Exhibit 10
SETTLEMENT AGREEMENT AND MUTUAL RELEASE
Settlement Agreement and Mutual Release ("Settlement Agreement") is made
effective September 1, 2005 by and among Omni Medical Holdings, Inc., a South
Dakota corporation ("Omni"), and XxXxx Financial Services, Inc., a Kentucky
corporation, formerly known as XxXxx Business Services, Inc. ("MFS") and
Xxxxxxx XxXxx, an individual resident of the State of Kentucky ("XxXxx").
Background Circumstances
A. On November 30, 2003, the Parties entered into an Asset Purchase
Agreement (the "APA") under which Omni purchased and MFS sold substantially
all of the assets of MFS used in the medical transcription business of MFS.
The conduct of the medical transcription business by MFS and Omni, utilizing
the assets acquired by Omni from MFS pursuant to the APA is referred to herein
as the "Business."
B. In connection with the APA, XxXxx and Omni executed an Employment
Agreement under which Omni employed XxXxx (the "Employment Agreement").
C. Pursuant to the APA, MFS and Omni executed a Xxxx of Sale and
Assumption Agreement and Omni executed an agreement providing for indemnity of
XxXxx from and against certain liabilities and XxXxx entered into a Covenant
Not to Compete in favor of Omni. The APA, and all other agreements,
instruments and deliveries given or executed by the parties in connection with
the APA, including without limitation, that certain Agreement dated February
16, 2005 among the Parties are collectively referred to herein as the "Asset
Purchase Documents."
D. Disputes and differences have arisen among the Parties concerning
the Parties' agreements and their respective performance and responsibilities
under the Asset Purchase Documents.
E. The Parties wish to resolve all claims, disputes, and differences
among them relating to the APA and the Employment Agreement.
Covenants
NOW, THEREFORE, in consideration of the recitals and the promises and
agreements contained herein, the Parties agree and covenant as follows:
1. Reconveyance of the Purchased Assets. Omni hereby sells,
transfers, and assigns to MFS all of Omni's right, title and interest in and
to the Purchased Assets, and all replacements and substitutions therefore,
existing and located in the business premises of Omni located at 0000 Xxxxxxx
Xxxx Xxxx, Xxxxx 000, Xxxxxxxxxx, XX 00000-0000, provided however, that Omni
does not convey any such assets consumed in the operation of the Business
between the date of the APA and the date of this Settlement Agreement. Omni
will prepare, execute and file such documents and/or instruments as are
necessary to revoke Omni's registration of the use of the assumed name "XxXxx
Business Services, Inc.," or any variation thereof, with the Kentucky
Secretary of State.
2. Assignment of WIP and Accounts Receivable; Consideration.
2.1. Omni hereby sells, transfers and assigns to MFS all of Omni's
right, title and interest in and to the work in progress and accrued accounts
receivable listed on the attached Schedule 2 (the "Omni AR's"). In the event
that Omni receives payments from customers in respect of services performed by
MFS after August 11, 2005, Omni will promptly forward all such payments to
MFS.
2.2. On or before November 15, 2004, MFS shall pay to Omni the sum of
Ten Thousand Dollars ($10,000) in immediately available funds.
3. Assumption of Liabilities. MFS hereby assumes and agrees to pay
only the liabilities listed on the attached Schedule 3 (the "Assumed
Liabilities"). MFS will not be responsible for any obligations of Omni except
for the Assumed Liabilities. Without limiting the foregoing sentence, MFS
shall not be liable to any party for payroll taxes or other obligations in
respect of payroll not paid prior to the August 11, 2005 payroll.
4. Release by XxXxx and MFS. XxXxx and MFS, for themselves and for
all their past, present, and future affiliates, officers, directors, managers,
agents, attorneys, shareholders, members, sureties, predecessors, successors
and assignees, hereby fully release and discharge Omni and its past, present,
and future subsidiaries, partners, members, affiliates, officers, directors,
agents, attorneys, employees, shareholders, sureties, predecessors, successors
and assigns from any and all manner of actions, causes of actions, suits,
damages, claims, liabilities, losses, expenses and demands whatsoever, in law
or in equity, whether known or unknown, which XxXxx and/or MFS may have had,
may presently have, or may have in the future, arising under or in connection
with the Asset Purchase Documents, or any of them, or in connection with
conduct of the parties in exercising control or dominion over the Purchased
Assets or otherwise enforcing or seeking to enforce their respective rights
under the Asset Purchase Documents.
Notwithstanding the generality of the foregoing this release shall not
constitute a release of obligations arising under this Settlement Agreement.
XxXxx and MFS will, contemporaneously with the execution of this Agreement,
cause the termination of all Uniform Commercial Code Financing Statements
respecting any security interest in their favor as Secured Party(ies) in any
assets of Omni.
5. Release by Omni. Omni, for itself and for all its past, present,
and future affiliates, officers, directors, managers, agents, attorneys,
shareholders, members, sureties, predecessors, successors and assignees,
hereby fully releases and discharges each of XxXxx and MFS and each of their
respective past, present, and future subsidiaries, partners, members,
affiliates, officers, directors, agents, attorneys, employees, shareholders,
sureties, predecessors, successors and assigns from any and all manner of
actions, causes of actions, suits, damages, claims, liabilities, losses,
expenses and demands whatsoever, in law or in equity, whether known or
unknown, which Omni may have had, may presently have, or may have in the
future, arising under or in connection with the Asset Purchase Documents, or
any of them, or in connection with conduct of the parties in exercising
control or dominion over the Purchased Assets or otherwise enforcing or
seeking to enforce their respective rights under the Asset Purchase Documents.
Notwithstanding the generality of the foregoing this release shall not
constitute a release of obligations arising under this Settlement Agreement.
6. Covenant Not to Xxx. Each Party covenants and agrees that it will
refrain from commencing or prosecuting any action, suit or administrative
proceeding based in whole or in part upon any actions or claims released
herein. This covenant not to xxx xxx be asserted as independent grounds for
immediate dismissal of any action brought in contravention hereof, and for the
issuance of a temporary, preliminary or permanent injunction against the
prosecution of any such claim, without bond. Each Party agrees to defend,
indemnify and hold harmless each of the persons released by it hereunder from
and against any action or claim (including reasonable attorneys' fees) which
may be brought against such released person by such Party or person claiming
under such Party, based in whole or in part, upon a claim, duty or obligation
released by such Party hereunder.
7. Indemnity by MFS. MFS agrees to defend, indemnify and hold
harmless Omni and its successors and assigns, agents and attorneys (the
"Indemnified Persons") from and against and will pay to the Indemnified
Persons the amount of, any loss, liability, claim, damage (including
incidental and consequential damages), expense (including costs of
investigation and defense and reasonable attorneys' fees) or diminution of
value, whether or not involving a third-party claim (collectively, "Damages")
any and all claims, threats, liabilities, taxes, interest, fines, penalties,
suits, actions, proceedings, demands, damages, losses, costs and expenses
(including attorneys' and experts' fees and court costs) of every kind and
nature arising out of, directly or indirectly, from or in connection with any
of the following:
(a) Any misrepresentation, omission or breach by XxXxx and/or MFS of
any representation or warranty contained in this Agreement;
(b) Any nonfulfillment, failure to comply or breach by XxXxx and/or
MFS of or with any covenant, promise or agreement of XxXxx and/or
MFS contained in this Agreement;
(c) The Assumed Liabilities; or
(d) Any third party claim arising from or in connection with the
operation of the Business on or after August 11, 2005.
The remedies provided in this Section 7 will not be exclusive of or limit any
other remedies that may be available to Omni or the other Indemnified Persons.
8. Indemnity by Omni. Omni agrees to defend, indemnify and hold
harmless XxXxx and MFS and their respective heirs successors and assigns,
agents and attorneys (the "Indemnified Persons") from and against and will pay
to the Indemnified Persons the amount of, any loss, liability, claim, damage
(including incidental and consequential damages), expense (including costs of
investigation and defense and reasonable attorneys' fees) or diminution of
value, whether or not involving a third-party claim (collectively, "Damages")
any and all claims, threats, liabilities, taxes, interest, fines, penalties,
suits, actions, proceedings, demands, damages, losses, costs and expenses
(including attorneys' and experts' fees and court costs) of every kind and
nature arising out of, directly or indirectly, from or in connection with any
of the following:
(a) Any misrepresentation, omission or breach by Omni of any
representation or warranty contained in this Agreement;
(b) Any nonfulfillment, failure to comply or breach by Omni of or with
any covenant, promise or agreement of Omni contained in this
Agreement; or
(c) Any third party claim arising from or in connection with the
operation of the Business after the effective date of the APA and
on or before August 10, 2005.
The remedies provided in this Section 8 will not be exclusive of or limit any
other remedies that may be available to Omni or the other Indemnified Persons.
9. Representations and Warranties.
9.1. Omni's Representations and Warranties. Omni represents and
warrants to XxXxx and MFS that:
(a) Omni is a duly organized and validly existing corporation formed
under the laws of the State of South Dakota and is in good
standing in such jurisdiction.
(b) Omni possesses good and merchantable title to the Purchased Assets
and the Omni AR's free and clear of any and all security
interests, agreements, restrictions, claims, liens, pledges and
encumbrances of any nature or kind, except a security interest
granted by Omni in favor of [TBD], which security interest has
been released.
(c) Omni has the right, power and authority to enter into and perform
its obligations under this Agreement.
(d) All requisite action to authorize the execution and performance of
this Agreement by Omni has been taken or has occurred. This
Agreement is a valid and legally binding obligation of Omni and is
fully enforceable against Omni in accordance with its terms,
except as such enforceability may be limited by general principles
of equity, bankruptcy, insolvency, moratorium and similar laws
relating to creditors' rights generally.
9.2. XxXxx and MFS's Representations and Warranties. XxXxx and MFS
jointly and severally represent and warrant to Omni that:
(a) MFS is a duly organized and validly existing corporation formed
under the laws of the State of Kentucky and is in good standing in
such jurisdiction.
(b) Neither XxXxx nor MFS has assigned or transferred any of its
rights under the Asset Purchase Documents, absolutely, or as
security and possesses good and merchantable title to its rights
under the Asset Purchase Documents free and clear of any and all
security interests, agreements, restrictions, claims, liens,
pledges and encumbrances of any nature or kind.
(c) Each of XxXxx and MFS has the right, power and authority to enter
into and perform its/her respective obligations under this
Agreement.
(d) All requisite action to authorize the execution and performance of
this Agreement by MFS has been taken or has occurred. This
Agreement is a valid and legally binding obligation of XxXxx and
MFS and is fully enforceable against them in accordance with its
terms, except as such enforceability may be limited by general
principles of equity, bankruptcy, insolvency, moratorium and
similar laws relating to creditors' rights generally.
10. Compromise Agreement. It is expressly understood and agreed that
the terms of this Settlement Agreement are contractual in nature and the terms
and agreements contained herein are made to compromise doubtful and disputed
claims, to avoid the expense and vexation of protracted litigation and to buy
peace between the Parties.
11. No Admission of Liability. By entering into this Settlement
Agreement, each Party agrees that it in no way operates as an admission of
liability by any party hereto for any claim which may have existed in the
past, present or future.
12. Voluntary and Informed Agreement. Each party has carefully read,
and knows and understands the full contents of this Settlement Agreement and
is voluntarily entering into this Settlement Agreement after having had the
opportunity to receive independent legal advice from its attorneys. Each
party to this Settlement Agreement has investigated the facts pertaining to
this settlement and this Settlement Agreement, and all matters pertaining
thereto, to the full extent that such Party deems necessary.
13. No Other Inducements. No party relies or has relied on any
statement, representation, omission, inducement, or promise of any other party
(or any officer, agent, employee, representative, or attorney for any other
party) in executing this Settlement Agreement, or in making the settlement
provided for herein, except as expressly stated in this Settlement Agreement.
14. No Confidentiality Required. The Parties explicitly agree that no
confidentiality provision applies to this Settlement Agreement.
15. Authority of Signators. Each person executing this Settlement
Agreement on behalf of a Party represents and warrants that he or she is fully
authorized to execute and deliver this Settlement Agreement on behalf of such
Party, and that no consent of any person or entity not a Party to this
Settlement Agreement is necessary in order for this Settlement Agreement to be
fully and completely binding upon such Party. Except as to such
representation and warranty, the individuals executing this Settlement
Agreement as a representative of a party shall have no personal liability on
account of such execution
16. Binding on Successors and Assigns. This Settlement Agreement is
binding upon, and shall inure to the benefit of, the Parties hereto and their
respective agents, employees, representatives, officers, directors,
subsidiaries, assigns, heirs, executors, administrators, insurers, and
successors in interest.
17. Jurisdiction and Governing Law. The Parties hereby agree that the
State and Federal Courts situated in the State of Kentucky shall have in
personam jurisdiction over the parties and any claims arising from this
Settlement Agreement. This Settlement Agreement shall be construed in
accordance with and governed by the laws of the State of South Dakota, without
regard to any laws relating to choice or conflict of laws between or among
jurisdictions.
18. Attorney's Fees. Each of the Parties hereto agrees to bear its
own costs, attorneys' fees, and other expenses associated with the disputes
between the Parties.
19. Adequacy of Consideration and Negotiations. Each of the Parties
hereto acknowledges that the consideration it has given or received hereunder
is fair and adequate consideration for the covenants, undertakings,
forbearances, and promises contained herein, and that this Settlement
Agreement has been negotiated in good faith and at arm's length.
20. Superceding Agreement. This Settlement Agreement supercedes all
prior undertakings, negotiations, and agreements between the Parties.
21. No Third Party Beneficiaries. Except as to affiliates of the
released persons and Indemnified Persons as referenced in paragraphs 4,5, 6, 7
and 8 hereof who are accorded releases and indemnities thereunder, there are
no third party beneficiaries to this Settlement Agreement. Nothing in this
Settlement Agreement, whether express or implied is intended to confer any
rights or remedies under or by reason of this Settlement Agreement on any
persons other than the Parties to it, their respective predecessors,
successors, and assigns, and the persons and entities identified in the
releases granted herein, and except as so provided, nothing in this Settlement
Agreement is intended to relieve or discharge the obligation or liability of
any third person to any Party to this Settlement Agreement, and no provision
herein shall give any third persons any right to subrogation or action against
any Party to this Settlement Agreement.
22. Entire Agreement. The Settlement Agreement contains the entire
understanding of the Parties relating to the subject matter of the Settlement
Agreement. No promise, inducement or agreement which is not specifically
provided in this Settlement Agreement has been made by any party to this
Settlement Agreement, and no warranties, representations, or undertakings are
made by the Parties hereto except as are expressly provided herein. The
Background Circumstances and Purposes set forth in this Settlement Agreement
shall be deemed a substantive part of this Settlement Agreement and shall be
utilized to guide the construction and interpretation of this Settlement
Agreement.
23. Certain Principles of Construction. In this Settlement
Agreement, the singular shall include the plural, the plural the singular, and
the use of any gender shall include all genders. It is the intent of the
Parties that the Background Circumstances shall be a substantive part of this
Settlement Agreement and this Settlement Agreement shall be construed whenever
possible to give effect to the purposes described therein.
24. Headings. The subject headings of the sections and subsections of
this Settlement Agreement are included only for the purposes of convenience,
and shall not affect the construction or interpretation of any of its
provisions. The Background Circumstances and Purposes set forth in this
Settlement Agreement shall be deemed a substantive part of this Settlement
Agreement and shall be utilized to guide the construction and interpretation
of this Settlement Agreement.
25. Participation. Each party has participated in, and in any
construction to be made of this Settlement Agreement shall be deemed to have
equally participated in, the negotiating, drafting, and execution of this
Settlement Agreement and each of its parts. Therefore, this Settlement
Agreement shall be construed evenly, and not strictly and not against or in
favor of a Party.
26. Severability. The Parties agree that if any provision, sentence,
or section of this Settlement Agreement shall be deemed or declared to be
unenforceable under any state or federal law or authority, then the remainder
of this Settlement Agreement shall remain in full force ad effect and shall be
binding upon the Parties hereto.
27. WAIVER OF TRIAL BY JURY.
EACH OF THE PARTIES TO THIS SETTLEMENT AGREEMENT
WAIVES THE RIGHT TO A TRIAL BY JURY IN ANY ACTION
UNDER THIS SETTLEMENT AGREEMENT OR ANY OTHER
TRANSACTION DOCUMENT OR ANY ACTION ARISING OUT OF THE
TRANSACTIONS CONTEMPLATED HEREBY, REGARDLESS OF WHICH
PARTY INITIATES SUCH ACTION OR ACTIONS.
28. Counterparts. The Settlement Agreement may be executed in
multiple original or facsimile counterparts, each of which shall be deemed an
original, but all of which together shall constitute one and the same
instrument. The parties acknowledge and agree that delivery of executed
copies of this Settlement Agreement by facsimile or other electronic means
shall be effective.
IN WITNESS WHEREOF, the Parties have executed the Settlement Agreement as of
the date first written above.
Omni Medical Holdings, Inc. XxXxx Financial Services, Inc.
a South Dakota corporation a Kentucky corporation
By:/s/Xxxxxx X. Xxxxx By: /s/Xxxxxxx XxXxx
Xxxxxx Xxxxx, President Xxxxxxx XxXxx, President
and:
Approved as to form:
/s/Xxxxxxx XxXxx
/s/Xxxxxx X. Xxxxx, Esq. Xxxxxxx XxXxx, an individual
Attorney for Omni Medical Holdings,
Inc. Approved as to form:
/s/J. Xxxxxxx Xxxxxx, Esq.
J. Xxxxxxx Xxxxxx, Esq.
Attorney for XxXxx Financial Services,
Inc. and Xxxxxxx XxXxx
SCHEDULE 2
Invoices for Period 07.21.05 08.10.05
9.9050 Alabama Pulmonary & Critical Care PC 285.40
9.9060 Xxxxx Xxxxxxx, MD 306.41
9.9061 Xxxxx X. Xxxxxxx, MD 275.20
9.9065 Xxxxx Xxxxxx, DC 64.28
9.9051 Breckenridge Urology Group PSC 1,136.52
9.9052 Xxxxxxx County Hospital 237.60
9.9091 X. Xxxxxx Buschemeyer, MD 292.08
9.9053 Cardiology of Kentucky PLLC 2,136.10
9.9059 Xxxxx Xxxxxxxxx, MD 45.36
9.9054 Center for Pain of Montgomery 3,456.83
9.9055 Xxxxxxxx Medical Group, PSC 292.44
9.9056 Children's Care Rehab/Development Center 518.83
9.9069 Xxxxxxxx Xxxxxx, MD 83.76
9.9057 Xxxxxxxx Community Hospital 695.86
9.9058 DermatoPathology Alliance of KY 346.64
9.9072 Mont X. Xxxxxxx, MD 5.17
9.9062 Horizon Health Care 279.50
9.9084 The Xxxxxxx Clinic 248.38
9.9063 Integrative Psychiatry, PLLC 143.52
9.9066 Louisville Heart Surgery PLLC 163.50
9.9067 Louisville Neurological Surgery, PSC 1,403.54
9.9068 Louisville Oncology 9,280.72
9.9071 Medical Laboratory Consultants PLLC 150.36
9.9073 Montgomery Internists 207.27
9.9074 Montgomery Women's Health Associates PSC 24.38
9.9075 OB-GYN Associates of Montgomery 159.50
9.9064 Xxxxxxxx X. Xxxxxx, MD 226.80
9.9076 Rapid City Community Health Center, Inc. 926.09
9.9077 Rehabilitation Associates PSC 1,257.58
9.9078 River City Orthopaedic Surgeons, PSC 2,897.89
9.9081 St. Clair Regional Hospital 860.57
9.9082 St. Xxxxxxxx Medical Associates 543.49
9.9070 Xxxxxx X. Xxxxxxxx, MD 537.26
9.9079 Southeast Kentucky Audiology 86.88
9.9083 Xxxxxxx Xxxxxxxxxx, MD, PA 52.78
9.9085 UL Family & Geriatric Medicine Newburg 10.68
9.9086 University OB-GYN Associates 1,634.88
9.9087 University of Louisville Trauma Group 1,081.71
9.9088 University Physicians Associates Admin. 8.64
9.9089 University Surgical Associates 6,099.45
9.9090 Urogynecology Specialists of KYANA 612.08
9.9082 West Med Rehab Inc. 38.85
TOTAL: $39,114.78
SCHEDULE 3
Assumed Liabilities
WAGES P/E 08.11.05 7873.54
Co. FICA 488.16
MCR 114.16
FUTA 62.99
SUTA 39.37
ST 8578.22
CONTRACTORS P/E 7/31 6960.16(1)
CONTRACTORS P/E 8/10 10930.89
RENT 8/1/05 8/10/05 605.28
(1876.38 X 10/31)
POSTAGE METER RENT 8/11/05 144.09
SERVICE SOLUTIONS 08/11/05 684.25
IT CONSULTANT (XXXX XXXXXX)
7/1/05-8/10/05 1000.00
TELEPHONE (NUVOX) 1780.29
XXXXXX 207.05
FURNITURE (2 DESKS & CHAIRS) 462.36
PURCHASED 7/7/05
TOTAL $31352.59
ASSUMPTION OF COPIER LEASE (OWE JULY & AUGUST + 53 REMAINING PAYMENTS OF
$183.38 = $10,085.90)
PAYMENT OF LANG COMPANY (JUNE: $120.56; JULY: $115.89; AUGUST: $67.59-
PRORATED THROUGH AUGUST 10 = $304.04)
PAYMENT OF LG&E XXXX (PRIOR TO AUGUST 11) $243.83
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(1) Omni believes that all of the payables referenced in this line item have
been paid by Omni. Inclusion of this line item in Schedule 3 is not intended
to create any obligation of MBS or XxXxx to refund any payments to Omni on
account of such obligations. However, to the extent that there are unpaid
obligations to these vendors, not exceeding $6,960.16 in the aggregate, XxXxx
will pay such vendors.
