Update!
Michelex Corporation (“Michelex”) and CadleRock Joint Venture II, LP (“CadleRock”) signed a “Confidential Settlement Agreement and Mutual Release” (“Agreement”) on March 11, 2014. The Agreement will fully and finally terminate and cancel all relationships, controversies, claims, debts, obligations and matters relating to existing litigation between the parties. Per the Agreement, CadleRock will file a Satisfaction of Judgment with the Third Judicial District Court in and for Salt Lake County, Utah. Counsel for both parties will then jointly file a Stipulation in the Trial Court noting the Agreement and request that this action be dismissed with prejudice.
Michelex expects all required actions to occur within 30 – 60 days and Michelex will notify shareholders when all required acts have been performed.
Questions and Answers:
Why will it take so long for final execution, doesn’t signing an Agreement end everything?
In some circumstances, signing an agreement while simultaneously delivering specified consideration is all that is required. In this particular situation, there is an active case in the Utah court system. Thus, additional steps are required to notify the courts of the Agreement and request that the case be dismissed with prejudice. As noted above, Michelex will inform shareholders when required actions have been performed.
Does Michelex have to provide any consideration as part of the Agreement, and if so, what is the consideration?
The Agreement requires Michelex to deliver twenty million shares of Michelex common stock to CadleRock within twenty-one days of signing the Agreement; Michelex has already delivered the required shares. In addition, Michelex waives any right to make claims and/or initiate legal action against CadleRock in regards to the pre-existing litigation.
What does Michelex receive in return?
CadleRock waives, relinquishes, forever discharges, etc., any claims, obligations, debts, etc., against Michelex relating to prior judgments and/or settlements.
How does the Agreement benefit Michelex?:
The Agreement benefits Michelex in two ways:
1. The Agreement ends litigation, therefore ending on-going litigation expense.
2. Michelex needs to resolve existing claims and/or litigation in order to secure new investors/funders/partners.
Background:
December 2003:
Merrill Lynch Business Financial Services, Inc. (“Merrill”) obtained a judgment against Envelope Packaging of Utah, Inc. (“ENPACK”) in the amount of $655,038.97
August 2004:
Merrill assigned its judgment to Cadleway Properties, Inc. (“Cadleway”).
November 2007:
Cadleway assigned said judgment to CadleRock.
July 2008:
CadleRock caused writs of garnishment to be served upon Michelex seeking to garnish money or property owed ENPACK.
January 2009:
CadleRock received a default judgment from the Third Judicial District Court of Utah against Michelex in the amount of $803, 031.31
Michelex filed a motion with the District Court to have the judgment set aside; the motion was denied.
In December, Michelex filed an appeal of the denial to the Utah Court of Appeals.
April 2010:
A settlement between Michelex and CadleRock was signed; Michelex was to deliver 50 million shares of Michelex common stock to CadleRock. (There was a dispute regarding whether the agreement was signed and/or delivered by Michelex and whether certain pre-conditions had been met. In any event, no shares were delivered.)
March 2011:
The Utah Court of Appeals affirmed the entry of the default judgment in terms of basic responsibility but remanded for an evidentiary hearing regarding the amount Michelex owed.
March 2014:
Michelex and CadleRock sign Settlement Agreement.
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Dino A. Sawyer
Vice President
Michelex Corporation
207-406-2588 (Office)
866-848-9508 (Fax)
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Safe Harbor: This email may contain forward-looking statements within the meaning of the Private Securities Litigation reform Act of 1995. These statements and the matters discussed in this email are forward looking statements that involve a number of important risks and uncertainties that could cause actual results to differ materially from those in such forward-looking statements, including, but not limited to, the extremely limited operating history, the performance of the subsidiaries, as well as other economic, competitive and technological factors involving the subsidiaries' operations, markets, services, products and prices, uncertainties related to the company's access to additional capital, the ability of the subsidiaries to enter into contracts with new customers, and dependency on key management.
