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EXHIBIT 10.31
SETTLEMENT AGREEMENT AND MUTUAL RELEASE
THIS SETTLEMENT AGREEMENT AND MUTUAL RELEASE (hereinafter the
"Agreement") is entered into as of this __ day of January, 1997, by and between
MotorVac Technologies, Inc. (hereinafter "MTI"), on the one side, and De-Carbon
Australia Pty Ltd, Carbon Clean Corporation Pty Ltd, Carbon Tune Pty Ltd, Xxxxx
Somas, Roydn Sweet and Xxx Xxxxx (hereinafter collectively referred to as
"De-Carbon"), on the other.
This Agreement is executed with reference to the following facts:
RECITALS
A. On or about May 24, 1996, De-Carbon Australia Pty Ltd filed a
complaint against MTI, formerly known as CarbonClean Corporation, in the Orange
County Superior Court, designated as Case No. 764248. Subsequently, on or about
August 13, 1996, MTI filed a cross-complaint in that action against De-Carbon
Australia Pty Ltd and Xxxxxx Xxxxxx. (The complaint and cross-complaint shall
hereinafter be referred to collectively as the "Lawsuit").
B. This Agreement does not pertain in any way to Xxxxxx Xxxxxx, and
nothing stated herein is intended to affect the rights of the parties hereto
with respect to Xxxxxx Xxxxxx.
C. The parties hereto desire to enter into this Agreement in order to
finally resolve the disputes existing between them relating to the Lawsuit.
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NOW THEREFORE, in consideration of the foregoing facts and the mutual
covenants and agreements contained herein, the parties hereto agree as follows:
1. ASSIGNMENT OF THE CARBONCLEAN NAME AND LOGO
(a) De-Carbon will assign, deed and take all other steps
necessary to transfer to MTI, or to MTI's designee, all of De-Carbon's alleged
rights to the name and logo of CarbonClean (and any trade names or trademarks
related thereto).
(b) Within ten (10) days of the date of full execution of this
Agreement (hereinafter "the Due Date"), MTI will provide De-Carbon with the
required transfer documentation.
(c) Within ten (10) days of the date of De-Carbon's receipt of
the transfer documentation from MTI, De-Carbon will execute and return this
documentation to MTI's Australian counsel, Xxxxxxxx Fox (attention Xxxxxx
Xxxxxx), with a fax copy to MTI's United States counsel, Xxxxxxx, Lumsdaine &
Xxxxx LLP (attention Xxxxxx X. Xxxxxxxxx).
(d) De-Carbon further agrees that it will, as of the Due Date,
discontinue all use of the CarbonClean name and logo, and not use the
CarbonClean name or logo as part of any company name.
(e) The failure by De-Carbon to comply with the terms of this
paragraph shall be a breach of this Agreement, but which is subject to the cure
period set forth in paragraph 13(b), below (hereinafter the "Cure Period").
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2. ASSIGNMENT OF THE MOTORVAC NAME AND LOGO
(a) De-Carbon will assign, deed and take all other steps
necessary to transfer to MTI, or to MTI's designee, all of De-Carbon's alleged
rights to the name and logo of MotorVac (and any trade names or trademarks
related thereto).
(b) Within ten (10) days of the date of dismissal of the Lawsuit
as provided in paragraph 12, below (hereinafter "the Due Date"), MTI will
provide De-Carbon with the required transfer documentation.
(c) Within ten (10) days of the date of De-Carbon's receipt of
the transfer documentation from MTI, De-Carbon will execute and return this
documentation to MTI's Australian counsel, Xxxxxxxx Xxx (attention Xxxxxx
Xxxxxx), with a fax copy to MTI's United States counsel, Xxxxxxx, Xxxxxxxxx &
Xxxxx LLP (attention Xxxxxx X. Xxxxxxxxx).
(d) De-Carbon further agrees that it will, as of the Due Date,
discontinue all use of the MotorVac name and logo, and not use the MotorVac name
or logo as part of any company name.
(e) The failure by De-Carbon to comply with the terms of this
paragraph shall be a breach of this Agreement, but which is subject to the Cure
Period.
3. NON-COMPETITION
(a) For the period of three (3) years immediately following the
date of this Agreement, De-Carbon shall not solicit any dealer, supplier,
distributor or customer
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to leave its relationship with MTI or an MTI distributor. The failure by
De-Carbon to comply with this provision shall be a breach of this Agreement,
but which will be subject to the Cure Period. De-Carbon will remedy such a
breach by providing written support of and approval of MTI products and
recommend that the relationship in question with MTI continue.
(b) For the period of three (3) years immediately following
the date of this Agreement, De-Carbon shall not manufacture, assemble,
wholesale or distribute any engine fuel systems cleaning machines, devices or
cleaning solvents or detergents for use in gasoline or diesel engines, within
the territories of Australia, New Zealand, Malaysia, Singapore, Indonesia and
Japan. De-Carbon may only sell carbon cleaning services through its retail
outlets in Australia and franchise those retail outlets in Australia with
respect to fuel system cleaning machines or detergents, except as provided in
paragraph 10, below. De-Carbon shall only use MTI CarbonClean detergent in MTI
CarbonClean equipment. The failure by De-Carbon to comply with this
subparagraph shall be a breach of this Agreement, but which will be subject to
the Cure Period.
4. ABANDONMENT OF RIGHTS TO THE CARBON TUNE AND DE-CARBON NAMES
MTI will abandon, now and forever, the right to acquire the Carbon Tune
and De-Carbon names or trademarks in Australia. However, De-Carbon will allow
all MTI distributors outside of Australia who are currently using the Carbon
Tune name to continue to use that name.
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5. CHANGE OF STYLE OF THE CARBON TUNE AND DE-CARBON NAMES
(a) Within ten (10) days of the Due Date, De-Carbon shall
change the logo, type and style of the Carbon Tune and De-Carbon names and
submit changes to MTI for approval at MTI's sole discretion. However, MTI's
approval shall not unreasonably be withheld. Subject to MTI's review and
approval, MTI will agree to accept a new logo for Carbon Tune and De-Carbon
that is:
(i) One word;
(ii) Of a different type set;
(iii) Not red and blue; and
(iv) Has no jet-stream effect.
(b) Within twenty (20) days after notification by MTI of
its approval of the new Carbon Tune and De-Carbon logos, De-Carbon shall no
longer use, and shall change, all signs, literature, business cards and other
items containing De-Carbon's use of the CarbonClean, De-Carbon and Carbon Tune
logo as currently fashioned, and provide MTI with a written statement
evidencing such compliance.
(c) The failure by De-Carbon to comply with this paragraph
shall be a breach of this Agreement, but which will be subject to the Cure
Period.
6. NOTIFICATION REGARDING TESTS CONDUCTED
De-Carbon shall notify in writing the Royal Melbourne Institute of
Technology ("RMIT"), the Federal Office of Road Safety ("FORS"), Broken Hill
Proprietary Ltd
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("BHP"), and Australian Environmental Health Services ("AEHS") that the tests
conducted by De-Carbon were conducted using only MTI-branded CarbonClean
equipment (which may have been modified to mining regulations) and detergent.
De-Carbon shall make such notifications, and provide MTI with proof thereof,
within ten (10) days of the Due Date.
7. REPURCHASE OF EQUIPMENT
With respect to the equipment described in Xxxxxxx Xxxxxx' letter to
Xxxxxx Xxxxxx dated December 19, 1996, whereby MTI agreed to repurchase five
(5) units, and regarding which MTI has delivered a check for $4,421.25 to
Xxxxxx Xxxxxx on December 30, 1996:
(a) With regard to machine number 4 on page 2, MTI will pay
a total of $1,121.25 (an increase of $825) if the four (4) complete adaptors
are included; and with regard to machine number 5, MTI will pay a total of
$1,237.50 (an increase of $825) if all four (4) adaptors are included. MTI
will supply De-Carbon with an adaptor list.
(b) With regard to the "15 units loaned out", MTI will
allow these units to remain loaned out provided that within ten (10) days of
the Due Date, De-Carbon provides MTI with a list of serial numbers, location,
business address of user, etc.
(c) MTI will also exercise its option to repurchase the 16
CCs II's (items 6 through 21 of Xxxxxxx Xxxxxx' December 19, 1996 letter) at
$725 x 75% or $543.75, subject to the inspection and approval by MTI or MTI's
distributor. Within ten (10) days
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of the Due Date, De-Carbon will allow MTI's distributor to inspect these 16
machines. Within ten (10) days after a satisfactory inspection by MTI's
distributor, MTI will send its distributor a check for the applicable funds
($8,700 if all is in good order), and MTI's distributor will in turn deliver
such payment to De-Carbon and pick up the subject machines. The failure by
De-Carbon to allow MTI's distributor to inspect these 16 units or to release
the subject units to MTI's distributor shall be a breach of this Agreement, but
which is subject to the Cure Period.
8. LIST OF WHOLESALE CUSTOMERS
Within ten (10) days of the Due Date, De-Carbon shall provide MTI with
a list of all of De-Carbon's current wholesale customers (including, but not
limited to, those for the fifteen (15) units loaned out as referred to in
paragraph 7(b), above), for the purpose of allowing MTI or MTI's distributor to
endeavor to supply further machines or detergent to such customers. De-Carbon,
however, shall have no obligation to require those customers in possession of
the fifteen (15) loaned out units to use any specific detergent.
9. SUPPLY OF MTI DETERGENT
If, during the three (3) year period immediately following the date of
this Agreement, MTI's distributor fails to supply De-Carbon with detergent for
its retail or franchise locations for any reason other than the breach of this
Agreement or business reasons, e.g., the failure by De-Carbon to pay, MTI will
supply De-Carbon with detergent at the international retail price. MTI shall
have the right to terminate this provision
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should De-Carbon commit an uncured breach of this Agreement.
10. SALE OF NON-REPURCHASED MACHINES
With respect to the machines for which MTI has not exercised its
repurchase option, as set forth in Xxxxxxx Xxxxxx' letter of December 19, 1996,
De-Carbon may sell these units only if:
(a) They are sold within one hundred fifty (150) days of
the date of this Agreement; and
(b) De-Carbon provides MTI with a list of locations, serial
numbers, address of unit, and other necessary identifying information of the
purchasers within one hundred sixty (160) days of the date of this Agreement or
within ten (10) days of sale by De-Carbon, whichever comes first.
(c) De-Carbon shall not sell to the users of the machines
referred to in this paragraph any additional detergent.
11. PAYMENT OF $100,000
(a) Subject to a letter by Xxx X. Xxxx, Inc., De-Carbon
will forward by wire transfer the sum of One Hundred Thousand Seven Hundred and
Fifty Dollars ($100,750) to Xxx X. Xxxx, Inc. by January 3, 1997. This wire
transfer shall be made to Xxx X. Xxxx, Inc., a Professional Law Corporation
Client Trust Account, Account No. 00000-00000, Bank of America (La Mirada
Branch), Corporate office, 000 Xxxxxxxxxx, Xxx Xxxxxxxxx, Xxxxxxxxxx 00000,
telephone (000) 000-0000, ABA/Routing No. 121 000
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358. Of the above amount, the sum of $100,000 is for the benefit of MTI and
$750 is an administrative fee to Xxx X. Xxxx, Inc.
(b) This $100,000 payment shall be as consideration for MTI's release
of De-Carbon from liability and full settlement with De-Carbon, as provided in
this Agreement. This sum will only be released to MTI upon MTI's signing of
this Agreement, MTI's filing of a request to withdraw the pending OSC re
contempt against De-Carbon, and the Court's entry of a dismissal with prejudice
of MTI's cross-complaint in the Lawsuit (except as to Xxxxxx Xxxxxx). This sum
is separate from and unrelated to any Stipulated Judgment as set forth in
paragraph 13, below.
(c) MTI will pay its attorneys' fees related to the drafting and
processing of this settlement with the court.
12. DISMISSAL OF LAWSUIT
As soon as practicable, but in no event later than ten (10) days from
the expiration date specified in paragraph 13(e) of this Agreement, De-Carbon
shall dismiss its complaint in the Lawsuit with prejudice and MTI shall dismiss
its cross-complaint in the Lawsuit with prejudice (except as to Xxxxxx Xxxxxx).
13. STIPULATED JUDGMENT
(a) Concurrently with the execution of this Agreement, De-Carbon
Australia Pty Ltd, Carbon Clean Corporation Pty Ltd, Carbon Tune Pty Ltd, Xxxxx
Somas, Rodyn Sweet, and Xxx Xxxxx shall execute a Stipulation for Entry of
Judgment in favor of
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MTI in the amount of One Hundred Fifty Thousand Dollars (U.S. $150,000). MTI
will prepare the Stipulation for Entry of Judgment and Stipulated Judgment, in
form and content satisfactory to both De-Carbon and MTI. For purposes of the
Stipulated Judgment, Carbon Clean Corporation Pty Ltd, Carbon Tune Pty Ltd,
Xxxxx Somas, Rodyn Sweet, and Xxx Xxxxx will be added as Roe cross-defendants in
MTI's cross-complaint in the Lawsuit. MTI may have the Stipulated Judgment
entered only against that entity and/or individual who violates the Settlement
Agreement.
(b) The Cure Period: In the event of a breach of this
Agreement, MTI shall notify De-Carbon thereof by both facsimile and courier
service. De-Carbon shall then have twenty (20) days from the receipt of MTI's
faxed written notice to remedy the breach specified and to notify MTI in writing
by facsimile and courier service that the breach has been cured. All references
to date and time shall be to Perth WA, Australia date and time.
(c) In the event that the breach is not remedied within the
twenty (20) day Cure Period, MTI may show proof to the Court and have the
Stipulated Judgment enforced against the entity and/or individual who violated
the Agreement.
(d) De-Carbon agrees and acknowledges that any breach of
this Agreement and failure to cure, if applicable, will amount to substantial
and irreparable harm to MTI. Therefore, in addition to enforcement of the
Stipulated Judgment, MTI may also exercise its right to any injunctive relief.
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(e) The Stipulated Judgment shall expire and be removed on
the third anniversary of the Due Date.
14. MUTUAL RELEASE
(a) For the consideration referred to herein, De-Carbon, on
the one side, and MTI, on the other, on behalf of themselves and for all of
their principals, agents, employees, predecessors, successors, assigns,
officers, directors, shareholders, trustees, representatives, heirs, executors,
administrators, attorneys, insurance carriers, partners, joint venturers,
investors, parent companies, subsidiaries, and affiliates, hereby forever
release and discharge each other, and the other's principals, agents,
employees, predecessors, successors, assigns, officers, directors,
shareholders, trustees, representatives, heirs, executors, administrators,
attorneys, insurance carriers, partners, joint venturers, investors, parent
companies, subsidiaries, and affiliates, from any and all claims, causes of
action, judgments, injunctions, pending depositions, liens, promises,
agreements, contracts, obligations, transactions, costs, damages, losses,
lawsuits, arbitrations, appeals, liabilities, indemnifications, debts,
restrictive covenants, demands, attorneys' fees or expenses of any nature
whatsoever, and rights of any kind or character, whether known or unknown or
speculative, except as to the enforcement of obligations expressly set forth in
this Agreement, which either party had, now has or may hereafter have against
the other, or any of them, by reason of any claims or allegations raised in or
arising out of the Lawsuit.
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(b) Without limitation on the generality of the above
release, De-Carbon further releases from any liability in any way relating to
their declarations all those who provided declarations for MTI in support of
MTI's Motion for Preliminary Injunction.
(c) Neither the above release nor any other provision of
this Agreement shall apply to Xxxxxx Xxxxxx.
15. WAIVER OF CIVIL CODE SECTION 1542
(a) By releasing and forever discharging any and all
claims, both known and unknown, as provided for in paragraph 14 above, the
parties hereto expressly waive their rights under California Civil Code section
1542, which provides:
"(a) 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
executing the release, which if known by him,
must have materially affected his settlement
with the debtor."
(b) With full knowledge and understanding of Civil Code
section 1542, the parties hereby waive and relinquish any and all rights and
benefits which they have or may have under section 1542, or under any similar
law of any other jurisdiction. The parties hereto acknowledge that they are
aware that they may hereafter discover facts in addition to or different from
those which they now know or believe to be true with respect to the subject
matter of the Lawsuit, but it is their intention hereby to fully and finally
forever settle and release any and all matters, disputes and differences
relating to the
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Lawsuit, known or unknown, suspected or unsuspected, which now exist, may exist
or heretofore have existed, and that in furtherance of this intention, the
releases herein given shall be and remain in effect as full and complete general
releases, notwithstanding the discovery or existence of any such additional or
different fact.
16. WITHDRAWAL OF OSC RE CONTEMPT
Within ten (10) days of the date of this Agreement, MTI will file with
the Orange County Superior Court a document requesting the withdrawal of the
OSC re contempt against De-Carbon.
17. STIPULATION FOR RELEASE OF CASH IN LIEU OF BOND
Within ten (10) days of the date of this Agreement, De-Carbon shall
execute a stipulation or other suitable document enabling the Orange County
Superior Court to release to MTI the cash deposited by MTI in lieu of bond for
the preliminary injunction. MTI will prepare the required documentation.
18. CONTROLLING LAW
This Agreement shall, in all respects, be deemed entered into in Orange
County, California, and interpreted, enforced and governed exclusively by and
under the laws of the state of California. Jurisdiction and venue for any
disputes that may arise out of this Agreement shall be exclusively in the
Orange County Superior Court.
19. ATTORNEYS' FEES
In any action or proceeding at law or in equity arising out of this
Agreement, the
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prevailing party shall be entitled to recover from the unsuccessful party all
costs, expenses and actual attorneys' fees incurred therein by the prevailing
party.
20. SOLE AND ONLY AGREEMENT
This Agreement, the Stipulation for Entry of Judgment executed pursuant
hereto, and that letter dated January 2, 1997 by Xxxxxxxx X. Xxxxx of Xxx X.
Xxxx, Inc. contain the entire understanding of the parties with respect to the
subject matter hereof. There are no representations, conditions, covenants, or
understandings other than those expressly referred to therein. Each party
acknowledges that no other party or any agent or attorney of any other party
has made any promise, representation or warranty whatsoever, not expressly
contained therein, concerning the subject matter hereof, to induce the other
party to execute this Agreement, and each party warrants and acknowledges that
he has not executed this Agreement in reliance on any such promise,
representation or warranty not specifically contained therein.
21. BINDING ON PREDECESSORS AND SUCCESSORS
This Agreement shall apply to, be binding upon and inure to the benefit
of the respective predecessors, successors, assigns, agents, employees, heirs,
administrators, executors, trustees, and all representatives of the parties
hereto.
22. WARRANTY OF AUTHORITY
The parties executing this Agreement warrant that they have the
authority and authorization to enter into this Agreement, and to bind their
respective corporate entities.
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23. SEVERABILITY
The provisions of this Agreement are severable, and should any
provision for any reason be unenforceable, the balance shall nonetheless be of
full force and effect.
24. JOINT PREPARATION
This Agreement shall be deemed to have been jointly prepared by the
parties hereto. Therefore, any uncertainty or ambiguity that may exist herein
shall not be interpreted against any party hereto, but otherwise according to
the application of the rules on interpretation of contracts.
25. COUNTERPARTS
This Agreement may be executed in counterparts.
26. KNOWING AND VOLUNTARY EXECUTION
The parties hereto warrant and acknowledge that they fully understand
the terms and consequences of this Agreement, that they have had the
opportunity to employ the services of independent and competent legal counsel
with respect to this Agreement, and that their decision to enter into this
Agreement was of their own free will, and was not based on, influenced by or
induced by any threat or coercion whatsoever.
27. NECESSARY DOCUMENTS AND INSTRUMENTS
The parties hereto agree to execute any and all other documents and
instruments which may be reasonably necessary or proper to effectuate and carry
out the purposes of
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this Agreement.
28. NO ASSIGNMENT
The parties warrant to one another that they have not assigned or
transferred, or purported to assign or transfer, to any person or entity, either
voluntarily or involuntarily, any claim, cause of action or right based on,
arising out of, or in connection with any matter, fact or anything described or
referred to in any of the pleadings, records or papers in the Lawsuit.
29. GENDER
Wherever the masculine, feminine or neuter form is used in this
Agreement, said term shall apply with equal force and effect to any other
gender, or to an entity, as required by the context wherein the term appears.
30. WAIVER AND MODIFICATION
No provision of this Agreement may be waived or modified except by a
writing signed by all of the parties hereto.
IN WITNESS WHEREOF, the parties have executed this Agreement so that
the same shall be effective as of the date first above written.
MOTORVAC TECHNOLOGIES, INC.
/s/ Xxx X. Melody
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By: Xxx X. Xxxxxx
Its: President
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DE-CARBON AUSTRALIA PTY LTD
/s/ XXX XXXXX
-----------------------------------
By: Xxx Xxxxx
Its: [SIG] JL
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CARBON CLEAN CORPORATION PTY LTD
/s/ XXX XXXXX
-----------------------------------
By: Xxx Xxxxx
Its: [SIG] JL
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CARBON TUNE PTY LTD
/s/ XXX XXXXX
-----------------------------------
By: Xxx Xxxxx
Its: [SIG] JL
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/s/ XXXXX SOMAS
-----------------------------------
Xxxxx Somas
/s/ ROYDN SWEET
-----------------------------------
Roydn Sweet
/s/ XXX XXXXX
-----------------------------------
Xxx Xxxxx
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APPROVED AS TO FORM AND CONTENT:
[SIG] X.X. Xxxxxxxxx
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Attorneys for Motor Vac Technologies, Inc.
[SIG] Xxxxxxxxxxx X. Xxxxxx
---------------------------------------------
Attorneys for De-Carbon Australia Pty Ltd,
Carbon Clean Corporation Pty Ltd,
Carbon Tune Pty Ltd, Xxxxx Somas, Roydn Sweet
and Xxx Xxxxx
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