Exhibit 10.1
SETTLEMENT AND RELEASE AGREEMENT and PLAN OR REORGANIZATION
This Settlement
and Release Agreement ("Agreement") is entered into and
effective this 10th day of March 2005, by
and between Lifeline Therapeutics,
Inc., a Colorado corporation ("LT") and
Lifeline Nutraceuticals Corp., a
Colorado corporation ("LN") and Michael
Barber, an individual residing at 2880
S. Locust Street, North Tower - 406,
Denver, CO 80222 ("Barber") (each a "Party"
and collectively the "Parties").
In consideration of the (i) recitals, representations and
warranties,
which are
expressly incorporated as a part of this Agreement and (ii) the
promises and obligations of the Parties as
set out in this Agreement, the
Parties agree as follows:
I. RECITALS
A. LN is a privately-held company that is involved in the
dietary
supplement
industry, sometimes referred to as the nutraceutical industry.
B. LT is a publicly traded company that is the parent company of
LN,
and is or
intends to be involved in the nutraceutical, cosmeceutical and
pharmaceutical
industries.
C. Barber is a former employee, Officer and Director of LN. On
July
15, 2003, Barber
entered into an Employment Agreement with LN.
D. On August 15, 2003, Barber was issued 4,500,000 shares of
common
stock in LN (the
"LN Common Stock"). Barber contends that the LN Common
Stock was properly and
validly issued and Barber paid all sums due and
owing for
it.
E. On April 7, 2004, Barber executed a written Resignation,
resigning
as an officer
and director of LN. Barber terminated his Employment
Agreement as
well.
F. A dispute has arisen between Barber, LN and LT regarding the
circumstances
under which Barber obtained the LN Common Stock and the
disposition of
that stock.
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G. The Parties desire
to avoid the uncertainty, time, and expense of
litigating their
dispute.
H. The Parties have reached a settlement of this dispute, and
through
this Agreement,
desire to memorialize their settlement.
II.
REPRESENTATIONS AND WARRANTIES OF THE PARTIES:
The following
are not all of the representations and warranties of the
Parties; these relate directly to the
ownership of the shares that will be
exchanged pursuant to this Agreement:
(A) Barber represents and warrants that:
(1) He is the sole owner of and has full power and authority to
convey good and
marketable title to the LN Common Stock, free and clear of
any mortgages,
liens, restrictions, security interests, claims, rights of
another or
encumbrances. He has not assigned, sold, conveyed,
hypothecated,
licensed,
leased, partitioned, pledged, granted, exchanged or otherwise
transferred
(voluntarily or involuntarily), any of the LN Common Stock. Any
such transfer
will not be recognized by LN or LT.
(2) The 4,500,000 shares of LN Common Stock are the only shares
of LN stock that
Barber has ever owned or held and that Barber has no other
stock, options,
warrants or any other interests in LN or LT, or right to
purchase any
other interests in LN or LT, except as set forth in this
Agreement.
(B) LN and LT represent and warrant that:
(1) LN and LT are corporations duly organized, validly existing
and in good
standing under the laws of the State of Colorado.
(2) LN and LT have full corporate power and authority to enter
into and perform
this Agreement. This Agreement has been, and any ancillary
documents will
be, duly executed and delivered by duly authorized officers
of LN or LT.
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III. TERMS, COVENANTS AND CONDITIONS
A. Share Exchange. LT agrees to deliver to Barber 1,000,000 shares
of
restricted
voting common stock of LT (the "Restricted Stock")in exchange
for Barber's
assignment and delivery of all of the LN Common Stock held by
him, directly or
indirectly (the "Exchange"). The parties shall cooperate,
use their respective
best efforts and take such actions and execute such
documents
(including a Plan of Reorganization, resolutions and consents,
stock powers,
and record-keeping and tax reporting requirements) as
reasonably
necessary to structure the Exchange as a tax-free
reorganization
within the
meaning of section 368(a)(1)(B) of the Internal Revenue Code.
It
is understood
that neither LT nor LN shall be responsible for any taxes,
interest or
penalties payable by Barber if the Exchange does not qualify as
a tax-free
reorganization and this Agreement is in no way contingent on
the
same.
(1) At the time
this Agreement is executed (the "Closing"), Barber will
deliver to LT
the original certificate(s) representing the LN Common Stock
to be delivered
by him pursuant to the Paragraph A. immediately above (the
"LN Stock
Certificates") and LT will deliver, at the same time, to Barber
the original
certificates representing the Restricted Stock. The LN Stock
Certificate(s)
shall be accompanied by original stock powers (in the form
attached hereto
as Exhibit A)duly endorsed in blank or accompanied by duly
executed
assignment documents in form and substance satisfactory to LT.
(2) LT agrees to
grant to Barber registration rights for the Restricted
Stock on a pari
passu basis with the registration rights to be granted to
the investors in
connection with the financing described below. LT agrees
to use its best
efforts to register the Restricted Stock for resale by
Barber at the
time it undertakes its first registration of shares
subsequent to
the possible financing that LT is currently discussing with
Keating &
Co. LT further agrees to use its best efforts to keep such
registration
statement current and effective until the earlier of (i) the
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date by which
all of the Restricted Shares have been sold or (ii) the date
by which all of
the Restricted Shares may be sold pursuant to Rule 144(k).
All of Barber's
shares shall be subject to volume limitations on the amount
that may be sold
under the registration statement in accordance with the
following:
immediately after the effective date of the registration
statement, but
not prior to such date, Barber may sell up to 150,000 of the
Restricted
Shares. Thereafter Barber may sell increments of up to 150,000
of the
Restricted Shares in each subsequent ninety (90) day period.
Notwithstanding
the limitations on the number of shares that may be sold by
Barber set forth
in the immediately preceding sentence, (i) Barber may sell
the Restricted
Shares in private placements immediately following the date
hereof and (ii)
in the event the registration statement on which the
Restricted
Shares were registered is not current or effective and Barber
is
not able to sell
his shares, then Barber shall be permitted to sell such
shares that he
would have otherwise been able to sell if the registration
statement was
current and effective without affecting and in addition to
the volume
limitations set forth above. Subject to the approval of LT,
such
approval not to
be unreasonably withheld or delayed, Barber may transfer
his shares in a
private sale to any person (i) if such person agrees to be
bound by the
volume limitations set forth above or (ii) if Barber's sale is
within the
volume limitations set forth above. Notwithstanding anything
else in this
paragraph, Barber agrees to comply with all state and federal
securities laws
and regulations with respect to the disposition of the
shares of LT
that Barber receives pursuant to this Agreement. LT further
agrees to use
its best efforts to remove all legends from the stock
certificates
representing such securities upon the request of Barber if
such legends are
no longer applicable, including if such shares are
eligible for
resale pursuant to Rule 144(k) of the Securities Act of 1933,
as amended.
Notwithstanding anything to the contrary contained herein, LT
agrees to use
its best efforts to file for registration of Barber's
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securities no
later than the earlier of (i) the date LT registers its first
registration
statement following the date hereof or (ii) within 45 days
after the
closing of the financing that LT is currently discussing with
Keating &
Co.
B. Compensation Payment to Barber. In consideration of Barber's
covenant not to
compete as provided in this Agreement, LN shall deliver to
Barber or
Barber's counsel the sum of Two Hundred Fifty Thousand Dollars
($250,000),
payable as follows:
(1) One Hundred Twenty-Five Thousand Dollars ($125,000) at the
Closing; and
(2) One Hundred Twenty-Five Thousand Dollars ($125,000)on April
15, 2005.
The payments
shall be delivered in the form of a cashier's check or wire
transfer of
immediately available funds to the bank account(s) nominated by
Barber. As to
the payment due on April 15, 2005, LN shall deliver to Barber
an unconditional
Promissory Note in favor of Barber and as to which LN is
the Maker in the
amount of $125,000 due and payable on April 15, 2005, with
interest
accruing from that date forward, if unpaid, at a rate of 8% per
annum. The
Promissory Note shall be in a form reasonably acceptable to
Barber and LN
and shall be attached hereto as Exhibit B. If LN makes
payment to
Barber of this April 15, 2005 payment of $125,000 by that date,
Barber shall
cancel the Promissory Note and return it to LN.
C. Amounts Owed to Barber; Withholding Liabilities. Any and all
amounts that may
be owed to Barber for services rendered, costs, expenses
and any other
matters through the date of this Agreement, and expressly not
including those
amounts set forth in paragraph III.B. above, are fully and
permanently cancelled.
Barber permanently waives his rights to claim any
amounts owed for
services rendered, costs, expenses, and any other amounts
advanced or
claimed as owed by LN or LT through the date of this Agreement,
and expressly
not including those amounts set forth in paragraph III.B.
above. In
addition, Barber agrees to pay all federal and state income,
FICA
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and Medicare
taxes due in connection with cancellation of the advances
described in
paragraph III.D. below.
D. Prior Compensation. Barber received payment from LN for
services
that may have
involved various fund raising activities on behalf of LN. The
Parties
acknowledge that any monies or other compensation paid to
Barber
was not payment
of commission(s), but constituted an advance to Barber as
an employee of
LN. LN and LT acknowledge and agree that Barber has no
obligation to
pay or repay to LN or LT any monies, including any monies or
other
compensation previously paid to him by LN.
E. No Admission of Liability. The Parties are entering into
this
Agreement as a
method of resolving and compromising their dispute and,
therefore, LN
and LT, by entering this Agreement, are not admitting any
liability to
Barber or any entity or individual associated with Barber. LN
and LT expressly
deny any such liability. Further, by entering into this
Agreement,
Barber is not admitting any liability to LN and LT. Barber
expressly denies
any such liability.
F. No Rights to Additional Interests. Barber represents and
warrants
to LN and LT
that, except as set forth in this Agreement, he waives any and
all claims to
any stock, membership units and other possible ownership or
other interests
and rights in LT or LN .
G. Association with LN or LT. Barber agrees that he will never in
his
own name or
through any individual or entity with whom he is associated in
any capacity
ever voluntarily advertise, publicize or publicly disclose,
any former or
present association with LN or LT. However, LN and LT agree
that Barber
shall be entitled to and have the right to disclose his entire
employment
history. In addition, Barber agree that he will not be involved
with any type of
communication intended for public viewing that compare the
benefits of any
LT or LN product with any product with which Barber has any
involvement.
Further, Barber agrees that he will not refer to or cite or
cause others to
refer or cite to Dr. Joe McCord, including, but not limited
to, (i) any
comment or other communication of any kind that directly or
ultimately
emanated from Dr. Mc Cord or that describes Dr. Mc Cord and any
of his
scientific work and (ii) any test or study in which Dr. McCord
has
had some role,
including any report of such test or stud
