AGREEMENT OF SETTLEMENT AND MUTUAL GENERAL RELEASE
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THIS AGREEMENT OF SETTLEMENT AND MUTUAL GENERAL RELEASE (the
"Agreement") is made and entered into as of April 23, 1996, by and among
COMPUMED, INC., a Delaware corporation (the "Company"), XXXXXX XXXXXXXXXX,
an individual ("Stuckelman") and XXXXXXX X. XXXXXXX, an individual
("Xxxxxxx") (the Company, Stuckelman and Xxxxxxx are hereinafter the
"CompuMed Parties"), on the one hand, and XXXXX XXXXXXX, an individual
("Xxxxxxx"), and XXXXX SILVERTON, an individual ("Silverton"), on the other
hand (all of the foregoing are referred to herein individually as a "Party"
and collectively as the "Parties"), with respect to the following facts:
RECITALS
A. WHEREAS, Xxxxxxx was the plaintiff in an action filed in the
Superior Court of the State of California, County of Los Angeles, Case
No. BC 108036, against numerous defendants including, among others, the
CompuMed Parties (the "Lawsuit");
B. WHEREAS, the Lawsuit concerned, in part, a drug in development known
as Rapid Ethanol Lowering drug ("Detoxahol");
C. WHEREAS, the Company and the University of Georgia Research
Foundation, Inc. are parties to a Research Agreement and an Exclusive
License Agreement, both dated January 3, 1994 (the "GRFI Agreements"), with
respect to Detoxahol;
D. WHEREAS, the Parties desire to compromise and settle all claims
asserted in the complaint filed in the Lawsuit and, in connection
therewith, to provide mutual general releases among the Parties to this
Agreement and to enter into other covenants and agreements, all as set
forth specifically herein; and
E. WHEREAS, the Parties deny each and every cause of action, claim,
allegation of fact, and assertion of wrongdoing or liability asserted
charged against them, and neither this Agreement nor any action taken
pursuant hereto nor the consideration provided for herein is or may be
construed as an admission by the Parties in any respect whatsoever.
NOW, THEREFORE, in consideration of the foregoing facts and mutual
covenants and agreements contained in this Agreement, the Parties agree as
follows:
1. Incorporation of Recitals. The recitals contained in
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Paragraphs A, B, C, D and E above are incorporated by reference as though
fully set forth herein.
2. Covenants and agreements between Silverton and the Company.
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(a) Transfer of Rights to Detoxahol.
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(1) No later than June 25, 1996 (the "Option Termination
Date"), Silverton, at his option, but subject to compliance by
Silverton with all the provisions of this Agreement (including
without limitation this Section 2) and satisfaction of the
conditions set forth below, may require the Company to assign and
convey all rights of the Company under the GRFI Agreements (the
"Detoxahol Transfer") to the company to be formed as a California
limited liability company, to be named, if possible, CompuMed, LLC
("LLC"). The form of the Operating Agreement used for purposes of
forming the LLC is attached hereto as Exhibit A (the "Operating
Agreement"). Silverton shall exercise such option (the "Detoxahol
Option") by providing written notice of exercise thereof to the
Company (the "Detoxahol Transfer Notice"). Silverton's failure to
timely provide the Detoxahol Transfer Notice shall relieve the
Company of its obligations to consummate the Detoxahol Transfer.
(2) The Detoxahol Transfer shall occur as soon as
reasonably possible after receipt of the Detoxahol Transfer Notice,
but subject to the receipt of all consents from any necessary
party. Simultaneously with the exercise of the Detoxahol Option,
Silverton shall pay to LLC, or to the Company to be held in
escrow, in immediately available funds by certified check or wire
transfer, the sum of Six Hundred Fifty Thousand Dollars
($650,000.00). In the event Silverton fails to make such
payment, the exercise of the Detoxahol Option shall be deemed
to have immediately expired without any further obligation on
the part of the Company whatsoever (including without limitation
any obligation to consummate the Detoxahol Transfer), and
Silverton shall reimburse the Company and LLC for all costs
and expenses incurred by them in connection with the
exercise of the Detoxahol Option.
(3) Beginning February 26, 1996, Silverton became
entitled to commence a 120 day due diligence period (the "Due
Diligence Period") with respect to Detoxahol. During the Due
Diligence Period, the Company has and shall make available to
Silverton, upon written request, all information in its possession
and/or control regarding Detoxahol including, without limitation,
research reports, patent application, licenses, option agreements,
invention statements, employment contracts, internal reports and
opinions relating to Detoxahol. Further, the Company shall
authorize University of Georgia researchers and personnel, outside
consultants and others involved in the development, research and/or
evaluation of Detoxahol to disclose any and all information in their
possession and control relating to Detoxahol to Silverton and/or his
representatives. For purposes of this Agreement, any written or
oral information provided to Silverton by CompuMed, its
representatives and agents and the University of Georgia researchers
and personnel, outside consultants and others involved in Detoxahol
shall be considered "Confidential Information" unless it became
available to Silverton on a non-confidential basis from someone who,
to Silverton's knowledge, had lawful access to such information.
Silverton hereby agrees for himself and shall cause his affiliates,
employees, agents, attorneys and representatives to hold the
Confidential Information in strictest confidence and shall only use
it solely for the purposes of evaluating Detoxahol for purposes of
exercising the option hereunder. In the event that Silverton does
not exercise the option, Silverton shall within ten (10) days after
the Transfer Termination Date return to CompuMed all copies of all
Confidential Information received pursuant to this Agreement,
maintain as Confidential Information any notes Silverton may have
created, not make any other use of such Confidential Information,
and not provide such Confidential Information to any other person or
entity for any purpose. This obligation shall survive in
perpetuity.
(b) The Operating Agreement. The LLC, and the Parties
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obligations and duties in connection therewith, shall be governed by the
Operating Agreement which will be executed immediately prior to or
concurrently with the Detoxahol Transfer, and is incorporated as though
fully set forth herein.
(c) Silverton's Right of First Refusal. During the first
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sixty (60) days of the Due Diligence Period, the Company is prohibited from
licensing, optioning, assigning or otherwise alienating any right to
Detoxahol or derivative products without written consent from Silverton.
During the second sixty (60) days of the Due Diligence Period, in the event
any third party offers to license, option or otherwise obtain any right in
Detoxahol or derivative products, Silverton may, at his discretion,
accelerate and exercise the Detoxahol Option as described in
Paragraph 2(a)(1), above, within five (5) business days of written notice
of the offer. In the event Silverton elects not to so exercise the
Detoxahol Option, CompuMed may accept the third party offer to license,
option or otherwise obtain rights in Detoxahol. Any such agreement, and
any benefit or rights ensuing therefrom, will be assigned and conveyed to
the LLC to be formed by the Company and Silverton in the event the
Detoxahol Option is exercised.
3. Mutual General Releases: For good and valuable consideration
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as set forth herein, and except with respect to the obligations of the
Parties hereto as set forth herein and in the Operating Agreement, which is
incorporated as though fully set forth herein:
(a) Dismissal of Lawsuit. Xxxxxxx represents and warrants
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that the Lawsuit has been dismissed without prejudice as to the CompuMed
Parties. Xxxxxxx hereby agrees that pursuant to this Agreement neither
he nor any of his affiliates, successors, assigns, employees, agents,
attorneys or representatives will reinstitute the case.
(b) Release of CompuMed Parties. Xxxxxxx and Silverton, on
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their own behalf and on behalf of their respective directors, officers,
shareholders, affiliates, subsidiaries, divisions, assigns, transferees,
employees, servants, successors, agents, attorneys and representatives,
hereby release, remise and forever discharge CompuMed, Stuckelman and
Xxxxxxx and their respective officers, directors, shareholders,
affiliates, subsidiaries, divisions, assignees, transferees, employees,
servants, successors, agents, attorneys and representatives, except
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Xxxxxx Xxxx, of and from any and all claims, demands, damages, debts,
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liabilities, actions, causes of action, suits, contracts, controversies,
agreements, accounts, reckonings, obligations and judgments, whether in
law or equity ("Claims"), which Xxxxxxx and/or Silverton now have, own or
hold, or at any time previously ever have, owned or held, or could,
shall, or may later have, own or hold, directly or indirectly,
individually, through others or other entities, derivatively or in any
other manner, based upon, related to or by reason of any action, contract
(express, implied in fact, implied in statute, law or otherwise), lien,
liability, law, matter, cause, action, lawsuit, fact, act or omission of
any kind whatsoever occurring or existing at any time prior to the
execution of this Agreement, including, without limitation, those set
forth in the Lawsuit. Specifically excluded from this Release are the
obligations of the Parties under this Agreement and the Operating
Agreement.
(c) Release of Xxxxxxx and Silverton. CompuMed, Stuckelman
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and Xxxxxxx, on their own behalf and on behalf of their respective
officers, directors, shareholders, affiliates, subsidiaries, divisions,
assigns, transferees, employees, servants, successors, agents, attorneys
and representatives, hereby release, remise and forever discharge Xxxxxxx
and Silverton and their respective officers, directors, shareholders,
affiliates, subsidiaries, divisions, assigns, transferees, employees,
servants, successors, agents, attorneys and representatives (except
Xxxxxx Xxxx or Xxxx Xxxxxxxx, if applicable), of and from any and all
Claims, which CompuMed, Stuckelman and Xxxxxxx now have, own or hold, or
at any time previously ever have, owned or held, or could, shall, or may
later have, own or hold, directly or indirectly, individually, through
others or other entities, derivatively or in any other manner, based
upon, related to or by reason of any action, contract (express, implied
in fact, implied in statute, law or otherwise), lien, liability, law,
matter, cause, action, lawsuit, fact, act or omission of any kind
whatsoever occurring or existing at any time prior to the execution of
this Agreement, including, without limitation, those set forth in the
Lawsuit. Specifically excluded from this Release are the obligations of
the Parties under this Agreement and the Operating Agreement.
(d) It is the intention of the Parties in executing this
Agreement that it shall be effective as a full and final accord and
satisfactory release of each and every matter herein specifically or
generally referred to. In furtherance of this intention, each Party
acknowledges that he or it is familiar with Section 1542 of the Civil
Code of the State of California, which provides as follows:
"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."
The Parties waive and relinquish any rights and benefits which they have
or may have under Section 1542 of the Civil Code of the State of
California to the full extent that they may lawfully waive all such
rights and benefits pertaining to the subject matter of this Agreement.
The Parties, and each of them, acknowledge that they are aware that they
may later 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
this Agreement, but it is their intention (except with respect to the
obligations set forth herein) to fully and finally forever settle and
release any and all matters, disputes and differences, known and unknown,
suspected and unsuspected, which now exist, may later exist or may
previously have existed between them, in any manner or any capacity, and
that in furtherance of this intention, the release given in this
Agreement shall be and remain in effect as a full and complete general
release notwithstanding discovery or existence of any such additional or
different facts.
4. Confidentiality.
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(a) The Parties and any person acting by, through, under or in
concert with any of them, agree not to disclose this Agreement or its
terms to any person except (a) immediate family members of the respective
Parties, or (b) the Parties' respective financial, business or legal
advisors; except as may be required by law or regulation, or by the rules
of the National Association of Securities Dealers, Inc., or for tax
reporting or tax dispute resolution purposes. In the event that any
judicial process, whether by subpoena or discovery demand, shall be
asserted against any party hereto seeking disclosure of this Agreement or
its terms, then the party so subpoenaed or against whom the discovery
demand is made shall give the other parties hereto prompt notice of such
subpoena or discovery demand, and shall reasonably cooperate with any
effort by the other parties to quash such subpoena or discovery demand or
to obtain a confidentiality agreement or order.
(b) [All documents or interrogatory responses produced
pursuant to discovery demands in the Lawsuit, and deposition transcripts
in the Lawsuit, shall be treated as confidential. Each Party hereto
represents and covenants that it will use its best efforts not to
disclose any documents or information obtained by it from any other Party
through discovery in the Lawsuit except to the extent permitted in
Paragraph 4(a) with regard to this Agreement or its terms. No party
hereto shall object to the sealing of the record of the Lawsuit, or any
portion thereof.]
5. Nonsolicitation. None of the Parties will either directly or
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indirectly, on their own behalf or in the service of others, disrupt,
damage, impair or interfere with the business of the other Parties and/or
their respective affiliates, whether by way of interfering with or raiding
their respective officers, employees, agents and/or independent contractors
or in any manner attempting to persuade any such person to discontinue any
relationship with the relevant Party and/or their respective affiliates, or
otherwise.
6. Notice. All notices given hereunder shall be in writing and
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shall be deemed to be properly given only when personally delivered or when
deposited in the United States mail, postage prepaid, using only certified
or registered mail, and addressed to:
If to the Company:
COMPUMED, INC.
0000 Xxxxxxxxx Xxxxxx, Xxxxx 0000
Post Office Xxx 00000
Xxxxxxxxx Xxxxx, XX 00000
Attention: President
If to Stuckelman:
Xx. Xxxxxx Xxxxxxxxxx
0000 Xxxxxxxx Xxxxx
Xxxxxx, XX 00000
If to Xxxxxxx:
Xxxxxxx X. Xxxxxxx, Esquire
Transworld Bank Plaza
00000 Xxxxxxx Xxxxxxxxx, Xxxxx 0000
Xxxxxxx Xxxx, XX 00000
As to CompuMed, Stuckelman and Xxxxxxx,
with a copy to:
Sheppard, Mullin, Xxxxxxx & Hampton
000 Xxxxx Xxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxxxxx, XX 00000
Attention: Xxxxxx X. Xxxxx, Xx., Esquire
If to Xxxxxxx:
Xx. Xxxxx Xxxxxxx
c/o Xxxxx X. Xxxxxxxx, Esquire
X'Xxxxx, Xxxxxxx & Sun
000 Xxxxxxxx Xxxxxxxxx, Xxxxx 000
Xxxxx Xxxxxx, XX 00000-0000
If to Silverton:
Xx. Xxxxx Silverton
116 Tigertail
Xxxxxxxxx, XX 00000
As to Silverton and Xxxxxxx,
with a copy to:
X'Xxxxx, Lysaght & Sun
000 Xxxxxxxx Xxxxxxxxx, Xxxxx 000
Xxxxx Xxxxxx, XX 00000-0000
Attention: Xxxxx X. Xxxxxxxx, Esquire
The above addresses may be changed only by proper
notice given hereunder. Notice given as herein provided shall
be deemed to be given, received and effective either upon
personal delivery thereof or upon three (3) days after the
proper mailing thereof.
7. Entire Agreement. This Agreement, and the
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Operating Agreement contain the entire understanding of the
Parties with respect to the subject matter hereof and
supersedes all prior and contemporaneous oral and written
agreements and discussions. There are no representations,
covenants, or undertakings other than those expressly set forth
in this Agreement and the Operating Agreement. Each Party
acknowledges that no other Party or any agent or attorney of
any other Party has made any promise, representation or
warranty whatsoever, express, implied or statutory, not
contained in this Agreement, concerning its subject matter to
induce them to execute this Agreement. The Parties acknowledge
that they have not executed this Agreement in reliance upon any
such promise, representation or warranty not specifically
contained in this Agreement. Xxxxxxx and Silverton acknowledge
that the CompuMed Parties have made no representation or
warranty upon which Xxxxxxx or Silverton are relying with
respect to Detoxahol or the GRFI Agreements and any projections
or statements with respect thereto. The CompuMed Parties
specifically disclaim any warranty as to the accuracy of any
such projections or statements, if any.
8. Binding on Successors; No Prior Assignment.
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(a) This Agreement and the covenants and
conditions contained in it shall apply to, be binding upon
and inure to the benefit of the Parties hereto and their
respective agents, employees, attorneys, representatives,
officers, partners, directors, divisions, subsidiaries,
affiliates, assigns, heirs, successors and predecessors in
interest and shareholders. Each Party represents and
warrants that it has not assigned or in any way conveyed,
transferred or encumbered all or any portion of the claims
or rights covered by this Agreement. Each Party does
hereby represent and warrant to each and every other Party
hereto that it has the full and complete right and
authority to enter into this Agreement and perform the
terms and conditions hereof, all necessary action has been
undertaken to make this Agreement legal, binding and
enforceable against them and each Party signing below is
fully authorized to execute this Agreement.
(b) Silverton hereby recognizes and agrees that
he shall not be entitled to transfer any of his rights
with respect to the Detoxahol Option under any
circumstances to Xxxxx Xxxxxxx or any of Xxxxx Xxxxxxx'x
affiliates or relatives. As to any other person or entity
in which Xxxxx Xxxxxxx does not have an interest,
Silverton may transfer such rights subject to the
Company's prior written reasonable approval. Subject to
the foregoing, should Silverton desire to transfer the
Detoxahol Option to any person or entity, prior to doing
so, in a notice delivered to the Company, Silverton shall
in writing offer to the Company the right to purchase the
Detoxahol Option on the price and terms specified in the
notice. The notice shall specify the price, terms and
identity of the proposed bona fide transferee. Within
thirty (30) days after the Company receives the written
notice upon which a right to purchase arises, the Company
shall give written notice to Silverton of its decision.
If the Company exercises its right, the purchase price
shall be paid by the Company to Silverton in the same
manner as in the notice provided by Silverton within
sixty (60) days of the Company giving its notice of
exercise. If the Company fails to exercise its right
pursuant to these provisions, Silverton may sell the
Detoxahol Option to the named transferee, if reasonably
approved by the Company, on the price and terms set forth
in the notice within sixty (60) days after expiration of
the period within which the Company must give a notice of
the exercise of its right. If the price or terms then are
changed or Silverton fails to complete his transaction
within the applicable period, the foregoing provision
shall continue to govern any proposed transfer.
9. Governing Law. This Agreement shall be deemed
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to have been executed and delivered within the State of
California, and the rights and obligations of the parties
hereunder shall be construed and enforced in accordance with,
and governed by, the substantive and procedural laws of the
State of California. The Parties agree that any dispute
relating to this Agreement, or to its negotiation and
execution, shall be adjudicated in the State of California.
10. Representation and Joint Preparation. Each
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Party acknowledges and agrees that it has been represented
throughout all of the negotiations which preceded the execution
of this Agreement by counsel of its own free choice. Each
Party further acknowledges and agrees that it has made such
investigation of the facts pertaining to this Agreement and all
the matters pertaining to this Agreement and all the matters
pertaining thereto as it deems appropriate. Each Party has
cooperated in the drafting of this Agreement. Hence, in any
construction to be made of this Agreement, the same shall not
be construed against any Party by reason of its having drafted
the same.
11. Attorneys' Fees and Costs. In the event that
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any Party hereto shall institute any action, proceeding or
arbitration to enforce any rights granted hereunder, the
prevailing party in such action or proceeding shall be
entitled, in addition to any other relief granted by the court
or other applicable judicial or arbitration body, to reasonable
attorneys' fees and costs.
12. No Waiver. Failure to insist on compliance with
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any term, covenant or condition contained in this Agreement
shall not be deemed a waiver of that term, covenant or
condition, nor shall any waiver or relinquishment of any right
or power contained in this Agreement at any one time or more
times be deemed a waiver or relinquishment of any right or
power at any other time or times.
13. Counterparts. This Agreement may be executed in
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one or more counterparts, including by telecopy, each of which
shall be deemed an original, but all of which together shall
constitute one of the same Agreement.
14. Further Assurances. Each Party agrees to
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execute such additional documentation and to take such further
action as reasonably necessary to effectuate the purpose of
this Agreement.
15. Binding Agreement. In entering into this
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Agreement each Party assumes the risk of any misrepresentation,
concealment or mistake. If any Party should subsequently
discover that any fact relied upon by it in entering into this
Agreement was untrue or that any fact was concealed from it, or
that its understanding of the facts or of the law was
incorrect, such Party shall not be entitled to any relief in
connection therewith, including without limitation on the
generality of the foregoing, any alleged right or claim to set
aside or rescind this Agreement. This Agreement is intended to
be and is binding between the Parties, regardless of any claims
of misrepresentation, promises made without the intention to
perform, concealment of fact, non-performance of this
Agreement, mistake of fact or law, or of any other
circumstances whatsoever.
16. No Admissions. This Agreement effects the
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settlement of disputes which are denied and contested and
nothing contained herein should be construed as an admission by
any Party of any liability of any kind with respect thereto.
All such liability is expressly denied.
17. Amendment. This Agreement may be amended or
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modified only by a writing signed by all of the Parties.
18. Fees and Expenses. Except as specifically
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otherwise provided in this Agreement, each Party agrees to be
responsible for the expenses incurred by it during the course
of the Lawsuit and its settlement, including, without
limitation, attorneys' fees and court costs.
19. Headings. The headings contained in this
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Agreement are set forth herein for convenience only and shall
not have any effect on the meaning or interpretation hereof.
IN WITNESS WHEREOF, the parties have executed this
Agreement on the date first above written.
"COMPUMED"
COMPUMED, INC.
a Delaware corporation
By: /s/ Xxx X. Xxxxxxxxx
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Name: Xxx X. Xxxxxxxxx
Title: Pres. & CEO
"STUCKELMAN"
/s/ Xxxxxx Xxxxxxxxxx
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XXXXXX XXXXXXXXXX
"XXXXXXX
/s/ Xxxxxxx X. Xxxxxxx
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XXXXXXX X. XXXXXXX
APPROVED AS TO FORM:
SHEPPARD, MULLIN, XXXXXXX & HAMPTON
counsel to CompuMed, Stuckelman and
Xxxxxxx
By:/s/ Xxxxxx X. Xxxxx
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XXXXXX X. XXXXX, XX., ESQ.
"SILVERTON"
/s/ Xxxxx Silverton
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XXXXX SILVERTON
"XXXXXXX"
/s/ Xxxxx Xxxxxxx
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XXXXX XXXXXXX
APPROVED AS TO FORM:
X'XXXXX, LYSAGHT & SUN
Counsel for Silverton and Xxxxxxx
/s/ Xxxxx X. Xxxxxxxx
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XXXXX X. XXXXXXXX
