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EXHIBIT 10.2
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SETTLEMENT AGREEMENT AND MUTUAL
GENERAL RELEASE
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This Settlement Agreement and
Mutual General Release (the "Agreement") is entered into as of May
9, 2008 (the "Effective Date") by and between James R. Arabia
("Creditor"), NatureWell, Incorporated, a Delaware corporation
("Debtor"), Dutchess Private Equities Fund, Ltd ("Dutchess"), and
NatureWell, Incorporated, a Nevada corporation ("NWNV") with
reference to the following facts:
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RECITALS
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A.
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Debtor desires to restructure its
existing debt and capital structure (the "Restructuring");
and
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B.
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Dutchess (a creditor of Debtor)
will provide capital to Debtor intended to facilitate the
Restructuring and Dutchess desires to acquire Creditor's 75 shares
of voting control Series C Preferred Stock owned by Creditor, which
are entitled to cast a vote equal to 52.5% of all voting stock of
Debtor (the "Series C Preferred"), and 19,000,000 shares of Series
A common stock owned or controlled by Creditor, which are entitled
to cast a vote equal to ten (10) votes per share (the "Series A
Common Stock"); and
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C.
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As part of the Restructuring
Debtor intends to sell its existing assets to NWNV (the "Asset
Sale"); and
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D.
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As of the Effective Date Creditor
is owed monies from Debtor pursuant to a senior secured note, face
value $425,000, and a subordinate secured note, face value
$325,000, for which there is a remaining aggregate balance due,
including all accrued and unpaid interest and/or penalties, if any,
in the amount of $750,000 (the "Notes"); and
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E.
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Creditor and Debtor agree that
the Notes represent all monies, services and/or any other form of
consideration owed to Creditor by Debtor as of the Effective Date
except for a Senior Secured Convertible Note, face value $45,000,
and a Subordinate Secured Convertible Note, face value $45,000 (the
"Remaining Notes"); and
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F.
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As part of the Restructuring and
to facilitate the Asset Sale, the parties desire for NWNV to
acquire Creditor's Notes using a promissory note issued by itself
(the "Promissory Note"), a copy of which is attached hereto as
Exhibit A, and thereafter NWNV shall cancel the Notes acquired from
Creditor in order to fulfill its obligation to Debtor under the
terms of the Asset Sale, and Creditor desires to sell/exchange the
Notes issued by Debtor for the Promissory Note issued by NWNV (the
"Exchange").
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NOW THEREFORE, in consideration
of the mutual promises and agreements set forth herein, and other
good valuable consideration, including but not limited to the
Incentive Shares, the Promissory Note and the provision by Dutchess
of capital to facilitate the Restructuring, the receipt and
sufficiency of which is hereby acknowledged by the parties, the
parties hereby agree as follows:
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1.
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Representations and
Warranties . Creditor represents and warrants that: (i) as
of the Effective Date, he has not previously assigned or
transferred in any manner the Notes, or purported to have assigned
or transferred in any manner, any Claim (as defined in Section 5
below) or right set forth in this Agreement and/or arising out of
the Notes, (ii) the Notes represent all monies, services and/or any
other form of consideration owed to Creditor by Debtor as of the
Effective Date except for the Remaining Notes, (iii) he understands
that by signing this Agreement, and subject only to the conditions
contained in this Agreement or cancellation of this Agreement
pursuant to Section 4(f) below, Creditor is irrevocably agreeing to
enter into the Exchange, (iv) upon payment of the Incentive Shares
(see Section 2 below) and completion of the Exchange Creditor shall
have no further claims against Debtor, for monies owed, services
rendered or otherwise except for the Remaining Notes, (v)
Creditor's consent to the Asset Sale is hereby given pursuant to
that Intercreditor, Subordination and Standby Agreement dated
September 2, 2003, as amended (the "Intercreditor Agreement") in
his capacity as both a holder of Senior Debt and a holder of
Subordinated Debt, (vi) Creditor is an "accredited investor" (or a
corporation or entity not formed for the purpose of investing in
Debtor) as such term is defined in Rule 501(a) of Regulation D
promulgated under the Securities Act of 1933, as amended, and (vii)
Debtor has made available to Creditor the opportunity to (A) ask
questions of and receive answers from Debtor concerning Debtor and
the activities of Debtor, including but not limited to the
Restructuring and the Asset Sale, and (B) otherwise obtain any
additional information, to the extent that Debtor possesses such
information and can lawfully provide such to Creditor or could
acquire it without unreasonable effort or expense.
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2.
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Payment of Incentive Shares to
Creditor . As an incentive for Creditor to enter into this
Agreement, Debtor shall issue 250,000,000 restricted shares of its
common stock to Creditor upon the execution of this Agreement (the
"Incentive Shares"). The Incentive Shares shall be earned upon the
signing of this Agreement and the receipt by Creditor of the
Incentive Shares is not conditioned upon the closing of the Asset
Sale.
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3.
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Debtor Covenants . In
consideration of the mutual covenants and agreements set forth in
this Agreement, Debtor shall issue the Incentive Shares to Creditor
promptly following the execution of this Agreement.
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4.
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Other Covenants . The
parties agree that:
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(a)
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p
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