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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 study.
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