EXHIBIT 4.1
COMPROMISE AND SETTLEMENT AGREEMENT
This Compromise and Settlement Agreement (the "Agreement") is made by
and between Genesis Financial Group, L.L.C. (herein "Genesis" or "Plaintiff"),
and ▇▇▇▇▇▇.▇▇▇, Inc. (herein "▇▇▇▇▇▇.▇▇▇" or "Defendant"). Genesis and
▇▇▇▇▇▇.▇▇▇ are referred to hereafter as the "Parties".
1. On August 14, 2000, Genesis filed suit against ▇▇▇▇▇▇.▇▇▇, Inc. in
case styled and numbered Genesis Financial Group, L.L.C. v. ▇▇▇▇▇▇.▇▇▇, Inc.,
Cause No. 2000-41386, in the 125th Judicial District Court of ▇▇▇▇▇▇ County,
Texas ("The Lawsuit"). The Lawsuit arises out of the settlement of an
arbitration proceeding between Genesis Financial Group, L.L.C. and ▇▇▇▇▇▇.▇▇▇,
Inc.
2. On May 4, 2000, Genesis commenced an arbitration proceeding against
FindEx seeking to recover damages and specific performance from ▇▇▇▇▇▇.▇▇▇
relating to the September 10, 1999 consulting agreement between the Parties. In
the Arbitration, Genesis alleged that ▇▇▇▇▇▇.▇▇▇ breached the consulting
agreement by failing to issue the warrant described in paragraph five therein
and sought to recover approximately $700,000, plus interest, costs and
attorneys' fees, or alternatively, specific performance of the consulting
agreement.
3. On June 16, 2000, the parties reached a compromise and settlement of
the arbitration proceeding. The settlement agreement called for (1) the issuance
of a warrant to Genesis, (2) the issuance to Genesis of 50,000 shares of FindEx
common stock, and (3) the payment to Genesis of $7,460.87. Genesis alleges that
FindEx breached the agreement because FindEx never issued the warrant or paid
the cash.
4. Genesis filed suit against ▇▇▇▇▇▇.▇▇▇, Inc. on August 14, 2000,
seeking damages for the alleged breach of the settlement agreement. In the
Lawsuit, Genesis sought to recover damages due to the alleged breach, plus
interest, costs and attorneys' fees. FindEx failed to answer the lawsuit. As a
result, on October 26, 2000, Genesis obtained a default judgment against FindEx
in the principal amount of $269,960.87, plus costs, interest and attorneys'
fees.
5. On December 22, 2000, Genesis commenced collection efforts on the
judgment in Nebraska. Those efforts resulted in the garnishment of FindEx's bank
accounts on December 29, 2000 in the amount of $86,562.35 (the "garnishment
proceeds"). On January 25, 2001, FindEx filed a motion for new trial and
additional pleadings and affidavits seeking to set aside the default judgment in
▇▇▇▇▇▇ County. FindEx alleged that it had not received proper notice of the
Lawsuit or judgment and sought to set aside the default judgment.
6. FindEx filed a similar motion in Nebraska seeking to set aside the
judgment and halt collection efforts. On February 9, ▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇ Nebraska entered an order requiring that the garnishment proceeds
be transferred to a trust account at ▇▇▇▇▇ ▇▇▇▇, L.L.P. in the name of Genesis
Financial Group, L.L.C. and ▇▇▇▇▇▇.▇▇▇, Inc., to be held in such account pending
a resolution of FindEx's pending efforts to set aside the judgment in ▇▇▇▇▇▇
County, Texas.
7. FindEx expressly denies that it has committed any wrongful act,
violated any duty it owes or owed to Genesis, or that it breached the Settlement
Agreement. FindEx alleges that it was Genesis that breached the Settlement
Agreement. ▇▇▇▇▇▇.▇▇▇ enters into this Agreement expressly upon the condition
that it represents a settlement of disputed claims and that it participates
solely for the purpose of buying peace and for the costs of litigation.
8. For and in consideration of the promises, agreements, and covenants
recited herein, and for and in consideration of the benefits to be obtained by
reason of this Compromise and Settlement Agreement and the mutual covenants and
promises made herein, the Parties agree as follows:
(a) The ▇▇▇▇▇ Fargo garnishment proceeds shall be immediately transferred
to Genesis Financial Group, L.L.C., with the exception of $20,000
which will be immediately transferred to FindEx. Both parties hereby
authorize ▇▇▇▇▇ ▇▇▇▇, L.L.P. to immediately transfer $66,562.35 to
Genesis Financial Group, L.L.C. and $20,000 to ▇▇▇▇▇▇.▇▇▇, Inc. and
the Parties agree to execute any additional documents as are needed to
facilitate this transfer immediately upon being presented with same;
(b) FindEx will issue a warrant to Genesis for 100,000 shares of common
stock with a strike price of $.50 per share; the warrant shall be
issued in the name of ▇▇▇▇▇ ▇. ▇▇▇▇▇, Personal Property, for 50,000
shares and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇, ▇▇. for 50,000 shares. The Warrant
shall provide for cashless exercise and shall be exercisable as to all
or any portion thereof from time to time on any business day for a
period of seven years from the date hereof. The Warrant, as to all or
any portion of the shares, options or rights under the Warrant shall
be freely transferable. FindEx shall bear all expense and effort in
connection with the issuance of such warrant. Such warrant shall be
delivered to Genesis no later than March 5, 2001;
(c) FindEx shall, at its expense, register any stock in Genesis'
possession and those shares of common stock underlying the warrant,
and still exercisable, within 90 days of the date of the settlement.
9. Such amounts and consideration described herein represent the total
and complete amount of money and consideration paid or to be paid to or for the
benefit of Genesis. Genesis acknowledges that it will not receive any further
payments or transfers of any kind from ▇▇▇▇▇▇.▇▇▇ on account of or attributable
to anything whatsoever.
10. The Parties expressly recite and acknowledge that all claims of the
Parties, one against the other, including the Claims as described above, are
being settled by this Agreement, except as expressly provided herein.
11. Maintenance of Default Judgment and Covenant Not to Execute. The
Parties agree that the October 26, 2000 Default Judgment shall remain in effect
until all provisions described in Paragraph 8 above are carried out. Genesis
agrees not to execute or otherwise seek to collect upon the judgment during such
period as long as FindEx is not in default under any of its obligations.
Likewise, FindEx agrees not to appeal or attempt to set aside the Default
Judgment in Texas or any jurisdiction. Once all obligations are satisfied, the
judgment will be released. "All obligations" means all of the obligations
described in Paragraph 8, except that the parties do not intend to keep the
judgment in effect during the seven-year term of the warrant. As long as the
warrant is delivered as required and all other obligations in sub-paragraphs
8(a), 8(b) & 8(c) are satisfied, the judgment shall be released. At that time,
the parties will execute mutual releases.
12. Until the Default Judgment is released, Genesis agrees to refrain
from taking any further action to enforce the judgment or record or abstract the
judgment as long as ▇▇▇▇▇▇.▇▇▇ is in compliance with all of its obligations
under this agreement. This includes, but is not limited to, activities such as
causing the judgment to be filed in the real property records of any state,
county or municipality or seeking enforcement of the judgment by execution,
garnishment or turnover. If ▇▇▇▇▇▇.▇▇▇ defaults on any obligation under this
Agreement and fails to cure such default within five days after written notice,
then Genesis shall be free to immediately enforce the judgment through all
lawful means.
13. This Agreement may be modified or terminated only by means of a
written memorandum executed by the parties hereto. All of the terms and
provisions of this Agreement shall be binding upon and inure to the benefit of
the Parties and their respective successors, and assigns. This Agreement shall
be interpreted and enforced under and in accordance with the laws of the State
of Texas. All of the covenants, representations and warranties contained herein
shall survive the execution of this Agreement and the transactions contemplated
herein. Should any of the Parties seek the enforcement of this Agreement and
prevail, said prevailing party shall be entitled to recover reasonable attorneys
fees and costs incurred in enforcing the terms of this Agreement.
14. This Agreement contains the entire understanding between the
Parties hereto concerning the subject matter contained herein. There are no
representations, agreements, arrangements or understandings, oral or written,
between or among the Parties hereto, relating to the subject matter of this
Agreement which are not fully expressed herein.
15. The signatories hereto acknowledge having had their designated
representatives read all of this Agreement, and acknowledge that they are
accepting the benefits of this Agreement after consulting with counsel.
16. Free and Independent Decision. The parties agree that they are
entering into this instrument of their own choosing and that no one has
exercised any undue duress, coercion or influence upon them. Further, they
acknowledge that this instrument is the product of free choice and that they
have conducted a substantial independent investigation into the underlying facts
and circumstances and that it, and its counsel are satisfied with such
investigation. Each also acknowledges that it has hired independent attorneys,
professionals and experts to advise it in this matter and that it is not relying
upon any representation of another party in choosing to enter into this
instrument.
17. This Agreement may be executed in any number of identical
counterparts, each of which shall be deemed to be an original for all purposes.
The Parties expressly agree to execute any additional documentation necessary to
carry out the terms of this agreement where necessary.
Signed this _19th_ day of _February_, 2001.
Genesis Financial Group, L.L.C.
By:__/s/ ▇▇▇▇▇ ▇. Regan____
Name:_Kevin P. Regan______
Its: __Managing Member_
SUBSCRIBED AND SWORN TO BEFORE ME this __19th__ day of _February__, 2001.
___/s/ ▇▇▇▇▇▇▇ Kitchen___
Notary Public in and for
THE STATE OF TEXAS
▇▇▇▇▇▇.▇▇▇, Inc.
By:__/s/ ▇▇▇▇▇▇ Malone____
Name:_Steven Malone__
Its:__Senior Vice President__
SUBSCRIBED AND SWORN TO BEFORE ME this _19th__ day of _February_, 2001.
__/s/ ▇▇▇▇▇▇ Nekuda_____
Notary Public in and for
THE STATE OF NEBRASKA
ADDENDUM TO FEBRUARY 19, 2001 SETTLEMENT AGREEMENT
On this _20th_ day of May, 2001, ▇▇▇▇▇▇.▇▇▇, Inc., hereinafter called
"Findex", and Genesis Financial Group, LLC, hereinafter called "Genesis", agree
to the following paragraphs, terms and conditions:
A. That Genesis filed a cause of action against Findex in the 125th Judicial
Court of ▇▇▇▇▇▇ County, Texas at Cause No. 2000-41386; and
B. Whereas prior to the above-mentioned case being adjudicated by the Court,
Findex and Genesis entered into a Settlement Agreement dated February 19,
2001 (hereinafter the `Settlement Agreement'); and
C. Whereas that in order to effectuate the enforcement of the Settlement
Agreement and to assist Findex in fulfilling the terms as set forth
therein, the parties hereby set forth their mutual understanding, which
understanding is not to circumvent the Settlement Agreement but to aid
Findex in completing the terms therein. In consideration thereof, the
parties agree as follows:
1. Genesis agrees to an extension of the deadline for Findex to register
its shares of stock to August 15, 2001 as described in Paragraph 8(c)
of the Settlement Agreement.
2. Genesis agrees to execute the Subordination Agreement attached hereto
as Exhibit "A". This Subordination Agreement shall not be in full
force and effect and shall be terminated and cancelled in the event
that Findex is liquidated or dissolved, in the event files a petition
in bankruptcy, voluntary or involuntary or if Findex makes an
assignment for the benefit of creditors. FindEx agrees that, until it
has complied with all of its obligations under this addendum and the
Settlement Agreement, it shall not become indebted to AFC at any given
time for more than $250,000 (two hundred fifty thousand and no/100
dollars). FindEx's failure to keep its indebtedness to AFC below such
amount shall constitute an event of default under the Settlement
Agreement, this addendum and the Security Agreement.
3. Genesis shall receive a security interest in all of the receivables of
Findex, as described in that certain Security Agreement entered into
concurrently herewith.
4. As consideration for the extension of deadlines described herein and
the execution of the subordination agreement, Genesis shall receive
the first $10,000 from the referred to receivables in Paragraph 3.
Such monies shall be due and owing and paid to Genesis. FindEx also
agrees to reimburse Genesis for the reasonable attorneys' fees and
expenses incurred in connection with this addendum and the related
documentation, with such amount not to exceed $3,500. All amounts
described in this paragraph shall be paid first to Genesis out of any
proceeds from the receivables described above, no later than 5
business days from FindEx's receipt of same.
5. Findex will immediately provide an irrevocable letter to its transfer
agent permitting Genesis to sell the 50,000 shares of Findex in its
possession.
D. Any default on any provision of this addendum shall be treated as an event
of default under P. 12 of the Settlement Agreement. If FindEx fails to
comply with any provision herein, Genesis shall be entitled to enforce all
of its remedies under the Settlement Agreement, including enforcement of
the Default Judgment, and its remedies under the Security Agreement
executed concurrently herewith.
E. Once FindEx complies with all terms of the Settlement Agreement and this
addendum, it shall have no further obligation to Genesis.
F. That the laws of the State of Texas shall govern this Agreement.
In Witness hereof the parties have signed this Agreement on the day and year
above written.
▇▇▇▇▇▇.▇▇▇, Inc. Genesis Financial Group, LLC
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇ By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
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▇▇▇▇▇▇ ▇▇▇▇▇▇, President ▇▇▇▇▇ ▇. ▇▇▇▇▇
EXHIBIT 4.2
STOCK ISSUANCE AGREEMENT
In consideration of services performed by _______________ (the
"Grantee"), and the covenants agreed to herein, ▇▇▇▇▇▇.▇▇▇, Inc., a Nevada
corporation (the "Corporation"), hereby agrees to issue to the Grantee
___________________ (__________) shares of the common stock, par value $0.0001,
of the Corporation (the "Shares").
Grantee hereby acknowledges that the Shares shall constitute
ordinary income to it for purposes of federal, state, and other tax obligations
that may be due.
Lock Up: Notwithstanding any registration of the Shares that
may be effectuated in the meantime, the Grantee agrees not to offer, sell or
contract to sell, or otherwise dispose of, directly or indirectly (including
short sales and/or other hedging to derivative transactions) the Shares until,
at least, April 1, 2003. The stock certificates issued to represent the Shares
shall be imprinted with a legend evidencing the existence of this lock-up
provision; a copy of this Grant shall be provided to the Corporation's transfer
agent; the transfer books and records of the Corporation shall reflect that the
Shares are subject to this lock-up provision; and the existence of this lock-up
provision shall be disclosed in any Registration Statement to be filed with
respect to these Shares.
No Employment or Service Contract: Nothing in this Agreement
shall confer upon Grantee any right to continue in the employ of the Corporation
for any period of specific duration or interfere with or otherwise restrict in
any way the rights of the Corporation or of Grantee, which rights are hereby
expressly reserved by each, to terminate Grantee's service at any time for any
reason, with or without cause.
DATED: September ___, 2002
▇▇▇▇▇▇.▇▇▇, INC. GRANTEE
By:____________________ ___________________________
Name:__________________ Address:___________________
Title:_________________ ___________________________
Soc. Sec. No:______________