SETTLEMENT AGREEMENT
Exhibit
10.3
THIS
SETTLEMENT AGREEMENT (“Settlement Agreement”) is made as of April 3, 2008, by
and between Calypso Wireless, Inc., a Delaware corporation (“Calypso Wireless”),
and Drago Daic, an individual residing in Houston, Texas (“Daic”).
WHEREAS, Drago Daic and other parties
sued Calypso Wireless, Inc. and other parties in a lawsuit styled Drago Xxxx, Xxxxxx Xxxxx Xxxxxx
d/b/a Tribeca, Champion Classic, Inc. and U.S. Lights, Inc. v. Calypso Wireless,
Inc., Xxxxxx Xxxxxxx and Xxxxx Xxxxxx, Cause No. 2004-63048 in the
000xx
Xxxxxxxx Xxxxx xx Xxxxxx Xxxxxx, Xxxxx (the “Daic Lawsuit”); and
WHEREAS a Final Judgment was rendered
in the Daic Lawsuit, in favor of Daic and against Calypso Wireless,
Inc. and other defendants, on December 8, 2006 (the “Daic Judgment”) which all
parties to this Agreement now agree is a valid and enforceable judgment under
the laws of the State of Texas; and
WHEREAS, Calypso Wireless filed a
lawsuit including a xxxx of review, seeking to set aside the Daic Judgment as to
Calypso Wireless and also asserting claims against Daic, styled Calypso Wireless, Inc. x. Xxxxx
Daic, Cause No. 2007-22571 in the 000xx
Xxxxxxxx Xxxxx xx Xxxxxx Xxxxxx, Xxxxx (the “Calypso Wireless Xxxx of Review
Lawsuit”), which all parties to this Agreement now agree is dismissed with
prejudice; and
WHEREAS, Daic filed an application for
turnover relief to enforce the Daic Judgment, with respect to certain patent
rights owned by Calypso Wireless commonly known as “ASNAP” and more particularly
described as United States Patent No. US 6,680,923 B1, together with all foreign
patents for the same technology, as more particularly set forth the Assignment
Agreement (as defined below), including the exhibits thereto (collectively, the
“ASNAP Patent”); and
WHEREAS,
Daic also filed an application for turnover relief to enforce the Daic Judgment,
with respect to certain patent rights owned by Calypso Wireless commonly known
as “Xxxxxx Patents” and more particularly described as (i) United States Patent
No. US 6,385,306; (ii) United States Patent No. US 6,765,996; (iii) United
States Patent No. US 6, 839, 412; and (iv) United States Patent No. US 67, 031,
439, together with all foreign patents for the same technology, as more
particularly set forth the Assignment Agreement (as defined below), including
the exhibits thereto (collectively, the “Xxxxxx Patents”); and
WHEREAS, the 000xx
Xxxxxxxx Xxxxx entered orders granting turnover and injunction relief, both in
the Daic Lawsuit and in the Calypso Wireless Lawsuit, with respect to the ASNAP
Patent and Xxxxxx Patents; and
WHEREAS, Daic and Calypso Wireless have
reached an agreement to resolve the disputes and litigation between them and
have further agreed to implement that agreement at a closing of the transactions
contemplated hereby, such closing to occur simultaneous with the execution of
this Settlement Agreement (the “Closing”);
NOW, THEREFORE, in consideration of the
mutual covenants set forth herein, Daic, Drago Xxxx, Xxxxxx Xxxxx Xxxxxx d/b/a
Tribeca, Champion Classic, Inc. and U.S. Lights, Inc. and Calypso
Wireless agree as follows:
1. Contemporaneously
with the Closing, Calypso Wireless will pay to Daic and Daic’s attorney, Xxxxx
Xxxxxxxxxx P.C. (“Xxxxxxxxxx P.C.”), by wire transfer to the trust account of
Xxxxxxxxxx, P.C., the sum of ONE HUNDRED THOUSAND AND NO/100 DOLLARS
($100,000.00) (the “Cash Payment”).
2. At
the Closing, Calypso Wireless will execute and deliver to Daic and Xxxxxxxxxx
P.C. a promissory note made payable to Daic and Xxxxxxxxxx, P.C. in the original
principal amount of NINE HUNDRED THOUSAND AND NO/100 DOLLARS ($900,000.00),
bearing interest at the XX Xxxxxx Xxxxx prime rate plus 1%, as same may be
revised from time to time, and being due and payable within thirty days from
Closing, or on May 3, 2008, said note to be executed in the form attached hereto
as Exhibit
“A-1” (the “ $900K Promissory Note”).
3. At
the Closing, Calypso Wireless will execute and deliver to Daic and Xxxxxxxxxx
P.C. a promissory note made payable to Daic and Xxxxxxxxxx, P.C. in the original
principal amount of THREE HUNDRED FIFTY THOUSAND AND NO/100 DOLLARS
($350,000.00), bearing interest at the XX Xxxxxx Chase prime rate plus 1%, as
same may be revised from time to time, and being due and payable within sixty
days from Closing, or on June 2, 2008, said note to be executed in the form
attached hereto as Exhibit
“A-2” (the “$350K Promissory Note”).
4. At
the Closing, Calypso Wireless will execute and deliver to Daic and Xxxxxxxxxx
P.C. a promissory note made payable to Daic and Xxxxxxxxxx, P.C. in the original
principal amount of ONE MILLION AND NO/100 DOLLARS ($1,000,000.00), bearing
interest at the XX Xxxxxx Xxxxx prime rate plus 1%, as same may be revised from
time to time, and being due and payable in twelve months from Closing, or on
April 3, 2009, said note to be executed in the form attached hereto as Exhibit
“A-3” (the “$1M Promissory Note”).
5. At
the Closing, Calypso Wireless will sell, assign, and transfer
to Daic and Xxxxxxxxxx P.C. an undivided twenty-five (25%) interest
in and to the ASNAP Patent and Xxxxxx Patents, pursuant to that
certain Assignment Agreement with Respect to Undivided Interest in Patents in
the form attached hereto as Exhibit
“B” (the “Assignment Agreement”). The ASNAP Patent and Xxxxxx
Patents are more fully described herein below in paragraphs (i) and (ii) and
shall mean as follows:
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(i)
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“ASNAP
Patents” shall mean: (1) United States Patent No. US 6,680,923 B1, U.S.
Patent Application Serial No. 11/040,482, and PCT Application No.
PCT/US01/07528 (2) all patents and applications throughout the world that
claim priority to, directly or indirectly, or from which the foregoing
claim priority, directly or indirectly; (3) all substitutions for and
divisions, continuations, continuations-in-part, renewals, reissues,
patent cooperation treaty applications, foreign applications, national
phase entries, and extensions of the foregoing patents and applications
throughout the world, and including patent applications and applications
throughout the world for like protection that have now been or may in the
future be granted on the invention disclosed in any of the foregoing
patents or applications, including without limitation, those obtained or
permissible under past, present, and future laws and statutes; and (4) all
right, title, and interest in and to any and all rights and causes of
action based on, arising out of, related to, or on account of past,
present, and future unauthorized use and/or infringement of any and all of
the foregoing, including but not limited to all past, present, and future
awards, damages, and remedies related thereto or arising
therefrom.
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(ii)
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The
“Xxxxxx Patents” shall mean: (1) United States Patents No. 6,385,306, No.
6,765,996, No. 6,839,412 and No. 7,031,439; (2) all patents and
applications throughout the world that claim priority to (directly or
indirectly) the foregoing, or from which the foregoing claim priority
(directly or indirectly); (3) all substitutions for and divisions,
continuations, continuations-in-part, renewals, reissues, patent
cooperation treaty applications, foreign applications, national phase
entries, and extensions of the foregoing patents and applications
throughout the world, and including patent applications and applications
throughout the world for like protection that have now been or may in the
future be granted on the invention disclosed in any of the foregoing
patents or applications, including without limitation, those obtained or
permissible under past, present, and future laws and statutes; and (4) all
right, title, and interest in and to any and all rights and causes of
action based on, arising out of, related to, or on account of past,
present, and future unauthorized use and/or infringement of the any and
all of the foregoing, including but not limited to all past, present, and
future awards, damages, and remedies related thereto or arising
therefrom.
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At such
time as Daic and Xxxxxxxxxx P.C. have received an aggregate of TWENTY MILLION
DOLLARS ($20,000,000.00) in cash under the Assignment Agreement, Daic and
Xxxxxxxxxx P.C. shall reconvey to Calypso Wireless all rights received pursuant
to the Assignment Agreement. Simultaneous with such reconveyance,
Calypso shall execute and deliver to Daic and Xxxxxxxxxx P.C. a Patent Proceeds
Assignment in the form attached hereto as Exhibit
“C”, pursuant to which Calypso shall pay to Daic and Xxxxxxxxxx P.C. five
percent (5%) of the proceeds of the ASNAP Patent and Xxxxxx Patents, without
limit (“Patent Proceeds Assignment”).
6. At
the Closing, Calypso Wireless will grant a security interest in the ASNAP Patent
and Xxxxxx Patents to secure Calypso Wireless’ obligations under the Settlement
Agreement and the documents executed at the Closing, pursuant to that certain
Patent Mortgage and Security Agreement in the form attached hereto as Exhibit
“D” (“Patent Mortgage and Security Agreement”).
7. Calypso
Wireless will issue, assign and deliver to Daic and Xxxxxxxxxx P.C. TWELVE
MILLION (12,000,000) shares of common stock in Calypso Wireless (the “Calypso
Shares”) out of its authorized and unissued shares. The shares shall
be assigned to Daic and Xxxxxxxxxx P.C. or to his/its designee or designees, as
he/it may request. With respect to such shares, a certificate
representing SEVEN MILLION (7,000,000) of the Calypso Shares shall be delivered
at the Closing, and a certificate for the remaining FIVE MILLION (5,000,000) of
the Calypso Shares (the “Remaining Shares”) shall be delivered in care of
Xxxxxxxxxx P.C. within ninety days from Closing, or on or before ,
2008. Calypso Wireless agrees to issue to Daic and Xxxxxxxxxx P.C.
out of its authorized and unissued shares the following Additional Shares if the
Remaining Shares are not delivered in ninety days from closing:
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(a)
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ONE
MILLION (1,000,000) Calypso Shares if a certificate delivering the
Remaining Shares is not delivered within ninety days from
Closing;
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(b)
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TWO
HUNDRED FIFTY THOUSAND (250,000) Calypso Shares, which are in addition to
the above described Shares, if a certificate delivering the Remaining
Shares is not delivered in one-hundred and twenty (120) days from
Closing;
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(c)
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TWO
HUNDRED FIFTY THOUSAND (250,000) Calypso Shares, which are in addition to
the above described Shares, if a certificate delivering the Remaining
Shares is not delivered in one-hundred and fifty (150) days from
Closing;
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(d)
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FIVE
HUNDRED THOUSAND (500,000) Calypso Shares, which are in addition to the
above described Shares, if a certificate delivering the Remaining Shares
is not delivered in one-hundred and eighty (180) days from
Closing;
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Nothing
herein shall negate the obligation of Calypso Wireless to issue the Remaining
Shares as provided herein or to deliver one or more certificates evidencing the
Remaining Shares as required hereby.
Calypso Wireless, as the issuer of the
Calypso Shares, agrees to have its securities counsel provide an opinion letter
pursuant to Securities Act Rule 144 to Calypso Wireless and its transfer agent
to permit the transfer and sale of the Calypso Shares as and when such opinion
letter is required under Rule 144. Daic and Xxxxxxxxxx P.C. agree to
provide the requisite representation letters from Daic and Xxxxxxxxxx P.C. and
their brokers. Calypso Wireless agrees to use its best efforts to
meet the current publication requirement of the Securities Act Rule 144 and file
and keep current filings for all required SEC reports, e.g. 10KSB, 10QSB,
etc.
8. Promptly
upon execution and delivery of this Settlement Agreement, delivery of the cash,
stock, and other items provided herein for delivery at the Closing:
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(a)
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Daic
and Xxxxxxxxxx P.C. and Calypso Wireless will file an Agreed Order
Dismissing Case with Prejudice, with respect to the Calypso Wireless Xxxx
of Review Lawsuit, which agreed order shall be in the form attached hereto
as Exhibit “E”;
and
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(b)
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Daic
and Xxxxxxxxxx P.C. and Calypso Wireless will file an Agreed Order
Dismissing Turnover Relief in the Daic Lawsuit, such agreed order to be in
the form attached hereto as Exhibit “G”
(collectively the “Agreed Orders”). If the payments and the
Calypso Shares listed in paragraphs 1, 2, 3 and 7 are not received within
the time required by the Settlement Agreement, all parties agree that the
turnover relief after judgment that is the subject of the Agreed Order
shall be reinstated in full force and effect.
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Xxxxxxxxxx
P.C. will hold Exhibit
“E” and Exhibit
“G”, the Agreed Orders, in trust until such time as
the delivery of the executed Settlement Agreement, delivery of the cash, stock,
and other items
provide herein for delivery at the Closing.
9. Upon
timely delivery of a certificate representing the Remaining Shares, and any
Additional Shares, pursuant to paragraph 5 above, and upon payment of the entire
balance of the $900K Promissory Note and $350K Promissory Note Daic shall
execute and deliver to Calypso Wireless a Release of the Daic Judgment, as to
Calypso Wireless only, such release to be in the form attached hereto as Exhibit
“F” (the “Release”); and
The
Release and Agreed Orders shall not be interpreted to reduce, detract or
supercede the Assignment Agreement, the Patent Proceeds Assignment or any of the
other consideration owed or provided to Daic and Xxxxxxxxxx P.C. under this
Settlement Agreement. If the payments and the Calypso Shares listed
in paragraphs 1, 2, 3 and 7 are not received within the time required by this
Settlement Agreement, Daic shall not be required to sign or deliver the
above-described Release or Agreed Order but instead shall be entitled to retain
and enforce the Daic Judgment.
10. Time
is of the essence. Default shall be conclusively shown, with respect
to monetary payments, by payments not being made and received on the due
date.
The
following items will also be a default for the purposes of this Settlement
Agreement:
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(a)
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Any
attempt to arrange, negotiate or consummate any sort of transfer or
assignment or impairment of the ASNAP Patent or Xxxxxx Patents such that
it would have an adverse impact upon the rights of Daic to collect all of
the amounts referred to herein;
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(b)
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Any
attempt to materially secrete or hide assets of Calypso Wireless that
would affect the rights of Daic to collect all monies contemplated in this
agreement.
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Should Calypso Wireless fail to pay the
Cash Payment, or the $900K note, or the $350K note and make timely
delivery of all of the Calypso Shares, then Daic shall not be required to
execute the Release and shall have the right to execute upon and collect the
Daic Judgment. Default shall be conclusively shown, with respect to
monetary payments, by payments not being made and received by the due
date. Default shall be conclusively shown, with respect to the
Calypso Shares, by failure to deliver a certificate delivering the Calypso
Shares enumerated herein in Paragraph 5 on the due dates.
11. Calypso
Wireless hereby releases, acquits and forever discharges Drago Xxxx, Xxxxxx
Xxxxx Xxxxxx d/b/a Tribeca, Champion Classic, Inc., U.S. Lights, Inc., and Xxxxx
Xxxxxxxxxx, P.C., from any and all claims, demands and causes of action that
Calypso Wireless may now own or be entitled to assert against him, including all
claims that were or could have been asserted against him in the Daic Lawsuit or
the Calypso Wireless Xxxx of Review Lawsuit.
12. Contingent
upon the timely receipt of all the consideration provided for in this Settlement
Agreement, including the delivery of a certificate evidencing the Remaining
Shares, and any Additional Shares, after the Closing, Xxxx, Xxxxxx Xxxxx Xxxxxx
d/b/a Tribeca, Champion Classic, Inc., and U.S. Lights, Inc., hereby releases,
acquits and forever discharges Calypso Wireless from any and all claims, demands
and causes of action that they/it may now own or be entitled to assert against
it, including all claims that were or could have been asserted against Calypso
Wireless in the Daic Lawsuit or the Calypso Xxxx of Review Lawsuit; provided,
however, the Daic Judgment shall not be released unless and until the payments
and all of the Calypso Shares listed in paragraphs 1, 2, 3, and 7, and the
Promissory Notes, Assignment Agreement, Patent Proceeds Assignment, Security
Agreement are delivered to Daic and Xxxxxxxxxx P.C. on a timely
basis. Nothing herein releases the Daic Judgment against Xxxxxx
Xxxxxxx or Xxxxx Xxxxxx.
13. Each
party represents and warrants to the other (i) that he or it has been
represented by attorneys in connection with the negotiation and drafting of this
Settlement Agreement, and has relied on the advice of his or its own attorneys
in entering into this Settlement Agreement; and (ii) that in entering into this
Settlement Agreement, he or it is not relying on any agreement, representation
or promise except as expressly set forth herein.
14.
This Settlement Agreement may be signed in multiple counterparts and shall be
effective
as of the date of the last signature as reflected below.
15. This
Settlement Agreement is made and performable in Xxxxxx County, Texas, and the
validity, effect, and construction of this Settlement Agreement shall be
governed by the laws of the State of Texas.
16. In
the event that any one or more of the provisions of this Settlement Agreement
shall, for any reason, be held invalid, illegal, or unenforceable in any
respect, such invalidity, illegality, or unenforceability shall not affect any
other provision of this Settlement Agreement.
17. This
Settlement Agreement may not be amended, modified, waived, or terminated unless
by writing and a notarized signature by all parties hereto.
18. This
Settlement Agreement shall not be construed in favor of or against any party on
the basis that the party did or did not author this Settlement Agreement,
including any attachment hereto. It is intended that this Settlement
Agreement shall be comprehensive in nature and shall be construed liberally to
affect its purposes.
19. Each
signatory to this Settlement Agreement hereby warrants and represents that such
person has authority to bind the party for whom such person acts, and the
claims, rights, and/or interests which are the subject matter hereto are owned
by the party asserting same, have not been assigned, transferred or sold, and
are free of any encumbrances.
20. All
payments and obligations provided for in the Settlement Agreement to Daic shall
be due and payable to Daic and/or his designee (or to his estate should Daic be
deceased) and to Xxxxx Xxxxxxxxxx, P.C.
21. The
parties agree that this Settlement Agreement, including the documents referred
to herein, constitutes the full, final and complete settlement of the
differences between them and supersedes all other written or oral exchanges,
representations, agreements, or understandings between them concerning the
subject matter of this Settlement Agreement, and further agree that there are no
exchanges, representations, agreements, or understandings, oral or written,
concerning the subject matter of this Settlement Agreement that are not fully
expressed and incorporated herein.
(Signatures
Continued on Following Page)
CALYPSO
WIRELESS:
CALYPSO
WIRELESS, INC.
By: /s/
Xxxxxx X.
Xxxxxx
Name: Xxxxxx
X.
Xxxxxx
Title: CFO
&
Director
Date: April
4, 2008
(Signatures
Continued on Following Page)
DAIC:
/s/
Drago
Daic
Drago
Daic
Date: April
2, 2008
(Signatures
Continued on Following Page)
XXXXXX
XXXXX XXXXXX D/B/A TRIBECA:
XXXXXX
XXXXX XXXXXX D/B/A TRIBECA
By: /s/
Xxxxxx Xxxxx
Xxxxxx
Name: Xxxxxx
Xxxxx
Xxxxxx
Title:
Owner
Date: April
2, 2008
(Signatures
Continued on Following Page)
CHAMPION
CLASSIC, INC.:
CHAMPION
CLASSIC, INC.
By: /s/ Drago
Daic
Name: Drago
Daic
Title:
President
Date: April
2, 2008
(Signatures
Continued on Following Page)
U.S. LIGHTS,
INC.:
U.S.
LIGHTS, INC.
By: /s/ Drago
Daic
Name: Drago
Daic
Title:
President
Date: April
2, 2008
