Sample Business Contracts

Settlement Agreement - Cheung Laboratories Inc. and William O. Cave

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                             SETTLEMENT AGREEMENT

         This Settlement  Agreement,  containing  payment terms, is entered into
this 28th day of October,  1996 by and between  William O. Cave,  an  individual
residing  in New  York  ("WOC"),  and  Cheung  Laboratories,  Inc.,  a  Maryland
corporation ("CLI").

         WHEREAS,  after much  discussion,  the parties hereto agree that WOC is
owed the total sum of $224,825 by CLI; and

         WHEREAS,  CLI is unable to promptly  pay this sum as of the date hereof
but wishes to establish  the total amount owed and is willing to make every good
faith effort to retire the balance in the shortest possible time; and

         WHEREAS,  the parties  hereto have also reached an  agreement  that CLI
will  issue  56,340  Common  Stock  Purchase  warrants  entitling  the holder to
purchase common shares of CLI for a price of $.50 per share, for a period of two
years from the date hereof; and

         WHEREAS, the parties desire to bring the relationship between them to a
mutually   satisfactory   settlement   regarding  all  previous  agreements  and
relationships  and fully and  finally  settle all claims  which the  parties now
have,  will  have,  or could  have,  arising  from or  related in any way to any
previous dealing between the parties;

         NOW,  THEREFORE,  in  consideration of the premises and mutual promises
herein contained, it is agreed as follows:

         1. Concurrent with the execution of this Agreement,  CLI will deliver a
check to WOC in the amount of $30,000 as an initial  payment,  thereby  reducing
the total amount owed by CLI to WOC to the sum of $194,825.

         2. CLI shall  also issue to WOC a  certificate,  of even date with this
Agreement,  evidencing  WOC's  ownership of 56,340  warrants to purchase  common
shares of CLI upon the terms and for the  period  first  mentioned  above.  This
certificate shall be prepared by counsel to CLI and will be issued to WOC within
thirty days of the date hereof.


         3. CLI shall use its best  efforts to pay the  remaining  balance at an
early date.  It is  anticipated  by both  parties that this will occur not later
than the end of February,  1997.  Unpaid  balances shall accrue  interest at the
annual rate of 15%.

         4. In order to induce CLI to pay the  initial  payment and to issue the
warrants,  WOC, individually and on behalf of his heirs, successors and assigns,
represents and warrants to CLI that the sums mentioned herein are accurate as of
the date hereof,  and grants to CLI his unconditional and total release from all
claims of whatever  description that he, his heirs,  successors or assigns might
otherwise assert against CLI for additional amounts.

         5. As further  consideration,  WOC,  individually  and on behalf of his
heirs,  successors  and  assigns,  hereby  releases  all  officers,   directors,
employees,  agents or  representatives  of CLI, past, present or future from any
and all  claims  which  might  arise  from  any  past  relationship,  agreement,
representation  or warranty that any of them might have had with WOC or might be
alleged to have had with WOC.

         6. This Settlement  Agreement sets forth the entire  agreement  between
the  parties  hereto,  and fully  supersedes  any and all prior  agreements  and
understandings between the parties.

         IN WITNESS  WHEREOF,  and  including to be legally  bound  hereby,  the
parties have executed this Agreement.


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301650.001(BF)                                     2