ewing") are parties to those certain
Consulting Agreements dated as of December 1, 2002 and January 1, 2003 (the
"Ewing Consulting Agreements"). T. QT-5 and Stephen Radusch ("Radusch") are
parties to that certain Consulting Agreement dated as of January 23, 2003 (the
"Radusch Consulting Agreement").
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U. At various times, Bossung, Alliance and Chess Management Group LLC
("Chess") have , directly or through related entities, (including family trusts)
received from QT-5 shares of QT-5 common stock (collectively, the "Bossung
Shares").
V. At various times, Affonso has, directly or through related entities,
received from QT-5 shares of QT-5 common stock (the "Affonso Shares").
W. At various times, Sunset and Sanders have, directly or through related
entities, received from QT-5 shares of QT-5 common stock (the "Sunset Shares").
X. At various times, Ewing has, directly or through related entities,
received from QT-5 shares of, and options to purchase shares of, QT-5 common
stock (said shares and options being collectively referred to herein as the
"Ewing Shares").
Y. At various times, Radusch has, directly or through related entities,
received from QT-5 shares of, and options to purchase shares of, QT-5 common
stock (the "Radusch Shares").
Z. NDMS and Moore, on the one hand, and QT-5, on the other hand,
(collectively, the "Parties") are each desirous of fully and forever amicably
resolving and settling their Claims, disputes and differences, on the terms and
conditions set forth herein. The Parties are also desirous of resolving Claims,
disputes and differences between QT-5, on the one hand, and Devenshire,
Alliance, Sunset, Affonso, Ewing, Radusch, Sanders, and Bossung (and related
persons and entities), on the other hand.
AA. As used herein, the term "Claims" shall have its broadest possible
meaning and shall include, without limitation: any and all manner of action or
actions, cause or causes of
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action, suits, proceedings, debts, liabilities, claims, calls, accounts,
accountings, demands, obligations, costs, expenses, sums of money,
controversies, damages, reckonings, and liens of every kind and nature
whatsoever, whether known or unknown, suspected or unsuspected, contingent or
liquidated, in personam or in rem, legal or equitable, statutory or
administrative, which the holder of such Claim has or at any time heretofore had
or may have had, by reason of anything whatsoever occurring, done, omitted or
suffered to be done prior to the date of this Agreement, whether accrued or
accruing before, on or after the date of this Agreement.
NOW, THEREFORE, in reliance upon and in consideration of the mutual
covenants, releases, agreements and conditions contained herein, and subject to
the provisions and terms of this Agreement, and for other good and valuable
consideration, the receipt and sufficiency of which hereby are acknowledged by
each and all of the Parties, the Parties each agree as follows:
1. EFFECTIVENESS. This Agreement shall become binding upon execution by all
of the Parties ("Effective Date"), whether in counterpart or upon single
instrument, and shall become fully effective immediately thereupon subject only
to the terms and conditions set forth herein.
2. INTENTIONALLY OMITTED.
3. NEW NDMS PROMISSORY NOTE AND SECURITY AGREEMENT. On the Effective Date,
QT-5 shall execute and deliver to NDMS: (a) a Secured Note in the form annexed
hereto as Exhibit A-1 and made a part hereof and (b) a Security Agreement in the
form annexed hereto as Exhibit A-2 and made a part hereof.
4. NEW AFFONSO NOTE AND SECURITY AGREEMENT. Immediately upon delivery of
the consent attached as Exhibit B-1, QT-5 shall execute and deliver to Affonso:
(a) a Secured Note
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in the form annexed hereto as Exhibit B-2 and made a part hereof and (b) a
Security Agreement in the form annexed hereto as Exhibit B-3 and made a part
hereof.
5. NEW DEVENSHIRE NOTE AND SECURITY AGREEMENT. Immediately upon delivery of
the consent attached as Exhibit C-1, QT-5 shall execute and deliver to
Devenshire: (a) a Secured Note in the form annexed hereto as Exhibit C-2 and
made a part hereof and (b) a Security Agreement in the form annexed hereto as
Exhibit C-3 and made a part hereof.
6. NEW ALLIANCE NOTE AND SECURITY AGREEMENT. Immediately upon delivery of
the consent attached as Exhibit D-1, QT-5 shall execute and deliver to Alliance:
(a) a Secured Note in the form annexed hereto as Exhibit D-2 and made a part
hereof and (b) a Security Agreement in the form annexed hereto as Exhibit D-3
and made a part hereof.
7. GENERAL RELEASES - PARTIES.
(A) RELEASE OF NDMS AND MOORE BY QT-5.
Except for the promises, covenants and obligations created by or under this
Agreement, QT-5, on behalf of itself and its directors, officers, predecessors,
successors, attorneys and assigns, does hereby absolutely fully and forever
release, relieve, waive, relinquish and discharge Moore and NDMS and their
respective directors, officers, parents, subsidiaries, members, managers,
partners, predecessors in interest, divisions, affiliates, agents, attorneys,
assigns, heirs, executors and administrators from any and all Claims which have
been, will be or could have been asserted, directly or indirectly, against them
or any of them arising out of or related to any fact, matter or thing
whatsoever, from the beginning of time to the present, including, without
limitation: (1) any and all Claims arising out of or related to the NDMS Notes;
(2) any and all Claims arising out of or related to the NDMS Shares; (3) any and
all Claims arising out of or
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related to the Moore Consulting Agreement; (4) any and all Claims relating to
QT-5; (5) any and all Claims arising out of any business relationship between
QT-5 and any releasee; and (6) any and all Claims for fraud, usury, misfeasance,
malfeasance, negligence, breach of duty, wrongful interference, securities
violations, advice given or not given.
(b) RELEASE OF QT-5 BY MOORE AND NDMS. Except for the promises, covenants
and obligations created by or under this Agreement, NDMS and Moore do hereby
absolutely, fully and forever release, relieve, waive, relinquish and discharge
QT-5 and its directors, officers, parents, subsidiaries, divisions,
predecessors, successors, attorneys, and assigns, from any and all Claims
arising out of or related to any fact, matter or thing whatsoever, from the
beginning of time to the present, including, without limitation: (1) any and all
Claims arising out of or related to the NDMS Notes; (2) any and all Claims
arising out of or related to the NDMS Shares; (3) any and all Claims arising out
of or related to the Moore Consulting Agreement; (4) any and all Claims relating
to QT-5; (5) any and all Claims arising out of any business relationship between
QT-5 and any releasee; and (6) any and all Claims for fraud, usury, misfeasance,
malfeasance, negligence, breach of duty, wrongful interference, securities
violations, advice given or not given. Notwithstanding the foregoing, nothing in
the foregoing or in this Agreement shall release, relinquish or waive: (1) the
ownership rights of Moore and NDMS in and to the NDMS Shares (and their right to
immediate and sole possession thereof); (2) the covenants, representations and
warranties of QT-5 in connection with the issuance of the NDMS Shares and the
Moore Shares; (3) the covenants, representations and warranties of QT-5 as to
Moore's and NDMS's "piggyback" registration
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rights; or (4) any and all rights of Moore to indemnification pursuant to the
Moore Consulting Agreement. (c) The Parties hereby covenant that they shall not
purport to assign or transfer or hypothecate, expressly, impliedly, or by
operation of law, any Claim released in Subparagraphs 7(a) or 7(b) above. The
Parties further covenant not to commence, maintain or suffer to be maintained,
against any releasee, any Claim released in Subparagraphs 7(a) or 7(b) above,
and the Parties represent and warrant that they shall take all necessary action
to dismiss any action, suit or proceeding against any releasee based upon or
constituting a Claim released in Subparagraphs 7(a) or 7(b) above. A breach of
these covenants may be specifically enforced, and the parties agree that, in the
event of such breach, the wronged party may obtain injunctive relief in any
court of competent jurisdiction to enforce these covenants, in addition to any
other remedy to which he or it may be entitled.
8. GENERAL RELEASES - AFFONSO.
(a) RELEASE OF AFFONSO BY QT-5.
Except for the promises, covenants and obligations created by or under this
Agreement, QT-5, on behalf of itself and its directors, officers, predecessors,
successors, attorneys and assigns, does hereby absolutely fully and forever
release, relieve, waive, relinquish and discharge Affonso and his partners,
predecessors in interest, divisions, affiliates, agents, attorneys, assigns,
heirs, executors and administrators from any and all Claims which have been,
will be or could have been asserted, directly or indirectly, against them or any
of them arising out of or related to any fact, matter or thing whatsoever, from
the beginning of time to the present, including, without limitation: (1) any and
all Claims arising out of or related to the Affonso Note; (2) any
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and all Claims arising out of or related to the Affonso Shares; (3) any and all
Claims relating to QT-5; (5) any and all Claims arising out of any business
relationship between QT-5 and any releasee; and (6) any and all Claims for
fraud, usury, misfeasance, malfeasance, negligence, breach of duty, wrongful
interference, securities violations, advice given or not given.
(b) Release of QT-5 By Affonso. Except for the promises, covenants and
obligations created by or under this Agreement, Affonso does hereby absolutely,
fully and forever release, relieve, waive, relinquish and discharge QT-5 and its
directors, officers, parents, subsidiaries, divisions, predecessors, successors,
attorneys, and assigns, from any and all Claims arising out of or related to any
fact, matter or thing whatsoever, from the beginning of time to the present,
including, without limitation: (1) any and all Claims arising out of or related
to the Affonso Note; (2) any and all Claims arising out of or related to the
Affonso Shares; (3) any and all Claims relating to QT-5; (4) any and all Claims
arising out of any business relationship between QT-5 and any releasee; and (5)
any and all Claims for fraud, usury, misfeasance, malfeasance, negligence,
breach of duty, wrongful interference, securities violations, advice given or
not given. Notwithstanding the foregoing, nothing in the foregoing or in this
Agreement shall release, relinquish or waive: (1) the ownership rights of
Affonso in and to the Affonso Shares; (2) the covenants, representations and
warranties of QT-5 in connection with the issuance of the Affonso Shares; or (3)
the covenants, representations and warranties of QT-5 as to Affonso's
"piggyback" registration rights.
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(c) The Parties hereby covenant that they shall not purport to assign or
transfer or hypothecate, expressly, impliedly, or by operation of law, any Claim
released in Subparagraphs 8(a) or 8(b) above. The Parties further covenant not
to commence, maintain or suffer to be maintained, against any releasee, any
Claim released in Subparagraphs 8(a) or 8(b) above, and the Parties represent
and warrant that they shall take all necessary action to dismiss any action,
suit or proceeding against any releasee based upon or constituting a Claim
released in Subparagraphs 8(a) or 8(b) above. A breach of these covenants may be
specifically enforced, and the parties agree that, in the event of such breach,
the wronged party may obtain injunctive relief in any court of competent
jurisdiction to enforce these covenants, in addition to any other remedy to
which he or it may be entitled.
(d) The provisions of this Paragraph 8 are conditioned upon Affonso's
execution and delivery to QT-5, within ten (10) business days of the Effective
Date, of the consent attached as exhibit B-1 to this Agreement.
9. GENERAL RELEASE - SUNSET, SANDERS AND DEVENSHIRE.
(a) RELEASE OF SUNSET, SANDERS AND DEVENSHIRE BY QT-5.
Except for the promises, covenants and obligations created by or under this
Agreement, QT-5, on behalf of itself and its directors, officers, predecessors,
successors, and assigns, does hereby absolutely fully and forever release,
relieve, waive, relinquish and discharge Sunset, Sanders, Devenshire, and any
entity in which Sunset, Sanders or Devenshire owns a 10% or greater interest,
and their respective directors, officers, parents, subsidiaries, members,
managers, partners, predecessors in interest, divisions, affiliates, agents,
attorneys, assigns, heirs, executors and administrators from any and all Claims
which have been, will be or could have been
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asserted, directly or indirectly, against them or any of them arising out of or
related to any fact, matter or thing whatsoever, from the beginning of time to
the present, including, without limitation: (1) any and all Claims arising out
of or related to the Devenshire Note; (2) any and all Claims arising out of or
related to the Sunset Shares; (3) any and all Claims arising out of or related
to the Sunset Consulting Agreement; (4) any and all Claims relating to QT-5; (5)
any and all Claims arising out of any business relationship between QT-5 and any
releasee; and (6) any and all Claims for fraud, usury, misfeasance, malfeasance,
negligence, breach of duty, wrongful interference, securities violations, advice
given or not given.
(b) RELEASE OF QT-5 BY SUNSET, SANDERS AND DEVENSHIRE.
Except for the promises, covenants and obligations created by or under this
Agreement, Sunset, Sanders and Devenshire do hereby absolutely, fully and
forever release, relieve, waive, relinquish and discharge QT-5 and its
directors, officers, parents, subsidiaries, divisions, predecessors, successors,
and assigns, from any and all Claims arising out of or related to any fact,
matter or thing whatsoever, from the beginning of time to the present,
including, without limitation: (1) any and all Claims arising out of or related
to the Devenshire Note; (2) any and all Claims arising out of or related to the
Sunset Shares; (3) any and all Claims relating to QT-5; (4) any and all Claims
arising out of or related to the Sunset Consulting Agreement; (5) any and all
claims arising out of any business relationship between QT-5 and any releasee;
and (6) any and all Claims for fraud, usury, misfeasance, malfeasance,
negligence, breach of duty, wrongful interference, securities violations, advice
given or not given. Notwithstanding the foregoing, nothing in the foregoing or
in this Agreement shall release, relinquish or waive: (1) the ownership rights
of Sunset in and to the Sunset Shares; (2) the covenants, representations and
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warranties of QT-5 in connection with the issuance of the Sunset Shares; or (3)
the covenants, representations and warranties of QT-5 as to Sunset's, Sander's
and/or Devenshire's "piggyback" registration rights; (4) any and all rights of
Sunset to indemnification pursuant to the Sunset Consulting Agreement; (5) any
and all rights of Sanders to indemnification under any consulting agreement; and
(6) any right of Sanders or Sunset to reimbursement of expenses incurred for the
benefit of QT-5.
(c) The Parties hereby covenant that they shall not, purport to assign or
transfer or hypothecate, expressly, impliedly, or by operation of law, any Claim
released in Subparagraphs 9(a) or 9(b) above. The Parties further covenant not
to commence, maintain or suffer to be maintained, against any releasee, any
Claim released in Subparagraphs 9(a) or 9(b) above, and the Parties represent
and warrant that they shall take all necessary action to dismiss any action,
suit or proceeding against any releasee based upon or constituting a Claim
released in Subparagraphs 9(a) or 9(b) above. A breach of these covenants may be
specifically enforced, and the parties agree that, in the event of such breach,
the wronged party may obtain injunctive relief in any court of competent
jurisdiction to enforce these covenants, in addition to any other remedy to
which he or it may be entitled.
(d) The provisions of this Paragraph 9 are conditioned upon Sunset's,
Sanders' and Devenshire's execution and delivery to QT-5, within ten (10)
business days of the Effective Date, of the consent attached as exhibit C-1 to
this Agreement.
10. RELEASES - BOSSUNG, ALLIANCE AND CHESS
(a) RELEASE OF BOSSUNG, ALLIANCE AND CHESS BY QT-5.
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Except for the promises, covenants and obligations created by or under this
Agreement, QT-5, on behalf of itself and its directors, officers, predecessors,
successors and assigns, does hereby absolutely fully and forever release,
relieve, waive, relinquish and discharge Bossung, Alliance, Chess and any entity
in which Bossung, Alliance or Chess owns a 10% or greater interest, and their
respective directors, officers, parents, subsidiaries, members, managers,
partners, predecessors in interest, divisions, affiliates, agents, attorneys,
assigns, heirs, executors and administrators from any and all Claims which have
been, will be or could have been asserted, directly or indirectly, against them
or any of them arising out of or related to any fact, matter or thing
whatsoever, from the beginning of time to the present, including, without
limitation: (1) any and all Claims arising out of or related to the Alliance
Note; (2) any and all Claims arising out of or related to the Bossung Shares;
(3) any and all Claims relating to QT-5; (4) any and all Claims arising out of
any business relationship between QT-5 and any releasee; and (5) any and all
Claims for fraud, usury, misfeasance, malfeasance, negligence, breach of duty,
wrongful interference, securities violations, advice given or not given.
(b) RELEASE OF QT-5 BY BOSSUNG, ALLIANCE AND CHESS.
Except for the promises, covenants and obligations created by or under this
Agreement, Bossung, Alliance and Chess do hereby absolutely, fully and forever
release, relieve, waive, relinquish and discharge QT-5 and its directors,
officers, parents, subsidiaries, divisions, predecessors, successors and
assigns, from any and all Claims arising out of or related to any fact, matter
or thing whatsoever, from the beginning of time to the present, including,
without limitation: (1) any and all Claims arising out of or related to the
Alliance Note; (2) any and all Claims arising out of or related to the Bossung
Shares; (3) any and all Claims relating to QT-5;
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(4) any and all claims arising out of any business relationship between QT-5 and
any releasee; and (5) any and all Claims for fraud, usury, misfeasance,
malfeasance, negligence, breach of duty, wrongful interference, securities
violations, advice given or not given. Notwithstanding the foregoing, nothing in
the foregoing or in this Agreement shall release, relinquish or waive: (1) the
ownership rights of Bossung, Alliance and Chess in and to the Bossung Shares;
(2) the covenants, representations and warranties of QT-5 in connection with the
issuance of the Bossung Shares; (3) the covenants, representations and
warranties of QT-5 as to Bossung's, Alliance's and/or Chess's "piggyback"
registration rights; or (4) any and all rights of Bossung to indemnification
under any consulting agreement.
(c) The Parties hereby covenant that they shall not purport to assign or
transfer or hypothecate, expressly, impliedly, or by operation of law, any Claim
released in Subparagraphs 10(a) or 10(b) above. The Parties further covenant not
to commence, maintain or suffer to be maintained, against any releasee, any
Claim released in Subparagraphs 10(a) or 10(b) above, and the Parties represent
and warrant that they shall take all necessary action to dismiss any action,
suit or proceeding against any releasee based upon or constituting a Claim
released in Subparagraphs 10(a) or 10(b) above. A breach of these covenants may
be specifically enforced, and the parties agree that, in the event of such
breach, the wronged party may obtain injunctive relief in any court of competent
jurisdiction to enforce these covenants, in addition to any other remedy to
which he or it may be entitled.
(d) The provisions of this Paragraph 10 are conditioned upon Bossung's,
Alliance's and Chess's execution and delivery to QT-5, within ten (10) business
days of the Effective Date, of the consent attached as exhibit D-1 to this
Agreement.
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11. GENERAL RELEASE - EWING.
(a) RELEASE OF EWING BY QT-5.
Except for the promises, covenants and obligations created by or under this
Agreement, QT-5, on behalf of itself and its directors, officers, predecessors,
successors, attorneys and assigns, does hereby absolutely fully and forever
release, relieve, waive, relinquish and discharge Ewing and The Business Law
Group, LLP and their respective directors, officers, parents, subsidiaries,
members, managers, partners, predecessors in interest, divisions, affiliates,
agents, attorneys, assigns, heirs, executors and administrators from any and all
Claims which have been, will be or could have been asserted, directly or
indirectly, against them or any of them arising out of or related to any fact,
matter or thing whatsoever, from the beginning of time to the present,
including, without limitation: (1) any and all Claims arising out of or related
to the Ewing Shares; (2) any and all Claims arising out of or related to the
Ewing Consulting Agreements; (3) any and all Claims relating to QT-5; (4) any
and all Claims arising out of any business relationship between QT-5 and any
releasee; and (5) any and all Claims for fraud, usury, misfeasance, malfeasance,
negligence, breach of duty, wrongful interference, securities violations, advice
given or not given.
(b) RELEASE OF QT-5 BY EWING.
Except for the promises, covenants and obligations created by or under this
Agreement, Ewing does hereby absolutely, fully and forever release, relieve,
waive, relinquish and discharge QT-5 and its directors, officers, parents,
subsidiaries, divisions, predecessors,
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successors, attorneys, and assigns, from any and all Claims arising out of or
related to any fact, matter or thing whatsoever, from the beginning of time to
the present, including, without limitation: (1) any and all Claims arising out
of or related to the Ewing Shares; (2) any and all Claims arising out of or
related to the Ewing Consulting Agreements; (3) any and all Claims relating to
QT-5; (4) any and all Claims arising out of any business relationship between
QT-5 and any releasee; and (5) any and all Claims for fraud, usury, misfeasance,
malfeasance, negligence, breach of duty, wrongful interference, securities
violations, advice given or not given. Notwithstanding the foregoing, nothing in
the foregoing or in this Agreement shall release, relinquish or waive: (1) the
ownership rights of Ewing in and to the Ewing Shares; (2) the covenants,
representations and warranties of QT-5 in connection with the issuance of the
Ewing Shares; or (3) the covenants, representations and warranties of QT-5 as to
Ewing's "piggyback" registration rights; or (4) any and all rights of Ewing to
indemnification pursuant to the Ewing Consulting Agreements.
(c) The Parties hereby covenant that they shall not purport to assign or
transfer or hypothecate, expressly, impliedly, or by operation of law, any Claim
released in Subparagraphs 11(a) or 11(b) above. The Parties further covenant not
to commence, maintain or suffer to be maintained, against any releasee, any
Claim released in Subparagraphs 11(a) or 11(b) above, and the Parties represent
and warrant that they shall take all necessary action to dismiss any action,
suit or proceeding against any releasee based upon or constituting a Claim
released in Subparagraphs 11(a) or 11(b) above. A breach of these covenants may
be specifically enforced, and the parties agree that, in the event of such
breach, the wronged party may obtain injunctive relief in any court of competent
jurisdiction to enforce these covenants, in addition to any other remedy to
which he or it may be entitled.
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(d) The provisions of this Paragraph 11 are conditioned upon Ewing's
execution and delivery to QT-5, within ten (10) business days of the Effective
Date, of the consent attached as exhibit E to this Agreement.
12. GENERAL RELEASE - RADUSCH.
(a) RELEASE OF RADUSCH BY QT-5.
Except for the promises, covenants and obligations created by or under this
Agreement, QT-5, on behalf of itself and its directors, officers, predecessors,
successors, attorneys and assigns, does hereby absolutely fully and forever
release, relieve, waive, relinquish and discharge Radusch and his directors,
officers, parents, subsidiaries, members, managers, partners, predecessors in
interest, divisions, affiliates, agents, attorneys, assigns, heirs, executors
and administrators from any and all Claims which have been, will be or could
have been asserted, directly or indirectly, against them or any of them arising
out of or related to any fact, matter or thing whatsoever, from the beginning of
time to the present, including, without limitation: (1) any and all Claims
arising out of or related to the Radusch Shares; (2) any and all Claims arising
out of or related to the Radusch Consulting Agreement; (3) any and all Claims
relating to QT-5; (4) any and all Claims arising out of any business
relationship between QT-5 and any releasee; and (5) any and all Claims for
fraud, usury, misfeasance, malfeasance, negligence, breach of duty, wrongful
interference, securities violations, advice given or not given.
(b) RELEASE OF QT-5 BY RADUSCH.
Except for the promises, covenants and obligations created by or under this
Agreement, Radusch does hereby absolutely, fully and forever release, relieve,
waive, relinquish and discharge QT-5 and its directors, officers, parents,
subsidiaries, divisions, predecessors,
17
successors, attorneys, and assigns, from any and all Claims arising out of or
related to any fact, matter or thing whatsoever, from the beginning of time to
the present, including, without limitation: (1) any and all Claims arising out
of or related to the Radusch Shares; (2) any and all Claims arising out of or
related to the Radusch Consulting Agreement; (3) any and all Claims relating to
QT-5; (4) any and all Claims arising out of any business relationship between
QT-5 and any releasee; and (5) any and all Claims for fraud, usury, misfeasance,
malfeasance, negligence, breach of duty, wrongful interference, securities
violations, advice given or not given. Notwithstanding the foregoing, nothing in
the foregoing or in this Agreement shall release, relinquish or waive: (1) the
ownership rights of Radusch in and to the Radusch Shares; (2) the covenants,
representations and warranties of QT-5 in connection with the issuance of the
Radusch Shares; or (3) the covenants, representations and warranties of QT-5 as
to Radusch's "piggyback" registration rights; or (4) any and all rights of
Radusch to indemnification pursuant to the Radusch Consulting Agreement.
(c) The Parties hereby covenant that they shall not purport to assign or
transfer or hypothecate, expressly, impliedly, or by operation of law, any Claim
released in Subparagraphs 12(a) or 12(b) above. The Parties further covenant not
to commence, maintain or suffer to be maintained, against any releasee, any
Claim released in Subparagraphs 12(a) or 12(b) above, and the Parties represent
and warrant that they shall take all necessary action to dismiss any action,
suit or proceeding against any releasee based upon or constituting a Claim
released in Subparagraphs 12(a) or 12(b) above. A breach of these covenants may
be specifically enforced, and the parties agree that, in the event of such
breach, the wronged party may obtain injunctive
18
relief in any court of competent jurisdiction to enforce these covenants, in
addition to any other remedy to which he or it may be entitled.
(d) The provisions of this Paragraph 12 are conditioned upon Radusch's
execution and delivery to QT-5, within ten (10) business days of the Effective
Date, of the consent attached as exhibit F to this Agreement.
13. WAIVER. In connection with the releases set forth in Paragraphs 7
through 12, the Parties each acknowledge that they are aware that they or their
attorneys may hereafter discover facts different from or in addition to the
facts which they now know or believe to be true with respect to the subject
matter of this Agreement. Nonetheless, it is their intention hereby fully,
finally, absolutely and forever to settle and release any and all matters
described in the preceding paragraph hereof which exist, may exist or may
heretofore have existed between them and, in furtherance of such intention, the
Releases herein given shall be and will remain in effect notwithstanding the
discovery of any additional or different facts relating to the subject matter of
this Agreement. Therefore, the Parties each acknowledge that they have had the
opportunity and ability to consult with and be informed by attorneys of their
choosing regarding all aspects of this Agreement and that they are familiar with
Section 1542 of the Civil Code of the State of California, which provides as
follows:
A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR
DOES NOT KNOW OR SUSPECT TO HAVE EXISTED IN HIS FAVOR AT THE TIME
OF EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM MUST HAVE
MATERIALLY AFFECTED HIS SETTLEMENT WITH THE DEBTOR.
19
The Parties each hereby waive and relinquish all rights and benefits it has or
may have under Section 1542 of the Civil Code of the State of California or any
like statute or law in any other jurisdiction to the full extent it may lawfully
do so.
14. ATTORNEYS' FEES AND COSTS. As they relate to the negotiation and
settlement of the dispute between the Parties, the Parties shall each bear his
or its own attorneys' fees, costs and all other expenses incurred with respect
to all aspects of the negotiation of this Agreement.
15. REPRESENTATIONS AND WARRANTIES.
(a) QT-5 represents and warrants that it is the sole owner of and
has not assigned or transferred (voluntarily, involuntarily or by operation of
law), or purported to assign or transfer, to any person, entity or institution,
any Claim released in Paragraphs 7(a), 8(a), 9(a), 10(a), 11(a) or 12(a) hereof.
(b) NDMS and Moore represent and warrant that they are the sole owners
of and have not assigned or transferred (voluntarily, involuntarily or by
operation of law), or purported to assign or transfer, to any person, entity or
institution, any Claim released in Paragraph 7(b) hereof.
(c) The Parties represent and warrant that there are no Claims against
the other(s) which are not released by Paragraph 7 hereof, or expressly
carved-out therein.
(d) QT-5 represents and warrants that the Moore Shares, the NDMS shares,
the Affonso shares, the Alliance shares, the Bossung shares, the Chess Shares,
the Ewing Shares, and the Radusch Shares have been duly authorized, validly
issued, are nonassessable, are not subject to any preemptive or other similar
rights and have not been issued in violation of any applicable laws, the QT-5
Articles of Incorporation, the QT-5 Bylaws or the terms of any contract to which
20
QT-5 is a party or bound. There are no obligations, contingent or otherwise, to
repurchase, redeem or otherwise acquire such shares.
(e) QT-5 represents and warrants that: (i) it is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware; (ii) it is duly qualified to transact business and is in good standing
in each jurisdiction in which the failure to be so qualified would have a
material adverse effect on its business or properties; (iii) it has taken all
corporate action on the part of the Company, its officers, directors and
shareholders necessary for the authorization, execution and delivery of this
Agreement, the notes and security agreements contemplated by Paragraphs 3, 4, 5,
and 6 hereof and the performance of all obligations of the Company hereunder and
thereunder; (iv) this Agreement, and the notes and security agreements
contemplated by Paragraphs 3, 4, 5, and 6 hereof, when executed and delivered by
the Company, shall constitute valid and binding obligations of the Company,
enforceable in accordance with their respective terms; (v) the Company is not in
violation or default of any term of its Articles of Incorporation or Bylaws, or
in any material respect, any contract, agreement, instrument, judgment, decree,
order, statute, rule or regulation (collectively, "Instrument or Law") to which
the Company is subject and a violation of which would have a material adverse
effect on the condition, financial or otherwise, or operations of the Company,
except that QT-5 discloses and represents that there is an existing dispute
between QT-5 and Marshall Thompson, the inventor and proprietary owner of that
certain United States Patent No. 6,268,386 dated July 31 2002 for Nicotine
Beverage and QT-5 is in the process of demanding arbitration to resolve the
dispute.
21
(f) QT-5 represents and warrants that (i) the execution, delivery and
performance of this Agreement, and the consummation of the transactions pursuant
hereto and thereto, will not result in a violation of or be in conflict with or
constitute, with or without the passage of time and giving of notice, a material
default under any such Instrument or Law, require any consent or waiver (which
has not been obtained) under any such Instrument or Law, or result in the
creation of any other lien, encumbrance or charge upon any of the properties or
assets of the Company pursuant to any such Instrument or Law; and (ii) no
consent, approval, order or authorization of, or registration, qualification,
designation, declaration or filing with, any federal, state or local
governmental authority on the part of the Company is required in connection with
the consummation of the transactions contemplated by this Agreement
(g) Each of the undersigned executing this Agreement in a representative
capacity represents and warrants, for the reliance of the Parties: (i) that the
entity on whose behalf he signs is validly existing under the laws of the
several States; (ii) that the entity on whose behalf he signs has the requisite
power and authority to enter into this Agreement and deliver any release
hereunder on his behalf; and (iii) that he has the requisite power and authority
to execute this Agreement on behalf of such entity and to bind such entity to
the covenants, conditions, representations and warranties herein.
(h) Each Party to this Agreement, and the undersigned, agree to defend,
indemnify and hold harmless the other Party(ies) (and the parties executing
consents in connection herewith) from any Claims arising out of or in connection
with his or its breach of the representations and warranties in this Agreement.
22
16. CONFIDENTIALITY. The Parties each agree that the terms of this
Agreement shall remain confidential and shall not be disclosed to any third
party other than: (1) to their respective attorneys, accountants, financial
advisors and business partners; (2) as required by applicable federal or state
law; (3) pursuant to a valid subpoena or other compulsory process of a court or
other administrative or governmental entity; or (4) as may be required to
enforce the terms of this Agreement or to perfect any security interest granted
pursuant hereto. In the event that any subpoena or process seeking disclosure of
this Agreement or confidential information concerning its subject matter is
received or expected to be received by any Party (or any officer, director,
employee, attorney or agent of any Party), such Party shall promptly provide
notice to the other Party.
17. ANTI-DEFAMATION. The Parties each agree not to make any statement to
any third party concerning the other(s) which is false, slanderous or
defamatory.
18. SUCCESSORS; THIRD PARTY BENEFICIARIES. This Agreement, and the
covenants and conditions herein, shall be binding upon each of the Parties and
also shall be binding upon and inure to the benefit of their respective
predecessors, successors and assigns. Non-Parties receiving releases hereunder
are intended third-party beneficiaries of this Agreement.
19. INTEGRATION; RELIANCE; FRAUD OR MISTAKE. This Agreement contains and
constitutes the entire Agreement and understanding of the Parties concerning the
subject matter hereof, and supersedes and replaces all prior discussions and
negotiations, proposed agreements or agreements, written or oral, pertaining to
such subject matters. Each of the Parties acknowledges that the other Party has
not made any promise, representation, or warranty not contained herein to induce
it to execute this Agreement and each of the undersigned represents and warrants
that it
23
has not executed this Agreement in reliance on (1) any promise, representation
or warranty not contained herein; or (2) any fact or state of facts not
expressly recited herein. This Agreement settles and releases Claims for fraud,
including Claims of fraudulent concealment, prior to full discovery of all
facts, and by its nature is based upon incomplete knowledge of all Parties; the
Parties acknowledge that they are entering into this Agreement notwithstanding
that fact. Each of the Parties hereto has conducted such investigation as it
deemed necessary prior to executing this Agreement, waives and deems unnecessary
any further investigation, inquiry or knowledge, and expressly assumes the risk
of any mistake of fact with regard to the making of this Agreement. The Parties
hereby irrevocably waive any right to request or obtain rescission of this
Agreement, and hereby irrevocably elect damages in an action at law as their
sole remedy for any claim of fraud or mistake in entering into this Agreement.
In the event that any claim of fraud or mistake is made by any Party with
respect to this Agreement, this Agreement shall remain in full force and effect
until entry of a final judgment sustaining such claim of fraud or mistake, and
the Party claiming fraud or mistake must pay all legal fees, costs and expenses
(including expert fees) of the defendants on a monthly basis, pending such final
judgment.
20. MODIFICATION. This Agreement may not be supplemented, modified,
amended, waived, released or terminated except (a) by a writing executed by the
Party to be bound thereby and (b) with the written consent of all other Parties.
Any delegation by any Party to this Agreement shall be ineffective to release
that Party from its obligation(s) to perform any delegated covenants, duties, or
agreements under this Agreement unless such delegation has been approved or
ratified in writing by the Party to whom such performance is due.
24
16. CONSTRUCTION. This Agreement in all respects shall be interpreted,
construed, enforced and governed by and under the laws of the State of
California without regard to any internal conflicts of law principles in such
jurisdiction. The Parties each waive any right, express or implied, to request
or to receive the application of the law of any jurisdiction other than the
State of California. This Agreement was and shall be deemed to have been
prepared in the State of California by all of the Parties jointly, and any
uncertainty or ambiguity existing in this Agreement shall not be interpreted
against any Party by reason of such Party having been responsible in any fashion
for the drafting hereof. Accordingly, any rule of law, statutory or decisional,
that would require interpretation of any ambiguities in this Agreement against
the Party that has drafted it shall be of no application and hereby is expressly
waived to the fullest extent possible. The provisions of this Agreement shall be
interpreted in a reasonable manner to effect the intentions of the Parties and
of this Agreement. If any non-material part of this Agreement is ruled
enforceable or invalid, such ruling shall not affect the enforceability or
validity of the remaining portions of this Agreement.
21. EXECUTION. This Agreement may be executed as a single original or in
any number of counterparts, each of which shall be deemed to be an original and
which, taken together, shall be deemed to be one and the same instrument.
Signatures delivered by facsimile shall be effective as original signatures.
22. BREACH. In the event that any proceeding, suit or action is brought to
enforce any provision of this Agreement, or in connection with any breach of or
default under this Agreement, the prevailing Party shall be entitled to recovery
of its reasonable costs and expenses, including actual attorneys' fees, in
addition to any other relief to which that Party may be entitled.
25
23. NOTICES. All notices required by this Agreement shall be deemed to have
been made (a) on the date of actual delivery thereof, if sent by facsimile (with
confirmation report) or personally delivered to the below address, or (b) on the
date which is two days after deposit with United States Express Mail or
overnight courier, addressed as follows:
(a) If to QT-5:
5655 Lindero Canyon Road, Suite 120
Westlake Village
Attention: Timothy Owens
Facsimile: 916-313-3565
(b) If to NDMS or Moore:
5855 Via Manigua
Las Vegas, NV 89120
Attention: Robert Moore
Facsimile: 702-547-4559
- with a copy to -
CHRISTENSEN, MILLER, FINK,
JACOBS, GLASER, WEIL & SHAPIRO, LLP
2121 Avenue of the Stars, 18th Floor
Los Angeles, California 90067-5010
Attention: Kevin J. Leichter, Esq.
Facsimile: 310-556-2920
24. ASSISTANCE OF COUNSEL. The Parties each acknowledge that it has been
represented by independent counsel of its own choice throughout all negotiations
proceeding the execution of this Agreement and in the execution of this
Agreement and that each of the Parties has
/ / /
executed this Agreement after consultation with counsel and after careful
consideration of each of its terms and with full understanding of the legal
effect of such terms.
26
THE UNDERSIGNED HAVE READ AND UNDERSTAND THE FOREGOING AND AGREE TO ITS
TERMS AS OF THE DATE SET FORTH AT THE BEGINNING OF THIS AGREEMENT.
Dated: June 10, 2003 QT-5:
By /s/ Timothy Owens
---------------------------------
Timothy Owens, CEO/Director
By /s/ Steve Reder
---------------------------------
Steve Reder, President/Director
Dated: June 10, 2003 NDMS INVESTMENTS, L.P.
By /s/ Robert Moore
---------------------------------
Robert Moore, General Partner
By /s/ Robert Moore
---------------------------------
Robert Moore, Personally
27
EXHIBIT A-1 [NEW NDMS NOTE]
28
EXHIBIT A-2 [NDMS SECURITY AGREEMENT]
29
EXHIBIT A-3 [PATENT MORTGAGE]
30
EXHIBIT B-1 [AFFONSO CONSENT]
31
EXHIBIT B-2 [AFFONSO NOTE]
32
EXHIBIT B-3 [AFFONSO SECURITY AGREEMENT]
33
EXHIBIT C-1 [DEVENSHIRE/SANDERS/SUNSET CONSENT]
34
EXHIBIT C-2 [DEVENSHIRE NOTE]
35
EXHIBIT C-3 [DEVENSHIRE SECURITY AGREEMENT]
36
EXHIBIT D-1 [ALLIANCE/BOSSUNG/CHESS CONSENT]
37
EXHIBIT D-2 [ALLIANCE NOTE]
38
EXHIBIT D-2 [ALLIANCE SECURITY AGREEMENT]
39
EXHIBIT E [EWING CONSENT]
40
EXHIBIT F [RADUSCH CONSENT]
41