EXHIBIT 10.1
AGREEMENT AND RELEASE
This
Agreement and Release (this "Agreement") is made and entered
into by and among Leslie Flegel, residing at 4951 Gulf Shore
Boulevard, PH 201, Naples, FL 34103 (the "Executive"), and
National Patent Development Corporation, a Delaware
corporation with principal executive offices at 10 East 40th
Street, Suite 3110, New York, New York 10016 ("NPDC") and Five
Star Products, Inc., a Delaware corporation with principal
executive offices at 10 East 40th Street, Suite 3110, New
York, New York 10016 ("Five Star").
WHEREAS,
the Executive, NPDC and Five Star have agreed to terminate
Executive's employment and/or consulting agreement with Five
Star, to terminate the Executive's positions as an officer and
member of the boards of directors of NPDC and Five Star and to
permit NPDC to purchase shares of Five Star Common Stock (as
defined) and NPDC Common Stock (as defined) owned by the
Executive and his family;
WHEREAS,
the Executive owns 200,000 shares of NPDC Common Stock which
are exchangeable, under certain circumstances, into 1,200,000
shares of Five Star Common Stock owned by NPDC;
NOW
THEREFORE, in consideration of the mutual promises and
covenants contained herein, it is agreed as
follows:
1.
Sale
of Stock and Closing .
(a) On
March 3, 2008 or such later date as the parties shall agree
(the "Closing Date"), the Executive shall sell to NPDC and
NPDC shall purchase subject to the conditions set forth herein
(i) 200,000 shares of common stock, par value $0.01 of NPDC
(the "NPDC Common Stock") owned by the Executive at the price
of $3.60 per share (the 1,200,000 shares of Five Star Common
Stock into which the NPDC Common Stock is exchangeable,
multiplied by $0.60 per share, the result then divided by the
200,000 shares of NPDC Common Stock) and (ii) 1,698,336,
shares of Five Star common stock, par value $0.01 per share
(the "Five Star Common Stock") owned by the Executive at a
price of $0.60 per share. The Five Star Common
Stock and NPDC Common Stock referred to herein as the
"Shares."
(b) Effective
the date of this Agreement, the Agreement dated as of March 2,
2007 between Five Star and the Executive regarding the
Executive's services to be rendered to Five Star is terminated
without any further liability of Five Star (the "Services
Agreement").
(c) Effective
the date of this Agreement, the Registration Right Agreement,
dated as of March 2, 2007 between Five Star and the Executive
is terminated without any further liability of Five
Star.
(d) Sections
2 and 6 of the Purchase Agreement dated as of March 2, 2007
between NPDC and the Executive (the "Purchase Agreement") is
terminated effective the date of this Agreement and the
balance of the Purchase Agreement is terminated effective the
Closing Date.
(e) Effective
the date of this Agreement, the Registration Rights Agreement
dated as of March 2, 2007 between NPDC and the Executive is
terminated.
(f) The
Executive resigns as an officer and director of Five Star and
as a director of NPDC effective the date of this
Agreement.
(g) The
Executive shall cause the sale to NPDC of 301,664 shares of
Five Star Common Stock owned by his family at the price of
$0.60 per share on the Closing Date pursuant to the terms of
the Sale Agreement attached hereto as Exhibit A and NPDC
agrees to buy such shares in accordance with the Sale
Agreement. However, if a seller of shares of Five
Star Common Stock cannot or will not sell its shares to NPDC
under the Sale Agreement, NPDC may at its sole discretion
waive that condition to purchase shares from the Executive and
the Executive shall be required to proceed with such sale to
NPDC
2.
Representation
and Warranties of The Executive .
(a) The
NPDC Common Stock to be transferred to NPDC by the Executive
pursuant to Section 1(a)(i) of this Agreement are on the date
of this Agreement, and will on the Closing Date be, owned by
the Executive free and clear of any and all pledges, liens,
encumbrances or security interests of every kind or nature
except as may be created by agreements with NPDC or Five Star
which are being terminated by this Agreement (collectively,
the "Encumbrances"), other than Encumbrances resulting from
acts or failure to act of NPDC, and the Executive shall have
full right and authority to so transfer such shares to
NPDC.
(b) The
Five Star Common Stock to be transferred to NPDC by the
Executive pursuant to Section 1(a)(ii) of this Agreement are
on the date of this Agreement, and will on the Closing Date
be, owned by the Executive free and clear of any and all
Encumbrances, other than Encumbrances resulting from acts or
failure to act of NPDC and the Executive shall have full right
and authority to so transfer such shares to NPDC.
(c) The
Executive acknowledges that NPDC may now or at the Closing
Date be in possession of material inside information regarding
NPDC or Five Star that the Executive is not aware
of. Nonetheless, the Executive willingly has agreed
to sell the shares of NPDC Common Stock and Five Star Common
Stock owned by him to NPDC pursuant to the terms of this
Agreement. The Executive represents that he is an
"accredited investor" (as defined in Rule 501(a) of Regulation
under the Securities Act of 1933, as amended) and is a
sophisticated investor with experience in transactions in
securities of the kind reflected in this Agreement and has
sought and received the advice of legal counsel familiar with
transactions of this kind and he is not relying on any
disclosure or non-disclosure made or not made, or the
completeness thereof, in connection with or arising out of his
sale of the Shares and has no claims against NPDC or Five Star
or their respective officers and directors with respect
thereto and if any such claim exists, the Executive,
recognizing his disclaimer of reliance and NPDC's and Five
Star's reliance on such disclaimer as a condition for entering
into the purchase of the Shares, covenants and agrees not to
assert it against NPDC, Five Star or any other Releasee (as
defined).
(d) No
authorization, consent or approval of, or exemption by, any
governmental or public body or authority is required to
authorize, or is required in connection with, the execution,
delivery and performance of this Agreement, or the taking of
any action contemplated hereby, by the Executive, except those
that have been obtained or are available.
(e) Except
with respect to agreements with NPDC and Five Star being
terminated by this Agreement, neither the execution and
delivery of this Agreement, nor compliance with any of the
terms and provisions hereof, nor the consummation of any of
the transactions herein contemplated will: (i) violate any
law, regulation, order, writ, injunction or decree of any
court or governmental department, commission, board, bureau,
agency or instrumentality applicable to the Executive, or (ii)
conflict or be inconsistent with, or result in any breach of,
any of the terms, covenants, conditions or provisions of, or
constitute a default under the terms of any indenture,
mortgage, deed of trust, agreement or other instrument, to
which the Executive is a party or by which he may be bound or
to which he may be subject.
(a)
By
the Executive . For and in consideration of
the purchase by NPDC of shares of NPDC Common Stock and Five
Star Common Stock owned by the Executive pursuant to Section
1, the Executive, for him, his heirs and family
members, hereby releases NPDC and Five Star and their
respective predecessors, successors, parents, affiliated or
subsidiary companies and its or their respective present or
former officers, directors, agents, employees, managers,
members, shareholders or partners and any and all of their
respective benefit plans, committees, trustees, fiduciaries,
and trusts (hereinafter collectively referred to as the
"Releasees") from any and all claims or causes of action he
may have or claim to have against the Releasees, including any
claims arising out of or relating in any way to his employment
and/or consulting relationship with NPDC or Five Star and/or
his separation from that employment and/or consulting
relationship. The claims released include, but are
not limited to: ›
(i)
all claims which were or could have been asserted by the
Executive against any of the Releasees;
(ii)
all federal, state and local statutory claims, including
claims arising under the New York Human Rights Law, New York
Labor Law, the New York City Human Rights Law, the
Conscientious Employee Protection Act, Title VII of the Civil
Rights Act of 1964, the Fair Labor Standards Act, the
Americans with Disabilities Act, the Rehabilitation Act, the
Employee Retirement Income Security Act, the Uniformed
Services Employment and Reemployment Rights Act of 1994, the
Sarbanes-Oxley Act of 2002, and the Family and Medical Leave
Act;
(iii) all
claims arising under the United States, New York or
other state Constitutions;
(iv) all
claims arising under any Executive Order or derived from or
based upon any federal, state or local
regulation;
(v)
all common law claims including claims for wrongful discharge,
constructive discharge, violation of public policy, breach of
an express or implied contract, breach of an implied covenant
of good faith and fair dealing, tortious interference with
contract or prospective economic advantage, promissory
estoppel, intentional infliction of emotional distress,
defamation, conspiracy, equitable estoppel, fraud,
misrepresentation, detrimental reliance, retaliation, and
negligence;
(vi) all
claims for any compensation including back wages, front pay,
bonuses or awards, commissions, fringe benefits, disability
benefits, medical benefits, severance benefits, reinstatement,
retroactive seniority, pension benefits, stock options,
contributions to 401(k) plans, or any other form of economic
loss, as well as interest, liquidated damages, and punitive
damages;
(vii) all
claims for personal injury, including physical injury, mental
anguish, emotional distress, pain and suffering,
embarrassment, humiliation, damage to name or reputation and
loss of consortium; and
(viii) all
claims for costs and attorneys' fees.
(b)
By
Five Star and NPDC . For and in
consideration of the sale by Executive of shares of NPDC
Common Stock and Five Star Common Stock owned by the Executive
pursuant to Section 1, Five Star and NPDC, and on behalf of
their respective predecessors, successors, parents, affiliated
or subsidiary companies, hereby release the Executive from any
and all claims or causes of action either of them may have or
claim to have against the Executive, including any claims
arising out of or relating in any way to his employment and/or
consulting relationship with NPDC or Five Star, his service as
an officer or director of either of NPDC or Five Star, or
related to his performance of services required in accordance
with the terms of the Services Agreement.
(c)
Limitation on
Releases . Nothing in this Section 3 is
intended, nor shall be deemed, to (i) release any future claim
by any party arising after the date of the execution of this
Agreement by the Executive or (ii) release NPDC or Five Star
from any obligation to indemnify Executive for serving in the
capacity as an officer or director of NPDC or Five Star to the
full extent permitted by law.
(d)
Executive's
Release Regarding Age Discrimination . For
and in consideration of NPDC’s transfer of ownership to
the Executive of the office furniture located in the
Executive’s office at NPDC’s principal offices and
of the NPDC-owned automobile used by the
Executive, the Executive, for himself, his heirs and family
members, hereby releases the Releasees from any and all claims
under the federal Age Discrimination in Employment Act of
1967, as amended. With respect to this Subsection
3(d), the Executive has been advised to consult legal counsel,
and acknowledges that he has up to twenty-one (21) days to
consider the release agreement in this Subsection
3(d). Further, after signing in the space provided
below, the Executive shall have up to seven (7) days to revoke
his signature with respect to Subsection 3(d) only by sending
notice of revocation to John Belknap within the seven-day
period. If not revoked within such seven-day
period, the provisions of this Subsection 3(d) shall become
effective, and the transfer of ownership of the office
furniture and automobile shall be made promptly thereafter,
provided, however, that no transfer of ownership of office
furniture and automobile shall take effect unless and until
the Executive has satisfied the requirements set forth in
Section 1 of this Agreement to sell the Shares owned by him
and his family to NPDC.
4.
Non-Disparagement;
Confidentiality .
(a) The
Executive represents that (i) he has not made and will not
make disparaging comments or statements (including statements
to the press) or (ii) he has not taken, and will not take,
unless in accordance with this Agreement, any other action(s)
that were or may be injurious to a Releasee's reputation or
interest or that pertain to or that may adversely affect (A) a
Releasee; (B) any customers, competitors, or suppliers of NPDC
or Five Star; or (C) any joint venture or similar business
relationship in which NPDC or Five Star is a party or a
participant.
(b) The
Executive has not and will not divulge or communicate to any
person or entity, or in any way make use of, any confidential,
proprietary or privileged information acquired in the
performance of his duties for NPDC or Five
Star. For purposes of this Agreement, "confidential
or proprietary information" shall mean all information
regarding NPDC or Five Star's affairs, finances, properties,
methods of operation, data, systems, employees or business
plans or strategy which is not publicly available except that
information made publicly available by the Executive's breach
of this Agreement shall remain confidential or proprietary
information.
5.
Specific
Performance . The Executive understands and
agrees that the representations and promises of the Executive
contained in this Agreement are material terms of this
Agreement, and that NPDC and Five Star were induced to enter
into this Agreement based upon such representations and
promises. The Executive acknowledges that a breach
of such representations and/or promises would result in
damages to NPDC and Five Star which would be difficult to
calculate and determine. Accordingly, the Executive
agrees that in the event of any breach of this Agreement by
him, NPDC and Five Star may seek specific performance of this
Agreement by the Executive without the necessity of posting
any bond or other security and the Executive consents to the
ordering of specific performance.
6.
Return of
Items . The Executive warrants and
represents that as of the date of his signing this Agreement,
except as provided in Section 3(d) above, he has returned to
NPDC all property of NPDC or Five Star (whether or not
produced by him) within his possession, custody or control,
including but not limited to all documents (and copies of
documents), all electronic forms of information (and copies of
the same), any keys or access security cards to the offices of
NPDC or Five Star, any identification cards, credit cards,
computers, laptops, cell phones and any ancillary equipment.
Notwithstanding the provisions of this Section, it is agreed
that the Executive may retain any documents relating solely to
benefits available to him as an officer or director of NPDC or
Five Star.
7.
Filing of
Complaints . The Executive represents that
he has not filed any charge, complaint, or lawsuit against
NPDC or Five Star or any other Releasee or with any
governmental agency or court. With respect to any
lawsuits, complaints, or charges that have been or may be
filed by any other person or entity concerning events or
actions relating to the Executive's employment or consultation
services with NPDC or Five Star or separation from such
employment or consultation services, the Executive
additionally waives and releases any right he may have to
recover in any lawsuit or administrative proceeding brought by
any such person or entity. If t
