EXHIBIT 99.2
SETTLEMENT AND TERMINATION AGREEMENT
THIS SETTLEMENT AND TERMINATION AGREEMENT (the "Agreement") is entered
into as of May 21, 2003, by and between ▇▇▇▇▇▇ Express, Inc. (the "Company"),
and CFOex, Inc. ("CFOex"). Arizona Diversified Equity, LLC ("ADE") and ▇▇▇▇
▇▇▇▇▇▇▇ ("▇▇▇▇▇▇▇") join for the purposes of the release described in Section 4,
below. ▇▇▇▇▇ ▇. ▇▇▇▇▇ ("▇▇▇▇▇"), ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ("▇▇▇▇▇▇▇") and ▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇, ▇▇. ("▇▇▇▇▇▇," and CFOex, ▇▇▇▇▇▇, ▇▇▇▇▇ and ▇▇▇▇▇▇▇ are collectively
referred to herein as the "CFOex Group") join for purposes of approving the
cancellation of ▇▇▇▇▇▇ Options (as defined below), for purposes of
representations and warranties related to the ▇▇▇▇▇▇ Options and for purposes of
the releases set forth in Section 4 below. ▇▇▇▇ and Rose ▇▇▇▇▇ ▇▇▇▇▇▇
(collectively, the "Cannons") join for purposes of the release set forth in
Section 4 below.
PREMISES
WHEREAS, the Company and CFOex have entered into that certain Letter
Agreement (the "Letter Agreement"), dated as of July 23, 2002, and as amended as
of August 17, 2002, pursuant to which CFOex and certain individual members of
the CFOex Group have provided certain executive management services to the
Company, on the terms and conditions set forth in the Letter Agreement;
WHEREAS, CFOex has transferred certain of the ▇▇▇▇▇▇ Options to ▇▇▇▇▇,
▇▇▇▇▇▇▇ and ▇▇▇▇▇▇, but not to any persons or entitles other than the individual
members of the CFOex Group;
WHEREAS, there has been proposed that the Cannons, the principal
stockholders and members of the board of directors of the Company, intend to
sell all of the shares of common stock of the Company beneficially owned by them
to ADE pursuant to a Stock Purchase Agreement, of even date herewith (the "Stock
Purchase Agreement");
WHEREAS, the Company and CFOex Group desire to reach certain agreements
with respect to the Letter Agreement, including without limitation, the
reclassification of the services to be rendered by the CFOex Group to the
Company and the relationship between the CFOex Group and the Company during the
balance of the term of the Letter Agreement, the compensation and consideration
to be received by the CFOex Group under the provisions of the Letter Agreement
and the contemplated termination of the Letter Agreement, to reflect their
mutual understanding of the parties in light of the transactions contemplated by
the Stock Purchase Agreement;
WHEREAS, the parties to this Agreement desire to grant certain releases
to and among each other, to the extent set forth in this Agreement; and
WHEREAS, the parties intend and believe that it is in their best
interests to enter into this Agreement and the other agreements contemplated
herein.
AGREEMENT
NOW, THEREFORE, on the stated premises and for and in consideration of
the mutual covenants and agreements hereinafter set forth and the mutual
benefits to the parties to be derived here from, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, and
intending to be legally bound, the parties hereby agree as follows:
1. At the closing of the transactions contemplated by the Stock
Purchase Agreement (the "Purchase Closing"), the individual members of the CFOex
Group shall resign in all capacities as executive officers and employees of the
Company and the obligations and duties of the CFOex Group to the Company set
forth under the provisions of the Letter Agreement under the sections entitled
"CFOex's Role" and "CFOex's Proposed Actions" shall terminate, except to the
extent set forth and as modified in this Agreement. As a professional courtesy
to assist in the transition during the two-week period (the "Transition Period")
following the date of the Purchase Closing (the "Purchase Closing Date"), each
of individual members of the CFOex Group shall make himself available to and
assist and cooperate with the Company and its management during reasonable
business hours and at the premises of the Company during the Transition Period,
if requested, to provide consulting services to the Company for the purpose of
effecting the transition of business operations to new management and in the
preparation and filing of its periodic reports, as required under the Securities
Exchange Act of 1934, as amended, in a timely manner. Notwithstanding anything
to the contrary herein, the board of directors of the Company shall have the
authority and discretion to reduce or limit, but not to increase, the
transitional involvement of the CFOex Group, but any such reduction or
limitation shall not affect the payment obligations of the Company to the CFOex
Group hereunder. The Company shall reimburse CFOex for all reasonable
out-of-pocket expenses, including travel expenses, incurred in assisting the
Company in the Transition Period, but in no event shall such expense
reimbursement exceed $2,500 per week, without prior approval by the Board of
Directors of the Company. On or before two Business Days (as defined below)
following the end of the Transition Period, CFOex shall submit a final, itemized
expense report, which shall be promptly reimbursed by the Company as set forth
in the Letter Agreement.
2. In consideration for all of the transactions contained herein,
including the termination of the Letter Agreement, the releases and the
cancellation of all of the options (the "▇▇▇▇▇▇ Options") granted to CFOex to
purchase up to 1,500,000 shares of common stock of the Company, as contemplated
by the Letter Agreement, the Company shall pay to CFOex (or as otherwise
directed in writing by all of the CFOex Group) the sum of $450,000 (less the
$50,000 payment due in May 2003 to CFOex under the Letter Agreement (the "May
Payment"), if paid prior to the Purchase Closing) in two installments. The first
installment of $150,000 (less the May Payment, if made) shall be paid on or
before the Purchase Closing Date. The second installment of $300,000 shall be
payable on or before the first anniversary of the Purchase Closing. However, in
the event that, following the Purchase Closing, the Company or a Subsidiary of
the Company shall complete either: (i) a merger, reorganization, share exchange,
consolidation with or the acquisition of all or substantially all of the assets
of a third party (other than a Subsidiary of the Company), or (ii) a traditional
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financing of equity securities of the Company resulting in gross proceeds of not
less than $3,000,000 to the Company, then the $300,000 payable under this
Section 2 shall be accelerated to the tenth day following the closing date of
such transaction (as such closing date shall be announced by the Company in a
Company press release or the Company's periodic reports filed with the
Securities and Exchange Commission), if such date shall be a day on which banks
are not required or authorized to close in Los Angeles, California (a "Business
Day"), and if not, then on the immediately following Business Day. A payment
shall be deemed delivered on a due date if a check or other negotiable
instrument with good funds shall be deposited in the United States mails by
registered or certified mail, postage prepaid, or with a nationally recognized
courier service, or a wire transfer shall be transmitted on such due date to
CFOex. CFOex Group represents and warrants that CFOex has been reimbursed in
full for all expenses incurred by CFOex under the Letter Agreement through May
16, 2003. On or before two Business Days following the Purchase Closing Date,
CFOex shall submit a final, itemized expense report for expenses incurred from
May 16, 2003 through the Purchase Closing, which shall be promptly reimbursed by
the Company as set forth in the Letter Agreement, but in no event shall such
expense reimbursement exceed $2,500 per week, without prior approval by the
Board of Directors of the Company. Except as expressly set forth herein, each of
CFOex Group agrees and acknowledges that each of CFOex Group shall have no right
or entitlement to any other fees, expenses, compensation, reimbursement or
consideration under the Letter Agreement, and in particular, each of CFOEx Group
shall not be entitled to any fees, expenses, compensation, reimbursement or
consideration in connection with the Purchase Closing. Notwithstanding anything
herein to the contrary, the Indemnification provisions of the Letter Agreement
shall survive the termination of the Letter Agreement in accordance with their
terms and conditions. For purposes of this Agreement, the term Subsidiary when
used with respect to any party means any corporation or other organization,
whether incorporated or unincorporated, at least a majority of the securities or
other interests of which having by their terms ordinary voting power to elect a
majority of the board of directors or others performing similar functions with
respect to such corporation or other organization is directly or indirectly
owned or controlled by such party or by any one or more of its Subsidiaries, or
by such party and one or more of its Subsidiaries.
3. Each of CFOex Group represents and warrants (which representations
and warranties shall be true and correct at the Purchase Closing): (a) CFOex or
the individual members of the CFOex Group are the owners, beneficially and of
record, of all the ▇▇▇▇▇▇ Options, free and clear of any mortgage, deed of
trust, pledge, hypothecation, assignment, deposit arrangement, encumbrance,
security interest, lien (statutory or other) or preference, equity, option,
charge, limitation on voting rights, right to receive dividends, dissenters' or
appraisal rights, priority or other security or similar agreement or
preferential arrangement of any kind or nature whatsoever (including, without
limitation, any conditional sale or other title retention agreement having
substantially the same economic effect as any of the foregoing), (b) each of
CFOex Group has full power to deliver his or its respective ▇▇▇▇▇▇ Options
hereby to the Company for cancellation without obtaining the consent or approval
of any other person, (c) none of CFOex Group has transferred (except among the
members of the CFOex Group) or exercised any of the ▇▇▇▇▇▇ Options, and (d) the
▇▇▇▇▇▇ Options constitute all of the securities of the Company beneficially
owned by any or all of the CFOex Group.
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4. Subject to and conditional on the Purchase Closing:
(a) In consideration of the terms and conditions of this Agreement, and
subject to the Closing, the Company, hereby fully and forever releases and
discharges each of CFOex Group, and, his or its respective parents,
subsidiaries, directors, officers, stockholders, members, partners, attorneys,
accountants, employees, agents, successors, assigns, heirs, legatees, nominees
and representatives, and each of them, of and from all manner of actions, causes
of action, claims, demands, costs, damages, liabilities, losses, obligations,
expenses and compensation of any nature whatsoever in law or in equity, known
and unknown, including, but not limited to, those asserted or which could have
been asserted against each other with respect to all claims, disputes and
differences between them; PROVIDED, HOWEVER, that this release shall not extend
in any way to any attorneys, accountants or other providers of professionals
services (excluding the members of the CFOex Group) who shall also have provided
such legal or accounting services to the Company or such other professionals who
shall have provided such other professional services directly to the Company.
(b) In consideration of the terms and conditions of this
Agreement, and subject to the Closing, each of ADE and ▇▇▇▇▇▇▇, hereby fully and
forever releases and discharges each of CFOex Group, and, his or its respective
parents, subsidiaries, directors, officers, stockholders, members, partners,
attorneys, accountants, employees, agents, successors, assigns, heirs, legatees,
nominees and representatives, and each of them, of and from all manner of
actions, causes of action, claims, demands, costs, damages, liabilities, losses,
obligations, expenses and compensation of any nature whatsoever in law or in
equity, known and unknown, including, but not limited to, those asserted or
which could have been asserted against each other with respect to all claims,
disputes and differences between them.
(c) In consideration of the terms and conditions of this
Agreement, and subject to the Closing, each of the Cannons, hereby fully and
forever releases and discharges each of CFOex Group, and, his or its respective
parents, subsidiaries, directors, officers, stockholders, members, partners,
attorneys, accountants, employees, agents, successors, assigns, heirs, legatees,
nominees and representatives, and each of them, of and from all manner of
actions, causes of action, claims, demands, costs, damages, liabilities, losses,
obligations, expenses and compensation of any nature whatsoever in law or in
equity, known and unknown, including, but not limited to, those asserted or
which could have been asserted against each other with respect to all claims,
disputes and differences between them.
(d) In consideration of the terms and conditions of this
Agreement, and subject to the Closing, each of CFOex Group, hereby fully and
forever releases and discharges the Company and, its parents, subsidiaries,
directors, officers, stockholders, members, partners, attorneys, accountants,
employees, agents, successors, assigns, heirs, legatees, nominees and
representatives, and each of them, of and from all manner of actions, causes of
action, claims, demands, costs, damages, liabilities, losses, obligations,
expenses and compensation of any nature whatsoever in law or in equity, known
and unknown, including, but not limited to, those asserted or which could have
been asserted against each other with respect to all claims, disputes and
differences between them, other than the executory provisions to pay the fees,
expenses (the reimbursement of such expenses subject to the obligations of CFOex
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Group to provide the expense reimbursement reports described in such Sections 1
and 2) and other amounts expressly set forth in Sections 1 and 2 of this
Agreement.
(e) In consideration of the terms and conditions of this
Agreement, and subject to the Closing, each of CFOex Group, hereby fully and
forever releases and discharges ADE and ▇▇▇▇▇▇▇, and, his or its parents,
subsidiaries, directors, officers, stockholders, members, partners, attorneys,
accountants, employees, agents, successors, assigns, heirs, legatees, nominees
and representatives, and each of them, of and from all manner of actions, causes
of action, claims, demands, costs, damages, liabilities, losses, obligations,
expenses and compensation of any nature whatsoever in law or in equity, known
and unknown, including, but not limited to, those asserted or which could have
been asserted against each other with respect to all claims, disputes and
differences between them.
(f) In consideration of the terms and conditions of this
Agreement, and subject to the Closing, each of CFOex Group, hereby fully and
forever releases and discharges each of the Cannons, and, his or her parents,
subsidiaries, directors, officers, stockholders, members, partners, attorneys,
accountants, employees, agents, successors, assigns, heirs, legatees, nominees
and representatives, and each of them, of and from all manner of actions, causes
of action, claims, demands, costs, damages, liabilities, losses, obligations,
expenses and compensation of any nature whatsoever in law or in equity, known
and unknown, including, but not limited to, those asserted or which could have
been asserted against each other with respect to all claims, disputes and
differences between them.
5. The Company agrees to provide director and officer liability
insurance coverage to those members of the CFOex Group who shall have been the
subject of such coverage prior to the Purchase Closing, comparable to the extent
of such coverage afforded to the directors and officers of the Company as of the
date of this Agreement, for a period of one year following the Purchase Closing.
6.
(a) The Company represents and warrants to CFOex that neither it, nor
any of its respective officers, directors, agents or employees has employed any
investment banker, broker or finder, or incurred any liability to any third
party, for any brokerage fees, commissions or finders' fees, in connection with
the transactions contemplated by this Agreement. The Company agrees to indemnify
CFOex against any claims by any such investment banker, broker, finder or third
party for any commission, brokerage or finder's fee or other similar fee arising
as a result of this Agreement or the transactions contemplated hereby, based
upon any agreement or understanding between the Company and such investment
banker, broker, finder or third party.
(b) Each of CFOex Group represents and warrants to the Company that
neither any of them, nor any of their respective officers, directors, agents or
employees has employed any investment banker, broker or finder, or incurred any
liability to any third party, for any brokerage fees, commissions or finders'
fees, in connection with the transactions contemplated by this Agreement. Each
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of CFOex Group agrees to indemnify the Company against any claims by any such
investment banker, broker, finder or third party for any commission, brokerage
or finder's fee or other similar fee arising as a result of this Agreement or
the transactions contemplated hereby, based upon any agreement or understanding
between any of CFOex Group and such investment banker, broker, finder or third
party; PROVIDED, HOWEVER, that with respect to the individual members of the
CFOex Group, the liability of such individual shall be limited to the respective
amount of aggregate proceeds received under this Agreement by each such
individual either directly from the Company or indirectly from CFOex.
7. This Agreement shall be subject to the unanimous approval of the
Board of Directors or a duly authorized subcommittee consisting of the
independent members of the Board of Directors of the Company prior to the
Purchase Closing, shall only be effective at the Purchase Closing and shall be
void in the event of the termination of the Stock Purchase Agreement.
8. All capitalized terms not defined in this Agreement shall have the
meanings set forth in the Letter Agreement.
9. This Agreement represents the entire agreement between the parties
relating to the subject matter hereof. This Agreement alone fully and completely
expresses the agreement of the parties relating to the subject matter hereof.
There are no other courses of dealing, understandings, agreements,
representations or warranties, written or oral, except as set forth herein.
10. This Agreement may be executed in multiple counterparts, each of
which shall be deemed an original and all of which taken together shall be but a
single instrument. The parties hereto, and their respective successors and
assigns, are hereby authorized to rely upon the signature of each person and
entity on this letter, which are delivered by facsimile, as constituting a duly
authorized, irrevocable, actual, current delivery of this letter with original
ink signatures of each such person and entity.
11. All notices that are required or may be given pursuant to this
Agreement must be in writing and delivered personally, by a recognized courier
service, by a nationally recognized courier service, by telecopy or by
registered or certified mail, postage prepaid, to the parties at the following
addresses (or to the attention of such other person or such other address as any
party may provide to the other parties by notice in accordance with this Section
11):
If to the Company, to: ▇▇▇▇▇▇ Express, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telephone no. (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile no. (▇▇▇) ▇▇▇-▇▇▇▇
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If to ADE or ▇▇▇▇▇▇▇, to: Arizona Diversified Equity, LLC
765 The Camelback Esplanade
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Telephone no. (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile no. (▇▇▇) ▇▇▇-▇▇▇▇
With copies to: ▇▇▇▇, Forward, ▇▇▇▇▇▇▇▇ & Scripps LLP
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇, Esq.
Telephone no. (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile no. (▇▇▇) ▇▇▇-▇▇▇▇
If to CFOex Group, to: CFOex, Inc.
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇
Chief Executive Officer
Telephone no. (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile no. (▇▇▇) ▇▇▇-▇▇▇▇
With copies to: Baker, Donelson, Bearman & ▇▇▇▇▇▇▇▇, P.C.
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇, Esq.
Telephone no. (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile no. (▇▇▇) ▇▇▇-▇▇▇▇
If to the Cannons, to: ▇▇▇▇ ▇▇▇▇▇▇
Rose ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telephone no. (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile no. (479) ___-____
or such other addresses as shall be furnished in writing by any party in the
manner for giving notices hereunder, and any such notice or communication shall
be deemed to have been given as of the date so delivered, mailed or telegraphed.
[SIGNATURES ON FOLLOWING PAGE]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed and entered into as of the date first above
("CFOex Group")
CFOEX, INC
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇
President
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇.
---------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇.
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
---------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
---------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇
("ADE")
Arizona Diversified Equity, LLC
a Nevada limited liability company
By: Nevada Diversified Equity, LLC
a Nevada limited liability company
Its Managing Member
By: American Building Management Corporation
a Nevada corporation
Its Managing Member
/s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
---------------------------
By: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇, President
("▇▇▇▇▇▇▇")
/s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
---------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇▇
[ADDITIONAL SIGNATURES ON FOLLOWING PAGE]
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[ADDITIONAL SIGNATURES FROM PRIOR PAGE]
("Cannons")
/s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
---------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇
/s/ Rose ▇▇▇▇▇ ▇▇▇▇▇▇
---------------------------------
Rose ▇▇▇▇▇ ▇▇▇▇▇▇
("Company") ▇▇▇▇▇▇ EXPRESS,
INC.
/s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
------------------------------------
By: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
Its: Chief Financial Officer
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