EXHIBIT 10(M)
RELEASE AND SETTLEMENT AGREEMENT
This Release and Settlement Agreement (the "Agreement") is hereby entered into
as of the 21st day of November, 2006 by and between the following parties:
A. CompuDyne Corporation, including any of its predecessors,
successors, subsidiaries and present and former officers, directors, employees,
assigns, and persons acting on their behalf (collectively, "CompuDyne");
B. ▇▇▇▇▇▇▇ ▇▇▇▇▇ Mezzanine Capital Fund II, L.P. including
any of its predecessors, successors, subsidiaries and present and former
officers, directors, employees, assigns, and persons acting on their behalf
(collectively, "▇▇▇▇▇"); and
▇. ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ Group, Inc., including any of
its predecessors, successors, subsidiaries and present and former officers,
directors, employees, assigns, and persons acting on their behalf (collectively,
"FBR") (CompuDyne, ▇▇▇▇▇ and FBR are collectively referred to herein as the
"Parties").
WHEREAS, on September 12, 2001, CompuDyne and FBR entered into
an agreement, which was amended on September 27, 2001, whereby FBR agreed to act
as financial advisor and lead underwriter in connection with the private
placement of two million four hundred fifty thousand (2,450,000) shares of
CompuDyne common stock (the "Offering");
WHEREAS, CompuDyne and FBR have expressed a desire to engage
in future business dealings and recognize that resolving the issues covered by
this Agreement will ▇▇▇▇▇▇ the ability to engage in future business dealings;
WHEREAS, the Parties do not admit that liability or wrongdoing
of any kind occurred in connection with the Offering.
WHEREAS, the Parties mutually desire to enter into a full and
final settlement of all claims that the Parties have or may have against one
another, from the beginning of time to the date of this Agreement, including
without limitation any and all claims arising out of or relating to the
Offering, or arising out of or relating to FBR's alleged trading in shares of
CompuDyne common stock (CDCY);
NOW, THEREFORE, in consideration of mutual covenants contained
herein, it is agreed by and between the Parties as follows:
1. FBR shall make the following payments to CompuDyne, for
the benefit of CompuDyne and ▇▇▇▇▇:
a. FBR shall pay to CompuDyne any amounts directed to
be paid by FBR to CompuDyne and/or ▇▇▇▇▇ pursuant to a settlement between FBR
and the United States Securities and Exchange Commission (the "SEC") in In the
Matter of Friedman, Billings, ▇▇▇▇▇▇ & Co., Inc. (the "SEC Settlement"); and
b. FBR shall pay to CompuDyne two million three hundred
thirty three thousand nine hundred fifty nine dollars ($2,333,959), within two
business days following the execution of this Agreement by all Parties, by wire
transfer pursuant to wiring instructions to be provided by CompuDyne.
2. In the event that the total amount paid by FBR to
CompuDyne and/or ▇▇▇▇▇ pursuant to Paragraph 1 of this Agreement is less than
four million five hundred thousand dollars ($4,500,000), FBR shall pay the
difference to CompuDyne at such time as the SEC-directed funds are paid to
CompuDyne, by wire transfer pursuant to wiring instructions to be provided by
CompuDyne.
3. In the event that the total amount paid by FBR to
CompuDyne and/or ▇▇▇▇▇ pursuant to Paragraph 1 of this Agreement exceeds four
million five hundred thousand dollars ($4,500,000), CompuDyne and ▇▇▇▇▇ agree to
deduct any amount paid in excess of four million five hundred thousand dollars
65
($4,500,000) from the amount paid to CompuDyne pursuant to Paragraph 1(b) of
this Agreement, and CompuDyne and ▇▇▇▇▇ further agree to return promptly such
excess amounts up to two million three hundred thirty three thousand nine
hundred fifty nine dollars ($2,333,959) to FBR. Except as provided in this
paragraph, neither CompuDyne nor ▇▇▇▇▇ shall have any obligation to pay any
amounts to FBR under this Agreement.
4. In the event the SEC determines not to require FBR to
make any payment to CompuDyne and/or ▇▇▇▇▇ in In the Matter of Friedman,
Billings, ▇▇▇▇▇▇ & Co., Inc., within two business days of receiving such notice
from the SEC, FBR shall pay $2,166,041 to CompuDyne, by wire transfer pursuant
to wiring instructions to be provided by CompuDyne.
5. The Parties hereby enter into the following releases:
a. CompuDyne and ▇▇▇▇▇, for themselves, their
predecessors, successors, insurers, attorneys and present and former agents,
servants, principals, directors, owners, officers, employees and assigns, hereby
fully, finally, and forever release and discharge FBR, from any and all claims,
rights, debts, liabilities, charges, losses, demands, acts, costs, attorneys'
fees, damages, suits, and causes of action of whatsoever kind, whether now known
or unknown and whether or not suspected or unsuspected, contingent or fixed,
that CompuDyne and ▇▇▇▇▇ now have or may have against FBR, from the beginning of
time through the date of this Agreement, including without limitation any and
all claims, rights, debts, liabilities, charges, losses, demands, acts, costs,
attorneys' fees, damages, suits, and causes of action arising out of or relating
to: (i) the Offering; (ii) any transaction(s) in CompuDyne securities prior
to the date of this Agreement; or (iii) any other financial transaction related
to CompuDyne entered into prior to the date of this Agreement, provided however,
that: (i) no release of FBR for any claim by CompuDyne and/or ▇▇▇▇▇ shall take
effect until after FBR has discharged its obligations to CompuDyne and/or ▇▇▇▇▇
pursuant to the SEC Settlement; and (ii) this release shall have no force or
effect with respect to claims that ▇▇▇▇▇ or CompuDyne may have against persons
other than FBR in connection with such person's trading in CompuDyne stock.
b. FBR, for itself, its predecessors, successors,
insurers, attorneys and present and former agents, servants, principals,
directors, owners, officers, employees and assigns, hereby fully, finally, and
forever releases and discharges CompuDyne and ▇▇▇▇▇ from any and all claims,
rights, debts, liabilities, charges, losses, demands, acts, costs, attorneys'
fees, damages, suits, and causes of action of whatsoever kind, whether now known
or unknown and whether or not suspected or unsuspected, contingent or fixed,
that FBR now has or may have against CompuDyne and ▇▇▇▇▇, from the beginning of
time through the date of this Agreement, including without limitation any and
all claims, rights, debts, liabilities, charges, losses, demands, acts, costs,
attorneys' fees, damages, suits, and causes of action arising out of or relating
to: (i) the Offering; (ii) any transaction(s) in CompuDyne securities prior to
the date of this Agreement; or (iii) any other financial transaction related to
CompuDyne entered into prior to the date of this Agreement, provided however,
that no release of CompuDyne and/or ▇▇▇▇▇ for any claim by FBR shall take effect
until after FBR has discharged its obligations to CompuDyne and/or ▇▇▇▇▇
pursuant to the SEC Settlement.
6. From the date of this Agreement until the date the
releases in Paragraph 5 become effective, CompuDyne and ▇▇▇▇▇ agree not to
commence any litigation against FBR, and FBR agrees not to commence any
litigation against CompuDyne or ▇▇▇▇▇, arising out of or relating to any
financial transactions related to CompuDyne entered into prior to the date of
this Agreement, including without limitation any and all claims covered by the
releases in Paragraph 5.
7. Within two business days following the execution of this
Agreement by all Parties, FBR shall return, or cause to be returned, to
CompuDyne the 40,000 warrants, which have no value, issued to FBR in connection
with its work on the Offering. Upon receipt of the warrants, CompuDyne shall
promptly cause the warrants to be cancelled.
66
8. Any controversy or claim arising out of or relating to
this Agreement, or the breach thereof, including any disputes as to
arbitrability, shall be settled by any means mutually agreed upon by the
Parties. In the absence of any such agreement, it shall be settled by
arbitration in accordance with the Commercial Arbitration Rules of the American
Arbitration Association, and judgment upon the award rendered by the arbitrators
may be entered in any court having jurisdiction thereof.
a. The place of arbitration shall be Washington,
D.C., and the arbitration tribunal shall consist of three (3) arbitrators, of
whom one shall be nominated by each of the parties and the third, who shall
serve as chairman, shall be chosen by the two party-nominated arbitrators or, in
the event the party-nominated arbitrators are unable or unwilling to designate
the third arbitrator, by the American Arbitration Association.
b. The award of the arbitrators shall be final and
binding. The Parties waive any right to appeal the arbitral award, to the extent
the right to appeal may be lawfully waived. Each Party retains the right to seek
judicial assistance: (i) to compel or aid arbitration; (ii) to obtain interim
measures of protection pending arbitration, including equitable relief; or (iii)
to enforce any decision of the arbitrators, including the final award.
9. Each of the Parties represents and warrants that it has
read this Agreement and that it is authorized to enter into this Agreement. Each
Party represents that it has made such investigation of the facts pertaining to
this Agreement as they deem necessary and desirable and have received
independent legal and business advice with respect to the advisability of
executing this Agreement.
10. This Agreement is final and binding and inures to the
benefit of each of the Parties together with their respective successors,
transferees and assigns. No modification or waiver of any provision of this
Agreement is effective unless agreed to, in writing, by all of the affected
Parties.
11. Any notice, demand, consent, approval, request, or other
communication required or permitted to be given hereunder shall be in writing
and delivered either personally to the persons specified below, or by overnight
express mail, as follows:
If to CompuDyne or ▇▇▇▇▇:
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
▇▇▇▇▇▇▇ & ▇▇▇▇▇ LLP
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇.▇., ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇
If to the FBR:
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇.▇.
▇▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇
67
Copy to:
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Chief Legal Officer
Friedman, Billings, ▇▇▇▇▇▇ Group, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
12. This Agreement may be executed in identical counterparts.
Each counterpart hereof is deemed to be an original instrument, but all
counterparts hereof taken together constitute a single document. Facsimile
signatures are deemed originals.
13. The Parties agree to execute any and all documents
reasonably necessary to implement the terms and provisions of the Agreement. 14.
This Agreement was mutually drafted and agreed upon and should not be construed
against any Party.
IN WITNESS WHEREOF, the Parties hereto have caused this
Agreement to be executed by each of them or their duly authorized
representatives as of the date first noted above.
COMPUDYNE CORPORATION, by its Authorized Agent:
/s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
-----------------------------------------------
Printed Name: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
Title: Chief Financial Officer
▇▇▇▇▇▇▇ ▇▇▇▇▇ MEZZANINE CAPITAL FUND II, L.P.,
by its Authorized Agent:
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
-----------------------------------------------
Printed Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Managing Director
FRIEDMAN, BILLINGS, ▇▇▇▇▇▇ GROUP, INC.,
by its Authorized Agent:
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-----------------------------------------------
Printed Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Chief Legal Officer
68