Compromise and Settlement Agreement among Health Anti-Aging Lifestyle Options Inc., Network Lifestyle Radio Corp., and Former NLR Shareholder
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This agreement is between Health Anti-Aging Lifestyle Options Inc. (HALO), Network Lifestyle Radio Corp. (NLR), and a former NLR shareholder. It resolves disputes arising from HALO’s acquisition of NLR and related share exchanges. The parties agree to rescind the prior share exchange agreements, release each other from all related claims, and settle any outstanding obligations. The agreement outlines the process for unwinding the transaction and specifies that all parties will drop any legal claims connected to the original deal. The closing is set for March 17, 2003, or another date determined by HALO.
EX-2.5 3 doc2.txt COMPROMISE AND SETTLEMENT AGREEMENT THIS COMPROMISE AND SETTLEMENT AGREEMENT (the "AGREEMENT") is made and entered into effective this day of February 2003, by and among: --------- Health Anti-Aging Lifestyle Options Inc. (formerly MicroAccel, Inc.), a Utah corporation ("HALO"); Network Lifestyle Radio Corp., a Delaware corporation ("NLR"); and The undersigned former shareholder of NLR (the "UNDERSIGNED"). RECITALS A. HALO acquired 99.65% of the issued and outstanding shares of NLR by issuing shares of common stock of HALO in exchange for shares of common stock of NLR pursuant to share exchange agreements dated for reference November 15, 2001 and December 31, 2001, entered into by and among HALO, NLR and the shareholders of NLR (collectively, the "SHARE EXCHANGE AGREEMENTS"), and the transactions contemplated under the Shareholder Agreements closed on February 28, 2002 (the "SHARE EXCHANGE"); B. Michael Woodman and Dean Mailey were the officers and directors of NLR and entered into indemnification agreements (the "INDEMNIFICATION AGREEMENTS") and employment agreements in connection with the Share Exchange (the "EMPLOYMENT AGREEMENTS"); C. HALO has granted Michael C. Woodman, Dean Mailey, Kathryn Williams and Stephen Greer (the "PRINCIPALS") options exercisable to acquire shares of common stock of HALO in the amounts set forth on Exhibit A (the --------- "PRINCIPAL OPTIONS"); D. The Principals were each shareholders of NLR prior to the Share Exchange and received, directly and indirectly, an aggregate of 5,452,500 shares of HALO in the Share Exchange; E. The Undersigned was a shareholder of NLR prior to the Share Exchange and received, directly and indirectly, that number of shares of HALO as indicated on the execution page of this Agreement in the Share Exchange; F. HALO has advanced to NLR an aggregate of approximately $2 million in connection with the development of its health, wellness and nutritional products and multi-media businesses (the "NLR ADVANCES"); -1- G. HALO has a working capital deficit and has been unable to raise additional financing to fund the working capital requirements of NLR due to the lack of public acceptance of the NLR products, current economic conditions and the capital structure of HALO; H. Justin Harbord was an officer and director of HALO prior to the Share Exchange and has asserted on behalf of certain shareholders of HALO that (a) the Principals breached certain representations made to HALO in connection with the Share Exchange, including that the business strategy of NLR was commercially viable and (b) it would be in the best interest of HALO and its shareholders to divest itself of NLR and the related obligations by rescinding the Share Exchange (the "HALO CLAIMS"); I. The Principals have asserted that (a) HALO has breached certain covenants under the Share Exchange Agreements to the former shareholders of NLR, (b) HALO is indebted to each of the Principals for compensation and expenses and (c) the NLR business strategy could be commercially viable, subject to raising sufficient financing to implement its business plan (the "PRINCIPAL CLAIMS"); J. Justin Harbord was appointed as an independent director of HALO (the "INDEPENDENT DIRECTOR") for the purposes of determining what strategy is in the best interest of HALO and its shareholders respecting the Share Exchange and for developing a business strategy for HALO; K. The Independent Director and the Principals have entered into a Compromise and Settlement Agreement dated effective the 14th day of February, 2003 (the "PRINCIPALS' COMPROMISE AGREEMENT") whereby the Principals have agreed to rescind their respective Share Exchange Agreements between HALO and each Principal provided that HALO made the same offer to compromise and settle any and all potential claims substantially on the same terms and conditions as the Principals' Compromise Agreement to all former shareholders of NLR that completed an Investor Questionnaire satisfactory to HALO; L. The Independent Director has negotiated this Agreement and approved the transactions contemplated herein on behalf of HALO with the understanding that (i) at the Closing, additional directors shall be designated, with the present directors who are the Principals resigning in seriatim; and (ii) the Closing of this Agreement shall be subject to the approval of the Independent Director and such newly designed directors; and M. The parties agree that it is in the best interest of HALO, the shareholders of HALO, NLR and the Undersigned that each of the parties to this Agreement compromise and settle their respective claims under the terms set forth in this Agreement, -2- NOW, THEREFORE, in consideration of the mutual covenants and agreements contained in this Agreement and other good and valuable consideration, the receipt and sufficiency of which is acknowledged, the parties agree as follows: I. Purpose and Definitions ----------------------- 1.1. The parties acknowledge that there presently exists a substantial, irreconcilable dispute among them, and without admitting or acknowledging the accuracy and truthfulness of the claims of any other party, these parties have determined it to be in their mutual best interests to resolve any such dispute. Therefore, the purpose of this Agreement is to rescind the Share Exchange and compromise and settle any and all claims or causes of action of any type or nature whatsoever or matters otherwise related to the disputes by, between and among the parties hereto and their respective successors, officers or agents, employees and stockholders. 1.2. In this Agreement including the Exhibits and amendments, the following terms shall have the meanings set forth below unless the context otherwise requires: 1.2.1 "AGREEMENT" means this Agreement including the Exhibits attached as the same may be amended or supplemented from time to time; 1.2.2. "CLOSING" means the completion of the rescission of the Share Exchange Agreements and the distribution of the NLR common shares by HALO; 1.2.3. "CLOSING DATE" means March 17, 2003 or such earlier or later date as HALO may determine; 1.2.4. "PLACE OF CLOSING" means 210-580 Hornby Street, Vancouver, BC; and 1.2.5. "SEC" means the United States Securities and Exchange Commission. II. General Release --------------- 2.1 General Release of HALO Claims. Except for the agreements, rights and ---------------------------------- obligations set forth in this Agreement, and for good and valuable consideration as set forth herein, the adequacy of which is hereby acknowledged on Closing, HALO, NLR and their respective insurers, subsidiaries, successors and assigns, release and forever discharge the Undersigned and any and all of their respective heirs, legal representatives and assigns, from any and all manner of action and causes of action, suits, debts, dues, accounts, contracts, agreements, judgments, claims and demands whatever, whether in law or in equity, which now exist or may subsequently arise based on facts or circumstances in existence on the Closing Date of this Agreement. -3- 2.2 General Release of the Undersigned Claims. Except for the agreements, ---------------------------------------------- rights and obligations set forth in this Agreement, and for good and valuable consideration as set forth herein, the adequacy of which is hereby acknowledged on Closing, the Undersigned and his acting heirs, legal representatives and assigns, does hereby release and forever discharge HALO, from any and all manner of action and causes of action, suits, debts, dues, accounts, contracts, agreements, judgments, claims and demands whatever, whether in law or in equity, which now exist or may subsequently arise based on facts or circumstances in existence on the Closing Date of this Agreement; provided. III. Terms of Settlement ------------------- 3.1. On the Closing Date, the Share Exchange Agreements between HALO and the Undersigned will be rescinded and the Undersigned will transfer and deliver his common shares of HALO to HALO and HALO will transfer and deliver common shares of NLR to the Undersigned. 3.2. The number of NLR common shares to be delivered to the Undersigned and the number of HALO common shares to be delivered to HALO are as indicated on the execution page of this Agreement. 3.3. HALO will make an offer to compromise and settle any and all potential claims as of the Closing Date that may be raised by the former shareholders of NLR listed in Exhibit B (the "NLR SHAREHOLDERS") to this --------- Agreement on substantially the same terms and conditions as this Agreement (the "NLR COMPROMISE AGREEMENTS"); provided that HALO shall only be required to make such offers to the NLR Shareholders that have returned an Investor Questionnaire that is reasonably completed to HALO's satisfaction. For an Investor Questionnaire to be reasonably satisfactory to HALO, HALO must be satisfied that the representations provided by the NLR Shareholder in the Investor Questionnaire permit HALO to distribute the NLR shares in reliance on an exemption from the registration requirements of the Securities Act of 1933, as amended (the "SECURITIES ACT"), in the United States and an exemption from prospectus filings in British Columbia. HALO will enter into compromise and settlement agreements with each NLR Shareholder that executes and delivers an NLR Compromise Agreement and transfer one share of NLR common stock for each share of HALO common stock tendered by the NLR Shareholder as set forth on Exhibit B. ---------- 3.4. In the event that (a) an NLR Shareholder does not return an Investor Questionnaire, or (b) the Investor Questionnaire is not satisfactory to HALO, HALO will transfer and deliver to NLR all of the NLR shares not distributed to any such NLR Shareholder as set forth on Exhibit B. After --------- giving effect to the transactions on contemplated in the Principals' Compromise Agreement and as set forth in Sections 3.1, 3.2, 3.3 and 3.4 of this Agreement, HALO shall have no ownership interest in or obligations to NLR whatsoever. 3.5. In the event that an NLR Shareholder that has not entered into an NLR Compromise Agreement requests his, her or its interests in the NLR shares -4- of common stock, NLR will promptly reissue shares of NLR common stock to such NLR Shareholder in the amount set forth on Exhibit B. ---------- 3.6. The NLR Advances and any inter-company debt owed by NLR to HALO will be deemed null, void, compromised, settled and satisfied in all respects without recourse. 3.7. The Indemnification Agreement will be deemed null and void ab initio. 3.8. The Employment Agreements will be deemed null and void in all respects effective as of the Closing Date and HALO will be liable for no amounts owing thereunder whatsoever, including, but not limited to, any expenses. 3.9. The Principals who are presently serving as directors or officers of HALO shall resign their respective positions on Closing of this Agreement. 3.10. The Principal Options shall be cancelled, null and void ab initio. 3.11. Any amount due and owing to any of the Principals from HALO as at the Closing Date shall be deemed to be nil and HALO will not be liable for any such amounts payable to the Principals whatsoever. IV. Representations and Warranties of the Undersigned ------------------------------------------------- 4.1. The Undersigned represents and warrants to HALO as follows and acknowledges that HALO is relying upon such representations and warranties in connection with the transactions contemplated by this Agreement: 4.1.1. the Undersigned has the legal capacity, power and authority to hold the HALO shares owned by him at the Time of Closing, to enter into this Agreement and to transfer the legal and beneficial title and ownership of the HALO shares to HALO free of all encumbrances; 4.1.2. the Undersigned not been provided with any offering memorandum or similar disclosure document, including financial information, in respect of HALO or its subsidiary, NLRs current or proposed business activities; 4.1.3. the Undersigned has such knowledge and experience in financial and business matters as to be capable of evaluating the merits and risks of an investment in the common shares of NLR (the SECURITIES) and the Undersigned is able to bear the economic risk of loss of his/her/its entire investment; 4.1.4. HALO has provided to the Undersigned the opportunity to ask questions and receive answers concerning the terms and conditions of the offering and he/she/it has had access to such information concerning HALO and NLR as he/she/it has -5- considered necessary or appropriate in connection with his/her/its investment decision to acquire the Securities; 4.1.5. the Undersigned is acquiring the Securities for his/her/its own account, for investment purposes only and not with a view to any resale, distribution or other disposition of the Securities in violation of the United States or British Columbia securities laws; 4.1.6. the Undersigned understands that the Securities have not been and will not be registered under the Securities Act or the securities laws of any state of the United States and that the sale contemplated hereby is being made in reliance on an exemption from such registration requirements; 4.1.7. the Undersigned understands that the Securities are being offered without a prospectus being filed with any securities commission in Canada and that the sale contemplated hereby is being made in reliance on an exemption from prospectus requirements in Canada; 4.1.8. the Undersigned has not purchased the Securities as a result of any form of general solicitation or general advertising, including advertisements, articles, notices or other communications published in any newspaper, magazine or similar media or broadcast over radio, or television, or any seminar or meeting whose attendees have been invited by general solicitation or general advertising; 4.1.9. if the Undersigned decides to offer, sell or otherwise transfer any of the Securities, he/she/it will not offer, sell or otherwise transfer any of such Securities directly or indirectly, unless: (i) the sale is to NLR; (ii) the sale is made outside the United States in a transaction meeting the requirements of Rule 904 of Regulation S under the Securities Act and in compliance with applicable local laws and regulations; (iii) the sale is made outside of the Province of British Columbia in a transaction meeting the requirements of Multi-Lateral Instrument 45-102 under Canadian securities law; (iv) the sale is made pursuant to the exemption from the registration requirements under the Securities Act provided by Rule 144 there under and in accordance with any applicable state securities or "Blue Sky" laws; or (v) the Securities are sold in a transaction that does not require registration under the Securities Act or any applicable state laws and regulations governing the offer and sale of securities, and it has prior to such sale furnished to NLR an opinion of counsel reasonably satisfactory to NLR; -6- 4.1.10. the certificates representing the Securities will bear a legend stating that such Securities have not been registered under the Securities Act or the securities laws of any state of the United States and may not be offered for sale or sold unless registered under the Securities Act and the securities laws of all applicable states of the United States or an exemption from such registration requirements is available; 4.1.11. the certificate representing the Securities will bear a legend stating that such Securities shall not be traded, unless permitted under securities legislation, until the earlier of (i) the date that is 12 months and a day after the date the issuer first became a reporting issuer in any of Alberta, British Columbia, Manitoba, Nova Scotia, Ontario, Quebec and Saskatchewan, if the issuer is a SEDAR filer; and (ii) the date that is 12 months and a day after the later of (A) the distribution date, and (B) the date the issuer become a reporting issuer in the local jurisdiction of the purchaser of the securities that are the subject of the trade; and 4.1.12. the Undersigned understands and agrees that there may be material tax consequences to the undersigned of an acquisition or disposition of the Securities. HALO gives no opinion and makes no representation with respect to the tax consequences to the undersigned under United States, Canadian, state, provincial, local or foreign tax law of the undersigned's acquisition or disposition of such Securities. V. Representations and Warranties of HALO -------------------------------------- 5.1. HALO represents and warrants to the Undersigned as follows and acknowledges that the Undersigned is relying upon such representations and warranties in connection with the transactions contemplated by this Agreement: 5.1.1. HALO is a corporation duly incorporated, organized and validly subsisting and in good standing under the laws of Utah. 5.1.2. This Agreement has been duly authorized and approved by HALO and the Independent Director, and on Closing, will be ratified by a majority of the board of directors of HALO not including the Principals, and HALO has the full power and lawful authority to consummate its obligations and transactions contemplated by this Agreement on the terms and conditions set forth in this Agreement. 5.1.3. No prior permit, consent, approval, authorization or other order of or filing with any other person or entity (including, but not limited to, the SEC) is required in connection with the execution, delivery and performance by HALO of this Agreement, and the transactions contemplated by this Agreement will not result in the violation or breach of any term or provision of, or constitute (with or without due notice or lapse of time or both) a default under any agreement or instrument to which -7- HALO is a party or is bound. The transactions contemplated by this Agreement constitute the valid and binding obligations of HALO, enforceable against HALO in accordance with the terms of this Agreement. 5.1.4. HALO has been represented by Leonard W. Burningham, Esq. as U.S. counsel, and DuMoulin & Boskovich, as special Canadian counsel, in connection with this Agreement and the matters related hereto. Any fees, expenses or costs associated with such representation shall be the sole expense and obligation of HALO. VI. Conditions of Closing and Closing --------------------------------- 6.1. HALO's Conditions to Closing. The obligation of HALO to complete the ------------------------------- transactions contemplated in this Agreement is subject to the following terms and conditions for the exclusive benefit of HALO, to be fulfilled or performed at or prior to the Time of Closing or waived in whole or in part by HALO at its sole discretion without prejudice to any rights the Undersigneds may otherwise have: 6.1.1. HALO shall have received from the Undersigneds signed Investor Questionnaires that are completed to the satisfaction of HALO; 6.1.2. HALO shall have filed it Form 10KSB with audited financial statements for the year ended December 31, 2002, all of which have been certified in accordance with the SEC requirements by Michael C. Woodman, as principal executive officer, and Kathryn William, as principal financial officer; 6.1.3. The Principals will resign effective at the Time of Closing; 6.1.4 The representations and warranties of the Undersigneds contained in this Agreement shall be true and correct in all material respects at the Time of Closing, with the same force and effect as if such representations and warranties were made at and as of such time; 6.1.5. A majority of HALO's board of directors, not including the Principals, shall have ratified and approved this Agreement; and 6.1.6. the transactions contemplated in the Principals' Compromise Agreement have been closed to the satisfaction of HALO. 6.2. Undersigned Conditions to Closing. The obligation of Undersigned to ------------------------------------ complete the transactions contemplated in this Agreement is subject to the following terms and conditions for the exclusive benefit of the Undersigned, to be fulfilled or performed at or prior to the Time of Closing or waived in whole or in part by the Undersigned at their sole discretion without prejudice to any rights HALO may otherwise have: -8- 6.2.1. The representations and warranties of HALO contained in this Agreement shall be true and correct in all material respects at the Time of Closing, with the same force and effect as if such representations and warranties were made at and as of such time; and 6.3. Time and Place. Upon satisfaction or waiver of the conditions to closing ---------------- set forth in Sections 6.1 and 6.2, the Closing will occur on the Closing Date at the Place of Closing. This Agreement shall become binding upon the exchange of executed copies thereof. The Parties may arrange for executed copies to be held in escrow prior to the exchange, so as to facilitate the exchange without the need for the presence of one or more of the Parties. VII. Change of Facts --------------- 7.1. Each of the parties hereto acknowledges that to the best of his, her or its personal knowledge and belief, the facts and circumstances as known to each under which this Agreement has been executed and entered into are true, accurate and complete in all material respects, and each party further acknowledges that such facts or circumstances may in the future prove to be different, and each assumes the risk of any such facts or circumstances proving to be otherwise than those understood at the time of the execution of this Agreement. IX. General ------- 9.1 The parties agree that in the event of any default hereunder by any party, the non-defaulting parties shall be entitled to recover reasonable attorney's fees and all costs incurred in enforcing the terms and provisions of this Agreement; further, each party designates the State of Utah in the United States as the forum state for any legal proceeding respecting this proceeding, and each party consents to jurisdiction in the State of Utah with respect to any such legal proceeding. 9.2 Except as may be otherwise expressly agreed between the parties in writing, this Agreement constitutes the entire agreement between the parties pertaining to the subject matter and there are no oral statements, warranties, representations or other agreements between the parties in connection with the subject matter except as specifically set forth or referred to herein. No amendment, waiver or termination of this Agreement shall be binding unless executed in writing by the party or parties to be bound thereby. No waiver of any provision of this Agreement shall be deemed or shall constitute a waiver of any other provision nor shall any such waiver constitute a continuing waiver unless otherwise expressly provided. 9.3 The representations, warranties, covenants and agreements contained in this Agreement and in any agreement, instrument, certificate or other document executed or delivered pursuant hereto shall survive the Closing and shall continue in full force an defect notwithstanding any investigation made by any party to this Agreement. -9- 9.4 No investigations made by or on behalf of HALO at any time shall have the effect of waiving, diminishing the scope of or otherwise affecting any representations or warranties made herein or pursuant hereto. No investigations made by or on behalf of the Undersigned at any time shall have the effect of waiving, diminishing the scope of or otherwise affecting any representations or warranties made herein or pursuant hereto. 9.5 All costs and expenses incurred in connection with this Agreement and the transactions contemplated hereby shall be paid by the party incurring such expense. HALO shall not bear any legal, accounting or other costs incurred by the Undersigned. 9.6 Any notice or other communication required or permitted to be given hereunder shall be in writing and delivered or sent by overnight mail, overnight delivery or telefax and, if telefaxed, shall be deemed to have been received on the next business day following transmittal and acknowledgment of receipt by the recipient's telefax machine or if delivered by hand shall be deemed to have been received at the time it is delivered. Notices addressed to an individual shall be validly given if left on the premises indicated below. Notice of change of address shall also be governed by this Subsection 9.6 Notices shall be delivered or addressed as follows: If to HALO: Health Anti-Aging Lifestyle Options Inc. Justin Harbord 210 - 580 Hornby Street Vancouver, BC. V6C 3B6 Fax ###-###-#### If to the Undersigned, at the address specified on the execution page of this Agreement. Any party may give written notice of change of address in the same manner, in which event such notice shall thereafter be given to it as above provided at such changed address. 9.7 Time shall be of the essence of this Agreement. 9.8 Each of the parties hereto agrees promptly to do, make, execute, deliver or cause to be done, made, executed or delivered at their own expense all such further acts, documents and things as the other party hereto may reasonably require for the purpose of giving effect to this Agreement whether before or after the Closing. 9.9 This Agreement is binding on and inures to the benefit of each of the parties and their respective heirs, personal representatives, successors and assigns and all of their past, present, and future principals, officers, directors, agents, and employees and their respective heirs and legal representatives. None of the parties may assign any rights or obligations hereunder without the prior written consent of the other parties, which consent shall not be unreasonably withheld. -10- 9.10 If any covenant, obligation or agreement of this Agreement, or the application thereof to any person or circumstance shall, to any extent, be invalid or unenforceable, the remainder of this Agreement or the application of such covenant, obligation or agreement to persons or circumstances other than those as to which it is held invalid or unenforceable, shall not be affected thereby and each covenant, obligation and agreement of this Agreement shall be separately valid and enforceable to the fullest extent permitted by the law. 9.11 As Agreement may be executed in any number of counterparts, each of which shall be an original but all of which together shall constitute one and the same instrument. A facsimile signature of any party shall be considered to have the same binding legal effect as an original signature. IF UNDERSIGNED IS AN INDIVIDUAL: SINGED, SEALED AND DELIVERED by ) THE UNDERSIGNED in the presence of: ) ) - --------------------------------- ) -------------------------------------- Witness Signature ) Signature ) - --------------------------------- ) -------------------------------------- Print Witness Name ) Print Name ) - --------------------------------- ) -------------------------------------- Witness Address ) Residential Address ) ) -------------------------------------- ) Number of Shares of Health Anti-Aging ) Lifestyle Options, Inc. Held by ) Shareholder IF UNDERSIGNED IS A CORPORATE ENTITY: - --------------------------------- ) Print Name of Corporate Entity ) ) ) - --------------------------------- ) -------------------------------------- Authorized Signatory ) Number of Shares of Health ) Anti-Aging Lifestyle Options, ) Inc. Held by Shareholder - --------------------------------- ) Print Name and Title ) ) ) - --------------------------------- ) Address -11- HEALTH ANTI-AGING LIFESTYLE OPTIONS, INC. Per: ----------------------------------- Justin Harbord, Director NETWORK LIFESTYLE RADIO CORP. Per: ----------------------------------- Michael C. Woodman (aka Jesse Dylan) President and Director -12-
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