SETTLEMENT AND GENERAL RELEASE
THIS SETTLEMENT AND GENERAL RELEASE (the "Agreement") is made and entered
into by and among ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ AND ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇ (hereinafter sometimes collectively called "the ▇▇▇▇▇ Family") and
MIKE'S ORIGINAL, INC. (hereinafter called "Mike's"). The parties acknowledge
that the terms and conditions of this Agreement have been voluntarily agreed to
and that such terms are final and binding.
WHEREAS, ▇▇▇▇▇▇▇ ▇▇▇▇▇ has been employed by Mike's as Chairman of the Board
and President; and
WHEREAS, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ has been employed by Mike's as Secretary and
Treasurer; and
WHEREAS, Mike's is indebted to ▇▇▇▇▇▇▇ ▇▇▇▇▇ and ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, and
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ in the sums of $281,337 (the "Indebtedness") and $25,000,
respectively; and
WHEREAS, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ has been a director of Mike's; and
WHEREAS, the Parties now desire to settle fully and finally all claims the
▇▇▇▇▇ Family may have against Mike's and that Mike's may have against the ▇▇▇▇▇
Family, including, but not limited to, any matters arising out of ▇▇▇▇▇▇▇ ▇▇▇▇▇
and ▇▇▇▇▇▇▇▇ ▇▇▇▇▇'▇ employment with Mike's and their separation therefrom and
any outstanding indebtedness to the ▇▇▇▇▇ Family;
NOW, THEREFORE, in consideration of the premises and mutual promises herein
contained, it is agreed as follows:
1. Non-Admission of Liability of Wrongdoing
This Agreement shall not be construed in any manner as an admission by
Mike's or the ▇▇▇▇▇ Family that either has acted wrongfully with respect to each
other or any other person or that either has any rights whatsoever against the
others.
2. Consideration by Mike's
I. In consideration for this Agreement and General Release, Mike's
shall make the following repayments in full discharge of any and all obligations
to the ▇▇▇▇▇ Family which amounts shall be equal to or greater than the
percentage being repaid to related parties, as such term is used in Mike's
financial statements.
(a) To ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇▇ ▇▇▇▇▇:
(i) $70,336 of the outstanding indebtedness to them is to be
repaid without interest at the earlier of (x) December 31,
1998 or (y) upon the closing of a proposed secondary
offering by Mike's of not less than $2 million (gross) to
occur in 1998 (the "Secondary Offering");
(ii) $5,000 of the Indebtedness is to be paid on the first of
each month commencing May 1, 1998 for twelve consecutive
months;
(iii)$50,000 of the Indebtedness is to be repaid only in the
event Mike's engages in an offering of its securities,
subsequent to the Secondary Offering and prior to April 30,
2001, for gross proceeds not less than $2,500,000 (the
"Subsequent Offering"); and
(iv) ▇▇▇▇▇▇▇ ▇▇▇▇▇ will be reimbursed $687 per month for twelve
months commencing May 1, 1998 for his leased vehicle. ▇▇.
▇▇▇▇▇ will maintain his own insurance on the vehicle during
such period for which the Company will pay him $125 per
month. At the end of such twelve month period, ▇▇. ▇▇▇▇▇ may
continue to lease the vehicle in which event he shall be
solely responsible for all fees and costs directly or
indirectly relating thereto, or he can return the vehicle to
the Company. In the event the vehicle is returned, ▇▇. ▇▇▇▇▇
will not be held responsible for any surrender charges
caused by the early termination of the lease on the vehicle
or any charges for mileage in excess of 45,000 miles.
(b) To ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇:
(i) $6,250 of the outstanding indebtedness to her is to be
repaid without interest at the earlier of (x) December 31,
1998 or (y) upon the closing of the Secondary Offering;
(ii) $5,000 of the indebtedness is to be repaid in the event
Mike's engages in the Subsequent Offering.
II. In further consideration for this Agreement and General Release:
(a) Mike's shall make Cobra payments on behalf of ▇▇▇▇▇▇▇ ▇▇▇▇▇ for
the months of May 1, 1998 through April 30, 1999. Mike's shall
have no further obligation to make any Cobra payments on behalf
of ▇▇▇▇▇▇▇ ▇▇▇▇▇ after the April 30, 1999 payment.
(b) All outstanding options to ▇▇▇▇▇▇▇ ▇▇▇▇▇ (as described in Exhibit
A , copies of which have been delivered to the ▇▇▇▇▇ Family)
shall be deemed vested as of the date hereof and, subject to
existing lock-ups, shall be exercisable until their respective
expiration dates.
3. Consideration by the ▇▇▇▇▇ Family
(a) In consideration of the foregoing and as a material inducement to
Mike's to enter into this Agreement and subject to clause (b) hereof:
(i) ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ will
voluntarily resign, effective immediately, as officers and
directors of Mike's.
(ii) The ▇▇▇▇▇ Family agrees to the complete releases set forth
in paragraph 4 hereof.
(b) In the event payment is not made pursuant to paragraph 2(a)(i)
hereof, the members of the ▇▇▇▇▇ Family who tendered their resignations as
officers of the company under paragraph 3(a)(i) hereof shall be reinstated as
such officers immediately and the employment contracts being terminated
hereunder shall be reinstated.
4. Complete Release
(a) As a further material inducement to Mike's to enter into this
Agreement, the employment agreements with ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ are hereby
terminated and except as set forth in paragraphs 2 and 3(b) hereof, any
outstanding indebtedness to ▇▇▇▇▇▇▇ ▇▇▇▇▇ and ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ is hereby
discharged and ▇▇▇▇▇▇▇ ▇▇▇▇▇ and ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ each hereby waives, remits,
releases and forever discharges Mike's, its Board members, officers, directors,
stockholders, employees, agents, attorneys, subsidiaries, servants, successors,
insurers, affiliates and their successors and assignees, from any and all manner
of action, claims, liens, demands, liabilities, causes of action, charges,
complaints, suits (judicial, administrative, or otherwise), damages, debts,
demands, obligations of any other nature, past or present, known or unknown,
whether in law or in equity, whether founded upon contract (expressed or
implied), tort (including, but not limited to, defamation), statute or
regulation (State, Federal or local), common law and/or any other theory or
basis, from the beginning of the world to the date hereof, including, but not
limited to, any claim that ▇▇▇▇▇▇▇ ▇▇▇▇▇ and ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ has asserted, now
asserts or could have asserted. This includes, but is not limited to, claims for
additional compensation or benefits, under employment agreements or otherwise,
tortious claims arising out of the employment relationship, claims of an
expressed or implied contract of employment, claims under the Family and Medical
Leave Act, claims arising under Federal, State or local laws prohibiting
employment or other discrimination or claims growing out of any legal
restrictions on the Company's rights to terminate its employees, including
without limitation any claims arising under Title VII of the United States Code,
and the Age Discrimination in Employment Act, but excludes indemnification for
acts as officers and directors of the Company to the extent permitted by
applicable laws. Included in this General Release are any and all claims for
future damages allegedly arising from the alleged continuation of the effect of
any past action, omission or event. ▇▇▇▇▇▇▇ ▇▇▇▇▇ and ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ further
agree to waive any rights he or she may have to reinstatement or reemployment
with Mike's except as set forth in paragraph 3(b).
(b) As a further material inducement to Mike's to enter into this
Agreement, and except as set forth in paragraph 2(b) hereof, any outstanding
indebtedness to ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ is hereby discharged and she hereby waives,
remits, releases and forever discharges Mike's, its Board members, officers,
directors, stockholders, employees, agents, attorneys, subsidiaries, servants,
successors, insurers, affiliates and their successors and assignees, from any
and all manner of action, claims, liens, demands, liabilities, causes of action,
charges, complaints, suits (judicial, administrative, or otherwise), damages,
debts, demands, obligations of any other nature, past or present, known or
unknown, whether in law or in equity, whether founded upon contract (expressed
or implied), tort (including, but not limited to, defamation), statute or
regulation (State, Federal or local), common law and/or any other theory or
basis, from the beginning of the world to the date hereof, including, but not
limited to, any claim that ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ has asserted, now asserts or
could have asserted. Included in this General Release are any and all claims for
future damages allegedly arising from the alleged continuation of the effect of
any past action, omission or event.
(c) As a further material inducement to the ▇▇▇▇▇ Family to enter into
this Agreement, and to the extent permitted under applicable laws for officers
and/or directors of public corporations, Mike's hereby waives, remits, releases
and forever discharges the ▇▇▇▇▇ Family, its agents, attorneys, servants,
successors, insurers, affiliates and their successors and assignees, from any
and all manner of action, claims, liens, demands, liabilities, causes of action,
charges, complaints, suits (judicial, administrative, or otherwise), damages,
debts, demands, obligations of any other nature, past or present, known or
unknown, whether in law or in equity, whether founded upon contract (expressed
or implied), tort (including, but not limited to, defamation), statute or
regulation (State, Federal or local), common law and/or any other theory or
basis, from the beginning of the world to the date hereof, including, but not
limited to, any claim that the Mike's has asserted, now asserts or could have
asserted. Included in this General Release are any and all claims for future
damages allegedly arising from the alleged continuation of the effect of any
past action, omission or event, except with respect to paragraph 5 hereof.
5. Non-Disclosure
Neither ▇▇▇▇▇▇▇ ▇▇▇▇▇ nor ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ shall disclose or deliver to
any other party certain trade secrets or confidential or proprietary information
gained through employment with Mike's. This includes, but is not limited to,
proprietary technologies, software programs and tools, financial information,
business plans, systems files, file structures, customer lists, supplier lists,
internal program structures and data developed by Mike's or any subsidiary or
division thereof. ▇▇▇▇▇▇▇ ▇▇▇▇▇ and ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ each agree that any breach of
this paragraph would cause Mike's substantial and irreparable damages that would
not be qualifiable and therefore, in the event of any such breach, in addition
to other remedies that may be available, Mike's shall have the right to seek
specific performance and other injunctive and equitable relief.
6. No Representations
The parties represent that in signing this Agreement, they do not rely
on nor have they relied on any representation or statement not specifically set
forth in this Agreement by any of the Releasees or by any of the Releasees'
agents, representatives or attorneys with regard to the subject matter, basis or
effect of this Agreement or otherwise.
7. Severability
Should any of the provisions of this Agreement be declared or be
determined to be illegal or invalid, the validity of the remaining parts, terms
or provisions shall not be affected thereby and said illegal or invalid part,
term or provision shall be deemed not be a part of this Agreement.
8. Entire Agreement
This Agreement sets forth the entire agreement between the parties
hereto, and fully supersedes any and all prior agreements or understandings
between the parties hereto pertaining to the subject matter hereof. All other
contracts, agreements or understandings between the ▇▇▇▇▇ Family and Mike's are
null and void.
9. Counterparts
This Agreement may be executed in counterparts. Each counterpart shall
be deemed an original, and when taken together with the other signed
counterpart, shall constitute one fully executed Agreement.
PLEASE READ CAREFULLY. THIS SETTLEMENT, AGREEMENT AND
GENERAL RELEASE INCLUDES A RELEASE OF ALL KNOWN AND UNKNOWN
CLAIMS.
Dated: May 15th 1998 Dated: May 11, 1998
MIKE'S ORIGINAL, INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
Authorized Signatory
Sworn to before me this Sworn to before me this
15th day of May, 1998 11 day of May, 1998
/s/ ________________________________ /s/_______________________________
Notary Public Notary Public
/s/ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Sworn to before me this
14th day of May, 1998
/s/________________________________
Notary Public
/s/ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Sworn to before me this
14th day of May, 1998
/s/________________________________
Notary Public
/s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Sworn to before me this
14th day of May, 1998
/s/________________________________
Notary Public
Exhibit A
MIKE'S ORIGINAL, INC.
Schedule of Stock Options Outstanding as of May 8, 1998
Name Grant Date Shares Exercise Price
---- ---------- ------ --------------
▇▇▇▇▇▇▇ ▇▇▇▇▇ May 30, 1996 33,333 $3.00
▇▇▇▇▇▇▇ ▇▇▇▇▇ September 12, 1996 166,666 $1.50
▇▇▇▇▇▇▇ ▇▇▇▇▇ May 1, 1997 50,000 $1.50