SEC Form 8-K

Release and Assumption Agreement

This Release and Assumption Agreement ("Agreement") is made and entered into this day of , by and among , a Delaware corporation ("PPI"), , a Delaware corporation ("SHS"); and , a Delaware limited liability company ("PC")

RECITALS

A. PPI and SHS entered into a Services Agreement dated as of (the "Services Agreement") with respect to the provision by PPI of certain services, personnel, facilities and equipment to SHS.

B. Pursuant to the Services Agreement, SHS issued in favor of PPI a variable rate promissory note in the principal amount of (the "Note") in payment for the services to be provided by PPI under the Services Agreement.

C. PC is willing to assume the Note and all obligations thereunder in exchange for shares of SHS Common Stock, and SHS is willing to issue such Shares to PC in exchange for such assumption and the release by PPI of SHS's obligations under the Note.

D. PPI is willing to release SHS from its obligations under the Note upon the assumption by PC of all of SHS's obligations thereunder.

NOW, THEREFORE, in reliance on the foregoing recitals and in consideration of the mutual covenants contained herein, the parties hereto agree as follows:

AGREEMENT

1. Assignment. SHS hereby assigns and transfers to PC all of SHS's right, title and interest in and related obligations under the Note, and PPI hereby consents to such assignment and the assumption by PC of the Note and SHS's obligations thereunder.

2. Assumption and Pledge. PC hereby assumes and agrees to pay, perform and discharge all obligations of SHS under or arising out of the Note. PC further agrees to secure its obligations under the Note by pledging shares of PPI Class B Common Stock (the "PPI Stock") pursuant to the terms of a Stock Pledge Agreement substantially in the form attached hereto as Exhibit A being entered into between PC and PPI concurrently herewith.

3. Release of Claims.

3.1 As used herein, the term "Claims" shall mean any and all claims, demands, damages, sums of money, costs, expenses, actions, rights, causes of action, agreements, promises, obligations or liabilities of any kind or nature whatsoever, known or unknown, fixed or contingent, suspected or unsuspected, which PPI may have had or claim to have had, or now has or claims to have, or hereafter may claim to have or assert to have, which arise out of in any manner whatsoever, either directly or indirectly, or are related to the Note.

3.2 In consideration of PC's assumption of the Note and SHS's obligations thereunder and PC's related pledge of the PPI Stock, PPI hereby acknowledges full and complete satisfaction of, and hereby releases, and forever discharges SHS as well as its successors, assigns, representatives, shareholders, officers, directors, employees, agents, servants and attorneys from any and all Claims. The parties intend that this release shall be broadly construed and interpreted so as to settle, release and extinguish any and all Claims or any matter related in any way thereto.

3.3 It is the intention of the parties in executing this Agreement that the same shall be effective as a bar to, and full settlement of, any and all Claims hereinabove specified. PPI hereby expressly waives any and all rights and benefits conferred upon PPI by the provisions of Section 1542 of the Civil Code of California, as well as by any other statutes or common law principles of similar effect.

"1542. A general release does not extend to claims which the creditor does not know or suspect to exist in his favor at the time of the execution of the Release, which if known by him must have materially affected his settlement with the debtor."

The parties understand that this Agreement shall act as a release of future claims that may arise from the Claims whether such Claims are currently known, unknown, foreseen, or unforeseen. PPI understands and acknowledges the significance and consequence of such specific waiver of Section 1542 and hereby assumes full responsibility for any injuries, damages, losses, or liability that he or she may hereafter incur from the Claims.

4. Stock Purchase and Certain Expenses. In consideration of PC's assumption of the Note and SHS's obligations thereunder and the release by PPI of SHS from its obligations under the Note as set forth herein, SHS agrees as follows:

4.1 SHS hereby sells to PC, and PC hereby acquires from SHS, an aggregate of shares of SHS Common Stock (the "Shares"). SHS shall deliver a certificate representing the Shares to PC as soon as is practical after the date of this Agreement.

4.2 SHS hereby agrees to pay from time to time promptly upon request by PC (i) all attorneys' fees and expenses incurred by PC in connection with PC's initial financing, (ii) all costs and expenses incurred by PC in connection with the preparation of PC's financial statements and the preparation and filing of PC's annual tax returns and (iii) all of PC's franchise taxes in Delaware and Nevada. SHS's payment obligations set forth in this Section 4.2 shall expire one year after the effective date of SHS's initial underwritten public offering.

5. SHS's Representations and Warranties. SHS hereby represents and warrants that:

5.1 SHS has and will transfer to PC, good, valid and marketable title to all of the Shares being sold hereunder, and there are no security interests, liens, claims, charges, encumbrances, assessments or restrictions or any other defects in title of any nature whatsoever on any of the Shares.

5.2 SHS, or the person executing this Agreement on behalf of SHS, has the right, power, legal capacity and authority to enter into and perform SHS's obligations under this Agreement.

6. PC's Representations and Warranties. PC hereby represents and warrants that:

6.1 PC is aware that the Shares are highly speculative and that there can be no assurance as to what return, if any, there may be.

6.2 PC is aware of SHS's business affairs and financial condition; has acquired sufficient information about SHS to reach an informed and knowledgeable decision to acquire the Shares; has received an opportunity to ask questions relating to SHS's business, legal and financial affairs and to obtain all additional information which PC requested.

6.3 PC is purchasing the Shares for investment for PC's own amount only and not as a nominee or agent, and not with a view to, or for resale in connection with, any "distribution" thereof within the meaning of the Federal Securities Act of 1933 (the "Act") or the California Corporate Securities Law of 1968 (the "Law").

6.4 PC does not have any contract, undertaking, agreement or arrangement with any person to sell, transfer or grant a participation in the Shares to such person or to any third person.

6.5 PC understands that the Shares have not been registered under the Act or the Law by reason of specific exemptions therefrom, some of which exemptions may depend upon, among other things, the bona fide nature of the PC's investment intent as expressed herein.

6.6 PC further understands that the Shares must be held indefinitely unless it is subsequently registered under the Act or an exemption from such registration is available.

6.7 PC is aware of Rule 144 promulgated under the Act which permits limited public resale of Shares acquired in a nonpublic offering, subject to the satisfaction of certain conditions...

6.8 PC further understands that in the event the requirements of Rule 144 are not met, registration under the Act, compliance with Regulation A or some other registration exemption will be required for any disposition of the Shares...

6.9 PC has either (i) a preexisting business or personal relationship with SHS or its directors or officers or (ii) by reason of PC's business or financial experience, the capacity to protect PC's own interest in connection with the transaction contemplated by this Agreement.

6.10 PC is (i) experienced in investing in companies recently organized and in the development stage, (ii) able to fend for itself in connection with this investment, and (iii) able to bear the economic risk of this investment.

6.11 PC is a limited liability company duly organized, validly existing and in good standing under the laws of the State of Delaware and has full power and authority to carry on its business as now conducted and as currently proposed to be conducted.

6.12 PC has all requisite power to enter into this Agreement, the Stock Pledge Agreement referred to in Section 2 hereof and the Investors' Rights Agreement referred to in Section 7 hereof and to otherwise carry out and perform all of its obligations under the terms of this Agreement, the Stock Pledge Agreement and the Investors' Rights Agreement.

6.13 All action necessary for the authorization, execution, delivery and performance of this Agreement, the Stock Pledge Agreement and the Investors' Rights Agreement has been duly and validly taken by PC and is currently in full force and effect.

6.14 This Agreement, the Stock Pledge Agreement, the Investors' Rights Agreement and the Note are valid and binding obligations of PC, enforceable in accordance with their respective terms...

6.15 The execution and delivery of this Agreement, the Stock Pledge Agreement and the Investors' Rights Agreement and the consummation of the transactions herein or therein contemplated, do not and will not conflict with, violate, or result in any material breach or lien upon PC's assets...

7. Investors' Rights Agreement. Concurrently with the execution of this Agreement and as a condition to PC's obligations hereunder, PC and SHS will enter into an Investors' Rights Agreement substantially in the form of Exhibit B attached hereto.

8. Binding upon Successors and Assigns. Subject to, and unless otherwise provided in, this Agreement, each and all of the covenants, terms, provisions, and Agreements contained herein shall be binding upon, and inure to the benefit of, the permitted successors, executors, heirs, representatives, administrators and assigns of the parties hereto.

9. Entire Agreement. This Agreement constitutes the entire understanding and Agreement of the parties hereto with respect to the subject matter hereof and supersedes all prior and contemporaneous Agreements or understandings, inducements or conditions, express or implied, written or oral, between the parties with respect hereto and thereto.

10. Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be an original as against any party whose signature appears thereon and all of which together shall constitute one and the same instrument.

11. Amendment and Waivers. Any term or provision of this Agreement may be amended, and the observance of any term of this Agreement may be waived only by a writing signed by the party to be bound thereby.

IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first hereinabove written.