Document:

Settlement Agreement dated as of December 17, 2002

Exhibit 10.19 
 
SETTLEMENT AGREEMENT AND MUTUAL RELEASE 
 
THIS SETTLEMENT AGREEMENT (“Agreement”) is executed this 17th day of December, 2002, by and between
Varitek Industries, Inc., a Texas Corporation (“Varitek”), and Technetics, Inc., a California corporation, doing business as SMTEK San Diego (collectively, the “Parties”). 
 
RECITALS 
 
Certain disputes have arisen between the Parties that are the
subject of a court action identified as Technetics, Inc., a California corporation, doing business as SMTEK San Diego v. Varitek Industries, Inc. et al, San Diego County Superior Court Case No. GIC 766876 (the “Action”). The Parties
desire to settle and compromise such disputes on the terms set forth below. 
 
AGREEMENT 
 
NOW, THEREFORE, in consideration of the foregoing premises and other good and valuable consideration, the Parties hereby agree as follows: 
 
1. Consideration. In full and final settlement of all claims raised by SMTEK against Varitek, Varitek
shall pay to SMTEK, the payment of which is hereby acknowledged, the sum $25,000 cash. Additionally, Varitek shall issue a total of 175,000 shares of Varitek common stock in the name of Technetics, Inc. SMTEK hereby acknowledges that it is an
accredited investor as that term is defined by Rule 501 of Regulation D promulgated pursuant to the Securities Act of 1933, as amended. Additionally, SMTEK acknowledges that it acquired these securities for investment purposes and without a view
towards further distribution of said shares. These acknowledgements are material to Varitek’s ability to establish an exemption from registration of the shares issued as a result of this Agreement. Additionally, SMTEK shall be permitted to
maintain ownership and control of any and all items of value, including component inventory held for the benefit of Varitek at the offices of SMTEK. 
 
Varitek agrees that it will register the resale of the shares being issued to SMTEK hereby at the earliest practicable date as part of the
first registration statement to be filed by Varitek, and that it will use reasonable commercial efforts to have said registration statement declared effective at the earliest practicable date. 
 
2. Dismissal of the Action. Upon the receipt of all
consideration and the effectiveness of the registration statement required to be filed hereby to register the resale of the Varitek common stock issued to SMTEK, SMTEK will file a motion to dismiss the Action without prejudice in accordance with the
form of dismissal, attached hereto as Exhibit A. 
 
3. Except for the obligations provided for by this Agreement, SMTEK hereby releases and discharges Varitek and its directors, officers, shareholders, attorneys, agents, employees, successors and assigns from all actions, causes of
action, claims and liabilities including, without limitation, those arising out of the Action, whether known or unknown. 
 
4. Varitek hereby release and discharge SMTEK and its attorneys, agents, employees, successors and assigns, from all actions, causes of
action, claims and liabilities including, without limitation, those arising out of the Action, whether known or unknown. 
 
5. The Parties shall refrain from any and all communication disparaging the other parties to this Agreement. 

 
6. The Parties
are represented by legal counsel and have received legal advice concerning this Settlement Agreement prior to their execution of it. No promise or inducement which is not expressed herein has been made to any party in order to induce them to enter
into this Settlement Agreement. 
 
7. The
settlement of the Action and the execution of this Settlement Agreement are being done in order to compromise disputed claims. This Settlement Agreement should not be construed as an admission of liability on the part of any party. 
 
8. This Settlement Agreement shall be governed by the laws of
the state of California. 
 
9. This Settlement
Agreement and the identified exhibit contains the entire agreement between the Parties, and all provisions of this Agreement are contractual and not a mere recital. 
 
10. This Settlement Agreement shall not be modified except in writing signed by the Parties. 
 
11. Should any action or proceeding be brought by any party to
this Settlement Agreement to enforce it or any provision hereof, the prevailing party in any such action or proceeding should be entitled to recover, in addition to any other relief, reasonable attorney fees, costs and expenses of litigation or
arbitration. 
 
12. The Parties shall bear their
own costs and expenses, including attorney fees, disbursements and court costs incurred in pursuing the Action. 
 
13. This Settlement Agreement may be executed in one or more counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same Agreement. 
 
14. The Parties agree that a facsimile signature may substitute for and have the same legal effect as the original signature. 
 

	 TECHNETICS, INC.

	
	 By:
	 	 /s/

	 Its:
	 	 Corporate Secretary

	
	 VARITEK INDUSTRIES, INC.

	
	 By
	 	 /s/    Randy
Bayne        

	 	 	 Randy S. Bayne

	 	 	 President and Chief Executive Officer

 

2Promissory Note in the principal amount of $228,000

 
Exhibit 10.20

 
PROMISSORY NOTE 
 
 

	 $228,000
	 	 San Diego County, California

	
	 	 	 January 22, 2003

 
FOR
VALUE RECEIVED, VARITEK INDUSTRIES, INC., a Texas corporation (“Maker”), promises to pay to the order of CALWEST INDUSTRIAL HOLDINGS, LLC, a Delaware limited liability company (“Payee”), the principal sum of two
hundred twenty-eight thousand dollars ($228,000), together with interest on the amount from time to time outstanding, to be computed from the date of this Note until such principal sum shall be fully paid at the rate of seven percent (7%) per annum,
as follows: 
 
Commencing on May 1, 2003 and
continuing on the first day of each successive month thereafter until November 1, 2003, inclusive, Maker shall pay to Payee a monthly installment in the amount of twenty-five thousand dollars ($25,000). Maker shall pay the entire unpaid balance of
the principal sum and all accrued but unpaid interest on December 1, 2003. 
 
All payments hereon shall be payable in lawful money of the United States of America to Payee, in care of its counsel, Pillsbury Winthrop LLP, 650 Town Center Drive, 7th Floor, Costa Mesa, California 92626 or at such other place as Payee may from time to time designate in writing and shall be
applied first against accrued interest and thereafter against principal. 
 
Maker shall have the right to prepay all or any part of the principal sum at any time without premium or penalty. 
 
This Note is the promissory note referred to in Paragraph 5(a) of the Stipulation for Entry of Judgment, Case No. GIN012774 (the
“Stipulation”). Payee is entitled to the benefits of the Stipulation and all other instruments executed by Maker in connection with the indebtedness evidenced by this Note, and Payee may enforce the agreements of Maker contained
therein and exercise the remedies provided therein or otherwise in respect thereof, all in accordance with the Stipulation and such other instruments. 
 
Should an event of default (as described in the Stipulation) occur and be continuing, Payee shall have the right to enforce and exercise
all of the rights and remedies of Payee under this Note and the Stipulation. Time is of the essence of this Note. 
 
Maker waives presentment, demand, protest, notice of protest, notice of dishonor and notice of nonpayment. 
 
Maker consents to any extension of time for the payment of
this Note. Any such extension or release may be made without notice to Maker and shall not discharge the liability of Maker. Failure to accelerate the maturity of the indebtedness evidenced by this Note upon default by Maker, or acceptance of any
past due installment, or failure to demand strict performance by Maker shall not constitute a waiver of any provision of this Note by Payee. 
 

 
If at any time
Payee collects interest pursuant to this Note in an amount in excess of the maximum amount of interest permitted by law, the amount of such excess shall be deemed payment of principal. 
 
This Note shall be governed by and construed in accordance with the laws of the State of California.

 
IN WITNESS WHEREOF, Maker has executed this Note
as of the date first hereinabove written. 
 

	 VARITEK INDUSTRIES, INC., a Texas corporation

	
	 By:
	 	 /s/    RANDY
BAYNE        

	 Its :
	 	 Randy BayneStipulation for Judgement dated as of December 16, 2002

 
Exhibit 10.21

 

	
	 1
	  	 David E. Bower

	
	 	  	 LAW OFFICES OF DAVID E. BOWER

	
	 2
	  	 510 Arizona Avenue

	
	 	  	 Santa Monica, CA 90401

	
	 3
	  	 Mailing Address

	
	 	  	 P. O. Box 2094

	
	 4
	  	 Santa Monica, CA 90406-2094

	
	 5
	  	 Attorney for Plaintiffs. CTI Contracting

	
	 6
	  	 SUPERIOR COURT OF THE STATE OF
CALIFORNIA

	
	   7
	  	 COUNTY OF SAN DIEGO

	 	
	 	 
	
	 8
	  	 CTI CONTRACTING, a California
	  	 Case No.: GIN 012774

	
	 	  	 Corporation
	  	 
	
	 9
	  	 Plaintiff,
	  	 STIPULATION FOR JUDGMENT

	
	 	  	 vs.
	  	 
	
	 10
	  	 	  	 
	
	 	  	 VARITEK INDUSTRIES, INC., et al.,
	  	 
	
	 11
	  	 Defendants
	  	 
	 	
	 	 

	
	 12
	  	 This agreement (Agreement herein) is entered into on the date signed below, by
and between CTI
	  	 
	
	 13
	  	 Contracting (CTI or Plaintiff herein) and Varitek Industries, Inc.
(Varitek or Defendant herein)
	  	 
	
	 14
	  	 and is made with reference to the following facts:
	  	 
	
	 15
	  	         The above referenced law suit was
filed by Plaintiff seeking damages for breach of
	  	 
	
	 16
	  	 contract and other causes of action regarding the failure of Defendant to pay for
services
	  	 
	
	 17
	  	 materials and equipment provided for tenant improvements for Defendant, at a property
they
	  	 
	
	 18
	  	 were leasing from Cal West Industrial Properties, located at 1499 Poinsettia Avenue
in Vista
	  	 
	
	 19
	  	 California. Defendant responded with a general denial Answer.
	  	 
	
	 20
	  	         Several other law suits were also
flied by the various subcontractors (CGE Inc.; T-
	  	 
	
	 21
	  	 Enterprises dba Concrete Cutting; San Marcos Glass; Hanna Plumbing and Casper) who
had
	  	 
	
	 22
	  	 provided labor, equipment and materials to the Varitek Project, seeking foreclosure
of their
	  	 
	
	 23
	  	 mechanic’s liens and other remedies.
	  	 
	
	 24
	  	         Thereafter, a settlement agreement
was reached and signed by all parties, which provided
	  	 
	
	 25
	  	 for payment of a total of $272,000.00 to CTI, with separate agreements for
distribution to each
	  	 
	
	 	  	 subcontractor, from this fund. This fund was to be contributed to as follows: Cal
West
	  	 

 
 

Stipulation for Judgment 
1 

 

	
	 1
	  	 Industrial Properties (CalWest herein) was to pay $114,000.00 and Varitek
(Defendant) was to

	
	 2
	  	 pay 158,000.00, with all funds going to CTI’s attorney, in trust, to be
disbursed in exchange for

	
	 3
	  	 dismissals and releases of liens as to each subcontractor and CTI and all actions
involved in the

	
	 4
	  	 then consolidated case. Cal West did in fact pay $114,000.00, but Varitek failed to
pay the

	
	 5
	  	 $158,000.00.

	
	 6
	  	 Now, a portion of the funds from Varitek ($100,000.00) is immediately available for
disbursal

	
	 7
	  	 and an agreement has been reached as to how those funds will be disbursed and terms
for

	
	 8
	  	 payment of the remaining funds are agreed upon as follows:

	
	 9
	  	 1.     Defendant shall pay to Plaintiff, the total sum of
$158,000.00 in full settlement of all

	
	 10
	  	 claims herein, as follows:

	
	 11
	  	         a.     Defendant
shall pay to Plaintiff, the sum of $100,000.00 upon execution of this

	
	 12
	  	 agreement, which shall take place before December 17, 2002. Such transfer shall be by
wire

	
	 13
	  	 transfer to the trust account of David E. Bower, attorney for CTI
Contracting.

	
	 14
	  	         b.     Defendant
shall pay monthly installments of $6,500.00 each, beginning May 1,

	
	 15
	  	 2003, and continuing on the first day of each month, until the remaining balance of
$58,000.00 is

	
	 16
	  	 paid in full (7 monthly payments of $6,500.00 and one final payment of the remaining
balance of

	
	 17
	  	 principal and interest. Interest shall accrue on the unpaid balance at the rate of 7%
per annum.

	
	 18
	  	 Monthly payments shall be first applied to interest, then principal. A Promissory
Note setting

	
	 19
	  	 forth this obligation and its terms shall also be executed in conjunction with this
Stipulation. All

	
	 20
	  	 payments shall be made to Attorney for Plaintiff, and made payable to “Law
Office of David E.

	
	 21
	  	 Bower for CTI Contracting”. Payments shall be deemed received if actually
received by the due

	
	 22
	  	 date or if received after the due date, if postmarked on the business day prior to
the due date for

	
	 23
	  	 each payment, and properly addressed to Plaintiff’s attorney1.
 ______________

	 24
	  	 1 The address for Plaintiff’s attorney is David E. Bower, P. O. Box 2094, Santa Monica, CA 90406-

	 25
	  	 2094, for mail. Hand deliveries or carriers other than the US Post office, should be sent to 510
Arizona

	 	  	 Avenue, Santa Monica, CA 90401. Plaintiff’s counsel shall be responsible for providing a change
of

	 	  	 address if necessary, in writing, otherwise, delivery to this address shall be deemed
appropriate.

 
 

Stipulation for Judgment 
2 

 

	
	 1
	  	 2.    Upon verification of the deposit and availability of the
$100,000.00 in the trust account of

	
	 2
	  	 David E. Bower, as provided for in paragraph 1(a), CTI shall, within 2 business days,
file a

	
	 3
	  	 Request for Dismissal of this action, with prejudice as to all parties, except
Varitek, and all

	
	 4
	  	 causes of action, except as to Varitek. Also, within the same two day period, CTI
shall disburse

	
	 5
	  	 funds to each of the above listed subcontractors (the “Subcontractors”).
Upon verification of the

	
	 6
	  	 delivery of these funds, CTI’s counsel shall give written acknowledgment to
Darren Cottriel,

	
	 7
	  	 attorney for Cal West, that he is authorized to record their mechanic’s lien
releases and Requests

	
	 8
	  	 for Dismissal that he is holding in trust. Plaintiff shall also File a Notice of
Conditional

	
	 9
	  	 Settlement (California Rules of Court Rule 225(c)) with the Court, setting
forth the generalities

	
	 10
	  	 of this Stipulation and indicating dismissal to be filed, if all terms are completed,
by December

	
	 11
	  	 19, 2003.

	
	 12
	  	 3.    Upon completion of the payments called for in paragraph
1(a) and 1(b) above, CTI shall

	
	 13
	  	 cause a Request for Dismissal of this entire action, to be filed with prejudice and
without

	
	 14
	  	 assessment of costs.

	
	 15
	  	 
	
	 16
	  	 4.    This Agreement is contingent upon the occurrence of the
following:

	
	 17
	  	         a.    The
Subcontractors or their attorney shall execute a written consent to release all

	
	 18
	  	 liens, claims, and dismiss all litigation, except as to such rights of theirs under
this Agreement,

	
	 19
	  	 upon their receipt of their respective shares of monies dispersed to them by CTI
under this

	
	 20
	  	 Agreement; and

	
	 21
	  	         b.    CalWest and
Varitek entering into an agreement (“CalWest Agreement”) which

	
	 22
	  	 contains the following material terms:

	
	 23
	  	                 1.    Varitek delivers a Promissory Note to CalWest in the amount of

	
	 24
	  	 $228,000.00, with said Note bearing interest at the rate of Seven Percent (7%) per
annum

	
	 25
	  	 beginning from December 9, 2002; payments of $25,440.00 a month beginning May 1, 2003
and

 
 

Stipulation for Judgment 
3 

 

	
	 1
	  	 continuing on the first of each successive month; with a final payment of the
remaining balance

	
	 2
	  	 of principal and interest.

	
	 3
	  	             2.    The execution of a Stipulation For Judgment between Varitek and

	
	 4
	  	 CalWest along the same general form as this herein Stipulation For
Judgment.

	
	 5
	  	         If the payment called for in item
1(a) above is not made by December 16, 2002, then this

	
	 6
	  	 agreement shall be null and void.

	
	 7
	  	 
	
	 8
	  	         The parties hereto have agreed that
if Defendant fails to pay the amounts specified above,

	
	 9
	  	 in item 1(b), in a prompt and timely manner (time is of the essence in this
Stipulation) Plaintiff

	
	 10
	  	 or Plaintiff’s counsel may give notice of such default by delivering such notice
to Defendant’s

	
	 11
	  	 counsel via facsimile or hand delivery2. If such default is not fully cured within 10 days after

	
	 12
	  	 delivery of such notice of default, then the following judgment may be entered, upon
ex-parte

	
	 13
	  	 (24 hour) telephonic notice to Defendant’s counsel:

	
	 14
	  	         Judgment for
Money:    Judgment shall be entered in favor of Plaintiff and against

	
	 15
	  	 Defendants in the sum of $58,000.00 plus interest from December 9, 2002 at 7%
per annum, to

	
	 16
	  	 the date of the judgment. (interest at 10% per annum shall accrue post judgment) The
amount of

	
	 17
	  	 this judgment shall be reduced by amounts previously paid by Defendants under this
stipulation,

	
	 18
	  	 and, shall also include additional sums fair costs, including reasonable
attorney’s fees required to

	
	 19
	  	 obtain such judgment. The Plaintiff shall have full right and authority to
immediately commence

	
	 20
	  	 execution hereunder;

	
	 21
	  	 
	
	 22
	  	 ______________

	
	 23
	  	 2 Defendant’s attorney (Ron Mix) is located at 3639 Midway Drive, Suite 293, San Diego, California,

	
	 	  	 Phone: 619-436-2800, Fax: 619-223-6794. It shall be the sole responsibility of
Defendant (and its

	
	 24
	  	 attorney) to provide any change of such address, phone and/or fax number information,
in writing,

	
	 	  	 immediately upon any change. Fax or hand delivery to the above referenced number
and/or address shall

	
	 25
	  	 be deemed proper notice hereunder, unless written notice of the change of address or
number has been

	
	 	  	 given prior to such Notice, regardless of whether Defendant or its counsel actually
received such Notice.

 
 

Stipulation for Judgment 
4 

 
 

	
	 1    
	  	         Judgment shall be entered with the
Declaration of Plaintiff’s counsel, showing the amount

	
	 2    
	  	 due, credits given and event of default, to be submitted to the Court upon Ex-Parte
application

	
	 3    
	  	 for judgment, with no further evidence being required.

	
	 4    
	  	         Defendants hereby acknowledge that
they have had full opportunity and have been

	
	 5    
	  	 advised to seek and have this Stipulation reviewed by legal counsel of their own
choosing, before

	
	 6    
	  	 signing this stipulation.

	
	 7    
	  	         The judgment so entered shall be
substantially in the form attached hereto as Exhibit A.

	
	 8    
	  	         The parties each represent herein
that the individual signing this agreement in the

	
	 9    
	  	 capacity stated has full authority to bind the corporation on behalf of whom they are
signing.

	
	 10    
	  	         Signatures transmitted via fax
machine shall be effective as if they were original

	
	 11    
	  	 signatures.

	
	 12    
	  	 December 16, 2002
	 	 VARITEK INDUSTRIES, INC.

	 13    
	  	 	 	 By:
  
	 	

	 	  	 	 	 Its:

	 14    
	  	 	 	 	 	 
	
	 15    
	  	 December 16, 2002
	 	 CTI CONTRACTING

	 16    
	  	 	 	 By:  
  
	 	 /s/    Richard
Hatcher                                       
             

	 	  	 	 	 Its:    President

	 17    
	  	 REVIEWED AND APPROVED:
	 	 
	
	 18    
	  	 December 16, 2002
	 	 LAW OFFICE OF DAVID E. BOWER

	 19    
	  	 	 	 By:
  
	 	 /s/    Ronald Mix

	 	  	 	 	 David E. Bower, attorney for CTI Contracting (Plaintiff)

	 20    
	  	 	 	 	 	 
	
	 21    
	  	 December 16, 2002
	 	 LAW OFFICE OF RONALD MIX

	 22    
	  	 	 	 By:
  
	 	 /s/    Ronald Mix

	 	  	 	 	 Ronald Mix, attorney for Varitek Industries, Inc. (Defendant)

	 23    
	  	 	 	 	 	 
	
	 24    
	  	 December 16, 2002
	 	 PILLSBURY WINTHROP, LLP

	 25    
	  	 	 	 By:
  
	 	 /s/    Darren K.
Cottriel                    

	 	  	 	 	 Darren K. Cottriel, Attorney For Cal West Industrial Properties, LLC (interested
party)

 

Stipulation for Judgment 
5

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