SETTLEMENT AGREEMENT AND MUTUAL RELEASE
SETTLEMENT
AGREEMENT AND MUTUAL RELEASE
This
Settlement Agreement and Mutual Release (“Agreement”) is entered into by and
between SECURED DIVERSIFIED INVESTMENT, a Nevada Corporation authorized to
do
business in California (“SDI”), on one hand, and XXXX XXXX, an individual (“Xx.
Xxxx”), and XXXXX XXXX, an individual (“Xxx. Xxxx”), (Collectively, “Plaintiffs”
or the “Leons”) on the other hand, (sometimes collectively referred to herein as
the “Parties”) with reference to the following recitals:
RECITALS
A. On
or
about July 2004, SDI and Xx. Xxxx into an employment relationship in which
Xx.
Xxxx was hired as Chief Executive Officer of SDI.
B. On
or
about January 5, 2005, SDI terminated Xx. Xxxx’x employment.
C. The
Leons
subsequently filed a lawsuit on April 1, 2005, styled Xxxx Xxxx, an individual,
et. al, v. Secured Diversified Investment, Ltd., a Nevada corporation, with
the
Superior Court of California in and for the County of Orange, Central District
Case No. 05CC04651, alleging causes of action for Breach of Contract, Promissory
Estoppel, Intentional Misrepresentation, and Labor Code Violations as to Xx.
Xxxx only, and Intentional Infliction of Emotional Distress and Negligent
Infliction of Emotional Distress as to Xx. Xxxx and Xxx. Xxxx.
D. SDI
and
the Leons would like to avoid the uncertainty, costs and risks involved if
this
action is further litigated and, as a result, want to settle the action in
its
entirety according to the terms of this Agreement.
NOW,
THEREFORE, in consideration of the foregoing recitals, promises, mutual
covenants and warranties set forth herein, and for other good and valuable
consideration, the receipt of which are hereby acknowledged, SDI and the Leons
agree as follows:
AGREEMENT
1. Payment
of Settlement Amount
1.1.
SDI shall
pay to the Leons the sum of exactly sixty five thousand dollars ($65,000.00).
In
addition, SDI shall deliver stock options to Xx. Xxxx with the following terms
and conditions: Expiration date of 180 days of execution of this Agreement;
option to purchase up to
150,000-shares
of SDI common stock at the strike price
of
15 cents per share; SDI to exercise reasonable and good faith efforts to deliver
share certificates to conclude any option exercise. The Parties acknowledge
and
agree that 15 cents per share is a reasonable value of the SDI shares at the
present time. The payment of the settlement amount set out above and the
delivery of the stock options shall be in full and final settlement of all
claims. The cash component shall be paid by check payable to the "The Xxxxxxxx
Law Firm client trust account."
All
arrangements for delivery of stock options and exercise shall be made directly
with SDI's CFO, without the requirement to consult with counsel for
SDI.
1.2.
Notwithstanding
payment of the settlement amount and the issuance of the stock options, the
Parties acknowledge that neither shall be considered the "prevailing party,"
as
defined by California Code of Civil Procedure section 1023(4), for purposes
of
recovering costs, because each party agrees to bear its own attorneys' fees
and
costs of this Action.
1.3.
Within
ten days after execution of this Agreement and SD1's payment of the principal
amount set out above, the Leons will file a Request for Dismissal with Prejudice
of the entire action.
2. Mutual
Release.
2.1 In
consideration of the mutual promises and obligations set forth above, SDI and
the Leons hereby forever release, acquit and discharge each other and their
respective partners, directors, officers, employees, shareholders, agents,
representatives, affiliates, heirs, personal
representatives, successors and assigns from any and all rights, claims, causes
of action, suits
and
liabilities of every kind or nature whatsoever, whether known or unknown,
suspected or unsuspected,
that they may have against each other which in any manner arise out of, relate
to, or
are
connected with the Action or the matters reflected and described in the Recitals
herein (collectively, the “Released Claims”).
2.2
The
Parties intend that this Agreement shall be a full and final settlement
of,
and
bar to, any and all claims and/or causes of action arising between and/or among
them. In
connection therewith, the Parties acknowledge that they may hereafter discover
facts different from or in addition to the facts which they may know or believe
to be true with respect to the Released Claims, but that they intend to hereby
fully and forever settle all disputes between and/or among them. In furtherance
of such intention, the general release given herein shall be
and
remain in effect as a full and complete mutual release, notwithstanding
discovery of any such different or additional facts. Therefore, the Parties
acknowledge that they have been informed of and are familiar with the provisions
of Civil Code section 1542, which provides as follows:
A
GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW
OR
SUSPECT TO EXIST IN HIS OR HER FAVOR AT THE TIME OF EXECUTING THE RELEASE,
WHICH
IF KNOWN BY HIM OR HER MUST HAVE MATERIALLY AFFECTED HIS SETTLEMENT WITH THE
DEBTOR.
The
parties
hereby waive and relinquish all rights and benefits they have under Civil Code
section 1542 to the full extent that they may lawfully waive all such rights
benefits pertaining to the Released Claims.
2.3 The
parties acknowledge that the execution of this Agreement affects the
settlement of contested and denied claims. The parties agree that nothing
contained in this Agreement shall be construed as an admission by any party
of
any liability to any other party in any way.
3. Representations
&
Warranties.
The
Parties represent and warrant to each other as follows:
3.1 That
as
of the date of their execution of this Agreement, they are unaware
of any
facts, conditions or matters relating to, arising out of, or connected with
the
events and/or transactions set forth in the Complaint, which would give rise
to
any claims for damages or equitable relief not being released by each party
pursuant to the terms of this Agreement.
3.2 That
each
party hereto has the requisite power and authority to enter into this Agreement
and to consummate the transactions contemplated by this Agreement, and that
this
Agreement and all other agreements and instruments, to the extent they are
to be
executed by any corporate or partnership entity in connection with this
Agreement, have been (or upon execution will have been) duly executed and
delivered by such corporate or partnership entity, have been effectively
authorized by all necessary action, corporate or otherwise, and constitute
(or
upon execution will constitute) legal, valid and binding obligations of the
respective parties hereto.
3.3 That
no
portion of any claim, demand, or cause of action that the Parties
may or
might have against the other, and which have been previously identified as
Released Claims herein, have been assigned or transferred to any other person,
firm or corporation, including, without limitation, any parent, subsidiary
or
affiliate of any party, in any manner, including by way of subrogation,
operation of law or otherwise. In the
event
any third party makes a claim against a party to this Agreement based upon
such
an alleged transfer or assignment of a Released Claim, the party to this
Agreement who is the alleged transferor or assignor
shall indemnify and hold harmless the party to this Agreement against whom
the
claim
is
asserted.
3.4 That
in
executing this Agreement, the Parties have relied solely upon their
own
judgment, belief and knowledge and on the advice and recommendations of their
own independently selected counsel concerning the nature, extent and duration
of
their rights and claims. Further, the Parties acknowledge that they have not
been influenced by any representations
or statements concerning any matters made by any other
parties or by any person
or
attorney representing any other parties in connection with the negotiation
and/or execution of this Agreement.
3.5 This
Agreement is intended to be final and binding between and among the Parties
and
is further intended to be effective as a full and final accord and satisfaction
between them regardless of any mistake of fact or law, or any other
circumstances whatsoever.
The
parties are relying upon the finality of this Agreement as a material factor
inducing each party's execution of this Agreement.
3.6 The
Parties have made such investigation of the facts pertaining to the underlying
disputes and this Agreement, and all of the matters pertaining thereto, as
they
deem
necessary.
3.7 The
terms
of this Agreement are contractual and are the result of arm's
length
negotiations between and among the Parties.
3.8 This
Agreement has been carefully read by each party, and the contents
hereof
are known and understood and freely executed by the Parties.
3.9 The
Parties covenant and agree not to bring any action, claim, suit or
proceeding
against the other, directly or indirectly, regarding or relating in any manner
to any Released Claim, and each further covenants and agrees that this Agreement
is a bar to any such claim, action, suit or proceeding.
4. Representations
regarding Stock Options.
The
Leons
represent and warrant to SDI that they:
(1) are
acquiring the Settlement Options for their own account as an investment and
without an intent to distribute;
(2) acknowledge
that the Settlement Options have not been registered under the Securities Act
of
1933, as amended, or any state securities laws, and that the Settlement
Options
and any shares of SDI common stock received upon exercise of the Settlement
Options
may not
be resold or transferred by such person without appropriate registration or
the
availability of an exemption from such requirements;
(3) have
such
knowledge and experience in business and financial matters in general
as to be capable of evaluating SDI, its proposed activities, and the risks
and
merits of an
investment in the Settlement Options and any shares of SDI common stock received
upon exercise of the Settlement Options;
(4) have
had
an opportunity to ask questions and receive answers from SDI regarding any
information they consider necessary or appropriate in deciding whether to enter
into the Agreement and acquire the Settlement Options; and
(5) are
an
"accredited investor" within the meaning of SEC Rule 501 of Regulation D, as
presently in effect.
5. Amendment.
This
Agreement may not be modified, altered or changed except upon express written
consent of both parties wherein specific reference is made to this
Agreement.
6. Non-Disparagement. In
response to inquiries from third parties concerning the status or disposition
of
this dispute and the Action, the Parties and their respective attorneys will
state only that the dispute has been resolved and that neither party can discuss
it except to the extent of any mutually agreeable writings prepared by or for
the Parties for release and dissemination. Should either Party allege a breach
of this provision, the prevailing party on as to the allegation will be entitled
to reasonable attorneys' fees and costs in having to defend or prosecute the
allegation, in addition to such other damages as may have resulted from the
violation.
7. Confidentiality. The
Parties and their respective attorneys agree that they will not publicize or
disclose or cause or knowingly permit or authorize the publicizing or disclosure
of the contents of this Agreement or of the negotiations leading up to it to
any
person, firm, organization or entity of any and every type, public or private,
for any reason, at any time, without the prior written consent of each other
unless otherwise required to do so by operation of law or legal process. The
Parties acknowledge their intention that the provisions of this Paragraph 5
create no liability for disclosures made: (a) prior to its execution, (b) by
the
Leons in confidence to each other or their attorneys or SDI in confidence to
its
attorneys, (c) by persons from public information released prior the execution
of this Agreement, (d) to enforce the terms of this Agreement, (e) as otherwise
required by law, or (f) as to matters already a matter of public record prior
to
execution. The parties hereto acknowledge that SDI is subject to the securities
laws as a publicly-traded company and may therefore be required to disclose
all
or portions of this Agreement in accordance with applicable securities
laws.
The
foregoing notwithstanding, the Parties and their respective attorneys,
acknowledge the
confidentiality provisions of this Paragraph 5 constitute a material inducement
of both parties
to enter
into this Agreement. The Parties are permitted, however, to make confidential
disclosures limited to the consideration and settlement amounts set forth in
Paragraph I above (hereafter "Permitted Disclosure"), as required, to their
spouse, accountants or to governmental authorities. However, each such person
so
informed shall be bound to the confidentiality provisions hereof with regard
to
only the subject matter of the Permitted Disclosure, and except as to
governmental authorities any breach of this Paragraph 5 by any such person
so
informed shall constitute a breach by the Parties, as applicable, of Paragraph
5. Should either Party allege a breach, the prevailing party on as to the
allegation will be entitled to reasonable attorneys' fees and costs in having
to
defend or-prosecute the allegation, in addition to such other damages as may
have resulted from the violation. Reference requests should be directed to
Xxx
Xxxxxxx, SDI's President (or her successor or designee), who will confirm only
Xx. Xxxx'x prior employment position with SDI, and dates of employment. date
of
hire and date of resignation. To the
extent that there is a breach of this provision, or if there is any other
reference made to a third
party as
to Xx. Xxxx which reference adversely impacts Xx. Xxxx, Xx. Xxxx reserves any
rights and remedies he may have, and will not be limited to breach of this
Agreement.
8. Attorneys'
Fees. If
legal
proceedings are commenced by any party hereto to enforce or interpret the
provisions of this Agreement, the prevailing party shall be entitled to recover
all of such party's attorneys' fees and costs and expenses of litigation,
including any fees and costs incurred in enforcing any resulting judgment or
award.
9. Entire
Agreement. All
agreements, covenants, representations and warranties, expressed and implied,
oral and written, by each party to this Agreement concerning its subject matter
are contained herein. No other agreements, covenants, representations or
warranties, expressed
or implied, oral or written, have been made by any party to any other party
concerning
the
subject matter of this Agreement. All prior and contemporaneous conversations,
covenants and warranties concerning the subject matter of this Agreement are
merged herein. This is a fully integrated Agreement.
10. No
Construction Against Drafter. The
Parties agree that each has participated in arriving at the final language
of
this Agreement and, therefore, this Agreement shall not be construed against
any
party as the drafter.
11. All
Remedies Available for Breach of the Agreement. All
remedies, including without limitation specific performance, shall be available
for a breach of this Agreement.
12. Counterparts. This
Agreement may be executed in counterparts, and/or by facsimile, and when all
the
Parties have signed and delivered at least one such counterpart to each other,
each counterpart shall be deemed an original, and, when taken together with
other signed
counterparts, shall constitute one agreement, which shall be binding upon and
effective as
to the
Parties. No original signatures shall be required to establish the validity
or
authenticity of this Agreement.
13. Successors. This
Agreement shall be binding on and shall inure to the benefit of the heirs,
representatives, administrators, executors, successors and assigns.
14. Governing
Law. This
Agreement shall be construed in accordance with, and shall be governed by,
the
laws of the State of California.
15. Severability. If
any
portion of this Agreement is declared by a court of competent jurisdiction
to be
invalid or unenforceable, such a portion shall be deemed severed from
this
Agreement, and the remaining portions shall remain in full force as though
such
invalid
or
unenforceable provisions or portions had not been a part of this
Agreement_
16. Survival.
The
warranties and representations of this Agreement are deemed to
and do
survive the closing hereof.
17. Effect
of Headings. Captions
of the sections of this Agreement are for convenience and reference only, and
the words contained in the captions shall in no way be employed to explain,
modify, amplify or aid in the interpretation, construction or meaning of the
provisions of this Agreement.
18. Disclaimer
of Third Party Beneficial Contract. By
execution hereof, the Parties specifically disavow any desire or intention
to
create a "third party" beneficiary contract, and specifically declare that
no
person or entity, save and except for the Parties, their heirs, successors,
and
assigns, shall have any rights hereunder nor any right of enforcement
hereof.
19. Entry
of Judgment. In
the
event that the terms of Paragraphs 1 and 2 are not fully performed, the Parties
agree that this Agreement shall serve as a written stipulation by the Parties
for settlement of the pending Action pursuant to California Code of Civil
Procedure section 664.6, and that the Orange County Superior Court, upon motion,
may enter judgment pursuant
to the terms of the settlement contained in this Agreement. To effectuate that
purpose,
the
Parties specifically request the Orange County Superior Court to retain limited
jurisdiction over them and this Agreement.
20. Notices. All
notices required under this Agreement shall be deemed effective if served by
telecopier or, in the option of the sender, by Federal Express or other
overnight delivery system, and shall be forwarded to the Parties as
follows:
A. If
to Plaintiffs Xxxx Xxxx and Xxxxx Xxxx
000
Xxxxxxxx Xxx Xxxxxxxxx, XX 00000
With
a
copy to:
c/o
Xxxxxxx X. Xxxxx
The
Xxxxxxxx Law Firm, A Professional Corporation
00000
XxxXxxxxx Xxxx. Xxxxx XX, Xxxxx 000, Xxxxxx,Xxxxxxxxxx 00000
Tel:
(000) 000-0000
Fax:
(000) 000-0000
B. If
to Defendant Secured Diversified Investment, Ltd.
Attn:
Xxxxxx X Xxxxxxxx, Secretary and Agent for Service
0000
Xxxxxxxx Xxxxxxxxx, Xxxxx 0000
Xxx
Xxxxxxx, XX 00000
With
a
copy to:
c/o
Xxxxxx X. XxXxxx, Esq. The Xxxxxxxx Law Firm, PC
000
Xxxxxxx Xxxxxx
Xxxxx
Xxxxx, Xxxxx 000
Xxxxxxx
Xxxxx, XX 00000-0000
Tel:
(000) 000-0000 Fax: (000) 000-0000
Should
addresses, facsimile numbers or other identified information change, notice
shall
be given
in accordance with this provision.
21. Time
is of the Essence. Time
is
of the essence in the performance of each and
every
obligation to be performed by the Parties as set forth in this
Agreement.
22. Effective
Date. This
Agreement shall be effective as of the date of its complete
execution by the last signing party.
EACH
OF THE UNDERSIGNED HEREBY DECLARE THAT THE TERMS OF THIS SETTLEMENT
AGREEMENT
AND MUTUAL RELEASE HAVE BEEN COMPLETELY READ AND ARE FULLY UNDERSTOOD, AND
BY
EXECUTION HEREOF VOLUNTARILY ACCEPT THE TERMS WITH '1HE INTENT TO BE LEGALLY
BOUND THEREBY.
IN
WITNESS
WHEREOF, the
parties have executed this Settlement Agreement and Mutual
Release
as of the date first set forth above.
Dated:
May
___, 2006 SECURED
DIVERSIFIED INVESTMENT, LTD., a Nevada corporation
By:_____________
Name:
Xxx
Xxxxxxx
Dated
May
31, 2006 By:
_____________
Xxxx
Xxxx
Dated
May
31, 2006 By:
_____________
Xxxxx Xxxx
