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Settlement Agreement and Release - Defense Industries International Inc. and Global Guarantee Corp.

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                              SETTLEMENT AGREEMENT
                                       AND
                                     RELEASE


                      MADE AND ENTERED INTO BY AND BETWEEN:


                     DEFENSE INSUSTRIES INTERNATIONAL, INC.

                          (hereinafter: "the COMPANY")

                                       AND

                          GLOBAL GUARANTEE CORPORATION
                             (hereinafter: "GLOBAL")



     Whereas the Parties hereto entered into a consulting agreement dated
     November 29, 2001 attached here as Appendix A (hereinafter: the "Consulting
     Agreement"), whereby Global agreed to provide the Company with certain
     business consulting services including but not limited to assisting the
     Company in raising a minimum of US$5 million from external resources and,
     pursuant to Global's efforts the Company entered into an exclusive
     financial consulting relationship with KPMG Consulting, all in
     consideration for certain compensation, as provided in the Consultancy
     Agreement, and


WHEREAS        pursuant to the Consultancy Agreement, letters and undertakings
               between the Parties during the term of the Consultancy Agreement,
               each of the Parties have claims, demands and allegations against
               the other Party in respect to the compensation, performance and
               other issues; and


WHEREAS        the Parties desire fully and finally to settle and compromise any
               and all claims and disputes between them, which have arisen prior
               to this Agreement, including any claims which have arisen under,
               pursuant to or in connection with the Consulting Agreement.

<PAGE>


NOW, THEREFORE, in consideration for the mutual promises and understandings and
after consideration specified herein, the parties hereby agree as follows:

1.   Concurrently with the signature of this Agreement, the Company shall
     deliver to Efrati, Galili & Co. (the "LAW FIRM"), in trust, the following
     documents: (a) a letter to the transfer agent of the Company (Attached
     hereto as APPENDIX B) requesting its transfer agent to cause the issuance
     to Global one Company stock certificate evidencing 50,000 shares of Company
     stock, all of which are deemed fully earned, fully paid for and
     nonassessable as of April 30, 2002; one Company stock certificate
     evidencing 20,000 shares of Company stock, all of which are deemed fully
     earned, fully paid for and nonassessable as of June 30, 2002; and one
     Company stock certificate evidencing 30,000 shares of Company stock, all of
     which are deemed fully earned, fully paid for nonassessable as of September
     30, 2002 (collectively, the "ISSUED SHARES") and (b) a copy of the
     resolution of the Board of Directors of the Company with respect to the
     issuance of the Issued Shares (attached hereto as APPENDIX C). The Company
     further agrees that immediately following the issuance of the Issued
     Shares, it will immediately cause its legal counsel to provide Global with
     an appropriate opinion letter(s), subject to the provisions of the
     applicable law, which enables Global to have the Rule 144 restrictive
     legend removed from the above-referenced stock certificates as of April 30,
     2003, June 30, 2003, and September 30, 2003 respectively, and that such
     stock certificates can be transferred free and clear of any restrictive
     legend pursuant to Rule 144 of the Securities Act of 1933, as amended.

2.   Global shall not act in any way or cause or encourage any third party to
     take any action which shall have the effect to depress the stock price of
     the Company's shares and if at any time any of the Issued Shares are to be
     sold by Global, Global shall not place a sell order below the last sale
     price.

<PAGE>


3.   Global agrees to hold the Company harmless and waives any rights it may
     have to collect from the Company 100,000 shares of Company stock (the
     "Redwood Shares") that remains due and owing from Redwood Consultants LLC
     to Global. Global further agrees to not attempt, in any manner, to collect
     the Redwood Shares from Redwood Consultants LLC., A letter to such effect
     addressed to Redwood Consultants LLC., is attached hereto as APPENDIX D.

4.   The Company undertakes to pay to Global US$32,000 (the "BASIC AMOUNT"), if
     and when the Company shall raise a minimum of US$5 million in an equity
     transaction with respect to the sale of its shares.

5.   Following review by the Company of the details of the expenses incurred by
     Global in relation to its performance of services under the Consultancy
     Agreement beginning as of the date of the execution of the Consultancy
     Agreement and until December 31, 2002 (the "CONSULTANCY TERM"), it is
     agreed that Global shall be entitled to be paid US$ 49,000 (the "EXPENSE
     AMOUNT") as full and final payment for all expenses incurred by Global
     during the Consultancy Term. Concurrently with the signature of this
     Agreement, the Company shall deliver to the Law Firm, in trust, irrevocable
     instructions by the Company addressed to the Company's bank (details of
     which are attached hereto as Appendix Q) (the "Bank"), instructing the Bank
     to transfer US$10,000 of the Expense Amount to the account of Global
     (attached hereto as APPENDIX E. As for the remaining US$39,000 of the
     Expense Amount, The Company agrees to pay said amount in installments
     pursuant to the mutual agreement of the Parties from time to time and as
     the business of the Company shall permit.

6.   Concurrently with the signature of this Agreement, each of the Parties will
     provide the Law Firm with its signed Settlement Agreement and Release (the
     "SETTLEMENT AGREEMENT") in respect to the Liviakis issue, a copy of which
     is attached hereto as APPENDIX F.

7.   Concurrently with the signature of this Agreement the Company shall deliver
     to the Law Firm, in trust, irrevocable instructions to the Bank (details of
     which are attached hereto as APPENDIX G) to transfer to Pace Communications
     Network the amount of US$ 23,526.39.

<PAGE>


8.   Following the signature of this Agreement by the Parties, the Company shall
     enter into a consulting agreement (in the form attached hereto as Appendix
     H) with a company managed by Mr. Michael Markow (a majority shareholder in
     such Company) and which is approved by the Company.

9.   Global irrevocably waives any of its rights to receive from the Company any
     warrants of any kind whatsoever, arising or which may arise in respect to
     the Consultancy Agreement.

10.  This Agreement will be effective on the date (the "EFFECTIVE DATE") that
     all of the following actions (the "Effectiveness Actions") have occurred:

     (a)  The Law Firm has delivered to the transfer agent the letters attached
          as APPENDICES B - D;

     (b)  The Law Firm has delivered to the Bank the letter attached as APPENDIX
          E.

     (c)  The Company has provided evidence to the Law Firm, that the Settlement
          Agreement was executed in full.

     (d)  The Law Firm has delivered to the Bank the letter attached hereto as
          APPENDIX G

11.  It is agreed between the parties that time is of the essence and the
     Parties will make a good faith effort to complete the Effectiveness Actions
     within fourteen (14) days after this Agreement has been signed by all
     parties.

12.  It is agreed between the Parties that any expenses of Global during the
     period beginning January 1, 2003 until the Execution date of this
     Agreement, shall be reviewed by Mr. David Efrati, and he shall have the
     sole discretion to determine the amount, if any, owed by the Company to
     Global in respect to any expenses during such period. The determination of
     Mr. David Efrati as provided above shall be final and binding upon the
     parties and the Parties hereby waive any right of appeal in respect to the
     above determination.

<PAGE>


13.  The Company and Global, each waive any and all rights which it or it had
     under the provisions of section 1542 of Civil Code of the State of
     California, which section reads as follows:


          "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."

14.  Each of the Company and Global acknowledge that the facts in respect to
     which this release is given may hereafter turn out to be different from the
     facts now known to them or believed by them to be true. Each of the Company
     and Global therefore assumes such risk of the facts turning out to be
     different and agrees that this release shall be in all respects effective
     and final and not subject to rescission by reason of said different facts.

15.  Except to claims under or arising out of this Agreement, Global on its
     behalf and on behalf of all its successors and assigns (the "Global
     Releasors") forever and irrevocably waives, releases and discharges the
     Company and its respective past, present and future officers, employees,
     directors, shareholders, representatives, affiliates and agents (the
     "Company Releasees"), from any and all claims, demands, causes of actions,
     fees, liabilities and expenses (inclusive of attorneys' fees) of any kind
     whatsoever, whether known or unknown, which the Global Releasors, ever had
     or now have or may in the future have against any of the Company Releasees
     by reason of any actual or alleged act, omission, transaction, practice,
     conduct, occurrence, or other matter up to and including the date hereof,
     including but not limited to, any claims under any applicable law,
     regulation, or ordinance or relating thereto or resulting therefrom,
     including without limitation, with respect to the Consultancy Agreement.
     Notwithstanding anything to the contrary in this agreement, it is expressly
     agreed that this waiver and release shall not include any act and/or
     omission of the Company and/or Company Releasees caused or arising from (i)
     any grossly negligent act or omission of the Company and/or Company
     Releasees, or (ii) any claim by any third party against Global regarding
     the accuracy, completeness and/or truthfulness of the information regarding
     the Company provided by the Company or anyone on its behalf. Global's
     (including Global Releasors) release of the Company Releasees, as set forth
     above herein, shall be binding upon Global and Global Releasors immediately
     upon signature of this Agreement by both parties and the effectiveness
     thereof shall not be subject to the execution of the Effectiveness Actions.

<PAGE>


     Global and Global Releasors collectively warrant that, they are not
     currently aware of any claim by a third party against Global regarding the
     accuracy, completeness and/or truthfulness of the information regarding the
     Company provided by the Company or anyone on its behalf, as referenced in
     Section 15(ii) herein.

16.  Except to claims under or arising out of this Agreement and subject to the
     second sentence of this Section 16, the Company on its behalf and on behalf
     of all its successors and assigns (the "Company Releasors") forever and
     irrevocably waives, releases and discharges Global and its respective past,
     present and future officers, employees, directors, shareholders,
     representatives, affiliates and agents (the "Global Releasees"), from any
     and all claims, demands, causes of actions, fees, liabilities and expenses
     (inclusive of attorneys' fees) of any kind whatsoever, whether known or
     unknown, which the Company Releasors, ever had or now have or may in the
     future have against any of the Global Releasees by reason of any actual or
     alleged act, omission, transaction, practice, conduct, occurrence, or other
     matter up to and including the date hereof, including but not limited to,
     any claims under any applicable law, regulation, or ordinance or relating
     thereto or resulting therefrom, including without limitation, with respect
     to the Consultancy Agreement. Notwithstanding anything to the contrary in
     this agreement, it is expressly agreed that this waiver and release shall
     not include any act and/or omissions of Global and/or Global Releasees
     caused or arising from (i) any claim of a third party that Global
     misrepresented its authority, or made any commitment or representation on
     behalf of or relating to the Company not expressly authorized in writing by
     the Company, or (ii) any grossly negligent or illegal act or omission in
     providing any services to the Company by Global and/or Global Releasees.
     The Company's (including the Company Releasors) release of the Global
     Releasees, as set forth above herein, shall be binding upon the Company and
     the Company Releasors immediately upon the signature of this Agreement by
     both Parties and the effectiveness thereof shall not be subject to the
     execution of the Effectiveness Actions.

<PAGE>


     Company and Company Releasors collectively warrant that they are not
     currently aware of ay claim of a third party that Global misrepresented its
     authority, or made any commitment or representation on behalf of or
     relating ot the Company not expressly authorized in writing by the Company,
     as referenced in Section 16 (i) herein.

17.  Notwithstanding the aforesaid, nothing in this Agreement will constitute a
     waiver or release by Global in respect to any press releases or other
     public releases released by Global in respect of the Company following
     written instructions by the Company as of November 29, 2001 until signature
     of this Agreement (the "Press Releases"). The Company undertakes to hold
     Global harmless and indemnify Global (and it employees, officers,
     directors, successors and assigns), including reasonable attorney's fees,
     in respect to any of the Press Releases. The Company's duty to hold Global
     harmless and indemnify Global shall be binding upon the Company immediately
     upon the signature of this Agreement by both parties and the effectiveness
     thereof shall not be subject to the execution of the Effectiveness Actions.

18.  This Agreement shall be binding on and shall inure to the benefit of the
     parties hereto and their respective successors, assigns, heirs and legal
     representatives.

19.  Each of the parties hereto shall bear his, her or its own attorney's fees
     and costs for the preparation and review of this Agreement.

<PAGE>


20.  Each of the recitals to this Agreement is incorporated herein by this
     reference and shall become part of the Agreement.

21.  No modification of this Agreement or of any part hereof shall be valid or
     binding upon the parties hereto unless made in writing and signed by the
     parties hereto and their respective attorneys. This document constitutes
     the entire agreement between the parties and supersedes all prior
     agreements, discussions, representations or negotiations. Each party
     acknowledges that he, she or it has not relied upon any representation
     whatsoever made by another party or said party's counsel in entering into
     this Agreement, except only as expressly set forth herein.

22.  Each of the parties acknowledges and agrees that he, she or it has
     cooperated in the preparation of this Agreement and have had opportunity to
     review the agreement and consult with attorneys .

23.  No party shall be deemed to be the "drafter" of this Agreement, such that
     an ambiguity in the Agreement would be interpreted against that party.

24.  The invalidity or unenforceability of any particular provision of this
     Agreement shall not affect the other provisions hereof, and this Agreement
     shall be construed in all respects as if such invalid or unenforceable
     provision were omitted.

25.  This Agreement shall be governed by and construed in accordance with the
     laws of the State of California and each of the Company and Global consent
     to the exclusive jurisdiction of the courts of the State of California, in
     the County of Los Angeles, in connection with the enforcement and or
     construction of this Agreement.

26.  This Agreement may be executed in one or more counterparts, each of which
     shall be considered an original, but all of which together shall constitute
     one and the same instrument.

<PAGE>


27.  Each of the Company and Global undertakes to keep in strict confidence, and
     not to use for any purpose whatsoever except for internal purposes, any and
     all information relating, in any way, to the other party which had been
     provided to such Party by the other Party or was otherwise obtained by the
     such Party including the terms and conditions of this Agreement and all
     transactions contemplated herein, including their existence, except for
     information: (i) which is or shall be in the public domain not due to any
     act of any of the Parties in breach of law or agreement; and/or, (ii) which
     such Party is required to disclose under any applicable law after providing
     the other Party with a detailed written notice of that fact so that the
     other Party may seek a protective order, confidential treatment or any
     other remedy, in that event such Party shall furnish only that portion of
     information which is legally required and shall exercise reasonable efforts
     to obtain reliable assurance that confidential treatment will be accorded
     that information to the extent reasonably requested by such Party.

28.  All notices or other communications hereunder shall be in writing and shall
     be given in person, by registered mail (registered international air mail
     if mailed internationally), by an overnight courier service which obtains a
     receipt to evidence delivery, or by facsimile transmission (provided that
     written confirmation of receipt is provided), addressed as set forth below:


     If to the Company:

                                   Defense Industries International, Inc.
                                   Attention: President
                                   Industrial Zone Erez, PO Box 779
                                   Ashkelon, Israel 78101
                                   Tel: 972-8-789-1611
                                   Fax: 972-8-689-9287 and
                                   Fax: 972-3-927-1572

                                   With a copy to:

                                   Efrati, Galili & Co.
                                   6 Wissotsky st.
                                   Tel Aviv 62330 Israel
                                   Fax: 972-3-604 0111
                                   Attn: Adv. David Efrati

                                   If to Global:

                                   Global Guarantee Corporation
                                   Attention: President
                                   15760 Ventura Boulevard, Suite 1020
                                   Encino, California 91436
                                   Tel: 818-783-0054
                                   Fax: 818-783-1120

<PAGE>


               IN WITNESS WHEREOF, the parties hereto have executed this
               Agreement as of the 1st day of May 2003.

         DEFENSE INDUSTRIES,  INCORPORATED


         By:                                          Dated:  May 1, 2003
         -----------------------------
         Joseph Fostbinder, Its Chief
         Executive Officer


         GLOBAL GUARANTEE CORPORATION,



         By:                                          Dated:  May 1, 2003
         -----------------------------
         Michael M. Markow, Its President