SETTLEMENT AND SECURITY AGREEMENT
Exhibit
10.1
SETTLEMENT AND SECURITY
AGREEMENT
THIS
SETTLEMENT AND SECURITY AGREEMENT (“Agreement”) is made effective the 15th day
of June 2009, by and between Cool Clean Technologies, Inc. (“Cool Clean”) and
ECO2
Plastics Inc. f/k/a ITec Environmental Group, Inc. f/k/a Beechport Capital
Corporation (“ECO2”). Cool
Clean and ECO2 may be
referred to below individually as a “Party” and collectively as “the
Parties.”
WHEREAS,
on or about February 27, 2009, Cool Clean filed a lawsuit against ECO2 in the
United States District Court for the District of Minnesota, Civil Action No.
09-CV-482 (the “Lawsuit”).
WHEREAS,
Cool Clean alleges claims in the Lawsuit related to a promissory note entered
into between the Parties on or about August 18, 2005 in the amount of $175,000
(the “Note”). A
true and correct copy of the Note is attached as Exhibit B to the Complaint
filed in the Lawsuit on or about February 27, 2009.
WHEREAS,
Cool Clean also alleges claims in the Lawsuit related to an Equipment Rental
Agreement entered into between the Parties on or about October 15, 2005 (the
“Rental
Agreement”). A true and correct copy of the Rental Agreement
is attached as Exhibit C to the Complaint filed in the Lawsuit on or about
February 27, 2009.
WHEREAS,
ECO2
denies all claims in the Lawsuit and alleges that it is entitled to a refund of
a deposit payment in the amount of $181,673.79 made to Cool Clean on or about
October 3, 2005 (the “Deposit
Payment”). Cool Clean denies that ECO2 is
entitled to a refund of the Deposit Payment.
WHEREAS,
the Parties desire to resolve the Lawsuit and all other claims between them on
the terms contained herein.
NOW,
THEREFORE, for good and valuable consideration, the receipt of which is hereby
acknowledged, the Parties agree as follows:
1. Defined
Terms.
“Senior Debt” shall
mean all indebtedness of ECO2 for all
principal, fees, expenses, interest, penalties, post bankruptcy petition
interest, and all other amounts payable for money borrowed in connection with,
under or pursuant to, (a) the $2,000,000 loan to ECO2 from the
California Integrated Waste Management Board; (b) that certain Convertible Note
and Warrant Purchase Agreement dated as of September 2, 2008, by and among
ECO2,
Trident Capital, Inc., Trident Capital Fund-VI, L.P., Trident Capital
Fund-VI Principals Fund, L.L.C., ▇▇▇▇▇▇ Living Trust dated 12/10/1996, and
certain other investors; (c) that certain Convertible Note and Warrant Purchase
Agreement dated as of December 17, 2008, by and among ECO2, Peninsula
Packaging, LLC, Trident Capital Fund-VI, L.P., Trident Capital Fund-VI
Principals Fund, L.L.C., ▇▇▇▇▇▇ Living Trust dated 12/10/1996, and certain other
investors; (d) that certain Convertible Note Purchase Agreement dated as of June
2, 2009, by and among ECO2, Peninsula
Packaging, LLC, Trident Capital Fund-VI, L.P., Trident Capital Fund-VI
Principals Fund, L.L.C., ▇▇▇▇▇▇ Living Trust, ▇▇▇▇▇▇▇▇▇ Capital Partners, LLC,
and certain other investors; and (e) all extensions and renewals of the
foregoing indebtedness.
“Senior Debt
Documents” shall mean all documents, instruments, and agreements executed
in connection with the Senior Debt, as they may from time to time be modified,
amended or restated.
“Senior Lenders” shall
mean those individuals or entities holding Senior Debt, including any
transferee, assignee, or subsequent holder of any Senior Debt.
2. Payments. ECO2 shall pay
Cool Clean the sum total of One Hundred Seventy-Five Thousand Dollars
($175,000.00). Payment of this sum shall be made in the following
installments. The first payment, in the amount of One Hundred
Thousand Dollars ($100,000.00), shall be paid no later than June 22,
2009. The second payment, in the amount of Eighteen Thousand Seven
Hundred Fifty Dollars ($18,750.00), shall be paid no later than September 30,
2009. The third payment, in the amount of Eighteen Thousand Seven
Hundred Fifty Dollars ($18,750.00), shall be paid no later than December 30,
2009. The fourth payment, in the amount of Eighteen Thousand Seven
Hundred Fifty Dollars ($18,750.00), shall be paid no later than March 30,
2010. The fifth payment, in the amount of Eighteen Thousand Seven
Hundred Fifty Dollars ($18,750.00), shall be paid no later than June 30,
2010. Payment will be made by either wire transfer or direct
electronic deposit to the following account:
Acct.
Name ▇▇▇▇▇▇▇
LAW FIRM PC IOLTA
Acct.
No. 9065192255
Bank: ▇▇▇▇▇
Fargo
Rout. No.
(Wire)
121000248
Rout. No. (Direct
Deposit)
091000019.
3. Stipulation for
Dismissal. Contemporaneous with the signing of this Agreement,
the Parties shall execute, through counsel, a stipulation and agreed order for
dismissal of the Lawsuit with prejudice and without fees or costs to either
Party. Such stipulation and agreed order of dismissal shall be
presented to the Court by counsel for ECO2 upon
confirmation of receipt by Cool Clean of the first payment provided for in
Paragraph 2 above.
4. Grant of Security
Interest. As collateral security for the prompt and complete
payment and performance when due of the payments identified in Paragraph 2
above, ECO2
grants to Cool Clean a security interest in all of ECO2’s right,
title and interest in, to and under the following, whether now existing or
hereafter acquired (all of which collateral being hereinafter called the
“Collateral”); provided,
however, that as further described in Paragraph 5 below, the security
interest granted hereunder shall be subordinate to any security interest granted
by ECO2 to any and
all holders of Senior Debt. Subject to the provisions of this
Agreement, Cool Clean is entitled to a security interest in the
following:
CONTRACTS
All
contracts, contract rights, royalties, license rights, leases, instruments,
undertakings, documents or other agreements in or under which ECO2 may now or
hereafter have any right, title or interest whether now existing or hereinafter
created and all forms of obligations owing to ECO2 arising
out of the sale or lease of goods, the licensing of technology or the rendering
of services by ECO2, whether
or not earned by performance, and any and all credit insurance, guaranties, and
other security therefore, as well as all merchandise returned to or reclaimed by
ECO2;
EQUIPMENT, FURNISHINGS AND
MISCELLANEOUS PERSONAL PROPERTY
All
presently owned and hereafter acquired furniture, furnishings, equipment,
machinery, inventory, vehicles (including motor vehicles and trailers) computer
hardware and software, accounting or bookkeeping systems, client or customer
lists and information, data sheets and other records of any kind, wherever
located, stored or inventoried, which are used or which may be used in ECO2’s
business;
FIXTURES
All
materials used by ECO2 in
connection with its business operations, including, but not limited to,
supplies, trade equipment, appliances, apparatus and any other items, now owned
or hereafter acquired by ECO2, and now
or hereafter attached to, or installed in (temporarily or permanently) any real
property now or in the future owned or leased by ECO2;
GENERAL
INTANGIBLES
All
general intangibles and other personal property of ECO2, now owned
or hereinafter acquired, including, without limitation, the
following: (a) permits, authorizations and approvals presently and
hereafter issued by any federal, state, municipal or local governmental or
regulatory authority in favor of ECO2; (b) all
plans, specifications, renderings and other similar materials presently owned or
hereafter acquired by ECO2; (c) all
presently existing and hereafter created contracts, leases, licenses and
agreements to which ECO2is a party;
(d) all presently and hereafter existing policies and agreements of insurance in
favor of ECO2; (e) all
presently and hereafter existing equity contribution agreements and other equity
financing arrangements in favor of ECO2; (f) all
copyrights, chattel paper, electronic chattel paper, licenses, money, insurance
proceeds, contract rights, subscription lists, mailing lists, licensing
agreements, patents, trademarks, service marks, trade styles, patents, patent
applications, franchise agreements, blueprints, drawings, purchase orders,
customer lists, route lists, infringements, claims, computer programs, computer
discs, computer tapes, literature, reports, catalogs, design rights, income tax
refunds, payments of insurance and rights to payment of any kinds, trade names,
refundable, returnable or reimbursable fees, deposits or other funds or
evidences of credit or indebtedness deposited by or on behalf of ECO2 with any
governmental agencies, boards, corporations, providers of utility services,
public or private; (g) all presently existing and hereafter acquired computer
programs, computer software and other electronic systems and materials of any
kind of ECO2; (h)
goodwill; and (i) all other presently existing and hereafter acquired documents,
accounts, general intangibles and intangible personal property of any
kind;
DOCUMENTS
All
documents, cash, deposit accounts, securities, securities entitlements,
securities accounts, investment property, financial assets, letters of credit,
certificates of deposit, instruments, chattel paper, and electronic chattel
paper now owned or hereafter acquired and ECO2’s books
relating to the foregoing;
INTELLECTUAL
PROPERTY
All
copyright rights, copyright applications, copyright registrations and like
protections in each work of authorship and derivative work thereof, whether
published or unpublished, now owned or hereafter acquired; all rights in and to
issued patents and patents pending; all trade secret rights, including all
rights to unpatented inventions, know-how, operating manuals, license rights and
agreements and confidential information, now owned or hereafter acquired; all
mask work or similar rights available for the protection of semiconductor chips,
now owned or hereafter acquired; all trade marks and trade names and associated
goodwill; all claims for damages by way of any past, present and future
infringement of any of the foregoing; and
PROCEEDS
All of
ECO2’s
books and records relating to the foregoing and any and all present and future
accounts, general intangibles, chattel paper, electronic chattel paper,
products, accessions, replacements, betterments and substitutions for any of the
foregoing described property, and all proceeds arising from or by virtue of, or
from the sale or disposition of, or collections with respect to, or insurance
proceeds payable with respect to, or claims against any other Person with
respect to, all or any part of the foregoing described property and
interests.
5. Subordination.
(a) Cool
Clean hereby acknowledges and agrees that the payment of any and all amounts due
to Cool Clean hereunder is hereby expressly subordinated and made junior to the
payment of the principal amount, all interest, fees, costs, expenses and any
other amounts due on the Senior Debt. Notwithstanding the foregoing,
so long as at the time of and after giving effect to any payment due to Cool
Clean hereunder, no event of default has occurred under the Senior Debt
Documents, or would occur as a result thereof, ECO2 agrees to
make the payments described in Paragraph 2 hereof to Cool Clean.
(b) Cool
Clean acknowledges and agrees that the payment and performance of the Senior
Debt is secured by certain security interests in the Collateral. Cool
Clean further acknowledges and agrees that notwithstanding the date, manner, or
order of creation, attachment, or perfection of those security interests, or of
the security interest granted to Cool Clean hereunder (the “Cool Clean Security
Interest”), and notwithstanding any provisions of the Uniform Commercial Code to
the contrary, the Cool Clean Security Interest shall be, in all respects,
subject to and subordinate to the security interests in the Collateral securing
the Senior Debt, to the full extent thereof. Cool Clean agrees not to
challenge the enforceability of a Senior Lender’s claim with respect to the
Senior Debt or to challenge the enforceability of any security interests in the
Collateral securing the Senior Debt.
(c) Prior
to the date that the Senior Debt is paid in full, Cool Clean shall not take any
action to enforce any rights, powers or remedies granted to Cool Clean in
connection with the Cool Clean Security Interest against any of the
Collateral. Cool Clean acknowledges and agrees that, until such time
that the Senior Debt is paid in full, the Senior Lenders shall have the
exclusive right to enforce rights and exercise remedies with respect to the
Collateral (which they may exercise in such manner as they may determine in
their sole business judgment) and shall not be required to marshal any
Collateral.
(d) Cool
Clean acknowledges and agrees that the terms of this Agreement, and the
subordination affected hereby, shall not be affected, modified or amended in any
manner or to any extent by any waiver, consent, release, indulgence, extension,
renewal, modification, or other action or inaction in respect of the Senior Debt
or any of the Senior Debt Documents.
(e) ECO2 hereby
authorizes Cool Clean to file a financing statement under the Uniform Commercial
Code in any jurisdiction with respect to the security interest granted hereby;
provided, however, that
Cool Clean shall indicate in any such financing statement that its security
interest in the Collateral is subordinated to the security interests of the
Senior Lenders.
(f) Cool
Clean acknowledges and agrees that the Senior Lenders (including, without
limitation, Peninsula Packaging, LLC and Trident Capital, Inc.) are intended
third party beneficiaries of this Agreement.
6. Termination and Release of
Security Interest. At such time as all payments required by
Paragraph 2 above have been fully satisfied, the security interest granted
hereunder shall automatically terminate without any further action on the part
of any party. Cool Clean shall take all such actions as may be
requested by ECO2 to
evidence such termination and to release the liens created
hereby. Without limiting the foregoing, upon payment by ECO2 of all
payments required by Paragraph 2 above, Cool Clean hereby authorizes ECO2 to file
UCC-3 financing statements terminating any financing statements filed by Cool
Clean pursuant to Paragraph 5(e) above.
7. Return of Rental
Equipment. Within thirty (30) days of the effective date of
this Agreement, ECO2 shall ship
the two CO2OL Clean Machines that were the subject of the Rental Agreement
(collectively, the “Equipment”) to Cool
Clean using a shipping method of ECO2’s
choosing. The Equipment shall be shipped to Cool Clean at the
following address: Cool Clean Technologies, Inc., ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇, ▇▇▇ ▇▇,
▇▇▇▇▇, ▇▇ ▇▇▇▇▇. ECO2 shall
assume all costs associated with shipping the Equipment to Cool
Clean. Cool Clean acknowledges that the Equipment is not functioning
and agrees to accept the Equipment “as is.” Cool Clean shall have no
recourse against ECO2 with
regard to the condition of the Equipment.
8. Release and Covenant Not to
▇▇▇.
(a) In
consideration of the promises contained herein, the Parties and their
representatives hereby waive, release and discharge the other Party, that
Party’s subsidiaries, affiliates, successors, assigns and/or past, present or
future agents, officers, insurers, directors, employees and attorneys, from, and
covenant not to ▇▇▇ with respect to any and all claims, causes of action, and
demands of any kind or nature, based on any theory of recovery, that could be
alleged to have occurred prior to the date of this Agreement, including but not
limited to claims for costs and attorneys’ fees.
(b) Only
to the extent that each payment as identified in Paragraph 2 is made within ten
(10) days of the specified due date, Cool Clean, on behalf of itself, its
affiliates and its assigns, waives, releases and discharges ECO2 and its
subsidiaries, affiliates, successors, assigns and/or past, present or future
agents, officers, insurers, directors, employees and attorneys (collectively,
the “ECO2 Affiliated
Group”) from, and covenants not to ▇▇▇ any of the ECO2 Affiliated
Group with respect to, any and all claims, causes of action, and demands of any
kind or nature, based on any theory of recovery, relating to the infringement of
any claim of any patent or patent application identified in Exhibit A of the
Patent License Agreement, by and among ECO2 and
Honeywell Federal Manufacturing & Technologies, LLC (“Honeywell”) (the
“License
Agreement”), including but not limited to claims for costs and attorneys’
fees. Cool Clean further covenants on behalf of itself, its
affiliates and its assigns that, to the extent Cool Clean is successful in any
suit it initiates against Honeywell to invalidate any patent which is the
subject of the License Agreement, or in being named a co-inventor thereof in
such suit, Cool Clean shall adopt in full any obligations of Honeywell with
respect to such patent pursuant to the terms of the License Agreement, including
any amendments thereto, and shall not seek to invalidate the License
Agreement. Cool Clean further covenants, to the extent Cool Clean is
successful in any suit it initiates against Honeywell to invalidate any patent
which is the subject of the License Agreement, or in being named a co-inventor
thereof in such suit, that it will take no actions inconsistent with ECO2’s
exclusive rights pursuant to the License Agreement. In the event that
Cool Clean is named a co-inventor of any patent identified in the License
Agreement, ECO2 shall pay
to Cool Clean a reasonable royalty rate for ECO2’s
exclusive rights in and to such patent(s) in an amount equal to one half of the
royalty rate ECO2 paid to
Honeywell under the License Agreement at the time that Cool Clean
initiated any aforementioned suit against Honeywell seeking to
invalidate said patent(s).
(c) The
Parties further acknowledge that this Agreement does not affect any Party’s
right to seek relief in the event of any breach or violation of this Agreement
occurring after the date of execution of this Agreement.
9. Section
1542. It is understood and agreed that this Agreement is
intended to cover and does cover all claims or possible claims of every nature
and kind whatsoever that could have been pleaded as of the date of this
Agreement, whether known or unknown, suspected or unsuspected, or hereafter
discovered or ascertained, and all right under Section 1542 of the Civil Code of
California (“Section
1542”) are hereby
expressly waived. The parties acknowledge that they are familiar with
Section 1542, which 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.
The
parties expressly, knowingly, and intentionally waive and relinquish any and all
rights which they have under Section 1542, as well as under any other similar
state or federal statute or common law principle.
10. No Admission of
Wrongdoing. This Agreement is entered into to compromise and
settle disputed claims. Nothing in this Agreement shall be deemed or
construed to be an admission of liability of any kind on the part of any
Party.
11. Notices. Any
notice, request or other communication required or permitted hereunder shall be
in writing and shall be delivered personally or by facsimile (receipt confirmed
electronically) or shall be sent by a reputable express delivery service or by
certified mail, postage prepaid with return receipt requested, addressed as
follows:
if to ECO2, to:
ECO2 Plastics,
Inc.
▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇.▇. ▇▇▇
▇▇▇
▇▇▇▇▇▇▇▇▇,
▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇
▇. ▇▇▇▇▇▇▇▇
Fax: (▇▇▇)
▇▇▇-▇▇▇▇
with a copy to:
K&L Gates LLP
▇▇▇ ▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇
▇. Guess
Fax: (▇▇▇)
▇▇▇-▇▇▇▇
if to Cool Clean,
to:
Cool Clean Technologies,
Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇
▇▇
▇▇▇▇▇ ▇▇ ▇▇▇▇▇
Attn: ▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Chief Executive
Officer
Fax: (▇▇▇)
▇▇▇-▇▇▇▇
With a copy to:
▇▇▇▇▇▇▇ Law Firm, P.C.
700 Lumber Exchange
Building
Ten South Fifth Street
Minneapolis MN 55402
Attn: ▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
All such
notices and communications shall be deemed to have been duly
given: (i) when delivered by hand, if personally delivered;
(ii) five business days after being deposited in the mail, postage prepaid,
if mailed certified mail, return receipt requested; (iii) one business day
after being timely delivered to a next-day air courier guaranteeing overnight
delivery; (iv) the date of transmission if sent via facsimile to the
facsimile number as set forth in this paragraph prior to 5:00 pm in the time
zone of the recipient on a business day, with confirmation of successful
transmission or (v) the business day following the date of transmission if
sent via facsimile to the facsimile number as set forth in this paragraph after
5:00 p.m. in the time zone of the recipient or on a date that is not a business
day. Change of a party’s address, facsimile number or specified
recipient may be designated hereunder by giving notice to all of the other
parties hereto in accordance with this paragraph.
12. Severability. Any
provision of this Agreement which is prohibited or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability without invalidating the remaining
provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.
13. Entire Agreement;
Amendments. This Agreement constitutes the entire agreement
between the Parties with respect to the subject matter hereof. No
amendment or waiver of any provision of this Agreement shall be effective unless
it is in writing and signed by the Parties.
14. Interpretation. This
Agreement has been generated pursuant to the equal negotiations and advice of
the Parties and their counsel. Accordingly, this Agreement should not
be construed more favorably or unfavorably as to either Party.
15. Governing
Law. The Parties agree that this Agreement shall be governed
by and construed in accordance with the laws of the State of Minnesota and that
the federal or state courts located in Hennepin County, Minnesota shall have
jurisdiction to hear and determine any claims or disputes between the Parties
pertaining to this Agreement, and that ECO2 hereby
acknowledges the jurisdiction of such courts and waives, to the fullest extent
permitted by law, the defense of an inconvenient forum to the maintenance of
such action; provided,
however, that any action, suit, or proceeding that seeks, in whole or in
part, to obtain possession of or foreclose upon any Collateral shall be governed
by and construed in accordance with the laws of the state where the Collateral
is located and the federal or state courts of the state where the Collateral is
located shall have jurisdiction to hear and determine any such action, suit or
proceeding.
16. Counterparts. This
Agreement may be executed in separate counterparts each of which will be an
original and all of which taken together will constitute one and the same
agreement.
17 Facsimile. This
Agreement may be executed using facsimiles of signatures, and a facsimile of a
signature shall be deemed to be the same, and equally enforceable, as an
original of such signature.
WHEREFORE, the Parties hereby
acknowledge their agreement and consent to the terms and conditions set forth
above through their respective signatures as contained below.
|
COOL
CLEAN TECHNOLOGIES, INC.
|
ECO2
PLASTICS, INC.
|
| By _____________________________ | By _____________________________ |
| Printed Name: ▇▇▇ ▇. Wikstrom________ | Printed Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ |
| Title: Chief Executive Officer__________ | Title: Chief Financial Officer |
| Dated: _______________________ | Dated: _______________________ |