SETTLEMENT AND MUTUAL RELEASE AGREEMENT
Execution
Copy
SUPREME
COURT OF THE STATE OF NEW YORK
COUNTY OF
NEW YORK
Plaintiff,
-against-
FURSA
MASTER GLOBAL EVENT DRIVEN FUND, LP, FURSA ALTERNATIVE STRATEGIES, LLC and
XXXXXXX XXXXXXXXX,
Defendants.
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Index
No. 08-603472
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This
Settlement and Mutual Release Agreement (this "Agreement"), dated as of March
3, 2009 (the "Effective
Date"), is entered into by Versadial, Inc. ("Versadial" or the "Plaintiff"), Xxxxxxxx
Xxxxxxxxx ("Xxxxxxxxx")
and Xxxxxxx Xxxxxxxx ("Harriton", and together with
Xxxxxxxxx, the "Versadial
Principals" or the "Plaintiff's Principals") and
FURSA Master Global Event Driven Fund, L.P. ("FURSA Master"), FURSA
Alternative Strategies, LLC ("FURSA Alternative", and
together with FURSA Master, "FURSA") and Xxxxxxx Xxxxxxxxx
("Xxxxxxxxx", and
together with FURSA, the "Defendants", and the
Defendants together with the Plaintiff, the "Litigation Parties", and the
Litigation Parties together with the Plaintiff's Principals, the "Parties").
RECITALS
WHEREAS,
on or about November 25, 2008, the Plaintiff commenced the above-captioned
lawsuit (the "Lawsuit")
against the Defendants by filing a complaint in the Supreme Court of the State
of New York, County of New York, Index No. 08-603472;
WHEREAS,
the Defendants have various claims and counterclaims that they could allege
against the Plaintiff and the Plaintiff's Principals;
WHEREAS,
the Plaintiff's Principals have various claims that they could allege against
the Defendants;
WHEREAS,
due to the ongoing settlement negotiations, and by stipulation of the Litigation
Parties, the Defendants have not answered or otherwise responded to the
Complaint;
WHEREAS,
on the Effective Date, and simultaneously with the Parties' entrance into this
Agreement, FURSA Master and Versadial entered into that certain binding term
sheet (the "Term
Sheet"), which requires, among other things, that the Parties enter into
this Agreement as a condition precedent to the effectiveness
thereto;
NOW,
THEREFORE, in consideration of the mutual covenants, agreements and conditions
set forth in this Agreement, the Parties hereby agree as follows:
A. TERMS OF
SETTLEMENT
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1.
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The
Parties agree to act in accordance with the specific terms of this
Agreement.
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B. MUTUAL RELEASES
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1.
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Definitions.
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a.
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With respect to Versadial and
the Versadial Principals:
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i. The
term "Versadial
Releasors" shall mean each of (A) Versadial and its predecessors,
successors, assigns, current and former affiliates and subsidiaries, each of
their respective agents and anyone claiming by or through any of the foregoing
persons, and (B) the Versadial Principals and each of their respective heirs,
agents and anyone claiming by or through any of the foregoing
persons.
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ii. The
term "Versadial
Releasees" shall mean each of (A) Versadial and its predecessors,
successors and assigns, (B) Versadial's affiliates and their predecessors,
successors and assigns, (C) any current and former managers, members,
shareholders, partners (limited or general), directors (except for Hawthorne),
officers, employees, agents and advisers, including all such persons' heirs and
assigns, of Versadial, its affiliates and each of their respective predecessors,
successors and assigns, and (D) the Versadial Principals and each of their
respective heirs, agents and anyone claiming by or through any of the foregoing
persons.
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b.
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With respect to
FURSA:
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i. The
term "FURSA Releasors"
shall mean each of FURSA Master and FURSA Alternative and their respective
predecessors, successors, assigns, current and former affiliates and
subsidiaries, and each of their respective agents and anyone claiming by or
through any of the foregoing persons.
ii. The
term "FURSA Releasees"
shall mean each of (A) FURSA Master and FURSA Alternative and their respective
predecessors, successors and assigns, (B) FURSA Master's and FURSA Alternative's
affiliates, and their respective predecessors, successors and assigns and (C)
any current and former managers, members, shareholders, partners (limited or
general), directors, officers, employees, agents and advisers, including all
such persons' heirs and assigns, of FURSA Master and FURSA Alternative, their
respective affiliates and each of their respective predecessors, successors and
assigns.
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c.
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With respect to
Hawthorne:
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i. The
terms "Hawthorne
Releasors" (together with the FURSA Releasors, the "Defendant Releasors") and
"Hawthorne Releasees"
(together with the FURSA Releasees, the "Defendant Releasees") shall
mean Hawthorne and his heirs, agents and anyone claiming by or through any of
the foregoing persons.
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2.
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Comprehensive Release
of Liability.
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a. Subject
to Section
B(2)(b) below, the Parties agree as follows ((i) and (ii), together, the
"Releases"):
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i.
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The
Versadial Releasors agree to forever release, waive and discharge all
claims, actions, suits, causes of action, demands, debts, and liabilities,
whether direct or derivative, liquidated or unliquidated, fixed or
contingent, matured or unmatured, disputed or undisputed, known or
unknown, foreseen or unforeseen, now existing or hereafter arising, in
law, equity or otherwise against any and all of the Defendant Releasees
that are based in whole or in part on any act, omission, transaction,
event or other occurrence taking place on or prior to the date of
execution of this Agreement (collectively, the "Versadial Claims")
including, without limitation, any and all Versadial Claims (A) related
to, arising out of the facts alleged in, or asserted by Versadial in, the
Lawsuit and (B) related to or arising out of that certain letter from
FURSA Master to Versadial, dated November 26, 2007, and all subsequent
correspondence and documentation entered into in connection with the
subject matter of such letter (collectively, the "Letter").
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ii.
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The
Defendant Releasors agree to forever release, waive and discharge all
claims, actions, suits, causes of action, demands, debts, and liabilities,
whether direct or derivative, liquidated or unliquidated, fixed or
contingent, matured or unmatured, disputed or undisputed, known or
unknown, foreseen or unforeseen, now existing or hereafter arising, in
law, equity or otherwise against any and all of the Versadial Releasees
that are based in whole or in part on any act, omission, transaction,
event or other occurrence taking place on or prior to the date of
execution of this Agreement (collectively, the "Defendant Claims")
including, without limitation, any and all Defendant Claims (A) relating
to, arising out of the facts alleged in, or asserted by Versadial in, the
Lawsuit and (B) related to or arising out of the
Letter.
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b.
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Notwithstanding
the foregoing Section
B(2)(a), the Parties agree and acknowledge that nothing in this
Agreement shall be construed to release any rights, liabilities or
obligations of a Party incurred (i) in connection with this Agreement, the
Term Sheet, the Advances Agreement (as such term is defined in the Term
Sheet) or the Loan Documents (as such term is defined in the Term Sheet),
including, without limitation, the Convertible Note (as such term is
defined in the Term Sheet), (ii) in connection with that certain
Securities Purchase Agreement (the "SPA"), dated as of
August 9, 2006, by and between Versadial, Mellon HBV Master U.S. Event
Driven Fund, L.P. and Mellon HBV Master Global Event Driven Fund, L.P.,
(iii) in connection with the warrants held by the Defendants to purchase
common stock of Versadial or (iv) after the Effective Date. For
the purposes of clarity, and without limiting the intent or the language
of this Section
(B)(2)(b), after the Effective Date, unless otherwise expressly
agreed, (A) Versadial and its board of directors shall continue to owe to
the Defendants, as its shareholders, and to FURSA Master, as its senior
secured creditor, the standard duties and obligations owed by such a
corporation to shareholders and creditors of such respective sizes, and
priority, (B) Versadial shall continue to owe to FURSA such duties and
obligations as are provided under the SPA and the Loan Documents,
including, without limitation, the Convertible Note, and (C) FURSA shall
continue to owe to Versadial such duties and obligations as are provided
under the Loan Documents, and the duties and obligations described in (A),
(B) and (C) above shall not be affected by the terms and conditions of
this Agreement.
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c.
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Within
five business days of the Effective Date, Versadial shall file a
Stipulation of Voluntary Discontinuance, with prejudice, pursuant to CPLR
3217(a) and (c).
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C. INDEMNIFICATION
1. In
further consideration of the agreements, covenants and releases set forth
herein, the Plaintiff hereby agrees to indemnify, defend and hold harmless the
Defendants from any and all claims, liabilities, losses (including, without
limitation, reasonable attorney's fees and expenses), demands, actions and
causes of action of whatsoever nature or character that may have been, or that
may hereafter be, asserted by any person or entity claiming by, through or under
such Defendant arising out of, or relating to, the Versadial
Claims.
D. GENERAL
PROVISIONS
1. No Admission Of
Liability. Each Party acknowledges that he or it expressly
understands that this Agreement and the settlement it represents (a) are entered
into solely for the purpose of avoiding any possible future expenses, burdens,
risks or distraction of litigation, (b) in no way constitute an admission by any
Party hereto of any liability or wrongdoing of any kind to any other Party and
(c) may be asserted by any Party as an absolute and final bar to any claim,
cause of action or suit now pending or hereafter brought by any other Party, or
any other person or entity claiming by, under or through any other Party, which
is based on any of the matters released hereby. In this connection,
the Defendants specifically deny any liability in connection with the claims
asserted in the Lawsuit.
2. No Tax Or Legal Advice
Provided. Each Party acknowledges, understands and agrees that (a)
no other Party is providing any tax, accounting or legal advice to it and that
none of the other Parties makes any representation regarding tax obligations or
consequences related to or arising from this Agreement and (b) such Party
assumes sole liability and responsibility for his or its federal, state and/or
local tax obligations or consequences that may arise from or relate to this
Agreement and that he or it will not seek any indemnification from or otherwise
seek to impose any liability on any other Party in regard thereto.
3. Representations And
Warranties. The Plaintiff represents and warrants that it is the
sole owner of all claims, rights, demands and causes of action that it asserted
in the Lawsuit or is relinquishing by executing this Agreement and that no other
person or entity has any interest in such claims, rights, demands and causes of
action.
4. Binding
Agreement. This Agreement shall be binding on and inure to the
benefit of the Parties and their heirs, legatees, executors, personal
representatives, administrators, successors and assigns.
5. Consideration. Each
Party acknowledges, warrants and agrees that, with respect to this Agreement,
adequate consideration was exchanged and supplied by all of the
Parties.
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6. Joint
Efforts. This Agreement has been prepared by the joint efforts of
the respective attorneys for each of the Parties. Each Party
acknowledges that he or it has carefully read this Agreement, that this
Agreement expresses the entire agreement between or among the Parties concerning
the subjects it purports to cover and that each Party has executed this
instrument freely and of his or its own accord. The Parties further
agree that this Agreement shall not be strictly construed against any Party
hereto.
7. Attorneys' Fees, Costs And
Expenses. Each Litigation Party shall bear all of his or its
own attorneys' fees, costs and expenses incurred in connection with the Lawsuit,
and each Party shall bear all of his or its own attorneys' fees, costs and
expenses incurred in connection with the negotiation, execution and delivery of
this Agreement.
8. Additional
Documents. The Parties or their respective counsel shall
execute all such further and additional documents that shall be reasonable,
convenient or necessary to carry out the provisions and intent of this
Agreement.
9. Counterparts. This
Agreement may be executed in one or more counterparts, each of which shall be
deemed an original, and all of such counterparts together shall constitute but
one and the same instrument. A signature of a Party transmitted to
any other Party by such Party by facsimile, PDF or other agreed upon electronic
means shall constitute the original signature of such Party for all
purposes.
10. Entire Agreement;
Amendment. This Agreement constitutes the full, complete and
entire understanding, agreement and arrangement of and between or among the
Parties with respect to the subject matter hereof, including, without
limitation, the Lawsuit, and supersedes any and all prior oral and written
understandings, agreements and arrangements between them. There are no other
agreements, covenants, promises or arrangements between the Parties relating to
the subject matter of this Agreement other than those set forth or incorporated
herein. There is no other consideration for this Agreement other than
the consideration set forth in this Agreement. No amendment,
modification, restatement or supplement of this Agreement shall be valid unless
the same is in writing and signed by all of the Parties.
11. No
Waiver. No waiver of any provision of this Agreement shall be
valid unless it is in a writing that specifically states that it is a waiver
under this Agreement that is signed by the Party against whom that waiver is
sought to be enforced. No failure or delay on the part of any Party
in exercising any right, power or privilege hereunder, and no course of dealing
between or among the Parties, shall operate as a waiver of any right, power or
privilege hereunder. No single or partial exercise of any right,
power or privilege hereunder shall preclude any other or further exercise
thereof or the exercise of any other right, power or privilege
hereunder. No notice to or demand on any Party in any case shall
entitle such Party to any other or further notice or demand in similar or other
circumstances (unless otherwise required hereunder) or constitute a waiver of
the rights of any Party to any other or further action in any circumstances
without notice or demand.
12. Controlling
Law. This Agreement and the rights and obligations of the
Parties shall be interpreted, construed and enforced in accordance with the
substantive laws of the State of New York, without regard to New York's
principles of conflicts of law.
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13. Exclusive Jurisdiction;
Venue. Any action to interpret or enforce this Agreement shall
be brought only in either the Supreme Court of the State of New York, New York
County, or the United States District Court for the Southern District of New
York, if that court has subject matter jurisdiction over the
dispute. With respect to any such suit, action or proceeding
commenced in either the Supreme Court of the State of New York, New York County,
or the United States District Court for the Southern District of New York, the
Parties hereby irrevocably waive any objection that they may now or hereafter
have regarding (a) the laying of venue in either such court, (b) the exercise of
personal jurisdiction by either such court and (b) the convenience of either
such forum.
14. Headings. The
headings and titles to the various sections of this Agreement are inserted for
convenience only and shall not be deemed a part hereof or affect the
construction or interpretation of any provision hereof.
15. Representation By And
Consultation With Counsel. Each of the Litigation Parties
represents and warrants that he or it has been represented by counsel of his or
its own choosing in connection with the Lawsuit. Each of the Parties
represents and warrants that he or it has been represented by counsel of his or
its own choosing in connection with the negotiation and execution of this
Agreement, and that he or it has had a reasonable and sufficient opportunity to
consult with such counsel to the extent he or it desires before executing this
Agreement.
16. No
Reliance. No Party has relied on or been induced to execute
this Agreement by any statements, representations, agreements or promises, oral
or written, made by any other Party, their agents, employees, servants or
attorneys, or anyone else, other than the statements expressly written in this
Agreement. The purpose of this Agreement being to end and/or avoid
all litigation between the Plaintiff and the Plaintiff's Principals, on the one
hand, and the Defendants, on the other hand, individually and collectively with
respect to each Party, and to reserve only limited and specific potential claims
going forward, if any, based solely on future conduct, the Parties expressly
deny and waive any claims of actual, constructive or statutory fraud or
fraudulent inducement with regard to this Agreement.
17. Authority To
Bind. Each individual signing this Agreement on behalf of a Party
represents and warrants that he is authorized to execute this Agreement on
behalf of such Party and binds such Party to the terms of this
Agreement.
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IN
WITNESS WHEREOF, the Parties have executed this Agreement as of the Effective
Date.
/s/
Xxxxxxxx Xxxxxxxxx
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Name:
Xxxxxxxx Xxxxxxxxx
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Title:
CEO
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XXXXXXXX
XXXXXXXXX
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/s/
Xxxxxxxx Xxxxxxxxx
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Xxxxxxxx
Xxxxxxxxx
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XXXXXXX
XXXXXXXX
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/s/
Xxxxxxx Xxxxxxxx
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Xxxxxxx
Xxxxxxxx
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FURSA
MASTER GLOBAL EVENT
DRIVEN
FUND, L.P.
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/s/
Xxxxxxx X. Xxxxxx III
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Name:
Xxxxxxx X. Xxxxxx III
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Title: President
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FURSA ALTERNATIVE STRATEGIES, LLC
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/s/
Xxxxxxx X. Xxxxxx III
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Name:
Xxxxxxx X. Xxxxxx III
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Title:
President
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XXXXXXX XXXXXXXXX
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/s/
Xxxxxxx Xxxxxxxxx
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Xxxxxxx
Xxxxxxxxx
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